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[2007] VSC 106
Supreme Court of Victoria
2007-04-17
HARPER J
Original judgment source is linked above.
LAND - Crown land - Application for leave to appeal from the Victorian Civil and Administrative Tribunal - Finding of fact - Whether supportable as having a rational basis - Contract - Offer and acceptance - Rule in Browne v Dunn (1893) 6 R 67 (HL) - Effect of breach.
1 On 10 July 1956, the Governor in Council accepted a recommendation which originated from the Department of Crown Lands and Survey. It was that a lease be granted to a company called Palais de Danse Pty Ltd. The land was described as being Allotment 103 at St Kilda in the Parish of Melbourne South, County of Bourke. It forms part of what is known as the St Kilda triangle, which is bounded by The Esplanade, Jacka Boulevard/Marine Parade and Cavell Street.
2 The recommendation was accepted. A lease for 50 years from 1 April 1956, expiring on 31 March 2006, was entered into. The parties were the Crown as lessor and Palais de Danse Pty Ltd as lessee. The rent for the first ten years was fixed at [sterling]1197 per annum. The lessee was "To have and to hold the demised premises ... to the intent that [they] shall be used as a site for amusement and recreation".
3 Bradto Pty Ltd, the plaintiff in proceeding No 9933 of 2006, claims an interest in the leasehold. That company was the lessee at the time of expiry of the term of the lease on 31 March last year. The Crown now seeks possession of the land. Although a notice to quit has been served by the Crown as lessor, Bradto nevertheless refuses to yield possession. It claims that the State of Victoria is contractually bound to grant it a lease for 60 years from a date no earlier than August 1982.
4 The importance of the St Kilda triangle as a centre of recreation has doubtless influenced all parties in their attitude to this litigation. Well before 1 April 1956, the Palais de Danse had found a niche in the folklore of Melbourne. Ever since cable trams came to St Kilda in 1888, its foreshore and its triangle were a particularly favoured resort for Melburnians in search of a touch of the exotic, the romantic and the suave. Dancing is a natural element in this important aspect of being human. And, for those who wished to dance, the Palais was among the natural places to do it.
5 In 1961, a small piece of land was added to the leasehold, giving it a narrow frontage to Marine Parade. A fresh lease, on which the additional land was coloured red and the original leasehold coloured yellow, was executed to reflect this change - but without any alteration to the length of the term. It was accordingly to expire, as before, on 31 March 2006. The fresh lease provided that the lessee at its own cost "shall and will by the first day of April 1963 have built ... on that portion of the said land coloured red buildings ... and/or other permanent improvements to the value of not less than [sterling] 60,000."
6 The Stardust Room was the result. It was used for receptions. Unlike the Palais (that is, the Ballroom) itself, the lessee had no rights of removal on the expiration of the lease. By clause 3(e), "upon the expiration ... of the said term that portion of the said land coloured red with all buildings erections extensions and improvements ... shall absolutely revert to and belong to Her said Majesty ... [without] any compensation whatsoever". In short, the Stardust Room would revert to the Crown when the term of the lease came to an end.
7 The Ballroom, by contrast, might or might not. That was to be the lessee's decision. Clause 3(f) of the lease provided "that upon or at any time prior to the expiration ... of the said term it shall be lawful for the lessee to take down and remove from that portion of the said land coloured yellow all buildings erections extensions and improvements now or hereafter built ... by the lessee on that portion of the demised premises coloured yellow doing as little damage as may be".
8 Late in the afternoon of Friday 27 December 1968, a fire broke out in the ceiling between the Stardust Room and the Palais Ballroom. It took a mere 30 minutes for the Ballroom to be destroyed. The Stardust Room survived, but was damaged. The future of the complex had to be approached afresh.
9 Negotiations were opened between the company and the authorities. The plaintiffs contend that these resulted in a contract between Palais de Danse Pty Ltd (and Bradto as the company's successor in title) and the State of Victoria. The effect of this arrangement is that Bradto is entitled to remain in possession of the leasehold.
10 The defendant denies the claim. The dispute went to the Victorian Civil and Administrative Tribunal. It was heard by Deputy President Macnamara. He found for the defendant. The plaintiffs now bring to this Court applications for leave to appeal from the Deputy President's decision.
11 Section 148(1) of the Victorian Civil and Administrative Tribunal Act 1998 provides that, if leave is given, a party may appeal on a question of law from an order of the Tribunal. The plaintiffs submit that they have identified three errors of law in Mr Macnamara's reasons. First, in holding that, if there were a contract, it was unilateral rather than bilateral; secondly, in holding that, if the State made an offer to Palais de Danse Pty Ltd, the company did not accept it, and there was therefore no contract anyway; and, finally, that if there were a contract the company failed to comply with the advertising requirements of s. 134 of the Land Act 1958, which failure rendered the contract unenforceable.
12 The plaintiffs' second issue seems to me to be the one that should be dealt with first. If there were no acceptance, then no contract came into existence. If no contract came into existence, then any proceeding or claim based upon it must necessarily fail; and this application for leave to appeal must likewise fail.
13 Whether parties have entered into a final and binding contract is, as the litigants here accept, a question of fact.[1] In some circumstances, however, a mistaken answer to a question of fact may amount to a mistake of law of the kind which brings s.148(1) of the Act to bear. Such a situation is exceptional. In the words of Eames J, it will nevertheless arise[2]:
"Where the analysis of evidence is so deficient as to demonstrate a lack of logic or a failure in the process of reasoning the analysis would constitute an error of law[3], but the mere fact that the appellate court regarded the conclusion reached to be wrong would not establish error of law, provided that there was a rational basis on which the Tribunal could have reached its conclusion.[4]"
14 It is in this context that I turn to an examination of the facts. The examination begins shortly after the fire. Palais de Danse Pty Ltd was then, of course, concerned about its position. One problem was insurance. Although the Stardust Room was destined to revert to the Crown, the Palais (that is, the Ballroom) was not. Yet one policy covered both. As the lease required, the policy was in the name not of the Palais de Danse Pty Ltd, but of the Secretary for Lands. Yet it was the company, not the government, that would be spending whatever moneys were dedicated to rebuilding. The amount insured was $440,000.
15 Another problem was the recoupment of the cost of rebuilding. To the extent that insurance moneys were insufficient to cover the necessary expenditure, the company would have to recoup the additional cost out of operating profit. But there could be no operating profit without operations from which a profit could be generated; and no such operations without a lease. Palais de Danse Pty Ltd saw the solution as an extension of the term, coupled with whatever other measures would be necessary to overcome other potential difficulties. For example, the then current town planning requirements might impact in fresh ways upon the improvements on the site. Car parking was a case in point: a permit to rebuild might have, as a condition of its being granted, the provision of an increased number of the car parking spaces available to patrons. If so, more land might be required to be incorporated in the lease. One possibility here was the addition to the Palais lease of land then used for a miniature railway.
16 The government department with responsibility for the lease of the Palais premises was the Department of Crown Lands and Survey. It was not unsympathetic. When, on 14 February 1969, the General Manager of Palais de Danse Pty Ltd, Mr Bromley, wrote to the Secretary for Lands with a request that the Department consider the grant of a new 60 year lease upon the surrender of that then in force, the Secretary responded by noting the proposal, while pointing out that any new lease would be "subject to the definition of the final boundaries". There was a likelihood that Marine Parade would be widened, and it might be that the authorities would require that access to the Stardust Room be from Cavell Street. Moreover, the company had raised the prospect of the enlargement of its leasehold by the addition of the land occupied by the miniature railway. All of this would of course affect the area encompassed by any new lease, which would, in turn, impact on the rent. The Secretary concluded his letter by saying that:
"The annual rental for the first ten year period of any new lease would be determined after the above land issues have been resolved."[5]
17 It is clear that the Secretary envisaged negotiations over the size and shape of the leasehold, which negotiations would have a bearing on the quantum of the rent. He also said that "on completion of a new building at your estimated cost of $400,000 and on re-instatement of the Stardust Room, the Department would be prepared to seek the consent of the Governor in Council to a surrender of the existing lease and to the issue of a new lease for a term of 60 years from now."[6]
18 Palais de Danse Pty Ltd was doubtless gratified by this display of departmental co-operation. Its solicitors nevertheless advised that further assurance was desirable. They were instructed by the company to write to the Department accordingly. The letter, which is dated 31 March 1969, also asked "whether on the information contained in your ... letter" of 13 March, the company "could go ahead with the re-building with the certainty that the new lease for 60 years will be issued to it when the boundaries of the area can be defined." There is no reference in the letter to the expenditure of $400,000, still less that this was to be the minimum cost. Rather, the solicitors refer to their understanding that "your Department has in fact recommended to the Governor in Council that subject to definition of boundaries, the new lease be granted to our client on re-instatement of the Stardust Room and surrender of the existing lease."
19 It has not been, nor in my opinion could it reasonably be, suggested that this letter constituted either an offer or an acceptance of anything. It was followed by another letter, this one written by the Secretary for Lands, addressed to the lessee's solicitors, and dated 11 April 1969. It informed the solicitors that a recommendation would be put to the Governor in Council. That recommendation would be "that consent be given subject to the new lease being issued when your client has expended not less than $400,000 on a new building, has re-installed the Stardust Room and when the lease boundaries have been re-defined in association with the widening of Marine Parade."
20 The contractual effect of what happened next has been the subject of much debate. On 15 April, the Governor in Council approved a recommendation put to him by the Secretary for Lands and co-signed by the Minister. It was in the following terms:
"PURSUANT to the provisions of s.134 of the Land Act 1958 RECOMMENDED that in respect of the Crown lease held by Palais de Danse Pty Ltd of allotment 103, at St Kilda, Parish of Melbourne South, for a term of 50 years from 1 April 1956, the Governor in Council consents to the grant of a new lease for a term of 60 years from a date to be determined on the condition that such new lease shall not be executed until such time as:
(1) the lessee has expended not less than $400,000 on the erection of a new building on the demised premises;
(2) the lessee has reinstated the reception room and kitchen erected on the demised premises and recently damaged by fire;
(3) the boundaries of the demised premises have been redefined having regard to the widening of Marine Parade at St Kilda;
(4) the lessee has complied with the statutory requirements of the Land Act 1958."
21 Two points require immediate noting. First, the company had not agreed to the expenditure of not less than $400,000 on the erection of a new building. Secondly, the Order in Council makes no reference to the incorporation, into the leasehold, of the land occupied by the miniature railway. This was an issue of importance to the company. The plaintiff nevertheless now submits that "[t]he Order in Council perfected a contract between the State and Palais de Danse to the grant of a new 60 year lease."[7] The facts compel a different conclusion.
22 The reference to the cost of erection of the new building must of course be seen in its context. The parties might have agreed that, although the company was not bound to re-instate the Ballroom, it might choose to do so. If it did, and if the amount spent on the re-instatement exceeded $399,000.99, then a 60-year lease would be granted if and when the other conditions precedent came to pass. But what would the lease contain, other than that it would expire on a date 60 years from a date to be determined? In particular, what rent would be charged? As the Secretary for Lands acknowledged in his letter of 13 March, "[t]he annual rental for the first ten year period of any new lease would be determined after the above land issues have been resolved." But if that resolution was not reached for some years, how was the rent to be fixed?
23 It being the plaintiffs' case that the Order in Council perfected a contract between the State and Palais de Danse Pty Ltd, it is for the plaintiffs to identify the terms of that contract. One of the most important terms of any lease is that which nominates, or which regulates the means of ascertaining, the rent chargeable by the landlord. In this case, this gives rise to a particular difficulty. The plaintiffs' argument that an agreement came into existence carries with it the necessary proposition that that agreement contained an implied term to the effect that the Crown alone would be in a position to determine the rent (albeit that, pursuant to another implied term, it would be under a duty to act reasonably in doing so). Yet it is unlikely that the lessee would have agreed to pay whatever rent the Crown might choose to impose. Nor, in this case, is there any evidence of such a meeting of minds.
24 The acceptance by the Governor in Council of the departmental recommendation was conveyed to the solicitors for the lessee by a letter dated 18 April 1969 from the Secretary for Lands. It informed the solicitors "that the Governor in Council has consented to a new lease being granted to your client company" and that "[t]he necessary Order in Council has been obtained." The solicitors replied on 21 April in the following words:
"We thank you for your letters of 11th and 18th April in connection with this matter, and have passed the information therein contained on to our client.
We note that our client will be advised of the statutory requirements when the other matters are complete."
25 On the same day, the solicitors wrote to their client enclosing, without comment, the letter from the Secretary. Thereafter, the Order in Council disappeared from view as if it never was. Subsequent correspondence never mentioned it. The parties acted as if it had slipped out of mind. Until its resurrection by the plaintiffs in support of their case in this litigation, it vanished from the relationship between lessor and lessee.
26 It is, nevertheless, now at the very heart of the plaintiffs' submissions. "The case put on behalf of Bradto" said Deputy President Macnamara in his judgment following the tribunal hearing -
"is that the Crown agreed with Palais de Danse Pty Ltd ... that [the latter] should have a further 60-year lease term. ... The basal contention is that a contract of some sort having that effect was entered into between the Crown and Palais de Danse. Putting aside special rules said to apply to the Crown's dealings with Crown land by virtue of the Land Act 1958, does the evidence make out such a contract?
The first question for determination is whether the putative contract if it exists would be regarded as a unilateral or a bilateral contract."
27 It seems to me, with respect, that the first question is whether there was any contract at all. There could not be, unless the parties to the relationship brought to it the essential element of contemporaneous reciprocity. This notion is, in the context of this case, a particularly helpful one. First, because it embraces both agreement and consideration - these being the two elements traditionally required by the common law in any contractual relationship. Secondly, it assists the rules of offer and acceptance to transcend the legalistic straightjacket into which they are sometimes forced. The economist's market of perfect competition, in which negotiation leads to an offer that, on acceptance, results in agreement and therefore the striking of an enforceable bargain, may often reflect reality. Equally often, it does not. To appreciate the point, one only has to think of the vending machine from which many things, from railway tickets to cigarettes, are purchased.
28 As the plaintiffs concede, it is impossible in this case to isolate an offer by one party and its acceptance by another. It does not necessarily follow, as the plaintiffs rightly submit, that the element of contemporaneous reciprocity is absent. Sometimes contractual relationships come imperceptibly into existence, there being no identifiable moment when offer and acceptance merge into agreement. In those circumstances, the court is required "to ask whether, objectively and having regard to the totality of the dealings between the parties, they should be considered to have entered into a contractual relationship without inquiring too closely into the formalities of offer and acceptance."[8]
29 In this case, the Deputy President examined the issue of acceptance through the lens of one who had already determined that the State had made a unilateral offer. In his opinion, nothing in the evidence indicated the existence of a bilateral contract. He then held that the only possible act of acceptance of the unilateral offer was the rebuilding of the Ballroom. He said:
"What of the situation here? On the face of it the Order in Council was a purely unilateral act on the part of the Crown. Admittedly the Order was made at the urging of the solicitors for Palais de Danse but in no way other than carrying out reconstruction work did Palais de Danse purport to accept an offer so as to constitute a contract. There was nothing in any piece of correspondence between the parties or, if it mattered, in any private memorandum of advice held by the one and not shared with the other in which it appeared that the Crown demanded or that Palais de Danse felt obliged to carry out any reconstruction other than reconstruction of the Stardust Room ... When Mr Bromley, the man at the heart of negotiations raised this issue with [the company's solicitors] on 24 February 1971 there is no hint that he regarded his company as subject to an obligation to outlay his $400,000 on the reinstatement of the Ballroom and the Stardust Room as necessarily it would have been if a bilateral contract had been made according to the terms of the Order in Council in 1969. ... The considerations which I have mentioned lead me to the conclusion that if there was a contract it was a unilateral one which would come into existence if at all, upon ... the expenditure of not less than $400,000 in the reinstatement of buildings on the premises."[9]
30 It would of course follow, if the Order in Council were "a purely unilateral act on the part of the Crown", that the Crown would not (or could not lawfully) demand that Palais de Danse Pty Ltd rebuild the Ballroom. Nor would the company be (or presumably feel) obliged to do so. But nor would the company be (or presumably feel) so obliged if there were no contract at all. The position would be different were the relationship between the parties to be governed by a bilateral contract that included a requirement that the lessee rebuild.
31 It is clear that the Deputy President did not finally conclude that a unilateral contract came into existence between the State and Palais de Danse Pty Ltd. On the contrary, he merely expressed the view that if there were a contract, it was unilateral rather than bilateral. But he then went on to hold that, while a unilateral offer had been made, it had not been accepted - and, accordingly, no contract had come into existence. It followed, so the Deputy President held, that the decision to rebuild the Ballroom - a decision that culminated in the expenditure of approximately $600,000 - was not based upon the belief that the company was contractually bound to adopt that course. It was taken because the alternative was that the proceeds of the insurance policy would default to the State. According to the evidence as understood by the Deputy President, the company's solicitors (Arthur Robinson & Co), who had been involved in procuring the Order in Council, were not of the opinion that it set forth the terms of a bilateral contract to which Palais de Danse Pty Ltd was committed, and which bound it to reinstate the Ballroom.[10] Rather, exchanges between the solicitors and the company appeared "to demonstrate the true motivation for Palais de Danse's scaling down of its grander plans ... and simply rebuilding on the original site." That motivation, the Deputy President continued:
" ... seems to be that it was only by this expenditure that the insurance moneys could be released. If the expenditure were not undertaken the insurance money would simply go to consolidated revenue of the State. In forwarding the Arthur Robinson & Co advice ... in his letter of 12 March 1971, Mr Bromley concluded:
'During my conversation with Mr Holt, Secretary for Lands, on Friday 5 March, he stated that if all the insurance money was not used in rebuilding, the remainder would be put into consolidated revenue. It appears, therefore, we have no option but to spend all moneys held by the Treasury.'
This shows the true motive for the expenditure ... had nothing at all to do with satisfying any condition or performing any putative obligation under the 1969 Order in Council."[11]
32 The plaintiffs submitted that this finding by the Deputy President was so inherently improbable as not to be open. I disagree. I think that it was not only open, but correct. Save for the evidence given during the Tribunal hearing by a former director of Palais de Danse Pty Ltd, Mr Leslie Hyams, nothing in the correspondence or other evidence put before me supports the plaintiffs' position. I will return to Mr Hyams' evidence. For the present, I record that in my opinion there is ample support for the Tribunal's finding that the company proceeded to rebuild the Ballroom because the alternative was that the insurance money would find its way into consolidated revenue and because rebuilding was - in the circumstances then obtaining, and despite the absence of a 60-year lease - the commercially appropriate thing to do.
33 I have come to this conclusion because it seems to me that the evidence points to there being no contract, whether unilateral or bilateral, between the State and Palais de Danse Pty Ltd by which the latter became entitled to a new 60-year lease from the former. It is not merely that Palais De Danse Pty Ltd never agreed to the terms of the Order in Council, or that the terms of any lease that might have resulted from it were uncertain. Although the existence of a contract may be evidenced otherwise than by offer and acceptance, the fact is, in my opinion, that no contract of the kind relied on by the plaintiffs in this case ever formed part of the relationship between the State and Palais de Danse Pty Ltd, or between the State and Bradto. There had been no meeting of minds - no contemporaneous reciprocity - during, before, or after April 1969.
34 I need not examine the evidence in detail. The Deputy President found that there was no evidence that a bilateral contract existed. He also found that, because the State's unilateral offer was not accepted, no unilateral contract existed either. These are findings of fact. I might disagree with them. That, however, would not establish error of law, so long only as the findings were rationally based. The Deputy President's decision must therefore prevail unless his analysis of the evidence was so deficient as to demonstrate a lack of logic or a failure in his process of reasoning. I, however, regard his conclusions not merely as having a rational basis, but as right. The only difference is that I do not think that the distinction between unilateral and bilateral contracts is in the circumstances of this case a matter of relevance.
35 I have already recorded that the Order in Council, having been made, sank without leaving any mark on the contractual relationship. As early as 28 May 1969, the Port Phillip Authority, an instrumentality of the executive government, could write in a memorandum to the Minister for Lands:
"With the impending re-building of the Palais de Danse at St Kilda and the proposed restoration of 'Stardust' the Authority believes that an opportunity now exists to examine the possibility of the more gainful use and general improvement of that area of foreshore bounded by Cavell Street, Marine Parade and the Lower Esplanade.
...
The entire area of the triangle is Crown land, and although some of it is leased, the present situation provides the opportunity to review the present leaseholds and occupancies and, possibly, by negotiation, on terms acceptable to all interested parties, open the door to planned development of the area rather than perpetuate the 'ad hoc' development which has taken place over the years."
36 So far as I am aware, there is in the large quantity of material in evidence only one post-April reference to the Order in Council. On 10 June 1969, a memorandum prepared within the Lands Department noted that:
"... it would cost at least $400,000 to rebuild the Ballroom, in view of which the Governor in Council has consented to the issue of a new lease for a term of 60 years on completion of the building program and re-definition of the leasehold boundaries having regard to the proposed Marine Parade widening."
37 After that, the company's accountants came as close as anyone to referring to the Order when, in a letter to their clients dated 24 April 1969, they said:
"We have been informed that the Department of Lands has consented to grant a new lease for 60 years from a date to be fixed in the near future, on completion of planning of road works, adjacent to the leasehold land of Palais de Danse Pty Ltd. It is understood that the lease rental for the first 10 years will be on the same basis as that payable under the company's present lease, which will be surrendered."
38 The references to "the near future" and rent "on the same basis as that payable under the ... present lease" find no echo in the Order in Council. Those references perhaps however reflect the then current expectation that a new lease was not far off. One can confidently assume that no-one had a 13 year wait in mind. It will be remembered that, consistently with this, the letter dated 13 March 1969 from the Secretary for Lands to the General Manager, Palais de Danse Pty Ltd, spoke of the "issue of a new lease for a term of 60 years from now."[12] If that expectation existed, however, it never came close to realisation. Even the plaintiffs now look to August 1982 as the time when the lease for which they contend could be said to commence. By then all parties had, in my opinion, long put aside the Order in Council of 15 April 1969 - 13 years before - as an event of no significance.
39 By November 1969, a mere seven months after the Order in Council, Palais de Danse Pty Ltd was "formally" applying for a lease "for 70 years over the areas currently occupied by the Palais de Danse, Mr Hall-Kenny's 'Miniature Railway' and 'Scoota Boats', Messrs Green & Thomas' 'Swirl' and 'Speedway' areas and the cottage currently occupied by the Foreshore Committee." In this letter, dated 11 November, to the Secretary of the Department, the company does not treat the Order in Council, or anything that might flow from it, as relevant, but with something better to be negotiated around it. The Order in Council is not treated as relevant at all. It is not mentioned.
40 Hereafter, the documentation of both the company and the Department reflect the same attitude. Thus, a Departmental memorandum dated 6 February 1970 discusses the company's "alternative proposal for the re-adjustment of the leasehold boundaries" without any mention of the events of April 1969 or anything that might result from them. And, by a letter dated 10 March 1970 to the Minister for Lands, the company seeks approval of its "proposed redevelopment plans", although this time the proposed new lease is of not 60 or 70 years, but of 75 years. Again, the Order in Council is left outside the parameters of the negotiations.
41 By letter dated 11 January 1971 to the Minister, Palais de Danse Pty Ltd asks "whether the Government would consider paying to us the total insurance moneys ($414,000) plus interest to date and accepting a surrender of our lease." A little more than a year later, in a letter dated 17 April 1972 to the Secretary for Lands, the company informed the Department that it was "quite agreeable to renounce all attendant rights on the Palais de Danse building if the present lease is cancelled and a new one issued for a term of 50 years."
42 The first progress certificate for the re-building of the Ballroom was issued on 10 April 1972. By 27 August 1974, a total of $570,943 had been certified as properly expended. Given the date, and the probability that the widening of Marine Parade would not be a problem, it was to be expected that the company would at that time - if it claimed rights under an agreement to lease - call for the new 60-year lease that the agreement supposedly encompassed. No such call was made. Nor was it made even when, in August 1982, the plans for Marine Parade were settled. By this time, nothing should have inhibited an approach based upon the Order in Council if, as the plaintiffs claim, it had indeed perfected a contract between the State and Palais de Danse to the grant of a new 60-year lease.
43 It seems to me that any doubt about whether leave to appeal should be granted from the decision of the Deputy President is at this point dispelled. If confirmation of this position were needed, it comes from answers to requisitions given in December 1983 by Palais de Danse Pty Ltd to Alamar Nominees Pty Ltd, the purchaser of its leasehold interest. In answer to the question: "Are there any written or oral leases or terms of the agreements affecting the said property?", the company said: "Apart from the terms of the Crown lease, not that the vendor is aware."
44 The plaintiffs place much reliance on the correspondence and other documentation that followed the 1968 fire. It demonstrates that Palais de Danse Pty Ltd was then most anxious to secure an extension of its period of occupancy of the leasehold premises. This was associated with the necessity of recouping the cost of rebuilding. Any ability to access the insurance moneys does not seem to have been taken into account as an offset to the cost, but I put that aside. I accept that the company was, for perfectly legitimate commercial reasons, concerned to press with Government its case for an extension of its time as lessee. There is nevertheless no suggestion that it was prepared to accept an extension whatever its terms. It wanted an enlargement of the boundaries of the leasehold, yet the likelihood was that the re-alignment of Marine Parade would have the opposite effect. The company would be (and was) in those circumstances looking for over-compensation elsewhere. Moreover, it gave no indication of its acceptance of the proposition that the lessor would unilaterally determine the new rent. And the indications are that it expected to surrender its then current 50-year lease, in favour of the proposed new 60-year version, in the relatively near future. The Order in Council did not protect the company's interests on any of these points. There is no basis in the evidence or elsewhere for the conclusion that the company accepted the Order in Council as supplying everything that the company was seeking, with the need for further negotiation therefore removed.
45 The Ballroom was rebuilt. That is a circumstance upon which the plaintiffs rely. They called, as a witness before the Tribunal, the former director, Mr Hyams. He had previously sworn an affidavit in which he deposed that he "would never have permitted Palais de Danse to expend the monies which it did to rebuild and redevelop the site save upon the basis that the State would grant the promised 60-year lease." When cross-examined, it was not put to him that, to the contrary, the rebuilding was undertaken because the alternative was to have the insurance moneys revert to the Crown. Yet that was the Crown's case. Mr Hyams was not through the medium of cross-examination given an opportunity to meet that case. This was a breach of the rule in Browne v Dunn.[13] His evidence, it was submitted on behalf of the plaintiffs, should in those circumstances be seen as uncontradicted.
46 Mr Hyams was an elderly witness. He exhibited, in the witness box, many of the frailties of his age. They affected the extent of his cross-examination and, at least in part, its form. Submissions about the course taken during the cross-examination, the reasons for it, and the consequences that should follow, were put to me by both sides. I do not need to analyse these in detail. I am satisfied that nothing improper was intended. Nevertheless, the purposes of the rule in Browne v Dunn were not realised.
47 The rule is designed to promote the fair trial of the proceeding. When considering the sanctions, if any, to be applied after a breach of the rule, the court must therefore seek to remedy any injustice to which the breach has given, or might give, rise. In this case, Mr Hyams was not given in cross-examination the opportunity to respond to the allegation, now relied upon by the defendant, that one governing motive behind the decision to rebuild the Ballroom was that otherwise the insurance moneys would be lost to the company.
48 I do not know what Mr Hyams' response would have been had the relevant question been asked. Since he had already told the Tribunal that the Ballroom was re-instated on the promise of a new 60-year lease, it is possible that he would simply have denied that insurance had anything to do with the decision. But he might have used his answer to strengthen that denial by giving reasons why considerations relating to the use of the insurance moneys were discounted. I accept that possibility.
49 I should also, I think, take into account other indicators of the degree to which the breach of the rule in Browne v Dunn was unfair to the plaintiffs or which might otherwise produce injustice. It was the plaintiffs' case before the Tribunal that the Ballroom was rebuilt on the faith of an agreement for a 60-year lease. Accordingly, the burden of proof on that issue lay with the plaintiffs. Palais de Danse Pty Ltd, wrote the letter dated 12 March 1971 to Arthur Robinson & Co.[14] The company then referred to the possibility that "if all the insurance money was not used in rebuilding, the remainder would be put into consolidated revenue" and expressed the view that it therefore had "no option but to spend all moneys held by the Treasury". In these circumstances, the plaintiffs can be taken to have been aware that a rationale for rebuilding, contrary to that expounded by Mr Hyams, would likely be before the Tribunal. It did not need adherence to the rule in Browne v Dunn to bring that point to light. And, the burden of proof being on the plaintiffs, it was incumbent on them, if they wished to rely on evidence which neutralised concerns about insurance proceeds as a factor in the decision to rebuild, to call that evidence. The failure to cross-examine Mr Hyams on the point cannot be seen as depriving the plaintiffs of their only opportunity to do so.
50 Even if the considerations outlined in the previous paragraph did not apply, it would not follow that Mr Hyams' evidence must be taken as uncontradicted. It is true that, if a witness is not cross-examined on a point, the cross-examining party may, depending upon the circumstances, be deemed to have accepted it. That party may, in like circumstances, be prevented from asserting that the court should not accept that point as true. On the other hand, the court cannot shut out reality, or deny the undeniable.[15] It is the fact that Palais de Danse Pty Ltd did not, after the Ballroom was rebuilt, seek to have the Crown make good any agreement for a 60-year lease. Even more to the point, it is the fact that the company did not, after the re-alignment of Marine Parade was settled, seek the same result. These facts, and the others to which I have referred above, plainly speak to a different conclusion than that about which Mr Hyams gave evidence. And the Tribunal and this Court must work with the evidence, and only the evidence, that is available and admissible.
51 It follows that Mr Hyams' evidence cannot with accuracy be said to be uncontradicted. Despite that which he put before the Tribunal, there was much evidence to support the conclusion that the Ballroom was rebuilt without the company holding any belief that it thereby secured for itself a new lease for a term of 60 years.
52 It therefore seems to me that the Deputy President was right to conclude that the Order in Council did not perfect a contract between the State and Palais de Danse to the grant of a new 60-year lease. If there was no agreement, there is not now any basis for Bradto's continued possession of the land. In my opinion, leave to appeal should therefore be refused.
[1] Plaintiffs' Submissions in support of Application for Leave to Appeal, 26 February 2007, para.3; Submissions of State of Victoria, 5 March 2007, para.9.
[2] Eiken v Housing Commission [2001] VSC 23 at [44].
[3] Watt v Thomas [1947] AC 484, at 487.
[4] Ericsson (Aust) Pty Ltd v Popovski, supra, at 265, per Brooking JA.
[5] Letter dated 13 March 1969 from the Secretary for Lands to the General Manager, Palais de Danse Pty Ltd: Court Book Vol. 12(B).
[6] Ibid.
[7] Plaintiffs' submissions in support of Application for Leave to Appeal, 26 February 2007, para.12.
[8] Seddon and Ellinghaus Cheshire & Fifoot's Law of Contract (8th Australian Edition, 2002) [3.5].
[9] Reasons for judgment of the Tribunal, 15 November 2006 at [111].
[10] Ibid.
[11] Reasons for judgment of the Tribunal, 15 November 2006 at paras [114] and [115].
[12] See para.[16] above. My emphasis.
[13] (1893) 6 R 67 (HL).
[14] See para. [31], above.
[15] Bulstrode v Trimble [1970] VicRp 104; [1970] VR 840 at 849 per Newton J.