(b) The second is whether there should be relief because of the improvements effected by the purchaser.
27 (a) Focusing on the first of these, the facts are that special condition 43 provided that the purchaser would pay a licence fee of $300,000 to be paid monthly at the rate of $37,500 for each of eight months. Under special condition 44, the vendor was to accept, on completion, such licence fees in reduction of the sale price. Special condition 45 then provided:
"In the event this contract is terminated by the Vendor as authorised by this contract then the whole of the deposit monies together with the licence fees as paid and received by the vendor shall vest upon the vendor absolutely and such moneys the parties agree shall be forfeited to the vendor as security for the Purchasers default under the contract."
28 In McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457, Dixon J said at 477-478:
"When a contract stipulates for payment of part of the purchase money in advance, the purchaser relying only on the vendor's promise to give him a conveyance, the vendor is entitled to enforce payment before the time has arrived for conveying the land; yet his title to retain the money has been considered not to be absolute but conditional upon the subsequent completion of the contract. … It is now beyond question that instalments already paid may be recovered by a defaulting purchaser when the vendor elects to discharge the contract."
29 The matter was considered in great detail by McPherson J in Lexane Pty Ltd v Highfern Pty Ltd [1985] 1 Qd R 446. That case involved a failed contract for a home unit building, Shangri-La in Surfers Paradise. The purchase price was $11.5 million with a deposit of $500,000 and a $4 million progress payment to be made in four equal instalments of $1 million each. The purchaser paid the $4.5 million, but defaulted in completion and the vendor terminated. McPherson J said at 454-5:
"The fundamental principle applicable to a vendor who rescinds for breach after receiving payment, wholly or in part, on account of the price is that 'he cannot have the land and its value too': Laird v Pim (1841) 7 M & W 474, 478; 151 ER 852, 854 per Parke B. Hence money so paid by the purchaser is recoverable from the vendor. At law it is recoverable as money had and received upon a total failure of consideration."
30 If the jurisdiction to relieve against forfeiture of instalments of purchase price exists at common law, then any consideration of conduct unconscientious or otherwise is quite irrelevant. Although Mr Gray did not put his case on the basis of the common law as opposed to equitable principles, the better view is that this part of the case is nowadays a matter of pure common law.
31 When considering total failure of consideration, two aspects of the matter have to be taken into account. The first is that there was a view in the early 20th century that there cannot be a total failure of consideration if the plaintiff obtains even a slight benefit from the contract. Thus in Real Estate Securities Ltd v Kew Golf Links Estate Pty Ltd [1935] VLR 114 at 120, there is a suggestion (which was indeed rejected in that case) that a person who has been in possession under the contract cannot say that consideration has fully failed. However, whilst the matter is not completely clear, the better view in 2005 is that being in possession does not mean that there has not been a total failure of consideration. The current view of the term is that total failure of consideration is directed to the key and principal part of the contract. In cases of the present type this is to provide a conveyance; see Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435 at 464 and Voumard, Sale of Land 5th ed [12 280].
32 The second reason is that if a contract contains a provision for forfeiture of the instalments, then that at law removes the right of action for money had and received; see eg Berry v Mahony [1933] VLR 314 at 320 and see Voumard op cit at [12 290]. However, as the authorities point out prior to the reconsideration of the matter by the High Court in AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170, there was an equitable remedy sometimes called relief against forfeiture of instalments, but, in reality, part of the exercise of the jurisdiction to relieve against penalty.
33 The equitable jurisdiction to relieve against penalty originally involved the plaintiff seeking relief against penalty in equity and there then being a reference to a court of common law to try an issue of quantum damnificatus. The jury then gave a verdict as to the real damages suffered and then courts of equity (later, courts of law) on the plaintiff in equity paying what the jury determined to be the real damages, relieved against the penalty; see Ashburner, Principles of Equity 2nd ed (Butterworths, London, 1933) p 265.
34 By statutory amendment and by gradual involvement of the common law in penalties, by 1986 Mason and Wilson JJ were able to say in AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170 at 191:
"All this leads to the conclusion that the equitable jurisdiction to relieve against penalties withered on the vine for the simple reason that, except perhaps in very unusual circumstances, it offered no prospect of relief which was not ordinarily available in proceedings to recover a stipulated sum, or alternatively, damages."
35 If a person entitled to the penalty sues for it , then at common law, the law will adjust the amount to what a jury would have found under a quantum damnificatus. However, where the person entitled to forfeit the money already has the money in his or her pocket, then there is no action at law available so that equity still needs to exercise its jurisdiction. Equity does so following the ordinary principles which originated in equity and are now part of the common law. There is no room for any examination of conduct unconscionable or otherwise.
36 Accordingly, in so far as the purchaser seeks relief against forfeiture of instalments, the additional evidence is not of any relevance.
37 (b) I now pass to the third aspect of the case, that is, the relief against forfeiture of the equitable estate of the purchaser under the contract without compensation for improvements.
38 The principles applicable were thoroughly discussed by the Court of Appeal in Clancy v Salienta Pty Ltd (2000) 11 BPR 20,425. The leading judgment on the present point was given by Giles JA with whom Stein JA agreed, Beazley JA coming to a different view. After review of the authorities, Giles JA considered that McPherson J in Highfern overstated the matter and that there was no automatic right of a purchaser to obtain compensation for improvements when a contract came to an end.
39 Giles JA said at [226] p 20,467 that the cases do not "provide clear support for a purchaser's entitlement as a matter of course to be compensated in respect of permanent improvements to the land if the vendor terminates the contract for the purchaser's default, whether to the extent to which the value of the land has been enhanced or in the amount of the expenditure. … That is not to say that a purchaser does not have an entitlement in some circumstances. But on what basis, and when?" He said that the recovery of instalments did not provide a satisfactory analogy ([240]) and it was really wrong to classify the case as one of relief against a penalty ([241]).
40 At [247] his Honour said that the basis must either be "equity's traditional jurisdiction to grant relief against unconscientious conduct, namely that a person should not be permitted to use or insist upon his legal rights to take advantage of another's special vulnerability or misadventure for the unjust enrichment of himself, or by adoption of principles of unjust enrichment." Even though Salienta knew of the improvements and acquiesced and encouraged their making, Giles JA did not think there would be any unconscionability in Salienta having the benefits of the improvements without compensation nor would there be any unjust enrichment.
41 At [111]-[112] at p 20,443 Stein JA agreed with Giles JA's conclusions. Beazley JA at [81]and following, p 20,438, took the view that the analysis in Highfern led to the view that the purchaser was entitled to compensation.
42 In the Salienta case Giles JA was guided by the decision of Hodgson J in Nepean District Tennis Association v Penrith City Council (1988) 4 BPR 9645; 66 LGRA 440. In that case the plaintiff had resurfaced tennis courts in the reasonable expectation of having a long licence to occupy them. The defendant council then put an end to the lease taking the view that an amendment to the Local Government Act 1993 meant they should lease the courts commercially. Hodgson J held that whilst there was a general principle that if A expends money on the land of B leading to the increase in the value of B's land, A cannot recover compensation, where it would be unconscionable (as he held to be the case in the matter before him) compensation should be made or else an extended licence given.
43 Accordingly, the view that binds me with respect to whether the purchaser is entitled to equitable compensation for improvements is a matter to be considered upon asking whether it is unconscionable for the vendor to walk away from this transaction while retaining land that has increased in value because of the purchaser's efforts, without making equitable compensation.
44 The question then is whether the fact, if it be the fact, that the purchaser has on many occasions in the past indulged in similar conduct to the prejudice of vendors is admissible on this issue.
45 As the enquiry is focused on the unconscionable conduct of the vendor rather than the conduct of the purchaser, to my mind it is not.
46 Accordingly, on all three aspects of the case the proposed further evidence does not assist and I decline to allow the defendant to reopen and call further evidence.
47 The motion must thus be dismissed, however, the argument on the motion was brief and has assisted my thinking on the final judgment in this matter. Thus costs of the motion should be costs in the cause.
48 There is now nothing to prevent me giving my final judgment in the proceedings. As I said earlier, I had already prepared this in final draft before the present matter came up. Part of what I was going to say I have now included in the reasons on this motion so it will be necessary to edit and revise my final draft, but I should be in a position to give final judgment shortly.