PARTIES: SYMMONS PLAINS PASTORAL HOLDINGS PTY LTD

Contracts - Statute of Frauds, section 4 - Note or memorandum - Contents - Terms of contract - No reference to transferor, promise to transfer, or parts of consideration.

Conveyancing and Law of Property Act 1884 (Tas), s36(1).

Sinclair, Scott & Co Ltd v Naughton [1929] HCA 34; (1929) 43 CLR 310; Allsop v Orchard [1923] 1 Ch 323; Johnson v Humphrey [1946] 1 All ER 460; North v Loomes [1919] 1 Ch 378; Hawkins v Price [1947] 1 Ch 645; Bradshaw v Watson (1856) 1 VLT 92; Rhodes Pty Ltd v Galati [1961] WAR 180; Lord v Lord [1964] WAR 219, referred to.

Conveyancing - Land titles under the Torrens system - Caveats against dealings - Lapse, removal and withdrawal - Removal - Where alleged contract would be unenforceable.

Land Titles Act 1980 (Tas), s135.

Judgment ID Number: [2005] TASSC 35

1 This is a proceeding for the removal of a caveat pursuant to the Land Titles Act 1980, s135. The applicant is the registered proprietor of a parcel of land comprising some 163.5 hectares adjacent to the Midland Highway at Symmons Plains. In July 2003 the respondent's solicitors lodged a caveat forbidding the registration of dealings in respect of that land, caveat no C479351. According to that caveat, the respondent claims an estate or interest in 7.3 hectares of the applicant's land, as shown on a plan annexed to the caveat, "by virtue of a Contract for Sale made in September 1994 between the authorised agent of the registered owner Symmons Plains Pastoral Holdings Pty Ltd as Vendor and Richard Boyce Ardell [sic] Youl as Purchaser". The respondent has sought to show cause why the caveat should not be removed. The applicant contends that there is no enforceable contract between the parties, and that the respondent has no estate or interest in the land.

2 The dispute that has given rise to this litigation is one between father and son. It is a dispute between the respondent's father, John Youl, and the respondent. Members of the Youl family and entities controlled by them own a number of parcels of land at Symmons Plains. The raceway at Symmons Plains is constructed on two parcels of land owned by companies controlled by members of the Youl family. Part of it is on the land which is the subject of the caveat. The rest of it is on adjacent land owned by EB Management Pty Ltd. That company and the applicant have each leased part of their land to the Tasmanian Motor Racing Club. There is evidence that the applicant's land is known within the Youl family as "the Big Flat". The land to which the caveat relates is the leased part of that land. In July 1994 the respondent and his brother, Andrew, had a fight. Before the fight, the respondent had been employed by a partnership named J & S Youl & Son. The partners included his father and his mother, Shirley Youl. He was not a partner. According to the evidence before me, the respondent had some expectation before the fight that his father would in due course cause land at Symmons Plains to be transferred to him. Arrangements were in train for some 40 acres adjacent to the land now in question to be transferred to the respondent's wife, Ann Youl, but the respondent had an expectation that substantially more was to be transferred at some time in the future. As a result of the fight, new arrangements were made. They were finalised at a meeting of family members in July or August 1994.

3 The respondent's case is that it was then orally agreed that he would cease his employment by the partnership; that he would abandon all claims against the partnership, including any workers compensation claims; that he would forego all claims to real estate other than the 7.3 hectares now in question, which was to be transferred to him at or before his father's death; and that he would instead be paid a total of $240,000 by instalments at the rate of $7,500 per quarter. He contends that the effect of conversations between himself, his father and others at and before the final meeting was that a contract was entered into; that he and the applicant company were amongst the parties to that contract; and that it was a term of that contract that the applicant company would transfer the 7.3 hectares in question to him on or before his father's death.

4 The respondent contends that no contract was entered into; alternatively, that if there was a contract, the applicant company was not a party to it; and, alternatively, that any such contract is unenforceable, and has not given rise to an estate or interest in land entitling the respondent to lodge a caveat.

5 The respondent does not contend that he made a promise to pay the applicant for the land in question. He therefore has no basis for claiming to be a purchaser. However, he contends that he gave consideration for a promise by the applicant to transfer the land to him. That consideration is said to comprise his resignation from his employment, his abandonment of claims against the partnership that employed him, and his abandonment of an expectation to have other land transferred to him. It would be sufficient for him to establish that consideration moved from him as the promisee. It is not necessary for him to contend or establish that such consideration moved to the applicant company as the promisor: Pico Holdings Inc v Wave Vistas Pty Ltd [2005] HCA 13 at par66. Whilst the respondent cannot claim to have any estate or interest in the land as a purchaser, the estate or interest that he claims to have is very similar to that of a purchaser, in that he contends that he is a party to a contract whereby the registered proprietor of land has promised to transfer that land to him, that he has given consideration for that promise, and that he has a contractual right to the transfer. It was not submitted that the caveat was defective in misdescribing the interest claimed as that of a purchaser. I would certainly not order its removal on the ground of misdescription. Technical deficiencies in the form and content of a caveat should not be allowed to deprive a bona fide claimant from obtaining the benefits of a caveat: Hooper v Australia and New Zealand Banking Group Limited (1996) 5 Tas R 398 at 404.

6 Mr McElwaine argued on behalf of the applicant that the respondent does not claim to have any contractual right to have the land transferred to him until his father's death; that he therefore has no present right to specific performance; that a purchaser does not have an estate or interest in land unless specific performance is available; and that the respondent therefore cannot possibly have an estate or interest in the land that entitles him to sustain his caveat. He also argued that the land to which the caveat relates, being only part of the land comprised in the applicant's certificate of title, could not be transferred to the respondent without a subdivision being approved by the granting of a permit under the Local Government (Building and Miscellaneous Provisions) Act 1993; that a purchaser of land that cannot be transferred without subdivision approval cannot obtain specific performance in respect of the promise to transfer the land until such approval has been granted; and that before such approval a purchaser therefore does not have an estate or interest in land that is sufficient to sustain a caveat. He relied on Brown v Heffer [1967] HCA 40; (1967) 116 CLR 344; Re Bosca Land Pty Ltd's Caveat [1976] Qd R 119; and Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57; (2003) 77 ALJR 1853. For the respondent, Mr Tree SC relied on a conflicting line of authority, particularly Jessica Holdings Pty Ltd v Anglican Property Trust Diocese of Sydney (1992) 27 NSWLR 140. Having regard to comments made in the Queensland Court of Appeal in Re Henderson's Caveat [1998] 1 Qd R 632 at 637 - 638 and 641, I think the question whether a purchaser who requires subdivision approval, or for some other reason is not entitled immediately to specific performance, may lodge a caveat is very much an open one. For the reasons that appear below, I think it is a question that I need not decide in this case.

7 There is a strong body of authority supporting the proposition that a statutory discretion to order the removal of a caveat should be exercised in accordance with the "balance of convenience" test that is applied in relation to interlocutory injunctions: Eng Mee Yong v Letchumanan [1980] AC 331; Re Burman's Caveat [1994] 1 Qd R 123; Lindsay Caveats Against Dealings in Australia and New Zealand, 206 - 211; Colbran and Jackson Caveats, 346 - 354. In applying that test in the context of a summary application for the removal of a caveat, it is not appropriate to determine factual issues that are in dispute between the parties. However, it is appropriate to assess the strengths and weaknesses of the parties' cases.

8 The respondent's case has certain weaknesses. In my view the greatest of them concerns the requirement of writing imposed by the Conveyancing and Law of Property Act 1884, s36(1), which is the modern counterpart of the Statute of Frauds 1677, s4. It reads as follows:

"36 -- (1) No action may be brought upon any contract for the sale or other disposition of land, or any interest in land, unless the agreement upon which such action is brought, or some memorandum or note thereof, is in writing, and signed by the party to be charged or by some other person thereunto by him lawfully authorized."

9 The only memorandum or note in writing relied upon by the respondent is an undated letter written to him by his father. It is on the letterhead of the partnership, J & S Youl & Son. The respondent's evidence was that he typed the letter on his computer shortly after the meeting at which the relevant arrangements were finalised. He said he prepared the letter because he wanted to borrow money from his bank, and wanted to provide evidence to the bank of the money that he would be receiving. The letter read as follows:

This letter is to confirm the implementation of the 'Plan' whereby you will receive a capital gift payment of $30,000.00 PA payable quarterly in advance commencing 1st September 1994.

As advised this payment is in lieu of you receiving any land via my will except for a small area of the Big Flat currently leased by the TMRC.

10 It is well established that a contract for the sale of land will be unenforceable unless the required memorandum or note contains all the important or material terms of the contract. A number of cases illustrate the sorts of terms that need to be stated. I will refer briefly to some significant examples from the High Court, English courts, and other Australian courts.

11 In Sinclair, Scott & Co Ltd v Naughton [1929] HCA 34; (1929) 43 CLR 310 at 318 - 319, Knox CJ, Rich and Dixon JJ held on the facts that a memorandum relating to the sale of a rural property was insufficient because it did not state that the sale was on a walk-in-and-walk-out basis, did not record that one party's option to require a bang tail muster was exercisable only before a certain date, did not state the true arrangement about the manager, did not state any part of that arrangement intelligibly, and made no statement of the arrangement for the deposit. Isaacs J dissented on the facts, reaching a conclusion to the effect that the contract contained no oral terms. The other member of the court, Starke J, found it unnecessary to consider the Statute of Frauds.

12 In Allsop v Orchard [1923] 1 Ch 323, specific performance was refused because the memorandum relied upon omitted a term excluding three acres of land from the sale. In Johnson v Humphrey [1946] 1 All ER 460, a contract for the sale of land was held to be unenforceable because the memorandum relied upon omitted any reference to a term that vacant possession was not to be given until the vendor could make suitable arrangements for herself and her furniture. In North v Loomes [1919] 1 Ch 378, the memorandum omitted reference to a term whereby the purchaser had promised to pay the vendor's legal costs, but the memorandum was held to be sufficient to satisfy the Statute of Frauds. In Hawkins v Price [1947] 1 Ch 645, specific performance was refused because the memorandum omitted reference to a term that vacant possession was to be given, and completion had, on a particular date.

13 In Bradshaw v Watson (1856) 1 VLT 92, the Full Court of the Supreme Court of Victoria held that a memorandum was insufficient because it did not adequately specify the boundaries of the property sold, and did not incorporate, expressly or by implication, a plan that had been prepared. In Rhodes Pty Ltd v Galati [1961] WAR 180, a memorandum evidencing the sale of a property for £9,500 was held to be insufficient because it did not record a term whereby the property was to be transferred upon the payment of £2,500, with a mortgage back to the vendor to secure the balance of the purchase money. In Lord v Lord [1964] WAR 219 however, a memorandum was held to be sufficient, despite the omission of a term whereby the plaintiff/purchaser was to permit the grandfather of the defendants/vendors to reside upon the subject property for the rest of his life. He was not intended to have an exclusive right of residence. D'Arcy J took the view that, despite the omission of that term, the memorandum contained all the terms considered by the parties to be material.

14 If the discussions in 1994 resulted in the making of a contract to which the applicant and the respondent were parties whereby (inter alia) the applicant promised to transfer to the respondent the "small area of the Big Flat currently leased by the TMRC", and the consideration provided by the respondent was his resignation from his employment, his abandonment of claims against his employer including workers compensation claims, and his abandonment of any expectation to receiving other land under his father's will, I think a memorandum or note of that contact would have been sufficient to satisfy s36(1) only if it recorded all of those terms. I think that they would all have been material terms of such a contract, without the recording of which a memorandum or note would have been insufficient to satisfy s36(1). The letter relied upon by the respondent recorded that he was not to receive any land under his father's will, except for a "small area of the Big Flat currently leased by the TMRC". It did not record any promise by the applicant to transfer that area to the respondent. It did not record that the transfer of that area was a part of the contract evidenced by the letter, rather than a part of some other contract or arrangement. It did not record the full consideration provided by the respondent, in that it did not record that the respondent was to cease his employment, nor that he promised to abandon his claims, including workers compensation claims, against the partnership. Because of those deficiencies in the letter, I think it is clear that, if there was a contract with the applicant as asserted by the respondent (and I very much doubt that there was), the latter was insufficient to satisfy s36(1).

15 The letter did not state the total amount that was to be paid to him in quarterly instalments, which in fact was $240,000. Because of the other deficiencies in the letter that I have referred to, I think I need not decide whether the omission of reference to the figure of $240,000 was material. If the respondent's claim were litigated and the letter relied upon, it might be held to be material.

16 The respondent contends that the letter in question was, within the meaning of s36(1), "signed by the party to be charged [ie the applicant] or by some person thereunto by him lawfully authorized". It was signed by the respondent's father. It was on the letterhead of the partnership. The applicant company was not mentioned. As I have said, the evidence was that the letter came about because he wanted to borrow money from his bank. He said he told his father that he was proposing to borrow from a bank to build a house on the 40 acres, and that he took a copy of the letter to that bank, which proceeded to make a loan to him and his wife. There is no evidence that suggests that the letter was brought into existence for any purpose other than to facilitate the obtaining of that loan, nor that the applicant company was intended or expected to play any part in the provision of the $240,000. There is evidence that the respondent and his father did not advert to the applicant's ownership of the land at the time the arrangements between them were concluded in 1994. In his affidavit, the respondent's father said that he then agreed to transfer the land in question to the respondent in his will or before he died, as a gift from father to son, without thinking that he was not the owner of the land. There was evidence that the applicant company's ownership of the land was adverted to by the father a little earlier in the negotiating process. For the purpose of the negotiations that followed the fight between the two brothers, the father prepared some documents, including one entitled "A PLAN". Copies of that document were circulated to various family members, as well as an accountant and a solicitor. In an addendum to that document, the father wrote "One change to the above is that I will leave the portion of the Big Flat (SPPH) that is leased to the TMRC to Richard." The references to "SPPH" and "Richard" were to the applicant and the respondent respectively. The father prepared a second edition of that document which omitted the direct reference to the applicant being the owner of the land now the subject of the caveat, but which included the following:

"Richard has indicated that he will withdraw from his expectation of owning and operating part of Symmons Plains (except for the 40 acres of S.P.P.H. currently being transferred) and the portion of the Big Flat that is leased to the TMRC which I will leave to Richard."

It is on the basis of this evidence that the respondent contends that his father signed the letter on behalf of the applicant company. The evidence suggests that it was highly unlikely that the father had the company's ownership of the leased part of the Big Flat in mind when he signed the letter, that he was more likely proceeding unthinkingly on the mistaken basis that the land in question was his, and that he was writing in his personal capacity and/or as a member of the family partnership on the subject of the funds that he and/or the partnership would be providing to the respondent, rather than writing on behalf of the company. If the question of the enforceability of the alleged contract were litigated, I think it most unlikely that a finding would be made that the father signed the letter on behalf of the applicant company.

17 On the evidence before me, there is no reason to think that any document other than the letter in question could be relied upon as constituting a memorandum or note in writing that could satisfy s36(1). I do not think there is any realistic chance that the letter in question would be held to satisfy that subsection. I think it is inevitable that it would be held that, if a contract were made between the parties as alleged by the respondent, it is unenforceable for want of writing. It is pointless to sustain a caveat that has been lodged to protect an estate or interest claimed pursuant to an agreement that is unenforceable: Sturt v McInnes [1974] 1 NZLR 729; Re Clement's Caveat [1981] Qd R 341.

18 As I understand it, the applicant contends that the arrangements made between the respondent and members of his family in 1994 were of a non-contractual nature. There is a rebuttable presumption that agreements between family members are not intended to be legally binding contracts: Balfour v Balfour [1919] 2 KB 571; Cohen v Cohen [1929] HCA 15; (1929) 42 CLR 91; Jones v Padavatton [1968] EWCA Civ 4; [1969] 2 All ER 616. Having regard to the extent of the informality of the 1994 arrangements, there is a chance that the respondent's claim, if litigated, would fail on the basis that this presumption was not rebutted. If the respondent were to establish that the 1994 arrangements were contractual, he would not necessarily succeed in establishing that the applicant was a party to the contract. I have already referred to the evidence that suggests that his father did not sign the letter on behalf of the applicant company. The same evidence suggests that nothing that was agreed to when the arrangements were made in 1994 was agreed to by anybody on behalf of the applicant company. I do not have evidence as to who all the shareholders and directors of the applicant company were at the relevant time. There is a chance that it might be held that the father intended to bind not only himself but all relevant entities controlled by him, that the applicant company was then controlled by him, and that he dealt with the respondent on that basis. However there is a significant chance that it might be held that the applicant was not a party to any contract that was made at the relevant time.

19 The applicant contends that a transfer of the relevant 7.3 hectares to the respondent cannot take place because of the provisions of the Northern Midlands Planning Scheme 1995 ("the Scheme"). Under the Scheme, the land is zoned "PARTICULAR PURPOSES (MOTOR SPORT) (PP3)". Clause 12.4.3(i) of the Scheme provides, in relation to land so zoned, "Subdivision shall be limited to Minor Subdivision as provided in Clauses 14.2 and 14.3." The term "Minor Subdivision" is defined in the Scheme as follows:

"'Minor Subdivision' means a subdivision for the purposes of:

14.2.1 Adjusting a boundary between lots in any zone may be approved by Council provided no additional lot is created and such adjustment of boundary is consistent with the intent, objectives and development provisions other than minimum lot size and dimensions for that zone.

14.3.1 The Council may permit minor subdivisions for the following purposes:

(i) to provide for public services and utilities; and

21 So long as the relevant provisions of the Scheme remain in force, a subdivision of the applicant's land will not be permitted, unless the 7.3 hectares can be somehow added to the 40 acre lot owned by the respondent's wife, which is adjacent to the 7.3 hectares. Another complication is that a subdivision for the purposes of cl 14.2 is not a "Minor Subdivision" as defined. The required subdivision could take place only if cl 12.4.3(i) were interpreted as permitting not only minor subdivisions as defined, but also subdivisions for the purpose of adjusting boundaries. It is arguable that that would not be a correct interpretation.

22 Because of the matters that I have referred to, I think there are a number of bases upon which the respondent's claim, if litigated, might fail. If the Conveyancing and Law of Property Act, s36(1) were pleaded, it would have no realistic chance of success. I think it follows that the caveat should be removed. Other factors relevant to the "balance of convenience" test are scarcely worth mentioning. The applicant, as registered proprietor, might suffer substantial inconvenience if it wishes to deal with the land and the caveat remains in force. If the respondent does have contractual rights against the applicant, damages are likely to be an adequate remedy, especially since the applicant owns the whole of the land in the certificate of title.

23 There will be an order that caveat C479351 registered on Certificate of Title Volume 137411 Folio 1 be removed.