Elesanar Constructions Pty Ltd v Pacific Exchange Corporation Pty Ltd [2003] HCATrans 477 (14 November 2003)

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Elesanar Constructions Pty Ltd v Pacific Exchange Corporation Pty Ltd [2003] HCATrans 477 (14 November 2003)

Last Updated: 25 November 2003

[2003] HCATrans 477

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Brisbane No B77 of 2002

B e t w e e n -

ELESANAR CONSTRUCTIONS PTY LTD

Applicant

and

PACIFIC EXCHANGE CORPORATION PTY LTD

Respondent

Application for special leave to appeal

GUMMOW J
HEYDON J

TRANSCRIPT OF PROCEEDINGS

FROM BRISBANE BY VIDEO LINK TO CANBERRA

ON FRIDAY, 14 NOVEMBER 2003, AT 11.27 AM

Copyright in the High Court of Australia

MR A.P. ABAZA: If the Court pleases, I appear for the applicant. (instructed by Andrew P. Abaza)

I understand there may be a difficulty in Brisbane in that my learned friends might not be in Court.

GUMMOW J: Let us see. Is Mr Gibson in Court in Brisbane?

MR..........: Not at this stage, your Honour.

GUMMOW J: We will call matter No 8.

AT 11.28 AM THE MATTER WAS ADJOURNED
UNTIL LATER THE SAME DAY

UPON RESUMING AT 11.58 AM:

GUMMOW J: We have your appearance, Mr Abaza, thank you. I want to hear the appearances for the other side. I want to hear them say it.

MR G.J. GIBSON, QC: If it please the Court, I appear for the respondent to this application, with my learned friend, MR D.A. QUAYLE. (instructed by HW Litigation)

Your Honours, might I take this opportunity to apologise for our apparent rudeness in not being here when the matter was called.

GUMMOW J: Yes, Mr Abaza.

MR ABAZA: Thank you, your Honour. May I submit to your Honours on behalf of the applicant that this was a simple case, and remains a simple case, of a common burden properly founding a claim for contribution. The applicant was obliged on the finding which your Honours will find at page 35 of the application book to service a substantial part of the respondent’s land. That appears in paragraph [13]. As submitted by us, the respondent also was obliged to adequately service its land. So there was, on the one side, the obligation on our part - - -

GUMMOW J: If you can go to page 36 of the application book, I do not think there is any disagreement as to the principle that is stated at paragraph [16] that what then has to be dealt with is the construction of the specific documents which Mr Justice Davies gave close attention to in the balance of the judgment.

MR ABAZA: That is so. On the construction points the focus - - -

GUMMOW J: It seems to come down to construction points.

MR ABAZA: In our submission, it goes further than that because the focus – instead of looking at the respective obligations of the applicant and the respondent, in my respectful submission, to adequately service the respondent’s land, the focus at first instance, and in the Court of Appeal, shifted to whether there was an obligation to provide the SS35 sewer pump station and that at that point that shift in focus was an error of principle.

Once the basic proposition was accepted that the obligation from each side existed, that the activity of the applicant had discharged the respondent of its obligation, then equity should have intervened and it should have intervened on the basis of the 62 per cent part, that is the substantial part, of the respondent’s land which had so been serviced.

At page 74 of the application book the respondent says as a point of dispute that they only used 36 per cent. We do not seek a premium from the respondent as to that 5 per cent, although we do submit that use is also a basis for contribution. Thus in terms of special leave, this application is concerned with the identification of obligation rather than with the manner of its exercise and with the principles underlying that obligation, and, secondly, with determining the commonality between the two.

Additionally and by way of a proposed draft notice of appeal, we do seek to advance the principle as part of the common law of Australia of the principle of sustainable development. If that principle be applied as one of obligation, in our respectful submission, it grounds the remedy of contribution upon a common burden from joinder of the several obligations of the appellant and the respondent to that common end, regardless of any constructional issues, albeit that we submit they were wrongly decided, on the deeds of rezoning and the approval of subdivision which was 23 June.

The respondent’s argument here requires some consideration in that it is said at application book 75, line 9, that all they were required to do was to do what was necessary and they say that they were only required to do that at the time it executed the deed of novation of 29 July and that, because the sewer pump station had been constructed prior to that date, they had no obligation. That in itself is a significant point. It is said to be so that they are not liable to contribute simply because they did not execute the deed and that is so despite them having connected to the pump station in February 1994 and having proceeded under the deed of rezoning which was dated in 1989 to in fact subdivide their land.

That argument was successful in the Court of Appeal and it is to that constructional point that one turns in answer to clause 1 of the deed of novation which your Honours will find at page 46 of the book and that is that it gave retrospective effect to the respondent’s obligation upon and from completion of the purchase by it of its parcel of land which is accepted on the facts in the application book as being March 1993.

The sequence is that they acquire it in March 1993, they are obliged to comply as and from the date of purchase and completion of purchase under clause 1.2 of the original deed of rezoning and, secondly, because they have proceeded under and pursuant to that deed of rezoning. This is not a case where they stood back from the approval which had been granted by this public instrument. This public instrument had granted to them a right to subdivide and they exercised that right. They exercised it in the relevant period.

The third constructional issue which then arises is in the definitional part of the deed of rezoning. It simply provided that this respondent was a successor in title to the original applicants, that is Limgold and Nista, to whom the original approval had been granted. For those reasons, that point, we submit, was wrongly decided against the applicant.

The claim was also dismissed at first instance on the basis that the deed of rezoning and subdivisional approval did not refer to the SS35 and that there was no obligation on the respondent to build it or to contribute to the construction of it. The reference for that is at page 10, point 5 of the application book, the decision at first instance. His Honour there said:

Here, the plaintiff was obliged to construct a sewerage pumping station as a term of its development approval but no imposition of that kind was placed, by the local authority, upon the defendant; nor, it must be noted, was it required to contribute to the cost of the pumping station.

So that is where the focus changes from rather than looking at the obligation to looking at the method of performance of that obligation.

In the Court of Appeal Mr Justice Davies held that the pumping station did not exclusively serve the respondent’s land and held, onward, that the respondent had no obligation in respect of it. His Honour at page 36 did accept the general principle that a common obligation could found a right of contribution in a case such as this but his Honour did refer to the common obligation being shown to a local government. Mr Justice Williams, with some reluctance, held that there was no enforceable burden on the respondent to provide the pump station and Justice Holmes agreed with both Justice Davies and Justice Williams.

In point of principle, the applicant respectfully submits the respondent’s obligation to adequately service its land did not cease to exist merely because the specific means of compliance was not prescribed. Second, the obligation of the respondent under the rezoning deed to properly service its land was not exhausted by infrastructure exclusive to that land. Third, enforceability does not represent a condition for the existence of obligation. Fourth, on the plain words of the deed of rezoning which your Honours can find at page 37 of the application book toward the bottom, shall carry out construction of:

any augmentation of the Council’s sewerage and water supply systems necessary in order . . . to adequately service the said land –

and which do not exclusively service the land bear that meaning. The same is submitted in respect of clause 3 of the supplementary book at page 59 where the provision is made for construction of, amongst other things:

all road, traffic management drainage, water supply, sewerage and allotment improvement works –

Again, on the constructional issues, relative to that which is then seen at the bottom of page 58 of the supplementary book, it is not confined just to matters internal to the respondent’s land. It is all of those things which would make the system work properly to adequately service the respondent’s land. There is otherwise no conflict that we see on the facts on that which appears in the application book.

There is this dispute as to the 36 per cent of use. In respect of use, to say that that does form a basis of contribution, there is the authority of Thamesmead Shire Council which appears as part of the bundle. Their use was held as a basis for payment being ordered not only as to the use of a road but in fact the sewerage systems. That was the decision of the Court of Appeal. It is then an issue, and an important issue, in our respectful submission, that this be seen in the context of two adjoining developers developing land effectively in a greenfields area, that is, it is to be used for the future and for people.

That approach, that purpose, does not easily see the idea that the developer should only do what was necessary. It was, in our submission, their job to properly service its land within the principle of sustainable development. What the Court of Appeal effectively did was to treat Lot 942 as an island immune from obligation and out of the reach of equity. The deed of rezoning was also misconstrued in that, in our submission, it is a conditional benefit agreement, that is, that upon taking the benefit of the subdivision the respondent was bound to bear the burden, just as it was bound to bear the burden of contribution on taking the benefit of the pump station. In point of principle on the ocean island equity upon we rely, there is that third basis of claim.

GUMMOW J: Was that Halsall v Brizell argument advanced below?

MR ABAZA: It was, your Honour. It was contained both in the notice of appeal which forms part of the application book here.

GUMMOW J: Can you take us to that. Was it in the Court of Appeal?

MR ABAZA: It was not.

GUMMOW J: Was it argued in the Court of Appeal?

MR ABAZA: The manner in which the particular point in the Court of Appeal was argued is not to my immediate recollection, but certainly the benefit and burden theory was advanced in the notice.

GUMMOW J: Whereabouts? Page 26, line 15?

MR ABAZA: Thank you, your Honour.

GUMMOW J: I am not sure if that is it. It does not seem to be, actually. It is another way of putting the contribution claim, I think. Yes. As Justice Heydon points out, letter (e) on page 27.

MR ABAZA: Thank you. Has that point been sufficiently covered? The issue here on the wider principle, if there is no common obligation and if developers can in fact simply not contribute one to the other for these necessary infrastructures, in our respectful submission, there is a risk to orderly development. If, alternatively, every time one of these situations arises there is a requirement to reduce each and every detail of the performance to writing, despite the widespread acceptance of duty to protect the environment, then the needs of present and future generations to the equitable distribution of the benefits and burdens of development will in fact be imperilled.

Thus, on the applicant’s case here, even if the words “does not exclusively serve” mean “exclusively” and even if “and/or” is to be read disjunctively and even if the unspecified formula upon which the Court of
Appeal have relied does not relate to the respondent’s land, or does relate to the respondent’s land and not to the university land in a manner which would operate to deny the existence of obligation under the deeds, then the applicant does submit that as a matter of law the applicant and respondent were under a common obligation to found the claimed contribution.

For those reasons and those appearing in the application book, particularly as to the construction issues, special leave is sought to establish that both the applicant and respondents were under a common obligation and a common duty not only to properly service the respondent’s land as to the substantial part, but they were under a common duty as a matter of law to do that properly to the common end of sustainable development. If the Court pleases, those are my submissions.

GUMMOW J: Mr Gibson, what do you say on the point made at page 81 of the application book at paragraph 10 as to Halsall v Brizell being applicable here?

MR GIBSON: There are two points to be made as to the issue first raised by your Honour with our learned friend in the course of his submissions.

GUMMOW J: We just want to hear you about Halsall v Brizell at the moment.

MR GIBSON: In our submission, the principle in that case is not applicable to the circumstances of this case. There was no relevant covenant or deed pursuant to which it could be submitted that the respondent’s failure to contribute to the cost of the construction of the sewerage pumping station represented a taking by it of the benefit and yet a failure by it to accept the burden of the covenant.

In this particular case there was, relevantly, a rezoning deed between the applicant and the Council. There was also a subdivision approval between the applicant and the Council. There was also a rezoning deed and subdivision approval as between the respondent and the Council. In some respects the rezoning deed between the respondent and the Council picked up common obligations between the applicant and the respondent. It did that with respect to the cost of the provision of road works and ancillary works but there was no provision in that rezoning deed which obliged the respondent to assume a burden of payment of the cost of the pumping station in accordance with the principle in Halsall.

The only basis, in our submission, upon which such an obligation could be established is upon the construction of those documents to which I have referred and as to which his Honour Justice Davies in particular gave careful consideration.

GUMMOW J: We do not need to hear you any more, thank you, Mr Gibson.

MR GIBSON: Thank you, your Honour.

GUMMOW J: Yes, Mr Abaza.

MR ABAZA: The Brizell point goes a little further than being able to say that something is not recorded in writing. From these deeds the submission which is made at page 81 is furthered here, that is, they did not have an unqualified right to take the benefit of it even though the particular pump station was not referred to in the documentation. That is why the focus of our submissions has been toward looking at the principle underlying those obligations and where the respondent, as here admittedly, has taken that benefit, then, in our respectful submission, it is well within the principle of Brizell that they should pay.

GUMMOW J: Thank you.

An appeal to this Court would necessarily turn upon the construction of various documents from which there are said to arise the necessary “coordinate liabilities” or “common obligations” to attract an equity of contribution. We are not satisfied that there are sufficient prospects of success in a challenge to the determination of those construction issues by the Queensland Court of Appeal to warrant a grant of special leave. Nor is this an appropriate case to consider the scope and application of the principle in Halsall v Brizel [1957] Ch 169. Accordingly, special leave is refused with costs.

AT 12.22 PM THE MATTER WAS CONCLUDED