It concluded by saying:
"As stated on the phone we have invested eleven months in this project. Our company has planned 40 per cent of its time to be taken up on the project in the next three to five years. Your withdrawal from our agreement has wasted eleven months. We need to know our position immediately. I am reluctant to spend further funds and time until the matter is resolved."
44 On 4 July 2001 Mr Baker wrote to Mr Owen. There had been some discussions between them about an amount which might compensate Mr Clarke for the time and effort he had put into working on the development proposal, and a continuation of that discussion was the main topic of that letter. It concluded:
"Would you kindly refund to me cheque in favour of my client for the $5,000 paid to your office on 21 September 2001, being the Option fee for the purchase documentation then in course of completion."
45 On 5 July 2001 Mr Owen wrote back again mainly dealing with the topic of what quantum of compensation might be appropriate, but also saying:
"We are taking appropriate steps to arrange for the release of the $5,000 held in our trust account and will forward the same to you shortly."
46 Later that day, 5 July, Mr Owen returned the $5,000 under cover of a letter which asserted that it "was held in escrow in our trust account on behalf of your client".
47 On 16 August 2001 a contract for sale was entered whereby South Creek sold, to D C & O Nominees Pty Limited, part of the land that it had been discussing selling to Mr Clarke's company.
48 On 21 December 2001 a statutory declaration was made which verified the caveat which is the subject of these proceedings. The precise date of lodgment of the caveat does not appear from the evidence, but it is likely to have been on or very soon after 21 December 2001. The interest which was claimed in the caveat was "an equitable interest as the purchaser under a contract for sale".
49 The facts which the caveat asserted gave rise to that equitable interest were:
"The registered proprietor and the caveator entered into a contract for sale of the land evidenced by, inter alia, a letter from the caveator to Mr Crosby dated 24 July 2000, a letter from the caveator to Mr Crosby dated 19 October 2000, a letter from Johnson & Sendall, the solicitor for the registered proprietor, to Mr Baker, the solicitor for the caveator, dated 13 February 2001 and a letter from Johnson & Sendall to Mr Baker dated 23 March 2001."
50 It will be observed that this caveat did not claim any interest in the land arising from any Option Agreement.
51 Before me, counsel for the plaintiff argued that there were three bases on which the plaintiff had an interest in the land of South Creek. One was that there was an agreement for sale of land, which was subject to formal contract. The second was that there was an estoppel of the type referred to in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 that an agreement had been reached. The detriment said to have given rise to that estoppel is the payment of the Option fee, and incurring expenses in connection with the preparation of the development application.
52 The evidence includes an affidavit from Mr Clarke which lists expenses incurred in connection with the seeking of the development approval. It lists expenses totalling a little over $118,000, which were incurred over the period from 8 September 2000 to 17 September 2001.
53 The third basis on which an interest in land was submitted to exist was that there was a legally binding Option Agreement arising from the conversation between the two men on 18 May 2001. It was common ground that an option over land confers an equitable interest in the land even before the option is exercised, and even when the option relates to a lot in an unregistered subdivision. (Re: Henderson's Caveat [1998] 1 Qd R 632; Jessica Holdings Pty Ltd v Anglican Property Trust Diocese of Sydney (1992) 27 NSWLR 140; Forder v Cemcorp Pty Ltd (2001) 51 NSWLR 486)
54 For the purpose of the present judgment, I do not propose to set out in any detail the evidence which has been filed on the part of the defendants. There is an affidavit of Mr Crosby which contests numerous of the parts of the evidence where Mr Clarke deposed to conversations between himself and Mr Crosby. For the purpose of an application such as the present, it seems to me that the appropriate way to proceed is on the basis that the plaintiff's evidence will, at trial, be accepted, though also noting that significant parts of that evidence are disputed. (Shercliff v Engadine Acceptance Corp Pty Ltd (1978) 2 NSWLR 729)
55 Even taking that approach there is, in my view, no serious question to be tried about whether there was any agreement for sale of land subject to a formal contract. The whole conduct of the parties in seeking to negotiate an Option Agreement arose from their mutual recognition that no agreement for the sale of land had, at that time, been entered.
56 Neither does it seem to me that there is a serious question to be tried concerning the arising of an interest in land from the Waltons v Maher type of estoppel. The alleged detriment is of the payment of money. It is well established, since The Commonwealth of Australia v Verwayen (1990) 170 CLR 394, that the appropriate remedy when an estoppel is established is the minimum remedy which would cure the injustice resulting from the defendant having resiled from a position which it had led the plaintiff to believe it was taking. Here, there is, in my view, no basis for saying that the minimum equity would extend any further than an order for the repayment of money.
57 The question of whether there is a legally binding Option Agreement is one which is, in my view, not quite so clear. The case that there was a legally binding Option entered into on 18 May is one which strikes me as a very weak case, but I do not think it should be said that it is completely non-existent. Under those circumstances, I then need to consider other elements which would go to the establishment of an enforceable agreement of the type alleged.
58 In the course of argument before me, the defendant submitted that any agreement made on 18 May 2001 was not enforceable because s 54A of the Conveyancing Act 1919 had not been complied with. Counsel for the plaintiff accepts that the Option Agreement, if it was entered into on 18 May, is one which does not comply with the requirements of s 54A of the Conveyancing Act 1919. Thus, it is necessary to establish that there are sufficient acts of part performance of that contract before it is legally enforceable.
59 One requirement of acts of part performance is that the acts must be unequivocally and in their nature referable to some such agreement as that alleged. (Maddison v Alderson (1883) 8 App Cas 467)
60 The Option Agreement is alleged to have been entered into on 18 May. I have said that the expenses connected with the preparation of the development application were incurred over the period up to 17 September 2001. Expenses which were incurred after 18 May 2001 related to geo-technical expenses, and also a planning consultant and some site design services. While it is well established that the mere payment of money is not able to be a sufficient act of part performance, it seems to me that there is a serious question to be tried whether the payment of expenses such as those which were incurred after 18 May 2001, which are related to this particular piece of land, could amount to sufficient acts of part performance.
61 I then turn to consider the topic of the balance of convenience.
62 There are several bases on which the defendants urge me to find that the balance of convenience favoured not permitting any caveat to continue. One was a suggested inadequacy of any undertaking as to damages. A company search was tendered which showed that the plaintiff was a company with a paid up capital of $2. I do not regard that in itself as particularly important evidence. There is also in evidence a search of South Creek Dairy which shows it has a paid up capital of $3, yet the evidence also discloses it owns land worth millions of dollars. In any event, Mr Clarke also proffers an undertaking as to damages.
63 It was also suggested damages were an adequate remedy because this was merely a commercial development. I do not agree with that submission. I see no reason in the present case to depart from the traditional view that equity regards each parcel of land as unique. Further, in this case the plaintiff has applied some money and intellectual effort to this particular piece of land by engaging a surveyor and other consultants to develop the subdivision plans. As well, there would be some difficulty in assessing damages because of the number of approved lots involved and the long period of time involved in carrying out the development.
64 However, the weakness of the case is a factor which is possible to take into account in any assessment of the balance of convenience. (OD Transport Pty Ltd v WA Govt Railways Commission (1987) 13 FCR 500; 71 ALR 356; Bullock v The Federated Furnishing Trades Society of Australasia (No 1) (1985) 5 FCR 464 (FC), at 472; Shercliff v Engadine Acceptance Corporation Pty Ltd [1978] 1 NSWLR 729 at 736 - 737; South Sydney District Rugby League Football Club Ltd v News Limited (1999) 169 ALR 120 ;[1999] FCA 1710 at [36] per Hely J)
65 This is a case where there was substantial delay. It is true that, in June 2001, Mr Clarke was asserting that Mr Crosby's company had gone back on an agreement. However, there was never any assertion that this agreement was one which was of itself legally binding until much later than June 2001. Even when the caveat was lodged, the agreement which was asserted to be legally binding was not the Option Agreement, but some earlier agreement for sale.
66 Further, the delay is not just delay by itself. It is delay in circumstances where a third party has acquired an interest in the land. I speak of the interest which has been acquired by the third party under the contract of 17 August 2001.
67 It may be the case that the circumstances in which that third party acquired its interest are such that, if there were to be a litigation between the present plaintiff and that third party about whether the Option Agreement had priority over the interest of the third party, the Option Agreement would be held to have lost priority by reason of the failure to lodge a caveat. As I understand the law on this topic, there is no obligation on a person who has an unregistered interest to lodge a caveat to preserve the priority of that interest - however, in certain circumstances failure to lodge a caveat may lead to loss of priority that the interest would otherwise have had.
68 Whether this occurs depends upon whether the failure to lodge the caveat, when considered in light of all the other circumstances, led another person to acquire an interest in the land on the mistaken assumption that the earlier unregistered interest did not exist (J & H Holdings Australia Pty Limited v Bank of New South Wales (1971) 125 CLR 546 at 554). In the present case, there is a realistic prospect that such a claim could be made out, although on the material before me I cannot express a view about whether it is more likely than not that it would be made out.
69 In all these circumstances, I have come to the view that the balance of convenience is such that the claim of the plaintiff to have an interest in the land over which the caveat was lodged, arising under the alleged oral Option Agreement, should not be permitted to be protected by an ongoing caveat.
70 At the time that there was discussion before me about the appropriate course to take, last Friday, when the prospect of treating the present application as an application under section 74O of the Real Property Act 1900 was raised, neither the parties nor I had focused on the difference between the interest which was asserted in the present proceedings (arising from the alleged option agreement of 18 May 2001), and the interest in the land which is asserted by the caveat. A caveat to assert an interest arising under the Option Agreement would not run foul of s 74O of the Real Property Act 1900. Section 74O says:
"(1) This section applies if a caveat lodged under a provision of this Part in respect of any particular estate or interest in land...lapses...and the same caveator lodges a further caveat with the Registrar General in respect of the same estate, interest or right and purporting to be based on the same facts as the first caveat.
(2) A further caveat to which this section refers has no effect unless:
(a) The Supreme Court has made an order giving leave for the lodgment of the further caveat and that order or an office copy of the order accompanies the further caveat when it is lodged with the Registrar General ...".