Plaintiffs v Defendants

Plaintiffs v Defendants - [2006] VSC 14 - VSC 2006 case summary — Zoe

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INTRODUCTION

1 In each of 1989, 1990, 1991, 1992 and 1993 Seymour Softwoods Ltd ("Seymour Softwoods") promoted to the public a separate afforestation scheme (collectively "the schemes") involving a right for investors to participate in the profits arising from pine tree plantations near Tumbarumba in New South Wales ("the plantations"). Each of the schemes offered significant "up-front" tax deductions for investors. Each of the schemes was offered to the public under a registered prospectus in compliance with the companies legislation applicable at the time. The legitimacy of the schemes under taxation law and company law is not in question.

2 In respect of each of the schemes, there was a separate trust established to administer the scheme. In each case, the trustee was National Mutual Trustees Ltd.

3 Each of the schemes involved, as an essential element, the investor leasing from the second plaintiff Sintoff Pty Ltd ("Sintoff") a portion of the land on which the plantations were to be established. Sintoff was a related company of Seymour Softwoods and was, in substance, a co-promoter of the schemes. Sintoff and Seymour Softwoods had common directors and ownership and acted in concert to promote the schemes. None of the schemes would have been possible without the participation of Sintoff as owner of the plantations.

4 For reasons which will become apparent, there was more than one lease from Sintoff to each investor ("the leases"). The total duration of the leases was linked to the period required for the pine trees to reach maturity. The leases were to terminate on clearfelling of the pine trees on the land which was the subject of the leases.

5 In order to participate in a scheme, it was also necessary for an investor to enter into two contracts with Seymour Softwoods. First, a "Works and Services Contract". Under this contract, the investor was required to pay $4,600 per hectare of leased land and, in return, Seymour Softwoods agreed to establish a pine tree plantation on the leased land. The minimum investment required a lease of at least two hectares. As the works and services to be performed under the Works and Services Contracts were to be performed within 13 months, the investor gained an initial "up-front" tax deduction of $4,600 per hectare which was leased.

6 Second, each investor was required to enter into a "Management Contract" with Seymour Softwoods. These contracts provided for the on-going maintenance and insurance of the land leased by the investor and the pine trees on that land until clearfelling of the pine trees when they reached maturity.

7 Initially, all went well under the schemes. The investors paid rent under their leases and fees under the other contracts, and claimed legitimate tax deductions as a result.

8 However, Seymour Softwoods became insolvent and was unable to comply with its obligations to maintain the leased land and the plantations. As a result, the prospect of the investors receiving a return on their investment became unlikely. Some of the plantings failed altogether. There were significant problems with noxious weeds and vermin on all of the plantations. Unless considerable further money was expended, it was likely that all of the plantations would fail as commercial enterprises.

9 Against this background, the trustee, in consultation with investors, attempted to salvage the schemes by giving the investors an opportunity to participate in a revised structure, under which a new manager would be appointed to bring the plantations up to an acceptable standard and maintain them until maturity and clearfelling. If this was done, there was a prospect of the investors realising a profit on their investment. However, in order to participate, the investors needed to invest further capital in the schemes. Although a majority of the investors were initially attracted to this course, and voted in favour of it, the required minimum proportion of investors failed to contribute the further funds which were required under the salvage schemes put forward, and they failed as a result.

10 Also against this background, there was a succession of assignments of the rights of Sintoff as lessor under the leases. For present purposes, it is sufficient to state that the first plaintiff Equuscorp Pty Ltd ("Equus") is the ultimate assignee of Sintoff's rights under the leases.

11 When attempts to salvage the schemes failed due to lack of financial support from the investors, Equus sought to enforce its rights as assignee of Sintoff's rights under the leases. Equus demanded from the investors that they pay the arrears of rental due under the leases.

12 By this time, many of the investors had grouped together and were represented by one firm of solicitors. In correspondence, the solicitors for the investors denied that, in the circumstances which had occurred, the investors were liable to continue to pay rent under the leases. These assertions, together with the failure of the investors to pay rent despite demand, or to comply with other obligations under the leases, caused Equus to treat the investors as having repudiated the leases. The plantations were put up for tender in December 1997 and, in April 1998 all of the plantations were leased to the successful tenderer, Furies Capital Ltd.

13 Having re-leased the plantations, Equus commenced proceedings in this Court against the investors for unpaid rent at the time the leases were terminated in April 1998, for damages for loss of bargain and for interest due under the terms of the leases or pursuant to statute.

14 Five proceedings were issued in this Court. Each proceeding congregates its defendants according to the year of the annual prospectus under which they invested in a scheme. There are hundreds of investors who have been sued. For example, in Proceeding No 7713 of 2000 there are 244 defendants. However, as a result of pre-trial management by another judge, and agreement of the parties, only two of the five proceedings in the Court, relating to the 1989 prospectus and the 1990 prospectus, were tried before me. Further, the trial before me proceeded against only one defendant in each case.

15 In Proceeding No 7713 of 2000 the case tried was against the eighth defendant, George Antonopoulos ("the Antonopoulos proceeding"). There were separate pleadings between the plaintiffs and Mr Antonopoulos in the Antonopoulos proceeding.

16 In Proceeding No 7712 of 2000 the case was tried against the fifth defendant, Mauro Belperio ("the Belperio proceeding"). There were separate pleadings between the plaintiffs and Mr Belperio in the Belperio proceeding.

17 Although the cases against Mr Antonopoulos and Mr Belperio were selected to be tried separately, there is no order of the Court or agreement between the parties that the defendants other than Mr Antonopoulos and Mr Belperio are bound by the decisions reached in the cases against them. However, it is accepted that the decisions in the cases against Mr Antonopoulos and Mr Belperio have the capacity to have a significant bearing upon the cases against other defendants and, in particular, as to whether those cases should proceed to trial. In this sense, the Antonopoulos proceeding and the Belperio proceeding can be loosely described as test cases. However, as will appear, the scope for the result in the Belperio proceeding to influence the result in other cases may be more limited, given the particular facts of the Belperio proceeding.

THE ANTONOPOULOS PROCEEDING

18 Mr Antonopoulos invested in June 1990 under the prospectus then in force ("the 1990 prospectus"). The 1990 prospectus provided that an investor could participate in the scheme covered by that prospectus ("the 1990 scheme") by investing in a long-term project of up to 25 years or for a short-term project of between eight and 12 years. Mr Antonopoulos chose to participate in a long-term project for up to 25 years in respect of two hectares of land ("the Antonopoulos land"). Accordingly, he executed seven separate lease agreements under which he agreed to lease the Antonopoulos land from Sintoff for a combined period of 25 years (the "Antonopoulos leases").

19 The Antonopoulos leases were comprised of six leases of four years' duration and one final lease of one year's duration. This structure was adopted in an attempt to avoid the operation of the subdivision requirements of the Local Government Act 1919 (NSW) ("the Act").

20 Section 4 of the Act provides a wide definition of "subdivision" and "subdivide" for the purposes of the Act, in the following terms:

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30 There is no dispute that only two leases signed by Mr Belperio, each of four years duration, have been located and are in evidence ("the Belperio leases"). Under the Belperio leases, Mr Belperio agreed to lease two hectares of land ("the Belperio land").

31 Putting to one side the issue as to whether Mr Belperio is bound by the Belperio leases for period of eight years, or by leases or agreements for lease for a combined period of 25 years, Mr Belperio also relies upon the same defences that are raised by Mr Antonopoulos. In reply, Equus relies upon the same estoppels that it raises against Mr Antonopoulos. Accordingly, the subdivision defence, the subdivision estoppel, the uncertainty defence and the uncertainty estoppel are, with necessary modifications, in issue in the Belperio proceeding.

32 There is another factual difference between the Belperio proceeding and the Antonopoulos proceeding. Mr Belperio alleges that, whatever the duration of the Belperio leases, he has paid all of the rental due under those leases. This defence is based upon an allegation by Mr Belperio that he received a written offer from Sintoff to pay the sum of $650 per hectare leased by him in full satisfaction of all of his obligations to pay rent under the Belperio leases (the "one-off lease payment plan defence"). In reply, Equus denies that the officer of Sintoff who made the offer was authorised to do so. Further, Equus contends that, even if authorised, it is not bound by the one-off lease payment plan because it was an arrangement entered into between Sintoff as mortgagor, and Mr Belperio as lessee, without the consent of Equus as mortgagee.

FACTS

(1) The schemes

33 The schemes in issue in the proceedings involved the promotion, establishment, conduct and clearfelling of the plantations. The 1989 scheme, in which Mr Belperio invested, related to a plantation known as the "Ardsley" plantation ("the Ardsley plantation"). The 1990 scheme, in which Mr Antonopoulos invested, involved a plantation known as the "Birmaroo" plantation ("the Birmaroo plantation").

34 As I have said in the introduction, the schemes were promoted by Seymour Softwoods and Sintoff. Sintoff owned the land on which the plantations were to be established, and thereafter maintained, by Seymour Softwoods.

35 In order for the schemes to be attractive to investors, it was necessary to structure them in a way which would attract tax deductions, in particular a significant up-front tax deduction in the year of investment. In order to qualify as a primary producer and obtain the tax deductions, an investor had to be in the business of afforestation. A mere investment would not be enough.[4] Structuring the schemes in this way meant that investors were undertaking all of the attendant risks of the business of afforestation. For example:

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(1) the grower must not do or permit anything to be done on the land or bring to or keep on the land anything which may invalidate any insurance relating to the land - cl. 1(c);

(2) the grower must comply with any notices, directions or orders affecting the land - cl. 1(d);

(3) the grower must destroy and keep down all rabbits, other vermin, thistles and other noxious weeds on the land - cl. 1(f);

(4) the grower must use and manage the land in a proper and businesslike and reputable manner and not allow the land to be used for any purpose which contravenes any applicable planning scheme or permit - cl. 1(g);

(5) the grower must keep any and all fences on the land in good and substantial repair - cl. 1(h);

(6) at the expiration or sooner determination of the lease, the grower must deliver up the land to the lessor in a condition which is consistent with the due performance of the covenants of the grower contained in the lease - cl. 1(j);

(7) if the grower decides to plant the land with trees and to use and maintain the land for the purposes of afforestation, the grower has complete freedom of choice as to the conduct of that business and is not obliged to engage any, or any particular, contractor to carry out the desired works and services - cl. 3(a)(i);

(8) the grower has the sole right to determine when the land shall be planted and when the produce of the land may be realised and marketed - cl. 3(a)(ii);

(9) the lease determines when the land is clear felled in accordance with good afforestation practices or, in the case of the form of lease contained in the 1990 prospectus[8], as determined by the grower - cl. 3(a)(iii);

(10) the grower is obliged to give the owners and occupiers of any adjoining parcel of land to the land all such rights of way and access over the land as are reasonably necessary for the proper use and enjoyment of that adjoining parcel of land - cl. 3(b);

(11) the grower indemnifies the lessor against a number of possible heads of liability arising from conduct upon or referable to the land - cl. 4;

(12) the grower is entitled to erect improvements on the land, subject to certain exceptions requiring the written consent of the lessor - cl. 7;

(13) the grower is prohibited from bringing onto the land, or permitting to remain thereon, any rabbits, horses, or livestock - cl. 9;

(14) if the grower does not pay rent in accordance with the terms of the lease, if the grower is otherwise in breach of the terms and conditions of the lease or if certain specified events occur, the lessor is entitled to re-enter into and upon the land and to repossess and enjoy it and, if the lessor so elects, the lease shall thereupon be determined - cl. 10(a);

(15) if the lessor elects to determine the lease, the lessor is granted an option to purchase the "grower's trees", which trees are defined in cl. 10(a) as "the trees then growing on the land" - cl. 10(b);

(16) in the event of a breach of the lease on the part of the grower, the lessor is entitled to enter the land and do such acts and things as the lessor considers necessary or desirable to remedy or attempt to remedy the breach - cl. 10(d);

(17) the produce of the land and any profits derived from the sale thereof remain the property of the grower at all times - cl. 10(i);

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71 There were two financiers of the schemes. First, RMBL Investments Pty Ltd ("RMBL") provided finance to Seymour Softwoods and Sintoff, and took a first mortgage over the plantations to secure their indebtedness to it. RMBL is and was at all relevant times a company owned and controlled by the partners of a legal firm in Victoria, Macpherson & Kelly. Secondly, in respect of each scheme, there was a "Finance Provisions Agreement" entered into between Equus and Seymour Softwoods. Under the Finance Provisions Agreements, Equus agreed to provide finance to investors in the schemes to enable them to invest, provided that they could meet the standard lending criteria of Equus.

72 Under the terms of the Finance Provisions Agreements, Seymour Softwoods agreed that it would deposit with Equus an amount equal to 5 per cent (later 7.5 per cent) of the principal of each loan made by Equus to an investor in the schemes. Equus agreed to hold these amounts in a "Reserve Fund". Further, if at any time the amount standing to the credit of the Reserve Fund fell below the specified per centage, Seymour Softwoods agreed to pay Equus, within seven days of demand, the amount required to ensure that the Reserve Fund comprised the agreed per centage of the total of outstanding loans to investors.

73 The obligations of Seymour Softwoods to Equus under the Finance Provisions Agreements were guaranteed by Sintoff and by other corporations and persons related to Seymour Softwoods.

74 By a deed of fixed charge dated 13 October 1992, Sintoff charged to Equus all of its property, including the plantations and its rights as lessor under the leases, in order to secure its obligations as guarantor of Seymour Softwoods under the 1991 Finance Provisions Agreement. This charge was registered ("the Equus charge").

75 Further, in order to secure its obligations to Equus as guarantor of Seymour Softwoods, Sintoff mortgaged the plantations to Equus ("the Equus mortgage"). Equus lodged a caveat over the plantations to protect its interest as second mortgagee behind RMBL.

76 Sintoff granted the Equus charge and the Equus mortgage in October 1992, at a time when Seymour Softwoods was in default under its obligations to maintain the Reserve Fund at the required levels. Demand had been issued by Equus to Seymour Softwoods requiring it to restore the Reserve Fund to the required levels, and this demand had not been met. It was this default which subsequently led to Equus appointing a receiver of all of the property of Sintoff.

77 By October 1993, Sintoff had defaulted under its first mortgage obligations to RMBL. RMBL entered into possession of the plantations and commenced collecting the rental due under the leases.

78 In June 1995, Equus appointed Mr Geoffrey Kelly of the firm of Clarke + Company as the receiver of all of the property of Sintoff ("the Receiver"). The Receiver acted at all times pursuant to the directions of Equus.

79 In 1996, Equus paid to RMBL all of the monies secured by its first mortgage over the plantations. Pursuant to an order made by the Supreme Court of New South Wales in December 1996, RMBL was ordered to deliver to Equus transfers of its first mortgages over the plantations, a withdrawal of its caveat over certain of the plantations, a deed of assignment of rental whereby RMBL assigned all of its rights under the leases to Equus and all of the records of RMBL and Sintoff which were in the possession of RMBL relating to the plantations and the leases.

80 As I have said in the introduction to this judgment, there has been a succession of assignments of the rights and obligations of Sintoff as lessor under the leases, resulting in Equus being the legal assignee of the rights and obligations of Sintoff under the leases. This chain of assignments can be briefly described:

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81 Notice of the assignments was given to Mr Antonopoulos, Mr Belperio and all of the other investors. I find that there has been a legal assignment to Equus of all of the right, title and interest of Sintoff under the leases, including the Belperio lease and the Antonopoulos lease. In any event, in order to meet any possible technical defence concerning the efficacy of the assignments, Sintoff has been joined as second plaintiff to the proceeding.

(5) Mr Antonopoulos invests

82 There is no dispute about the form of the investment by Mr Antonopoulos in the 1990 scheme. He chose to invest in a long-term investment for up to 25 years. He signed the Antonopoulos leases, a Works and Services Contract and a Management Contract. He borrowed money from Equus to enable him to fund his investment in the 1990 scheme.

(6) Conduct of Mr Antonopoulos after investment

83 Under the terms of the Antonopoulos leases, Mr Antonopoulos was obliged to pay rent annually in advance by 30 June each year. Mr Antonopoulos continued to pay rent annually in advance until he made his final payment on 27 June 1996 in respect of the financial year ending 30 June 1997.[10] Mr Antonopoulos continued to make these payments notwithstanding, as appears hereafter, the failure of Seymour Softwoods to maintain the Birmaroo plantation, the dismissal of Seymour Softwoods as plantation contractor, the failure of the salvage scheme proposed by the Trustee and the winding up of the Trusts, all of which occurred by 20 October 1995.

84 Further, on 20 July 1995, Mr Antonopoulos repaid Equus all of the outstanding monies due under his loan agreement with Equus.

85 As will hereafter appear, it was not until September 1996 that, through his solicitors, Mr Antonopoulos denied any obligation to pay rent.

86 Finally, in respect of the conduct of Mr Antonopoulos after his investment, it is necessary to record that Mr Antonopoulos claimed tax deductions in respect of all of the payments made by him in respect of his investment in the 1990 scheme.

(7) Mr Belperio invests

87 As I have said, there is an issue as to the term of the investment by Mr Belperio. The issue for determination is whether Mr Belperio must be taken to have agreed to lease the Belperio land for a period of 25 years, constituted by six leases of four years' duration and one lease of one year's duration, or whether Mr Belperio is only bound by the Belperio leases, comprised of two leases which are each of four years' duration.

88 In addition to the Belperio leases, Mr Belperio signed a Works and Services Contract and a Management Contract. He paid the full amount due under the Works and Services Contract, a sum of $4,600 per hectare leased by him.

89 Mr Belperio invested in the 1989 scheme after discussing it, together with other possible investment opportunities, with his accountant Mr Moskowitz in June 1989. Both Mr Belperio and Mr Moskowitz gave oral evidence.

90 Mr Belperio was a most unsatisfactory witness. Mr Beaumont QC, who appeared with Mr Maiden on behalf of the plaintiffs in the Belperio proceeding, submitted that Mr Belperio was a combative, evasive and disingenuous witness who cannot be believed. I accept that this description is apt in respect of much of the evidence given by Mr Belperio. However, on the critical issue of whether Mr Belperio invested for a period of eight years only, there are contemporaneous documents to support Mr Belperio's version of events and, in addition, the evidence of Mr Moskowitz also supports Mr Belperio on this critical issue.

91 As to Mr Moskowitz, although I am satisfied that he was genuinely attempting to tell the truth, much of his evidence in cross-examination was constituted by his acceptance of propositions put to him as to what is likely to have occurred, given his position as an accountant with a professional responsibility to his clients. In my view, this evidence should be treated with caution. Much of it is reconstruction based on what Mr Moskowitz perceived was in accordance with his professional duties at the time. This perception was engendered and encouraged by the form and tone of the questions put in cross-examination.

92 Further and in any event, in considering what is likely to have occurred in 1989, and in respect of the one-off lease payment plan in 1993, it is in my view safer to resolve any factual disputes and inconsistencies by reference to the contemporaneous documents wherever possible. The lapse of time makes reliance upon oral recollection of events unreliable.

93 Mr Belperio met with Mr Moskowitz in June 1989. A number of investment alternatives were discussed. Following discussion with Mr Moskowitz, upon whom Mr Belperio relied, he decided to proceed with an investment in the 1989 scheme over other investment alternatives. It is clear that Mr Belperio cannot recall all that was said at this meeting. The extent of his recollection is set out in the following exchange:

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104 In the face of the contemporaneous documents, it was contended on behalf of Equus that, nevertheless, I should find that Mr Belperio was untruthful when he said that he only invested for eight years and that Mr Moskowitz was mistaken in his evidence to that effect, having confused the 1989 scheme with the 1990 scheme. In this regard a number of submissions were put. I will not deal with all of them. In the main, they all come back to the form of the 1989 prospectus, which did not contain any reference to a short-term investment, the lack of any detailed financial projections in the 1989 prospectus or elsewhere as to the return which could be expected on a short-term investment in the 1989 scheme, attacks on the credit of Mr Belperio generally and reference to subsequent conduct of Mr Belperio which indicates a belief that he was still a "grower" after the expiration of the eight year term of the Belperio leases.

105 Although there is force in some of these submissions, and I am satisfied that Mr Belperio was an untruthful witness in many respects, I find that Seymour Softwoods did offer a short-term investment option in connection with the 1989 scheme. In my view, the evidence of both Mr Belperio and Mr Moskowitz that the "Trees and Money" brochure was issued by Seymour Softwoods in connection with the 1989 scheme, the reference in the "Only 8 Years!" document to there having been a limited short-term option available under the 1989 scheme and, in particular, the content of the statement in the 1989 tax return of Mr Belperio which was prepared by Mr Moskowitz, are decisive on this issue.

106 There is a further factual issue relating to the initial investment by Mr Belperio. When the Belperio leases were presented to him for signature, he made handwritten alterations to the rental escalation clauses. These alterations were initialled by Mr Belperio and Mr Moskowitz. It appears that, after this occurred, the executed Belperio leases were returned to Seymour Softwoods and were executed by Sintoff. The evidence does not permit a finding as to whether the alterations were brought to the attention of Seymour Softwoods or Sintoff at the time they were returned for execution. However, no case of unilateral mistake was sought to be made out. In these circumstances, the submission by Mr Moskowitz, on behalf of Mr Belperio, of the Belperio leases with handwritten alterations must be seen as an offer, or counter-offer made by Mr Belperio to Sintoff. That offer or counter-offer was accepted by Sintoff executing the Belperio leases containing the handwritten alterations.

107 Finally, in respect of Mr Belperio's investment, it should be noted that he borrowed money from Equus in order to fund his participation in the 1989 scheme and that he claimed tax deductions for all payments made by him under the 1989 scheme.

(8) Conduct of Mr Belperio after investment

108 After he invested, Mr Belperio made payments of rental to Sintoff in or about June 1990, June 1991 and June 1992. Some amended invoices were issued, which had the effect of reducing the rental escalations. Nothing turns on this.

109 Notwithstanding that on 17 January 1992, Sintoff had assigned its rights under the leases to RMBL, Sintoff continued to issue invoices to Mr Belperio in 1992 and 1993. The amended invoice for rent due by 30 June 1993, in respect of the period ended 30 June 1994, is dated 12 May 1993. It was sent to Mr Belperio on 14 May 1993, under cover of a letter from Sintoff to growers offering a "one-off lease payment plan".

(9) One-off lease payment plan

110 The letter from Sintoff offering growers the opportunity to participate in the one-off lease payment plan is on Sintoff letterhead. It purports to be issued by Stephen Gilmour, General Manager of Sintoff. It has been signed on his behalf by another Sintoff employee.

111 The offer to growers to participate in the one-off lease payment plan is set out below:

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"14 May 1993

Dear Grower,

Please find enclosed your lease accounts for the financial year 1992-93. If you accept this offer and acknowledgment of the debt you will be entitled to a full tax deduction. Remember, this must be paid prior to 30 June 1993 to qualify for the full tax deduction.

Sintoff Pty. Ltd., the owners of the land you lease to grow the plantation, have offered for the first time a 'One-Off Lease Payments Plan'. This should not be confused with a 'pay the lease in advance plan which of course would not be fully tax deductible this year.

A 'One-Off Lease Payments Plan' means there will be no further lease payments required for the life of the plantation, until clear felling.

At present lease payments vary, depending on the contract life, from $150.00/Ha - $194.00/Ha, per annum. If we ignore the C.P.I. index and inflation, and multiply $150.00 by eight years, you would pay a minimum of $1200.00/Ha.

The 'one-off lease payment plan' has a payout figure of $650.00/Ha, including this years lease payment - fully deductible this year so in effect if you are paying 48 cents tax in the dollar, it is really costing approximately $312.00.

The full amount of $650.00/Ha includes this years lease cost, so assuming you owe $150.00 and you accept this offer - for an additional cost of $500.00/Ha now, you stand to save at lease [sic] $550.00 in lease payment over the life of the plantation, plus you [sic] tax break.

You will agree this is not only a substantial cost saving of many hundreds of dollars, but is a welcome tax deduction this financial year.

Should you agree to go ahead and finalise the lease under this plan, your rights as a tennant [sic] will not alter. The only change will be your annual commitment will be zero.

By completing the attached finance application form, and forwarding it with your cheque for $54.17/Ha payable to Berrema Finance being the first months payment, leaving a further 11 monthly payments to conclude the agreement. Your $650.00/Ha is now 100% fully tax deductible.

If you have any questions, please telephone (03) 894 2667, but certainly act now. There is no obligation to agree to this 'One-Off Lease Payments Plan'. However it should be seen as an easy way to vary your commitment substantially, regarding your cash flow, a larger than usual tax deduction and a saving of hundreds of dollars over the next few years.

* Take a tax break

* Save yourself $$$

* This is a limited offer

* Demand will outstrip available finance

* Act now!!

Please complete the attached finance application form for your interest free loan, enclose your first months payment (payable to Berrema Finance), along with completed periodical payments authority to -

Berrema Finance Pty Ltd

PO Box 52

Nunawading Vic 3131

Yours faithfully

Sintoff Pty Ltd

[per (signature of employee)]

Stephen B Gilmour

General Manager

------------------

FINANCE APPLICATION

'ONE-OFF LEASE PAYMENTS PLAN'

Loan Amount required $........... ($650.00/Ha).

To be repayed in 12 equal monthly instalments of $54.17/Ha.

(First months payment $................. enclosed.)

I understand that no interest or fees will be charged and no security will be required to obtain this automatic loan to pay the lease.

The amount of the loan will be fully tax deductable this financial year.

Growers Name ...............................................

(Please Print)

Signed ..............................................................

Date ..................................................................

Return completed documents to -

Berrema Finance Pty Ltd

PO Box 52

Nunawading 3131"

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112 Having regard to the assignment to RMBL of the rental due under the leases, the offer of the one-off lease payment plan by Sintoff was clearly improper. At the time of the offer, there were four directors of Sintoff - Carl Smith, Alan Lawry, Stephen Gilmour and his wife Colleen Gilmour. Mr Lawry gave evidence that he and Carl Smith expressly disapproved of Mr Gilmour's plan to offer the one-off lease payment plan. Mr Lawry said that he was so against the offer that he resigned as a director of Sintoff, so as to dissociate himself from the offer. Whether or not this conduct was in accordance with Mr Lawry's duties as a director of Sintoff is not in issue in this proceeding.

113 A question arises as to whether it was only possible to accept the one-off lease payment plan offer by borrowing the money from Berrema Finance, or whether the offer could be accepted by payment in full of the $650 per hectare. In my view, giving the offer a commercially sensible interpretation, it is clear that Sintoff was offering to accept $650 per hectare in full satisfaction of all of a grower's obligations to pay rent and, in addition, was informing growers of an option to fund such a one-off payment by interest free finance from Berrema Finance.

114 Further questions arise as to the authority of Mr Gilmour to make the offer and as to whether, in the absence of such authority, Mr Belperio was nevertheless entitled to assume in his dealings with Sintoff that Mr Gilmour had such authority. In my view, it is obvious that Mr Gilmour had no actual authority to make the offer. This is established by the evidence of Mr Lawry combined with the fact that Sintoff had, at the time, no capacity to vary the terms of any of the leases. It had assigned all of its rights to receive rental to RMBL and, in addition, had expressly agreed with RMBL that it would not vary any of the leases, including Mr Belperio's lease, without RMBL's prior written consent.[11] I will consider whether Mr Belperio was entitled to assume that Mr Gilmour had authority later in these reasons.

(10) Mr Belperio and the one-off lease payment plan

115 Mr Belperio received the offer to participate in the one-off lease payment plan together with his amended invoice for rental due by 30 June 1993 in respect of the year ended 30 June 1994. He decided to accept it. There is no issue that he paid out of his own monies, rather than borrowing from Berrema Finance as contemplated in the offer, the sum of $650 per hectare leased by him under the Belperio leases, a total of $1,300.

116 Mr Belperio's evidence about his acceptance of and payment pursuant to the one-off lease payment plan was contained in his witness statement, as follows:

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120 I do not accept this evidence of Mr Belperio. It is consistent with much of Mr Belperio's evidence, in which he obviously reconstructed, or told untruths, in order to bolster his case. The manner in which Mr Belperio gave evidence concerning this conversation was highly unsatisfactory. He said "I think" this and that. When asked to recall the conversation, he replied "Well, I can't. It's impossible for me to recite a conversation made in 1993." When asked "How did the conversation go?" he replied "Look, I can't recall."

121 If I am wrong, and the conversation between Mr Belperio and the receptionist was as described by Mr Belperio, the only explanation for the issue of the authority of Mr Gilmour being raised with the receptionist is that Mr Belperio thought that the offer was "too good to be true". That would be consistent with Mr Belperio believing he was under a 25 year lease obligation. However, as I have found, Mr Belperio was under an eight year lease obligation only, and this must have been apparent to him at the time. Based on an eight year lease obligation, the one-off lease payment plan was only marginally beneficial to Mr Belperio. In this circumstance, there was no reason for him to have a discussion with the receptionist about the authority of Mr Gilmour to make the offer, or as to whether or not the offer was "a good offer".

(11) Seymour Softwoods fails to maintain the plantations

122 As I have said, initially all went well under the schemes. The plantations were established and Seymour Softwoods commenced maintaining them. However, by late 1993, things had gone awry. Seymour Softwoods had run out of working capital. It ceased maintaining the plantations. It defaulted in its obligations to RMBL, as did Sintoff.

123 On 11 October 1993, RMBL entered into possession of the plantations as mortgagee in possession. At this time, RMBL was both mortgagee in possession and the assignee of the rights of Sintoff under the leases.

124 Macpherson & Kelly wrote to all growers on 5 November 1993 and informed them of the situation. Mr Antonopoulos and Mr Belperio received this letter. On behalf of RMBL, Macpherson & Kelly informed the growers of its view of their obligations, in the following way:

[109]

128 Based on the statements made by Mr Stenning at the growers meeting on 10 November 1993, it was submitted on behalf of Mr Belperio that RMBL ratified any contract arising from acceptance of the offer by the statements of Mr Stenning at the meeting.

129 At the November 1993 meeting, a "growers committee" was formed. It is apparent that this committee consulted with the Trustee and RMBL as to what could be done to save the plantations and the Trusts. Further, it appears, that some basic maintenance works were done with respect to the plantations whilst alternatives were being considered.

(12) Salvage schemes fail

130 On 21 December 1994, the Trustee dismissed Seymour Softwoods as the manager of the plantations.

131 On 8 February 1995, the Trustee wrote to all growers, including Mr Antonopoulos and Mr Belperio, and informed them of the dismissal of Seymour Softwoods as manager, effective on 21 January 1995, and of the work which had been done over the past year with the growers committee in considering various possible restructuring options for the Trusts, so as to enable the plantations to be brought to profitability. Growers were notified that a meeting would be called in the near future and that an Information Memorandum had been drafted and would be dispatched in the near future.

132 As events transpired, the formulation of the proposals to put to a growers' meeting took longer than expected. As the Trust Deed provided that the Trusts would terminate 60 days after dismissal of Seymour Softwoods as manager, unless a replacement manager had been found, an application was made to this Court to extend the 60 day period. On 17 March 1995, this Court extended the time to find a replacement manager until 19 May 1995. This avoided an automatic winding-up of the Trusts at this time as specified in the Trust Deeds. On 21 April 1995 the Trustee provided growers with a package of documents relating to a growers' meeting convened for 18 May 1995.

133 At the meeting held on 18 May 1995, the growers resolved to modify the Trust Deeds applicable to their investment and to appoint RCA Management Ltd ("RCA") as the contractor under a new management agreement ("RCA Management Agreement").

134 The terms of the RCA Management Agreement required, for the agreement to come into effect, that growers with leases totalling 60 per cent in aggregate of the hectares attributable to a Trust must sign the RCA Management Agreement and pay the first annual maintenance levy within 60 days of receiving an invoice. Both Mr Antonopoulos and Mr Belperio signed the RCA Management Agreement relevant to the Trust applicable to their investment and paid the first annual maintenance levy within the 60 day period. However, a sufficient number of growers did not take this course and the 60 per cent requirement was not met in respect of any of the Trusts. Accordingly, the RCA proposal failed. As a result, the Trustee returned the maintenance levies to investors who had supported the RCA proposal, including Mr Antonopoulos and Mr Belperio. Further, the Trustee wrote to growers on 31 August 1995, advising of its intention to seek orders from this Court winding up the Trusts. The growers were advised:

[113]

137 By letter dated 4 September 1996 from Mills Oakley, solicitors representing a number of growers including Mr Antonopoulos and Mr Belperio, to Macpherson & Kelly, Mills Oakley advised Macpherson & Kelly that its clients would not pay the rental demanded and, further, that any action to recover outstanding rental would be met with substantial counter-claims against RMBL, the Trustee and Equus. The letter gave reasons why, in the view of Mills Oakley, its clients were not liable for the rental monies claimed by RMBL. These reasons included the fact that the leases did not sufficiently identify the leased land. There was no reference to the subdivision defence.

138 Mr Antonopoulos made no further payments of rental. Nor did Mr Belperio. Mr Belperio had a further defence to a claim for rental. He claimed to have been relieved of any liability to pay rent upon his acceptance of the one-off lease payment plan.

(16) Equus re-leases the plantations

139 Equus did not consider that a sale of the plantations by RMBL, in order to recover the debt to RMBL, was in its interests as second mortgagee of the plantations. Accordingly, Equus took steps to pay-out the debt owed to RMBL and to take a transfer of its mortgages. This occurred on 18 December 1996. At the same time, Equus took an assignment from RMBL of its rights (as assignee from Sintoff) to receive the rental due under the leases.

140 On 10 July 1997, Equus assigned its interest in the leases and rental payments back to Sintoff.

141 On 11 July 1997, the receiver of Sintoff wrote to all growers, including Mr Antonopoulos and Mr Belperio, and advised them that Equus had acquired the RMBL mortgages and of the assignment by Equus to Sintoff of the right to receive rent under the leases. The receiver enclosed invoices to growers for rentals due for the year ending 30 June 1998, together with any arrears of rental.

142 The receiver's letter of 11 July 1997 also sought expressions of interest from growers as to whether they were interested in participating in a proposal prepared by Equus to rehabilitate the plantations and maintain them until maturity so that their investment could be salvaged.

143 This proposal by Equus did not attract any substantial interest from growers. Furthermore, nearly all of the growers were in default of their rental obligations in respect of the year ended 30 June 1998. Accordingly, Equus decided to treat the growers as having repudiated the leases and to put the plantations up for lease.

144 In December 1997, the Receiver issued tender documents for the lease of the plantations ("the Sintoff tender"). The Sintoff tender was to close on 11 February 1998, and the time for acceptance of tenders was 25 February 1998. The tender documents expressly left open the possibility that the Receiver might reach agreement with one or more growers, in which event the tender would not apply to the land leased by those growers.

145 By letter dated 27 December 1997 from Equus to Mills Oakley, solicitors for a number of the growers, including Mr Antonopoulos and Mr Belperio, Equus informed Mills Oakley and its clients of the Sintoff tender. Copies of all of the tender documents, and of the advertisements issued in respect of them, were enclosed. The letter stated:

[115]

146 None of the growers entered into arrangements with the Receiver or Equus prior to the expiration of the tender period. As a result, the Receiver accepted the highest tender from Furies Capital Ltd, a Hong Kong company. The amount payable by Furies Capital Ltd was calculated by reference to its offer in respect of each two hectare allotment contained in the plantations. In this respect, the offer was to pay a total lease amount of $1 in respect of unproductive allotments and $427.38 in respect of productive allotments.

147 By re-leasing the plantations, the Receiver elected to treat the conduct of the growers in denying any obligation to continue to make lease payments, and in failing to pay rental, as a repudiation which it accepted. As a result, Equus (as assignee of Sintoff's rights under the leases) claims arrears of rental due until the re-leasing of the plantations on 2 April 1998 and damages for loss of bargain.

148 It appears that Equus sought and obtained from the Registrar-General of New South Wales on 4 April 2000 an order of foreclosure over all of the land which was the subject of the leases. Presumably, this order was sought by Equus in its capacity as chargee of the assets of Sintoff, second mortgagee and assignee of RMBL's rights as first mortgagee. In his defence, Mr Belperio alleges that this order for foreclosure had the effect of releasing all debts due to Equus by Sintoff. As appears hereafter, it is unnecessary for me to consider the effect of any order for foreclosure.

(17) Identification of land issues

149 In addition to the above factual issues, I must decide as a matter of fact and law whether the leases to Mr Antonopoulos and Mr Belperio contain a sufficient description of the boundaries of the Antonopoulos land and the Belperio land. To the extent that factual issues are involved, they are considered in relation to the uncertainty defence, to which I now turn.

THE UNCERTAINTY DEFENCE

(1) The Antonopoulos land

150 Schedule 1 to each of the Antonopoulos leases describes the Antonopoulos land in the following terms:

[122]

162 There is attached to the notice a description of the title particulars of the Birmaroo plantation and a compartment map of the Birmaroo plantation on which there appears the name "George Antonopoulos" in handwriting and Lot 64 has been coloured green ("the amended Antonopoulos plan").

163 On the original Antonopoulos plan there appears the handwritten notation "Reallocated #64", a handwritten crossing out of the green colouring of Lot 304 and Lot 64 has been coloured green. However, there have obviously been other changes from the original to the amended Antonopoulos plan. In particular, the location and dimensions of Lot 64 on the original plan is not coincident with Lot 64 on the amended Antonopoulos plan, although it is in the same general area.

164 In truth, there was no "re-allocation" of the land leased to Mr Antonopoulos under the Antonopoulos leases. More accurately, Mr Antonopoulos was informed that there had been a reconfiguration of the Birmaroo plantation and, as a result, the location and boundaries of his and other allotments had been altered. As explained in the notice, and in oral evidence by Mr Lawry, who was previously a director of Seymour Softwoods, and Mr Grant, a surveyor involved in the mapping of the plantations at the time, it was necessary to reconfigure the allotments in the Birmaroo plantation because, after the land was cleared, its physical features and condition became more apparent and exposed areas that could not be planted such as creek beds, ridges, steep hills or other areas of scenic beauty which had to be protected under local laws. These matters were revealed in the course of the development work performed under the Works and Services Contract.

165 The alteration to the description of the Antonopoulos land was accepted by Mr Antonopoulos without comment or action. I have no doubt that this was because of the pooling arrangements under the Trust Deed. It appears that he received the notice from Sintoff, filed it away and continued to pay rent under the Antonopoulos leases until things went awry in later years. In particular, when the invoices for annual rental were received by Mr Antonopoulos, and referred specifically to Lot 64, he made no comment and took no action other than to pay the rent demanded.

166 I find that Mr Antonopoulos, by his conduct, agreed to the alteration of the description of the Antonopoulos land. The Antonopoulos leases, if valid and binding at the time, were varied as a result. Whether or not the Antonopoulos leases were valid and binding, and whether or not the amended Antonopoulos plan describes the Antonopoulos land with sufficient certainty, are matters which I will consider hereafter.

167 The amended Antonopoulos plan appears on the reverse of a document setting out the title particulars of the Birmaroo plantation. It is in the same form as Schedule 2 to the Antonopoulos leases, as described above, except that there is no heading "SCHEDULE 2".

168 Annexure 3 to this judgment is a copy of the amended Antonopoulos plan.

169 The amended Antonopoulos plan has "George Antonopoulos" written in handwriting across the top. There is a typed annotation at the side of the amended Antonopoulos plan describing it as:

[128]

178 The Belperio plan, as with the original Antonopoulos plan, bears the logo of Land Management Surveys Pty Ltd. There is an arrow depicting north and the scale is stated to be "SCALE: 1:10,000".

179 The Belperio plan is headed "JOINS SHEET 1". Sheet 1 is not annexed.

180 The Belperio plan is divided into a number of lots, most of which are rectangular. However, there are many uneven lots. There is reference to some title particulars and some areas are described as "UNCLEARED & PROTECTED AREAS".

181 Lot 257 is an irregularly shaped lot.

(3) Are the leases uncertain?

182 The defendants allege that the Antonopoulos leases and the Belperio leases are void for uncertainty on the basis that the descriptions of the land do not enable the boundaries of the land demised under those leases to be clearly identified. The defendants adduced expert evidence to support this submission. Mr Christopher Borough, a forester, furnished a report to the Court and was cross-examined. In summary, Mr Borough's evidence was that the boundaries of the land demised under the Antonopoulos leases and the Belperio leases were not able to be ascertained with certainty from the plans annexed to the leases or, in the case of the Antonopoulos leases, the amended Antonopoulos plans.

183 Mr Borough explained that this was because the plans included no bearings at any specific reference point (for example the corner of either plantation), contained no measurements of either individual lots or the whole of one or more sides of either plantation, and contained an inaccurate scale. Mr Borough's evidence was that the scale was not 1:10,000 as indicated but in fact had been adjusted when the plan was reduced and photocopied. In the case of the amended Antonopoulos plan there was no scale provided.

184 With the assistance of the plans and extrinsic materials,[12] Mr Borough estimated that he was able to locate the boundaries of the leased lots to within plus or minus 100m.

185 The plaintiffs deny that the leases are uncertain in their description of the land. The plaintiff's submit that the land is capable of identification from the description in the leases by a professional surveyor, and that this is sufficient for me to find that the leases are not uncertain at law.

186 The plaintiffs relied on the expert evidence of Mr Alan Grant, a licensed surveyor. Mr Grant submitted evidence on affidavit and was cross-examined. Mr Grant prepared the original A1 sized plans, reduced A4 copies of which were annexed to the Antonopoulos leases and the Belperio leases.

187 Mr Grant was engaged by Seymour Softwoods to prepare a proposed lease allotment plan of two hectare lots for both plantations so that leases could be made with investors in the schemes. It was envisaged at the time of preparation of each of the plans that revised plans would be prepared after the plantations were cleared. Revised plans are necessary because the clearing of the land reveals more detail about the terrain and allows more precise identification of the areas that cannot be planted because, for example, the terrain is too steep to support the pine trees.

188 Much of Mr Grant's evidence was directed to establishing that the plans annexed to the Belperio leases and the Antonopoulos leases were based on sound surveying work and were therefore accurate in the sense that they depicted a "carve up" of the plantations that was actually physically possible. Mr Grant's evidence in this regard was that the plans were based on measurements of the boundaries of the plantations, extracted from the Certificates of Title, and measurements of the area of land available for planting in each plantation. Mr Grant's evidence was that he used a computer program to graphically "carve up" the plantations into "possible" two hectare lots, based on the boundary measurements and area calculations.

189 However, Mr Grant was clear in his evidence that the plans annexed to the leases were not sufficiently accurate as would be required if a plan of subdivision were to be submitted for approval. Mr Grant said that it was impractical to peg individual lots prior to clearing as the pegs are ripped out during clearing. Mr Grant described the plans prepared by him as a precursor to more accurate plans that would be drafted following the re-survey after clearing.

190 Nevertheless, Mr Grant's evidence was that a professional surveyor could use the plans annexed to the Antonopoulos leases and the Belperio leases as a starting point and, with the assistance of further materials and further calculations and assumptions, could locate and peg the boundaries of the Antonopoulos land and the Belperio land "pretty accurately". The technique proposed by Mr Grant was to find an identifiable starting point, such as the corner of the plantation or an intersection of roads, and then locate the Antonopoulos and the Belperio land by measuring along the boundaries of the regularly shaped lots between the starting point and the land in question. This would require a navigation of the plans for the whole plantation by means of a zigzag measurement of regularly shaped lots, so as to ascertain the location of one corner of the land in question.

191 In his witness statement in the Antonopoulos proceeding, Mr Grant himself commented that such a process of navigation:

[132]

194 Mr Grant's evidence was that the original measurements and calculations from which the graphical computer generated plans were derived had been lost or destroyed. However, he said that a surveyor could ascertain those measurements from the other material listed above and re-do the calculations. This process would involve making assumptions, for example, where a portion of land that was unable to be cleared because a steep gradient began and ended. While these assumptions would not be exactly the same as the original assumptions made by Mr Grant in formulating the lease plans, Mr Grant's evidence was that, following sound surveying practices, the assumptions would be sufficiently similar to allow an accurate identification of the particular lots in question.

195 Mr Grant conceded that the defendants or another surveyor could not, solely by reference to the plans annexed to the Antonopoulos leases and the Belperio leases, locate the lots demised under those leases.

196 The amended Antonopoulos plan was derived from a plan produced by Mr Malcolm Gray, a surveyor. Mr Gray gave expert evidence on affidavit which was relied on by the plaintiffs. He was not cross-examined. Mr Gray was engaged by Seymour Softwoods to produce plans of the Ardsley and Birmaroo plantations in the early 1990s showing two hectare lots within those plantations ("the Gray plans").

197 The Gray plans were produced subsequent to the Grant plans. Mr Gray was given the Grant plans by Seymour Softwoods to inform his work. The amended Antonopoulos plan appeared to Mr Gray to be a copy of his plan of the Birmaroo plantation but reduced in size from A1 to A4. As I have said, the amended Antonopoulos plan does not include the scale, or the compass arrow indicating north, that appears on the original.

198 Mr Grant's evidence was that it would be possible for a surveyor to identify the Antonopoulos land depicted in the amended Antonopoulos plan (Lot 64), by following the same method as he described to locate the Antonopoulos land and the Belperio land. Mr Grant's evidence was that it would be more difficult to locate Lot 64 on the amended Antonopoulos plan, because that lot adjoined an undefined area of unknown dimensions that was not available for planting. However, he maintained that it could be done.

199 Again, Mr Grant conceded that it was not possible for Mr Antonopoulos or a surveyor engaged by him to identify Lot 64 by reference solely to the amended Antonopoulos plan.

200 I am satisfied as a matter of fact that it was not possible for either of Mr Antonopoulos or Mr Belperio, or a surveyor or other expert engaged by them, to locate the two hectare lots demised to each of them by reference only to the descriptions of the land contained in the plans annexed to the Antonopoulos leases and the Belperio leases. This situation did not alter with the substitution of the amended Antonopoulos plan.

201 I turn now to consider whether this factual finding renders the leases uncertain at law.

202 A contract will not be binding and enforceable if one of its essential terms has not been agreed upon. In Thorby v Goldberg[13] Menzies J, in considering arguments that the agreement in question was void for incompleteness or uncertainty, adopted a statement in the dissenting judgment appealed from as summarising the relevant principles:

[134]

203 It was accepted by counsel for all parties that the leases in this case are subject to this general principle. Further, it was accepted that it was an essential term of any lease that the demised land be described with sufficient certainty in the lease.

204 In Goldsworthy Mining Ltd v Federal Commissioner of Taxation[14] Mason J (as he then was) stated that the requirement for certainty in the description of property demised under a lease is satisfied, "if the description is one which enables the boundaries of the property to be ascertained or identified." That case involved a lease over a portion of sea bed for the purposes of dredging. The description of the property in the lease was in words to the effect that the lease was over the surface of the sea bed as it existed at the time of the lease, but not extending beyond a specified depth. The lease otherwise provided that the surface of the sea bed leased would fluctuate over time in consequence of the plaintiff's dredging.

205 Mason J held that the description of the land demised by reference to the surface of the sea bed as it existed from time to time was one which made the property "capable of ascertainment" and that this was sufficiently certain. The fact that the boundary would or may have moved was "not inconsistent with the requirement of certainty", so long as the boundary remained, at all times, capable of ascertainment by reference to the description in the lease[15].

206 The plaintiffs submit that this case is authority for the proposition that a description of land in a lease is sufficiently certain so long as the land is capable of ascertainment or identification. The plaintiffs rely on the evidence of Mr Grant to establish that the land leased to the defendants is capable of ascertainment or identification. I do not accept the plaintiffs' submissions in this regard. The requirement described by Mason J in Goldsworthy is clearly that the land demised must be capable of ascertainment or identification by reference to the description of the land in the lease. It is not sufficient that the land in question is capable of ascertainment by a surveyor or other expert by reference to material extrinsic to the lease and further surveying work. In this case the descriptions of the land leased to the defendants did not enable the boundaries of the lots demised under those leases to be ascertained or identified. It follows that the descriptions of the land demised under the leases were uncertain.

207 The plaintiffs contend that, where there is uncertainty or ambiguity in the description of land in a lease, extrinsic material can be relied upon for the purpose of giving certainty to that description. In addition to the extrinsic material that Mr Grant referred to, which I have described above, the plaintiffs contend that the Court should have regard to the Gray plans for both the Birmaroo and Ardsley plantations. Both Mr Grant and Mr Gray gave evidence that it would be simple to identify Lot 64 in the Birmaroo plantation and Lot 257 in the Ardsley plantation by reference to the Gray plans, provided that the coordinates for a starting point were obtained from the relevant Certificates of Title.

208 Mr Gray's plans for the Birmaroo and Ardsley plantations were drawn up after the Antonopoulos and Belperio leases were executed. Mr Gray appears to have been hired by Seymour Softwoods to re-survey the plantations after the land was cleared in order to produce more accurate plans dividing the plantations into two hectare lots. To assist with this task, Mr Gray was provided with the original plans produced by Mr Grant prior to the clearing of the land. Mr Gray said that his plans were still subject to a final survey which would have been carried out if Seymour Softwoods intended to lodge a plan of subdivision for approval. This final survey would have led to a plan being produced that showed the survey data for the corners of each lot in the plantations, and possibly those corners would have been pegged.

209 The amended Antonopoulos plan was derived from Mr Gray's plan of the Birmaroo plantation. It is important to note that at no stage did Sintoff or its assignees ever provide copies of the Gray plans to either of the defendants.

210 The defendants agree with the proposition that, to a limited extent, extrinsic evidence is admissible to establish the subject matter of a contract if the subject matter is uncertain from the description in the contract. However, the defendants contend that the only extrinsic evidence to which the court may have regard is that which establishes the common knowledge of the parties at the time of the contract.

211 The plaintiffs relied on Akot Pty Ltd v Rathmines Investments Pty Ltd[16]. It was submitted that this case stands for the proposition that extrinsic evidence is admissible to give certainty to a description of land in a contract of sale. In that case, the land sold was described as unit 115 on level 15 of a particular block of apartments in accordance with an annexed plan. The annexed plan showed five units on level 15 and did not make clear which one was unit 115. The purchaser sought to have the contract declared void for uncertainty. There was affidavit evidence of the real estate agent of a meeting with the purchaser in which the purchaser agreed to purchase two units "off the plan" by reference to the location of those units as depicted on a brochure. The unrefuted evidence was that this was the only such brochure in existence at the time. This evidence established that, at the time of the contract, the purchaser knew which unit was number 115. This evidence was held to be admissible to give certainty to the description of the property.

212 In Akot, Macpherson J began with the starting point that the parol evidence rule provides that evidence extrinsic to a contract is not normally admissible to add to, subtract from, vary, or contradict the express terms of a contract which is apparently entire and complete.[17] However, Macpherson J noted an established exception by which extrinsic evidence is admissible to identify the subject matter of a written instrument.[18]

213 In Prenn v Simmonds[19] Lord Wilberforce described this exception to the parol evidence rule in the following terms:

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215 In Codelfa Construction Pty Ltd v State Rail Authority[23], Mason J (as he then was) considered the authorities on the exception to the parol evidence rule in the context of implied terms. Mason J noted that, generally speaking, facts existing at the time a contract was made will not be admissible unless they were known to both parties. However, if certain facts were notorious, knowledge of them will be presumed.[24]

216 After considering the authorities establishing this exception to the parol evidence rule, Macpherson J in Akot concluded that this exception may in fact be consistent with the parol evidence rule because it is clear that the only evidence which is admissible under the exception is evidence which establishes the common knowledge of the parties at the time of the contract.[25] From this evidence, the Court can ascertain what the parties objectively intended the subject matter of the contract to be, notwithstanding the uncertainty or ambiguity in the descriptive term used by the parties in the contract.

217 This case does not fit within this recognised exception to the parol evidence rule. It is not the case that the defendants negotiated with Sintoff by reference to plans that enabled the boundaries of the relevant lots to be identified, or that the defendants visited the plantations and examined the pegged boundaries of their respective lots before signing the leases. The leases do not incorporate by reference the more accurate plans, which were held unilaterally by Sintoff and its assignees, to give certainty to the descriptions of the land leased under the Antonopoulos and Belperio leases. The extrinsic evidence relied on by the plaintiff falls foul of the parol evidence rule because it seeks to add to the leases to give certainty where there is none, rather than establishing the knowledge and intention of the parties at the time of the contract.

218 The plaintiffs contend in the alternative that, notwithstanding that I might find that the descriptions of the land were uncertain, I should refrain from finding the leases void for uncertainty. It was submitted on behalf of the plaintiffs that, in view of the pooled nature of the project, the identification of each growers individual lot did not matter, either as a matter of fact or law. As I have said, under the pooling provisions of the Trust Deeds each grower was entitled to a share in the pooled profits of the plantation by reference to a nominal two hectare allotment.

219 As I have described earlier in these reasons, the need for a lease over an identifiable parcel of land was for tax purposes to enable the growers to obtain tax deductions on the basis that they were primary producers carrying on the business of afforestation. It was submitted on behalf of the plaintiffs that the overall structure and purpose of the pine plantation scheme pointed to the fact that the land demised under the Antonopoulos and the Belperio leases was described with "sufficient certainty for the purposes of the parties' bargain".

220 Counsel for the plaintiffs also submitted that a court should be reluctant to set aside a contract which the parties have already performed. It was submitted that the fact that the leases were performed by the defendants indicates that the leases were capable of performance in their existing form.

221 I reject these submissions. The leases imposed onerous obligations on Mr Antonopoulos and Mr Belperio in respect of "the land" as described in the Antonopoulos and Belperio leases. I have set out these obligations in full earlier in this judgment, and noted that the plaintiffs rely upon alleged breaches of them, which allegedly took place whilst the pooling arrangements under the schemes were still in force.

222 In my view, Mr Antonopoulos and Mr Belperio were prevented from discharging these obligations by their inability to ascertain or identify the boundaries of their land with any certainty.

223 I accept that for practical purposes, while the pooling provisions under the schemes were operating, neither Sintoff, Seymour Softwoods nor the defendants were concerned about the defendants' ability to identify the boundaries of their respective individual lots in the plantations. However, given the obligations in relation to the land imposed under the Antonopoulos and Belperio leases, the precise description of the land in those leases was always relevant to the parties and formed part of their bargain. I find that the Antonopoulos leases and the Belperio leases (as originally executed) were void for uncertainty.

224 Accordingly, the provision of the amended Antonopoulos plan, and the acceptance of that amendment by Mr Antonopoulos, cannot give rise to a variation to the Antonopoulos leases. They were void. In any event, the amended Antonopoulos plan did not sufficiently identify the replacement lot (Lot 64) which was assigned to Mr Antonopoulos, for the reasons explained above.

225 Before leaving the subject of uncertainty of the Antonopoulos leases and the Belperio leases, I note that it may well have been commercially unrealistic for Sintoff to prepare plans which identified the relevant land with sufficient certainty. No doubt, it was for this reason that a decision was made by Seymour Softwoods and Sintoff that no application would be made to subdivide the plantations which were the subject of the schemes. The consequence is that Sintoff took the risk that the leases would be void for uncertainty.

THE UNCERTAINTY ESTOPPEL

226 It was submitted on behalf of Equus that each of Mr Antonopoulos and Mr Belperio was estopped from denying that his leases identified the land leased by him with sufficient certainty for the purposes of his bargain with Sintoff. In the pleadings, it is alleged that this estoppel arises because there was, in the circumstances, a mutual assumption between the parties to each of the leases that "the leases would be valid or enforceable".

227 The pleaded facts upon which the plaintiffs rely to establish the assumption are not in dispute. They may be summarised as follows:

[142]

229 It was submitted on behalf of Equus that neither Sintoff as lessor, nor Mr Antonopoulos or Mr Belperio as lessee, was concerned about precise identification of the boundaries to the land which was leased. This was because of the pooling provisions of the Trust applicable to the scheme in which each of them participated. Based on these pooling provisions, neither Mr Antonopoulos nor Mr Belperio was concerned about the precise identification of the boundaries of the land leased to him. As a result, each of them participated in the scheme in which he invested by paying rent and claiming tax deductions. It was submitted that this conduct demonstrated that the identification of the precise boundaries of the land which was leased to each of Mr Antonopoulos and Mr Belperio "did not matter" to him.

230 On the other hand, it was submitted on behalf of Equus that, when the scheme collapsed and the pooling provisions ceased to apply, each of Mr Antonopoulos and Mr Belperio, as the proprietor of an independent business on the land leased by him, had "complete freedom to do what he liked on his land" either himself or by hiring a contractor of his choice to conduct the business and comply with the various terms of his lease.

231 The inconsistency of these submissions on behalf of Equus is manifest. On the one hand, based upon the pooling provisions, it is submitted that the precise identification of the leased land did not matter. On the other hand, when the schemes collapsed and the pooling provisions ceased to have effect, it was submitted that each of Mr Antonopoulos and Mr Belperio had an interest as lessee in an identifiable area of land upon which he could conduct an independent business subject to the terms of the lease. As I have said, the terms of the leases imposed onerous obligations upon Mr Antonopoulos and Mr Belperio in respect of "the land" leased by him.

232 I am not satisfied that the facts relied upon by Equus to establish the estoppel, or indeed the assumption relied upon, are capable of establishing the uncertainty estoppel which is contended for. I do not accept that there was a common assumption shared by Mr Antonopoulos and Sintoff, or Mr Belperio and Sintoff, to the effect that the leases between them would be enforceable even if the leased land was not identified in the leases with sufficient certainty to enable it to be located. The mere existence of the pooling provisions in the applicable Trust Deeds does not establish such an assumption. This is especially so in circumstances where the Trust Deeds make provision for the termination of the Trust and the consequent cessation of the pooling provisions. Furthermore, any such assumption would be directly inconsistent with the detailed provisions of the leases which impose obligations on Mr Antonopoulos and Mr Belperio by reference to "the land". In order to comply with or enforce those obligations, it is necessary to know with certainty where the land is.

233 It may be that an attempt by Mr Antonopoulos or Mr Belperio to resile from his leases at a time when the schemes were operating as intended, including the pooling arrangements, could have been met by an estoppel. However, that is not this case. It was only when the schemes collapsed that Mr Antonopoulos and Mr Belperio sought to avoid the leases on the ground that the land which was leased to him was not identified in his leases. Furthermore, this was in circumstances where the reason for the collapse of the scheme was the failure of Seymour Softwoods, a related company of Sintoff, to comply with its obligations as manager of the schemes. In effect, Seymour Softwoods and Sintoff were co-promoters of the schemes in which each of Mr Antonopoulos and Mr Belperio invested. In these circumstances, there is nothing unjust or unconscientious in Mr Antonopoulos or Mr Belperio relying upon the uncertainty of his leases as a ground for refusing to perform them further.

THE SUBDIVISION DEFENCE

234 I have set out the material provisions of the Act in the introduction to this judgment. For convenience, I will set them out again.

235 Section 4 of the Act provides a wide definition of "subdivision" and "subdivide" for the purposes of the Act, in the following terms:

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(1) Each of the 1989 prospectus and the 1990 prospectus makes it plain that the grower is to be bound by all of the leases which are the subject of the investment. The prospectuses emphasise the long-term nature of the investment and the need for the duration of the leases to coincide with the length of the investment. Further, each prospectus states in unequivocal terms that the method of using a number of separate leases, each of less than five years, is adopted for the sole purpose of minimising the risk of the leases being considered a subdivision within the meaning of the Act.

(2) In order to invest, Mr Antonopoulos was required to sign all of the Antonopoulos leases, and Mr Belperio was required to sign both of the Belperio leases, at the time of investment. This is consistent with an agreement to lease for the total period of the Antonopoulos leases and the Belperio leases respectively.

(3) At the time that they signed their leases, Mr Antonopoulos and Mr Belperio also signed a Management Contract. The Management Contract defines "the Lease" between the grower and Sintoff as "a number of leases in respect of the Land". Under the Management Contract, Seymour Softwoods is obliged to undertake the works and services set out in the first schedule for a period commencing no later than 13 months after the date of execution of the Management Contract and ending on the termination of "the Lease" or the clearfelling of the plantation (which was, in any event, a circumstance giving rise to the termination of the leases).

(4) The fact that the commencing rental for the second and subsequent leases is calculated by reference to the rental being paid during the immediately preceding 12 month period under the prior lease, further demonstrates the connection between the leases. They are all interdependent and should be seen as forming part of one agreement.

(5) The interdependence of the Antonopoulos leases can also been seen from cl. 10(m), which provides that termination of a lease brings each subsequent lease to an end. Although there is no such express term in the Belperio leases, there was, in my view, an implied term of the first Belperio lease that, if it terminated, the second Belperio lease would also terminate. Such a term is not inconsistent with the terms of the first Belperio lease. To the contrary, it is directly consistent with cl. 10(b) of that lease, which provides that Sintoff has the right to acquire Mr Belperio's pine trees upon termination of the first lease. Such an implied term is in accordance with the presumed intention of the parties, reasonable and equitable, necessary to give business efficacy to the Belperio leases, so obvious it goes without saying, capable of clear expression and, as I have said, not contrary to any express term.[29]

(6) Finally, I have taken into account the reasoning of Foster J in Hopkins v Seymour Softwoods Ltd.[30] In that case, which involved the 1991 scheme, Foster J held that the granting of three consecutive leases to Dr Hopkins, at the time she invested "... must, relevantly, be regarded as one dealing. It was, in effect, a lease for 12 years...".[31]

[165]

"It is therefore necessary to look to general principle in the interpretation of statutes, in particular the purposive rule, to which the corollary ought to be that any deliberate attempt to evade the provisions of a statute should be taken to be caught by the provision itself. One aspect of the rule preventing evasion is said by Maxwell on the Interpretation of Statutes to be 'that the statute may be applied to the substance rather than the mere form of transactions, thus defeating any shifts and contrivances which parties may have devised in the hope of thereby falling outside of the Act'. As was said many years ago by Wilmot CJ, when the courts find any attempt at concealment, they should 'brush away the cobweb varnish, and shew the transactions in their true light'. If one is prepared to accept that there is a general principle of interpretation, at least a desire, to give effect to substance rather than form in the face of attempted evasion of some statutory provision, as examined in some detail in Bennion, then one should be prepared, as I am, to adopt this statement of principle expressed by Bennion:

'The Court will infer an intention by Parliament that evasion of an Act should not be countenanced where the method used is constant repetition of acts which taken singly are unexceptionable, but which considered together cumulatively effect an evasion of the purpose of the Act.' [37]

One may allow that the authorities cited by the learned author are by no means direct or compelling in their support of the proposition, but there ought, in my opinion, to be no doubt that where a person affected by a statute deliberately chooses either to repeat or to break up into smaller parts a step or transaction required by that statute in order to avoid its outcome, the statute ought to be interpreted so that one looks at the substance, namely at the totality, of what the person affected is doing or purporting to do. If that amounts to a breach of the statute or otherwise to a circumstance which might bring into operation a provision of a statute, then the party affected ought not to be allowed to devise and use such a scheme merely for the purpose of avoiding the object of the provision." (Citations omitted.)

[170]

255 The effect of s. 327(3) is to impose in each of the Antonopoulos leases and the Belperio leases a condition that neither party to the leases was under any obligation to perform its obligations unless and until council approval for a subdivision had been obtained. Further, if council approval was not obtained within a reasonable time, either party could avoid the leases.

256 My view of the operation of s. 327(3) is consistent with authority which directly relates to s. 327(3) of the Act and with general authority concerning the consequences of agreements where performance depends upon the satisfaction of a condition.

257 In Pejovic v Malinic[39] the Full Court of the Supreme Court of New South Wales considered a proceeding seeking specific performance of an agreement to sell part of land in contravention of ss. 323 and 327(2) of the Act. Walsh J, with whom Street CJ agreed, held that the sale agreement was not rendered void or illegal because of the provisions of s. 327(3) of the Act. However, specific performance could not be granted of the sale agreement unless the decree of the Court was moulded so that the sale agreement should be performed if, but only if, the requirements of the Act were first fulfilled.[40]

258 In Perri v Coolangatta Investments Pty Ltd[41], the High Court considered a contract for the sale of land which fixed no time for completion. A special condition of the contract provided that the contract was "entered into subject to purchasers completing a sale of their property." After about three-and-a-half months, the vendor gave notice to the purchasers that it required them to complete the contract by a date which was about four months after the making of the contract. The purchasers did not do so, and the vendor gave a notice rescinding the contract. Later, the vendor commenced proceedings claiming a declaration that the contract had been terminated. The purchasers cross-claimed for specific performance of the contract. After the commencement of the proceedings by the vendor, the purchasers purported to waive the condition.

259 The majority of the High Court held that, at the time proceedings were issued by the vendor, a reasonable time had elapsed for the purchasers to have complied with the condition or waived it. Accordingly, it was held that the vendor had validly avoided the contract prior to the waiver of the condition by the purchasers. Gibbs CJ considered that the description of the condition as a condition precedent or a condition subsequent or was "a mere matter of terminology", and concluded:

[172]

260 In my view, the statements of Gibbs CJ are, with the exception of his Honour's comments concerning waiver, applicable to the effect of the condition imported into the Antonopoulos leases and the Belperio leases by s. 327(3). Given that this condition is imported into those leases by statute, it is not capable of waiver by the parties or one or other of them. It is not for the benefit of the parties only. The statutory condition is, in my view, also for the benefit of adjoining landowners and the community generally. I will return to this topic later in this judgment.

261 It follows, in my view, that neither Mr Antonopoulos nor Mr Belperio was, at any time, under a legal obligation to pay rental. The rental obligations appearing in the Antonopoulos leases and the Belperio leases were conditional upon the relevant shire council approving an application for a subdivision. No such application was ever made. Accordingly, the conduct of Mr Antonopoulos and Mr Belperio in failing to pay rental was not capable of constituting a repudiation of those leases.

262 Nor can the statements denying any obligation to pay rent which were made by Mills Oakley in its 4 September 1996 letter on behalf of growers, including Mr Antonopoulos and Mr Belperio, be treated as a repudiation of the Antonopoulos leases and the Belperio leases. The position may be different if, at the time of those statements by Mills Oakley, a reasonable time had not then elapsed for the obtaining of council approval to a subdivision. However, that was not the case. Sintoff, RMBL and Equus did not intend, at any time, to apply for a subdivision and a reasonable time to do so had well and truly elapsed as at September 1996.

263 In my view, a reasonable time to obtain council approval for an application for a subdivision having elapsed, either party to the Antonopoulos leases and the Belperio leases (or their assignee) was entitled to bring those leases to an end without giving any prior notice.[43]

264 The plaintiffs elected to terminate the Antonopoulos leases and the Belperio leases on 2 April 1998 when the Antonopoulos land and the Belperio land was re-leased.

265 In the circumstances, the claim by Equus for arrears of rent, damages for loss of bargain and interest must fail, unless Equus can establish some estoppel or equity preventing Mr Antonopoulos and Mr Belperio from relying upon the failure to obtain council approval for a subdivision.

THE SUBDIVISION ESTOPPEL

(1) Pleadings and relief sought

266 In their reply, the plaintiffs contend that the defendants are estopped from resiling from a mutual assumption ("the assumption") that the Antonopoulos leases and the Belperio leases "would be valid or enforceable and did not require subdivision under the Act". The plaintiffs allege that they are entitled to such an estoppel because, in all of the circumstances of the case, it would be unconscientious for Mr Antonopoulos and Mr Belperio to resile from the assumption. If this estoppel is established, the plaintiffs seek a declaration that each of Mr Antonopoulos and Mr Belperio is estopped from denying the plaintiffs' claims in the proceeding against him by contending that the leases to which he is a party as alleged by the plaintiffs are illegal, void, invalid or unenforceable under s. 327 of the Act. If such a declaration were made, it was submitted on behalf of the plaintiffs that this would be sufficient to entitle Equus to judgment for monetary sums for arrears of rent and damages for breach of agreement.

267 The pleaded facts upon which the plaintiffs rely to establish the assumption are not in dispute. They may be summarised as follows:

[179]

"It has been said 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' (see In re A Bankruptcy Notice, per Atkin LJ). But a principle as widely stated as this might prove to be rather an elusive guide, since there is no statute, at least public general statute, for which this claim might not be made. In their Lordships' opinion 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 (Carter v James) override an estoppel: so do the provisions of the Rent Restriction Acts with regard to orders for possession of controlled tenancies (Welch v Nagy).

General social policy does from time to time require the denial of legal validity to certain transactions by certain persons. This may be for their own protection, as in the case of infant or other category of persons enjoying what is to some extent a protected status, or for the protection of others who may come to be engaged in dealings with them, as, for instance, the creditors of a bankrupt. In all such cases there is no room for 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. See In re Stapleford Colliery Co., per Bacon VC" (Citations omitted.) (Emphasis added.)

[188]

276 Authorities subsequent to Kok Hoong have consistently approved of the statements of principle by Viscount Radcliffe and applied them. These authorities include Barilla v James[52], The Owners - Strata Plan No 51487 v Broadsand Pty Ltd[53], Considine v Citicorp Australia Ltd[54], Beckford Nominees Pty Ltd v Shell Co of Australia Ltd[55], Keen v Holland[56] and Overmyer Industrial Brokers Pty Ltd v Campbells Cash & Carry Pty Ltd.[57]

277 It was submitted on behalf of the plaintiffs that, notwithstanding the continued applicability of the principles stated by Viscount Radcliffe in Kok Hoong, there was indistinguishable authority in the Court of Appeal in New South Wales which established that an estoppel could be made out in the face of a contravention of ss. 323(1) and 327(2) of the Act. Reliance was placed upon the decision of Powell J in Starr v Barbaro[58] which was affirmed by the Court of Appeal in Silovi Pty Ltd v Barbaro.[59] It was submitted that the effect of these decisions is that, provided the Court can give effect to the estoppel by framing its orders so that there is no breach of the Act, an estoppel can stand in the face of a breach of ss. 323(1) and 327(2) of the Act.

278 The case involved the lease of a portion of land in New South Wales for a period of 10 years, in circumstances where no application was made for approval or registration of a plan of subdivision. Mr and Mrs Barbaro (the lessors) were the owners of the land in question. Mr Starr and Mrs Dixon (the lessees) occupied land immediately adjoining the land owned by the lessors. Silovi Pty Ltd (Silovi) occupied land adjoining the land occupied by the lessees. Both the lessees and Silovi conducted a plant nursery business on the land occupied by them.

279 An agreement was reached between the lessors and the lessees to lease a portion of the land for a period of 10 years. The express purpose of the lease was to enable the lessees to cultivate a slow growing crop of palm trees on the portion of the land to be leased.

280 A lease agreement was executed, providing for a lease for a 10 year period from 1 September 1982. The lessees took occupation of the portion of the land which was leased to them and incurred considerable expenditure clearing it, installing an irrigation system and planting the palm trees.

281 Silovi was aware of the lease and of the fact that the lessees had expended a considerable amount in reliance upon the lease.

282 When the lease was lodged for registration in 1983, the Registrar-General informed the solicitor for the lessors that the lease constituted a subdivision within the meaning of the Act and that it was therefore necessary that a plan of subdivision, bearing council approval, be lodged for registration. In response, the solicitor for the lessors informed the lessees of the position and said that the lessors did not wish to lodge a plan of subdivision for approval or registration.

283 In 1984, the lessors sold the land to Silovi, subject to the lease. After exchange of contracts, Silovi stated that it did not intend to be bound by the lease. The lessees thereupon commenced proceedings seeking to protect their rights under the lease. They sought a series of declarations, including a declaration that the lease was valid and enforceable and a declaration that their interest under the lease took priority over any interest of Silovi as purchaser of the land. Later, the lessees sought an alternative declaration, to the effect that the lessors and Silovi were estopped from denying that the lessees were entitled to occupy the portion of the land which had been leased to them.

284 After the commencement of proceedings, but before trial, the lessors sought to obtain approval and registration of the necessary subdivision. That application was unsuccessful and was the subject of an appeal to the Land Environment Court of New South Wales at the time of the hearing before Powell J.

285 Powell J decided that it would be unconscionable for the lessors to deny to the lessees the expectation which had been created by the execution of the lease and, on the face of which, the lessees had expended considerable sums of money. Accordingly, he granted relief based upon equitable or proprietary estoppel. However, Powell J recognised that he could not, by reason of the provisions of the Act, declare that the lease was valid or order the execution of a fresh lease, on the same terms as the lease, for the balance of the period of the lease. This was because the unexpired term of the lease exceeded five years. Accordingly, Powell J fashioned a remedy which did not contravene the prohibitions in the Act against unregistered subdivisions. The result was a declaration that the lessees were entitled to a licence to enter upon the leased land upon the same terms as the unenforceable lease.

286 Silovi appealed to the Court of Appeal. The appeal was dismissed. Priestley JA (with whom Hope and McHugh JJA agreed) specifically referred to the issue which I must decide, in the following terms:[60]

[192]

289 In my opinion, the decision in Silovi is distinguishable from the present case. In the first place, the orders made in Silovi did not give effect to the lease in issue. The orders permitted the plaintiffs to have access to the land, for the purposes of tending and harvesting the palm plantation, simultaneously with the continuing occupation of the land by Silovi as owner of the land. This was inconsistent with a lease under which the plaintiffs would have enjoyed a right to separate occupation of the land, exclusive of any right of Silovi to occupy it.

290 Secondly, in Silovi it was the lessees who were seeking to enforce their rights as lessees and to continue in occupation of the land at issue. The lessees had, upon the faith of the lease, entered into possession of the land and spent considerable sums upon it in planting a slow-growing crop of palm trees, which they hoped to harvest upon maturity for financial gain. A belated application by the lessors for approval and registration of a plan of subdivision was refused. In these circumstances, the orders made by Powell J were to give effect to a different kind of equity than the estoppel relied upon by Equus in this case. Silovi involved the granting of relief to a lessee based upon proprietary estoppel.

291 By contrast, the estoppel relied upon by Equus in this case is an estoppel by convention, based on an alleged common assumption by the parties to treat the leases as enforceable notwithstanding the effect of the Act. There is no issue in this case as to the existence of a proprietary estoppel. Mr Antonopoulos and Mr Belperio are not seeking to continue in occupation of the land. Indeed, the leases to which they are parties have been terminated by Sintoff and the land has been re-leased to a third party. This conduct on the part of Sintoff occurred prior to it availing itself of the opportunity to seek to have a plan of subdivision approved and registered so as to render the leases enforceable.

292 Further, there is no consideration in Silovi of the principles concerning estoppel in the face of a statute as stated by Viscount Radcliffe in Kok Hoong. Not only are these principles not referred to by Priestley JA in his judgment, but the report shows that Kok Hoong and other relevant authorities concerning estoppel in the face of a statute were not cited in argument or submissions to the Court of Appeal. In this regard, I note that a differently constituted Court of Appeal in New South Wales has recently approved the principles stated by Viscount Radcliffe in Kok Hoong and noted that Kok Hoong and other relevant authorities applying those principles were not cited to the Court of Appeal in Silovi. In Overmyer Industrial Brokers Pty Ltd v Campbells Cash & Carry Pty Ltd[63], Young CJ in Equity referred with approval to the principles stated by Viscount Radcliffe in Kok Hoong,[64] and continued:[65]

[196]

293 I agree with the analysis of Young CJ as to the uncertainty surrounding the basis of the decision in Silovi. It is unclear whether the principles stated in Kok Hoong were considered by the Court of Appeal in Silovi. However, in my view, it is clear that the equitable remedy fashioned by the Court in Silovi is not open in this case. The estoppel relied upon by Equus in this case is an estoppel by convention based on a common assumption to treat the leases as enforceable notwithstanding the requirements under the Act to subdivide the land. Such an estoppel is, in my view, inconsistent with the social policy underlying the provisions of the Act under consideration.

294 If the facts were different, and it was Mr Antonopoulos or Mr Belperio seeking to invoke a proprietary estoppel to defeat reliance by Sintoff on the subdivision requirements of the Act, it may be that proprietary estoppel would be available, as in Silovi. In this regard, I note the decision of the England Court of Appeal in Yaxley v Gotts[66]. In that case, the Court was of the view that, although estoppel by convention was not available, different considerations may arise when considering other equitable remedies such as proprietary estoppel or constructive trust.[67] This reasoning is consistent with the approach adopted in Silovi. However, it is unnecessary for me to consider this matter further. This is not such a case.

295 Accordingly, I find that the subdivision estoppel, even if established on the facts of the case and the applicable authorities, cannot have the effect of preventing Mr Antonopoulos and Mr Belperio from contending that the leases signed by them are unenforceable by reason of the provisions of s. 327(3) of the Act.

296 It is accordingly, not necessary for me to consider whether the subdivision estoppel has been made out on the undisputed facts referred to above.

ONE-OFF LEASE PAYMENT PLAN DEFENCE

297 Having regard to my findings that the leases are void for uncertainty and, if not void, unenforceable by reason of failure to comply with the subdivision requirements of the Act, it is unnecessary for me to consider the one-off lease payment plan defence raised by Mr Belperio. However, as the matter was fully argued and as the Belperio proceeding can be loosely described as a test case on this issue, I will consider it briefly.

298 I have found that Mr Belperio accepted the one-off lease payment plan offer. The question remains as to whether the one-off lease payment plan offer, and Mr Belperio's acceptance of it, is binding upon Equus as assignee of the rights of Sintoff under the leases.

299 As I have said in the introduction to this judgment, in reply to the one-off lease payment plan defence, Equus:

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