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[2007] NSWSC 121
Supreme Court of NSW
2006-12-12
Biscoe AJ, Mr J
Original judgment source is linked above.
Introduction 32 On 20 March 2003, while the parties' development application and the related Land and Environment Court proceedings were pending, there was a meeting between the parties. The meeting was attended by Mr Cook and his advisor Mr Beesley, and Natuna was represented by Mr Hart and Mr Short.
33 Natuna claims that at this meeting they agreed that Mr Cook would pay two-thirds of the costs incurred by Natuna for the rezoning and the development application. That is, that they in effect agreed to vary the 50/50 cost sharing provided for under the 1995 deed and the July 2001 oral agreement.
34 Mr Cook claims that at the meeting they agreed that: (a) Natuna would be responsible for paying one-third and Mr Cook would be responsible for paying two-thirds of any joint costs and expenses incurred thereafter in relation to the development of the Riveroaks Land as would benefit both parties (the earlier costs relating to the rezoning and subdivision applications, as had previously been agreed, would be shared equally); (b) in accordance with a proposed condition of council consent, Mr Cook would provide the use of the mangrove relocation land to Natuna. That land was to be valued and Natuna was to pay Mr Cook compensation for its use. The costs of relocating the mangroves to the mangrove relocation land were to be borne by Natuna; (c) in accordance with a proposed condition of council consent, Mr Cook would provide land to be used as playing fields. This land was to be valued and its value was to be deemed part of Mr Cook's contribution to the joint development costs; (d) all joint costs and expenses incurred by Natuna, whether they were incurred before or after March 2003, were not to be payable by Mr Cook until they were off-set against the value of Mr Cook's contributions of the playing fields land and the mangrove relocation land; and (e) Natuna confirmed an oral agreement entered into in early 2001 that Natuna would grant Mr Cook road access to the Pacific Highway over land owned by Natuna. 35 Mr Cook gave evidence that he would not have allowed the parties' pending subdivision development application to proceed (as a landowner his consent was required), unless there was agreement with Natuna on these matters. One of the proposed conditions of consent involved Mr Cook agreeing to the transplantation of mangroves onto his land. Mr Cook submitted that before agreeing to such a blight on his land, he wanted to be assured that Natuna, which was the beneficiary of the mangrove transplantation, would compensate him for the loss of his land. Mr Cook submitted that, having been satisfied of those matters as a result of the parties' agreement on 20 March 2003, in early June 2003 he decided to allow the development application to proceed.
36 Natuna submitted that any consensus reached as to compensation for land contributions and offset arrangements at the meeting was predicated on the parties proceeding with a joint development in accordance with a consent to the pending development application. Natuna further submitted that no concluded contract was reached, a submission which sits uneasily with Natuna's case that there was an agreement at this meeting that Mr Cook would be responsible for two-thirds of the joint costs and expenses already incurred.
37 There is tension within each party's position. Natuna says that the meeting was forward looking, except for costs and expenses. Mr Cook says that the meeting was backwards looking, except for costs and expenses.
38 It is necessary to determine whether or not any consensus as to these matters was predicated on the parties proceeding with a joint development since, in the end, they did not do so. The conduct of the parties antecedent and subsequent to the 20 March 2003 meeting casts light on that issue. Antecedent conduct 39 In January 2003 Mr Hart was informed by Mr Cook's advisor Mr Beesley that Mr Cook was planning to develop and subdivide his portion of the Riveroaks Land on his own or do a joint venture with someone, and that Mr Beesley had had discussions with several parties who had expressed interest in a joint venture. Mr Hart broached this subject with Mr Cook and asked what they were going to do about settling up the expenses. Mr Cook told him that when his land was sold, Natuna would be paid out. Mr Cook had discussed with the council aspects of a separate development of his portion.
40 On 5 March 2003 Mr Beesley sent a fax to Mr Smith of Stacks, solicitors for the joint venturers' interests in the pending Land and Environment Court proceedings. The fax confirmed their telephone conversation that morning that Mr Cook did not wish to proceed with the court case and instructed Mr Smith to withdraw Mr Cook's "application". Reference was also made to an offer made by Mr Cook to council officers on 28 February. Mr Smith replied by fax the same day pointing out that: (a) if Mr Beesley was suggesting, as the first paragraph of his letter read literally would suggest, that Mr Cook wished to withdraw his consent to the development application, that application would be void because it would no longer have owners' consent; (b) it was Ardill Payne & Partners who would have to withdraw from the court case because the application to the Court was in their name; (c) Mr Beesley's letter, if construed literally (as above), effectively scuttled the development application before the council and before the Court; and (d) Stacks were unable to deal with the application to the Court until there was a resolution by the joint venturers as to whether the development application was to proceed or not.
41 Mr Cook testified, and I accept, that as a result of Mr Beesley explaining to him what Mr Smith had written he understood that he had to make a choice between continuing with a joint development of the Riveroaks Land or commencing a fresh application for development just of his own portion, and that he chose the first course.
42 He had made that choice by the time he instructed Mr Beesley to reply to Mr Hart by fax dated 6 March 2003 which stated, among other things: Further to this morning's telephone conversation, I confirm that Don Cook has now instructed that he is agreeable to remaining a party to the proceedings. However, a meeting with representatives of Natuna must take place as soon as possible and well before the scheduled hearing date of 31 March, to try to establish agreement between the 2 parties regarding both - (a) the direction of the proceedings and; (b) the respective rights and obligations in relation to the land/development as no terms and conditions have yet been agreed, this despite recent efforts to establish dialogue on the matters.
43 On 8 March 2003 Mr Beesley wrote to Mr Cook expressing his deep concern about the prospects of success in the upcoming court hearing and stating that a number of other issues gave him cause for alarm. He expressed the opinion that the cost benefit of the exercise if the court case was won was out of proportion to the overall value of the land and the potential profit.
44 By fax dated 11 March 2003 to Ardill Payne & Partners, Mr Smith of Stacks recorded that Mr Cook had telephoned him that morning and that his instructions were to proceed to adjourn the court case as agreed with the council's solicitors and to negotiate a settlement. He reiterated that the joint venturers should have separate discussions to ensure that when he met with the council there was an agreed position.
45 By 12 March 2003 the parties to the court case had agreed to seek a consent order that the hearing dates of 31 March and 1 and 2 April be vacated, and had agreed to negotiate with a view to a settlement.
46 On 14 March 2003 Mr Cook sent a letter to Mr Smith at Stacks notifying that Mr Beesley was to be his sole spokesperson from that time onwards and withdrawing any consent he may have given for Mr Hart to speak on his behalf. All Mr Cook's decisions and instructions were to be taken by Mr Smith and everyone else direct from Mr Beesley on his behalf and not from Mr Cook himself.
47 On 15 March 2003 Mr Beesley wrote to Mr Hart stating among other things: I have been advised by Tony Smith that a conference with [counsel retained in the pending court proceedings] has been arranged at Stacks' Tweed Heads office for 8.30 am next Friday for the purpose of reviewing the Consent Conditions. This is to ensure that the Conditions are acceptable to possible financiers, joint venturers and the like if development proceeds . [Tony has also advised me that neither the proposed negotiations with Council nor the court proceedings can go ahead unless Natuna and Don are in agreement…] … I faxed a list of issues to you prior to your going to Ballina for the conference with Council. When I broached you at Ballina about the issues you indicated that you did not wish to discuss them. Nor were you willing to divulge other issues which you said existed and also needed to be resolved. Don and I need to be appraised of the additional issues you have in mind if they are to be resolved. … If the development is to proceed with a view to both Don and Natuna each achieving maximum benefits, I think we should meet. If you want to meet, then please let me know. (emphasis added)
48 The "list of issues" referred to in this communication appears to be Mr Beesley's document entitled "Suggested Points of Discussion" to which I refer later. The other words that I have emphasised in the above extract suggest that resolution of those issues was for the purpose of establishing a basis on which the parties could proceed with a joint development once development consent had been obtained. Mr Cook gave evidence, which I accept, that the Suggested Points of Discussion were prepared by Mr Beesley after he had discussed with Mr Beesley the matters he wanted to raise with Natuna as arrangements that would bind the parties if they were to move forward with a joint development of the land. He testified, and I accept, that he would most likely have told Mr Beesley that most of them would have to be agreed.
49 On 16 March 2003 Mr Reid wrote to Mr Cook stating that he valued Mr Cook's friendship and stating, among other things: Last week I was very angry that Trevor could support you to attempt to negotiate directly with the Council staff, and without any reference to us: He should have known better. He has encouraged you to destroy our teamwork. You told me on Monday that Council would pass the DA if they received the valuation from Owen Allsopp by Wednesday the nineteenth - that holding this over the Council would force them to approve the DA. I agreed with you [sic] decision and supported you, providing this was an achievable outcome. I asked Evan to check this with Tony Smith. Tony told him this was not so and thus, Tony would approach the Council solicitor and establish an achievable time table for a negotiable settlement. … It will not [be] the end of the world if you break the agreement as it stands. The land is still there, but all our hopes and expectations will be dashed and all the work we have put in is wasted - so we start again. I would like to know why it has come to this? (emphasis added)
50 This communication suggests that Natuna was hoping that a joint development would still occur as had long been hoped and expected.
51 By fax dated 18 March 2003 to Mr Hart, Mr Beesley said that unless they agreed by 4.00 pm that day to meet before Friday, then Mr Cook would not agree to the incurring of any further legal costs or other expenses "until the issues between him and Natuna are resolved".
52 On 18 March 2003 Mr Reid wrote to Mr Cook recounting a number of events and concluding with the following statement: The majority of points in Trevor's list are not in dispute they have to [be] worked out once we know the full implications after approval.
We would like to understand what points you are concerned about so we can reach a solution suitable to both of us. (emphasis added)
53 This communication suggests an understanding that Mr Beesley's Suggested Points of Discussion were aimed at creating a consensus which would operate if there was a joint development following approval of the development application.
54 In cross-examination Mr Cook said that his understanding was that the meeting on 20 March 2003 was to discuss the arrangements which would bind the parties if they were to proceed with a joint development. I accept this evidence.
55 Mr Cook agreed in evidence, and I accept, that towards the start of the 20 March 2003 meeting Mr Beesley said something to the effect that the parties needed to be clear on what the arrangements would be if they proceeded to do a joint development; and that Mr Cook understood that the points they went on to discuss were discussed as arrangements that would be binding if the parties proceeded to do a physical joint development of the land.
56 My conclusion from the evidence so far referred to is that the parties understood that agreement on the issues in Mr Beesley's Suggested Points of Discussion was for the purpose of establishing a basis on which the parties could proceed with a joint development of the Riveroaks Land once development consent had been obtained. The documentary and other evidence of the discussions at the 20 March 2003 meeting, and the parties' subsequent and other conduct, which are considered below, are consistent with that conclusion. I would accept that Natuna also understood that Mr Cook may not have proceeded with the development application unless those issues were addressed. Documentary evidence of the meeting 57 The meeting of 20 March 2003 was held at the offices of Ardill Payne & Partners in Ballina. It was attended by Mr Cook, his advisor Mr Beesley, and Natuna's representatives Mr Hart and Mr Short (a shareholder of Natuna).
58 Mr Hart and Mr Beesley led the discussion. Mr Short had little recollection of the meeting. Mr Cook's evidence, which I accept, was that he was "out of [his] depth", and he let Mr Beesley speak on his behalf. He had given Mr Beesley instructions to represent him because he "wasn't up to the standard of that kind of work". 59 The documentary records of the meeting comprise "Suggested Points of Discussion" which Mr Beesley sent to Mr Hart prior to the meeting; handwritten notes made at the meeting by Mr Beesley and Mr Hart on their respective copies of that document; a typed file note which Mr Beesley made shortly after the meeting from his contemporaneous handwritten notes (which have not survived); and a letter written by Mr Beesley to Mr Hart dated 26 March 2003 confirming matters resolved or verified at the meeting. 60 The Suggested Points of Discussion sent by Mr Beesley to Mr Hart prior to the meeting, was in the following terms: RIVEROAKS DEVELOPMENT SUGGESTED POINTS of DISCUSSION between Don Cook and Bob Hart [Where costs/expenses, etc. are agreed as joint, then Cook to be responsible for 2/3rd and Natuna for 1/3rd]
62 At the meeting Mr Beesley struck out item 11, ticked items 1, 2 and 8 and wrote on his copy of the document: · Next to item 3 "N's cost" · Next to item 4 "2/3 x 1/3" · Next to item 5 "& Mangrove" · Next to Item 7 "Fair and reasonable" · Next to Items 9 and 10 "Natuna" · Next to Item 12 "Don" 63 At the meeting Mr Hart wrote on his copy of the document: · next to item 9 "Natuna 100%" · next to Item 12 "Cook 100%" · "13. Dedication of 2 ha conservation area?" · "14. Cycleway" 64 Mr Beesley's file note of the 20 March 2003 meeting was as follows: Bob opened by stating that there was an agreement to agree on joint development which therefore was not an agreement. I agreed that there was no agreement but wanted clarified what had been agreed between Don and Natuna as I was never informed over the past 11 years what the arrangements were. Bob said there was nothing in writing but there was never any diagreement [sic] and it was to be done on the 1/3rds - 2/3rds basis. I said that we had to be in agreement on the issues between Natuna and Don before we could proceed on the joint instructions to Tony Smith because Don thought it was integral to the whole matter.
Bob said it was not right to state in my letter that he refused to discuss the issues and I said that's the way I perceived it.
We then proceeded through the list I had previously faxed Bob, item by item [I made notes on my copy but the following points are expanded for future reference]:-
Link road compensation to be shared in proportion to area of land being dedicated.
Link road would be dedicated to Council when required and cost of construction of link road 1/3rd - 2/3rds
Bob agreed that Natuna should be responsible for the cost of the Conservation Area Embellishment.
Buffer zone would also be on a 2/3rds - 1/3rd basis.
Bob agreed that the area being given by Don for the playing fields would be credited also at valuation and the 2/3rds - 1/3rd arrangement would apply.
Payment for infrastructure, contributions and other costs incurred in Stages 1-5 that were for the benefit of Stages 6 & 7 would be reimbursed on a fair and reasonable basis if Don constructed such infrastructure when he did Stages 1-5 without any obligation in Don's part to do so.
Payments made by Natuna as agreed on joint account in accordance with the written agreement (rezoning and D.A.) would be offset against playing fields, mangrove land, infrastructure.
Bob also agreed that Natuna will be responsible for paying Don for the land he was making available for the transplant of the mangroves at valuation. Further, Natuna would have to pay for the actual transplanting & maintenance of mangroves and Don would assume the responsibility for the Kenyon land and house in exchange for the Kenyon land. Bob agreed.
I asked for a copy of the accounts. Bob pointed to a copy in his file and said he would give me a copy. I asked what the total was and he said $360,000. Don and I were somewhat surprised because the last time Don asked (a few months earlier, it was only $200,000). Bob then volunteered that it included his airfares, car hire, accommodation but not meals.
Bob also said that he knew the valuation for compensation for the link road would be about $450,000 and that therefore he was not fussed so much about the compensation because originally he thought it would be about $1,5000,000 [sic] but now it was so low he didn't care. I said Don's position was that he would cede the compensation but Bob said we had to be united on that front. I said Natuna's position would be enhanced by Don's stance not the reverse. Bob then asked David Short whether Don could have a separate agreement with Council without affecting Natuna and David said he couldn't see why not.
I added that the Council had obviously made a mistake in not having an agreement with the applicant before rezoning to the effect that there would be a dedication without compensation. Bob said Greg Trent and Steve Barnier had always said that compensation was payable. I then said the link road should have not been rezoned residential and Bob agreed that this was indeed Council's mistake. If it was rezoned 9(b) Road Purposes then a completely different, and lower, valuation would apply. 65 Mr Beesley's letter dated 26 March 2003 to Mr Hart canvassed a number of matters. One was a proposal which Mr Hart had put to Mr Beesley following the meeting of 20 March 2003 for Natuna to buy Mr Cook out rather than jointly develop the Riveroaks Land with him. The letter contained a number of questions apparently directed to Natuna's capacity and experience to carry out a joint development. The letter stated in relation to the 20 March 2003 meeting: I want to confirm the matters resolved/verified at last Thursday's meeting: (a) Where costs, expenses, etc. are agreed as joint, then Natuna is responsible for 1/3rd and Don for 2/3rds. (b) The cost of the embellishment of the Conservation Area on Natuna's land is to be borne by Natuna. (c) The Buffer Zone costs are to be borne as a joint cost. (d) The land which Don is providing for Playing Fields is to be valued and the value is to be deemed to be part of Don's contribution to joint costs/expenses. (e) The mangrove land to be provided by Don is at Natuna's cost based also on valuation and the cost of transplanting and maintaining same is Natuna's. (f) Don will assume responsibility for the Beth Kenyon property including the house to be built. (g) If the 1/3rd - 2/3rds basis cannot apply where services are agreed to be shared, the basis for determining proportions to be contributed shall be that which is "fair & reasonable". Lastly, can you please forward a copy of the accounts which you were going to give me at last Thursday's meeting? Discussions 66 The following general points may be noted concerning the evidence of the discussions at the meeting. First, in cross-examination Mr Cook agreed with almost all of Mr Hart's evidence of the discussions. In considering that evidence, I propose to take into account that Mr Cook is 75 years of age and appeared tired at times during his cross-examination. Secondly, Mr Beesley's file note was inconsistent with his evidence in some respects, and it was demonstrated in his cross-examination that to some extent it attempted to summarise or amalgamate discussions which occurred at different points in the meeting. Thirdly, in cross-examination, Mr Cook substantially agreed with the first paragraph of Mr Beesley's file note set out above except for the last sentence.
Access road 67 There was a discussion about the access road at the meeting. I deal with it separately later in this judgment when addressing the access road issue.
Mr Cook's proportion of costs and expenses 68 It is common ground that Mr Cook is liable for at least half the costs of $386,572.83 paid by Natuna associated with the rezoning and the development application, as provided by the 1995 deed and the July 2001 agreement referred to earlier, less a sum of $2,100 which Mr Cook paid. However, Natuna contends that at the meeting on 20 March 2003 Mr Cook agreed to pay two-thirds of those costs retrospectively, thereby varying the 1995 deed and the July 2001 oral agreement.
69 The fact that the parties had recorded in the 1995 deed their contemplation that the value of Mr Cook's land was approximately double that of Natuna's land exposes the reasoning which lay behind any two-thirds/one-third agreement at the 20 March 2003 meeting. 70 Mr Beesley's "Suggested Points of Discussion" circulated prior to the 20 March 2003 meeting stated: "Where costs/expenses etc are agreed as joint, then Cook to be responsible for 2/3rds and Natuna for 1/3rd". Mr Beesley's file note of the meeting commenced with these words: "Bob opened by stating that there was an agreement to agree on joint development which therefore was not an agreement. I agreed that there was no agreement but wanted clarified what had been agreed between Don and Natuna as I was never informed over the past 11 years what the arrangements were. Bob said there was nothing in writing but there was never any diagreement [sic] and it was to be done on the 1/3rds - 2/3rds basis". Mr Beesley's letter of 26 March 2003 confirmed that one of the matters "resolved/verified" at the meeting was "(a) Where costs, expenses etc are agreed as joint, then Natuna is responsible for 1/3rd and Don for 2/3rds".
71 Mr Hart gave evidence that, not long after the meeting had started, the issue of the joint development of the Riveroaks Land was raised and there was a conversation to the following effect: Hart: Don and Natuna had an agreement to agree on doing a joint development which, of course, is not an agreement at all.
Beesley: That's right, but it would still be good for me to know what had been agreed between Don and Natuna, as I have never been told over the past eleven years what the arrangements were.
Hart: There was never anything in writing, but there was never any disagreement between us that the joint development was to be done on a one-third to two-thirds basis - Natuna would be liable for one-third of the costs and receive one-third of the profit and Don would be liable for two-thirds of the costs and receive two-thirds of the profit.
Beesley: We have to have agreement on the issues between Natuna and Don before we can give joint instructions to Tony Smith. 72 Mr Cook agreed in cross-examination with this evidence of Mr Hart except that he could not recall the second lot of words attributed to Mr Hart.
73 Mr Beesley's affidavit gave the following account of the discussion at the commencement of the meeting: Hart: An agreement between the parties to agree is not agreement at all on joint development and therefore there is no agreement yet between Don and us.
Beesley I agree entirely. We have to be in agreement on the issues between Natuna and Don before we can proceed with instructing Tony Smith because Don thinks it is integral to the whole matter. 74 Mr Beesley testified that he then introduced the topic of infrastructure costs for the Riveroaks Estate and said: Beesley: In relation to infrastructure costs, we are happy to share the costs, where the infrastructure is to be of benefit to both parties, on a one-thirds, two-thirds basis if that suits you.
Hart Yes, there was nothing in writing but there was never any disagreement it was to be done on a one-third - two-thirds basis. 75 Mr Beesley's affidavit evidence changed the order of parts of the conversation recorded in his file note and put forward Mr Hart's comments on the two-thirds/one-third basis as relating to infrastructure costs. Mr Beesley accepted that this was inconsistent with his file note. His Suggested Points of Discussion did not limit the two-thirds/one-third arrangement to infrastructure costs but referred to "where costs/expenses, etc. are agreed as joint". The Suggested Points of Discussion did not list an item involving infrastructure costs until item 7 and the file note did not record any mention of infrastructure costs until item 7 was discussed. Mr Beesley's file note and his notation to item 7 on his copy of the Suggested Points of Discussion used the words "fair and reasonable" in relation to this item, not one-third/two-thirds.
76 I accept Mr Hart's evidence, which I think is consistent with Mr Beesley's file note. It indicates that the two-thirds/one-third consensus reached at the meeting was referable to "joint development" costs and profit. In context, in my view, the words "joint development" refer to future joint physical development of the subdivision in accordance with the anticipated development consent. Tellingly, there was no reference to the two-thirds/one-third proportions applying retrospectively to past joint costs of the rezoning and development applications.
77 There is no doubt that prior to the 20 March 2003 meeting the parties had understood for years that they shared the costs of the rezoning and development applications on a 50/50 basis. It would have been surprising, to say the least, if they had agreed in March 2003 to reverse their longstanding agreements and replace them with a new arrangement for the splitting of costs dating back to 1995. I am satisfied that they did not do so.
78 I conclude that, Mr Cook is liable to pay Natuna 50 percent of $386,572.83 less $2,100, which equals $191,186.41.
Mr Cook's mangrove relocation land 79 Mr Cook cross-claims that at the 20 March 2003 meeting it was agreed that he would be paid compensation for the use of his mangrove relocation land.
80 Situated on Natuna's land is a large patch of mangroves and saltmarsh. Their presence was raised as a development issue by the NSW Department of Fisheries. In July 1998 the Department advised that its site inspection had confirmed the presence of a well developed mangrove and saltmarsh community which had significant environmental value, and requested that the relevant land be rezoned for environmental protection to allow for its conservation. It was a requirement of the Department of Fisheries that for every hectare of mangrove and saltmarsh removed from Natuna's land two hectares of vacant land be found on which to replant them. A Natuna file note dated 28 September 1998 indicated that a mangrove compensatory area would need to be purchased and that the "land must be dedicated to Council (perhaps on Don's land)". In evidence, Mr Hart agreed that at about that time, he was aware that an area for mangrove regeneration had to be found and that Natuna needed to purchase land for that purpose "at value". 81 Throughout 1999, different sites for the mangrove relocation area were considered. By about March 2000 a consensus emerged whereby the mangroves and saltmarsh would be relocated in an area of 2 to 2.5 hectares on other land owned by Mr Cook. This was just to the south of the Riveroaks Land, and adjacent to the proposed link road, in a 400 metre "buffer zone" surrounding a sewage treatment plant. A report of 13 June 2002 prepared by Gunninah Environmental Consultants as part of the subdivision development application indicated the area. 82 Mr Cook gave evidence that in a conversation in about March 2000 Mr Reid agreed orally with Mr Cook's statement that "You'll have to purchase your share of the playing field land and the full value of the proposed mangrove area". I accept this evidence, notwithstanding that Mr Reid did not recall the conversation. There was no discussion of how the lands would be valued. Mr Reid testified, and I accept, that he would never have agreed to allow Natuna to pay Mr Cook the land value of the mangrove relocation land as Mr Cook would remain the owner. 83 Mr Hart accepted in evidence that the relocation of the mangroves away from Natuna's land was "essential for the redevelopment". Mr Reid accepted in evidence that the mangrove relocation was a "requirement" of council and that but for the relocation Natuna would not have been able to have the reconfiguration of its land that provided it with the ability to put a number of extra lots on its land. In response to a draft condition of development consent that "the proponents rehabilitate an additional 2.5 hectares of native vegetation, that consists of mangrove, saltmarsh and terrestrial plantings", Mr Hart wrote to the council on 9 September 2002 (on behalf of both Natuna and Mr Cook) stating: "We are required by NSW Fisheries to provide 2.76 ha of compensatory habitat (Mangroves, Saltmarsh) adjacent to the S.T.P. That requirement has been met and has been incorporated into our design. This condition should reflect that agreement or be deleted". 84 Mr Hart gave the following evidence which I accept: In my discussions with Mr Cook, I had always accepted that the mangroves on Natuna's land were an impediment to Natuna. After it had been proposed that there would be a mangrove regeneration area, which was ultimately allocated on the north-western [sic] boundary of the Cook Land within the 400 metre buffer zone and adjacent to the Ballina Sewerage Treatment Works, I had said to Mr Cook on a couple of occasions words to the effect that " we will have to compensate you for allowing us to use your land for the mangroves ". At all times after the mangrove regeneration area on Mr Cook's property had been proposed, I was aware that it was not proposed that the land would be transferred to Natuna or that Mr Cook would lose title to any part of his land or be otherwise deprived of the use of his land due to the mangrove relocation. I did not ever have any discussions with Mr Cook or Mr Beesley on the basis on which the compensation for allowing the mangroves to be relocated onto his land would be assessed or on any other terms of the compensation to [sic] given if the mangroves were relocated onto Mr Cook's land.
85 Mr Hart testified that this view as to Mr Cook's entitlement to compensation for the mangrove relocation land was held at a time when he believed that there was a joint undertaking on foot, and was on the assumption that the parties would jointly proceed with a development or jointly sell the Riveroaks Land. He did not understand that Mr Cook would be entitled to any compensation if he sold his portion of the Riveroaks Land. I accept Mr Hart's evidence. I think that his assumption and understanding were reasonable.
86 Mr Reid gave similar evidence that it was also his intention that Mr Cook would be paid proper compensation for the mangrove land. This was reflected in a letter he wrote to Mr Cook on 18 March 2003. He testified that it was never said that Mr Cook was the only one that would be compensated.
87 This subject of compensation for the mangrove land was discussed at the 20 March 2003 meeting. Mr Beesley's Suggested Points of Discussion item 9 states: "New mangroves land to be valued and Cook to be compensated". Mr Beesley wrote "Natuna" next to item 9 on his copy of this document. Mr Hart wrote "Natuna 100%" next to item 9 on his copy of this document. Mr Beesley's file note of the meeting recorded: "Bob also agreed that Natuna will be responsible for paying Don for the land he was making available for the transplant of the mangroves at valuation". Mr Beesley's letter of 26 March 2003 was also confirmatory on this point, although not well expressed.
88 According to Mr Hart, the conversation on this topic at the meeting was to the following effect: Beesley: Okay, now Natuna would have to pay for the new mangrove land that Don is making available and be responsible for the cost of transplanting and maintaining the mangroves.
Hart: Sure, there would be compensation from Natuna for Don allowing us to use his land for the mangroves, we have always recognised that, and Natuna would pay the costs of relocating the mangroves.
89 In cross-examination Mr Cook agreed with Mr Hart's evidence. 90 Mr Beesley's version of the conversation was as follows: Beesley: Natuna is responsible for paying Don for the land he is making available for the transplant of the mangroves, at a fair and reasonable valuation...
Hart: Yes I agree. 91 In cross-examination Mr Hart agreed that words to that effect were said.
92 Mr Cook's affidavit evidence was: Beesley: Don will have to be paid a fair and reasonable price for the mangrove land...
93 The recollections of Mr Hart and Mr Beesley are substantially similar to that recorded in Mr Beesley's file note, although each embellished what was recorded in the file note.
94 I conclude that at the meeting there was agreement that Natuna would be responsible for paying Mr Cook for the land he was making available for the transplantation of mangroves at a valuation to be obtained. The words "making available" meant, in my view, making available in a joint development of the Riveroaks Land. The antecedent conduct of the parties supports the conclusion that the agreement was predicated on that occurring. When Mr Cook subsequently sold his portion of the Riveroaks Land he put it out of his power to proceed with a joint development. By reason of that event, the agreement between the parties in relation to the mangrove relocation land ceased. As regards the valuation referred to in the agreement, given that Mr Cook would retain ownership, it was implicit, I think, that Natuna would not pay Mr Cook the full value of that land as if the title in fee simple were to be transferred to Natuna, but that the valuation would be by reference to the value of that land without the mangroves less its value with the mangroves.
95 Mr Cook submitted that the essential point is, irrespective of whether the Riveroaks Land was developed by Natuna and Mr Cook jointly, that Mr Cook has "set aside" the mangrove relocation land which was required in order for the development consent to be issued. He submitted that Natuna has benefited substantially from his "agreement to set aside" that land for Natuna's mangroves because (a) the value of Natuna's land has increased as a result of the granting of development consent; and (b) Natuna is able to develop a significantly larger proportion of its land than might otherwise have been the case, were it not able to relocate the mangroves.
96 The submission that Mr Cook had set aside or agreed to set aside his mangrove relocation land was based on three underlying facts. First, it was a condition of the June 2003 subdivision development consent that the mangroves be relocated to that land. Secondly, Mr Cook's land is burdened by an easement for development access, registered on 16 February 2005, which permits the developer of the Riveroaks Land access to his land for the construction and maintenance of works required to be undertaken in connection with the development consent and which are associated with, among other things, mangrove regeneration works. Thirdly, Mr Cook is ready, willing and able to provide the mangrove relocation land so that the condition of the 2003 subdivision development consent requiring mangrove relocation is complied with.
97 Those three facts may be accepted, although the second should be put in context. The easement for development access was required to be created by a condition of consent to Mr Cook's development application 2004/627 granted by the council on 11 March 2004. Mr Beesley's letter of 27 January 2004 to Mr Cook indicated that that development application was made because Mr Cook's contract of sale to Rayshield required approval to, and registration of, a three lot plan of subdivision. Thus, it was Mr Cook's late 2003 sale contract with Rayshield which was essentially causative of the easement. Further, the easement only permits access. It does not entitle Natuna to carry out mangrove regeneration work. Any such entitlement depends upon agreement between Mr Cook and the developer under which Mr Cook would presumably require compensation.
98 In my opinion, none of the abovementioned facts mean that Mr Cook has set aside or agreed to set aside the mangrove land in any way that is legally binding between him and Natuna. Just as he was free to sell his portion of the Riveroaks Land, he is free to sell or do what he will with his mangrove relocation land. 99 Mr Cook submitted that there is no evidence to suggest that the 2003 development consent will not be activated and that there is every likelihood that Mr Cook's mangrove relocation land will be used for its intended purpose, in which case Mr Cook is entitled to be compensated. It is possible that those events will occur. However, they have not occurred, Natuna will not necessarily be involved if they do occur, and, in my view, Mr Cook is not obliged to permit the use of the mangrove relocation land in the absence of a new agreement with the developers which would presumably provide for compensation to Mr Cook. The evidence of Mr Hart, which I accept, is that currently Natuna is not interested in developing its portion of the Riveroaks Land and wishes to sell it for as much as possible. No evidence was called from Rayshield. Clause 48.1 of the 2005 Rayshield sale contract makes provision for Rayshield to seek an alternative development consent which would not include the Natuna land. The development consent will lapse five years after its issuance unless work is physically commenced in accordance with the consent before that time. Mr Cook's playing fields land 100 Mr Cook cross-claims claims that it was agreed at the 20 March 2003 meeting that his playing fields land was to be valued and that he would be credited with one-third of the valuation.
101 Mr Beesley's Suggested Points of Discussion item 5 stated: "Valuation of Cook rural land for open space (playing fields?)(Joint?)". Mr Beesley's file note of the meeting recorded "Bob agreed that the area being given by Don for the playing fields would be credited also at valuation and the 2/3rds-1/3rd arrangement would apply". Mr Beesley's letter of 26 March 2003 stated: "The land which Don is providing for Playing Fields is to be valued and the value is to be deemed to be part of Don's contribution to joint costs/expenses".
102 Mr Beesley testified that the following was said at the 20 March 2003 meeting: Mr Beesley: Don's land for the playing fields and mangrove would be valued and the valuations would be offset against expenses owed to Natuna by Don. You pay for all the mangrove land and Don will contribute two-thirds and you contribute one-third for the playing fields.
Mr Hart: Yes, agreed. 103 In cross-examination Mr Hart agreed with this evidence. He also said "It has always been my understanding that the playing fields would be valued and that Natuna would be responsible for approximately one-third of the value of those playing fields". 104 Mr Hart's affidavit evidence was that at the 20 March 2003 meeting the following was said: Mr Beesley: Don's Playing Fields.
Mr Hart: Well, just like with the buffer zone, the land to be given by Don for the playing fields will also need to be valued and would be a joint cost to be shared two-third by Don and one-third by Natuna.
Mr Cook: Yes. 105 In cross-examination Mr Cook agreed with this evidence. Mr Cook's recollection in an affidavit was as follows: Mr Beesley: Don will have to be paid a fair and reasonable price for the mangrove land and your share of the playing fields land.
Mr Hart or Mr Short: I agree. 106 I conclude that there was agreement at the 20 March 2003 meeting that Mr Cook's playing fields land would be valued and would be deemed to be a joint cost to be shared one-third by Natuna and two-thirds by Mr Cook. Thus, Mr Cook would be credited with one-third of the value of that land. However, in my view, as stated earlier, this consensus was predicated on the parties proceeding with a joint development once the pending development application was approved.
107 The playing fields land was part of Mr Cook's portion of the Riveroaks Land which he later sold to Rayshield Pty Ltd. Mr Cook has therefore received the value of the playing fields land, with any enhanced value that it had as a result of the development consent. It is unlikely to my mind that at the 20 March 2003 meeting the parties intended by their agreement that Natuna had to credit Mr Cook with one-third of the value of the playing fields land even if Mr Cook sold it. Clause 44.4 of the Rayshield sale contract purported to preserve Mr Cook's right to seek contribution from Natuna in respect of one-third of that land: The Vendor acknowledges that, on exchange, it will have no right to seek contribution from the Purchaser or any other party for any matter required for the completion of the Project in accordance with the Development Consent and/or the new Development Consent PROVIDED THAT nothing in this condition shall prevent the Vendor from seeking contribution from Natuna in respect of:
(a) the land content of the Mangrove Rehabilitation Area proposed to be located on the Remaining Cook Land as shown on the Draft Plan; and
(b) one third of the land identified as the "sports field" as shown on the Draft Plan and as described in the Development Consent. 108 Mr Cook submitted that the 2003 development consent has benefited Natuna in that it has resulted in a substantial increase in the value of Natuna's land. Accordingly, he submitted, he remains entitled to compensation notwithstanding the sale of the playing fields land. The submission did not identify what this increased value might be. The submission seems to be in the nature of a restitutionary claim, which was not pleaded by Mr Cook, rather than the pleaded claim of an agreement entered into at the 20 March 2003 meeting for Natuna to pay Mr Cook one-third of the value of the playing fields land. I therefore do not think that it should be entertained. In any event, the expert valuation evidence did not address an issue of the increased value of Natuna's land resulting from the development consent or from the playing fields component of the development consent. In the absence of expert valuation evidence, it is impossible to determine what any such increased value might be: Concrete Pty Ltd v Parramatta Design and Developments Pty Ltd (2006) 81 ALJR 352 at 386 [161]. Mr Cook's offset 109 Mr Cook's cross-claim pleads that it was agreed at the 20 March 2003 meeting that his liability for costs and expenses would be offset against the value of his mangrove relocation land contribution. In submissions, he extended this claim to Natuna's portion of the value of his playing fields land.
110 Item 8 on Mr Beesley's Suggested Points of Discussion for the 20 March 2003 meeting was "Offsetting above incurred by Cook (where applicable) against payments already made by Natuna". Mr Beesley's file note of the meeting recorded "Payments made by Natuna on joint account in accordance with the written agreement (rezoning and DA) would be offset against playing fields, mangrove land, infrastructure".
111 Mr Hart gave evidence that at the meeting there was a discussion to the following effect: Mr Beesley: Right, the next is offsetting Don's costs and contributions against the payments that have already been made by Natuna.
Mr Hart: Look, we obviously cannot work out what is involved now, but as a matter of principle, where Don contributes to the joint development, then clearly there will have to be an adjustment at the end. 112 Mr Cook in cross-examination agreed with this evidence. Mr Beesley gave oral evidence that Mr Hart agreed that the mangrove relocation land and the playing fields land would be valued and offset against the joint costs. However, he denied that the discussion at the meeting was on the basis that the "adjustment" or offsetting would be subject to any joint development. The affidavit evidence of Mr Beesley has Mr Hart agreeing to the following proposition put by Mr Beesley: Don's land for the playing fields and mangrove would be valued and the valuations would be offset against expenses owed to Natuna by Don. You pay for all the mangrove land and Don will contribute two-thirds and you contribute one-third for the playing fields. 113 In cross-examination, Mr Hart agreed that words to that effect were said. 114 Mr Beesley's affidavit evidence is consistent with his file note and I accept it. I conclude that there was an agreement at the 20 June 2003 meeting that there would be an offsetting of Mr Cook's liability for half the costs and expenses that had been paid by Natuna against one-third of the value of the playing fields and the value of the use of the mangrove relocation lands. Once again, as stated earlier, I consider that this consensus was predicated on a joint development by the parties of the Riveroaks Land in accordance with the anticipated development consent. Natuna's conservation area 115 Mr Beesley's Suggested Points of Discussion item 3 referred to "Cost of Conservation Area Embellishment to be borne by Natuna". At the meeting Mr Beesley wrote next to this item on his copy "N's cost". His file note recorded "Bob agreed that Natuna should be responsible for the cost of the Conservation Area Embellishment". His letter of 26 March 2003 stated that one of the matters resolved or verified at the meeting was "The cost of the embellishment of the Conservation Area on Natuna's land is to be borne by Natuna".
116 Mr Hart testified that at some point during the 20 March 2003 meeting when the conservation area was being discussed, he realised that the discussion points did not include an item relating to compensation for the dedication of Natuna's conservation area. He testified that he added the following on his copy of the suggested Discussion Points "13 Dedication of 2 ha conservation area". His copy is in evidence and those handwritten words do appear on it. He testified that a little later, shortly after discussion on compensation for the mangrove relocation land, there was a conversation to the following effect. He raised the subject of compensation for the conservation area. Mr Cook said that the conservation area should be paid for by Natuna. Mr Hart said "No Don, if Natuna is to compensate you for the playing fields and the mangrove land you've given up for the project, then the same should apply to the land given up by Natuna. This land was zoned 7(a) Wetlands and will be required to be dedicated to the Council so Natuna will lose it forever". Mr Beesley said "Hang on, this problem is on your land. Why should Don be penalised for something that's on your land?" Mr Hart said "Trevor, the conservation area is a problem for our development as a whole. It's a problem both for Natuna and for Don because without the dedication of that corner, we will not get approval". Mr Beesley said "I don't agree". Mr Hart said "Well, agree or not, Trevor, it's a fact that we wouldn't have got the rezoning without that, so you are going to just have to accept it if you want the development. Anyway, let's move on". Mr Cook in cross-examination agreed with this evidence.
118 I conclude that at the meeting the parties addressed, but failed to reach agreement upon, the issue of compensation to Natuna for its conservation area. The only consensus in relation to Natuna's conservation area was that the cost of any embellishment would be borne by Natuna.
Natuna's buffer zone 119 Item 4 on Mr Beesley's Suggested Points of Discussion was "Buffer Zone (Joint?)". At the meeting Mr Beesley wrote next to item 4 on his copy "2/3 x 1/3". Mr Beesley's file note of the meeting included the words "Buffer zone would also be on a 2/3rds 1/3rd basis". Mr Beesley's letter of 26 March 2003 recorded that it was resolved or verified that "The buffer zone costs are to be borne as a joint cost".
120 Mr Hart gave affidavit evidence that there was a conversation to the following effect at the 20 March 2003 meeting: Mr Beesley: Okay, point 4 is next - the buffer zone. I think Don agrees that would be a joint cost to be shared two-thirds by Don and one-third by Natuna
Mr Hart: Yes, I agree. 121 Mr Cook could not recall this conversation. Mr Beesley's oral evidence was "When it came to buffer zone, my recollection is that related to the embellishment of the buffer zone, there was no mention of a valuation in relation to the buffer zone". 122 I accept Mr Hart's evidence, which is supported by Mr Beesley's file note.
123 I conclude that there was an agreement at the 20 March 2003 meeting that Natuna's buffer zone area would be a joint cost to be shared two-thirds by Mr Cook and one-third by Natuna. Again, as stated earlier, I am of the view that this consensus was predicated on a joint development of the Riveroaks Land by the parties once development approval was obtained. Subsequent conduct 124 The parties' subsequent correspondence suggests that the agreements reached at the 20 March 2003 meeting were not intended to be binding contracts but were significant steps in a process of finalising a contract to govern their future relationship. Mr Beesley's fax of 28 April 2003 to Mr Hart stated that Mr Cook was negotiating with other groups who were interested in becoming involved with the development of his land, and continued: Natuna - Cook Obligations/Rights
Don requires a deed setting out all matters between him and Natuna. Matters such as construction of joint facilities, compensation for those parts of Don's land required for Natuna's purposes, timing of payments, etc. have to be addressed. This is not something which he wants to be put to the side any longer. He regards this as an urgent priority. 125 In Mr Hart's reply of 29 April 2003, he said that he did not intend to address such issues until after the council development consent had issued. Mr Beesley's letter of reply of 4 May 2003 stated that Mr Cook would not be selling his property to Natuna and that: "We can work together or go our own separate ways; it is your call. But Don has tired of waiting for a response from you to my letter of 26 March. He hopes to finalise arrangements for his property in the near future. If, in the interim, you find time and still wish to have some input, then, of course, Don, as always, is willing to consider what you have to say". Mr Beesley's fax of 4 September 2003 to Mr Hart proposed a meeting to resolve issues including in relation to the playing fields (sharing of acquisition and construction costs) and the mangrove relocation land (including as to acquisition, maintenance and ownership). A letter from Mr Hart to Mr Beesley dated 16 September 2003 stated in part: "The informal advice given to us is that Don could, if he chose, engage silk and mount a case in equity on the very issues which you have raised; but the likelihood is that Don would be long dead before the matter was resolved". It was suggested in cross-examination that, taking into account that Mr Cook was then aged 73, this was a bullying tactic and a threat to delay proceedings. It is true that it has a callous flavour when read in isolation, but I accept Mr Hart's explanation in re-examination that he was passing on informal advice he had received from counsel. Mr Beesley's fax of 6 October 2003 to Mr Edwards suggested that the development be re-staged on the basis that Mr Cook would construct stages 1, 3, 4 and 5; Natuna stage 2; and the parties concurrently stages 6 and 7. He suggested a meeting to enable "a detailed, all-encompassing agreement [to] be signed so that construction of Stage 1 can commence prior to Christmas…" The fax continued: "The agenda for the meeting would obviously need to include shared costs, offsets, timing, marketing, boundary adjustments, etc. Obviously, a great deal of time and thought will be needed to be put in by everyone. Perhaps a lot of the issues can be canvassed by fax, etc. before the meeting so that finality can be reached at the meeting". That proposal to re-arrange the staging was withdrawn in Mr Cook's letter of 20 October 2003.
126 Having regard to the parties' communications following the 20 March 2003 meeting, I am inclined to the view they did not intend that their consensus or agreements at that meeting should have binding contractual effect.
F. NATUNA'S CLAIM FOR MR COOK'S PROPORTION OF COSTS AND EXPENSES
127 It is common ground that (leaving aside interest) Natuna paid joint costs and expenses totalling $386,572.83. Pursuant to the 1995 deed and the July 2001 oral agreement, Mr Cook is liable for at least half of this amount, that is $193,286.41, minus the $2,100 he already paid, equals $191,186.41. I have earlier rejected Natuna's claim that Mr Cook's liability increased to two-thirds by reason of an oral agreement at the 20 March 2003 meeting.
128 Natuna claims that Mr Cook is liable to pay two-thirds, or alternatively one half, of bank interest and charges (which I will collectively refer to as "interest") incurred by Natuna on a loan which Natuna took out to fund the joint costs paid by Natuna. Mr Cook denies liability. Quantum is agreed at $74,350.49. The claim is pleaded on four alternative bases. First, by reason of an agreement between the parties. Secondly, on the basis that Mr Cook is estopped from denying that he agreed to pay this share. Thirdly, by applying the general equitable principle identified by Deane J in Muschinski v Dodds (1985) 160 CLR 583 at 620, and adopted in Baumgartner v Baumgartner (1987) 164 CLR 137 at 147 - 148, which restores to a party contributions made to a joint endeavour which fails. Fourthly, on principles of unjust enrichment.
129 The evidence as to the circumstances in which Natuna came to fund the joint costs by borrowing money was as follows.
130 Mr Reid, a director of Natuna, testified that on 23 September 1998 he had a conversation with Mr Cook in which he explained that to pay for experts' reports "I am going to have to fund them through Natuna or a joint account as we had originally agreed". Mr Cook said that he would "look into" contributing towards a joint account. Mr Reid gave undisputed evidence that he sought contributions towards the joint costs from Mr Cook on a number of occasions throughout 1998 and 1999 and was told by Mr Cook that he would try to raise some money and that Natuna would be paid back.
131 Mr Reid gave evidence that on 13 February 2001 he had a conversation with Mr Cook to the following effect: Reid: Don, I need to talk to you about these joint expenses. At this stage the expenses are well over the amount that we thought we would incur. You said you would reimburse us at the end of this project, but I need to know what will happen. When we have our DA, we should then make a decision as to whether we organize a Joint Venture, or sell it and at that stage we will have some cash.
Cook: When the land gets sold, Natuna will get paid out of the money I get paid for the land
Reid: Okay. It's just that the way the costs are increasing, I'll have to raise more finance. We're very close to the rezoning being approved but we are going to have to further raise funds for the Development Application.
Cook: I will talk to my bank manager at the National Bank on Monday.
132 Mr Cook agreed in cross-examination that he had a conversation to that effect with Mr Reid on 13 February 2001 and that "the land" to which he referred was Mr Cook's land. 133 Mr Reid gave evidence that on 11 July 2001 a conversation took place at the offices of Ardill Payne to the following effect: Reid: Natuna has spent about $120,000 on the project so far.
Cook: Can you continue to cover expenses until my land is sold?
Reid: Yes, Natuna has just applied for a $100,000 loan from Westpac. This means that financial adjustments will need to be made for the costs of the project and Natuna will need to be reimbursed either out of the proceeds of the sale or if a joint venture for the development is set up.
Cook: Okay. 134 Mr Hart, a director of Natuna, gave evidence of a conversation on the same occasion which included the following: Cook: Can you cover that until my land is sold?
Reid: Yes Don. Natuna has just applied for a $100,000 loan. 135 In reply, Mr Cook testified that at no stage did he request Mr Hart, Mr Reid or anyone else from Natuna to cover his share of expenses. However, in cross-examination it was clarified that Mr Cook recalled either Mr Hart or Mr Reid saying something to the effect that they would continue to cover the expenses provided he would pay his share once his property was sold. He admitted that (a) he agreed to this proposal; (b) he was made aware that Natuna was applying for a $100,000 loan from Westpac in order to fund the joint expenses; (c) he understood that Natuna would be incurring interest on this loan in order to meet the joint expenses of the development application; and (d) this interest was part of the joint expenses that he was agreeing to pay from the sale proceeds of his land.
136 Mr Reid gave unchallenged evidence that it was his understanding after this discussion that Natuna would be reimbursed from the proceeds of the sale of Mr Cook's land once development consent had been granted and that he was therefore happy for Natuna to continue to pay for the expenses until development consent was obtained.
137 I accept the evidence of Mr Reid and the evidence in cross-examination of Mr Cook, referred to above.
138 Natuna took out a $100,000 Westpac loan in 2001. All of the interest costs incurred by Natuna were incurred after the said conversation on 11 July 2001.
139 Mr Hart gave evidence that he had a conversation with Mr Cook after a council meeting on 31 January 2003 to the following effect: Hart: Don, Trevor's just told me you want to do the subdivision on your own. We need to talk about the expenses - what are we going to do about settling up with money?
Hart: Well, there has to be a settling up at some point.
Hart: Don't worry. If you can keep paying the expenses, when my land is sold, you'll be paid out.
140 In cross-examination, Mr Cook remembered saying words to the effect of "when my land is sold, you'll be paid out" and accepted that, in this conversation, he agreed to have his share of any expenses incurred into the future paid out from the sale proceeds from his land.
141 Mr Hart gave unchallenged evidence of relying on these statements made by Mr Cook in continuing to have Natuna pay all of the joint fees and expenses for the project. I accept Mr Hart's evidence of this conversation and of his reliance. It is not disputed that Natuna paid for joint development costs and incurred interest charges after this conversation in January 2003. I uphold the interest claim based on contract.
142 If I am in error as to the contractual basis, I would uphold Natuna's interest claim on the basis of estoppel. As a result of the conversation on 11 July 2001, Mr Reid assumed that Mr Cook would reimburse Natuna for his share of the joint costs from the proceeds of sale of his land. Based on this assumption, Natuna proceeded to borrow from Westpac, paid for expenses incurred on the development application with the borrowed monies and incurred interest costs. I would hold that in these circumstances Mr Cook is estopped from denying that he is liable to reimburse his share of the interest costs incurred by Natuna.
143 It is unnecessary to consider the other alternative causes of action.
144 The interest paid by Natuna thus became part of the joint costs and expenses. It is common ground that under the oral agreement of July 2001 the parties were to share joint costs and expenses equally. Hence, Mr Cook became liable to pay one half of the interest paid by Natuna. Natuna claims that Mr Cook's liability increased to two-thirds under a further oral agreement at the meeting of the parties on 20 March 2003. For reasons given earlier when I considered that meeting, I reject that claim. Therefore Mr Cook is liable for one half of $74,350.49, that is, $37,175.25 in respect of this claim.
H. MR COOK'S MANGROVE RELOCATION LAND CROSS-CLAIM Contract 145 Mr Cook cross-claims for the value of his mangrove relocation land. Insofar as this claim is based on an alleged contract entered into on 20 March 2003 I have rejected it for the reasons given above when considering the 20 March 2003 meeting. It remains to consider the alternative pleaded causes of action in estoppel, misleading conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth), and restitution. Estoppel 146 Mr Cook submitted that an estoppel arose by virtue of (a) the encouragement of an assumption by Natuna that it would pay Mr Cook compensation for the mangrove relocation land; (b) in reliance on which Mr Cook acted to his detriment in agreeing to proceed with the subdivision development application without requiring a valuation of the mangrove relocation land or a formal agreement with Natuna to pay him compensation for the provision of the mangrove relocation land. Mr Cook submitted that in those circumstances Natuna was estopped from denying that it was obliged to pay Mr Cook compensation for the use of the mangrove relocation land in accordance with authorities on promissory estoppel such as Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 and Commonwealth v Verwayen (1990) 170 CLR 394.
147 In Verwayen at 502 McHugh J adopted Brennan J's analysis of the elements of equitable estoppel in Waltons at 428-429 as follows: In my opinion, to establish an equitable estoppel it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act or avoid that detriment whether by fulfilling the assumption or expectation or otherwise. For the purposes of the second element, a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant's property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff's reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs.
148 In Verwayen at 413 Mason CJ said: "The result is that it should be accepted that there is but one doctrine of estoppel, which provides that a court of common law or equity may do what is required, but not more, to prevent a person who has relied upon an assumption as to a present, past or future state of affairs (including a legal state of affairs), which assumption the party estopped has induced him to hold, from suffering detriment in reliance upon the assumption as a result of the denial of its correctness. A central element of that doctrine is that there must be a proportionality between the remedy and the detriment which is its purpose to avoid. It would be wholly inequitable and unjust to insist upon a disproportionate making good of the relevant assumption".
149 The critical element is the conduct of the defendant after the representation in encouraging the plaintiff to act upon it. In Giumelli v Giumelli (1999) 196 CLR 101 at 121 the High Court observed that McPherson J in Riches v Hogben [1985] 2 Qd R 292 at 300-301 had noted this, and quoted the following passage from his Honour's judgment: What distinguishes the equitable principle from the enforcement of contractual obligations is, in the first place, that there is no legally binding promise. If there is such a promise, then the plaintiff must resort to the law of contract in order to enforce it, it being the function of equity to supplement the law not to replace it. The second distinguishing feature is that what attracts the principle is not the promise itself but the expectation which it creates… Finally, the equitable principle has no application where the transaction remains wholly executory on the plaintiff's part. It is not the existence of an unperformed promise that invites the intervention of equity but the conduct of the plaintiff in acting upon the expectation to which it gives rise.
150 There are a number of difficulties with the estoppel submission. First, the submission did not identify any evidence of the alleged unqualified assumption. Secondly, I do not accept that Natuna encouraged Mr Cook to adopt an unqualified assumption that he would be paid for the mangrove relocation land. Even before the 20 March 2003 meeting, their discussions were predicated upon a joint development or joint sale proceeding.
151 Thirdly, I do not accept that Mr Cook acted to his detriment in agreeing to proceed with the subdivision development application. Provision for mangrove relocation was necessary in order to obtain development consent. Normally, obtaining a development consent increases the value of land: Concrete Pty Ltd v Parramatta Design and Developments Pty Ltd (2006) 81 ALJR 352 at [100], [161]. However, the continuance or value of that benefit is unclear, to say the least, in the unusual circumstances of the present case where the subdivision development consent related to adjoining lands separately owned by the joint venturers; where Mr Cook brought the joint venture to an end by selling his land; and where the implementation of the development consent now depends upon agreement between Natuna and Rayshield or their successors in title in relation to the lands the subject of the development consent and compliance with the consent conditions, and upon agreement between the developers and Mr Cook for the use of his mangrove relocation land. Having decided not to proceed with the joint development, Mr Cook is free to do as he will with his mangrove relocation land and is not currently obliged to permit its use for mangrove relocation.
152 Fourthly, Mr Hart gave unchallenged evidence that had Mr Cook insisted on a formal agreement with Natuna to pay him such compensation, Mr Hart would have required Mr Cook to pay compensation for the Natuna conservation area land under the same agreement. In cross-examination Mr Cook admitted that if Mr Hart had required the formal agreement to provide for him to pay compensation for the conservation area land, then he would not have entered into any such binding agreement. Fifthly, development by Natuna in accordance with the development consent may never occur, in which case Natuna will never have "the use" of the mangrove relocation land. Finally, if the elements of an estoppel were otherwise present, the measure of compensation, I think, would be the value added to Natuna's land by reason of the development consent or (more accurately) the mangrove relocation component of the development consent, after taking into account the effect on that value of Mr Cook's discontinuance of the joint venture. It is impossible to quantify any such increased value in the absence of expert valuation evidence: Concrete (above) at [161]. The expert valuation evidence in the present case addressed other matters. For these reasons I do not accept the estoppel submission. Section 52 Trade Practices Act 153 Alternatively, Mr Cook submitted that the representations made by Natuna that it would pay Mr Cook compensation for his mangrove relocation land were made in trade or commerce and that the failure by Natuna to "fulfil its promise" in the circumstances amounted to misleading or deceptive conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth). Section 52 relevantly provides that "A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive". In my view, any representations made by Natuna were predicated upon a joint development proceeding. Mr Cook decided not to proceed with a joint endeavour. In my opinion, there was no misleading or deceptive conduct by Natuna. Restitution 154 Mr Cook's brief restitution submission was that (a) the parties' development application would not have succeeded but for the provision for relocation of the mangroves; (b) the "setting aside" by Mr Cook of the mangrove relocation land has benefited Natuna in that its land is now worth considerably more than it was prior to the development consent granted on 16 June 2003; and (c) in those circumstances it would be unjust for Natuna to have the benefit of the setting aside of Mr Cook's mangrove relocation land without having to pay him compensation for it. No authority was cited in either party's restitution submissions.
155 The elements of a restitutionary action are usually analysed in terms of (a) an enrichment of the defendant, (b) an unjust factor, (c) expense to the plaintiff, and (d) the inapplicability of any defence: Pavey and Matthews Pty Ltd v Paul (1987) 162 CLR 221; David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353. One of the main questions which the law of restitution addresses is the circumstances in which a person is liable to compensate another for benefits in kind provided by the other person, in the absence of a contractual or tortious duty to do so.
156 Has Natuna been unjustly enriched at the expense of Mr Cook? The development consent was not subject to a condition that it was granted only to the applicant and that it did not attach to or run with the land (such a condition is permitted by s 78A(6) of the Environmental Planning and Assessment Act 1979). Therefore the development consent endured for the benefit of subsequent owners of each party's land during its currency. Normally that benefit would have been reflected in the sale price of Mr Cook's land. In Concrete Pty Ltd v Parramatta Design and Developments Pty Ltd (2006) 81 ALJR 352 Kirby and Crennan JJ (with whom Gummow ACJ agreed) said at 367 [67]: "There is a longstanding principle that a development consent is not personal to the applicant but endures for the benefit of subsequent owners during the currency of the development consent". They said at 372 [100]: "Leaving aside entirely the question of how much a development consent adds value to the sale price of the land, there is a clear benefit to the seller in holding a development consent. There can be no doubt that a sale of land by owners, with the benefit of a development consent which runs with the land, carries the possibility that a purchaser may wish to exploit the development consent that it obtains with the land, rather than pursue the option, and associated costs, of applying for a fresh development consent". As analysed earlier at [151], it is unclear in the unusual circumstances of the present case, whether any increased value occasioned by the development consent continued after, or (if so) whether its quantum was affected by, the discontinuance of the joint venture when Mr Cook sold his land.
157 If development of the land currently owned by Natuna were to occur in accordance with the 2003 development consent, then utilisation of Mr Cook's mangrove relocation land would benefit the developer by enabling it to optimise the yield of subdivision lots from its part of the Riveroaks Land, being the lots which would occupy the area currently occupied by mangroves. However, as analysed earlier at [151], development in accordance with the 2003 development consent depends on agreement being reached between Natuna and Rayshield or their successors in title and agreement between the developers and Mr Cook for the use of his mangrove relocation land, which would presumably provide for compensation to Mr Cook. Development on Natuna's land has not yet occurred, may never occur and, if it does occur, the developer may be a successor in title to Natuna. Adding to the uncertainty is (a) the evidence of Mr Hunt, an expert valuation witness, which I accept, that Natuna could gain approval to change the mangrove relocation area to another location; and (b) the indication in cl 48 of Mr Cook's 2005 contract of sale with Rayshield that Rayshield may seek a fresh development consent relating only to the land purchased.
158 Although Mr Cook's submission that the development application would not have succeeded but for its provision for relocation of mangroves is probably correct, the same can be said for other aspects of the development application, including the provision of Natuna's buffer zone strip and conservation area. His submission that he has "set aside" his mangrove relocation land is critical to a conclusion that he has incurred an expense from which Natuna has been unjustly enriched. In my view, Mr Cook has not "set aside" his mangrove relocation land in the sense that he is under a legal obligation to Natuna, by reason of the dealings between them, to make it available for mangrove relocation in accordance with the development consent. It is common ground that he was free to sell his portion of the Riveroaks Land and walk away from a joint development or joint sale, and that is what he chose to do. Natuna has a corresponding freedom. Equally, in my view, Mr Cook is free to sell or do as he wishes with his mangrove relocation land.
159 In the circumstances, I do not think that Natuna has been enriched at the expense of Mr Cook, nor that there is an unjust factor. Consequently, in my opinion, the restitutionary claim is not sustainable.
160 If Mr Cook's restitution claim is sustainable (contrary to my opinion), it is not quantifiable on the evidence. The measure of compensation, in my view, would be the value added to Natuna's land by the development consent or, more accurately, by the mangrove relocation land element of the development consent, having regard to any adverse effect on that added value occasioned by Mr Cook's discontinuance of the joint venture (as discussed above at [151]). Indeed, Mr Cook's own argument against Natuna's restitutionary second cross-claim was similar. There he argued that the relevant benefit which each party obtained was the increase in the value of their respective holdings as a result of the granting of the development consent. The parties' submissions did not quantify such enhanced value of Natuna's land, nor was it addressed in the expert valuation evidence. By just how much Natuna's land value increased by reason of the development consent, or (more to the point) by reason of the mangrove relocation land component of the development consent, it is impossible to say in the absence of expert valuation evidence. In Concrete (above) at 386 [161] Callinan J (with whom Gummow ACJ also agreed) said that "It is unthinkable that the obtaining of the development approval for the larger development did not increase the value of the land, and therefore the financial return to the joint venturers to some extent at least on account of it. By just how much the value would have been increased it is impossible however to say, in the absence of expert valuation evidence". Conclusion 161 At the present time, a joint development of the Riveroaks Land in accordance with the 2003 development consent is dependent, in my view, upon a contract between Natuna and Rayshield to proceed with that joint development. It is also dependent upon a contract between the developers and Mr Cook for the use of his land for mangrove relocation, which would presumably provide for compensation. Neither contract exists at the present time. In the absence of such a contract with Mr Cook he is not obliged, in my view, to make his land available for mangrove relocation nor does he have a right to compensation.
162 For the above reasons, I do not accept Natuna's mangrove relocation land claim.
I. NATUNA'S SECOND CROSS-CLAIM FOR RESTITUTION 163 Natuna's second cross-claim claims restitution in the sum of $190,000, or such amount as the Court may determine. That claim is based on the benefit which Mr Cook is said to have obtained from the development consent because of the value of Natuna's contribution of its "conservation area land" and "buffer zone land". The second cross-claim is also pleaded as a set-off to Mr Cook's restitutionary claim. Natuna pleads that both Mr Cook and Natuna obtained an incontrovertible benefit from the development consent in that the value of their respective lands increased; that it would be unjust to keep that benefit in the circumstances; and that Natuna is entitled to restitution of the net benefit provided to Mr Cook. Natuna's pleading quantifies that net benefit by propounding the following values of the four relevant parcels of land as at 23 August 2006 but assuming planning as at 22 March 1998: Value of Natuna's conservation area land $210,000 Plus value of Natuna's buffer zone land $ 25,000 Less value of Cook's playing field land $ 25,000 Less value of restriction on use of Cook's mangrove relocation land $ 20,000 $190,000
164 Natuna clarified that its second cross-claim was responsive to Mr Cook's restitutionary cross-claim, and was pressed only on the basis that if Mr Cook succeeded on his restitutionary claim, then Natuna was likewise entitled to restitution. Consequently its brief submissions in relation to the second cross-claim were confined to its submissions in reply. No authorities were cited. As I have rejected Mr Cook's restitutionary cross-claim that is sufficient to also dispose of the second cross-claim.
165 Mr Cook cross-claims for one-third of the value of his playing fields land on the basis that it was agreed at the 20 March 2003 meeting that Natuna would pay him one-third of its value. I do not accept that claim for the reasons given earlier when considering the 20 March 2003 meeting.
166 Mr Cook cross-claims that it was agreed at the 20 March 2003 meeting that the value of his mangrove relocation land and one-third of the value of his playing fields land would be offset against his liability to Natuna for his proportion of the joint costs and expenses paid by Natuna. I have earlier accepted that there was such an agreement but held that it was predicated on a joint development proceeding and was not contractually binding: at [114], [126].
167 Mr Cook pleads that in early 2001 the parties entered into an oral access agreement (between Mr Reid and Mr Cook) that "Natuna would permit Cook access to the Pacific Highway over land owned by Natuna, in return for which Cook would permit Natuna access to the Pacific Highway [over land] owned by Cook in order to build a link road". He pleads that Natuna breached this agreement by refusing to permit him access to the Pacific Highway over Natuna's land and by continuing "to refuse to permit Rayshield access to the Pacific Highway over its land". Notwithstanding that Mr Cook has sold his relevant land to Rayshield, he seeks an order in the nature of specific performance that Natuna "do all things necessary and sign all documents necessary to enable the land owned by it the subject of the proposed access road to the Pacific Highway to be constructed and to be dedicated as a public road". He also claims damages for breach of the alleged access agreement which are said to arise from the consequential delay in payment of $9,113,000 being the balance of the purchase price under cl 47.2 of the 2005 Rayshield sale contract.
168 Alternatively, Mr Cook pleads that Natuna is estopped from denying that it is obliged to permit him or alternatively Rayshield, as his successor in title, access to the Pacific Highway over land owned by Natuna in order to build a link road. The underlying allegations are that on the occasion referred to above in early 2001 Mr Reid, on behalf of Natuna, orally represented to Mr Cook that Natuna would permit him such access in order to build a link road; that he thereby assumed that Natuna would permit him such access; that in reliance on that assumption he proceeded with the joint rezoning application and subsequently approved the lodgement of a joint subdivision development application; and that it would be unconscionable for Natuna to depart from the assumption that it had created or encouraged. However, in Mr Cook's final submissions this alternative estoppel claim was not mentioned and therefore was not pressed. Contract 169 Natuna did not accept that there was any such agreement or representation or that any agreement was contractual. It submitted that there are a number of other reasons why the access road claim should not be accepted.
170 Natuna has refused to permit Mr Cook or Rayshield access to the Pacific Highway over its land. Natuna currently has no intention of developing its land and wishes to sell it for as much as possible. Natuna has engaged in negotiations with Rayshield for Rayshield to buy Natuna out.
171 The council rezoning report of 26 March 1998 (set out earlier) noted that it was proposed to access the development by means of a new road intersecting the Pacific Highway. This would also provide a strategic link as the northern section of an arterial road ultimately connecting the Pacific Highway north and south of Ballina.
172 The subdivision development consent of June 2003 specified a link road which would provide access to the Pacific Highway from the housing estate on both parties' lands. The land over which this road would pass was owned partly by Natuna and partly by Mr Cook. Now Mr Cook's part is owned by Rayshield Pty Ltd, to whom he sold it. The access road would also provide substitute access for the existing access to Mr Cook's property south of the Riveroaks Land, being a small road which runs alongside the canal, which was to be surrendered. This would be dedicated as a cycleway pursuant to condition 1.37 of the development consent of 16 June 2003. However, the existing accessway will not be lost unless the development consent is activated and the link road dedicated and built. Thus, Mr Cook will not be denied access to the Pacific Highway.
173 Mr Cook gave the following evidence in relation to an access road agreement in or about early 2001: There was never an issue between the parties that the main road into the estate traversed both properties. I recall briefly discussing the matter with Reid, sometime before the rezoning application was approved.
I said words to the effect: It will have to be one for one Stephen. You let me out to the Highway and I'll let you into your property over my land.
174 Mr Reid testified that he could not recall having had this conversation. The only comment which he could recall making to Mr Cook in relation to access was in a telephone conversation on 29 September 2003: "If we sort out the development consent, and Stage 1 is ready to proceed, access will automatically be granted over the Link Road." This comment is supported by a file note.
175 I accept Mr Cook's evidence. I also accept Mr Reid's evidence as to his September 2003 comment.
176 Mr Cook submitted that the alleged 2001 oral access agreement was confirmed at the meeting held on 20 March 2003. Given that the access claim was only pleaded as based on an oral agreement in early 2001, this submission should not be elevated to a claim based on an agreement at the 20 March 2003 meeting.
177 Item 2 in Mr Beesley's Suggested Points of Discussion sent to Natuna prior to the meeting stated: "Link road dedication". Mr Beesley's file note of the meeting recorded "Link road compensation to be shared in proportion to area of land being dedicated. Link road would be dedicated to Council when required and cost of construction of link road 1/3rd - 2/3rds". Mr Cook's evidence was that at this meeting Mr Cook or his advisor Mr Beesley raised the issue of access to his part of the Riveroaks Land, to which Mr Hart or Mr Short of Natuna responded: "We will not deny you access to your property Don". Mr Beesley gave evidence of a conversation to the following effect at the meeting: Beesley: In relation to the link road, I trust there will not be any problems in Natuna dedicating its part of the link road when required? It is essential for Don to be able to commence the development.
Hart: We will dedicate the road whenever Don requires it. 178 This is not supported by Mr Beesley's file note or his subsequent letter.
179 Mr Hart gave evidence of a conversation to the following effect at the meeting: Beesley: The link road should be dedicated when required by Council and the cost of constructing the link road would be a joint cost - one third by Natuna and two thirds by Don.
Hart: It's really too early to be discussing construction costs for the Link Road at the moment - we haven't even got the consent yet. But what I think I can say is that, if there is to be a joint development, then this will naturally be a joint expense to be shared one-third by Natuna and two-thirds by Don.
180 In cross-examination, Mr Cook recalled a conversation to that effect.
181 I accept Mr Hart's evidence. I do not think that there was confirmation of the alleged 2001 agreement at this meeting. I accept that there was a consensus at this meeting that if there was a joint development the construction costs would be shared one-third by Natuna and two-thirds by Mr Cook.
182 As invited in Mr Cook's submissions, I have taken into account the parties' conduct subsequent to the 20 March 2003 meeting. After the 20 March 2003 meeting there was correspondence between the parties, before and after the development consent of 16 June 2003, in which Mr Beesley, on behalf of Mr Cook, unsuccessfully sought confirmation that Mr Cook was entitled to access over that part of Natuna's land constituting part of the proposed access road; that Mr Cook might construct the road over Natuna's land; and that Natuna would dedicate that part when the road was completed.
183 Mr Hart wrote a letter to Mr Beesley on 6 June 2003 which included the following: "Whilst you raise the spectre of Natuna not granting access to Don, it is not an issue which has ever been canvassed within our partnership. We are committed to honouring the terms of consent as foreshadowed in the draft conditions." Those draft conditions required the access road land to be dedicated with the issue of the first subdivision certificate, which would be after certain roadworks involving the intersection with the Pacific Highway had been planned and constructed. Those draft conditions did not change significantly in the equivalent final conditions of development consent. The time when the parties would be required to dedicate their lands for the access road did not arise because Mr Cook sold his land.
184 There was a meeting in September or October 2003 between Mr Cook, Mr Beesley, a Mr Elford (of Ardill Payne & Partners) and Messrs Short and Edwards of Natuna. According to Mr Beesley, Messrs Short and Edwards agreed at the meeting that Mr Cook was entitled to access. Mr Short denied that he agreed. He recalled Mr Edwards complaining about Mr Cook abandoning the joint development when Natuna had paid for all the expenses and Mr Cook had paid nothing. Messrs Elford and Edwards did not give evidence. I am not satisfied that there was the agreement alleged by Mr Beesley. Mr Beesley gave evidence that on 18 October 2003 Mr Edwards (a shareholder of Natuna) told him that Mr Reid acknowledged that Mr Cook was entitled to access. He wrote a letter to Mr Edwards on 19 October asserting this and also asserting that Mr Edwards and Mr Short had also acknowledged the same thing. Mr Reid denied having done so. Although Mr Edwards did not give evidence, I accept his denial.
185 There are, in my view, several obstacles to the access road agreement claim. First, I do not think that the discussion in early 2001 constituted a binding contract. Here it is helpful to distinguish between three questions. Did the parties arrive at a consensus? If they did, was it such a consensus as is capable of forming a binding contract? If it was, did the parties intend that the consensus at which they arrived should constitute a binding contract? See Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622 at 627 per McLelland J (affirmed on appeal 40 NSWLR 631) quoting the dictum of Mahoney JA in Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 at 326. Depending upon the size, importance and complexity of the subject matter, the less formal the initial agreement, the less likely it will be that it was intended to be legally binding and enforceable: Player v Isenberg [2002] NSWCA 186 at [49] - [52]. There was a loose oral consensus in early 2001, before the pending rezoning application was approved, that each party would provide part of its or his land for an access road. I do not think that such a casual conversation, referring in an ill-defined way to parties giving each other road access over their respective lands, was capable of forming a binding contract or, if it was, that the parties intended that their consensus should constitute a binding contract. The consensus did not deal with essential matters such as the location and dimensions of the road, the parties' respective liability for construction costs, and dedication of the road to (and compensation therefor by) the council. Elevation of the consensus to a binding contract lay in the future. There was an attempt at the 20 March 2003 meeting to move towards a contract.
186 Secondly, even if the consensus was contractual, its essence was that it imposed reciprocal access obligations on the parties. By selling his land to Rayshield, it became impossible for Mr Cook to perform his reciprocal obligation of providing Natuna with access over that land. There are no such reciprocal obligations between Rayshield and Natuna. Rayshield was not a party to the access agreement and Rayshield and Natuna are not contractually bound to provide the other with access over the land owned by each.
187 Thirdly, even if Mr Cook had not sold his land, the parties were not obliged to undertake the development because of the alleged access agreement or the development consent or for any other reason. It is common ground that Mr Cook was free to sell his land, as he elected to do, rather than undertake the development. Natuna has a corresponding freedom. Natuna is not currently interested in carrying out the development. The parties implemented their joint venture to the point of obtaining a development consent but came under no obligation to proceed further. The access agreement should be viewed as being predicated upon the parties proceeding with a joint development. This corresponds with Mr Cook's understanding of the access agreement. As he conceded, he understood that either party could decide not to proceed with the development at any time prior to the time when the link road was to be dedicated under the development consent conditions and that nothing in the early 2001 discussions meant that either party had to continue with the joint development. In the circumstances, I do not consider that it was a breach of the access agreement for Natuna to refuse to permit Mr Cook or Rayshield access over Natuna's land.
188 Finally, Rayshield is not a party to these proceedings. If specific performance of the access agreement as sought were available (contrary to my opinion), it would have to be moulded so as to ensure that Natuna had reciprocal access rights over Rayshield's portion of the road. It is impossible to do that in a way which would bind Rayshield when it is not a party to the proceedings.
189 For these reasons, I do not accept Mr Cook's access agreement claim. As I have not accepted Mr Cook's access agreement claim, it is unnecessary to deal with his damages case for breach of the access agreement. Estoppel 190 Had the alternative pleaded estoppel cause of action been pressed, I think that it would have been infected by similar difficulties to those that infect the access agreement cause of action. In addition, in my view, Mr Cook suffered no detriment from the pleaded assumptions made in reliance on any access representation and the circumstances do not support a finding of unconscionable conduct.
M. MR COOK'S CROSS-CLAIM FOR LODGEMENT OF CAVEAT WITHOUT REASONABLE CAUSE 191 Mr Cook claims compensation under s 74P of the Real Property Act 1900 (NSW) for lodgement of a caveat without reasonable cause.
192 Although the caveat is not in evidence, the following matters are admitted on the pleadings. On or about 16 March 2005 Natuna caused to be lodged caveat AB 353525 over the portion of the Riveroaks Land owned by Mr Cook. The nature of the interest in Mr Cook's land claimed by Natuna was an "equitable interest in the land herein described arising pursuant to the joint venture to re-develop the said land by the Caveator and the Registered Proprietor pursuant to a Deed and arising pursuant to the improvements carried out to the land by the Caveator at the request of the Registered proprietor". On or about 21 April 2005, Natuna's solicitors were served with a lapsing notice pursuant to section 74J. Natuna had 21 days after service to obtain an order extending the operation of the caveat. Natuna commenced these proceedings seeking that order. On 13 May 2005, by consent, the caveat was extended until further order. On or about 26 August 2005, Natuna issued a notice withdrawing the caveat upon Mr Cook lodging a security deposit with the Court in the amount of $400,000. Completion of the Rayshield sale agreement occurred on 4 October 2005.
193 Mr Cook submits that the lodging of the caveat delayed settlement of the Rayshield sale contract by about five months from the date the caveat was lodged to the date that the notice of withdrawal was issued. He claims that he has sustained pecuniary loss, being the loss of opportunity to invest the balance of the sale proceeds ($9,113,000) for that period. Natuna denies that it lodged the caveat without reasonable cause. Alternatively it submits that the caveat was not causative of the alleged pecuniary loss and that Mr Cook failed to take all reasonable steps to mitigate his loss. 194 Section 74P is in the following terms: 74P Compensation payable in certain cases
(1) Any person who, without reasonable cause: (a) lodges a caveat with the Registrar-General under a provision of this Part, (b) procures the lapsing of such a caveat, or (c) being the caveator, refuses or fails to withdraw such a caveat after being requested to do so, is liable to pay to any person who sustains pecuniary loss that is attributable to an act, refusal or failure referred to in paragraph (a), (b) or (c) compensation with respect to that loss.
(2) Compensation referred to in subsection (1) is recoverable in proceedings taken in a court of competent jurisdiction by the person who claims to have sustained the pecuniary loss.
(3) A person who is a caveator is not entitled to bring proceedings under subsection (1)(b) if that person, having had an opportunity to do so, has failed to take all reasonable steps to prevent the caveat from lapsing.
195 "Reasonable cause" for the lodgement of a caveat exists where the caveator has an honest belief, based upon reasonable grounds, that the caveator has a caveatable interest. In order to establish liability under s 74P, the onus is on Mr Cook to prove, first, that Natuna had no caveatable interest and, secondly, that Natuna did not have an honest belief based on reasonable grounds that a caveatable interest existed. As to the second issue, the test is partly subjective and partly objective. It is subjective in that it requires an examination of the caveator's actual belief and whether it was honestly held. It is objective in that it requires that the belief be held on reasonable grounds: see Lee v Ross (No. 2) (2003) 11 BPR 20,991; [2003] NSWSC 507 at [21] - [23]; Beca Developments Pty Ltd v Idameneo (No 92) Pty Ltd (1990) 21 NSWLR 459 at 469 - 470 (CA); Bedford Properties Pty Ltd v Surgo Pty Ltd [1981] 1 NSWLR 106; Northstate Carpet Mills Pty Ltd v B R Industries Pty Ltd [2006] NSWSC 1057 at [61]. A caveator may have reasonable grounds on which to believe that it has a caveatable interest even though it is mistaken and it is ultimately held that it did not: Ceda Nominees Pty Ltd v Registrar of Title [1982] ANZ ConvR 524. 196 The first issue is whether Natuna had, as at 16 March 2005, a caveatable interest in Mr Cook's portion of the Riveroaks Land. To be a caveatable interest, the interest must be "a legal or equitable estate or interest in land": s 74F(1). The caveat alleged an equitable interest arising on two bases. The first was a "joint venture" between the parties to "redevelop" the land pursuant to "a Deed". The "Deed" was the 1995 deed. That deed only obliged the parties to share the costs of a rezoning application. In my view, it did not confer on any of the landowners a proprietary interest in the land of any of the other landowners. It did not give Natuna any equitable interest in Mr Cook's land. 197 The second basis stated in the caveat for the claimed equitable interest in Mr Cook's land was the "improvements" carried out to the land by Natuna at Mr Cook's request. This appears to be a reference to the costs and expenses incurred by Natuna to progress the rezoning and development applications in respect of the Riveroaks Land. 198 In Excel Quarries Pty Ltd v Payne [2000] QCA 213, the Queensland Court of Appeal held that no caveatable interest arose in circumstances where the caveator, a prospective mining lessee under an agreement with the registered proprietor, expended significant sums of money on a rezoning application which ultimately failed. The Court held that there was a claim for unjust enrichment but that did not give rise to a caveatable interest, by way of constructive trust or otherwise. Mr Cook submitted that this case supports the proposition that the incurring of expenditure on an application to a council in respect of development of land does not give rise to any caveatable interest. In my view, the case is distinguishable because, unlike the present case, and as the Court of Appeal pointed out, the relationship of the parties in that case was not in the nature of a joint relationship or endeavour and was not analogous to those concepts. Thomas JA (Ambrose and Helman JJ agreeing) held at [15] - [16]: [15] I do not consider that the case which is advanced raises or requires the formulation by the court of a constructive trust. I accept the submission of [counsel] for the respondent that the relationship of these parties was not in the nature of a joint relationship or endeavour and was not truly analogous to such concepts. This was an arm's length agreement in relation to property in which a developer and an owner made a particular agreement which was capable of resulting in the developer obtaining the right to exploit the property on certain conditions. They would never have become joint venturers even if the agreement were fully carried out. They remained in a defined contractual relationship until its termination. Thereafter there has been no further relationship.
[16] An identifiable analogy between joint venturers and persons who live together in a relationship has been drawn in Baumgartner and Muschinski and in a body of case law dealing with the property rights and duties that may arise in such relationships. Depending on the circumstances of the particular case, a constructive trust may be imposed to restrain unconscionable advantage being taken of legal rights which one party may have over the other. However the relationship of persons who make a commercial agreement for the transfer or leasing of property does not of itself place such parties in any relationship other than the legal relationship that they have created. The present situation should be seen as an agreement for the grant of a lease upon conditions, not as the commencement of a relationship or joint venture between the parties. The essential co-adventure, joint venture or endeavour that is a pre-condition for a trust such as that contemplated in Baumgartner does not exist. Moreover, there was no ensuing relationship between the parties other than the performance or failure of performance of the contract. The respondent was not guilty of any misleading conduct or activity which caused the appellant to act to its detriment. Her decision to insist on her rights under the contract did not smack of sharp practice. 199 It is unnecessary to express a concluded view on whether Natuna had a caveatable interest because, in my view, Mr Cook has not discharged his onus of proving that Natuna did not honestly believe on reasonable grounds that it had a caveatable interest in Mr Cook's land. There appears to be no evidence to support a finding that Natuna did not have an honest belief that a caveatable interest existed. No questions were directed in cross-examination to either of the directors of Natuna, Mr Hart and Mr Reid, which suggested that they did not have an honest belief that a caveatable interest existed. Absence of cross-examination on the issue of honest belief was regarded as significant by Palmer J in Lee v Ross (No 2) (above) at [27]. In this state of the evidence, I decline to find that Natuna did not have an honest belief that a caveatable interest existed.
200 As to whether there were reasonable grounds for such a belief, Mr Cook pointed out that Natuna's caveat was lodged over a year after Natuna became aware, in February 2004, of the sale to Rayshield. Mr Cook submitted that given the experience of the major shareholders of Natuna, Natuna must have known that its claim to a proprietary interest was unprecedented and therefore there were no reasonable grounds for believing that it had such an interest. I do not accept the submission. I accept, substantially as submitted by Natuna, that on the evidence Mr Hart and Mr Reid were aware when Natuna lodged the caveat that: (a) Natuna had been engaged in a joint endeavour with Mr Cook to rezone and obtain development consent for a subdivision of the Riveroaks Land with a view to obtaining a profit either by selling the land with development consent or developing the land in accordance with the development consent and selling lots in the subdivision; (b) Natuna had made contributions on the basis and for the purposes of the joint endeavour by paying the costs of applying for the Riveroaks Land to be rezoned and the costs of the development application in circumstances where it had not been specifically provided that Mr Cook would keep the benefit of those contributions if the joint endeavour ended; (c) the substratum of the further joint endeavour between Natuna and Mr Cook had been removed on Mr Cook selling his part of the Riveroaks Land to a third party; (d) Mr Cook had agreed in discussions in February and July 2001 and January 2003 to pay his share of the rezoning and development application costs to Natuna from the proceeds of sale of the land in respect of which the caveat was lodged; (e) Natuna had performed its part of the agreement with Mr Cook by paying the costs and pursuing the obtaining of development consent for a subdivision of the Riveroaks Land; (f) based on statements made by Mr Cook that he would pay his share of the rezoning and development application costs to Natuna from the proceeds of sale of his land, Mr Reid and Mr Hart assumed that Natuna would be paid from those proceeds; and (g) based on their assumption, Natuna had paid for the development application costs.
201 Natuna submitted that based on these matters there were reasonable grounds for it to believe that it had the following caveatable interests in Mr Cook's land. First, a constructive trust or equitable charge for the payment to Natuna of Mr Cook's share of the joint costs paid by Natuna in improving the land which were paid, to the knowledge of Mr Cook, on the faith of a promise by Mr Cook that Natuna would have an interest in the land. Reference was made to NSW Trotting Club Ltd v Glebe Municipal Council (1937) 37 SR (NSW) 288 at 308 and Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 404 in aid of the proposition that there were grounds for believing that principles of proprietary estoppel applied so as to give Natuna an interest in the land. Secondly, a constructive trust or equitable charge protecting Natuna's equitable right to the return of its contributions to the failed joint venture. Reference was made to Muschinski v Dodds (1985) 160 CLR 583 at 620 where the High Court imposed a constructive trust over land in circumstances of failure of a joint venture. Thirdly, an equitable charge for the payment to Natuna of Mr Cook's share of the joint costs paid by Natuna in circumstances where the agreement to charge the land was supported by sufficient acts of part performance. An equitable charge is sufficient to support a caveat: Composite Buyers Ltd v Soong (1995) 38 NSWLR 286; Big River Timbers Pty Ltd v Stewart (1999) 9 BPR 16,605. It was said that there were sufficient acts of part performance by Natuna of the oral agreement creating the charge - in procuring the grant of development consent - so that the statute of frauds did not apply.
202 Mr Cook in reply submitted that Excel (above) was a complete reply to Natuna's submission as to reasonable grounds. In my view, it is not and is distinguishable for reasons discussed earlier. It has not been established, in my opinion, that there were no reasonable grounds for Natuna to believe that it had a caveatable interest. The costs paid by Natuna were related to the rezoning and subdivision development consent. It is at least arguable that the rezoning and the development consent increased the value of the Riveroaks Land, including Mr Cook's portion: Concrete Pty Ltd v Parramatta Design and Developments Pty Ltd (2006) 81 ALJR 352 at 372 [100], 386 [161]. Mr Cook was liable to repay Natuna half those costs and had promised to do so out of the proceeds of sale. Those circumstances combined with the subsequent collapse of their commercial joint venture led to a situation in which, I think, there were reasonable grounds for a belief that a constructive trust or equitable charge attached to Mr Cook's land, or would be imposed by the court, to secure his liability for those costs. Caveats are commonly lodged to protect a claim under a constructive trust: see Lindsay, Caveats against Dealings, Federation Press, 1995, p90, footnote 6 and the cases there collected.
203 For these reasons, I do not accept Mr Cook's claim for compensation under s 74P.
204 In summary: (a) I have upheld Natuna's claim that Mr Cook is liable for half the costs and expenses of $386,572.83 which Natuna paid for the rezoning and development applications, less $2,100 paid by Mr Cook, which equals $191,186.41. I have also upheld Natuna's claim that Mr Cook is liable for half the bank interest and charges of $74,350.49 which Natuna incurred on bank borrowings to fund that expenditure, which equals $37,175.25. The total of those two sums is $228,361.66. I have rejected Natuna's alternative and higher claim that Mr Cook is liable for two-thirds of those costs and expenses and bank interest and charges. I propose to order Mr Cook to pay 75 percent of Natuna's costs of Natuna's claim to reflect the fact that Mr Cook was successful on this discrete proportion issue. (b) I have rejected Mr Cook's cross-claim. (c) I have rejected Natuna's second cross-claim.
205 There will be judgment and orders as follows: (1) Judgment for the plaintiff for $228,361.66 (2) Order that the defendant pay 75 percent of the plaintiff's costs of its claim. (3) The cross-claim is dismissed with costs. (4) The second cross-claim is dismissed with costs. (5) The exhibits may be returned.
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Natuna Pty Ltd
Cook
CITATION : Natuna Pty Ltd v Cook [2007] NSWSC 121
Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622 Baumgartner v Baumgartner (1987) 164 CLR 137 Beca Developments Pty Ltd v Idameneo (No 92) Pty Ltd (1990) 21 NSWLR 459 Bedford Properties Pty Ltd v Surgo Pty Ltd [1981] 1 NSWLR 106 Big River Timbers Pty Ltd v Stewart (1999) 9 BPR 16,605 Ceda Nominees Pty Ltd v Registrar of Title [1982] ANZ ConvR 524 Commonwealth v Verwayen (1990) 170 CLR 394 Composite Buyers Ltd v Soong (1995) 38 NSWLR 286 Concrete Pty Ltd v Parramatta Design and Developments Pty Ltd (2006) 81 ALJR 352 CASES CITED : David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 Excel Quarries Pty Ltd v Payne [2000] QCA 213 Giumelli v Giumelli (1999) 196 CLR 101 G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 Lee v Ross (No. 2) (2003) 11 BPR 20,991 Muschinski v Dodds (1985) 160 CLR 583 Northstate Carpet Mills Pty Ltd v B R Industries Pty Ltd [2006] NSWSC 1057 NSW Trotting Club Ltd v Glebe Municipal Council (1937) 37 SR (NSW) 288 Pavey and Matthews Pty Ltd v Paul (1987) 162 CLR 221 Player v Isenberg [2002] NSWCA 186 Riches v Hogben [1985] 2 Qd R 292 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387
(1985) 2 NSWLR 309
(1986) 40 NSWLR 622
(1987) 164 CLR 137
(1990) 21 NSWLR 459
(1990) 170 CLR 394
(1995) 38 NSWLR 286
(2006) 81 ALJR 352
(1992) 175 CLR 353
(1999) 196 CLR 101
(1986) 40 NSWLR 631
(1985) 160 CLR 583
(1987) 162 CLR 221
(1988) 164 CLR 387