Cairns City Council v Xontan Pty Ltd [1999] QSC 215

State Reporting ~;{(f{/2 5 Bureau u.BRA~y TRANSCRIPT OF PROCEEDINGS Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau. r-;'~: ,~' . '~ . f ( " lE,::,i,:.(~; ',f,' ,fC:;"" .,., ' SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION JONES J No 12 of 1999 CAIRNS CITY COUNCIL Plaintiff and XONTAN PTY LTD Defendant CAIRNS .. DATE 10/09/99 JUDGMENT ,111i 11,,,,1', Till: Law COllrls, (;('ol'gl' Stn:d, Brishalll', Q. ·WOO Telephol1e: (07) .un ... JCiI) Fax: (07) JZ ... 7 SSJZ -- 1 of 12 -- 100999 D.1 T1/LCS M/T CNS800/99 (Jones J) HIS HONOUR: In this matter also I have reduced my reasons to writing and you will notice in the last paragraph I have left open the question of costs, giving the parties seven days to make submissions. If you are in a position to argue the question of costs now, I am prepared to hear it. 10 This is the case in which there was an application for disclosure which was rendered unnecessary by compliance at a very late hour and it seemed to me that the applicant ought to have its costs in respect of that. HIS HONOUR: My orders will then be that the application for the determination of preliminary question of law is dismissed 30 and that the costs of the application in respect of that matter will be costs in the cause. Costs incurred in respect of the application for disclosure will be paid by the defendant to the plaintiff. 40 C/ 50 60 2 JUDGMENT -- 2 of 12 -- ( ( IN THE SUPREME COURT OF QUEENSLAND CAIRNS No. 12 of 1999 Before the Hon. Justice Jones [CAIRNS CITY COUNCIL -v- XONTAN PTY LTD] BETWEEN: CAIRNS CITY COUNCIL Plaintiff XONTAN PTY LTD Defendant JONES J Judgment delivered 10th day of September, 1999 There is no obvious advantage in determining the questions raised by way of a preliminary hearing. Catchwords: PRACTICE - PRELIMINARY POINTS OF LAW - Defendant was the successful tenderer to develop tourist facilities for the local Council - Deed of agreement - Council purported to terminate the arrangement - Identification of issues - Credibility - No advantage in determining questions raised by way of this hearing. Counsel: Solicitors: Mr. M.A. Jonsson for the Applicant Mr. A. Philp for the Respondent MacDonnells for the Plaintiff Voiton Walker Davis for the Defendant -- 3 of 12 -- IN THE SUPREME COURT OF QUEENSLAND CAIRNS Writ No. 12 of 1999 BETWEEN: CAIRNS CITY COUNCIL AND: XONTANPTYLTD REASONS FOR JUDGMENT BEFORE THE HONOURABLE JUSTICE JONES DELIVERED THE lo.fh DAY OF SEPTEMBER, 1999 Plaintiff Defendant 1. Before me is an application by which the plaintiff seeks an order pursuant to RA83 of the UCPR, for the determination of a preliminary question of law. l Background 2. In 1988 the plaintiffs predecessor, the Mulgrave Shire Council, (hereinafter both entities referred to as "the Council") was the lessee from the Crown of a special lease of land situated at Palm Cove in Cairns in the State of Queensland. It sought to sublet the land so that it could be developed for Business (Tourist Facilities). To this end, the Council called tenders from developers prepared to undertake this task. The defendant (through its predecessor) was the successful tenderer having been so selected by a decision of the Council in March of 1988. Between the acceptance of the tender and the 31 March, 1989 various discussions were held between the Council and the defendant about the nature of the 1 The application for the disclosure order is rendered unnecessary now because the defendant has complied with the plaintiff s request. -- 4 of 12 -- ( 2 were held between the Council and the defendant about the nature of the development and the appropriate terms to be included in a written agreement, including a sublease to be executed by the parties. 3. On 31 March, 1989 the defendant delivered to the Council a Deed of Agreement (including a sublease) executed by it. 4. The defendant was never advised whether the Council has executed the deed or the sublease. Notwithstanding this fact, the defendant has continued to proceed with its proposals to develop the subject land. That development work proceeded with the knowledge and support of the Council until April, 1993 during which time the defendant claims to have spent in excess of $600,000 on the work. The Defendant claims that work ceased then because the Council failed to resolve issues concerning the acquisition of adjacent Commonwealth land and the closure of a caravan park to enable works to be continued. • 5. By letter dated 26 August, 1996 the council wrote to the defendant purporting to terminate the arrangement (to use a neutral term) between the parties. 6. The Council asserts that it has never executed any agreement with the defendant. The Council points to the statutory requirements necessary for a valid contract to be created by the Council. The relevant provision of the Local Government Act 1936, ("LOA") is in the following terms:- "19(1)(i) Local authority may enter into contracts. A local authority may enter into contracts for the discharge of any of the functions of local government. (ii) How contracts made, varied, or discharged. Every contract entered into by the local authority shall be made, varied or discharged as follows:- (a) -- 5 of 12 -- (b) (c) 3 Any contract which, if made between private persons, would by law be required to be in writing signed by the parties to be charged therewith shall be made in writing signed by the chairman, or by any two members acting by direction and on behalf of the Local Authority, and shall be varied or discharged in the same manner; " 7. The Council asserts that there was no such execution of the Deed of Agreement or sublease by the defendant and consequently there can be no valid agreement between the p~ies. The Council brings this action seeking a declaration to this effect. 8. By its defence, the defendant puts the Council to proof of its allegation that the relevant deed and sublease were not executed. In addition, the defendant raises the circumstances of its dealings with the Council and its expenditure on the development proposal with the Council's consent, to suggest that the Council is estopped by its conduct from denying that there existed an agreement between it and the Council. 9. By its defence, the defendant pleads in great detail the facts upon which it relies to establish its claim that the doctrine of part performance or alternatively promissory estoppel applies. The Council has not, by way of reply, raised a challenge to those pleaded facts. 10. The Council argues that its case gives rise to three discreet and defined issues, the resolution of which would resolve the whole of the controversy. These issues are identified as:- "(a) If an agreement to sublease was made between the plaintiff and the defendant, was the making of that agreement regulated by s.19(1)(ii)(b) of the Local Government Act 1936? (b) If so, was there any such agreement between the Council and the defendant made in writing signed by the chairman or by two members of the Council acting by direction and on behalf of the Council? -- 6 of 12 -- ( 4 (c) Ifnot, are the doctrines of part performance and/or promissory estoppel capable of operating to render an agreement enforceable notwithstanding the non-compliance with the statutory requirements?" At the hearing of the application a "Summary of Issues" was tendered in which the above were identified respectively as issues 3, 4 and 5. 11. The defendant argues that none of these questions can be isolated from the factual and credit issues which are raised in the defence. In order to determine these issues the whole history of the dealings between the parties must be looked at The issues of part performance and promissory estoppel depend on representations made by officers of the Council and the actions taken by the defendant and the Council in respect of them. This clearly raises an issue of mixed fact and law. Legal Principles 12. The relevant provision of the UCPR relied on by the Council is in the following terms:- "483(1) The Court may make an order for the decision by the Court of a question2 separately from another question, whether before, at, or after the trial or continuation of the trial of the proceeding". 13. This provision is in terms which are virtually identical with the equivalent provision in the Federal Court Rules (0 29 r 2). An examination of this rule was made by Branson J in Reading Australia Pty Ltd v Australian Mutual Provident Society3. Her Honour described the Court's wide powers to regulate procedures to be adopted for hearing and determination of a proceeding. She then identified the ways in which the general rule requiring all issues of fact and law to be determined at one time has been modified, and then compendiously set out the 2 "Question" Includes a question or issue in a proceeding, whether of fact or law or partly offact and rartly of law, and whether raised by pleadings, agreement of parties or otherwise. (1991) FCA 718 -- 7 of 12 -- 5 principles applicable to questions of the kind to be considered here. At paragraph 8 she said:- "8. The principles that govern the circumstances in which an order will be made under 0 29 r 2 (equivalent of R 483) are relatively well established. They may be summarised as follows:- (a) the term "question" in 0 29 r 1 includes any question or issue of fact or law in a proceeding. The distinction in the rule between an "issue" and a "question" is the distinction between that which, when resolved, will result in an adjudication in favour of one party or the other, being an "issue", and less decisive matters of dispute being "questions" (Landsal Pty Ltd (in /iq) v REI Building Society (1993) 113 ALR 643 at 647); (b) a question can be subject of an order for a separate decision under o 29 r 2 even though a decision on such a question will not determine any of the parties' rights (Landsat Pty Ltd (in /iq) v REI Building Society at 647); (c) however, the judicial determination of a question under 0 29 r 2 must involve a conclusive or final decision based on concrete and established or agreed facts for the purpose of quelling a controversy between the parties (Bass v Permanent Trustee Co Ltd [1999] RCA 9 at para 45); (d) where the preliminary question is one of mixed fact and law, it is necessary that the question can be precisely formulated and that all of the facts that are on any fairly arguable view relevant to the determination of the question are ascertainable either as facts assumed to be correct for the purposes of the preliminary determination, or as agreed facts or as facts to be judicially determined (Jacobson v Ross [1995] 1 VR 337 at 341, referring to Nissan v Attorney-General [1970] AC 179 at 242-243 per Lord Pearson; Bass v Perpetual Trustee at para 53); (e) care must be taken in utilising the procedure provided for in 0 29 r 1 to avoid the determination of issues not "ripe" for separate and preliminary determination. An issue may not be "ripe" for separate and preliminary determination in this sense where it is simply one of two or more alternative ways in which an applicant frames its case and determination of the issue would leave significant other issues unresolved (CBS Productions Pty Ltd v 0 'Neill per Kirby P at 606); (f) factors which tend to support the making of an order under 029 r 2 include that the separate determination of the question may - -- 8 of 12 -- 6 (i) contribute to the saving of time and cost by substantially narrowing the isues for trial, or even lead to disposal of the action; or (ii) contribute to the settlement of the litigation (CBS Productions Pty Ltd v 0 'Neill (1985) 1 NSWLR 601 per Kirby P at 607); (g) factors which tell against the making of an order under 0 29 r 2 include that the separate determination of the question may - (i) give rise to significant contested factual issues both at the time of the hearing of the preliminary question and at the time of trial (GMB Research & Development Pty Ltd v The Commonwealth; Arnold v Attorney-General for Victoria [1995] FCA 727). This factor will be of particular significance if the Court may be required to form a view as to the credibility of witnesses who may give evidence at both stages of the hearing of the proceeding; or (iii) prolong rather than shorten the litigation (GMB Research & Development Pty Ltd v The Commonwealth)." 14. Consideration must also be given to the remarks of the High Court in Bass v Permanent Trustee 4 in which the following appears:- "It cannot be doubted that in many cases the formulation of specific questions to be tried separately from and in advance of other issues will assist in the more efficient resolution of matters in issue. However, that will be so only if the questions are capable of final answer and are capable of being answered in accordance with the judicial process. Preliminary questions may be questions of law, questions of mixed law and fact or questions of fact. Some questions of law can be decided without any reference to the facts. Others may proceed by reference to assumed facts, as on demurrer or some other challenge to the pleadings. In those cases, the judicial process is brought to bear to give a final answer on the question of law involved. Findings of fact are made later. If that is necessary. Or preliminary question is a pure question of fact but, too, can be answered finally in accordance with the judicial process if the parties are given an opportunity to present their evidence and, also, to challenge the evidence led against them. Special problems can arise where the preliminary question is one of mixed fact and law. As Booking J pointed out in Jacobson v Ross 5 it is necessary in that situation that there be precision both in formulating a question and in specifying the facts upon which it is to be decided." 4 (1999) 73 ALJR 522 at p.534 s (1995) 1 VR337 at341 -- 9 of 12 -- 7 15. The ultimate question to be determined on an application such as this is whether the making of the order is '~ust and convenient" and this must take account of the nature of the judicial process. At Bass v Permanent Trustee the Court further said 6 :- "Judicial power involves the application of the relevant law to facts as found in proceedings conducted in accordance with the judicial process. And that requires that the parties be given an opportunity to present their evidence and to challenge the evidence that he gives them. It is contrary to the judicial process and no part of the judicial power to affect a determination of rights by applying the law to facts which are neither agreed nor determined by reference to the evidence in the case." The present case 16. The defendant does not accept that the Council has adequately or correctly identified the issues. Even the issue of whether the Deed of Agreement was executed by the Council, which could be seen as a simple question of fact, might not be one of easy resolution. The onus of proving that it was not executed rests on the Council. What happened to the documents executed by the defendant and delivered to the Council on 31 March, 1989 remains something ofa mystery. The disclosure process did not provide any clues. Consequently there is a potential for matters of credit to arise in the determination of this issue. This being so, the defendant asserts that the conduct of various Council officers in the context of the whole history of the transaction becomes relevant. 17. Whilst considerations of credibility which could affect the determination of the limited issue are also relevant to other issues it seems to me neither just nor convenient to embark on the hearing of the limited issue. 6 at para 56 -- 10 of 12 -- 8 18. Whether the doctrines of part performance and promissory estoppel enable enforcement of an agreement notwithstanding non-compliance with s.19( 1)(ii)(b) of the LGA might well be seen as a question of law only, but it will arise for consideration only if the Council satisfies its onus of proving that there was no execution of the documents by the Council. 19. On balance I have come to the view that there is no obvious advantage in determining the questions raised by way of a preliminary hearing. All issues need to be seen in the context of what appears to be a very significant history of interaction between the Council and the defendant. Consequently it is unlikely there will result any saving of time and cost. Moreover one could not be sure the findings would lead to a disposal of the action so as to avoid a later repetition of the evidence. 20. At this point the Council has not delivered a Reply to the well particularised Defence. I cannot therefore be certain of the scope of the issues which will arise for determination. 21. Convenience and justice in a case such as this requires that the parties be given a proper opportunity to present and contest evidence as to circumstances before there can be any determination of their respective rights. Costs 22. The plaintiff seeks its costs relating to the application for disclosure in respect of which the defendant complied with its obligation on the last business day prior to the hearing. Because I was not addressed on this question by counsel for the defendant I will defer making an order on this point but I would indicate, in the absence of argument, that there is a prima facie entitlement to such an order. -- 11 of 12 -- 9 23. Similarly, in the light of my determination of the application which was argued, the defendant seems to me to have a prima facie entitlement to its costs on the application. I will give the parties leave to make submissions in writing on the question of costs within 7 days should either wish to contend for an order different to the indications which I have just made. s. G. JONES, J. -- 12 of 12 --