Overmyer Industrial Brokers Pty Ltd v Campbells Cash & Carry Pty Ltd

LOWER COURT District Court JURISDICTION : LOWER COURT 6121/98 FILE NUMBER(S) : LOWER COURT Gibson DCJ JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 40767/02

MEAGHER JA BEAZLEY JA YOUNG CJ in EQ

Friday 17 October 2003 OVERMYER INDUSTRIAL BROKERS PTY LTD v CAMPBELLS CASH & CARRY PTY LTD CATCHWORDS

TRADE PRACTICES- Equity- Estate Agent's commission- Alleged promise by vendor not to take advantage of statute- How far estoppel in face of a statute- How far equity will permit statute to be used as a cloak for fraud- Equitable jurisdiction of District Court examined. FACTS

Respondent wished to sell its commercial property. It appointed a raft of agents including the appellant and entered into the agreement prescribed by s 42AA of the Property Stock & Business Agents Act 1941 with the appellant.

The respondent then changed its marketing policy. It terminated all agency agreements. Representatives of the parties then spoke. No new agreement in the prescribed form was entered into. The appellant was the cause of the sale. The section of Act referred to prohibited an agent receiving remuneration if the prescribed form of agreement was not used.

The appellant argued that it was unconscionable conduct under the Trade Practices Act or in Equity for a vendor to promise or represent to pay an agent notwithstanding that both parties appreciate that the Act prevents receipt of remuneration. The argument was that breach of duty under that Act led to damages and that breach of the equitable duty led again to equitable damages. In neither case did damages constitute "remuneration" within the meaning of the Act.

Held that the appellant's argument was correct in law, but on the facts no such representation was made. The trial judge's verdict for the defendant should be upheld. ORDERS

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 40767/02

MEAGHER JA BEAZLEY JA YOUNG CJ in EQ

Friday 17 October 2003 OVERMYER INDUSTRIAL BROKERS PTY LTD v CAMPBELLS CASH & CARRY PTY LTD

Judgment 1 MEAGHER JA: I agree with Young CJ in Eq. 2 BEAZLEY JA: I agree with Young CJ in Eq. 3 YOUNG CJ in EQ: This is an appeal from a judgment of her Honour Judge JC Gibson who ordered that an estate agent refund the commission that it had deducted from monies held in its trust account on a sale of the respondent's property. Her Honour also found against the appellant in a claim for an additional amount of commission. 4 There appears little contest between the parties that, were it not for section 42AA of the Property, Stock and Business Agents Act 1941, the appropriate conditions had been fulfilled to entitle the appellant to the amount of commission which it claimed. 5 Section 42AA reads as follows: " 42AA Agency agreements to be in writing (1) A licensee shall not be entitled to: (a) any remuneration by way of commission, fee, gain or reward for services performed by the licensee in his or her capacity as licensee, or (b) any sum or reimbursement for expenses or charges incurred in connection with services performed by the licensee in his or her capacity as licensee, from the person for whom or on whose behalf those services were performed unless: (c) the agreement pursuant to which those services were performed is in writing and signed by or on behalf of: (i) the licensee, and (ii) that person, (d) the agreement contains such terms (if any) as may be prescribed, and (e) a copy of the agreement was served by the licensee on that person within 48 hours of the agreement being signed by or on behalf of that person. (2) Subsection (1) does not apply to a prescribed agreement, transaction, circumstance or person or an agreement, transaction, circumstance or person of a prescribed class or description. (3) Any provision in, or applying to, an agreement referred to in subsection (1) and purporting to exclude or restrict the operation of the terms (if any) required to be contained in that agreement has no force or effect. (4) Where a licensee has recovered or retained from a person any remuneration or sum to which the licensee is not entitled by virtue of subsection (1), the person who would be entitled to the remuneration or sum so recovered or retained by the licensee had that remuneration or sum not been so recovered or retained may bring proceedings in any court of competent jurisdiction for the recovery of that remuneration or sum, or both, as a debt. (5) A licensee who recovers or retains any remuneration or sum to which the licensee is not entitled by virtue of subsection (1) is guilty of an offence against this Act." 6 The evidence showed that there had at one stage been a contract between the parties which did comply with the Act. However it is common ground that that contract was terminated in July 1997. The termination was because the respondent wished to have one agent managing its whole project rather than a series of agents. 7 The appellant says essentially that on 9 December 1997 there was a representation made by an agent of the respondent that should the appellant be the cause of the sale, it would get 2.5% commission and the respondent would not take advantage of s 42AA of the Act. I will come back to that conversation shortly. 8 When the sale was made and contracts were exchanged, the purchaser paid the deposit under the contract to the appellant whose name was on the contract as the vendor's agent. The deposit was placed in the appellant's trust account. 9 On 4 May 1998, the appellant withdrew $117,970 from that account being 2% commission, $116,000 plus expenses $1970. The appellant said it made a mistake in only deducting 2%. It should have deducted 2.5%. 10 There was a dispute between the parties. Originally the dispute was whether the appellant was only entitled to 1.5% commission rather than what it had deducted or now claims. The appellant insisted on what it considered to be its full commission and then, it would seem, the respondent realised that under the Act it did not have to pay any commission at all. On 19 August 1998 the respondent commenced the present proceedings to recover the $117,970. The appellant defended the proceedings on technical grounds and also on the basis that the respondent was estopped from relying on s 42AA and that it was entitled to damages for breach of s 52 of the Trade Practices Act 1974 (Comm) of an equivalent amount to the commission it would have received had the contract been in writing. There was also a claim for the additional 0.5% commission. 11 Her Honour found a verdict for the respondent. 12 On this appeal, the appellant has argued two points:

(a) That the Trade Practices Act count should have been decided in favour of the appellant;

(b) That the estoppel count should have been decided in favour of the appellant. 13 However, it is necessary to consider the case on a number of heads, and it seems to me that the following is a convenient way of discussing the claim:

(5) The result of the appeal. 14 The appeal was heard by the Court on 14 August 2003. Mr S G Finch SC and Mr D B Studdy appeared for the appellant and Mr J E Armfield, for the respondent. 15 I will now deal with the matter under the five headings that I outlined earlier. 16 (1) I have already set out the text of the section. Its purpose in this 21st century is unclear. It derives from the time when in transactions over the sale of domestic dwellings the rapaciousness of some less reputable real estate agents was notorious. Its effect has been soundly criticised by leading Judges; see for instance, Windeyer J's words in Terry Pfeiffer Real Estate Pty Ltd v Connors [2000] NSWSC 452 [18] where his Honour deplored the harsh and unfair way the section could operate and called for legislative reform. However, despite this, the legislature has basically repeated the section as s 55 of the Property, Stock and Business Agents Act 2002 No 66 which the Court was informed came into force on 1 September 2003. 17 The Act was recently considered by Barrett J in Investmentsource Corp Pty Ltd v Knox Street Apartments Pty Ltd (2002) 56 NSWLR 27. His Honour said at [66] p 43 that the present section and s 42A: "do not forbid the making of any contract. Nor do they render a contract void. There is no prohibition upon the rendering of agency services where the statutory conditions are not satisfied. There is nothing to stop a client or principal making voluntary payment for agency services rendered in such circumstances (although, in a s 42AA case, the recipient may encounter severe difficulties under subs (4) and subs (5) in retaining any such payment). One section deprives the licensee of the entitlement to 'remuneration by way of commission, fee, gain or reward for services performed'. The other rules out proceedings by the licensee 'for the recovery of … any remuneration by way of commission, fee, gain or reward for services performed'."

His Honour then went on to say, a proposition which is conceded to be correct by both sets of counsel, that the section applied to prevent actions in quantum meruit. 18 Mr Finch puts great store on the proposition that the activity of acting as a commission agent is not illegal: the section merely prevents recovery of remuneration. He acknowledges the difficulty with sub-section (5) in that his client retained remuneration by removing the amount from its trust account and thereby probably committed a criminal offence. However, he says this is a mere collateral matter. 19 The learned trial judge, like Windeyer J and other judges, was scathing in her criticism of the operation of s 42AA. Nonetheless, she did her duty and applied it. 20 (2) The appellant says that it is clear that the parties were acting on representations that:

(a) the appellant was the respondent's commission agent for the sale of the property;

(b) the appellant would be entitled to commission if it were the cause of the sale;

(c) the appellant was entitled to deduct the commission from the proceeds of sale;

(e) that the respondent would not rely on the statute.

The appellant says it did work on the basis of these representations. The appellant says that because of the representations it:

(a) lost the chance of securing a proper agreement for commission that complied with the Act; and

(b) lost the chance of negotiating a commission agreement with the purchaser. 21 Mr Finch says that damages awarded under the Trade Practices Act are not "remuneration" within the meaning of s 42AA. Mr Armfield disputes this proposition and says that the width of the expression and the large number of words describing monetary reward in the section show that it was intended to be comprehensive and cover any attempt by an agent to receive a payment which was connected with the rendering of services. 22 In developing his proposition, Mr Finch put that damages under the Trade Practices Act are quite different from remuneration. He put that it would, of course, follow that the appellant would be liable on the claim made by the respondent and would need to restore all the money it abstracted from its trust account. However, having done that, it then would have suffered damage under the Act equivalent to its 2.5% commission. 23 Mr Finch says that one must clearly distinguish between remuneration and damages. What the appellant was seeking was not remuneration under the contract but damages for the lost chances which I have set out in (a) and (b). Mr Finch puts that an action for damages under the Trade Practices Act is not an action on the contract for remuneration under the contract for debt arising out of the contract but rather is a claim to be compensated for loss because of breach of a statutory obligation. 24 Mr Finch referred us to Brownbill v Kenworth Truck Sales (NSW) Pty Ltd (1982) 59 FLR 56; 39 ALR 191. That was a case where the applicants acquired from the first respondent a prime mover which they said was defective. The applicants sued for damages under the Trade Practices Act, but their damages could only be established on the basis that they were using the vehicle for longer hours than were permitted by law. 25 Sheppard J said at ALR 202-3; FLR 69: "My conclusion so far is that the causes of action for breaches of the Trade Practices Act and for negligent misrepresentation are not taken away by reason of the illegal operation of the vehicle nor by admissions made by the first applicant that he intended to use the vehicle for the illegal carriage of grain. I am of opinion, however, that the amount of damages which the applicants may recover will be affected because they will not be permitted to recover loss of earnings if that loss has only come about as a result of their inability, due to the respondent's wrongful acts, to operate the vehicle unlawfully." 26 This is one of the few authorities on the point of illegality and the Trade Practices Act: Mr Finch says that if it says anything about the present problem, it is favourable to his side in that the mere fact that a contract may be performed illegally does not prevent one suing for a misrepresentation. 27 Her Honour said that it had been put to her that as the Trade Practices Act was Commonwealth legislation, the terms of State legislation such as s 42AA should be read down. Mr Finch denied that this submission had ever been put below and that if her Honour had understood that it had been, he wished to make it clear he did not rely on it at all. 28 Her Honour said at Red Appeal Book 41, which I have slightly edited as will clearly appear from the following: "The [respondent] submits that the [appellant] knew all the time that non-compliance with the Act meant it was not entitled to a commission, and that one could ask rhetorically how any statement made by the plaintiff could amount to a representation that the plaintiff would pay the defendant commission notwithstanding this. Even if the [appellant's] version of the 7 December 1997 conversation is accepted and held to amount to a representation, the defendant was never misled by this conduct because the defendant knew the Act precluded it from receiving commission or reimbursement of expenses. Further there was no causal nexus between the loss of the commission and the [respondent's] conduct. The loss is caused by the operation of the Act which destroys the defendant's entitlement to commission and recovery of any sum or reimbursement for expenses or charges incurred by the [appellant] in connection with services performed by it as licensee. This is a cause which operates quite separately from any representation made by the [respondent]. While reliance on the representation may not be essential, there never was any reliance because the [respondent] never came out into the open and assured the [appellant] that notwithstanding the informality of the agreement and its failure to comply with Section 42AA the plaintiff would undertake to honour the agreement." 29 Although her Honour sets this out as the submissions of the respondent and does not actually say that she accepts them, the context shows that she almost certainly did accept them. After a little interlude, her Honour continued: "… even if the cause of action under the Trade Practices Act were to prevail, no damages could be awarded because the [appellant's] loss is due to its wrongful acts, namely its failure to obtain an agreement which complies with the Act and its retention of remuneration and disbursements in breach of Section 42AA(5)."

It is hard to see, with respect, how that statement can be justified, and indeed, I did not understand Mr Armfield to support it. She continued: "There is an additional matter which troubles me, and that is the degree to which it is desirable to extend Section 52 to nullify the effects of other statutes (particularly where these statutes contain criminal sanctions). … If the [appellant's] arguments are correct, a number of Acts preventing the recovery of remuneration would become surplusage; for example the protections in the Legal Profession Act 1987 would be rendered meaningless because solicitors could sue for whatever fees they wanted without the fee agreements the statute considers are mandatory. "Finally, even on the facts as established by the [appellant], this is a case of each of the parties being under a misapprehension rather than a case of the [respondent] making representations of any kind. The [appellant] hoped it would be paid 2.5% and not 1.5% commission, and the [respondent] was clearly quite unaware of its legal rights at all relevant times. The complex problems caused by parties agreeing to conduct which is illegal need not be taken further because there never was any representation to this effect nor any agreement to waive or not to be bound by the provisions of Section 42AA." 30 With great respect, I cannot see how what her Honour said really deals with the submissions made by the appellant. 31 Essentially the appellant says that a person may make a false and misleading representation in trade and commerce, that he or she or it will not plead the statute if an estate agent is the effective cause of the sale and will pay the amount that would otherwise be payable, notwithstanding a written agreement. As a matter of fact, that is what happened in this case. The respondent did not pay as represented. The appellant is thus entitled to damages. Such damages are not remuneration within the meaning of the Act. The fact that the appellant breached s 42AA(5) by retaining the commission is irrelevant because it is conceded that what was improperly removed must be restored. 32 In my view, those submissions are perfectly correct. 33 Mr Finch says that her Honour was quite misguided in discarding the case on reliance. He says that there must be reliance in the situation where whilst everyone knew that the law was X, a representation was made that notwithstanding this, a person would be paid. There would be reliance even if both parties knew of the statute. 34 In the instant case, of course, only one party knew at the relevant time. However, Mr Finch's proposition must be accepted. 35 It is thus necessary to look at the facts and the findings of her Honour on the facts, to see whether there was any such representation. 36 Again, with respect, her Honour's judgment does not always speak with the one voice. However, I must first examine the evidence. 37 On 9 December 1997, there was a meeting between Mr Stone, a representative of the respondent, and Mr McRae, a representative of the appellant, at which Mr Lynch, one of the appellant's directors, was present. Mr Lynch's affidavit says that there was a conversation as follows. Where the people taking part in that conversation refer to a "Ted Care" agreement, they are referring to the initial written agreement between the parties: "Lynch: Where do we stand with this agency agreement? I want to know because we're not interested in sharing commission with anyone else. Stone: No. You're dealing direct with us. Lynch: So do we need a new agreement or can I depend on the one I signed by Ted Care? Stone: No, the Ted Care one is okay. Lynch: So, we've got our full commission then? Stone: Yes, that's right." 38 The meeting was then interrupted by another matter and when that other matter was concluded, Mr McRae said to Mr Lynch in the presence of Mr Stone: "Are you satisfied with the agency? Is everything okay?"

to which Mr Stone replied: "Yes". Mr Lynch said he also replied "Yes". 39 Mr McRae's affidavit said that he said to Messrs Stone and Lynch: "Have you two guys fixed our agency up?" to which Mr Stone replied "Yes, yes, it's alright" and Mr Lynch said "Yes we've sorted it out." 40 Her Honour said that although Mr Lynch denied this conversation she found it did take place. However, she said: "A significant feature of this conversation is that nobody, not even the [respondent] suggests that any actual figure for the commission (whether 1.5%, 2% or 2.5%) was actually mentioned. It is possible therefore that even if this conversation occurred the [respondent] walked away with the belief that the [appellant] would be paid commission in light of the subsequent agreement with Jones Lang Wootten while the defendant walked away with the belief that the whole of the original agreement was reinstated and that Jones Lang Wootten were out of the picture." 41 Her Honour had said at 34F that she accepted the appellant's submission that Mr Stone's denial of the conversation should not be accepted and she further said: "… indeed wherever there is a dispute of fact (unless I have stated to the contrary) I prefer the evidence of the [appellant] to that of the [respondent], as it is the only way to arrive at an understanding of how it came about that the [appellant] went ahead and did all this work to bring about the sale of the [respondent's] property." 42 However, as Mr Armfield points out, not only did her Honour find that there was no representation and that the highest the evidence got was that both parties left the meeting in which the conversation took place with a different interpretation on it, there was also not a scintilla of evidence that any representative of the respondent ever said that the respondent would not rely on s 42AA. 43 Accordingly, although I am prepared to accept Mr Finch's submissions as to the law, in my view there is just not the factual basis that there was the representation made which would found liability under s 52. 44 (3) Mr Finch did not put overmuch emphasis on the estoppel claim, and indeed acknowledged that much of the argument presented under the Trade Practices Act submission was relevant also to estoppel. The submission was that the respondent is estopped from raising an impediment pursuant to s 42AA to the retention by the appellant of the commission and the expenses. It is further estopped from denying liability to account for the further half percent. The appellant relies on estoppel by representation and/or estoppel by convention. 45 As the facts show that there was no representation it is of little purpose to take that matter further. As to estoppel by convention, there is no material to suggest that until shortly before the litigation commenced, the respondent was aware of s 42AA, though the appellant was certainly aware of the provision. 46 Accordingly, there is really no basis for any estoppel claim. 47 However, her Honour dealt with the matter on the basis that the decision of Bryson J in Multo Pty Ltd v Craddock, 11 March 1988, unreported but see BC 8802136, was an answer to the claim in estoppel. 48 In that case his Honour said of s 42AA (BC 8802136 at 7): "By subs (3), contracting out is of no force or effect. By subs (4) where remuneration is recovered or retained to which the licensee is not entitled by virtue of subs (1), the person charged may recover it back. By subs (5) 'a licensee who recovers or retains any remuneration or sum to which he is not entitled … ' commits an offence. "This section deals with the substance and states the law as to entitlement; it does not deal with procedure and put procedural barriers in the way of enforcement of rights. … "It is also to be observed that s 42AA deals not only with entitlement to remuneration under express or implied contracts, but deals also with any remuneration by way of gain or reward for services performed; it does not limit itself to disentitling parties from enforcing their contracts and the disentitlement which it enacts is irrespective of the legal basis of a claim for remuneration by way of reward for services." 49 His Honour then turned to the doctrine of part performance and held it had no application to claims at law. He then concluded his judgment by saying: "On my understanding of its meaning s 42AA makes illegal and has the effect of forbidding the enforcement of any equities arising in that manner just as much as it forbids the enforcement of the contract itself." 50 The Multo case was followed by Newman J in Hinkley v Shaw (1991) NSW Conv R 55-583 at p 59,286. 51 Although not referred to in the judgment, there are a number of authorities to the effect that one can never have an estoppel in the face of a statute. The leading authorities for this proposition are the decision of the Privy Council in Kok Hoong v Leong Cheong Kweng Mines Ltd [1964] AC 993 and Barilla v James (1964) 81 WN (Pt 1) (NSW) 457, a decision of a Full Court consisting of Walsh, Wallace and Asprey JJ. The test to apply, according to the Privy Council in the former case at 1016, was that: "the question whether an estoppel is to be allowed or not depends on whether the enactment or rule of law relied upon is imposed in the public interest or 'on grounds of general public policy'. … A more direct test to apply in any case such as the present, where the laws of moneylending or monetary security are involved, is to ask whether the law that confronts the estoppel can be seen to represent a social policy to which the court must give effect in the interests of the public generally or some section of the public, despite any rules of evidence as between themselves that the parties may have created by their conduct or otherwise. Thus the laws of gaming or usury … override an estoppel … "General social policy does from time to time require the denial of legal validity to certain transactions by certain persons. … In all such cases there is no room for the application of another general and familiar principle of the law that a man may, if he wishes, disclaim a statutory provision enacted for his benefit, for what is for a man's benefit and what is for his protection are not synonymous terms. Nor is it open to the court to give its sanction to departures from any law that reflects such a policy, even though the party concerned has himself behaved in such a way as would otherwise tie his hands … ". 52 However, in Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466, this Court held that the then provisions of the Local Government Act 1919 dealing with illegal subdivisions did not prevent equitable estoppels coming into operation. The report shows that the cases on no estoppel in the face of a statute were not cited to the Court nor were they referred to in any of the judgments. 53 With respect, it is not completely clear whether Silovi's case was decided on the basis that an estoppel lies in the face of a statute where the orders sought do not on their face breach the statute, or whether the estoppel raised was not one made "in the face" of a statute. It would not, however, seem to be of any great relevance in the instant case. 54 The English Court of Appeal in Shah v Shah [2002] QB 35 Pill LJ at [20] page 44, approved a statement of Beldam LJ in Yaxley v Gotts [2000] Ch 162, 191 that: "the general principle that a party cannot rely on an estoppel in the face of a statute depends upon the nature of the enactment, the purpose of the provision and the social policy behind it." 55 It would seem to me almost unarguable that the legislature has made it as plain as plain can be that there is not to be recovery of the remuneration in the instant case and that no estoppel in the face of the statute will lie. 56 Although in Silovi the estoppel was an equitable estoppel, it does not seem to me that this was a distinguishing factor and that there can be neither a legal nor an equitable estoppel in the face of a statute if that runs counter to the social policy of the statute. 57 It follows that in my view, estoppel could not succeed.

(4) Equity and the District Court 58 Mr Finch's submissions were to the effect that the Judge in the District Court ought to have applied equitable principles of estoppel and that she was wrong not to do so. The Court queried just how far the District Court could apply principles of equity. 59 Mr Finch replied that s 46 of the District Court Act 1973 conferred on the District Court in any action power to grant any injunction which the Supreme Court might have granted. Accordingly he says, that as what was before the District Court Judge was an action, that is a common law action, she was given the ancillary power of granting injunctions. Thus she should have directed her mind as to whether equity would have granted an injunction to prevent the respondent, unconscionably, relying on the statute. 60 Although I initially had some doubt about this matter, it seems to me that the limited submission which I have set out above is correct. Whilst the District Court has only a very limited jurisdiction to grant injunctions under its special jurisdiction in ss 134 and 135 of the District Court Act where there is an action at law properly before it, it has greater powers to grant an injunction in those proceedings by way of ancillary equitable relief. 61 Questions were asked of counsel as to how the District Court might enforce any injunction it might give under s 46 or otherwise. No clear answer was given. The District Court does not appear to have any machinery for enforcing injunctions. However, in the ultimate this is of little moment as either that Court would invent its own machinery under its inherent powers to make the jurisdiction given to it by its Act work, or alternatively the matter could be reported to this Court. 62 Mr Finch also put that even if the District Court did not have jurisdiction to make an injunction this Court is conducting a rehearing and has all the powers of the Supreme Court. I very much doubt whether this is correct. When this Court is hearing an appeal from the District Court, it is considering whether the District Court should have come to the decision that it did come to, having regard to its jurisdiction and powers. The fact that had the matter been before this Court from the beginning other orders could be made is to my mind irrelevant. As Isaacs J said in Dearman v Dearman (1908) 7 CLR 549, 561, "the whole duty of every Court of Appeal is to give the judgment which in its opinion ought to have been given in the first instance." 63 It is now necessary to consider whether her Honour erred in not granting such relief. 64 In McCormick v Grogan (1869) LR 4 HL 82, 97, Lord Westbury said: "The Court of Equity has, from a very early period, decided that even an Act of Parliament shall not be used as an instrument of fraud; and if in the machinery of perpetrating a fraud an Act of Parliament intervenes, the Court of Equity, it is true, does not set aside the Act of Parliament, but it fastens on the individual who gets a title under that Act, and imposes upon him a personal obligation, because he applies the Act as an instrument for accomplishing a fraud. In this way the Court of Equity has dealt with the Statute of Frauds, and in this manner, also, it deals with the Statute of Wills." 65 Lord Westbury's reference to the Statute of Wills was to the development of the rules of secret trusts. The fact that it appears that fraud as a basis for the doctrine of secret trusts is not now always required (vide Re Snowden [1979] Ch 528) does not concern me here. What I need to be concerned with is whether the principle that equity will not allow a statute to be used as a cloak of fraud extends to a wider field. 66 There are a number of cases illustrating how equity prevents the Statute of Frauds being used as a cloak for fraud; see eg Wood v Midgley (1854) 5 De GM & G 41; 43 ER 784. 67 So far as the Statute of Frauds is concerned, equity has assumed that it can, from all the circumstances without enforcing an oral contract, assess whether not signing a contract is against conscience so that an order can be made compelling the defendant to enter into a contract which complies with the Statute; see eg McBride v Sandland (1918) 25 CLR 69, 77. 68 Under the Statute of Fraud cases, relief can only be given if, in the words of Pomeroy (iii para 921): "The plaintiff must be induced through the deceit, false statements, or concealments of the other party to waive a written instrument, and to rely upon the parol undertaking."

or where the doctrine of part performance applies so that the contract has been partly executed and it would be fraudulent not to enforce the whole contract. There have been judicial warnings that courts should not increase the scope of this principle, for instance Lord Redesdale said in Lindsay v Lynch (1804) 2 Sch & Lef 1, that relaxation of the Statute of Frauds has been a ground of much perjury and much fraud. 69 In ISPT Nominees Pty Ltd v Chief Commissioner of State Revenue [2003] NSWSC 697 at [336], Barrett J took the view that "the Statute of Frauds cannot be used as an instrument of fraud is limited to cases in which the legal owner of property has only obtained its legal title by acceding to the existence of a trust." This point was not argued before us, but it is probably correct. This shows that it is unwise to think of the maxim "Equity will not allow a Statute to be used as a cloak for fraud" as having a wide operation. 70 There is no doubt that the same principle applies where there is a statute like the Statute of Frauds requiring observance by the parties of a particular form as a precondition to enforceability at law: Last v Rosenfeld [1972] 2 NSWLR 923, 927 and see Meagher Gummow and Lehane's Equity Doctrines and Remedies 4th ed (Butterworths, Sydney, 2002) [12-105]. 71 Sheridan on Fraud at p 146 says that the maxim "Equity will not permit a statute to be used as a cloak for fraud" may be interpreted in three ways, (1) it is an exception to the rule that equity is bound by statutes; (2) equity will construe statutes as if they contained an exception for cases of fraud; (3) equity will apply another right to counter the right provided in the statute. (3) would seem to be the current justification for the rule. 72 In Pickin v British Railways Board [1974] AC 765, the House of Lords had to deal with a novel problem where a private Act of Parliament had divested the respondent's predecessor in title of land which was to revert upon the closure of a railway. At 795, Lord Wilberforce quoted the passage from McCormick v Grogan which I have set out earlier, and then said: "This is widely expressed and the context must be understood; the references, though general, to an Act of Parliament are references to the Wills Act or the Statutes of Frauds - public Acts - and to such equitable doctrines as secret trusts or part performance. The doctrine may well be admitted that equity, when faced with an appeal to a regulatory public statute, which requires compliance with formalities, will not allow such a statute (assumedly passed to prevent fraud) to be used to promote fraud and will do so by imposing a trust or equity upon a legal right."

His Lordship then went on to say that it was impossible to use the maxim to say that if an Act of Parliament was passed through fraud equity would give relief. 73 It seems to me that the principle that equity will not allow a statute to be used as a cloak for fraud is limited to the Statute of Wills in so far as secret trusts are concerned and the Statute of Frauds and statutes in like plight. It does not apply to a statute such as the present which as the Multo case and others already referred to have shown is of a completely different nature. 74 However, there is another principle and that is that it may be fraudulent to make a representation that one will not rely on a contract or a statute where an injunction will be granted to prevent a person reneging from that representation. An example is Kritzer v Moffat 240 P 355; 44 Am LR 681 (Wash) (1925), wherein a mortgagor after foreclosure relied on a fraudulent promise of the mortgagee that he would carry the debt without the necessity for redemption. 75 This principle is a very narrow operation. It cannot be used to create an enforceable nudum pactum and in most cases an injunction will not lie because damages are an adequate remedy. There must be some fraudulent conduct in and about the representation and the injunction must be the appropriate equitable remedy to award to prevent the fraudster succeeding. 76 It is unnecessary to explore this matter further as, for the reasons I have set out above, no representation was established that the respondent would not rely on the statute. 77 (5) It follows from what has been said above that the appeal must be dismissed with costs.

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