Ransa Sydney Squadron Ltd and Anor v Rushcutters Bay Maritime Reserve Trust and Anor [1999] NSWSC 569 (11 June 1999)

Last Updated: 11 June 1999

NEW SOUTH WALES SUPREME COURT

CITATION: RANSA Sydney Squadron Ltd & Anor v Rushcutters Bay Maritime Reserve Trust & Anor [1999] NSWSC 569 revised - 11/06/99

CURRENT JURISDICTION: Equity

FILE NUMBER(S): 3546/1998

HEARING DATE{S): 1, 2 and 3 February 1999

JUDGMENT DATE: 11/06/1999

PARTIES:

RANSA Sydney Squadron Ltd (First Plaintiff)

Thomas Reed Fisher representing Royal Australian Naval Sailing Association (Second Plaintiff)

Rushcutters Bay Maritime Reserve Trust (First Defendant)

Minister for Land and Water Conservation (Second Defendant)

JUDGMENT OF: Simos J

LOWER COURT JURISDICTION: Not Applicable

LOWER COURT FILE NUMBER(S): Not Applicable

LOWER COURT JUDICIAL OFFICER: Not Applicable

COUNSEL:

SJ Archer and GL Raffell for the plaintiffs

CRC Newlinds for the defendants

SOLICITORS:

Parry Carroll Kanjian for the plaintiffs

Michell Sillar for the defendants

CATCHWORDS:

CONTRACT - Agreement Between Commonwealth and State Governments.

CONTRACT - For Benefit of Third Party - No Trust Created in Favour of Third Party.

CONTRACT - No Concluded Agreement as to Terms of Proposed Lease.

PROMISSORY ESTOPPEL - Not Established.

CONVENTIONAL ESTOPPEL - Not Established.

ACTS CITED:

Crown Lands Act 1989 (NSW)

Crown Lands Consolidation Act 1913 (NSW)

Conveyancing Act 1919 (NSW)

DECISION:

Proceedings dismissed with costs.

JUDGMENT:

IN THE SUPREME COURT

OF NEW SOUTH WALES

EQUITY DIVISION

SIMOS J

FRIDAY, 11 JUNE 1999

RANSA SYDNEY SQUADRON LIMITED and THOMAS REED FISHER representing the members of the ROYAL AUSTRALIAN NAVAL SAILING ASSOCIATION v RUSHCUTTERS BAY MARITIME RESERVE TRUST and the MINISTER FOR LAND AND WATER CONSERVATION (NO. 3546/1998)

JUDGMENT

1 HIS HONOUR:

2 The Proceedings: By statement of claim filed 4 November 1998 the plaintiffs claimed in substance that one or other of them was entitled to a lease of certain land at Rushcutters Bay located at the northern end of a larger area of land which, until 1979, was Commonwealth land and used for naval purposes.

3 This entitlement to a lease was alleged to have arisen from an agreement entered into on or about 27 April 1979 between the Commonwealth of Australia, in which the subject land was then vested, and the State of New South Wales, whereby the Commonwealth, for the consideration set out therein, agreed to transfer the subject land, and certain other lands, to the State of New South Wales. The relevant term relied upon in the agreement was in the following terms:-

"(iv) The State Government further undertakes that following determination of the lease to the Commonwealth Government it will reserve the whole of the land for public recreation under the provisions of the Crown Lands Consolidation Act and will grant to the R.A.N. Sailing Association a lease of the property presently occupied by that Association."

4 It is alleged in the statement of claim that in breach of this term of the agreement, the defendants had not, and still refused, to grant to either of the defendants a lease as contemplated by the said term of the agreement.

5 It is further alleged in the statement of claim that one or other of the defendants had from time to time represented to one or other of the plaintiffs, that a lease would be granted in accordance with the said term of the agreement, and that the grant of such a lease on reasonable term was imminent. It is alleged that induced by such representations, and on the faith of such representations, the plaintiffs acted to their detriment, including paying rent, expending money and doing work, done by members of the plaintiffs, on maintenance and improvements of the boatshed and appurtenances erected on the said land, and by failing to find alternative premises elsewhere.

6 It is alleged that the defendants are, accordingly, estopped and precluded from denying that one or other of them is liable to grant a lease over the boatshed area to one or other of the plaintiffs on reasonable terms.

7 It is also alleged in the statement of claim that one or other of the defendants represented to one or other of the plaintiffs that, "over and above the lease of the boatshed area", the plaintiffs would be granted occupation of a reasonable and separate area upon the land for car-parking purposes. It is alleged that induced by such representations, and on the faith of such representations the plaintiffs have acted to their detriment in the manner referred to above. It is alleged that by reason of these representations also, the defendants are accordingly estopped and precluded from denying that one or other of them is liable to grant occupation of "a reasonable area upon the land, separate from the boatshed area" to one or other of the plaintiffs for car-parking purposes.

8 In the alternative, it is alleged that on or about 18 October 1994, in consideration of their mutual promises, the first defendant agreed to grant and the Royal Australian Naval Sailing Association agreed to take, upon terms and conditions then agreed upon, a lease, licence and/or right of way over the subject land, and that in breach of such agreement the first defendant has refused to grant such lease, licence and/or right of way to the Royal Australian Naval Sailing Association.

9 It is alleged in the alternative that, on or about 1 May 1991, in consideration of their mutual promises, the first defendant agreed to grant, and the first plaintiff agreed to take upon the terms and conditions then agreed upon a lease over the boatshed area and that in breach of such agreement the first defendant has refused to grant such lease to the first plaintiff.

10 It is further alleged in the alternative that, since 1 July 1990 or shortly thereafter, and until September 1998, one or other or both of the plaintiffs have, with the consent of the first defendant, used certain areas for car-parking purposes. It is alleged that during this period of time the first defendant on the one hand, and one or other of the plaintiffs on the other hand, have conducted their affairs and the relationship between them on the assumption that the area to be leased to one or other of the plaintiffs would include the area used for car-parking purposes, or that the first defendant would grant a lease, licence or right of way over such areas to one or other of the plaintiffs for car-parking purposes, or the first defendant would otherwise grant to one or other of the plaintiffs the right to use such areas for car-parking purposes and/or for access to a car-parking area. It is further alleged that the defendants are accordingly estopped and precluded from denying the said assumption.

11 In their defence the defendants deny the principal allegations contained in the statement of claim, and claimed that neither of the plaintiffs was entitled to any of the orders sought in the statement of claim.

12 Further, and in the alternative, the defendants allege that on 1 September 1997 the Minister for Lands adopted a plan of management in relation to, inter alia, the subject land, pursuant to section 114 of the Crown Lands Act 1989 (NSW) ("the plan of management"), which plan of management precluded car-parking on the land, by virtue of which performance of various of the agreements alleged by the plaintiffs was rendered legally impossible, with the result that neither of the plaintiffs was entitled to any of the relief sought.

13 In their written "Outline of Plaintiffs' Submissions" the plaintiffs submitted that they were entitled to a lease upon four legal bases, namely:-

"(a) Upon the 1979 Agreement, which was plainly made by the parties to it for the benefit of one or other of the Plaintiffs (Statement of Claim, para. 8-12.).

(b) Upon estoppel by representation (Statement of Claim, paras. 13-15 and 16-18).

(c Upon an agreement made in January 1995 (rather than October 1994 as pleaded) (Statement of Claim, paras. 19-20) or in May 1991 (Statement of Claim, para. 21-22).

(d) Upon conventional estoppel (Statement of Claim, para. 23-26)."

14 In relation to the reliance by the Defendants upon the making of the plan of management, the Outline of Plaintiffs' Submissions submitted as follows:-

"The short answer to that defence is that the provisions of `a plan of management' made a time when the second defendant well knew of the rights of Plaintiffs, cannot operate to defeat those rights. Otherwise, the Defendants would be entitled to rely on self-created `impossibility' to avoid their plain obligations."

15 The Facts:

16 The subject land, upon part of which is erected a boatshed, and which the plaintiffs claim to have been in the occupation of one or other of the plaintiffs for some time, is Crown land within the meaning of the Crown Lands Act 1989 (NSW), and the second defendant is the Minister of the Crown responsible for that land.

17 Prior to 27 April 1979 the subject land was vested in the Commonwealth of Australia and, on or about that date, the Commonwealth of Australia and the State of New South Wales entered into an agreement for the transfer of certain land including the subject land by the Commonwealth of Australia to the State of New South Wales. The agreement was contained in an exchange of letters, being a letter dated 27 April 1979 from the then Premier of New South Wales to the then Prime Minister of the Commonwealth and attachments thereto, and a letter dated 30 April 1979 from the then Prime Minister of the Commonwealth to the then Prime Minister of New South Wales and attachments thereto (being the same attachments as were attached to the letter dated 27 April 1979).

18 The said letters were in the following terms:-

"27 April 1979

Dear Mr. Fraser,

I refer to the agreements in principle reached in Sydney on 15th December, 1978 between my colleague, the Hon. W.F. Crabtree, M.P., the New South Wales Minister for Lands, and the Hon. J.E. McLeay, M.P., Minister for Administrative Services, concerning the exchange of certain Commonwealth and State lands in New South Wales. These agreements were subsequently confirmed by our two Governments.

It was proposed that the arrangements agreed upon should be embodied in Letters of Intent between our Governments. These would include all the essential elements of the matters negotiated, including the proposed pooling arrangements, to obviate delay in effecting the transfers of the lands concerned. I concur in this proposal, and accordingly confirm on behalf of the State that the understandings set out in the attachments to this letter (Attachments 1 to 13) are to apply, as relevant, to the land exchanges covered by the proposed pooling arrangement.

It is my understanding that you are sending a letter similar to this to confirm these arrangements. I agree that the exchange of these letters authorises the transfer of titles of the areas referred to above.

The land exchanges are of considerable importance to the people of this State and it is a matter of great satisfaction to my Government that these agreements have been reached and that the way is now clear for the land exchanges to be effected quickly. I would like to express appreciation for the co-operation received from your colleague, the Hon. JE McLeay, MP, during the negotiations.

Yours sincerely,

(sgd.) Neville Wran

Premier."

"Prime Minister

Canberra

30 April 1979

My dear Premier,

I refer to the agreements in principle reached in Sydney on 15th December, 1978 between my colleague, the Hon. JE McLeay, MP, Minister for Administrative Services and the Hon. WF Crabtree, MLA, the New South Wales Minister for Lands, concerning the exchange of certain Commonwealth and State lands in New South Wales. These agreements were subsequently confirmed by the two Ministers.

It was proposed that the agreed arrangements should be embodied in Letters of Intent between our Governments. These would include all the essential elements of the matters negotiated, including the proposed financial pooling arrangements to obviate delay in effecting the transfers of the lands concerned. I concur with this proposal, and accordingly confirm on behalf of the Commonwealth that the understandings set out in the attachments to this letter (Attachments 1 to 13) are to apply, as relevant, to the land exchanges covered by the proposed pooling arrangement.

It is my understanding that you are sending a letter similar to this to confirm these arrangements. I agree that the exchange of these letters authorises the transfer of titles of the areas referred to above.

The proposed land exchanges have been the subject of negotiations between successive Commonwealth and State Governments and it is a matter of considerable satisfaction to my Government that an equitable and amicable conclusion to these negotiations has now been achieved. I should like in particular to express appreciation for the co-operation received from Mr. Crabtree during the negotiations.

Yours sincerely,

(sgd.) Malcolm Fraser

Malcolm Fraser."

19 Attachment 9 to each of the said letters provided, inter alia, as follows:-

"(iii) The State Government undertakes to lease the land to the Commonwealth following transfer at a peppercorn rental ...

(iv) The State Government further undertakes that following termination of the lease to the Commonwealth Government it will reserve the whole of the land for public recreation under the provisions of the Crown Lands Consolidation Act and will grant to the R.A.N. Sailing Association a lease of the area presently occupied by that Association."

20 As at 27 April 1979 (and presumably also as at 30 April 1979), the first plaintiff was not incorporated, but was a branch of the Royal Australian Naval Sailing Association ("RANSA") which is, and has at all material times been, an unincorporated voluntary association.

21 As at 27 April 1979 the boatshed then on the land was occupied by the second plaintiff, and the plaintiffs claim that, as at that date, one or other of them had the use of certain other land for car-parking purposes.

22 By notification published in the New South Wales Government Gazette on 16 January 1987, pursuant to section 28 of the Crown Lands Consolidation Act 1913 (NSW), the then New South Wales Minister for Lands declared that the land was reserved from sale for certain public purposes, namely, public recreation and maritime purposes.

23 By notification published in the New South Wales Government Gazette on 26 June 1987, pursuant to section 37O of the Crown Lands Consolidation Act 1913 (NSW), the then Minister for Lands appointed certain persons to be trustees of the land for a term of five years and declared such trustees and their successors in office to be a corporation having assigned to it the name "Rushcutters Bay Maritime Reserve Trust".

24 By transfer registered No. R830805 dated 24 April 1980 the land was transferred by the Commonwealth of Australia to Her Majesty Queen Elizabeth II in right of the State of New South Wales, as Crown lands within the meaning of the Crown Lands Consolidation Act 1913 (NSW).

25 On 2 September 1981 the land was leased back to the Commonwealth of Australia by the State of New South Wales and, on or about 11 August 1987, the lease was formally relinquished by the Commonwealth of Australia.

26 Since that relinquishment no lease has been granted to either of the plaintiffs in respect of the land and the plaintiffs claim that this is in breach of the agreement contained in clause (iv) as set out above to Attachment 9 to the letters of 27 April 1979 and 30 April 1979 set out above.

27 By their defence the defendants say:-

"That at all material times since the Trust (the first defendant) came into existence it has been prepared to enter into a lease with RANSA of the boatshed area (as that term is defined in the Statement of Claim) on reasonable terms."

28 The defendants, however, submit, in substance, that "reasonable terms" are a matter for agreement between the parties, and that if the parties are unable to agree, there is no enforceable agreement which can be enforced by the Court. In other words, the submission in this connection is to the effect that an agreement to agree on reasonable terms is an agreement to agree, which is no agreement at all.

29 Following the exchange of correspondence in April 1979 referred to above, there was considerable further correspondence over a period of almost twenty years relating to the proposed grant of a lease to the second plaintiff, including negotiations as to the terms to be included in any such lease, until the letter dated 22 July 1998 from the solicitors for the plaintiffs to the solicitors for the defendants in which it was stated that the plaintiffs proposed to commenced proceedings in the Supreme Court. The proceedings were commenced on 13 August 1998 when a summons was filed. Prior to that date the parties had been negotiating for the grant of a lease by the first defendant to the second plaintiff but no agreement had been reached in relation to its terms. It is both impractical and unnecessary to set out the whole, or, indeed, any substantial part of the voluminous correspondence which, as stated above, was written over a period of almost 20 years.

30 Submissions of the Plaintiffs

31 The First Submission of the Plaintiffs

32 The first of the four legal bases upon which the plaintiffs base their claim to be entitled to a lease was set out in the written Outline of Plaintiffs' Submissions referred to above in the following terms:-

"(a) Upon the 1979 Agreement, which was plainly made by the parties to it for the benefit of one or other of the Plaintiffs (Statement of Claim, paras. 8-12)."

33 In further elaboration of this submission the plaintiffs' Outline contained the following paragraph:-

"2.2 As to the 1979 Agreement, the Plaintiffs' case is as follows:-

(a) The terms of the Agreement are plain and unambiguous ... On its face it was made, inter alia, for the benefit of the RAN Sailing Association. From the moment that the Agreement was concluded, alternatively from the moment that the land was transferred by the Commonwealth to the State pursuant to the 1979 Agreement in April 1980 ... the State held the right of RANSA to have a lease over the relevant part of the land upon trust for RANSA absolutely. Although RANSA was a `third party' to the 1979 Agreement, equity will intervene so as to enable it to obtain an order for specific performance of the obligation of the Defendants to grant a lease to RANSA

(b) The relevant principles are found generally in ... (reference was made here to various texts and authorities).

(c The Court is entitled to take into account the circumstances surrounding the making of the Agreement, including statements made by the parties at the time and subsequently, to determine whether such a trust arose ... such statements include those found at AB074, AB075, AB077."

34 Document 074 is a Minute dated 6 December 1985 to the First Assistant Secretary of the Commonwealth Department of Defence in Canberra from the Chief Property Officer for New South Wales of the Department of Local Government and Administrative Services. That Minute contains, inter alia, the following paragraph:-

"Generally we have proposed that Option 3 should be supported, particularly in view of the Command Sailing Centre requirements, and have suggested that any additional value for the change of the `intended' use of the site to a mixed use of public recreation and unreserved Crown Land should be offset by a long term lease/tenancies for the Command Sailing Centre and RAN Sailing Association in the proposed National Sailing Centre (former Administration Building) at nominal rentals with free use of the associated sailing and parking facilities, including the Sayonara Slipway on a priority basis.

Further advice will be forwarded as soon as the Minister's views on the State's proposal have been received."

35 Option 3 is referred to in a letter dated 27 November 1985 from the Minister for Public Works, Ports and Roads of New South Wales to the solicitors for the plaintiff in the following paragraph:-

"In keeping with the Government's intention to make available to the general public as much foreshore area of the Harbour as possible, the Board supports the proposal by the Crown Lands Office as contained in its Option 3. This Option allows for restoration of the foreshore land to recreation use yet at the same time, allows for use by specific groups of boat users and general public access to the waterways."

36 Document 075 is a letter dated 9 December 1986 from the Minister for Agriculture, Lands and Forests, New South Wales, to the Principal Private Secretary, Office of the Minister for Local Government and Administrative Services, Sydney, and contains, inter alia, the following paragraphs:-

"The transfer was conditional upon the land being reserved for public recreation, and provision for the RAN Sailing Association to retain its use of part of the land ...

The Navy has indicated that it is interested in leasing one building so as to enable its Naval Sailing Centre to continue at this location and RANSA also wish to stay there ...

This is a happy coincidence as the income from any lease negotiated would assist the trust to fund the restoration and renovation necessary to other buildings, and maintain them thereafter."

37 Document 077 is a submission to the Minister for Local Government and Administrative Services from the Acting Secretary of the Department dated 10 December 1986 which was apparently approved by the Minister and contained, inter alia, the following paragraphs:-

"However, further to your recent inspection of the site, the following strategy was accordingly discussed and now forwarded for your consideration.

* The site be reserved for `public recreation and maritime purposes' ...

* A private trust be appointed to manage the reserve.

* The trust be incorporated under the assigned name of the `Rushcutters Bay Maritime Reserve Trust'.

* The trust be required to prepare a plan of management for the reserve having regard to its anticipated use by the Royal Australian Navy, the Royal Australian Navy Sailing Association and a Unit of the Naval Reserve Cadets.

* Occupation of the various buildings (to be retained) within the reserve be ratified by lease agreements between the trust and the respective lessees."

38 Paragraphs 11 and 12 of the Statement of Claim are in the following terms:-

"11. In the premises, the promises made by the State Government and set out in paragraph 9 above were made for the intended benefit of the Squadron or RANSA and one or other of them is entitled to bring these proceedings to enforce them. [Paragraph 9 of the Statement of Claim sets out the matter quoted in paragraph 19 of this judgment.]

12. Pursuant to the said agreement the land was leased to the Commonwealth of Australia and such lease was terminated on or about 13 August 1987 but in breach of clause (iv) set out in paragraph 9 above, the Defendants have not, and still refuse to, grant to either the Squadron or RANSA a lease of the boatshed area of the kind contemplated by the said agreement or at all."

39 The passages relied upon by the plaintiffs in the various authorities cited on their behalf include following:-

"Then there is the trust of the contractual promise on which the appellant places particular reliance as a palliative of the difficulties generated by the common law principles. Despite the insistence ...on the need for a clear expression of intention to create a trust and the warning that such an intention cannot necessarily be inferred from general words, there are a number of authorities which justify the difficulty expressed by Fullagar J in understanding the reluctance of the court sometimes to infer trusts ... in (certain authorities) the courts readily inferred the existence of a trust from the circumstance that the contract was made for the benefit of a third party ... critics of the common law rules have pointed to the uncertainty surrounding the circumstances in which the courts will recognise a trust in contracts for the benefit of third parties as a reason for rejecting the trust concept as a sufficient answer to the difficulties caused by those rules ...

This apparent uncertainty should be resolved by stating that the courts will recognise the existence of a trust when it appears from the language of the parties, construed in its context, including the matrix of circumstances, that the parties so intended. We are speaking of express trusts, the existence of which depends on intention. In divining intention from the language which the parties have employed, the courts may look to the nature of the transaction and the circumstances, including commercial necessity, in order to infer or impute intention. ...

But, even if adherence to this approach produces greater consistency of outcome, there are still the cases where the third party has no remedy because there is no sufficient intention to create a trust" ...: per Mason CJ and Wilson J in Trident General Insurance Co. Ltd. v McNiece Bros Pty. Ltd. [1988] HCA 44; (1987-1988) 165 CLR 107 at 120-121.

...the requisite intention to create a trust of a contractual promise to benefit a third party can, however, be formed and carried into effect (either by the contract itself or some other act) by a promisee who would be bemused by the information that the chose in action constituted by the benefit of a contractual promise is property and uncomprehending of the distinction between law and equity ... In the context of such a contractual promise, the requisite intention should be inferred if it clearly appears that it was the intention of the promisee that the third party should himself be entitled to insist upon performance of the promise and receipt of the benefit and if trust is, in the circumstances, the appropriate legal mechanism for giving effect to that intention. A fortiori, equity's requirement of an intention to create a trust will be at least, prima facie, satisfied if the terms of the contract expressly or impliedly manifest that intention as the joint intention of both promisor and promisee ...

The question whether a particular contract itself creates a trust of the benefit of one or more of the promises which it contains is primarily a question of the construction of the terms of the contract. Those terms must, however, be construed in context and a trust of a contractual promise will obviously be more readily discerned in the terms of some classes of contract than it will in others": per Deane J, ibid, at 147-148.

"... That the common law rule was a rule which could operate unjustly in some circumstances may be conceded, but equity could and did intervene in many cases by treating the promisee as a trustee of a promise made for the benefit of a third party, and allowing the third party to enforce the promise, making the promisee - trustee, if necessary, a defendant in an action against the promisor ... It is difficult to understand the reluctance which courts have sometimes shown to infer a trust in such cases" per Fullagar J in Wilson v Darling Island Stevedoring and Lighterage Co. Ltd. [1956] HCA 8; (1955-1956) 95 CLR 43 at 67.

"The case for recognising a contract for the benefit of a third party is simple and straightforward. The autonomy of the will of the party should be respected. The law of contract should give effect to the reasonable expectations of contracting parties. Principle certainly requires that a burden should not be imposed on a third party without his consent. But there is no doctrinal, logical or policy reason why the law should deny effectiveness to a contract for the benefit of a third party where that is the expressed intention of the parties. Moreover, often the parties and particularly third parties, organise their affairs on the faith of the contract. They rely on the contract. It is therefore unjust to deny effectiveness to such a contract. I will not struggle further with the point since nobody seriously asserts the contrary" per Steyn L.J. in Darlington Borough Council v Wiltshier Northern Ltd. [1994] EWCA Civ 6; (1995) 1 WLR 68 at 76.

40 Counsel also referred to Meagher and Gummow, Jacob's Law of Trusts in Australia (6ed. - 1997) at paras. 221-225 and Seddon and Ellinghaus, Cheshire and Fifoot's Law of Contract (7 Aust. ed. - 1997) at paras. 7.43-7.49.

41 In my opinion, the submission made on behalf of the plaintiffs that "From the moment that the Agreement was concluded, alternatively from the moment that the land was transferred by the Commonwealth to the State pursuant to the 1979 Agreement in April 1980 ... the State held the right of RANSA to have a lease over the relevant part of the land upon trust for RANSA absolutely" must be rejected.

42 In this connection it should be observed, firstly, in my opinion, that the words of clause (iv) record an undertaking by the State Government that it will grant a lease, the precise words being "The State Government further undertakes that ... it will ... grant a lease". In my opinion, these words, according to their plain, ordinary meaning must be construed in their context as involving only "an undertaking" by the State Government to the Commonwealth Government and cannot be construed as "an undertaking" by the State Government to RANSA, or as it is described in clause (iv) "RANSA Sailing Association".

43 Secondly, in my opinion, it is extremely unlikely that those acting on behalf of the State Government would have intended that the State Government should be regarded, in effect, as giving such an undertaking directly to RANSA. The letters dated 27 April 1979 and 30 April 1979 referred to above passed between the then Premier of the State of New South Wales and the then Prime Minister of the Commonwealth and it cannot, in my opinion, be inferred that those acting on behalf of those entities had, in the circumstances, any intention that the State Government in that exchange of that correspondence would be giving any undertaking to RANSA or any intention that RANSA should itself be able to enforce that undertaking against the State Government.

44 These textual and contextual considerations also militate, in my opinion, against any view that it should be inferred that both Governments intended to create a trust of the right of RANSA to have a lease, to the intent that RANSA would be able to enforce such rights as it might have if the Commonwealth Government failed to take proceedings to enforce the State Government undertaking to it to grant a lease to RANSA.

45 If, as in my opinion is the case, clause (iv) is not to be construed as recording, in effect, an undertaking by the State Government to RANSA, it is, in my opinion, even more certain that the clause cannot be construed so as to give rise to such a trust. Nor, in my opinion, do the references to which attention has been drawn by the plaintiffs by way of example in the correspondence suggest any contrary view. Those references and many others, indicate no more than that it was genuinely intended by relevant governments that a lease would be granted, but they certainly, in my opinion, are not evidence of any intention on the part of the relevant parties to create a trust in favour of RANSA of a right to obtain a lease.

46 In my opinion, in the context of the relevant circumstances, the parties to the exchange of land agreements did not intend to create a trust in favour of the plaintiffs not least, inter alia, because in my opinion, they would not have intended that the plaintiffs or either of them could sue to enforce, in effect, the agreement between them, and more especially because there had been no agreement or specification of the more detailed terms of any such lease in circumstances in which, in my opinion, parties of the nature of the parties to the exchange of lands agreement would require to be negotiated before final agreement on those terms was reached. Nor, of course, was there any commercial or other necessity in the context of the relevant circumstances for the position to be otherwise. In this respect the present situation is, in my opinion, very different from the circumstances in the Trident case. As Deane J said, supra, "a trust of a contractual promise will obviously be more readily discerned in the terms of some classes of contract than it will in others" (at 148).

47 In any event, even if it were to be held that such a trust as is alleged by the plaintiffs did, prima facie, come into existence, any such trust would, in my opinion, as submitted, in effect, by the defendants, be void for uncertainty, having regard to the failure of clause (iv) to specify what the terms of the contemplated lease between the State Government and RANSA would be. Indeed, again as submitted, in substance, by the defendants, this consideration makes it plain, in my opinion, that clause (iv), at least insofar as it deals with the grant of a lease from the State Government to RANSA, is void for uncertainty and therefore, unenforceable. This is so, in my opinion, even if clause (iv) could be construed as if it contained a provision to the effect that the contemplated lease would be granted on "reasonable" terms since, in my opinion, there is nothing in clause (iv) to suggest that the parties to that clause, namely, the State Government and the Commonwealth Government, had in mind any standard by reference to which the reasonableness of suggested terms of the lease could be measured.

48 Any lease that might have been granted by the State Government to RANSA of what would otherwise have been public land accessible to the whole public would, of course, be expected to be of some complexity, as later negotiations confirm, and this, in my opinion, coupled with the absence of any intention on the part of the parties to prescribe a standard by reference to which reasonableness might be measured, also adds support to the conclusion that the clause is void for uncertainty and unenforceable. I add that I recognise, of course, that in other circumstances, a provision in the contract which requires the Court to make a judgment as to the reasonableness of some provisions in a contract, may, depending upon the circumstances, be enforceable but, in my opinion, this is not such a case. I would also add that in the present circumstances the provisions of sections 84 and 85 of the Conveyancing Act 1919 (NSW) which imply certain terms into any lease are of no avail to the plaintiffs since the operation of those sections requires the prior existence of a lease into which the terms are to be implied.

49 The Second Submission of the Plaintiffs

50 The next submission on behalf of the plaintiff was to the effect that one or other of the plaintiffs was entitled to a lease upon the basis of:-

"(b) Estoppel by representation (Statement of Claim, paras. 13-15 and 16-18)."

51 Paragraphs 13-15 of the Statement of Claim are in the following terms (omitting the particulars of paragraphs 13 and 14):-

"13. Further, or in the alternative, one or other of the Defendants has, from time to time, represented to one or other of the Squadron or RANSA that:-

13.1 The Agreement referred to in paragraph 8 above would be complied with;

13.2 The grant of a lease on reasonable terms over the boatshed area was imminent ...

14. Induced by such representations and on the faith of such representations the Squadron and RANSA acted to their detriment ...

15. The Defendants are accordingly estopped and precluded from denying that one or other of them is liable to grant a lease over the boatshed area to one or other of the Plaintiffs on reasonable terms."

52 Paragraphs 16-18 of the Statement of Claim (omitting the particulars contained in paragraphs 16 and 17) are in the following terms:-

"16. Further, or in the alternative, one or other of the Defendants represented to one or other of the Squadron or RANSA that, over and above the lease of the boatshed area, the Squadron or RANSA would be granted occupation of a reasonable and separate area upon the land for car-parking purposes ...

18. The Defendants are accordingly estopped and precluded from denying that one or other of them is liable to grant occupation of a reasonable area upon the land, separate from the boatshed area, to one or other of the Squadron or RANSA for car-parking purposes."

53 Further elaboration of this submission is set out in the Outline of Plaintiffs' Submissions" as follows:-

"2.3. As to the claim founded upon estoppel by representation, the Plaintiffs' put their case as follows:-

(a) The evidence shows an unbroken continuum of representations since 1979 by both Defendants and by their predecessors, by whose representations the Defendants are bound, that a lease would be given to one or other of the Plaintiffs ...

(b) While the representations differ as to the terms upon which such a lease will be granted, they are unequivocal upon the critical point, namely, that a lease will be granted. Put at their lowest these representations can only be understood as meaning that the Plaintiffs would be granted a lease in accordance with the 1979 Agreement. (underlining supplied).

(c Upon the faith of these representations, the plaintiffs have acted to their detriment ...

(d) By reason of these representations, accompanied by reliance by the Plaintiffs to their detriment, the Defendants are estopped from denying that they are bound to grant one or other of the Plaintiffs a lease. That conclusion necessarily flows from an application of the principles explained in Waltons Stores (Interstate) Ltd. v Maher [1988] HCA 7; (1987-1988) 164 CLR 387 ...".

54 Some of the particulars of the representations relied upon by the plaintiffs relate to correspondence passing between representatives of State and Commonwealth Government Departments which are not shown to have come to the attention of the plaintiffs or either of them. Other such particulars relate to correspondence with one or other of the plaintiffs from one or other of the defendants which cannot, in my opinion, on their true construction, be construed as unequivocal representations that a lease "would be given" upon any particular terms to one or other of the plaintiffs. Thus, one of the letters relied upon by the plaintiffs is the letter dated 10 March 1989 from the Secretary of the Rushcutters Bay Maritime Reserve Trust to RANSA which is in the following terms:-

"Your solicitors have formally requested the Trust's agreement to permanent occupation of its present location by RANSA.

At a meeting on 8 March 1989 the Trust agreed to recommend to the Minister that a long term lease of the existing premises be granted to RANSA as a matter of urgency.

There are, of course, some details to be discussed and the Trust has appointed a sub-committee to meet with RANSA and resolve any issues, including a formula for the determination of rent. They will be in touch with you shortly."

55 By way of example, in my opinion, the representation, if any, contained in this letter to the effect that a lease "would be given to one or other of the plaintiffs", is subject to qualifications and therefore is not unequivocal in relation to "details to be discussed and ... (resolution) of any issues, including a formula for the determination of rent". In my opinion, that letter cannot therefore be regarded as an unequivocal representation that a lease "would be given to one or other of the plaintiffs" on any particular terms.

56 The same is true of a further letter particularised by the plaintiffs, namely, the letter of 23 May 1989 from the Secretary of the Rushcutters Bay Maritime Reserve Trust to RANSA which contains the following passages:-

"As has been verbally indicated by both the Chairman of the Trust and myself to you and your solicitors it is not possible to finalise the Lease details until the presently unresolved matter of the joint occupation of the Boatshed by RANSA and the Naval Command Sailing Centre is decided ...When you have resolved this with the Navy, we will be able to enter into final negotiations with RANSA." (underlining supplied).

57 Once again, the reference to entering into "final negotiations" makes it plain that this letter cannot be construed as an unequivocal representation to the effect that a lease on particular terms certainly "would be given" to one or other of the plaintiffs.

58 Another letter particularised by the plaintiffs is the letter dated 2 January 1990 from the Minister for Natural Resources to the solicitors for the plaintiffs which contains the following paragraph:-

"As you are aware, transfer of the former Naval depot, HMS Rushcutter, was partly conditional upon RANSA being granted a lease of the area it occupied. In this regard, it is the intention of the Department of Lands for RANSA and the Reserve Trust to negotiate an appropriate lease which will ultimately require my approval."

59 Once again, reference is made to the necessity to "negotiate" which makes it impossible, in my opinion, to regard the letter as constituting either alone or in conjunction with other letters, an unequivocal representation that a lease certainly "would be granted" to one or other of the plaintiffs on any particular terms.

60 Another letter relevantly of the same nature, particularised by the plaintiffs, is the letter of 23 April 1991 from the Trust to RANSA which contains the following sentences:-

"It makes a resolution of the terms of the lease urgent so as to enable you to make the necessary alternative arrangements. It would therefore seem appropriate to reopen discussions at the earliest opportunity."

61 Further, from time to time in the correspondence reference is made to the submission of a draft lease from the Trust to RANSA for approval, for example, in the letter of 5 June 1991 from a representative of the Trust to RANSA. Eventually, by letter dated 11 July 1991 from a representative of the Trust to RANSA a draft lease is submitted for approval which is said to have been sent "subject to the approval of the Trustees and the Minister for Lands". The draft lease enclosed contained 32 clauses.

62 On 22 November 1991 a further draft lease was forwarded from a representative of the Trust to RANSA with a covering note in the following terms:-

"Draft lease as discussed. It follows the Specimen Lease prescribed by the Department for these things - with the exceptions of clauses 30 and 31. The question of car-parking perhaps we could discuss when you have had a chance to look at the draft."

63 A further letter particularised by the plaintiffs is the letter dated 8 January 1993 from the Secretary of the Trust to RANSA which contains the following paragraphs:-

"I can assure you that every effort is being made to complete formal documentation of the lease acceptable to both parties for rationalisation on the appointment of a new Maritime Trust by the Minister for Conservation and Land Management."

64 A letter dated 16 February 1993 from the Minister for Conservation and Land Management and Minister for Energy of the State of New South Wales to the solicitors for RANSA contains the following passages:-

"A new Trust for the Reserve has been appointed and negotiations may now be resumed with the Trust to finalise the terms of the lease ...

When a draft lease is submitted by the Trust for my consideration, action will be taken to expedite the process." (underlining supplied).

65 The letter dated 16 August 1993 from the Trust to RANSA included the following paragraph:-

"The Maritime Trust is currently proceeding to complete a revised plan of management for the site and the completion of formal leasing arrangements with the various occupants of the Reserve area forms part of the Trust's overall considerations in the matter."

66 By letter dated 18 October 1994 from a representative of the Trust to the solicitors for RANSA a further draft lease was submitted containing 33 clauses. Clause 33 was in the following terms:-

"33. Notwithstanding any to the contrary herein contained or implied the lessee at its own expense within 24 months from the date hereof shall carry out the repairs and renovations listed in the document of even date herewith at an estimated cost of $200,000, which such amount includes the cost of painting and other work hereinbefore referred to."

67 A further letter dated 8 January 1993 from the Trust to Mr. Price contained the following paragraphs:-

"I would suggest that in the absence of a formally constituted Trust, there are no real avenues open to complete a lease with the Association at this stage. However, it would be appropriate for a draft to be drawn up which incorporates those issues detailed in the Trust's letter to Commodore Fisher of 19th May 1992, - copy enclosed.

I assume that any legal work would be undertaken by Blake, Dawson, Waldron and if this is the case, could you contact the Company with a view to it preparing a draft lease as early as practicable."

68 There followed further negotiations between the parties relating to the terms of the lease and by letter dated 31 August 1995 the Minister for Land and Water Conservation to RANSA the Minister advised that:-

"The finalisation of the Association's lease has been held up pending the finalisation of a Plan of Management for the Reserve ... These issues will need to be resolved before the question of the Association's lease can be finalised."

69 As has been stated above the parties never agreed to the terms of the proposed lease and eventually the present proceedings were commenced on 13 August 1997.

70 The relevant principles in relation to representations relied upon by the plaintiffs in the present proceedings are as set out in the decision of the High Court in Waltons Stores (Interstate) Ltd. v Maher, supra.

71 The passages upon which counsel for the plaintiffs relied in this decision included the following:-

"One may therefore discern in the cases a common thread which links them together, namely, the principle that equity will come to the relief of a plaintiff who has acted to his detriment on the basis of a basic assumption in relation to which the other party to the transaction has `played such a part in the adoption of the assumption that it would be unfair or unjust if he were left free to ignore it' ... Equity comes to the relief of such a plaintiff on the footing that it would be unconscionable conduct on the part of the other party to ignore the assumption ...

The foregoing review of the doctrine of promissory estoppel indicates that the doctrine extends to the enforcement of voluntary promises on the footing that a departure from the basic assumptions underlying the transaction between the parties must be unconscionable. As failure to fulfil a promise does not of itself amount to unconscionable conduct, mere reliance on an executory promise to do something, resulting in the promisee changing his position or suffering detriment, does not bring promissory estoppel into play. Something more would be required. Humphreys Estate suggests that this may be found, if at all, in the creation or encouragement by the party estopped in the other party of an assumption that a contract will come into existence or a promise will be performed and that the other party relied on that assumption to his detriment to the knowledge of the first party. Humphreys Estate referred in terms to an assumption that the plaintiff would not exercise an existing legal right or liberty, the right or liberty to withdraw from the negotiations, but as a matter of substance such an assumption is indistinguishable from an assumption that a binding contract would eventuate. On the other hand the United States experience suggests ... that the principle is to be expressed in terms of a reasonable expectation on the part of the promisor that his promise will induce action or forbearance by the promisee, the promise inducing such inaction or forbearance in circumstances where injustice arising from unconscionable conduct can only be avoided by holding the promisor to his promise": per Mason CJ and Wilson J at 404-407.

"Parties who are negotiating a contract may proceed in the expectation that the terms will be agreed and a contract made, but so long as both parties recognise that either party is at liberty to withdraw from the negotiations at any time before the contract is made, it cannot be unconscionable for one party to do so. Of course, the freedom to withdraw may be fettered or extinguished by agreement but, in the absence of agreement, either party ordinarily retains his freedom to withdraw. It is only if a party induces the other party to believe that he, the former party, is already bound and his freedom to withdraw has gone that it could be unconscionable for him subsequently to assert that he is legally free to withdraw.

It is essential to the existence of an equity created by estoppel that the party who induces the adoption of the assumption or expectation knows or intends that the party who adopts it will act or abstain from acting in reliance on the assumption or expectation ... When the adoption of an assumption or expectation is induced by the making of a promise, the knowledge or intention that the assumption or expectation will be acted upon may be easily inferred ...

The unconscionable conduct which it is the object of equity to prevent is the failure of a party, who has induced the adoption of the assumption or expectation and who knew or intended that it would be relied on, to fulfil the assumption or expectation or otherwise to avoid the detriment which that failure would occasion. The object of the equity is not to compel the party bound to fulfil the assumption or expectation; it is to avoid the detriment which, if the assumption or expectation goes unfulfilled, will be suffered by the party who has been induced to act or to abstain from acting ...

In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them, and in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise": per Brennan J at 423-429.

72 In this connection it is critical to identify the particular assumption (or expectation) which the other party is said to have induced, created or encouraged. In the present case it was submitted on behalf of the plaintiffs, in effect, that the assumption induced was an assumption on the part of either or both of the plaintiffs that the State Government would grant a lease to one or other of the plaintiffs. The difficulty, however, which, in my opinion, the plaintiffs face, is that an assumption expressed simply in terms that a lease would be granted, says nothing about the terms upon which it was said to be assumed that such a lease would be granted. There have, of course, been various submissions made on behalf of the plaintiffs to the effect that, in some way, the terms of the lease were to be implied, but elsewhere in this judgment I have rejected those submissions. Accordingly, in my opinion, in the absence, as I have found, of any common assumption as to the terms upon which any lease would be granted, the submissions of the plaintiff in this connection must be rejected.

73 In accordance with the above stated principles, I am of the opinion that it cannot be said that the defendants made unequivocal representations to the plaintiffs to the effect that a lease "would be given" to one or other of the plaintiffs on any particular terms. In my opinion, it was always made abundantly clear in the correspondence that the granting of any lease to any plaintiffs or either of them would be subject to negotiation and agreement between the parties. In those circumstances, the defendants are not, in my opinion, estopped from denying that they were or are bound to grant to the plaintiffs, or either of them, a lease on any particular terms.

74 It follows, in my opinion, that the submissions of the plaintiffs as to estoppel by representation must be rejected. The same is true, in my opinion, as to the alleged representations of the defendants relied upon by the plaintiffs in relation to the granting to one or other of the plaintiffs of "occupation of a reasonable and separate area upon the land for car-parking purposes." (see later).

75 The Third Submission of the Plaintiffs

76 The third submission on behalf of the plaintiffs was to the effect that they were entitled to a lease upon the basis of:-

"(c An agreement made in January 1995 (rather than October 1994 as pleaded)(Statement of Claim, paras. 19-20) or in May 1991 (Statement of Claim, paras. 21-22)."

77 Paragraphs 19-20 of the Statement of Claim, omitting particulars, are in the following terms:-

"19. In the alternative, on or about 18 October 1994, in consideration of their mutual promises, the First Defendant agreed to grant and RANSA agreed to take upon, terms and conditions then agreed upon, a lease, and/or right of way over the whole of the land described in the Schedule described in the Summons ...

20. In breach of such agreement, the First Defendant refused to grant such a lease, licence or right of way to RANSA."

78 Paragraphs 21-22 to the Statement of Claim, omitting particulars, are in the following terms:-

"21. In the alternative, on or about 1 May 1991, in consideration of their mutual promises, the First Defendant agreed to grant, and the Squadron agreed to take, upon the terms and conditions then agreed upon, a lease over the Boatshed area ...

22. In breach of such agreement, the First Defendant has refused to grant such a lease to the Squadron."

79 In further elaboration of this submission the Outline of Plaintiffs' Submissions contained the following paragraph:-

"2.4. As to the contract claims the Plaintiffs say as follows:-

(a) The evidence shows that either in January 1995 or in May 1991, there was a binding agreement between the parties for the granting of a lease. The former was constituted by the documents identified in the particulars under para. 19 of the Statement of Claim: see AB364-440.

(b) The latter was constituted by the conversation and documents identified in the particulars under para. 21 of the Statement of Claim: see AB185-195".

80 In my opinion, however, the material relied upon by the plaintiffs in support of this submission does not establish the coming into existence of an agreement for lease binding the relevant parties since it is plain, in my opinion, from the correspondence, that any such agreement was always subject to the execution of a formal document. As such, in my opinion, the situation fell within the third class of contracts referred to in Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353, namely, that class of contracts in which the parties do not intend to be bound unless and until they execute a formal contract.

81 The relevant passages in Masters v Cameron (at 360) are as follows:-

"Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three classes. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.

In each of the first two cases there is a binding contract; in the first case a contract binding the parties at once to perform the agreed terms whether the contemplated formal document comes into existence or not, and to join (if they have so agreed) in settling and executing the formal document; and in the second case a contract binding the parties to join in bringing the formal contract into existence and then to carry it into execution ...

Cases of the third class are fundamentally different. They are cases in which the terms of agreement are not intended to have, and therefore do not have, any binding effect of their own ...The parties may have so provided either because they have dealt only with major matters and contemplate that others will or may be regulated by provisions to be introduced into the formal document ... or simply because they wish to reserve to themselves a right to withdraw at any time until the formal document is signed ...

The question depends upon the intention disclosed by the language the parties have employed, and no special form of words is essential to be used in order that there shall be no contract binding upon the parties before the execution of their agreement in its ultimate shape."

82 Reference was also made to, inter alia, the following passage in the judgment of Gleeson CJ in Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd. (1988) 18 NSWLR 540 at 548:-

"The question in a case such as the present is expressed in terms of the intention of the parties to make a concluded bargain: see, e.g., Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353 at 360. That is not the same as, although in a given case it may be closely related to, the question whether the parties have reached agreement upon such terms as are, in the circumstances, legally necessary to constitute a contract. To say that parties to negotiations have agreed upon sufficient matters to produce the consequence that, perhaps by reference to implied terms or by resort to considerations of reasonableness, a court will treat their consensus as sufficiently comprehensive to be legally binding, is not the same thing as to say that a court will decide that they intended to make a concluded bargain. Nevertheless, in the ordinary case, as a matter of fact and commonsense, other things being equal, the more numerous and significant the areas in respect of which the parties have failed to reach agreement, the slower a court will be to conclude that they had the requisite contractual intention.

Reference has earlier been made to `intention'. Cases which typically give rise to problems of the kind presently under consideration are cases in which there is no doubt that the parties had a common intention that at some stage, and by some means, they would enter into contractual relations. They have entered into negotiations for that specific purpose. The problem which arises is that they have exchanged communications which, on the one hand, use the language of agreement but, on the other hand, disclose an expectation that at some future time a document embodying the terms of their contractual arrangement will be brought into existence. Where, as in the present case, the communications which the parties have exchanged are in writing, the question of their `intention' is, prima facie, to be resolved objectively, and as a matter of construction of the relevant documents."

83 See also: GR Securities Pty. Ltd. v Baulkham Hills Private Hospital Pty. Ltd. (1986) 40 NSWLR 622 and 631 (CA).

84 Alleged Agreement of May 1991

85 In the course of the hearing it was indicated that the plaintiffs did not press their submissions in respect of this allegation. I propose, nevertheless, to deal with those submissions on their merits because, in my opinion, the analysis of those submissions sheds historical light on the dealings between the parties which is relevant to other submissions.

86 In relation to the alleged agreement between the First Defendant and the First Plaintiff to grant a lease over the boatshed area upon terms and conditions then agreed upon said to have come into existence on or about 1 May 1991, the plaintiffs originally relied principally upon the notes of a discussion between the Commodore of RANSA with a representative of the Trust held on 1 May 1991, in respect of which notes of discussion were made by the representative of the Trust, Mr. David Price.

87 In my opinion, however, it is plain that the matters discussed at the meeting of the 1 May 1991 between the Commodore of RANSA and Mr. Price on behalf of the Trust were not intended to be the whole of the terms of the proposed lease. They certainly appear to have dealt with the principal matters, including the term of the lease and the rental, but it is plain, in my opinion, that the parties realised and intended that other matters would have to be covered in the lease as well. In this connection I note that the letter of 17 May 1991 from the representative of the Trust to the Commodore, Sydney Squadron RANSA, states:-

"I attach a copy of notes of our discussion which I have submitted to the members of the Trust who have unanimously approved the same in principle. I suggest that these may form the basis of the Lease arrangements between RANSA and the Trust and if you agree, you might let us have your views in order that we can arrange for the preparation of the Lease. Any Lease of course would have to be subject to the consent of the Minister but in the circumstances we would not anticipate this to be a problem." (underlining supplied).

88 This passage indicates, in my opinion, that, at least the Trust, was envisaging a more formal document containing terms additional to those discussed at the meeting of 1 May 1991.

89 This view is also supported by the fact that in the Sydney Squadron's letter dated 22 May 1991 to the Trust it is stated that "I am pleased to advise you that at a Sydney Squadron Committee meeting held at the Boatshed on 17 May 1991, it has agreed to principles contained in the proposal." The letter also contained the following passages:-

"(a) Would you please prepare a draft lease for our perusal.

(b) May we assume that all previous agreements are replaced with this agreement and commencement date of this new agreement is 17 May 1991.

(c) The new rental agreement commences 1 June 1991, and rental for the first period of five years shall be payable monthly in advance at a rate of one-twelfth of $5,000 (five thousand dollars) or $416.67...

(e) It is noted that it is intended to reduce the rental level once the site development is completed.

(f) It is recommended that additional car-parking requirements are addressed by discussing the liquor licensing requirements of the Woollahra Municipal Council and the Waverley Licensing Court. I believe a further 20-25 would put us in the ball park.

(g) Public Liability Insurance is already in operation."

90 Significantly, the last paragraph of this letter was in the following terms, in my view indicating that there had not been complete and final agreement coupled with an intention immediately to be bound by the terms referred to:-

"Whilst it is appreciated the effort and patience to achieve the result so far, may we work towards execution of the lease before conclusion of my tenure i.e. 31st July."

91 The letter dated 5 June 1991 to the Commodore from David Price on behalf of the Trust responds to the various matters raised in the letter of 22 May 1991 indicating again that final agreement had not been reached in relation to at least some of the matters referred to.

92 This view is further reinforced by the fact that the draft lease forwarded with the letter of 11 July 1991 from the Trust to the Commodore contained provisions relating to many more subject matters than those discussed at the meeting of 1 May 1991 and referred to in the following correspondence.

93 The final letter particularised by the plaintiffs in this connection, being the letter of 22 October 1991 from RANSA to the Trust relates to the obtaining of a liquor licence, inter alia, and states, inter alia, as follows:-

"Two obstacles stand in our path. The first is the speedy resolution of a lease with the Trust. I believe that there is overall agreement regarding the rent to be paid and the conditions which will apply to our continuing tenancy of the Boatshed. Unfortunately, Mr. David Price has been away overseas, but as soon as he returns, I hope to resolve the details of the lease and I am sure you will ensure that the final lease is expedited through its latest stages. We are relying on function licences at the present, but these have been approved, only until the end of the year."

94 In my opinion, this makes it abundantly clear that, even at this stage the parties had not reached final and concluded agreement on all the terms of their proposed bargain. Moreover, on 22 November 1991 it appears that a draft lease was sent by facsimile to RANSA from Mr. David Price representing the Trust through a firm of solicitors which facsimile was in the following terms as also set out above:-

"Draft Lease as discussed. It follows the Specimen Lease prescribed by the Department for these things with the exception of clauses 30 and 31. The question of car parking perhaps we could discuss when you have had a chance to look at the draft."

95 It is plain, in my opinion, that even as at this date, namely, 22 November 1991, the parties had not reached final and concluded agreement on all the terms of the proposed lease and, accordingly, the original submission on behalf of the plaintiffs to the effect that on or about 1 May 1991, in consideration of the mutual promises, the First Defendant agreed to grant, and the Squadron agreed to take, upon the terms and conditions then agreed upon, a lease over the boatshed area, as set out in paragraph 21 in the Statement of Claim and there particularised as well as being referred to in paragraph 2.4(b) of the Plaintiff's Outline, would have had to be rejected.

96 Alleged Agreement of January 1995

97 The material relied upon on behalf of the plaintiffs to support the submission that a binding contract came into existence in January 1995, commenced with the letter dated 18 October 1984 from the solicitors for the Trust to the solicitors for RANSA forwarding a draft lease of some complexity (as well as a costs agreement between solicitor and client and a memo of the Trust's solicitors' costs and disbursements), which makes it plain that the parties still contemplated and intended that a formal document should be executed. Thereafter there followed correspondence between the solicitors for the parties concerning the terms contained in the draft lease as so submitted (some of which have been referred to above) and by letter dated 5 January 1995 from the solicitors for the Trust to the solicitors for RANSA various amendments to the draft lease were submitted for consideration in the following terms:-

"Following our conference we suggest the following amendments to the Lease submitted to you for your consideration (the amendments and indeed the Lease are subject to approval by the Trust and in due course the Minister ...)".

98 There followed various suggested amendments.

99 By letter dated 25 January 1995 from the solicitors for RANSA to the solicitors for the Trust it was stated as follows:-

"We refer to the writer's telephone message left for Mr. Price yesterday and confirm that we have been instructed by RANSA to agree to the amendments to the lease set out in your letter of 5 instant.

Accordingly, we shall be obliged to receive the lease for execution at your earliest opportunity....".

100 In this connection it should be remembered, however, that the amendments in respect of which it was being stated that they had been agreed to by RANSA were amendments which were "subject to approval by the Trust and in due course the Minister". The letter of 25 January 1995 also plainly contemplates the execution of a formal document.

101 The last letter relied upon in this connection by the plaintiffs, as particularised, is the letter dated 21 February 1995 from the Secretary of the Trust to the Department of Conversation and Land Management containing the following passages:-

"Following extensive negotiation the Trust has completed a draft lease with the Royal Australian Naval Sailing Association for that Organisation's occupation of portion of the Reserve ...the Department should be aware that the draft lease has been approved by the Trust with one member, Mr. M. Junner, dissenting on the grounds that the area subject to the lease and licence, in his opinion, is greater than that used by the Association at the time of the land transfer.

It would be appreciated if arrangements could now be made for the draft lease to be submitted for the Minister's consideration."

102 It is to be observed that it does not appear that this letter came to the attention of the solicitors for the plaintiffs, nor that they were informed otherwise of the Trust approval of the draft lease (presumably with the amendments discussed) which was, in any event, still subject to approval by the Minister, and, in my opinion, in all the circumstances, subject to the execution of a formal document.

103 The next letter in the agreed bundle of agreed documents is the letter dated 31 August 1995 from the Minister for Land and Water Conservation to RANSA Sydney Squadron and RANSA which as set out above contains the following paragraphs:-

"I refer to your recent letter regarding RANSA's occupation at the Rushcutters Bay Maritime Reserve. As you would appreciate, the finalisation of the Association's lease has been held up pending finalisation of a Plan of Management for the Reserve ... these issues will need to be resolved before the question of the Association's lease can be finalised."

104 There is no suggestion that, at this time, or, indeed, earlier, RANSA had written to the Minister and/or the Trust and/or its solicitors claiming that in the light of the earlier correspondence a final and concluded agreement for lease had been reached. From this I infer that the plaintiffs, and, indeed, the defendants as well, were of the view that there could be no final and binding agreement between them until the execution of a formal document.

105 These considerations are not affected, in my opinion, by the further matter relied upon and particularised by the plaintiffs, namely, the resolution of the RANSA Council to accept the amendments proposed by the solicitors for the Trust and the subsequent verbal communication of such resolution to the solicitors for the Trust and/or to the Trust itself.

106 The Fourth Submission of the Plaintiffs

107 The fourth submission on behalf of the plaintiffs was to the effect that one or other of the plaintiffs was entitled to a lease upon the basis of "conventional estoppel (Statement of Claim, paras. 23-26)".

108 Paragraphs 23 to 26 of the Statement of Claim are in the following terms:-

"23. In the alternative, since 1 July 1990, or shortly thereafter, and until September 1998, the Squadron and/or RANSA have, with the consent of the First Defendant, used the areas marked by dots and by cross-hatching on the plan annexed hereto for car-parking purposes.

Particulars of Consent

1.5.90 Letter, First Defendant to RANSA

3.4.91 Letter, First Defendant to Squadron

24. During the said period of time, the First Defendant on the one hand and the Squadron or RANSA on the other hand, have conducted their affairs and the relationship between them on the assumption that -

24.1 The area to be leased to the Squadron or RANSA would include the said areas marked by dots and cross-hatching or

24.2 The First Defendant would grant a lease, licence or right of way over such areas to the Squadron or RANSA for car-parking purposes, or

24.3 The First Defendant would otherwise grant to the Squadron or RANSA the right to use such areas for car-parking purposes and/or for access to a car-parking area.

25. The Defendants are accordingly estopped and precluded and from denying the said assumption.

26. The Squadron and RANSA are ready, willing and able to enter into and take a lease on reasonable terms of the boatshed area, and a lease, licence or right of way or other right of occupation on reasonable terms over the areas marked with dots and cross-hatching on the plan annexed hereto or any other reasonable area within the land."

109 The plaintiffs' submission in relation to conventional estoppel was further elaborated in the Outline of Plaintiffs' Submissions as follows:-

"2.5 As to the claim founded upon conventional estoppel, the Plaintiffs' case is as follows:

(a) The relations between the parties have been conducted at all times upon the basis of an agreed or assumed state of affairs, namely, that one or other of the Plaintiffs was entitled to occupy, pursuant to a long-term lease at a nominal rental, an area of the Defendants' land which included the boatshed and the land appurtenant to it for car-parking. The Plaintiffs rely upon the matters set out above in relation to promissory estoppel. They also rely upon the delineation of the area of land that they were authorised to occupy in March 1991 and upon the fact that, until late 1998 they were permitted by the Defendants to occupy that area.

(b) There can be no doubt about the relevant principles ..." (Here reference was made to various authorities).

110 The first letter particularised in paragraph 23 of the Statement of Claim is the letter dated 1 May 1990 from the Chairman of the Trust to RANSA which was in the following terms:-

"As you know the Trust is faced with the task of raising considerable sums of money to fund the development of the Reserve and the restoration of the building situated upon it. At the present moment its resources are limited to existing occupants pending rezoning of the site which the Trust hopes will be forthcoming and which will enable the leasing of certain areas as an income-producing measure.

As an interim measure the Trust is considering leasing the parade ground area as parking for neighbouring organisations pending its redevelopment as passive recreation area for the general public.

Existing occupants would be offered the first opportunity to secure this temporary facility.

The Trust feels a reasonable period of notice is appropriate, and therefore wishes to advise you that as of 1st July 1990 unrestricted parking by your members will no longer be permitted. In light of this you may wish to advise your members of the possibility that the volume of parking presently available to them may not be so after 1st July. Naturally a reasonable area will be allocated for the exclusive use of RANSA when this arrangement is put into effect. The Sub-Committee of the Trust presently negotiating with your Association in terms of the Lease will be in touch with you to discuss this proposal in the near future."

111 The second letter particularised by the plaintiffs in paragraph 23 of the Statement of Claim is the letter dated 3 April 1991 from the Trust to RANSA which is in the following terms:-

"Following the renewal of the fence along the New Beach Road boundary of the Reserve, the parade ground area south of the temporary internal fence will no longer be available to your members for parking.

The lock which formerly secured the main gates will be used to secure the new entrance accessing the area to the north of the temporary internal fence. Your members are at liberty to use this area for parking for the time being. In due course a properly defined area will be allocated to RANSA.

This arrangement will take effect from Friday 12 April 1991. Please advise your members."

112 The passages relied upon on behalf of the plaintiffs in the relevant authorities included the following:-

"The object of estoppel in pais is to prevent an unjust departure by one person from an assumption adopted by another as the basis of some act or omission which, unless the assumption be adhered to, would operate to that other's detriment. Whether a departure by a party from the assumption should be considered unjust and inadmissible depends on the part taken by him in occasioning its adoption by the other party. He may be required to abide by the assumption because it formed the conventional basis upon which the parties entered into contractual or other mutual relations, such as bailment ... or because he directly made representations upon which other party founded the assumption": per Dixon J in Thompson v Palmer [1933] HCA 61; (1933) 49 CLR 507 at 547.

"...The principle upon which estoppel in pais is founded is that the law should not permit an unjust departure by a party from an assumption of fact which he has caused another party to adopt or accept for the purpose of their legal relation. This is, of course, a very general statement. But it is the basis of the rules governing estoppel. Those rules work out the more precise grounds upon which the law holds a party disentitled to depart from an assumption in the assertion of rights against another. One condition appears always to be indispensable. That other must have so acted or abstained from acting upon the footing of the state of affairs assumed that he would suffer a detriment if the opposite party were afterwards allowed to set up rights against him inconsistent with the assumption. In stating this essential condition, particularly where the estoppel flows from representation, it is often said simply that the party asserting the estoppel must have been induced to act to his detriment. Although substantially such a statement is correct and leads to no misunderstanding, it does not bring out clearly the base or basal purpose of the doctrine. That purpose is to avoid or prevent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the former acted or abstained from acting" per Dixon J in Grundt v Great Boulder Pty. Goldmines Ltd. [1937] HCA 58; (1937) 59 CLR 641 at 674.

"Estoppel by convention is a form of estoppel founded not on a representation of fact made by a representor and acted on by a representee to his detriment, but on the conduct of relations between the parties on the basis of an agreed or assumed state of facts, which both will be estopped from denying. The existence of an estoppel based on convention between the parties has often been recognised" per Gibb CJ, Mason, Wilson, Brennan and Dawson JJ in Con-Stan Industries of Australia Pty. Limited v Norwich Winterthur Insurance (Australia) Ltd. [1986] HCA 14; (1985-1986) 160 CLR 226 at 244.

113 In my opinion, the "agreed or assumed state of affairs" upon the basis of which the plaintiffs have alleged that "The relations between the parties have been conducted at all times", namely, "that one or other of the Plaintiffs was entitled to occupy, pursuant to a long-term lease at a nominal rental, an area of the Defendants' land which included the boatshed and the land appurtenant to it for car-parking", is not such as to fall within the principles as to conventional estoppel referred to above, principally, inter alia, because the "agreed or assumed state of affairs" did not include any assumption as to the particular terms of the "long-term lease at a nominal rental" pursuant to which it is alleged that one or other of the plaintiffs was entitled to occupy the relevant area. In this connection the considerations and reasoning applied in relation to the submissions on behalf of the plaintiffs in respect of estoppel by representation as set out earlier in this judgment apply, mutatis mutandis.

114 In my opinion, in the absence of any common agreement or assumption as to the terms of any such lease it cannot be said that it would be inequitable for the defendants to refuse to grant a lease to one or other of the plaintiffs of the relevant area. Conversely, in my opinion, in those circumstances, it was not reasonable for the plaintiffs to conduct their affairs in reliance upon any assumption that the defendants would grant to the plaintiffs a lease on terms acceptable to them, and any detriment that they may have suffered by reason thereof could not have the effect of rendering it inequitable for the defendants to refuse to grant to one or other of the plaintiffs a lease of the relevant area other than a lease upon terms acceptable to them (the plaintiffs).

115 Accordingly, in my opinion, the submissions on behalf of the plaintiffs to the effect that one or other of the plaintiffs was entitled to a lease of the car-parking area based upon the principles relating to conventional estoppel must be rejected.

116 Submissions As To The Plan of Management

117 Having regard to the above findings, it is unnecessary for me to deal with the defence of the defendants to the effect that by reason of the adoption by the Minister of the plan of management in relation to, inter alia, the subject land, pursuant to section 114 of the Crown Lands Act 1989 (NSW), which plan relevantly precludes car-parking on the land, any agreement which the Court might find binding upon the defendants to grant a lease including car parking to either of the plaintiffs has been frustrated and is not enforceable, and further that, as a matter of discretion, the Court would not order specific performance of any such agreement nor make any orders sought by the plaintiffs even if the estoppel alleged by the plaintiffs in the Statement of Claim were made good. I note that in relation to this defence the plaintiffs have submitted that the adoption of a plan of management at a time when the second defendant well knew of the rights of the plaintiffs cannot operate to defeat those rights since otherwise the defendants would be entitled to rely upon self-imposed impossibility" to avoid their obligations.

118 Having regard to my findings, there was, in my opinion, no impediment to the adoption by the Minister of the plan of management in relation to the subject land.

119 Submissions of the Plaintiffs as to the Terms of the Alleged Lease

120 As stated above, I have found that there was no agreement between the parties as to the terms of any proposed lease to be granted to one or other of the plaintiffs, and my finding to that effect necessarily involves the rejection of the plaintiffs' submissions as to the terms of the lease. Those submissions are contained in paragraphs 3.1 and 3.2 of the Outline of Plaintiffs' Submissions which are in the following terms:-

"3.1 The terms of the 1979 Agreement and of statements made by the parties at that time make it plain that the relevant Plaintiff would be entitled to occupy the relevant land indefinitely and at a nominal rental. The Plaintiffs accept that, prima facie, because the land is Crown Land and there is now a statutory maximum period of a lease of such land of 100 years (Crown Lands Act 1989, section 41), that, 20 years having passed, they are only reasonably entitled to a lease for another 80 years. They accept that the rental agreed upon between them and the First Defendant in 1994-1995, namely, $5,000 per annum is a `nominal rental'. Prima facie, no other terms are necessary, since the obligation to keep the premises in good order can reasonably be implied.

3.2 However, the Plaintiffs accept that such a lease could properly include such terms as might reasonably be found in a long-term lease of Crown Land to a voluntary organisation for sporting purposes. It was plainly not within the contemplation of the party to the 1979 Agreement that the lease to the RANSA Sailing Association would be on `commercial terms' such as those sought to be imposed by the First Defendant in the lease which is presently on offer: AB699."

121 In my opinion, it is plain from the correspondence between the parties that there was never any final agreement between the parties to the effect that "the relevant Plaintiff would be entitled to occupy the relevant land indefinitely and at a nominal rental" as alleged by the plaintiffs. Any apparent agreement to that effect was plainly conditional upon agreement on all the other contemplated terms of the proposed lease, and until agreement had been reached on all the terms of the proposed lease, there could be no final and concluded agreement on any particular terms of any such lease, even if, as is doubtful, meaning could be given to the words "indefinitely" and "nominal rental". Moreover, in my opinion, for these reasons there was no final and concluded agreement to the effect that the sum of $5,000 per annum would be "a nominal rental' within the meaning of the alleged agreement. Nor, in my opinion, is it to the point to submit, as the plaintiffs do, that "no other terms are necessary, since the obligation to keep the premises in good order can reasonably be implied", in circumstances where the relevant correspondence makes it plain that it was at all material times intended that the lease would contain many other detailed terms as to which agreement was never reached.

122 I am also of the opinion that even if there were agreement to the effect that a lease would be granted containing terms "such ... as might reasonably be found in a long-term lease of Crown Land to a voluntary organisation for sporting purposes" because "it was plainly not within the contemplation of the parties to the 1979 Agreement that the lease to the RANSA Sailing Association would be on "commercial terms", such an agreement would be void for uncertainty having regard to the uncertainty of identifying what were and what were not "such terms as might reasonably be found in a long-term lease of Crown Land to a voluntary organisation for sporting purposes."

123 Order of the Court

124 I therefore dismiss the statement of claim of the plaintiffs and I order that the costs of the defendants of these proceedings be paid by the plaintiffs.

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LAST UPDATED: 11/06/1999