Raymond Pemberton v Milivoj Dimitrijevic

Raymond Pemberton v Milivoj Dimitrijevic - [2001] NSWSC 54 - NSWSC 2000 case summary — Zoe

[5]

1 The plaintiff Raymond Pemberton is the registered proprietor of property known as 14 Clarke Street, Riverstone (the property). The property is the whole of the land comprised in Certificate of Title Folio Identifier 1/30211 which comprises some 25 acres, 3 roods and one-half perch in imperial measurements or about 10.12 hectares. 2 The plaintiff purchased the land from Milivoj Dimitrijevic, the defendant, pursuant to a contract dated 14 July 1994 (the Contract). 3 It is a term and condition of the Contract that the plaintiff will, "at no cost to" the defendant, reconvey to the defendant a parcel of land comprised in a part of the plan annexed to the Contract. The Contract referred to this land as "the Licensed Premises" which description I shall adopt in this judgment. The parties executed a Deed of Licence over the Licensed Premises (the Licence) and a lease (the Lease) being registered Lease O955400. The Contract provides that the defendant is not entitled to demand the reconveyance "until the Blacktown City Council, or the then zoning authority, rezones the property such that the Licensed Premises may be subdivided from the property". The parties have co-existed on the property pursuant to the arrangements under the Lease and Licence since 1994. 4 On 29 October 1999 the plaintiff commenced these proceedings seeking, inter alia, a declaration that the Lease is void for uncertainty. Although there is a claim in the Summons for damages, such was abandoned at trial. The matter was expedited on 4 February 2000 and listed for hearing on 24 February 2000. 5 On 22 February 2000 the defendant filed a cross claim, without objection, seeking a declaration that the Lease is valid. The defendant also claims that the plaintiff is estopped from denying that the defendant is entitled to occupy the Licensed Premised until such time that the land is subdivided and reconveyed. The defendant seeks declarations that he holds an equitable interest in the land and that he is entitled to quiet enjoyment and exclusive possession until such time as the plaintiff performs all of the covenants in the Contract. The defendant seeks an order restraining the plaintiff from disposing of the land until authorised to do so by the defendant. 6 The matter proceeded to hearing on 24 and 25 February 2000. At the conclusion of the hearing on 25 February 2000 I acceded to an application for an adjournment of the matter so that the parties could join in an application to Blacktown City Council (the Council) for the subdivision of the land to enable the reconveyance of the Licensed Premises of land to the defendant. 7 The matter was mentioned a number of times during the year 2000 when the parties indicated that they were close to settlement and sought further adjournments which were granted. Finally when the matter appeared not able to be settled I relisted the matter for completion of the hearing on 12 February 2001. Mr D Raphael appeared for the plaintiff. Mr George, of Counsel, appeared for the defendant in February 2000 and Mr T Boyd, of counsel, appeared for the defendant in February 2001.

[6]

The Contract 8 The Special Conditions of the Contract include the following: 1(a) It is a term and condition of this contract that the Purchaser will, at no cost to the Vendor, their heirs, executors or assigns, reconvey to the Vendor, or his heirs or executors or assigns, that parcel of land comprised in the plan annexed and marked "F" and coloured in red (hereafter referred to as the "Licensed Premises"). (b) The vendor shall not be entitled to demand the reconveyance pursuant to clause 1(a) until the Blacktown City Council or the then zoning authority rezones the property such that the licensed premises may be subdivided from the property. (c) The Vendor shall, at his own cost, be entitled to prepare and lodge with the zoning authority a development application for the rezoning of the land and the Purchaser shall provide any consents or other documents in its possession to enable the preparation and lodgement of such application or applications, provided that any costs associated with the production of such documents shall be met by the Vendor. (d) The Vendor shall, upon attaining the necessary consents for the subdivision of the land, prepare a form of transfer and submit same to the Purchaser for its execution. (e) The Purchaser shall within fourteen (14) days of being provided with the transfer, execute the transfer and return same to the Vendor to enable registration and the Purchaser shall thereafter do all things and take all necessary steps, and comply with any requisition from the Land Titles Office, to enable the registration to take place. (f) Should the Purchaser breach the obligations contained under this clause, the Vendor shall be entitled forthwith to issue a Notice to Complete, requiring the Purchaser to comply with the terms of this clause within a further period of fourteen (14) days and such notice shall make time of the essence. (g) The terms of this clause shall be binding upon both parties their heirs, executors and assigns, and this clause shall not merge on completion. 2. Upon completion, the Purchaser will enter into a Lease with the Vendor in the form annexed hereto and marked with the letter "D" and the purchaser shall take the property subject to that Lease. It shall be the responsibility of the Purchaser to ensure such Lease is registered to gain priority over any other dealings subsequently registered in respect of the property and shall register such Lease and the only costs to be allowed to the Purchaser shall be registration fees payable in respect of the Lease. This clause shall not merge upon completion. 3. Upon completion the Purchaser will enter into a Licence with the Vendor in the form annexed hereto and marked with the letter "E" and the purchaser shall take the property subject to that Licence.

[8]

It is clear that the numeral "2" on the last line of clause 2 should be "3". 11 Clause (G) also provides: 5. With an Option to Purchase set out in see clause 3 herewith. 6. Together with and reserving the Rights set out in Contract for Sale between the parties incorporates the provisions set out in ANNEXURE "A" hereto. 12 Other relevant terms of the Lease are as follows: 4. The Lessee shall pay to the Lessor rent in the amount of One hundred dollars ($100) per annum payable on the 1st day of July in each year. 10. The Lessee shall pay any legal costs, stamp duty and registration fees in respect of this Lease. 11. The Lessee shall use the subject premises as a residential dwelling only. 12(a). The Lessor will not object to the Lessee during the term of this Lease at its own cost, improving the leased building by erecting a shed and/or garage on the subject premises, or by renovating the leased premises provided that same is completed in a proper and workmanlike manner. (b) The Lessee shall bear the whole cost of the Building Application and any other expense of and incidental to the erection of the buildings referred to above and the Lessee shall Indemnify and keep the Lessor Indemnified against all costs, charges, fees, suits and damages arising out of the erection of the buildings. (c) The Lessor shall provide the Lessee with all necessary consents and approvals to enable the Lessee to lodge the Building Application and to erect the dwellings and will sign all such documents and do all such things as may be reasonably required to be done on the Lessors part to assist the Lessee with the erection of the dwellings. (d) It is acknowledged by the parties hereto that all right title and interest in all buildings, structures fixtures and other improvements from time to time erected installed, constructed or otherwise affixed to the said land shall become the property of the Lessee. 13. The provision of this lease shall be binding on the parties, their heirs, executors or assigns, and upon the death of the Lessee the benefits and obligations provided for in the Lease shall pass to his heirs and executors. 13 The plaintiff submitted that the Lease is void for uncertainty. It is further submitted that there is no ready formula to fix the term of the Lease. Alternatively it was submitted that the Lease is an instrument in breach of s 327AA of the Local Government Act 1919. As such subdivision was not consented to by the Council it is submitted it is illegal.

[9]

The Licence 14 The Licence includes the following provisions: WHEREAS : A. The parties have entered into a Contract for sale dated 14/7/94 (hereinafter called the "Contract") for the sale and purchase of the property known as Lot 1 DP 30211, being 14 Clarke Street, Riverstone (hereinafter called the property). B. It is a condition of the said Contract that upon completion of the said sale the parties will enter into this agreement. C. It is a further condition of the said Contract that Licensor shall reconvey to the Licensee a parcel of land comprised in the plan annexed hereto and marked "A" and coloured hatched in red (hereinafter "the licensed premises") such reconveyance to take place at such time as the Blacktown City Council (or the then zoning authority) rezones the property to enable the licensed land to be subdivided from the property. D. The Licensor is agreeable to the Licensees entering into occupation of that portion of the property shown on the plan annexed hereto and marked "A" until such time as the reconveyance referred to in recital "C" subject to the terms and conditions herein contained. C. It has been mutually agreed between the said parties hereto that this Deed shall be supplemental to the Contract. NOW THIS DEED WITNESSETH that in consideration of the Agreement:- 1. The Licensees shall be permitted to enter into occupation of the said licensed premises on Licence as and from the date which is the completion for the Contract at yearly occupation fee of one hundred dollars ($100.00) such fee payable on the first day of each year. 2. This deed shall be deemed to be supplemental to the Contract. 3. The rights between the parties hereto shall rest in Contract only and this deed shall confer no right of exclusive occupation of the licensed premised on the Licensees and shall not create in or confer upon the Licensees any tenancy or any estate or interest whatsoever in or over the licensed premises and the rights of the Licensees shall be those of Licensees only. 4. The licensees will not do anything on the licensed premises which may be of annoyance or nuisance to the Licensor or the adjoining occupiers. 15 The Summons does not seek any relief in respect of the Licence, although submissions were made in reply to the Cross Claim that it too is void. 16 I am of the view that the Lease relates only to the building in which the defendant lives. The Licensed Premises include the whole of the area on the plan hatched in red including the building in which the defendant resides.

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The Facts 17 The settlement of the sale of the land was effected on 1 February 1995. On 18 April 1995 the defendant lodged a caveat over the property which particularised the nature of the estate as "fee simple" by virtue of the Lease (the Caveat). The Lease was registered on 3 March 1996. 18 The purchase price of the land was $440,000. The property is located on the corner of Clarke Street and Riverstone Road, Riverstone. The land is zoned 1(a), General Rural and is subject to the Blacktown Local Environmental Plan 1988 (the LEP). Under clause 11 of Division 1 of Part 3 of the LEP the Council may only consent to an application to subdivide land if each separate allotment created by the subdivision has an area of not less than 40 hectares. 19 The defendant lives in the Leased Premises and grows various types of vegetables on the Licensed Premises. The plaintiff commenced to occupy the remainder of the property in about 1994 and uses the land to breed and train horses. The dwelling in which the plaintiff lives has been described by the plaintiff as just a "shack". This led him to apply for approval from the Council to build a two-storey home for himself and his family on that portion of the property on which he lives. 20 Although the evidence is far from clear, it would appear that the Council approved the application on the condition that the plaintiff demolish the defendant's dwelling. The plaintiff wrote to the Council in May 1996 informing it that the application to demolish the defendant's dwelling "will be done". In June 1996 the plaintiff advised the Council of the nature of the materials to be removed and the method of disposal after demolition. 21 The plaintiff gave evidence that he did not proceed with the plan. He said "I realised I was in a lot of trouble…to do with the building permission. It was like..I had bought a property that I couldn't build on. I could build on at the point of walking over other people but out of principle I didn't do that" (tr. 20). 22 In 1998 the plaintiff commenced dealing with Mr Garry Adams, a Licensed Real Estate Agent with LJ Hooker at Riverstone. The plaintiff instructed Mr Adams to list the property, including the Leased and Licensed Premises, for sale. Mr Adams gave evidence that he caused advertisements to be placed in a number of newspapers. Mr Pemberton instructed Mr Adams not to speak to the defendant as he, the plaintiff, would "handle everything" (tr. 40). 23 During 1999 the Lutheran Church made an offer to purchase the property. After some negotiation, a figure of $1.7 million was offered. The plaintiff gave evidence that he understood that the defendant had agreed to the sale if he was paid $300,000. The sale price was then agreed with the Lutheran Church at $2 million. 24 The plaintiff claimed that two days prior to the proposed exchange date with the Lutheran Church the defendant requested details of the full purchase price. After the figure was disclosed to the defendant's solicitors, the $300,000 was rejected and the defendant advised the plaintiff that he would accept $740,000. Negotiations broke down. 25 The proposed Contract between the plaintiff and the Lutheran Church is in evidence. Clauses 29 and 30 of that Contract provide as follows: 29 This contract is entered into by the parties subject to and conditional upon the vendor being able to give to the purchaser vacant possession of the property. In the event that vacant possession is not so available within 5 months of this date, then the purchaser shall be at liberty to rescind this contract by written notice to the vendor whereupon the provisions of clause 19 shall apply. In the event that vacant possession is not so available within 12 months of this date, then the vendor shall be at liberty to rescind this contract by written notice to the purchaser whereupon the provisions of clause 19 shall apply. 30 This contract is also entered into by the parties subject to and conditional upon the vendor being able to give the purchaser on completion, with the appropriate registration fees allowed, Withdrawal of Caveat 0165162 and Surrender of Lease 0955400 in registrable form. In the event that the provisions of this clause cannot be performed within 5 months of this date, then the purchaser shall be at liberty to rescind this contract by written notice to the vendor whereupon the provisions of clause 19 shall apply. In the event that the provisions of this clause cannot be performed within 12 months of this date, then the purchaser shall be at liberty to rescind this contract by written notice to the vendor whereupon the provisions of clause 19 shall apply.

[12]

The letter then went on to advise the plaintiff that if he wished to obtain further details on when the property "may be released" for urban development he could write to the Department of Urban Affairs and Planning. 27 No approach has been made to the Minister or the Department in respect of the possible release of the property and there is no evidence before me as to the possible approach that may be adopted by the Minister or the Department. 28 In May 2000, the defendant, with the plaintiff's consent, lodged with the Council an application for a Subdivision Certificate. That application referred to the minimum 40 hectares provision of the LEP and made a number of seemingly powerful points in support of the grant of a Certificate. I understand that a Certificate has not been granted. 29 The plaintiff commenced these proceedings in October 1999, during the period of negotiations with the Lutheran Church. Impediments to completion of the proposed Contract are the Lease, the Licence and the Caveat. Should the plaintiff be successful on his Summons then the basis for the Caveat would be removed. The defendant fears the Licence may be revoked and the impediments to completion of the Contract would be removed. 30 I accept that the plaintiff attempted to build a new home on the portion of the land upon which he was residing but that he abandoned those plans in favour of selling the property to the Lutheran Church. I am also satisfied that Mr Adams was instructed by the plaintiff not to deal with the defendant. The defendant and his wife are pensioners and although there is little evidence about their lifestyle, the photographs of their dwelling and the evidence given by the plaintiff convince me that they lead a simple life on the Licensed Premises. 31 The Contract makes it abundantly clear that the price of the property did not include the Licensed Premises. Evidence was given by the defendant and his wife, that prior to the auction they each informed the plaintiff that the Licensed Premises were to "remain for us" and that it was intended to "keep for us and stay here". I am satisfied that the plaintiff's reference to the matter of principle being that which stopped him proceeding with the demolition of the defendant's house, was that he was cognisant of the terms of the Contract in which he promised to reconvey the land to the defendant, "at no cost". 32 The Contract, the Lease and the Licence contemplate the prospect that subdivision may not occur for a long time. Special Condition 1(b) refers to the "Blacktown City Council or the then zoning authority". Clause 13 of the annexure to the Lease provides that upon the Lessee's death the benefits and obligations pass to his heirs and executors. The Lease also accommodates extensions to the existing building and erection of other buildings on the Licensed Premises (cl. 12). The Licence recites that the plaintiff and the defendant have agreed that the defendant would occupy the Licensed Premises until the reconveyance occurs.

[13]

The Lease 33 The defendant accepted the plaintiff's contention that a lease is void for uncertainty when its duration is not fixed with certainty: Lace v Chandler (1944) 1 All ER 305. The defendant also accepted the plaintiff's contention that registration under the Real Property Act 1900 does not save a lease otherwise void for uncertainty of the term: Re Lehrer and the Real Property Act (1960) 61 SR NSW 365; Karacominakis v Big Country Developments Pty Ltd [2000] NSWCA 313 at [52]. 34 Mr Raphael helpfully referred me to numerous cases and to Professor Lang's learned work Leases and Tenancies in New South Wales. In the circumstances of the approach adopted by the defendant it is not necessary to refer to these in detail. 35 In purporting to fix the termination date of the term of the Lease at fourteen days after registration of the proposed plan of subdivision, clause 3 (a) relies upon an event, the date of which cannot be ascertained. Indeed the evidence during the trial makes it abundantly clear that the registration of any plan is dependent upon advice or consent of the Minister and a subsequent approval by Council. The dates of those events are unascertainable and uncertain. 36 Having regard to the terms of clause 3 of the Lease and the position adopted by the defendant, I am satisfied that the Lease is void for uncertainty and the plaintiff is entitled to a declaration consistent with this finding. 37 In the light of this finding it is not necessary to deal with the detailed submissions made by Mr Raphael in relation to a claim that the Lease is illegal because it is in breach of s 327AA of the Local Government Act 1919. Mr Raphael pressed for a finding in relation to this submission on the basis that if the Lease is illegal the Court would be less willing to grant the injunctive relief sought by the defendant in his Cross Claim. 38 The starting point of the defendant's argument in this regard is the definition of "subdivision" which includes "a lease for a period in excess of five years". This Lease is void for uncertainty and although a submission was made that the Lease had in fact run for five years, in the light of my finding as to uncertainty the argument does not run. Even if it did run I would be following the approach adopted by Priestley JA with whom Hope and McHugh JJA agreed, in Silovi Pty Ltd v Barbaro & Ors (1988) 13 NSWLR 466 at 473-476, in particular, that the agreement should be deemed to be made subject to Council approval being obtained: see also Headland Developments Pty Ltd v Bullen (1975) 2 NSWLR 309. 39 The effect of the finding that the Lease is void for uncertainty is that the relationship becomes a tenancy determinable at the will of either of the parties by one month's notice in writing expiring at any time: Morison v Edmiston (1907) VLR 191; s127 Conveyancing Act 1919 (NSW).

[14]

The Licence 40 The Licence was entered into pursuant to clause 3 of the Special Conditions of the Contract. The Licence is "deemed to be supplemental to the Contract" (cl.2). Clause 6 provides that the Licence "shall be capable of being assigned or otherwise disposed of and shall be binding upon the parties, their heirs, their executors or their assigns". 41 As to the term of the Licence, Recitals C & D state: C. It is a further condition of the said Contract that Licensor shall reconvey to the Licensee a parcel of land comprised in the plan annexed hereto and marked "A" and coloured hatched in red (hereinafter "the licensed premises") such reconveyance to take place at such time as the Blacktown City Council (or the then zoning authority) rezones the property to enable the licensed land to be subdivided from the property. D. The Licensor is agreeable to the Licensees entering into occupation of that portion of the property shown on the plan annexed hereto and marked "A" until such time as the reconveyance referred to in recital C subject to the terms and conditions herein contained. 42 The term of the Licence suffers the uncertainty upon which the Lease foundered. However such uncertainty does not have the same consequence for the Licence in this case: E.R. Ives Investments Ltd v High [1967] 1 All ER 504 at 513 - 514. 43 The Licence has been entered into by the parties pursuant to their contractual obligations. The evidence demonstrates that the parties' intentions have always been that the Licence and the Lease were to give the defendant exclusive possession of the Licensed Premises until it could be reconveyed to him. It was never the intention of the parties that the plaintiff would be entitled to own or occupy the Licensed Premises. 44 The problem has arisen because the plaintiff has been frustrated by the Council's refusal to allow him to build his house without demolishing the defendant's house and its refusal to subdivide the property because such would create a parcel of land less than 40 hectares. 45 A source of even further frustration is the apparent incongruity that the property itself is a great deal less than 40 hectares and all the properties along the boundaries are obviously far less than 40 hectares, very much smaller than the area of the property occupied by the plaintiff and not very much larger than the area of the Licensed Premises. 46 It is obviously a matter for Council and such decisions may be appropriately reviewed by the Land and Environment Court, but it is difficult to see how, in this instance, such a subdivision would or could offend against the stated objects of the relevant parts of the LEP.

[15]

Cross Claim 47 The plaintiff has a contractual entitlement to the reconveyance of the land in the Licensed Premises together with the Leased Premises, the building. Clause 1(a) of the Special Conditions of the Contract limits the plaintiff's interest in the land by defining the defendant's interest to which the plaintiff's title is subject. The plaintiff thus gave the defendant an undertaking to hold title subject to the defendant's interest: Bahr v Nicolay [No 2] (1988) 62 ALJR 268. 48 The defendant has an equitable interest in the land with a contractual right to occupy the Licensed Premises until reconveyance is possible. I am satisfied that it would be in breach of contract, or alternatively, unconscionable on the part of the plaintiff to enter into a contract, the carrying through of which would enable the Lutheran Church to defeat the defendant's entitlement to use and occupy the Licensed Premises and to have the Licensed Premises reconveyed to him: Silovi v Barbaro at 472-473. 49 The subdivision has not yet been granted to enable the reconveyance. The necessary steps that may be taken to facilitate such reconveyance have yet to be taken. These include a request for review by the Council, an application to the Department, a possible application to the Minister and a possible review by the Land and Environment Court of the decisions of the Council. Although at one stage during the course of final submissions Mr Raphael made mention of the Frustrated Contracts Act 1978 and the relief thereunder, no application is made under that Act which is understandable in the circumstances that I have just outlined. 50 Although the Lease suffers from the flaw of uncertainty I am satisfied it would be unconscionable for the plaintiff to terminate the defendant's tenancy or to revoke the defendant's Licence in the circumstances of this case. 51 Having regard to the terms of the Contract, in particular the Special Conditions of the Contract, I am satisfied that the defendant was encouraged by the plaintiff to believe that his entitlement to exclusive possession of the Leased Premises and Licensed Premises would not be interfered with by the plaintiff. 52 Ultimately the parties may be able to agree on a satisfactory formula that will enable the sale of the whole property to the Lutheran Church or to some other party. It is apparent they were at least working towards such a formula prior to the proceedings, and also during the proceedings. However until that formula is fixed upon, the defendant may well be at risk, having regard to some recent conduct of the plaintiff outlined in the evidence of placing fencing, in the form of rope, across parts of the Licensed Premises. 53 In all circumstances the parties are to bring in Short Minutes reflecting the following declarations and order which I am satisfied should be made in this case:

At a glance

Court

Decision date

Before

Source

Judgment (17 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (4)

Cited By (2)