Legune Land Pty Ltd v Northern Territory Land Corporation ... · NORTHERN TERRITORY LAND CORPORATION AND ... Northern Territory Land Corporation acknowledge Legune Land’s ... the

Legune Land Pty Ltd v Northern Territory Land Corporation and Anor

[2013] NTCA 7

PARTIES: LEGUNE LAND PTY LTD

v

NORTHERN TERRITORY LAND

CORPORATION

AND

NORTHERN TERRITORY OF

AUSTRALIA

TITLE OF COURT: COURT OF APPEAL OF THE

NORTHERN TERRITORY

JURISDICTION: CIVIL APPEAL FROM THE SUPREME

COURT EXERCISING TERRITORY

JURISDICTION

FILE NO: AP 12 of 2013 (21103427)

DELIVERED: 22 July 2013

HEARING DATES: 3, 4 and 5 April 2013

JUDGMENT OF: RILEY CJ, SOUTHWOOD and

BLOKLAND JJ

APPEALED FROM: KELLY J

CATCHWORDS:

APPEAL — Appeal against findings of the trial judge – claim by Legune

Land Pty Ltd to an equitable lease over land owned by the Northern

Territory Land Corporation — whether agreement reached between Legune

Land and the Northern Territory of Australia — whether estoppel by convention applies to prevent the Northern Territory of Australia from

denying the existence of the agreement — whether asserted agreement

conferred an option to lease or profit a` prendre — whether “assignment” of

rights under earlier agreement with predecessor in title — whether any

rights in Legune Land Pty Ltd binding on Northern Territory Land

Corporation — whether Northern Territory Land Corporation acknowledged

existence of rights and undertook to hold registered interest subject to those

rights — no agreement — no assignment — no estoppel — agreement

propounded not such as to confer option or other interest in land — no

equitable lease or profit a`prendre — no acknowledgement by the Northern

Territory Land Corporation of rights in Legune Land – appeal dismissed.

Native Title Act (Cth) Pastoral Land Act (NT)

Contracts Act (NT)

Law of Property Act (NT)

ALH Group Property Holdings Pty Ltd v Chief Commissioner of State

Revenue of New South Wales (2012) 245 CLR 338

Bahr v Nicholay (No 2) (1988) 164 CLR 664

Beneficial Finance Corporation Lt d v Multiplex Constructions Pty Ltd

(1995) 36 NSWLR 510

Bishop v Taylor (1968) 118 CLR 518

Booker Industries Pty Ltd v Wilson Park (QLD) Pty Ltd (1982) 149 CLR 600

Broken Hill Co Pty Ltd v Waugh (1988) 14 NSWLR 360

Brown v Dunn (1893) 6 R 67

Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226

Copperart Pty Ltd v Bayside Developments Pty Ltd (1996) 16 WAR 396

Ferguson v Hullock [1955] VLR 202

Foote & Ors v Acceler8 Technologies Pty Ltd and Ors [2012] NSWSC 635

Harvey v Pratt [1965] 1 WLR 1025

Jones v Dunkel (1959) 101 CLR 298

Lace v Chandler [1944] KB 368

Lee v Russell [1961] WAR 103

Legune Land Pty Ltd v Northern Territory Land Corporation & Anor [2012]

NTSC 83

Mackay v Wilson (1947) 47 SR (NSW) 315

Maddison v Alderson (1883) 8 App Cas 467

Mangiola v Costanza (1980) A & NZ Conv R 331

NZI Insurance Australia Limited v Baryzcka (2003) 85 SASR 497

Olsson v Dyson (1969) 120 CLR 365 Pagnan spA v Feed Products Ltd [1987] 2 Lloyd’s Rep 601

Penrith RSL Club Ltd v Cameron & Anor (2001) 10 BPR 18,621

Presbyterian Church (NSW) Property Trust v Scots Church Development Ltd

[2007] NSWSC 676

Steinberg v Federal Commissioner of Taxation (1975) 134 CLR 640

Toyota Motor Corp Australia Ltd v Ken Morgan Motors Pty Ltd [1994] 2 VR

106

Vroon BV v Foster’s Brewing Group [1994] 2 VR 32

REPRESENTATION:

Counsel:

Appellant: P Dunning SC and S Williams

First Respondent: D Robinson SC

Second Respondent: MP Grant QC and R Bruxner

Solicitors:

Appellant: Povey Stirk

First Respondent: Clayton Utz

Second Respondent: Solicitor for the Northern Territory

Judgment category classification: B

Judgment ID Number: Sou1306

Number of pages: 135

1

IN THE COURT OF APPEAL

OF THE NORTHERN TERRITORY

OF AUSTRALIA

AT DARWIN

Legune Land Pty Ltd v Northern Territory Land Corporation & Anor

[2013] NTCA 7

No. AP 12 of 2013 (21103427)

BETWEEN:

LEGUNE LAND PTY LTD

Appellant

AND:

NORTHERN TERRITORY LAND

CORPORATION

First Respondent

AND

NORTHERN TERRITORY OF

AUSTRALIA

Second Respondent

CORAM: RILEY CJ, SOUTHWOOD and BLOKLAND JJ

REASONS FOR JUDGMENT

(Delivered 22 July 2013)

RILEY CJ:

[1] I agree that the appeal should be dismissed for the reasons given by

Southwood J .

SOUTHWOOD J:

Index

[2] INDEX

Introduction [3]

2

Legune Land’s claims in the Supreme Court [8]

The history of the acquisition of Areas 1, 2 and 3 [17]

The findings of Kelly J [138]

The grounds of appeal [140]

Ground 5 [144]

Ground 6 [161]

Ground 8 [167]

Ground 9 [179]

Ground 10 [180]

Ground 11 [185]

Ground 12 [198]

Ground 13 [212]

Ground 14 [214]

Conclusion [225]

Introducti on

[3] This is an appeal from a judgment of Kelly J dismissing (1) Legune Land

Pty Ltd’s1 claim for a declaration that the Northern Territory Land

Corporation holds two areas of land known as Area 1 and Area 2 within the

perpetual pastoral lease known as Spirit Hill s Station on constructive trust

for Legune Land to the extent of Legune Land’s entitlement to a lease or a

1 Hereafter referred to as ‘Legune Land’.

3

profit a’prendre until such time as the areas of land are required by the

Northern Territory for Stage 2 of the Ord River Irrigation Scheme; and

(2) Legune Land’s claim for damages for breach of contract or,

alternatively, equitable compensation against the Northern Territory.

[4] Areas 1 and 2, and another area known as Area 3, were originally part of a

perpetual pastoral lease known as Legune Station. In 1999 the Northern

Territory took steps to acquire Areas 1, 2 and 3 from Legune Station Pty

Ltd, who was then the registered owner of Legune Station, for purposes of

expansion of the Ord River Irrigation Scheme and for such other purposes as

the Northern Territory may require. However, for reasons to do with a

native title claim over the whole of Legune Station, the acquisition was not

completed until 2010. After the acquisition was completed the land was

incorporated in Spirit Hills Station which was owned by the Northern

Territory Land Corporation.

[5] In 2000, which was before the acquis ition of Areas 1, 2 and 3 was perfected,

the registered title of Legune Station was transferred by Legune Station Pty

Ltd to Legune Land. In order for this to occur and to protect the Northern

Territory’s interests, certain arrangements were made between Legune Land

and the Northern Territory. Legune Land’s case at trial was that those

arrangements culminated in the Northern Territory granting a lease (or a

profit a`prendre) of Areas 1 and 2 to Legune Land from 1 September 2001

until the land was required for use in the Ord River Irrigation Scheme.

Legune Land’s interests in the land survived the perfection of the

4

acquisition of the land in 2010. As the Northern Territory Land Corporation

was aware of Legune Land’s interest in the land and had undertaken to

recognise its interest, the corporation held the land on trust for Legune

Land. Consequently, the Northern Territory Land Corporation could not

require Legune Land to stop grazing cattle on Areas 1 and 2 and vacate the

land unless and until the areas were required for the expansion of the Ord

River Irrigation Scheme.

[6] The principal issues in the appeal are: (1) Does the evidence establish that

Legune Land was granted an option by the Northern Territory to obtain a

lease of Areas 1 and 2 (or a profit a`prendre)? (2) Did Legune Land

exercise the option and o btain a lease of Areas 1 and 2 (or profit a`prendre)

before the areas were incorporated into Spirit Hills Station? (3) Did the

Northern Territory Land Corporation acknowledge Legune Land’s

occupation and use of Areas 1 and 2 and undertake to recognise the rights of

Legune Land in Areas 1 and 2 before those areas were incorporated in Spirit

Hills Station?

[7] For the reasons set out below, the answers to each of these questions is no.

It has not been established by Legune Land that Kelly J erred in any way

and the appeal should be dismissed. The appellant’s submissio ns amounted

to clutching at straws. They lacked the ring of reality.

5

Legune Land’s cl ai ms i n the Supreme Court

[8] Legune Land’s claims at first instance were based on three steps. The first

step was to try and prove (one way or another) that the Northern Territory

was bound by the terms of a Deed of Agreement alleged to have been made

between Legune Land and the Northern Territory on 7 September 2000 .2

[9] The First Right of Refusal Deed was executed by Legune Land before

settlement of the transfer of Legune Station to Legune Land. The document

was executed in order to obtain the Northern Territory’s consent to the

transfer of Legune Station. Clause 2.2 of the First Right of Refusal Deed

stated that:

If at the expiry of the Term the Territory desires that the Licensed

Areas be used for grazing stock and no other purpose then the

Territory will grant to the Lessee a first right of refusal to lease the Licensed Area from the Territory at a rental and upon and subject to

conditions as the Territory may in its absolute discretion impose

PROVIDED that such rental and terms and conditions shall not be

less favourable than the terms and conditions upon which the

Territory would be prepared to offer a lease of the Licensed Areas to

any third party for the same purpose.

[10] “Licensed Areas” was defined to mean Areas 1 and 2 and the Term of the

license expired on 1 September 2001. Legune Land claimed that cl 2.2 of

the First Right of Refusal Deed granted Legune Land an option for a lease

(or a profit a`prendre) of Areas 1 and 2.

[11] The second step was to try and prove that the preconditions for the exercise

of the option had come into existence, the option had been exercised and

2 The deed is hereafter referred to as the ‘Firs t Righ t o f Refus al Deed’.

6

Legune Land had been granted a lease of Areas 1 and 2 (or a profit

a`prendre) before the acquisition of the areas of land by the Northern

Territory had been completed.

[12] The third step was to try and prove that the Northern Territory Land

Corporation acknowledged and undertook to recognise the exis tence of the

rights created by clause 2.2 of the First Right of Refusal Deed thereby

giving rise to a constructive trust .

[13] While the elements of the Legune Land’s case are clear enough, Legune

Land faced a number of serious difficulties in proving its case . First, the

Northern Territory’s case was that, for a number of reasons, it had

deliberately not executed the First Right of Refusal Deed. Second, Legune

Land could not produce a copy of the First Right of Refusal Deed which it

claimed had been executed by the Northern Territ ory. Third, Legune Land

did not have any direct evidence that the First Right of Refusal Deed had

been executed by the No rthern Territory. Fourth, even if it was established

that the First Right of Refusal Deed was executed by the Northern Territory,

that of itself did not amount to the grant of a lease of Areas 1 and 2 . Fifth,

cl 2.2 of the First Right of Refusal Deed was drafted in a manner which did

not readily convey that the clause was intended to be the grant of an option

for a lease of Areas 1 and 2 to Legune Land. Sixth, there was no evidence

which had a tendency to prove that the pre -conditions to the exercise of the

rights under cl 2.2 of the First Right of Refusal Deed ever came into

existence; in particular, there was no evidence that the Northern Territory

7

desired to use Areas 1 and 2 for grazing stock and no other purpose.

Seventh, there was no evidence to suggest that the Northern Territory had

offered Legune Land a lease of Areas 1 and 2 in accordance with cl 2.2 of

the First Right of Refusal Deed. Nor was there any evidence to suggest that

Legune Land had accepted any such lease. Eighth, the terms of cl 2.2 are

too uncertain and incomplete to constitute an agreement to enter into a lease.

No term or rent , or mechanism for calculating the term or rent , are specified

in the clause.

[14] To overcome these problems, Legune Land attempted to do three things.

First, it tried to construct a circumstantial case out of the conduct and

conversations of various agents of the parties and various documents which

were in the possession of the parties . Second, it argued that the objective

theory of contract restricted the use which the respondents could make of

some of the evidence that was tendered on their behalf. Third , it pleaded a

number of alternative causes of action and suits to try and establish that the

Northern Territory was bound by the terms of the First Right of Refusal

Deed, including an agreement by conduct, part performance and estoppel by

convention.

[15] Legune Land’s case in respect of each of its pleaded claims was severely

hampered because none of its directors or owners was called to give

8

evidence. The natural inference being that they were incapable of giving

evidence which supported any of Legune Land’s claims.3

[16] The circumstantial case that was constructed on behalf of Legune Land was

a very weak and strained case and it did not improve by bei ng recast under

the heads of different claims . Nor did it improve by being repeated in this

Court. Legune Land’s case did not succeed on the balance of probabilities

and it was more than met by the evidence tendered by the respondents.

The hi story of the acqui si ti on of Areas 1, 2 and 3

[17] The history of the acquisition of Areas 1, 2 and 3 and their incorporation

into Spirit Hills Station and the dealings between the parties is as follows.

[18] On 19 April 1995 a Memorandum of Understanding (MOU) about the

development of Stage 2 of the Ord River Irrigation Scheme was signed by

the Chief Minister of the Northern Territory and the Premier of Western

Australia. Under the MOU the Northern Territory was to make suitable land

available for the expans ion of the scheme. Land was identified on Spirit

Hills Station and Legune Station for that purpose. The Northern Territory

acquired Spirit Hill s Station by publication of a Notice of Acquisition in the

Northern Territory Gazette dated 15 November 1994.

[19] On 13 August 1999 the Northern Territory entered into a D eed of

Agreement4 with Legune Station Pty Ltd for the surrender of three areas of

land from Legune Station, being proposed NT Portions 5774, 5775 and

3 Jones v Dunk el (1959) 101 CLR 298

4 Hereafter referred to as ‘the Excis ion Deed’.

9

5776, in return for compensation of $900,000 . NT Portions 5774 and 5775

were designated for use in the expansion of the Ord River Irrigation Scheme.

NT Portion 5776 was designated for incorporation into the Keep River

National Park. The areas became known as Areas 1, 2 and 3.

[20] The Excision Deed contained the following recitals and operative provisions

of relevance to this appeal .

Recitals

A. The Lessee is the registered proprietor of those parcels of land

being NT Portions 798 and 3222, as contained in Perpetual

Pastoral Lease No. 1062 and e ntered in the Register Book

Volume 588 Folio 080 and known as Legune Station (“the

Pastoral Lease”).

B. The Territory wishes to acquire from the Lessee an area of

approximately ONE THOUSAND ONE HUNDRED (1,100)

square kilometres, the precise boundaries of which are to be

surveyed, but generally including those parts of the Pastoral Lease shown on the plan which is Attachment “A” hereto (“the

Land”) for the purposes of the Ord River Extension Scheme

and/or such other purposes as the Territory may require .

C. The Lessee and the Territory wish to document the terms and

conditions upon which the Land shall be surrendered by the

Lessee to the Territory.”

Operative provisions:

2. Surrender and Compensation

2.1 The Lessee hereby surrenders the Land from the Pastoral

Lease in favour of the Territory upon and subject to the

following conditions:

10

2.1.1 The Territory grants the Lessee a licence (“the Licence”) to

remain in possession of Area 1 and Area 2 (“the Licensed

Areas”) on the following terms:

[There follow a list of conditions to the grant of the Licence over

Areas 1 and 2 including condition (d): “that the Lessee shall not

transfer sell lease licence mortgage charge dispose of or in any way

or manner part with possession of t he Licensed Areas or any part

thereof during the Term;”.]

…. [Clauses not set out]

2.3 If at the expiry of the Term the Territory desires that the

Licensed Areas be used for grazing stock and for no other

purpose, then the Territory will grant to the Lessee a first right

of refusal to lease the Licensed Areas from the Territory at a

rental and upon and subject to such terms and conditions as the

Territory may in its absolute discretion impose PROVIDED

that such rental and terms and conditions shall not be less

favourable than the terms and conditions upon which the

Territory would be prepared to offer a lease of the Licensed

Areas to any third party for the same purpose.

…. [Clauses not set out]

4. Registration of Surrender

4.1 The Lessee shall upon payment of the Compensation Sum hand to the Territory an executed surrender of the Land from the

Pastoral Lease in the form annexed hereto and marked “B”

(“the Panel Form”) which shall be held in escrow by the

Territory. The Lessee hereby authorise s the Territory to lodge

the Panel Form for registration at the Land Titles Office in

Darwin at any time after the expiration of the Term or the

sooner lawful termination of the Licence but not before.”

[21] The Excision Deed provided for : a partial surrender of the perpetual pastoral

lease confined to Areas 1, 2 and 3; subject to certain conditions, a licence

enabling Legune Station Pty Ltd to remain in possession of Areas 1 and 2

11

for grazing purposes ; subject to earlier termination upon the Northern

Territory giving six weeks’ notice that the land was required for the Ord

River Irrigation Scheme, a licence term from 16 August 1999 to

1 September 2001; and a first right of refusal to Legune St ation Pty Ltd for a

lease over Areas 1 and 2 at a rental and on terms imposed by the Northern

Territory if at the expiry of the licence on 1 September 2001 the Territory

desired that those areas be used for grazing stock and no other purpose. The

Excision Deed imposed both benefits and burdens on the Northern Territory

and Legune Station Pty Ltd. The burdens on Legune Station Pty Ltd

included the maintenance of all boundary and other fencing and fixed

improvements within Areas 1, 2 and 3 in good condition and tenantable

repair and condition.

[22] On 16 August 1999 the Northern Territory paid Legune Station Pty Ltd

compensation of $900,000 and the company executed a partial surrender of

lease for Areas 1, 2 and 3 . The instrument of surrender was held in escrow

by the Northern Territory pending the resolution of a native title claim over

the whole of Legune Station. The surrender was held in escrow because the

Northern Territory was uncertain what impact the perfection of the surrender

would have on the native title claimants’ prospects of success. The effect of

the execution and delivery of the partial surrender was to transfer the

beneficial interest in Areas 1, 2 and 3 to the Northern Territory and leave

Legune Station Pty Ltd with the bare legal title to those areas.

12

[23] On 3 May 2000 Cridlands , who were the Darwin solicitors for Legune Land,

sent a letter to Mr Tony Fowlestone who was the Director of the Land

Management Branch of the Department of Lands Planning and Environment.

The letter was part of the due diligence that Cridlands was undertaking on

behalf of Legune Land for the purchase of Legune Station and it requested

information about compliance with lease covenants, Crown rental, proposed

surrenders and any other matters that may affect Legune Land if it became

the lessee.

[24] On 4 May 2000 Mr Fowlestone replied by letter . He stated that the

conditions applicable to the perpetual pastoral lease were those set out in

s 38 and s 39 of the Pastoral Land Act ; there had been an acquisition of

“230 square kilometres” (sic)5 of land in the south of the property which had

been proposed for inclusion in the development of Stage 2 of the Ord River

Irrigation Scheme; and there was a native title claim over the whole of

Legune Station.

[25] The Land Management Branch of the Department of Land Planning and

Environment is a separate branch to the Land Acquisition Branch of the

Department. The due diligence enquiries made by Cridlands were not the

kind of enquiries that would have caused someone in the Land Manageme nt

Branch of the Department to immediately give consideration to the status of

the Northern Territory’s interest in Areas 1, 2 and 3 and how the interest

should be protected.

5 The Northern Territo ry had in fact acqu ired no t 250 bu t 1,100 s quare kilometres o f Legune Stat ion .

13

[26] On 18 May 2000 Cridlands wrote to Fox and Thomas , the principal

solicitors for Legune Land, and informed them that the major issues for the

purchase of Legune Station were the native title claim , any residual

problems with stock subject to the Brucellosis Tuberculosis Eradication

Campaign, the agreement with the Northern Territory about the expansion of

the Ord River Irrigation Scheme and issues surrounding the proposed use of

the property.

[27] On 19 May 2000 Cridlands sent a facsimile to Fox and Thomas which had

attached to it a copy of the Excision Deed. The facsimile also advised Fox

and Thomas that Legune Station Pty Ltd could not transfer Legune Station

to Legune Land without the consent of the Northern Territory.

[28] On 9 August 2000 Legune Land and Legune Station Pty Ltd signed the

Contract of Sale of Legune Station. Under the Contract of Sale , Legune

Land did not purchase Areas 1, 2 and 3. The land being sold was defined as

the portions contained in the relevant pe rpetual pastoral lease but

specifically excluding Areas 1, 2 and 3 which had been surrendered by

Legune Station Pty Ltd to the Northern Territory under the Excision Deed.

The Contract of Sale was also conditional upon the consent of the Minister

to the transfer of Legune Station to Legune Land.

[29] The Contract of Sale contained a number of special conditions. Special

condition 6 of the Contract of Sale states:

14

6. DEED OF AGREEMENT – NORTHERN TERRITORY

6.1 The Vendors disclose the existence of an agreement dated

13 August 1999 between the Northern Territory of Australia (“the

Territory”) and Legune Station with respect to the surrender of

approximately 1,100 square kilometres of land;

6.2 If registration of the surrender has not been effected prior to the

Completion Date, the Purchaser will accept the title to the Land and

will assume the obligations of Legune Station under the Deed of Agreement and will, if requested by the Territory, exe cute a further

surrender to be registered following Completion by the Territory of

the necessary surveys of the land being surrendered;

6.3 The Purchaser agrees to indemnify and keep indemnified

Legune Station for any liability imposed upon it, or loss o r damage

suffered by it, as a consequence of the Purchaser’s failure to observe

the obligations of Legune Station under the Deed of Agreement after

Completion;

6.4 Subject to the consent of the Territory being obtained, Legune

Station will assign any continuing benefits it has under the Deed of

Agreement to the Purchaser with effect from the Completion Date;

and

6.5 If the consent of the Territory is not obtained to the assignment

referred to in the immediately preceding subparagraph, Legune Station will execute a Deed of Surrender of any remaining interests it

has in such Deed of Agreement and in particular will not permit any

other party to occupy or depasture stock on the land the subject of

the surrender.”

[30] Special condition 6.2 of the Contract of Sale provides that, if the surrender

of Areas 1, 2 and 3 had not been registered by the completion of the

Contract of Sale, then Legune Land would accept title6 to the land and

would assume the obligations of Legune Station Pty Ltd under the Excision

Deed including the execution of a further surrender. This sub-clause had

6 That is , legal t it le to the whole o f Legune Stat ion .

15

force and effect regardless of whether any of the benefits that Legune

Station Pty Ltd had under the Excision Dee d were assigned to Legune Land.

[31] On 22 August 2000 Mr Guy Riley, who was a legal practitioner with Clayton

Utz the solicitors for Legune Station Pty Ltd, sent a letter to Mr Fowlestone

advising him that Legune Station Pty Ltd and Legune Land had ente red into

the Contract of Sale for Legune Station and that settlement was due on

7 September 2000 which, at that time, was incorrect. The Contract of Sale

provided that settlement would take place on 6 September 2000. A copy of

the Contract of Sale was not enclosed with the letter. Mr Riley also asked to

be informed when the parties could expect the Minister’s consent to the

transfer of Legune Station.

[32] On 1 September 2000 Cridlands sent a letter to Mr Fowlestone and

Mr John Pinney who was the Chief Executive Officer of the Department of

Land Planning and Environment . The letter enclosed a document described

as an undertaking which contained particulars about Legune Land’s holdings

of pastoral land in the Northern Territory, the shareholders of Legune Land

and the use to be made of the property. The purpose of providing the

undertaking was to obtain the Minister’s consent to the transfer of Legune

Station by demonstrating that Legune Land met the usual criteria applicable

in determining whether a party was a suitable holder of a perpetual pastoral

lease.

16

[33] On 1 September 2000 someone within the Department of Land Planning and

Environment requested a copy of the Contract of Sale and Cridlands

facsimiled a copy of the contract to the Pastoral Management Branch of the

Department.

[34] On 3 September 2000 Ms Menz, who was then a junior solicitor at

Cridlands, sent an email to Mr Fox of Fox and Thomas advising him, among

other things, that: (1) the Pastoral Management Branch of the Department of

Land Planning and Environment was presently attending to the consent to

transfer of the pastoral lease; and (2) the vendor ’s solicitor had informed her

that the Deed of Surrender which was executed by Legune Station Pty Ltd

had not been registered and matters had not proceeded further since the

exchange of the Contract of Sale. Ms Menz stated that as a result it was

likely that the Legune Land would be required to take on the obligations of

Legune Station Pty Ltd under the Excision Deed in accordance with special

condition 6 of the Contract of Sale.

[35] On 4 September 2000 Mr Fowlestone sent a memorandum to Mr Pinney

which recommended that Mr Pinney exercise his delegation under s 68(3) of

the Pastoral Land Act to consent to the transfer of the perpetual pastoral

lease 1062, being Legune Station, from Legune Station Pty Ltd to Legune

Land. This recommendation was based on Legune Land meeting the usual

criteria applicable to the holder of a perpetual pastoral le ase and without

reference to the Excision Deed and the surrender of Areas 1, 2 and 3 and the

Land Acquisition Branch of the Department of Land Planning and

17

Environment. On 5 September 2000 Mr Pinney approved Mr Fowles tone’s

recommendation. However, the Minister’s consent was not immediately

delivered to either Legune Land or Legune Station Pty Ltd.

[36] On the morning of 6 September 2000 Ms Noreen Blackley, who was the

Manager of the Lands Acquisition Branch of the Department of Lands

Planning and Environment, became aware of the proposed tr ansfer of

Legune Station. She became concerned that the transfer of the perpetual

pastoral lease may jeopardise the Northern Territory’s acquisition of Areas

1, 2 and 3 which had yet to be perfected by registration of the surrender

documents. The surrender documents were still being held in escrow in

accordance with the Excision Deed. Ms Blackley became aware of this

transaction about one hour before settlement of the Contract of Sale was

originally scheduled to occur7. As a result , she entered into dealings with

Cridlands. She did so of her own motion without recommending to

Mr Pinney that the Northern Territory enter into a Deed of Agreement with

Legune Land or obtaining instructions from him to that effect . Ms Blackley

did not have authority to bind the Northern Territory in such matters.

Mr Pinney was the delegate of the Minster . Neither Ms Blackley nor

Ms Menz had a detailed recollection of their dealings.

[37] Ms Blackley gave evidence that she had a general understanding that the

effect of the Excision Deed was that the Northern Terr itory paid $900,000

7 As mat ters t rans p ired complet ion o f the Contract o f s ale d id no t occur on 6 Sep tember 2000. It

occurred on 7 Sep tember 2000.

18

for the surrendered areas. She was aware that the surrender was not to be

immediately registered on the title to Legune Station because the Northern

Territory was uncertain about the impact registration would have on the

native title claim over the whole of Legune Station. She was aware that,

under the Excision Deed, Legune Station Pty Ltd was to continue to use the

surrendered areas for grazing cattle until 1 September 2001 unless the

licence was terminated earlier by the Northern Territory. She understood

that, under the Excision Deed, Legune Station Pty Ltd had agreed not to sell

or otherwise deal with the surrendered areas while the grazing licence was

in place. Ms Blackley had not seen a copy of the Contract of Sale for

Legune Station. Her only concern was to try and protect the Northern

Territory’s interest in Areas 1, 2 and 3 .

[38] Ms Menz’s file notes of her dealings with Ms Blackley record the following.

On 6 September 2000 Ms Blackley telephoned Ms Menz and told her that

the Department of Land Planning and Environment was withholding consent

to the transfer of the perpetual pastoral lease of Legune Station because the

Department needed an undertaking, a simil ar agreement with the purchaser

to the agreement the Northern Territory had with Legune Station Pty Ltd and

a surrender document executed by Legune Land. After this telephone call,

Ms Blackley telephoned Ms Menz again. She advised Ms Menz that (1) the

Department preferred not to register the surrender document executed by

Legune Station Pty Ltd at that time; and (2) the Department would consent

to the sale of Legune Station provided the proposed purchaser (a) signed a

19

partial surrender , and (b) an agreement to take on the responsibility for the

existing Deed of Agreement between Legune Station Pty Ltd and the

Northern Territory. The new agreement was to be confined to Areas 1 and

2. Clause 2.1.2 of the Excision Deed which dealt exclusively with Area 3

was not appropriate for the new agreement.

[39] On 6 September 2000 Fox and Thomas sent a form of undertaking to

Simon Hall at Legune Land for signature . The undertaking was signed by

Mr Peter Campbell on behalf of Legune Land and then facsimiled to

Cridlands. The undertaking stated:

Legune Land Pty Ltd … hereby undertakes as follows:

1. To be bound by and to the terms of a certain Deed of

Assignment entered into between the Northern Territory of

Australia and Legune Station Pty Ltd … dated 13 August 1999 as though and to the effect that Legune Land Pty Ltd had entered

into the executed document in place of Legune Station Pty Ltd.

2. In particular, Legune Land undertakes to execute all documents,

Deeds and papers and to do all things that may be required by

the Northern Territory and in particular the execution of any

further form of surrender as may be required by the Northern

Territory to give effect to the terms of the Deed of Agreement.

[40] At some point in time a copy of the Undertaking was given to the

Department of Land Planning and Environment.

[41] At 4.11 pm on 6 September 2000 Ms Menz sent an email to Mr Fox and

Mr Riley. The email stated:

20

Norm, this is to confirm our telephone conversation, and Guy, for

your information.

Noreen from Department of Lands has advised that they require an

original Partial Surrender form executed by our clients, and an

original new Agreement in the same terms as the Agreement with

Legune Station Pty Ltd, except the Agreement is to be in relatio n to

Areas 1 and 2 only – Area 3 is not to be included (although it is to be

surrendered).

I will prepare the two documents and the clients will attend at

Cridlands at 9 am tomorrow morning to execute them. I have

confirmed with Noreen that the documents will be delivered to the

Department of Lands who will then provide the consent to the

transfer.

Settlement is rescheduled for 11am tomorrow morning at the Lands

Titles Office.

[42] On its face the statement that “they require an … original new Agreement,

in the same terms as the Agreement with Legune Station Pty Ltd” in

Ms Menz’s email , does not accurately reflect Ms Menz’s file note s of the

two telephone conversations that she had with Ms Blackley. According to

the file notes of those conversations, Ms Blackley sought a similar

agreement under which Legune Land took on the responsibilities that

Legune Station Pty Ltd had under the Excision Deed . It should also be

noted that Ms Menz did not state in her email that Department of Land

Planning and Environment would provide a signed copy of the Agreement to

Legune Land at settlement . It is only the consent to the transfer of Legune

Station that was to be provided.

21

[43] At 4.12 pm on 6 September 2000 Mr Fox sent an email to Mr Riley which ,

among other things, stated:

We confirm our agreement to proceed to settlement on the basis of

your undertaking that:

1. ….

2. You undertake on behalf of your clients that your clients will execute a Deed of Assignment of Benefit with respect to the

original agreement with the Northern Territory of Australia and in

addition execute a Deed of Surrender of Benefit of the benefits

the subject of that Deed of Agreement and that you will deliver

those documents as soon as possible after settlement [emphasis

added].

[44] Mr Fox’s email provides some evidence that at the close of business on

6 September 2000 the agents of Legune Land did not think that the Northern

Territory was actually going to enter into an agreement with Legune Land in

terms of the First Right of Refusal Deed or, in any event, did not think that

any concluded agreement had been reached with the Northern Territory . If a

concluded agreement had been reached in terms of the First Right of Refusal

Deed it would have been unnecessary for there to be an assignment of

Legune Station Pty Ltd’s benefits under the Excision Deed. It would only

be necessary for Legune Station Pty Ltd to surrender its benefits under the

Excision Deed in accordance with special condition 6.5 of the Contract of

Sale.

[45] Nor did the agents of Legune Land think that the Northern Territory had

consented to the assignment contemplated by special condition 6.4 of the

22

Contract of Sale. The email contemplates that any assignment of any

benefits that Legune Station Pty Ltd had under the Excision Deed would

only occur after settlement if at all. If the Northern Territory had given

consent to the assignment of Legune Station Pty Ltd’s benefits under the

Excision Deed, it would not have been necessary for Legune Station Pty Ltd

to execute the Deed of Surrender of Benefit.

[46] Contrary to Ms Menz’s statement in her email to Mr Fox and Mr Riley on

6 September 2000 , the Partial Surrender and First Right of Refusal Deed

were not delivered to Ms Blackley prior to settlement on the morning of

7 September 2000. Instead, at 9.52 am on 7 September 2000 , which was

only one hour before settlement, Ms Menz sent a facsimile to Ms Blackley

which enclosed the First Right of Refusal Deed and a Partial Surrender . The

email stated:

We refer to our telephone conversation earlier today.

Please find enclosed the [First Right of Refusal Deed] and Partial

Surrender, as requested by you, executed by Legune Land Pty Ltd.

Could you please confirm that the documents are satisfactory to you

and that the Department is in a position to provide their consent to

transfer at settlement at 11 am today at the Land Titles Office in

Darwin? We shall provide the original documents at settlement.

Please let me know if you have any queries.

[47] Ms Blackley was not asked to arrange for the First Right of Refusal Deed to

be executed by the Northern Territory prior to settlement so that the original

23

deeds could be exchanged at settlement . Ms Menz did not even give

evidence that prior to settlement Ms Blackley confirmed that the documents

were satisfactory. Nor were Ms Blackley, or the Department of Lands

Planning and Environment, asked by Ms Menz to provide consent to the

assignment to Legune Land of the benefits Legune Station Pty Ltd had under

the Excision Deed.

[48] The facts referred to in par [46] and par [47] above support Kelly J’s

finding that the only agreement reached between the Northern Territory and

Legune Land was that if Legune Land provided the First Right of Refusal

Deed signed by Legune Land the Northern Territory would consent to the

transfer of Legune Station to Legune Land.8 As matters transpired, the

signed document was provided and the consent was given. Nothing else

occurred.

[49] Ms Blackley’s evidence was that it was likely she considered the

attachments to the facsimile transmission she received before settlement .

However, given that the facsimile transmission only arrived an hour before

settlement, she doubted if she considered the attachments in any detail. Her

main concern was to satisfy herself that Legune Land would be producing a

surrender document for the surrendered areas.

[50] The First Right of Refusal Deed facsimiled to Ms Blackley contained the

following recitals:

8 Legune Land Pty Ltd v Northern Terri tory Land Corpora t ion & Anor [2012] NTSC 83 at par [33]

24

WHEREAS

A. The Lessee is the registered proprietor of those parcels of land

being NT Portions 798 and 3222, as contained in Perpetual

Pastoral Lease No. 1062 and entered in the Register Book

Volume 588 Folio 080 and known as Legune Station (“the

Pastoral Lease).

B. The Territory wishes to acquire from the Lessee an area of

approximately ONE THOUSAND ONE HUNDRED (1100) square kilometres, the precise boundaries of which are to be

surveyed, but generally including those parts shown on the plan

which is Attachment “A” hereto (“the Land”) for the purpo se of

the Ord River Extension Scheme and/or such other purposes as

the Territory may require.

C. The Lessee and the Territory wish to document the terms and

conditions upon which the Land shall be surrendered by the

Lessee to the Territory.

[51] The recitals are inaccurate in two important respects. First, at the time the

First Right of Refusal Deed was executed by Legune Land, Legune Land

was not the registered owner of the pastoral lease. Legune Station Pty Ltd

remained the registered owner until sett lement. Second, the Northern

Territory had acquired the beneficial interest in Areas 1, 2 and 3 and the

rights to acquire the legal title from Legune Station Pty Ltd and had paid

$900,000 compensation to do so.

[52] As to surrender and compensation, the operative part of the First Right of

Refusal Deed contained the following provisions:


25

2.1 The Lessee hereby surrenders the Land from the Pastoral

Lease in favour of the Territory upon and subject to the


2.1.1 The Territory grants the Lessee a licence (“the

Licence”) to remain in possession of Area 1 and

Area 2 (“the Licensed Areas”) on the following

terms:

(a) for a licence fee of $1.00 per annum (if demanded);

(b) for a period commencing on the date hereof and

expiring:

(i) upon the expiration of six (6) weeks

written notice by the Territory to the

Lessee that the Licensed Areas are

required by the Territory to be used for

the Ord River Extension Scheme (“the

Scheme”); or

(ii) on 1 September 2001;

whichever comes first (“the Term”);

(c) that the Lessee shall not transfer sell lease

licence mortgage charge dispose of in any way

or manner part with possession of the Licensed Areas or part thereof during the Term;

(d) that the Lessee shall not be placed in

receivership, placed in liquidation or make any

arrangement for the benefit of its creditors;

(e) that the Lessee shall maintain all boundary and

other fencing and fixed improvements (if any)

within the Licensed Areas in good and

tenantable repair and condition fair wear and

tear excepted;

26

(f) that the Lessee obtain written consent of the

Territory prior to erecting, constructing,

altering, renovating, dismantling or

demolishing any structure or fixture within the

boundaries of the Licensed Areas or

undertaking any works within the Licensed

Areas of any nature whatsoever which may

alter the value of the Licensed Areas (whether detrimentally or not);

(g) that no compensation monetary or otherwise

will be payable to the Licensee in respect of

any improvements made to the Licensed Areas

in any circumstances; and

(h) that a breach of any term of the License shall

constitute a breach of a condition of this

Agreement and that without limiting the rights

of the Territory at law the License may be

terminated by the Territory by not ice in writing

to the Licensee at which time the Territory

forthwith be entitled to Register the Panel Form

in accordance with clause 3 hereof.

2.2 If at the expiry of the Term the Territory desires that the Licensed Area be used for grazing stock and no other

purpose then the Territory will grant to the Lessee a first

right of refusal to lease the Licensed Area from the Territory

at a rental and upon and subject to conditions as the

Territory may in its absolute discretion impose PROVIDED

that such rental and terms and conditions shall not be less

favourable than the terms and conditions upon which the

Territory would be prepared to offer a lease of the Licensed

Areas to any third party for the same purpose.

[53] Clause 2.1.1 of the First Right of Refusal Deed provides that the Licence

referred to in the clause expires on 1 September 2001 at the very latest. Any

rights granted by cl 2.2 only co me into existence after the expiry of the term

of the Licence and i f the Northern Territory desired the License Areas to be

used for grazing stock and no other purpose. Clause 2.2 does not specify the

27

term of any Lease nor the rent payable under any lease . Nor does the clause

provide any mechanism for calculating the term of the lease or the rent

payable.

[54] The First Right of Refusal Deed ended with the following provision for

signature by the Northern Territory:

IN WITNESS WHEREOF the parties have executed this Deed the day

and year first herein before written.

SIGNED by

For and on behalf of the

NORTHERN TERRITORY OF AUSTRALIA

Pursuant to a delegation under the Contracts Act

in the presence of

…………………..

Witness

[55] The First Right of Refusal Deed contained clear provision for the deed to be

signed by someone who had appropriate authority under the Contracts Act

(NT). The only person who had that authority was Mr Pinney. In the

circumstances, simply receiving a copy the deed, which had been signed by

Legune Land, and providing the Minister’s consent to the transfer of Le gune

Station at settlement is not conduct which evinces an intention that the

Northern Territory be bound immediately to the deed.

[56] On 7 September 2000 Ms Menz sent a facsimile, which enclosed a Deed of

Assignment and a Deed of Surrender under special conditions 6.4 and 6.5 of

the Contract of Sale, to Mr Riley. In contrast to the facsimile sent to

28

Ms Blackley, the facsimile asked Mr Riley to arrange for the documents to

be executed before settlement . It also confirmed that Cridlands had

provided the Department of Land Planning and Environment with an

executed Partial Surrender and the First Right of Refusal Deed. In fact,

Ms Menz had only sent a facsimile copy of each of t hose documents to

Ms Blackley.

[57] Settlement of the Contract of Sale occurred at 11 .00 am on 7 September

2000. At settlement the Northern Territory was given a copy of the First

Right of Refusal Deed which had been executed by Legune Land and a

cheque for rent payable in respect of the whole area o f Legune Station which

was consistent with Legune Land receiving legal t itle to the whole of the

perpetual pastoral lease in accordance with special condition 6.2 of the

Contract of Sale . In return the Department of Land Planning and

Environment provided the Minister’s consent to the transfer of the perpetual

pastoral lease and a notice was rec orded on the Record of Administrative

Interests and Information on the title advising that the surrendered areas

were the subject of a proposed acquisition.

[58] After settlement , Legune Land took possession of Legune Station and the

cattle which formed part of the Contract of Sale. Thereafter, Legune Land

continued to graze the cattle which it had purchased and were on Areas 1

and 2 on those same areas in the same manner that Legune Station Pty Ltd

had done.

29

[59] At 1.00 pm on 7 September 2000 Ms Blackley sent an email to Mr Pinney to

notify him that Legune Station had been transferred and to update him for

his meeting with the new owners of Legune Station. Ms Blackley reminded

Mr Pinney of the arrangements that were in place between Legune Station

Pty Ltd and the Northern Territory and informed him of the steps she had

taken to protect the Northern Territory’s interests in the surrendered areas of

land. She stated that the solicitors for the purchaser were asked to provide

another agreement and a new partial surrender document which were signed

by the new owners. The email did not attach a copy of the First Right of

Refusal Deed. Nor did Ms Blackley make a recommendation to Mr Pinney

in the email that he should sign the First Right of Refusal Deed on behalf of

the Minister.

[60] On the afternoon of 7 September 2000 Mr Pinney met with two of the

owners of Legune Land. Mr Pinney gave evidence that he did not recall who

they were. It was the first time that he had met with the representatives of

Legune Land. His file note of the meeting states:

I spoke to two of the new owners today.

They are interested

1. In leasing Areas 1 and 2 if the Ord#2 is delayed.

2. Having 1st

right of purchase on areas 1 and 2 if Ord#2 is

cancelled.

30

They advised that the native title holders told them yesterday that

they want Ord#2 constrained to the west of the Keep River.

[61] The notes of the meeting do not suggest that the owners asked for a signed

copy of the First Right of Refusal Deed or that Mr Pinney said that he would

be signing the deed. The representatives of Legune Land stated what their

wishes were if the expansion of the Ord River Irrigation Scheme was

delayed or cancelled. The fact that they said that they were interested in a

lease, if the Scheme was delayed, and in purchasing the surrendered areas, if

the expansion of the Scheme was cancelled, suggests that they

acknowledged that the Northern Territory was for all intents and purposes

the owner of Areas 1 and 2 and Legune Land’s interest in those areas , at that

time, was less than a leasehold interest. Mr Pinney’s notes do not suggest

that the First Right of Refusal Deed was discussed at all or that the

representatives of Legune Land would be exercising any rights granted by

that document. The two owners of Legune Land were not called to give

evidence about what was discussed during that meeting. They were not even

identified.

[62] Mr Pinney gave evidence that his intention at that time was not to bind the

Northern Territory to any agre ement because he wanted to retain as much

flexibility as possible for the Northern Territory. The principal purpose he

had in mind was the expansion of the Ord River Irrigation Scheme but he

was also aware of the Miriuwung Gajerrong native title c laim and the fact

that the Northern Territory may have to make an offer of some land in order

31

to resolve that claim. He stated that at no time during the course of the

meeting on 7 September 2000 , or at any other time , did any representative of

Legune Land suggest that the company had any right to occupy Areas 1 and

2. At no time during the course of t he meeting on 7 September 2000 , or at

any other time, did any representative of Legune Land suggest to him that

the company had a first right of r efusal for a lease of Areas 1 and 2 . At no

time during the course of the meeting, or at any other time , did any

representative of Legune Land request a lease of the two areas on the basis

that the Northern Territory had determined that the land would only be used

for grazing stock and no other purpose. Mr Pinney’s evidence was

consistent with the contents of the file note that he made of the meeting he

had with the representatives of Legune Land on 7 September 2000.

[63] On 8 September 2000 Ms Menz sent a facsimile to Mr Fox. Among other

things she stated:

We enclose with the original of this letter:

…

…

The original of the Deed of Assignment and Deed of Surrender (in

respect of the Agreement with the Northern Territory) prepared by you and executed by Legune Station Pty Ltd;

The original Deed of Agreement executed by Legune Land – we

shall forward a copy of the Agreement executed on behalf of the

Northern Territory once it is available.

32

In relation to the agreement with the Northern Territory, the

Department of Land Planning and Environment accepted the Partial

Surrender form and an Agreement (in substantially the same form as

was executed by Legune Station Pty Ltd) in exchange for production

of the consent to transfer the pastoral lease at settlement.

However, the present Real Property Act (NT) will be replaced by the

Law of Property Act (NT) (this is presently scheduled to occur in

September 2000) and the form of partial surrender acceptable for lodgement at the Lands Title Office will be changed. Therefore, the

Department may require Legune Land to execute a replacement

Partial Surrender form at that time.

[64] On 13 September 2000 Ms Menz sent a letter to Ms Blackley which enclosed

a further copy of the First Right of Refusal Deed. Among other things, the

letter stated:

Please find enclosed a further copy of the Deed of Agreement

provided to you on 7 August (sic)9 2000, executed by Legune Land.

Once the Deed of Agreement is executed on be half of the Northern

Territory, could you please return one copy to this office, for our

client’s records?

[65] This was the first time that the Northern Territory was requested to return a

signed copy of the First Right of Refusal Deed to either Cridlands or Legune

Land. The request was made after settlement and after the Norther n

Territory had provided the Minister’s consent to the transfer of Legune

Station. This tends to suggest that a concluded agreement had not been

reached as yet and that the agr eement was contingent on the Northern

Territory signing the deed and delivering it to the solicitors for Legune

Land.

9 The Deed of Agreement was p rov ided to the Northern Territo ry on 7 Sep tember 2000.

33

[66] By 13 September 2000 the Northern Territory had been provided with three

copies of the First Right of Refusal Deed which had been executed by

Legune Land. Senior counsel for Legune Land argued that more than three

executed copies of the deed had been provided to the Northern Territory but

there is no evidence of this occurring. No owners or representatives of

Legune Land were called to give evidence that they signed more than three

copies of the deed. The wording of the facsimile that was sent to the

Northern Territory on 7 September 2000 clearly states that a facsimile copy

of the deed was enclosed with the facsimile. The let ter dated 13 September

2000, states that “a copy” of the deed was delivered at settlement and only

encloses “a further copy” not “copies” of the deed. If more than one signed

copy of the deed had been provided to the Northern Territory at settlement

there would be no need to enclose another signed copy of the deed on

13 September 2000.

[67] None of the copies of the First Right of Refusal Deed were executed by the

Minister or Mr Pinney who was his delegate. All three copies of the deed

(including the facsimiled copy) which were provided to the Northern

Territory were tendered in evidence and none of them was signed on behalf

of the Northern Territory. Mr Pinney gave evidence that he did not sign the

deed and gave reasons for not doing so. However, contrary to the usual

practice of the Department of Land Planning and Environment, no formal

written record of the decision not to sign the deed was produced by the

Department.

34

[68] The usual practice of the Department of Land Planning and Environment

was that a record would be made of both a decision to sign and a decision

not to sign such a deed. In the circumstances, t he fact the Northern

Territory did not follow the usual process of recording that a decision was

made not to sign the First Right of Refusal Deed does not have a tendency to

prove the contrary. There simply was no formal record at all of the decision

on this occasion. The lack of the formal record is not a piece of

circumstantial evidence which tends to prove the deed was signed. The lack

of the record is not evidence of anything other than there was no record

made by the Department . Mr Pinney’s evidence is corroborated by the fact

that all three copies of the deed which had been given to the Northern

Territory were tendered in evidence and were not signed by the Northern

Territory and by the fact that the copy of the deed sent to Mr Fox by

Ms Menz on 8 September 2000 was not signed by the Northern Territory .

[69] The Northern Territory never sent a signed copy of t he First Right of

Refusal Deed to Cridlands or Legune Land and no further request was ever

made for the Northern Territory to provide Legune Land wi th a signed copy

of the deed.

[70] On 1 September 2001 the l icences said to have been granted to Legune Land

by cl 2.1.1 of the Excision Deed and the First Right of Refusal Deed would

have expired. However, there was no communication about this , at all ,

between the Northern Territory and Legune Land, and Legune Land’s

occupation of Areas 1 and 2 continued as it had immediately following the

35

settlement of the Contract of Sale. There is also no evidence that as at 1

September 2001 the Northern Territory wished Areas 1, 2 and 3 to be used

for grazing stock and for no other purpose.

[71] On 6 April 2003 an internal email was sent by Ms Gail McLeod to

Ms Beve Griffiths. Both Ms McLeod and Ms Griffiths were employees of

the Department of Land Planning and Environment. In the email,

Ms McLeod stated that Parks and Wildlife were querying who was

responsible for Areas 1, 2 and 3 within Legune Station. Ms Griffiths was

out of the office, so on 6 May 2003 Ms McLeod forwarded the email to

Ms Blackley. She asked Ms Blackley if she could identify who was

responsible for the surrendered areas of land. She also informed

Ms Blackley that the Department of Land Planning and Environment had

received an application for consent to a sublease of Legune Station to

Legune Pastoral Co Pty Ltd and Peter Campbell FT Pty Ltd as trustee for the

Peter Campbell Family Trust. Mr Campbell was one of the owners of

Legune Land. The propose d term of the sublease was from 1 November

2002 to 31 October 2004. Ms Blackley was asked to advise if the subleas e

would have any effect on the partial s urrender of Legune Station.

[72] At 2.05 pm on 6 May 2003 Ms McLeod sent an email to Ms Simone White ,

who was in the Department of Transport and Works , advising her that

Legune Land was responsible for the surrendered areas within Legune

Station. The advice was consistent with special condition 6.2 of the

Contract of Sale, cl 1 of the Undertaking executed by Legune Land on

36

6 September 2000 and cl 2.1.1 (f) of the Excision Deed and the First Right of

Refusal Deed.

[73] On 29 May 2003 Povey Stirk, the solicitors who were now acting for Legune

Land, sent a letter to the Pastoral Branch of the Department of Land

Planning and Environment seeking consent under s 68 of the Pastoral Land

Act to a sublease of the whole of Legune Station. The letter made no

mention of the areas that had been surrendered to the Northern Territory.

[74] On 1 July Mr Peer Schroter at Povey Stirk telephoned Mr Fowlestone and

they discussed the contents of Mr Fowlestone’s anticipated response to

Legune Land’s application. Mr Fowlestone raised two matters:

(1) protection of the Northern Territory’s interest in the surrendered areas

and (2) major development works that were being carried out on the lease.

During the conversation, Mr Schroter stated that he was not aware of the

two matters raised by Mr Fowlestone because he had not received

instructions about those matters from the Toowoomba solicitors.

Mr Schroter advised that he would relay the matters to Bernays and Bernays

who were the Toowoomba solicitors for Legune Land.

[75] On 2 July 2003 Mr Fowlestone replied by letter to Povey Stirk. In his reply,

among other things , he stated:

As discussed, there are two matters that need to be resolved before I

can submit the application to the delegate of the Minister for

consideration.

37

The first of the matters relates to the acquisition of NT portions

5774, 5775 and 5776 from Legune Land by the Northern Territory. I

would appreciate your advice on how the matter is to be dealt with

having regard to the proposed sublease. The delegate will need to be

absolutely sure that the Territory’s interest is protected. Ms Noreen

Blackley of this Department … is the person to contact if you need

any further particulars in this regard

The second matter relates to major development works that have been carried out on the lease. I understand that the lessees are waiting for

advice on the procedures, if any, they may be required to follow

under the Environment Assessment Act. The delegates of the

Minister will need to be briefed about such requireme nts and how the

proposed sublease might impact on these. The delegate of the

Minister will need to be absolutely sure that any lessee obligations

will not be impacted on by the proposed sub-lease.

[76] On 4 July 2003 Mr Fowlestone made a file note on a copy of the letter dated

2 July 2003 which states , “Bernays and Bernays10

phoned. 4/7/03. After

speaking to Noreen Blackley and me, they will apply to vary the lease to

include a covenant/condition to surrender the land at nil cost when requested

to do so by the Minister.” This file note tends to suggest that Legune Land

acknowledged that the land was to be surrendered unconditionally at the will

of the Minister. No note was made to suggest that the solicitors for Legune

Land maintained that any surrender was contingent on Areas 1 and 2 being

used for the expansion of the Ord River Irrigation Scheme or was subject to

the First Right of Refusal Deed. It was Mr Fowlestone’s evidence that to

the best of his recollection the Queensland solicitor did not suggest to him

that there was any agreement between Legune Land and the Northern

Territory relating to the surrendered areas.

10

The p rincipal s o licito rs o f Legune Land in 2003.

38

[77] On 25 August 2003 Ms Blackley met with Mr Campbell and a representative

of the proposed sub-lessee. On 26 August 2003 Ms Blackley sent the

following email to Mr Fowlestone:

Met with Peter Campbell and Co yesterday to discuss the proposed

sublease etc.

I advised that we would consent to the proposed sublease subjec t to

the sublessee acknowledging that NTP 5774, 5775 and 5776 have

been “acquired” but not yet surrendered out of the lease. I don’t

think we need to amend/vary the pastoral lease to note that the area

will be surrendered. Please forward me the details o f the

pastoralist’s solicitor i.e. name and address so that I can arrange the

sign off of the acknowledgement . Also may I have the details of the

company (Family Trust) that will sublease?

Nicky D’Antoine is going to follow up with Parks to see if they wi ll

accept title over NTP 5776 – extension to Keep River National Park.

She is also going to follow up with DBIRD re status of the ORD

proposal.

I mentioned to Campbell that we will need to start charging rental on

NTP 5774 and 5775. The first right of re fusal over these two portions, should the land not be required by the Government for the

ORD or some other purpose, will also form part of the “agreement to

use these areas”.

I will let you know when the sublessee signs off.

[78] The email is arguably some acknowledgment by Ms Blackley that Legune

Land had an existing first right of refusal of some unspecified kind for

Areas 1 and 2 . However, there is no suggestion that the first right of refusal

had been exercised by Legune Land or that the preconditions for the

exercise of the right had come into existence . A reasonable inference from

39

the contents of the email is that the first right of refusal had not been

exercised because it was to form part of “the agreement to use these areas”.

[79] There was then a further exchange of emails between Mr Fowlestone and

Ms Blackley on 26 August 2003 during which Mr Fowlestone pressed on

Ms Blackley a suggestion that before Legune Station was subleased the

perpetual pastoral lease should be varied to incorporate a co ndition stating

that Areas 1, 2 and 3 would be surrendered at nil cost when the Minister

requested such surrender. The exchange of emails ended with Ms Blackley

sending an email to Mr Fowle stone in which she stated, “You are right – the

longer term view – can you arrange for a variation to add a clause that says

‘the lessee will surrender NT Portions 5774, 5775 and 5776 when requested

and no compensation is payable ”.

[80] On 23 October 2003 Mr Fowlestone sent a letter to Mr Robert Wiemers at

Bernays Lawyers who were the principal solicitors for Legune Land. Among

other things , the letter stated:

My understanding, following the meeting between representatives of

your client company and the P roperty Purchasing Unit of this

Department, is as follows:

Your client company was going to consult with you and make an application to vary the conditions of Perpetual Pastoral Lease

1062 to include a condition to the effect that the lessee would

surrender NT Portions 5774, 5775 and 5776 from the lease at nil

cost when called upon to do so by the Minister. A copy of section

44 and 47 of the Pastoral Land Act (Variation of lease provision

and noting variation of lease) is attached for your information.

You will note that the lessee is required to make an application in

40

writing for a variation. You may wish to suggest wording

acceptable to your client in the application.

This Department was going to follow up the other issues relation to NT Portions 5774, 5775 and 5776 and continue negotiations

with your client company in this regard (future surrender of the

portions and agreement for your client to use these areas). These

are not areas that will delay a decision in respect of the

application for consent to sublease Legune Station once the above

mentioned variation has been registered on the lease.

[81] Ultimately, no application to vary the conditions of Perpetual Pastoral Lease

1062 was made by Legune Land and Legune Station was not sublet. Other

than to state that he had some dealings with Mr Fowlestone in 2003,

Mr Wiemers gave no evidence about the dealings between Legune Land and

the Department of Land Planning and Environment in 2003 . Nor did

Mr Campbell or anyone else on behalf of Legune Land give evidence about

these dealings.

[82] The Department of Land Planning and Environment then proceeded to give

consideration to the acquisition of Are a 3 for use in Keep River National

Park.

[83] On 23 September 2004 Mr Fowlestone sent an email to Ms Griffiths, who

was then in the Property Purchasing Branch of the Department of Planning

and Infrastructure, which stated:

I refer to our brief discussion yesterday about the acquisition of land

from Legune Station partly for park and partly for Ord S tage 2.

Bill Binns, Director of Park Management, advised me yesterday that

Parks and Wildlife are proposing to include the land acquired for

41

park in the Park Estate. I undertook to ascertain the status of the

land and let Bill know so Parks and Wildlife can decide, in

consultation with its solicitors, how best to achieve this.

My understanding of the current status of the land is as follows:

The acquisition became a priority when Ord Stage 2 looked like it was going ahead;

In view of uncertainty in relation to indigenous land issues at the time the Government decided to pay the then lessee of

Legune Station for the land in exchange for a signed surrender;

and

The current status of the land is that it is part of Legune Station.

My only involvement in the matter was when the current lessee

requested consent to sublease the whole of Legune [Station] to

another company controlled by the lessee several years ago. At that

time I spoke to Noreen Blackley about how best to protect the

Government’s interest in the land. I suggested that if the land

acquired was not to be surrendered from the lease, the lease should

be varied to include a condition requiring the land to be surrendered at nil cost when requested by the Minister.

The lessee’s solicitor has not yet made the necessary application for

variation. Failure to progress the lease variation may or may not be

related to the fact that the lessees and the [Northern] Territory and

Federal Governments are consulting with regard to envir onmental

assessment issues affecting the lease.

It will not be necessary to vary the Legune [Station] lease conditions

if the acquired land can be surrendered from Legune [Station].

We now need to ascertain the following:

[Is] the indigenous land issue sufficiently clarified to enable the acquired land to be surrendered?

42

If so, what is the most appropriate tenure for the park and land for Ord Stage 2 respectively, e.g. perpetual Crown leases to

Conservation Land Corporation and [Northern Territory] Land

Corporation respectively?

The lessees of Legune [Station] have previously indicated that they

would like to continue using the land acquired for Ord Stage 2. This

could be subleased to Legune [Land] by the [Northern Territory]

Land Corporation if the Corporation is granted a lease.

Is it possible for Property P urchasing to resolve the above and

finalise the acquisition please?

[84] There does not seem to have been any response to Mr Fowlestone’s email.

However, on 5 September 2006 an enquiry about the status of the

surrendered areas was made by Ms Carol Kinnaird who was a Planning

Officer in the Parks and Wildlife Service of the Department of Natural

Resources, Environment and the Arts. This ultimately resulted in

Ms Griffiths sending the following email to Mr Richard Morris , who was a

Regional Manager Planning and Lands , on 25 September 2006.

As far as I am aware:

The Territory purchased by agreement part of NT Portion 798 (NT Portions 5775, 5774 and 576 Areas 1, 2 and 3 – Legune PPL1062 in

August 1999. NT Portions 5775 and 57 74 for the extension of the

Ord River Scheme Stage 2 and NT Portion 576 to be incorporated

into the Keep River National Park).

Compensation in the amount of $900,000 was paid to the owners of

Legune Station Pty Ltd.

A Deed of Agreement between the lessees Legune Station Pty Ltd

and the Northern Territory of Australia was made 13 August 1999.

The Deed was stamped on 30 August 1999. This Agreement

provided for a licence whereby the lessee was to remain in

43

possession of areas of 1 and 2 subject to certain terms. The

Agreement also granted the lessee a first right of refusal to be

granted a licence to conduct from area 3 any tourist operation as may

be approved in writing subject to certain terms. The Agreement was

for a period to September 2001 but could be terminated by the

Territory by giving six weeks’ notice. The Agreement was not

transferrable.

A partial surrender was executed by the lessee Legune Station Pty Ltd on 16 August 1999 for the above three portio ns and has been

held in escrow by the Territory. (In view of uncertainty in relation to

Native Title issues at the time, the Territory decided to pay the then

lessees of Legune for the land in exchange for a signed surrender).

On 7 September 2000 the PPL was transferred to Legune Land.

On 13 (sic)11

September 2000 the further Deed of Agreement was

prepared between Legune Land Pty Ltd and the Territory. This Deed

was executed by Legune Land Pty Ltd but not the Territory.

By document 11307700: SLM126684: DWN, Legune Land Pty Ltd

undertook:

To be bound by the terms of the Deed dated 13 August 1999

and acknowledge that it would observe all covenants contained

therein as though and to the effect that Legune Land had

entered into and executed such documents in place of Legune Station Pty Ltd; and in particular Legune Land Pty Ltd

undertook to execute all documents, deeds and papers and do

all things as may be required by the Territory and in particular

the execution of any further form of surrender as may be

required by the Territory to give effect to the terms of the

Deed of Agreement.

The bottom line is that the current status of the land is that it is part

of Legune PPL1062, i.e. surrender of the three NT Portions 5775,

5774 and 5776 as yet to be lodged/actioned.

[85] Ms Griffiths was not called to give evidence.

11

The Firs t Righ t o f Refus al Deed was p repared and execu ted by Legune Land on 7 Sep tember 2000.

A further copy of the deed was s en t to the Northern Territo ry on 13 Sep tember 2000.

44

[86] On 14 November 2006 Mr Paul Wharam, a Director in the Land

Administration Branch of the Department of Planning and Infrastructure,

sought advice from the Aboriginal Land Division of the Solicitor for the

Northern Territory about whether there were any impl ications (including

revival of rights) under the Native Title Act (Cth) that would be relevant

subsequent to the surrender of Areas 1, 2 and 3.

[87] On 2 May 2007 Ms Lucia Ku, a solicitor in the Aboriginal Land Division, of

the Solicitor for the Northern Territory responded to Mr Wharam as follows:

I refer to your instructions to Anita Kneebone dated 14 November

2006 and your conversation with Judith Bonner on 22 November

2006 in regards to the above. I note that I will be assisting Judith in

providing this advice.

In your instructions of 14 November 2006 you indicated that the

original intention of surrendering the three parcels was to make two of the three proposed parcels available for the Ord State Irrigation

Scheme and the other parcel for addition to the Keep River National

Park. However, you further instructed that the scope of the Ord

Scheme is now not immediately relevant, and that the subject parcel

is not significant to the extension of the Keep River National P ark.

From our file note on your telephone conversation with Judith, you

advised that you would like to formalise the original deal, that is,

take the part of the land your Department wants and give the lessees

a grazing licence.

It also appears from that file note that your Department was thinking

that land should be held by NT Land Corporation as that is how

Spirit Hills is now held. Would you please confirm your instructions

on what your Department proposes to do with the three proposed

parcels once surrendered to the Territory, that is will all three parcels

be transferred to NT Land Corporation as a PPL similarly to how Spirit Hills is currently held and then will each or any of the parcels

be subject to a licence in accordance with original Deed of

Agreement between the Territory and the current lessee of Legune

45

PPL, or will there be some other arrangement and proposed use of

the land.

Our files indicate that a tenure history was prepared by the then

Department of Lands, Housing and Local Government, specifically

for the part of the Native Title Determination Application covering

the Legune Pastoral Lease on 7 April 1995, however I am unable to

locate the supporting documentation attached to the tenure history.

Would you please provide an updated tenure history including attachments, that is , maps and copies of title documents?

I note in your instructions, you refer to the Native Title

Determination Application with the National Native Title Tribunal, I

assume the Native Title Determination applicatio n you are referring

to has the National Native Title Tribunal reference number DC95/1

with the Federal Court number DG008/98, now NTD6008/98.

[88] On 28 November 2007 Mr Ste phen Hearn, a solicitor with the Solicitor for

the Northern Territory, provided an advice to the Chief Executive of the

Department of Planning and Infrastructure. Mr Hearn concluded that:

The addition of Areas 1, 2 and 3 to PPL 1149 [Spring Hill Station] to

the Northern Territory Land Corporation will not raise any native title implications.

With respect to the ultimate use of Areas 1, 2 and 3, there will be

native title issues that will have to be addressed at some time in the

future, both before construction commences on the Ord Project

within the boundaries of Areas 1 and 2, and before declaration of the

national park of Area 3.

[89] It seems that following the receipt of Mr Hearn’s advice, the Northern

Territory determined that the most appropriate way to complete the

acquisition of Areas 1, 2 and 3 was to add the surrendered ar eas to Spirit

Hills Station perpetual pastoral lease which was held by the Northern

Territory Land Corporation. However, this did not occur until 2010.

46

[90] In February 2008 Legune Land advised the Northern Territory that it

proposed to invite expressio ns of interest for the purchase of Legune Station

with a view to completion of the sale in July 2008. No c onsent to transfer

was sought or given at that time and ultimately the decision to sell Legune

Station was abandoned. The dealings between Legune Land and the

Northern Territory about this proposal were as follows.

[91] On 14 February 2008 Mr Robert Wiemers, the solicitor for Legune Land,

received an email from Mr Mark Harrison seeking clarification of how

Legune Station might properly be described in advertising for the sale of the

perpetual pastoral lease given the three areas which were subject to the

Excision Deed. Mr Wiemers did not advise Mr Harrison that Areas 1 and 2

had been leased by Legune Land from the Northern Territory under cl 2.2 of

the First Right of Refusal Deed. Instead, upon receiving the email

Mr Wiemers telephoned Mr Fowlestone and thereafter they had a number of

telephone discussions on 18, 21 and 22 February 2008.

[92] During their first telephone call on 18 February 2008 Mr Fowlestone told

Mr Wiemers that the acquisition of Areas 1, 2 and 3 had not been perfected

because of something to do with native title. During their second telephone

call on that day Mr Fowlestone told Mr Wiemers that Areas 1, 2 and 3 were

to be added to the Spirit Hills Station perpetual pastoral lease . The

Northern Territory could do that under s 66 of the Pastoral Land Act and

Legune Land should tell any prospective purchasers that the Government

will want the land back. At no stage during either of these telephone calls

47

did Mr Wiemers tell Mr Fowlestone that Legune Station had been granted a

lease (or profit a`prendre) of Areas 1, 2 and 3 under cl 2.2 of the First Right

of Refusal Deed.

[93] After the first two telephone discussions with Mr Fowlestone on

18 February 2008, Mr Wiemers obtained instructions from the directors of

Legune Land. He did not give evidence about the instructions he received.

He then telephoned Mr Fowlestone a third ti me on 18 February 2008.

Mr Fowlestone then advised Mr Wiemers that arrangements were in place to

transfer Areas 1, 2 and 3 to the Northern Territory Land Corporation. He

said that the Northern Territory Land Corporation would need to make a

decision about leasing Areas 1, 2 and 3. Once again, Mr Wiemers did not

assert that the surrendered land had been leased to Legune Land or that the

company had a profit a`prendre .

[94] After the third telephone c all with Mr Fowlestone on 18 February 2008,

Mr Wiemers telephoned Mr McLean who was one of the directors of Legune

Land and recommended that he telephone Mr Fowlestone. Mr McLean then

telephoned Mr Fowlestone. During their telephone conversation Mr McLean

asked Mr Fowlestone about the “leasing” arrangement which allows Legune

Land to run cattle on Areas 1, 2 and 3. Mr McLean stated that under the

arrangement Legune Land pays $1 per year , any fixed improvements become

the property of the Northern Territory and the Northern Territory is able to

give Legune Land one month’s notice to vacate the three areas of land. This

is likely to have been a reference to the license referred to in cl 2.1.1 of

48

First Right of Refusal Deed. Mr McLean did not say that Legune Land had

obtained a lease under cl 2.2 of Fir st Right of Refusal Deed. Nor was he

called to give evidence about the leasing arrangement he was referring to

when he spoke to Mr Fowlestone or the terms on which he understood

Legune Land grazed cattle on Areas 1 and 2.

[95] Following the telephone co nversation between Mr Fowlestone and

Mr Mclean it is likely that there was a telephone conversation between

Mr Fowlestone and Ms Griffiths during which they discussed the status of

Areas 1, 2 and 3.

[96] There was then a fourth telephone discussion betwe en Mr Wiemers and

Mr Fowlestone on 18 February 2008. During this telephone discussion

Mr Fowlestone told Mr Wiemers that he believed that the Northern Territory

could acquire Areas 1, 2 and 3 by an acquisition by agreement document and

that the current ar rangements regarding Legune Land agisting cattle on

Areas 1, 2 and 3 could continue . Once again, there was no discussion of a

lease of Areas 1, 2 and 3.

[97] On 21 February 2008 there was a fifth telephone conversation between

Mr Fowlestone and Mr Wiemers . There is disagreement between

Mr Wiemers and Mr Fowlestone about what was said during this telephone

call. Mr Wiemers gave evidence that Mr Fowlestone said words to the

following effect: (a) the proposal of the Northern Territo ry would be to take

the excised areas and give a pastoral lease to Legune Land; (b) part would

49

be taken for park purposes and to that end it may not be available to Legune

Land; and (c) the Northern Territory was aware of the current arrangements

that Legune Land had with the Northern Territory regarding the excised area

and would endeavour to keep those arrangements in place when it

transferred the excised areas to the Northern Territory Land Corporation .

[98] Mr Fowlestone gave evidence that he disagreed with the statement that he

told Mr Wiemers on 21 February 2008 that the Northern Territory would

give a pastoral lease to Legune Land over the excised areas. It was clear in

his mind that the surrendered areas were to be vested in the Northern

Territory Land Corporation and to the best of his recollection that is what he

told Mr Wiemers . Mr Fowlestone agrees that he said to Mr Wiemers that

part of the surrendered areas would be taken for National Park purposes. He

disagrees that he said anything which might have suggested that Legune

Land would be given a lease or occupancy over the balance of the

surrendered areas. Mr Fowlestone denies that he said anything to

Mr Wiemers about any current arrangements that Legune Land had with the

Northern Territory regarding the excised areas beyond the fact that Legune

Land had continued to run cattle on the surrendered areas without any

objection from the Department of Lands because of the delay in registering

the acquisition of those areas. To the best of Mr Fowl estone’s recollection,

he said words to the effect that , once the land had been transferred to the

Northern Territory Land Corporation, Legune Land would have to deal with

the Corporation.

50

[99] Mr Fowlestone’s recollection of the telephone conversation with

Mr Wiemers on 21 February 2008 is consistent with the work he was doing

in February 2008 and the email he sent to Ms Griffi ths which is set out in

par [104] below. At the same time as Mr Fowlestone was speaking to

Mr Wiemers, he was preparing (1) a submission to the Minister of Natural

Resources Environment and the Arts about the Northern Territory Land

Corporation acquiring Areas 1, 2 and 3 , and (2) a draft offer of Areas 1, 2

and 3 to be made by the Minister to the Northern Territory Land

Corporation. In order to prepare the submission and the draft he was

liaising with Ms Griffiths .

[100] At 2.10 pm on 21 February 2008 (which is likely to have been before the

telephone conversations referred to in par [97 ] above) Mr Fowlestone sent

the following email to Ms Griffiths:

Thanks for the papers from the Spirit Hills files.

From the papers it seems that:

1. Cabinet decided to acquire the lease;

2. There was consultation with the NTLC;

3. There was legal advice;

4. The Minister then made an offer of the PPL to the NTLC at nil

cost;

5. The NTLC accepted the offer; and

51

6. The acquisition was coordinated with the lease grant (Notice of

Right to Grant of Interest lodged simultaneously with Gazettal

of Acquisition)

In the Legune [Station] case, 1 has taken place, 2 has to be done, you

are requesting 3, I am drafting 4, 5 will happen after an offer has

been made and we will do 6 when the first five steps have been

finalised.

To enable me to complete my draft submission can you please advise:

NT Portion Numbers and areas for land being acquired from

Legune [Station].

Cabinet Decision Number and what it generally said, e.g. acquire

and vest in the NTLC or whatever.

[101] At 5.34 pm on 21 February Ms Griffiths sent Mr Fowlestone a detailed email

which set out the history of the acquisition of Spirit Hills Station and the

steps which had been taken to acquire Areas 1, 2 and 3 on Legune Station.

The email was in similar terms to an email that Ms Griffiths sent to

Mr Richard Morris on 25 September 2006. Among other things, the email

stated:

On 6 September 2000 with only one hour to settlement, Land

Administration became aware of a proposed transfer of Legune PPL

and in order to protect the Territory’s interest as it had alre ady paid

for the three areas of land within Legune, consent to transfer the

lease was withheld. Although the agreement executed on 13 August 1999 by Legune Station Pty Ltd stated that the agreement was not

transferable that is exactly what the company was doing.

On 7 September 2000 a Deed of Agreement between the proposed

purchaser, Legune Land, and the Northern Territory was executed by

Legune Land but not the Terri tory [emphasis added]. The Deed

was intended to bind Legune to the 1999 Deed to surrender the

52

3 defined areas to the Territory for the purposes of the Ord River

Extension Scheme and/or such other purposes as the Territory may

require. Legune Land undertook:

To be bound by the terms of the Deed dated 13 August 1999 and acknowledged that it wo uld observe all covenants

contained therein as though and to the effect that Legune Land

had entered into and executed such documents in the place of

Legune Station Pty Ltd; and

To execute all documents, deeds and papers and do all things as may be required by the Northern Territory and in particular

the execution of any form of surrender as may be required by

the Territory to give effect to the terms of the Deed of

Agreement.

On the same day a Form 51 Partial Surrender of Lease (Pastoral Land

Act) was executed by Legune Land …. The partial surrender has been held by the Northern Territory.

On 7 September 2000, following the signing of the Deed and the

Partial surrender documents, consent to transfer was given and the

Legune PPL was transferred to Legune Land.

On 11 September 2000 Land Administration advised Pastoral Branch

that prior to granting any consent to transfer, mortgage or other

dealing in relation to Legune to check with acquisitions re the land

already purchased by the Territory ….

The bottom line is that the current status of the land is that it is still

part of Legune PPL 1062. S99/246 has yet to be approved.

[102] While on the face of the email there may be some confusion about whether

Ms Griffiths was talking about one or two documents , the fact is that

Ms Griffiths was referring to two documents namely, the Undertaking which

was signed by Mr Campbell on 6 September 2000 and the First Right of

Refusal Deed. The First Right of Refusal Deed was executed by Legune

53

Land on 7 September 2000 and expressly deals with the surrender of the

three defined areas for the purpose of the ‘Ord River Extension Scheme ’.

Whereas the Undertaking was executed on 6 September 2000 and makes no

mention of the ‘Ord River Extension Scheme ’, the dot points in the email

are almost a direct quote from paragraphs 1 and 2 of the Undertaking that

was signed on 6 September 2000. Ms Griffiths is stating that (1) the

Department Land Planning and Environment asked Legune Land to execute

the First Right of Refusal Deed to bind Legune Land to the 1999 Excision

Deed to surrender the Areas 1, 2 and 3 to the Northern Territory for the

purposes of the ‘Ord River Extension Scheme ’ and/or such other purposes as

the Northern Territory may require; (2) the Northern Territory did not

execute the First Right of Refusal Deed. This is supported by her email to

Mr Morris of 26 September 2006 , where she expressly identifies both

documents , and her email to Mr Fowlestone dated 22 February 2008 in

which she sets out cl 2 of the First Right of Refusal Deed.

[103] While there is no direct evidence about where Ms Griffiths obtained the

information that the First Right of Refusal Deed had not been executed by

the Northern Territory Gove rnment, it may be inferred from the email that

she sent to Mr Fowlestone on 22 February 2008 t hat she had seen and read a

copy of the First Right of Refusal Deed which had been signed by Legune

Land but not by the Northern Territory. How else could she have directly

quoted cl 2 of the First Right of Refusal Deed in the email.

54

[104] At 8.18 am on 22 February 2008 Mr Fowlestone sent Ms Griffiths an email

in reply to Ms Griffith’s email of 21 February 2008. The email states:

Thanks Beve. That is very illuminating.

One of the shareholders of Legune [Land], (Mr McLean, I can’t find

my note with his first name on it) phone d late yesterday afternoon.

The company’s proposed timetable for completing a sale is 28 July 2008. Advertising for expressions of interest, inspec tions, due

diligence enquiries, contact etc., will take place between now and

July.

He and the company solicitor, Bob Wiemers, have asked about the

“leasing” arrangement which allows the company to run cattle on the

land being acquired. According to Mr Mc Lean, the company pays

$1 per year, any fixed improvements they put on the land become the

property of the Territory, and the Territory is able to give them one

months’ notice . Do you know if this is in writing?

With regard to the continuing arrangement o nce the land is handed

over to the NTLC, it is something they, or any new owners , would

need to take up with the NTLC at that time.

[105] At 11.55 am on 22 February 2008 Ms Griffiths sent Mr Fowlestone the

following email:

Basically – What leasing agreement? Legune Land signed a Deed on

7 September 2000 but the Territory did not execute the same. There

was a clause in the unexecuted Deed:


2.1. The lessee hereby surrenders the Land from the pastoral

lease in favour of the Territory upon and subject to the


55

2.1.1 The Territory grants the Lessee a Licence (“the Licence”)

to remain in possession of Area 1 and Area 2 (“the

Licensed Areas”) on the following terms:

(a) For a licence fee of $1.00 per annum (if demanded);

(b) For a period commencing on the date hereof and

expiring:

(i) Upon the expiration of six (6) weeks written

notice by the Territory to the Lessee that the Licensed Areas are required by the Territory to

be used for the Ord River Extension Scheme

(“the Scheme”); or

(ii) On 1 September 2001;

Whichever comes first (“the Term”) ….

If Legune is sold and transferred (hopefully by then without NT

Portions 5774, 5775 and 5776) and the new owner wishes to use parts

of NT Portions 5774, 5775 and 5776 it will need to take it up with

the Northern Territory Land Corporation at that time.

[106] At 3.05 pm on 22 February 2008 Mr Fowlestone sent to Ms Griffiths, for her

consideration, a draft Ministerial briefing and a draft offer to the Northern

Territory Land Corporation that he had prepared. Among other things , the

draft Ministerial Briefing stated:

…. In 1999, the Territory government entered into an agreement

with the lessee of Legune Station to surrender two parcels of land for

the Ord River Irrigation Area Stage 2 and one parcel of land for

inclusion in the Keep River National Park. At the time, uncertainty

concerning native title resulted in the Government deciding to pay

the $900,000 purchase price and obtain a signed surrender form for

the land. The surrender form was held by the NT Government, but

not registered, pending resolutio n of native title issues.

56

In 2000, Legune Station was sold to the current lessee, Legune Land,

and the Government entered into an agreement with the incoming

lessee and obtained a surrender form from them for the three parcels

of land. Legune Land recentl y advised that it proposes to invite

expressions of interest to buy the lease with a view to completing the

sale by July 2008.

The Department of Justice has been consulted about the most

appropriate way to complete the acquisition of the three parcels of land from Legune Station before the lease is transferred to the new

lessee. It has been agreed that the acquisition could be completed

and the land included in a perpetual pastoral lease with the land

currently contained in Spirit Hills Station without nat ive title being

affected. The land can be held in the perpetual pastoral lease until

native title issues are resolved to enable the land to be used for the

purposes it is being acquired for. The three parcels of land have

been surveyed as NT Portion 5774 , 5775 and 5776.

The matter has been discussed with Mr Peter Blake, Chairman of the

NTLC, who has no objection to the proposal and indicated that the

land could be managed in the same way the land on Spirit Hill

Station is, i.e. land for Ord Stage 2 is sub-leased to an adjoining

pastoral lessee and land for park is managed by Parks and Wildlife.

[107] On 22 February 2008 there was a further telephone call between

Mr Wiemers and Mr Fowlestone. There is disagreement about what was

said during this telephone call. Mr Wiemers gave evidence that

Mr Fowlestone said words to the following effect: (a) Mr Fowlestone had

been talking to the Chairman of the Northern Territo ry Land Corporation;

(b) in Mr Fowlestone’s conference with the Chairman of the Northern

Territory Land Corporation it was discussed that the excised land would

become part of Spirit Hills Station pastoral lease; (c) in the discussions with

the Chairman of the Northern Territory Land Corporation, Mr Fowlestone

was informed that the Northern Territ ory Land Corporation had

57

arrangements in place regarding the agistment of cattle within the existing

boundaries of the Spirit Hills Station Pastoral Lease with another adjoining

owner; (d) if the excised areas were held by the Northern Territory Land

Corporation and Legune Land was s till the owner of the Station, Legune

Land would need to talk to the Northern Territory Land Corporation; (e) the

Northern Territory could get an approval within 3 weeks or so for the

excision to be completed. A survey plan needs to be drawn by the Surveyor

General; (f) in the first instance, the Northern Territory Land Corporation

was not the owner , so Mr Wiemers was to talk to Mr Fowlestone as the

Northern Territory may have an offer at the time that the perfect ion of the

excision occurred; and (g) finally, Legune Land’s agistment of cattle over

the excised areas should be able to be managed in the same way as Spirit

Hills Station already had in place with another adjoining land owner to the

existing Spirit Hills Pastoral Lease.

[108] Mr Fowlestone gave evidence that he disagreed he said to Mr Wiemers that,

in the first instance , Mr Wiemers should speak to him because the Northern

Territory may have an offer for Legune Land at the time the excision was

perfected. Mr Fowlestone stated that he would not have said anything to Mr

Wiemers that indicated Legune Land could expect to have any right to use

the surrendered areas after they were vested in the Northern Territory Land

Corporation. Nor did he tell Mr Wiemer s that Legune Land would be

granted a similar right to the excised land as the other adjoining land owner

had been granted over other land within Spirit Hills Station. At all times

58

Mr Fowlestone’s position was that Legune Land would have to deal with the

Northern Territory Land Corporation about any future use of Areas 1, 2 and

3. Mr Fowlestone’s evidence was consistent with the email he sent to

Ms Griffiths which is set out in par [104] above. Further, taken at its highest

the statement which Mr Wiemers attributes to Mr Fowlestone that, “Legune

Land’s agistment of cattle over the excised areas should be able to be

managed in the same way as Spirit Hills Station already had in place with

another adjoining land owner to the existing Spirit Hills Pastoral Le ase”, is

nothing more than an intimatio n of a future possibility. It was certainly not

an acknowledgement that Legune Land had an interest in the land

comprising Areas 1, 2 and 3.

[109] On 28 February 2008 the draft Ministerial was circulated to other m embers

of the Department for their consideration. Mr Fowlestone also stated in his

email that the document was being sent to the Department of Justice for

clearance to acquire the land from Legune Land before Legune Station was

sold to a new owner.

[110] On 19 March 2008 there was a meeting of the members of the Northern

Territory Land Corporation at which the Corporation resolved to accept

Area 3 from the Northern Territory. Area 3 was to be incorporated into the

Keep River National Park.

[111] On 15 Apri l the Ministerial Briefing, “RE: OFFER OF A PERPETUAL

PASTORAL LEASE TO THE NORTHERN TERRITORY LAND

59

COPORATION OVER SPIRIT HILLS STATION AND THREE PARCELS

OF LAND ACQUIRED FROM LEGUNE STATION”, which was prepared

by Mr Fowlestone, was signed by Mr Jim Grant the Acting Chief Executive

Officer of the Department of Natural Resources, Environment and the Arts.

On 23 April 2008 the recommendations contained in the Ministerial Briefing

were approved by the Minister .

[112] On 21 July 2008 Ms Griffiths sent a letter to the directors of Legune Land.

Among other things, the letter stated:

I refer to the surrendered parts of Perpetual Pastoral Lease 1062,

more specifically proposed NT Portions 5774, 5775 and 5776 shown

on survey plan S99/246 to the Territo ry.

To finalise the surrender please find enclosed Application to Note

Acquisition by Agreement (…) to be executed and registered. Could

you please have the form executed by a Director and the Secretary of Legune Land and return to me for execution by the Northern

Territory, stamping and registration?

Once the form is registered the title in respect of NT Portions 798

and 3222 will be cancelled and a new title issue to Legune Land over

the balance of NT Portion 798 together with NT Portion 3222.

[113] On 15 August 2008 there was a high level meeting between various

employees of the Department of Natural Resources, Environment and the

Arts, Department of Primary Industry, Fisheries and Mines and the

Department of Planning and Infrastructure and members of the Northern

Territory Land Corporation. The meeting was chaired by Mr Peter Blake the

Chairman of the Northern Territory Land Corporation. At the meeting the

60

following agreed outcomes were reached about Areas 1, 2 and 3 and noted in

the minutes of the meeting:

Map 2 outlines the areas of Legune Station, now being added to

Spirit Hills Pastoral Lease. It was agreed these areas need to be put

under effective management.

Area 3 is clearly intended to be part of the extension of the Keep River National Park. It was agreed this area could be added to the

Parks and Wildlife Management Agreement.

Area 1 is the part acquired for the future expansion of the Ord River

Irrigation Scheme. It was agreed that this area could best be offered

to Laverton Nominees as an extension of their licence area and in

exchange for the areas of Spirit Hills that will no longer be available

to them.

It was noted that there is no future use for Area 2 that has been

identified in the search of previous records. Some recreational use

by the public is known to occur. Parks and Wildlife indicated that

they will make enquires about the area as to any interest for

conservation or park purposes. At this stage they do not want to

include the area in their management agreement. They will advise if

they have an interest at a later date. The alternative is to offer all or part of it to Laverton Nominees for pastoral use purposes once Parks

and Wildlife’s position becomes clear.

[114] On 7 April 2009 Mr Blake sent a letter to the Director of Laverton Nominees

Pty Ltd. The letter informed Laverton Nominees Pty Ltd of changes which

would have to be made when Laverton Nominees Pty Ltd’s licence to run

cattle on Spirit Hill Station was renewed. The advice was consistent with

the outcome of the meeting held on 15 August 2008. Among other things,

the letter stated:

As you are aware, this Corporation granted to Laverton Nominees Pty Ltd a licence to use part of Spirit Hill Pastoral Lease (…) for a

61

period of three years commencing 1 July 2006 and ending 30 June

2009.

Consideration needs to be given to what future arrangements may

now be entered into beyond 2009.

….

The NT Government has offered the Corporation additional land to

be added to the Spirit Hill Pastoral Lease being the former western

part of Legune Station. Transfer arrangements are now proceeding. The area of Legune Station between the Keep River and Sandy Creek

is intended for use in the future expansion of the Ord River Irrigation

Scheme. The future use of Legune Station west of Keep River is yet

to be determined. The Department of natural Resources,

Environment and the Arts and Sports will be evaluating this area in

the coming dry season.

The reason for apprising you of the above is that some changes to the

areas available for you to use in the future agreement are necessary.

Attachment A indicates the area currently subject to your licence.

Attachment B indicates the areas to be set aside for the Ord River

Irrigation Expansion as provided to the Corporation by the NT

Government. The latter could continue to be made available to you

together with that part of Legune Station once transferred to the

Corporation between Keep River and sandy Creek. Whether additional areas of Legune Station west of the Keep River could also

be included is yet to be determined.

[115] By 15 May 2009 the transfer of Areas 1, 2 and 3 to Spirit Hills Station had

not been completed and the existing arrangements between Laverton

Nominees and the Northern Territory Land Corporation were extended for a

further six months.

[116] On 5 July 2009 Ms Gri ffiths sent a letter to the Directors of Legune Land.

Among other things , the letter stated:

62

….

Despite previous correspondence, email and telephone conversation

in relation to this matter, no documentation has been received to date

to enable the matter to be finalised and the land purchased by the

Territory, remains with the PPL.

I advise that the Territory wishes to finalise this long outstanding

matter.

As you will be aware, Legune Land Pty Ltd is unable to transfer the PPL to a new lessee until NT Portions 5774, 5775 and 5776 are

surrendered to the Territory.

I have prepared updated documents to affect the surrender of NT

Portions 5774, 5775 and 5776 …. Please find enclosed an

application to Note Acquisition by Agreement (….) to be executed

and registered. This document should be executed by Legune Land

and returned for execution by the Northern Territory, stamping and

registration.

….

Once all of the documents have been lodged and registered, the

current title being … will be cancelled and a new title issued to

Legune Land over the balance of NT Portion 798 and NT Portion

3222.

….

As this matter has been outstanding for a number of years I request

that the documentation be executed and forwarded within 14 days

from the date of this letter.

I intend to email a copy of this letter to Mr Brian McLean who was

the last person from Legune Land to be in contact with the Northern

Territory.

….

63

[117] The documents were not executed within 14 days from 5 July 2009. On

8 December 2009 another letter was sent by Mr Blake to Mr Ken Warriner at

Laverton Nominees Pty Ltd advising that, as nothing had changed by that

date, Mr Blake would have a new licence agreement prepared for Laverton

Nominees Pty Ltd for Spirit Hills Station for the period of 1 January 2010 to

31 December 2010 covering the existing area on the same terms and

conditions for his consideration.

[118] On 18 December 2009 there was a meeting of the Northern Territory Land

Corporation. The minutes note that the transfer of parts of Legune Station

to Spirit Hills Station was still to be completed. The minutes also note that

Mr Blake briefed members on a discussion with Mr Warriner and his

solicitor and a draft letter of intent to Laverton Nominees Pty Ltd, setting

out the intention of the Northern Territory Land Corporation to enter into a

sublease with Laverton Nominees P ty Ltd was tabled and agreed. The

intention to progress a sublease of the existing area of Spirit Hills Station

was noted with adjustments to be made to the area leased once the Legune

Station areas were transferred.

[119] At the end of December 2009 Le gune Land executed the Application to Note

Acquisition by Agreement for Areas 1, 2 and 3. On 29 January 2010 new

perpetual pastoral lease No. 01200 of Spirit Hills Station was is sued to the

Northern Territory Land Corporation with no conditions about Legune Land

continuing to have an interest in Areas 1, 2 and 3. Mr Blake believed the

corporation was being granted a clear title to the areas and that Legune Land

64

did not retain any interest in the surrendered areas. He gave evidence that

he had received no contact from Legune Land from early 2008 through to

when the title to the surrendered areas was transferred to the Northern


[120] On 12 February 2010 Mr Blake sent a letter to Legune Land ad vising that

the Northern Territory Land Corporation required vacant possession of

Areas 1, 2 and 3 . The letter stated:

As you are now aware the Northern Territory Government has now

settled the transfer of NT Portions 5774, 5775 and 5776 from Legune

pastoral Lease to Spirit Hills Pastoral Lease.

This Corporation is the owner of Spirit Hills which now includes

these three portions .

Prior to this transfer being completed, the Corporation managed the

former Spirit Hills Lease area under two agreements being:

1. A management agreement with the Territory Parks and Wildlife Commission to manage the eastern part of the lease as a proposed

extension of the Keep River national park; and

2. A licence agreement with Laverton Nominees Pty Ltd

(Consolidated Pastoral) to use the western part of the lease for

pastoral purposes pending the land being required for the future

Ord River Scheme expansion.

Now that the transfer of the land has been completed, the

Corporation will be amending the areas of land all ocated under the

above two agreements. This will involve the Parks and Wildlife area

being extended to the west and to the north into PT Portion 5776.

Laverton Nominees will reduce their areas to the west and extend

north to NT Portions 5775 and 5774.

65

The Corporation will now be proceeding to formalise these

arrangements to be effective as soon as possible. I understand that

you may still have cattle on all or some of NT Portions 5774, 5775

and 5776. I am advi sed by the NT Government representati ves

that you had no arrangement wi th them i n respect of the cattl e

remai ni ng on these areas.

The Corporation now requires vacant possession. Could you please

advise what cattle numbers if any you have on each of three portions 5774, 5775 and 5776? Could you ple ase also advise what program

you will put in place for stock removal and when this will be

completed for each of the portions?

The Board of the Corporation next meets on 3 March and I would

appreciate your advice on these matters before then. The Board wi ll

of course also address what agistment fees may be appropriate whilst

the cattle remain on the Corporation’s land.

I would appreciate your attention to this matter.

[121] After 12 February 2010 , Mr Blake received telephone calls from Mr Peter

Campbell and Mr Geoff Wagstaff on behalf of Legune Land in response to

his letter to the company. The minutes of a meeting of the Board of the

Northern Territory Land Corporation on 3 March 2010 note that during these

telephone calls Mr Campbell and Mr Wagstaff expressed concern about the

request for vacant possession. They indicated that they had

“understandings” with the Northern Territory about the use of the

transferred lands dating back several years. They expressed the wish to

either sublease or obtain a licence of the surrendered areas for their

continued use. Mr Blake advised Mr Campbell and Mr Wagstaff to put their

concerns and request in writing for consideration of the Board at its meeting

66

on 3 March 2010. Neither Mr Campbell nor Mr Wagstaff were call ed to

give evidence about these matters.

[122] The minutes do not suggest that either Mr Campbell or Mr Wagstaff told

Mr Blake that Legune Land had been granted either a lease or a licence of

the surrendered areas by the Northern Territory. Nor do the minutes suggest

that either Mr Campbell or Mr Wagstaff asserted that the Northern Territory

Land Corporation had acknowledged the existence of the alleged

“understanding” with the Northern Territory.

[123] On 26 February 2010 Bernays Lawyers, who were the solicitors for Legune

Land, replied to Mr Blake’s letter in the following terms:

We act on behalf of Legune Land Pty Ltd which company has

referred to us your letter to it of 12 February 2010 regarding the proposal by your Corporation to licence the area being NT Portions

5775 and 5774 for use by Laverton Nominees Pty Ltd and to licence

NT 5776 as proposed expansion of the Keep River National Park.

The history of our client’s occupation of the three portions

mentioned above is that these three portions previously formed part

of the pastoral lease for Legune Station and they were sold to the

Northern Territory Government in 1999, shortly before our client

purchased Legune Station, but still remained a part of the pastoral

lease. An agreement for grazing rights in favour of the former

owners of the Legune Station, and then to our client, was entered into

with the Government. In 2002 and 2003 various discussions were

entered into between our client and the Government in regard to

proposed sub-lease of the pastoral lease and this also raised the

question of grazing rights on the property. In meetings betwee n our

clients and Nicky D’Antoine and Noreen Blackley of the Government 2003 it was determined that no sub-lease would be issued but that our

client would be entitled to continue to graze cattle on the three

portions. It was also intimated to our clients in those meetings and

in later telephone conversations with Mr Tony Fowlestone, civil

servant, that , if the Government were to issue a formal lease or

67

licence over those lands , it would be offered firstly to the existing

Legune leaseholder. The matter had also been raised in subsequent

years and on each occasion our clients were basically told to

continue with their grazing and pastoral management of the land.

The portions remain part of NT Portion 798 and in that respect our

clients have been paying Crown rental on the portions, with the last

payment of that rental having been made as at 1st

February 2010. We

attach hereto a copy of the rental notice for the properties. You will note that the area of the leased land is 3,060 square kilometres which

was the area of the previous portion and the total annual rental for

the whole of the NT Portions 798 and 3222 was $47,092.

Whilst our clients have always been aware the Northern Territory

Government has always had the right to excise the three portions of

the land from Legune Pastoral Lease to use for the development of

the Ord River Irrigation Scheme our clients have also been aware

that the development of the Scheme is many years away. In addition,

our clients are also aware that the land being Portion 5774 was never

going to be used for the Ord River Irrigation Scheme and they

presumed that area of land would have also been available for use for

grazing purposes and they could have negotiated a lease or licence to

graze the land.

You can appreciate therefore that it came as something of a surprise to our clients to learn of your Corporation’s intentions with respect

to the licensing for the above portions. In particular, given that the

land was to be used for the Ord River Irrigation Scheme our clients

do not believe that your Corporation should have the right to simply

excise the land from the Legune Pastoral Lease to give to a third

party for grazing purposes. Our clients are particularly interested in

continuing with the lease or licence for NT Portions 5774 and 5775.

They do not have any particular interest in NT Portion 5776 as this is

escarpment land.

During the ten years that our clients have occupied Portions 5774 and

5775 they have spent a considerable amount of capital in improving

the areas. In particular, our clients have constructed a new fence

along the southern boundary of the two portions, constructed

roadways to other yards, put down new bores and pipelines,

constructed water storages, put in new bore pumps and troughs and invested substantially in the eradication of woody weeds and feral

animals. Our clients would estimate that they have expended

approximately $500,000 in the two portions which would include the

value of capital improvements, maintenance and management costs.

68

Our clients currently run approximately 10,000 head of cattle on the

portions at various times and the use of those portions for grazing

purposes is of prime importance to our clients and indeed to the

wellbeing of Legune Station and is of more importance to them than

to their neighbour, Laverton Nominees Pty Ltd. If our clients cannot

continue with the use of Portions 5774 and 5775 t hen they would

suffer substantial economic loss as they will face a gross

overstocking problem on Legune Station and they would then need to effect the sale of approximately 9,972 head of cattle which are

running on the two portions. In addition, Legune S tation has been

run on the basis that Portions 5774 and 5775 were used for general

grazing of stock and the flood plain country, which is contained in

the remainder of Legune Station, is irrigated for use by young

weaners and sale cattle. If the breeding stock which is grazing on

Portions 5774 and 5775 has to be sold then the property will be put

into an imbalance which will again substantially affect our clients

economically.

At no time has our client not wished to continue with the use of the

two portions mentioned above. They had not put in any specific

request for use of the portions following the resumption of those

portions in the belief that having regard to their past contact with the

Northern Territory Government, there would be an offer forthco ming to them in regard to the future use of the land and to either the lease

or licence to use that land.

In these circumstances and given our clients track record with regard

to the management of the land and also the fact that the two portions

have prior to their purchase by the Government been part of Legune

Station for probably the last 100 years we would submit that it is

only fair that your Corporation should give the first offer of the

licence to use Portions 5774 and 5775 to our client.

Our clients are more than happy to discuss with you your terms and

conditions for use, including rental, etc. and they have always been

more than happy to do this with the Northern Territory Government

but in the past there have been no formal request s in this regard.

We attach to this letter for your perusal a list of livestock and

infrastructure and other matters which pertain to the use of the two

portions by our client and a copy of our client’s grazing and pastures management requirements for Legune Station for the 2008/2009 year

which gives an indication of our client’s husbandry of the area. We

would be obliged if you could place this information before the

69

Board at its meeting next week and let us know your Board’s

response to our client’s request.

[124] The letter from Bernays does not assert that Legune Land had a grazing

licence or a lease over the acquired areas. Nor was there any mention of the

First Right of Refusal Deed.

[125] At its meeting on 3 March 2010 the Board of the Northern Terri tory Land

Corporation noted the response by Bernays Lawyers. Mr Blake advised the

meeting that the Northern Territory Land Corporation’s position had been

explained to Legune Land’s representatives and the Corporation’s position

about the transfer of Areas 1, 2 and 3 from Legune Station to Spirit Hills

Station was minuted as follows:

1. The Corporation had no involvement in The NT Government’s

purchase of these portions in 1999 from the former lease owners.

2. The Corporation had no involvement or knowledge of the

arrangements with Legune Land Pty Ltd from the time of their

purchase of Legune Station in 2000 until their 26 February 2010

response to the Corporation 12 February 2010 letter.

3. No advice was received from the NT Government as to any

existing undertakings or commitments to the company for their

continued use of the land.

4. In response to questions to the NT Government on the status of

the land the Corporation was advised verbally that:

(a) the original 1999 contract of purchase contained no

arrangement concerning continued use of the land but did

leave the land as a part of the Legune Pastoral Lease

until the NT Government wished to take possession;

70

(b) there was no agistment, sublease, licence or other formal

arrangement for Legune Land regarding the use of the

land;

(c) the actions to take possession of the three land areas

commencing in April 2008 when the then Minister

offered the land to the Corporation did not include any

arrangements for Legune Land to continue their use of

the land; and

(d) there were no conditions on the formal transfer of the

land relating to future use of the land.

In these circumstances the Corporation did have knowledge of

the matters raised in the Company’s response.

….

Members agreed it will be necessary to take advice from the NT

Government before making any decisions in relation to Legune

Land.

….

The Chairman will write to the Chief Executive of the

Department of Lands and Planning to get advice on the history

of the arrangements with Legune Land and ascertain if there was

any NT Government commitment or understanding.

Further negotiations with Legune Land, Laverton Nominees and Parks and Wildlife will be necessary to reach an appropriate

outcome.

[126] On 5 March 2010 Mr Blake sent a letter to the Chairman of Legune Land.

Mr Blake advised Mr McLean that the issues which were raised in Bernays

Lawyers letter of 26 February 2010 hinged on any understanding that may

have been reached between Legune Land and the Northern Territory. As the

71

Northern Territory Land Corporation had no involvement or knowledge of

the events in 1999 and, subsequently, the Corporation needed to take advice

from the Northern Territory before the Corporation would be in a position to

meet with the representatives of Legune Land to pursue the matter further.

Mr Blake also stated in the letter that the Corporation was advised there was

no agistment arrangement in place and no conditions relating to Legune

Land’s interest were placed on the Corporation on the transfer of the land.

The Corporation had no knowledge of Legune Land’s actual use of the land

and the extent to which it was being utilised.

[127] On 17 March 2010 , on behalf of Legune Land, Bernays Lawyers sent a letter

to the Northern Territory Land Corporation. The letter asked if , pending

answers being obtained from the Northern Territory Government and until

31 December 2010, Legune Land could be granted a licence to graze cattle

on NT Portions 5774 and 5775. It did not assert that Legune Land held

either an existing licence or a lease of the Areas 1 and 2.

[128] On 22 April 2010 Bernays Lawyers sent a further letter to the Northern

Territory Land Corporation. Among other things, the letter referred to the

First Right of Refusal Deed and stated:

You will note particularly clause 2.2 of the Agreement which gives to our client a first right of refusal to lease the licensed areas from

the NT Government if those areas are to be used for grazing stock.

You will also note that the original Licence Agreement was noted as

expiring on 1 September 2001. As we understand it, there were no

other executed documents extending the term of the licence but in

fact our client and the NT Government did continue the Licence and

72

by implication it was continued on the terms and conditions outlined

in the Deed of Agreement.

At no time, apart from your letter to our client of 12 February 2010

was our client ever requested to remove stock from the licensed areas

or to cease its use and occupation of those areas and the NT

Government well knew from its dealings with our client that our

client was using the land for grazing purposes. In those

circumstances, our client acted on the basis that the Licence Agreement was continuing and it was on this basis that our client was

awaiting advice from the NT Government regarding a future lease of

the land after the Land was surrendered back to the Government.

We trust that this is of some assistance to you in regard to the

resolution of the matter.

[129] The letter of 22 April 2010 does not suggest that Legune Land had exercised

the first right of refusal granted by cl 2.2 of the First Right of Refusal Deed.

The letter only asserts that the grazing licence was extended. It asserts that

the next step was contingent on the Northern Territory providing advice

about a future lease to Legune Land. The logic of the letter would dic tate

that any such advice was contingent on the terms of cl 2.2 of the First Right

of Refusal Deed.

[130] In April 2010 there was an out of session mee ting of the Northern Territory

Land Corporation which reviewed and made recommendations about what

steps needed to be taken to resolve the issues that had been raised by the

solicitors for Legune Land. The minute of the meeting stated that, “Should

Board members have any views or concerns in respect of the issues

addressed in this paper, your advice would be appreciated. A detailed

73

discussion on issues will be appropriate at our June 2010 meeting when

further information becomes available.” The minute recommended that:

1. An agistment licence to Legune Land be issued for the period

29 January 2010 to 31 December 2010 …. The draft licence

when prepared … be circulated to Board members for

agreement;

2. The agreement with Parks and Wildlife be amended by the

addition of NTP 5776;

3. A report on NTPs 5774 and 5775 be commissioned with an

experienced pastoral person to ascertain the condition of the

area and improvements as transferred to the Corporation;

4. The Chairman be authorised to commence discussions with the

relevant NT Government agencies to explore the issue s outlined

in this paper in relation to the future use of NTPs 5774 and 5775

[131] On 12 May 2010 Mr David Ritchie, the Chief Executive of the Department

of Lands and Planning, responded by letter to Mr Blake’s enquiries of the

Northern Territory about Legune Land. Among other things, the letter

stated:

In September 2000 , consent to transfer the Legune PPL from Legune

Station to Legune Land was withheld by the Territory until a partial

surrender of lease PSL (Partial Land Act) document was executed by

Legune Land in respect of NT Portions 5774, 5775 and 5776 on the

basis that the Territory had already paid the previous lessee for the

land. Although Legune Land Pty Ltd presented a new Deed of

Agreement based on the original 1999 agreement between the

Territory and Legune Station Pty Ltd, the Territory did not

execute/sign the agreement, but held in escrow the executed partial

surrender of lease (Pastoral Land Act) document and allowed the

lease to transfer.

There was no agreement, formal or otherwise, in relation to Legune

Land continuing to utilise NT Portions 5774, 5775 and 5776 or carry

74

out extensive improvements. There was also no evidence on the

Department’s files to indicate any understanding between

Government officers and the representatives of Le gune Land to that

effect.

While the Territory did not finalise the acquisition for a number of

years, any improvements to parts of NT Portions 5774, 5775 and

5776 that Legune Land undertook were in my view in full knowledge

that the Territory had paid for the land and that it would eventually be removed from the Legune Perpetual Pastoral Lease. The

acquisition was finalised when documents were executed by Legune

Land and the Territory were registered on 29 January 2010 at the

Land Titles Office.

As previously agreed by Government, NT Portions 5774, 5775 and

5776 were subsequently added to Spirit Hills Perpetual Pastoral

Lease held by the Northern Territory Land Corporation to be

managed until such time as it is requested to be used for the purpose

for which it was acquired, that is, the extension of the Ord River

Scheme Stage 2, an extension to the Keep River National Park and/or

such other purposes as the Territory may require.

The Department of Natural Resources, Environment, the Arts and

Sport is arranging any rental adjustment that may be required under

the Pastoral Land Act in relation to Legune Land Holdings.

Any claims by Legune Land in relation to the acquired land are

matters for the Territory and not the NTLC. If such a claim was

made to this Department, further legal advice would be sought.

[132] On 26 May 2010, following receipt of Mr Richie’s advice, Mr Blake s ent a

further letter to Mr McLean, the Chairman of Legune Land. Among other

things, the letter stated:

…

The Corporation has now re ceived advice from the NT Government

in respect of the issues raised by Bernays on your behalf. The

Northern Territory Government through the Department of Land s and

Planning has advised that there was no agreement, formal or

75

otherwise, with your company for the continued use of NT Portions

5774, 5775 and 5776 or any agreement to carry out extensive

improvements.

It advised that the agreement with the previous owners to acquire

these three areas was not transferrable. The previous owners were

paid for the land. The transfer of Legune Pastoral Lease to your

company in 2000 was only approved by the NT Government when

your company executed a partial surrender of the lease. This was held in escrow for a number of years until such time as the NT

Government ac tioned the completion of the acquisition. This was

completed on 29 January 2010.

As the owner of Spirit Hills Pastoral Lease, the Corporation will now

deal with the matter of considering your request to continue to use

the land in question, on the basis t hat the Corporation is not

constrained by any existing or past commitments or understandings

between the NT Government and your company.

Should you decide to further pursue the matters , prior to the

Corporation’s ownership, you will need to take these matt ers up with

the NT Government.

The Board of the Corporation again meets in mid June 2010. The

Board will again address a number of matters concerning Spirit Hills

both in respect of your company’s interests and those of our existing licensee, Laverton Nominees and the Parks and Wildlife

Commission.

In the meantime, I have obtained agreement from the Corporation

Board to proceed with the documentation of a licence to your

company to continue to use NT Portions 5774 and 5775 for pastoral

purposes during 2010 subject to appropriate conditions and

commercial terms.

…

The Corporation’s primary interes t in owning and holding Spirit

Hills Pastoral Lease is to achieve the objectives of:

1. An extension of the Keep River National Park; and

76

2. Preparing the Ord River Irrigation extension area for that

future use.

Any pastoral use will be temporary only within the strict conditions

and subject to termination or reduction of area as soon as the land is

required for these purposes.

Your request to use NT Portions 5774 and 5775 beyond 2010 will be

considered later in the year once the Corporation has completed i ts

assessments and advice has been received from the Parks and Wildlife Commission in respect of their requirements relating to the

proposed expansion of the Keep River National Park.

Again, this letter does not imply any commitment beyond

31 December 2010.

[133] On 10 June 2010 Bernays Lawyers sent a letter to Cridlands seeking their

assistance in determining the status of the Excision Deed. Among other

things, the letter stated:

The purpose of our letter is to seek your assistance in determining

the status of an Agreement between the Northern Territory

Government and Legune Station Pty Ltd dated 13 August 199 9 by

which Legune Station Pty Ltd, the previous owner of Legune Station and the vendor under the Contract of Sale with our client,

surrendered approximately 1100 square kilometres of Legune Station

to the Northern Territory Government in respect of the Ord River

Extension Scheme and by which the Northern Territory Government

granted to Legune Station Pty Ltd a l icence to occupy and use the

surrendered land for the period up to 1 September 2001.

We note that it was a condition of the Contract of Sale between

Legune Land and Legune Station Pty Ltd that Legune Station Pty Ltd

would endeavour to obtain an assignment of its interests under the

Deed of Agreement with the Northern Territory Government to our

client as Purchaser and if it was unable to do this then it would in

fact surrender its interests under the Deed of Agreement. Ou r client

was particularly interested to take an assignment of the residual

benefits under the Deed of Agreement with the Northern Territory

Government. We note from a copy of the letter from Clayton Utz,

77

the Seller’s Solicitors, to your firm dated 6 Septe mber 2000 that firm

stated that it had not formally sought consent of the Northern

Territory Government to the assignment of the residual benefits.

However, Mr Guy Riley, the partner handling the matter, intimated

that he had discussed the matter with Nor een Blackley who would

telephone your firm. He sai d that the posi ti on of the Terri tory was

that they woul d l i ke Legune Land Pty Ltd to si gn a repl acement

surrender of those areas exci sed from the l ease i n return for i ts

consent to the assi gnment of the re si dual benefi ts. Following

receipt of that letter an undertaking was given by our client to the

Northern Territory Government that it would be bound by the terms

of the Deed of Agreement entered into between the Northern

Territory Government and Legune St ation Pty Ltd on 13 August 1999

as though and to the effect that Legune Land had entered into and

executed the document in place of Legune Station Pty Ltd and further

that it would execute any documents, deeds and papers and do all

things as may be required by the Northern Territory Government and

in particular the execution of any further form of Surrender as may

be required by the Northern Territory Government to give effect to

the terms of the Deed of Agreement.

It appears that at settlement the Seller’s Solicitors handed over a

Deed of Assignment of their interest under the Deed of Agreement and as well an executed Surrender of its rights under the Agreement.

Settlement of the sale proceeded on 7 September 2000 and following

settlement under cover of a letter dated 8 September 2000 Ms Simone

Menz of your firm forwarded to Messrs Fox and Thomas inter alia

the original Deed of Assignment and Deed of Surrender in respect of

the Agreement with the Northern Territory Government which was

executed by Legune Station Pty Ltd and an original Deed of

Agreement executed by Legune Land in the same terms as the

Agreement between the Northern Territory Government and Legune

Station Pty Ltd. The letter went onto state that you would forward a

copy of the latter Agreement executed on behalf of the Northern

Territory Government once it was available. The letter further stated

that in relation to the Agreement with the Northern Territory

Government the Department of Lands Planning and Environment

accepted the partial surrender form and an Agreement in substantially the same form as was executed by Legune Station Pty

Ltd in exchange for the production of its consent to transfer the

Pastoral Lease at settlement.

We have been in communication with our client and at this point we

have not been able to locate any copy of a Deed of Agreement

78

between the Northern Territory Government and Legune Land which

has been executed on behalf of the Northern Territory Government.

At the present time the Northern Territory Government has

proceeded with the excision of the lands purchased by it from the

Pastoral Lease for “Legune Station” but there has been some dispute

with the Northern Territory Government regarding an ongoing

licence to use the surrendered areas by our client. Obtaining an

executed copy of the Deed of Agreement between our client and the Northern Territory Government would be of considerable assistance

on the matter.

We would be obliged if you could now check your records and if you

could let us know whether or not your fir m received any executed

Agreement between Legune Land and the Northern Territory

Government on the settlement and, if so, whether that Agreement

remains in your possession or whether you have some record as to

where it may have been forwarded following the receipt of the

document by your firm. If the document is still held by your firm we

would appreciate it if you could let us have a Photostat copy of the

same and we will arrange to obtain the original Agreement from you

on authority from our client.

….

[134] On 21 June 2010 Mr Blake sent a letter to Legune Land advising that a

rental of $4500 per month would be charged for the proposed licence for

Legune Land to graze cattle on the surrendered areas which now formed part

of Spirit Hills Station. On 8 J uly 2010 Clayton Utz, who are the Solicitors

for the Northern Territory Land Corporation, sent the proposed Deed of

Licence and associated documents to Mr Wiemers at Bernays Lawyers.

[135] On 6 September 2010 Mr Blake sent a letter to Legune Land. The l etter

stated:

79

I refer to my letters to you of 12 February 2010, 5 March 2010,

26 May 2010 and 21 June 2010.

Those letters very clearly advised you that NT Portions 5774, 5775

and 5776 are now owned by this Corporation as part of the Spirit

Hills Pastoral Lease No 01200. The letters also advised that

following advice from the NT Government that “the Corporation is

not constrained by any existing or past commitments or

understandings between the NT Government and your company”, that your company is now dealing with this Corporation in respect of any

continuing use of NT Portions 5774 and 5775.

The letters then outlined the terms and conditions that would be

contained in a licence agreement to 31 December 2010.

Subsequently the Corporation solicitors, Clayto n Utz, forwarded a

draft licence agreement to you solicitor, Bernays Lawyers, on 8 July

2010. No response to the licence offers in the 26 May 2010 and

21 June 2010 letters has been received and your solicitors have

advised ours that they await the company’s instructions.

The Corporation Board met on 1 September 2010 and considered a

number of matters concerning the Spirit Hills Pastoral Lease.

Of particular concern to the Corporation is the content of material

promoting the sale of Legune Station which i ncludes “plus

111,000 ha with the consent of the NT Government. Presumably this relates to NT Portions 5774 and 5775 and is out of order. Your

company currently holds no rights to this land and any licence or

other arrangement that is entered into with you will be non-

transferrable and will terminate should you dispose of Legune

Station. These conditions are not negotiable.

If you wish to continue to enter the proposed licence agreement to

31 December 2010, the Board requires a clear statement from you r

company in respect of its intentions to sell Legune Station and a

retraction of any reference or intentions in respect of NT Portions

5774 and 5775 in any sale or sale material.

In respect of the draft licence agreement, the Board wishes the matter

to be dealt with promptly subject to the above paragraph. The Board

will consider withdrawing from the proposed licence agreement if

80

this is not the case. There would appear to be no reason why the

arrangements could not be finalised by 31 September 2010.

[…]

[136] On 19 October 2010 Bernays Lawyers sent a letter to Clayton Utz, the

lawyers for the Northe rn Territory Land Corporation. The letter advised

that Legune Land had received extensive advice from senior counsel

regarding its rights concerning the land known as Areas 1 and 2

(NT Portions 5774 and 5775). Among other things, the letter stated:

Relevantly Legune Land received advice that it has actionable claims

against a number of parties, including the NTLC, regarding the

NTLC’s assertion that Legune Land does not have a continuing right

of occupation of Areas 1 and 2.

In relation to the NTLC, aft er a careful review of the material

available to us, Legune Land has received advice to the effect that it

has a cause of action against the NTLC in light of the NTLC’s stated

refusal to recognise Legune Land rights in respect of Areas 1 and 2.

Legune Land’s position is the NTLC is bound to recognise Legune Land’s pre -existing rights in relation to Areas 1 and 2 by reason of

the arrangements and understandings that we understand were made

and reached between the Northern Territory and the NTLC at the

time of, and in the lead up to, the transfer of those areas to the

NTLC.

Obviously Legune Land’s knowledge of those matters is not perfect

because they are peculiar within the knowledge of the NTLC and the

Northern Territory. However Legune Land has sufficient evidence

from which it may be inferred that the transfer occurred in

circumstances where the NTLC both knew of Legune Land’s rights

and undertook to respect them. That gives Legune Land an

entitlement as against the NTLC to remain in possession for the

purpose of grazing its cattle until the land is required for the Ord

River Extension Scheme.

81

Legune Land intends to assert that right. Legune Land is both

presently in possession of the land, and intends to remain in

possession.

…

Junior counsel has now been briefed and senior and junior counsel

are in the process of preparing the proceedings which will be

commenced shortly against, inter alia , the NTLC to vindicate the

above entitlement.

It necessarily follows that Legune Land does not wish to enter into a

licence agreement with NTLC as put forward because it already

enjoys an interest in respect of that land.

[137] Of note, the letter from Bernays Lawyers does not specify or particulari se

the interest in the land comprised by Areas 1 and 2 that was asserted on

behalf of Legune Land.

The fi ndi ngs of Kel l y J

[138] Kelly J made the following critical findings.

1. Legune Land did not have an agreement with the Northern

Territory.

2. The agreement which Legune Land asserts with the Northern

Territory would not have given rise to an interest in land.

3. There was no evidence that when the Northern Territory Land

Corporation acquired its registered intere st in Areas 1, 2 and 3 ,

it acknowledged that Legune Land had any interest in the land

or undertook to hold its interest in the land subject to any rights

that Legune Land may have possessed. There is no evidence

that when the Northern Territory Land Corporation acquired its

registered title in Areas 1, 2 and 3, it was even aware that

Legune Land claimed an interest in the land; indeed it is far

from clear that at that time Legune Land claimed any interest in

the land.

82

4. There was no evidence that the First Right of Refusal Deed was

signed by the Northern Territory.

5. There was no agreement by conduct between Legune Land and

the Northern Territory at the time settlement of the Contract of

Sale occurred on 7 September 2000.

6. The First Right of Refusal Deed was not properly characterised

as a grant of interest in land.

7. There were insufficient acts of part performance to evidence an agreement in terms of the First Right of Refusal Document.

8. The Northern Territory and Legune Land did not adopt the First

Right of Refusal Deed as the convent ional basis of their

relationship.

9. Clause 2.2 of the First Right of Refusal Deed was neither an

option for a lease nor an agreement for a lease.

10. Areas 1, 2 and 3 were not subject to a constructive trust and

Legune Land had no interest which was enfo rceable against the

Northern Territory Land Corporation.

[139] In my opinion, her Honour did not err in making any of these findings.

The grounds of appeal

[140] The grounds of appeal were pleaded in a prolix and discursive manner. The

principal grounds of appeal were as follows:

1. The trial Judge erred in finding that the First Right of Refusal

Deed had not been signed by the Northern Territory (ground 5).

2. The trial Judge erred in finding that there was no agreement by

words or conduct in terms of the First Right of Refusal Deed

(ground 6).

83

3. The trial Judge erred in determining that Excision Deed was not

assigned from Legune Station Pty Ltd to Legune Land (ground

8).

4. The trial Judge erred in holding that the First Right of Refusal

Deed was not the grant of an interest in land by Legune Land to

the Northern Territory (ground 9).

5. The trial Judge erred in determining that there were insufficient

acts of part performance to evidence an agreement in terms of the First Right of Refusal Deed (ground 10).

6. The trial Judge erred in failing to find that Legune Land and the

Northern Territory adopted the First Right of Refusal Deed as

the conventional basis of their agreement from September 2000

onwards (ground 11).

7. The trial Judge erred in construing cl 2.2 of the First Right of

Refusal Deed in a manner which did not confer upon Legune

Land an interest in Land in circumstances where the proper

construction of cl 2.2, or alternatively cl 2.3 of the Excision

Deed, conferred on Legune Land such interest in land as a

lessee, or the holder of a profit a`prendre or a licensee, together

with an option for a lease or alternatively a profit a`prendre, for

the period from 1 September 2001 until the Excised Areas were

required for the Ord River Scheme, subject to certain conditions being as at 1 September 2001 (ground 12).

8. The trial Judge erred in failing to hold: (a) that the conditions

for the option for a lease, or alternatively a profit a`prendre, to

become exercisable had been met as at 1 September 2001; and

(b) that the option was exercised (ground 13).

9. The trial Judge erred by failing to find the Northern Territory

Land Corporation acknowledged to the Northern Territory as

transferor, in the relevant sense, Legune Land’s interest in the

land, and consequently that the Northern Territory Land

Corporation held such land on constructive or resulting trust for

Legune Land (ground 14).

84

[141] As Mr Grant QC submitted on behalf of the Northern Territory, the above

grounds of appeal are cumulative . There are four stages or parts to the

appeal. In order to succeed in this appeal, Legune Land must be successful

at every stage. Success on one or other of the stages of the appeal only, will

not result in the appeal being allowed.

[142] The first stage of the appeal is about the alleged failure of Kelly J to find

that there was a legally enforceable agreement between Legune Land and the

Northern Territory in the terms of the First Right of Refusal Deed or the

Excision Deed. Grounds 5, 6, 8, 9, 10 and 11 constitute this stage of appeal.

The second stage of the appeal is abo ut her Honour’s alleged failure to find

that Legune Land had an option for a lease , or a profit a`prende , under either

the First Right of Refusal Deed or the Excision Deed and thereby an interest

in the land that comprised Areas 1 and 2 . Ground 12 constitutes this stage

of the appeal. The third stage of the appeal is about her Honour’s alleged

failure to find that the conditions for the exercise of the option had been met

as at 1 September 2001. Ground 13 constitutes this stage of the appeal. The

fourth stage of the appeal is about Kelly J’s alleged failure to find that the

Northern Territory Land Corporation acknowledged to the Northern

Territory as transferor, in the relevant sense, Legune Land’s interest in the

land, and consequently that the Northern Territory Land Corporation held

the acquired land on constructive or resulting trust for Legune Land.

Ground 14 constitutes this stage of the appeal.

85

[143] To succeed Legune Land must demonstrate that the evidence at the trial

established that: (1) there was a legally enforceable agreement in terms of

the First Right of Refusal Deed or the Excision Deed ; (2) the terms of the

agreement imposed an obligation on the Northern Territory to grant a lease

(or profit a`prendre) over Areas 1 and 2 to Legune Land; (3) the existence of

any conditions precedent to the exercise of the obligation to grant a lease (or

profit a`prendre) ; (4) the Northern Territory offered Legune Land a lease of

Areas 1 and 2 (or profit a`prendre) on certain terms which was accepted by

Legune Land and thereby Legune Land had an interest in the acquired land ;

and (5) the Northern Territory Land Corporation held Areas 1 and 2 on

constructive trust for Legune Land. In respect of each of these matters

Legune Land had the burden of proof.

Ground 5

[144] As to ground of 5 of the appeal , Legune Land submitted that Kelly J erred in

finding that the First Right of Refusal Deed was not signed by the Northern

Territory. That finding is set out in par [25] to par [28] of her Honour ’s

Reasons for Decision. Her Honour found there was no evidence that the

First Right of Refusal Deed was signed by the Northern Territory and plenty

of evidence to the contrary.

[145] In support of this ground of appeal the senior c ounsel for the appellant

asserted that there exists, or existed, a copy of the First Right of Refusal

Deed that had been signed by the Northern Territory. This assertion was

based on three grounds. First, a complaint that Kelly J had failed to record

86

the failure of the Northern Territory to discover or produce the original copy

of the document that was handed over at settlement on 7 September 2000.

Second, an assertion that Ms Menz was likely to have handed over two

copies of the document at settlement and had enclosed two copies of the

document in her letter dated 13 September 2000. Third , certain

circumstantial evidence .

[146] Grounds one and two are refuted by an examination of the known copies of

the document and a consideration of the basis on which they were admitted

into evidence.

[147] Two original copies of the First Right of Refusal Deed were tendered in

evidence by Legune Land. They appear at AB 811 – 823. They are the

copies which were in the possession of the Northern Territory and which

were discovered by it. A further copy of the First Right of Refusal Deed

was faxed to Ms Blackley by Ms Menz on 7 September 2000. A comparison

of the signatures on all three of those documents reveals that no two

versions of the signatures are the same.

[148] The obvious question to ask then is what happened to the original of the

document faxed to Ms Blackley on 7 September 2000? If that document was

handed over to the Northern Territory at Settlement then i t might lend some

support to an assertion that the document may have been signed and the

evidence of Mr Pinney and the emails of Ms Griffiths are incorrect.

However, there is no such support. On 8 September 2000 Ms Menz faxed

87

and sent a letter to Mr Fox which enclosed c ertain documents including an

original copy of First Right of Refusal Deed executed by Legune Land.

That enclosure appears at Ex P1 at p 133. The signature of that document is

the same as the one that was faxed to Ms Blackley on 7 September 2000.

That document remained in the possession of Legune Land as is apparent

from the fact that a copy of the document was attached to Mr Wiemers ’

letter to the Northern Territory Land Corporation on 22 April 2010.

[149] So that it may be concluded that there were t hree original copies of the First

Right of Refusal Deed and all of those documents were executed by Legune

Land only. One was handed to the Northern Territory at settlement on

7 September 2000. One was sent to Mr Fox on 8 September 2000 and one

was sent to Ms Blackley by letter on 13 September 2000. The copies

received by the Northern Territory on 7 September 2000 and 13 September

2000 were discovered by the Northern Territory and tendered in evidence .

[150] The known copies of the First Right of Refus al Deed are all accounted for

and none is signed by the Northern Territory. For the assertions of senior

counsel for Legune Land to hold true there would need to be at least a fourth

copy of the document. There was no evidence about any such document.

None of the owners or directors of Legune Land were called to give

evidence that they had signed more than three copies of the First Right of

Refusal Deed.

88

[151] The circumstantial evidence relied on by the appellant to establish the fact

that the First Right of Refusal Deed was signed by the Northern Territory

was as follows . First, Ms Blackley’s requirement that Legune Land enter

into an agreement with the Northern Territory that was similar to the

Excision Deed before the Northern Territory would deliver the Minister’s

consent to the transfer of Legune Station. Second, Ms Blackley’s reasons

for obtaining from Legune Land a copy of the First Right of Refusal Deed

executed by Legune Land. In particular, her understanding that the

surrender of Areas 1, 2 and 3 had not been perfected and certain steps would

have to be undertaken by the Legune Land in the future so that the surrender

could be perfected. She wanted an agreement in place so that all of the

necessary steps could be taken to perfect the surrender. Ms Blackley also

wanted Legune Land to be responsible for looking after Areas 1, 2 and 3

until the surrender of the areas was pe rfected. Ms Blackley wanted to

ensure that Legune Land would not make a further claim for compensation

for the surrendered areas. Third, Ms Blackley’s practice of following up on

any matters that needed to be attended to after settlement. Fourth,

Mr Pinney’s discussion with the representatives of Legune Land on

7 September 2000 and the file notes he made of that conversation. Fifth, the

fact that the Northern Territory does not have a formal administrative record

of a decision not to sign the First Right of Refusal Deed. Sixth, Mr Blake’s

evidence that Mr Pinney did not tell the other members of the Board of the

89

Northern Territory Land Corporation that he had made a deliberate decision

not to sign the First Right of Refusal Deed.

[152] In my opinion, none of these matters either individually or together logic ally

gives rise to an inference that the First Right of Refusal Deed was in fact

signed by the Northern Territory. They merely provide a reason for

obtaining a document that was signed by Legune Land which contained an

undertaking or agreement by Legune Land to assume the obligations that had

been imposed on Legune Station Pty Ltd by the Excision Deed before the

Minister’s consent to the transfer of Legune Station was provided to Legune

Land. The fact that there is no formal administrative record that Mr Pinney

did not sign the First Right of Refusal Deed is not probative of anything.

The fact of the matter is that there is no administrative record of the

document either being signed or not signed. The absence of this record is

completely neutral it does not have a tendency to support the assertion that

the First Right of Refusal Deed was signed.

[153] During Ms Blackley’s cross -examination there was the following exchange

between senior counsel for Legune Land and Ms Blackley about what

occurred after the settlement of the sale of Legune Station:

Counsel: So if at settlement there were documents that still required execution, you would have them executed?

Witness: Yes and – yes.

Counsel: And if they required registration you would ensure that

they got registered?

90

Witness: Yes.

Counsel: And I trust that you will be relieved to know that ,

12 years after the event , I am not going to ask you if you

remember what you did with the documents on

7 September [2000]. But we can assume that you would

have followed your ordinary practice in relation to how

you dealt with those documents on 7 September, agreed?

Witness: Yes.

Counsel: So any document that required registration, for example,

you would make sure it got sent off for registration?

Witness: At the Titles Office do you mean?

Counsel: Yes.

Witness: Yes.

Counsel: And any document that required execution on the

Northern Territory’s part , you would make sure that it

was put forward for execution?

Witness: Yes.

Counsel: Now if all that goes without incident, the reality is you

are unlikely to remember all these years later that

occurred. Agreed?

Witness: Agreed.

Counsel: What it is likely you would remember is that if there was some incident or objection within the Northern Territory

Government to signing a document you negotiated that is

something that you are likely to remember?

Witness: 12 years on, not necessarily.

91

Counsel: All right. You certainly, if somebody within the

Territory refused to sign a document you had negotiated

on behalf of the Territory, that is something that you

would keep a record of, a written record of, agreed?

Witness: No.

Counsel: Well is it at least likely that you would keep a written

record of it?

Witness: If it was – yes, on a file or part of a file, there would be a file as to, you know, what happened.

Counsel: You would not just leave it up in the air?

Witness: No.

Counsel: So if somebody said to you, “I am not going to sign this

document” you would ensure that there was a file note

on the file so there is a permanent record that would

have been a positive decision not to sign it?

Witness: That is what would normally happen.

Counsel: Yes, well that would be your practice ?

Witness: Yes.

Counsel: Thank you, and you have no reason to think you departed

from your practice on this occasion?

Witness: No.

Counsel: And it would have been your practice, no doubt, that if that occurred to communicate to the person on the other

side that, ‘Look we have changed our mind and we are

now not willing to sign that document’?

92

Witness: It would certainly be. Yes, have those discussions and

follow that through.

Counsel: And follow it through in writing again so there was a

permanent record?

Witness: Yes.

Counsel: And that would be your normal practice?

Witness: Yes.

Counsel: And can you think of any reason why you would have departed from your normal practice on this occasion?

Witness: I have no recollection as to …

Counsel: No, no, if you can just attend to my question?

Witness: Sorry?

Counsel: You can think of no reason why you would have

departed from that practice on this occasion?

Witness: No.

[154] The answers of Ms Blackley do not amount to evidence that the First Right

of Refusal Deed was signed by the Northern Territory. The cross -

examination was completely hypothetical. It commences on the premise that

at settlement there were still documents that required execution. There were

no such documents. She was then asked about her normal practice on the

basis of that false premise.

93

[155] The facts were as follows. The Northern Territory was not provided with a

copy of the First Right of Refusal Deed that was capable of being signed by

the Northern Territory prior to settlement nor was the Northern Territory

asked to execute the Fi rst Right of Refusal Deed prior to settlement. The

Northern Territory was only provided with one original copy of the First

Right of Refusal Deed at the settleme nt. That document was provided in

exchange for the Minister ’s consent to the transfer of Legune Station to

Legune Land. The document was for the Northern Territory’s own records.

Ms Blackley was not asked if she received the letter of 13 September 2000 .

Nor was she asked if she received the further copy of the First Right of

Refusal Deed attached to that letter. Nor was she asked if she recommended

that document be signed by Mr Pinney. Nor was she asked if that document

was signed by the Northern Territory and returned to Cridlands. The

principles enunciated in Browne v Dunn12

required senior counsel for

Legune Land to directly put to Ms Blackley that she had recommended that

the document be signed and that it was s igned and returned to Cridlands. He

did not do so and this further weakens this very tenuous submission.

[156] On the other hand, the Northern Territory led evidence to the effect that the

Northern Territory had not signed the First Right of Refusal Deed.

Mr Pinney stated that only he held a delegation under s 7 of the Contracts

Act (NT) authorising him to execute documents such as the First Right of

Refusal Deed on behalf of the Northern Territory. He was not involved in

12

(1893) 6 R 67

94

the dealings on 6 and 7 September 2000 leading up to the settlement of the

sale of Legune Station. He did not authorise any employee of the

Department, or any other person, to enter into an arrangement on behalf of

the Northern Territory with the prospective purchasers of Legune Station in

terms similar to cl 2.1.1 and cl 2.3 of the Excision Deed. His intention in

September 2000 was not to bind the Northern Territory to any arrangement

in relation to the surrendered areas because he wanted to retain for the

Northern Territory as much flexibility as possible in the event that the land

was required for some other purpose. The principal purpose he had in mind

at that time was the extension of Ord River Irrigation Scheme, bu t he was

also generally aware that the Miriuwung Gajerrong people had lodged

claims for native title to various areas of the Ord River region and the

Northern Territory might have to offer land in order to achieve a settlement

of those claims. Mr Pinney recalled that at some time shortly following the

settlement of the transfer of Legune Station on 7 September 2000 he was

advised that the solicitors representing the new owners had sent to the

Department a contract which had been signed by the new owners which

purported to give them rights in terms similar to cl 2.1.1 and cl 2.3 of the

Excision Deed. He could not say for c ertain who advised him, but he was

fairly sure it was Ms Blackley. Whoever it was, Mr Pinney advised that the

Northern Territory would not be entering into such an agreement and for

that reason would not be signing the document. His attitude at the time was

that he was content for the new owners of the pastoral l ease to use the land

95

for the time being, but that he did not want the Northern Territory to be

made subject to any legal or other obligation that would restrict its ability to

take possession of the land as and when required.

[157] Mr Pinney’s evidence is supported by the fact that all of the copies of the

First Right of Refusal Deed that were given to the Northern Territory were

produced in evidence and none of them had been signed by Mr Pinney or

anybody else on behalf of the Northern Territory. The only written

communication between Mr Pinney and Ms Blackley was her email of

7 September 2000 and that did not contain a recommendation that he sign

the First Right of Refusal Deed. A signed copy of the First Right of Refusal

Deed was not sent to Cridlands . Ms Griffiths read an unsigned copy of the

First Right of Refusal and did not see a copy of the First Right of Refusal

Deed that had been signed by the Northern Territory.

[158] Legune Land sought to discredit the reliability of Mr Pinney’s evidence by

suggesting that he had no recollection of these events and had simply

adopted Ms Griffiths account of what had occurred . Legune Land submitted

that Ms Griffiths had confused the Undertaking signed by Legune Land on

6 September 2000 and the First Right of Refusal Deed. Mr Blake gave

evidence that contradicted Mr Pinney’s evidence . Mr Blake’s evidence was

that Mr Pinney did not tell the Board of the Northern Territory Land

Corporation that he had not signed the First Right of Refusal Deed.

96

[159] Legune Land’s argument about the reliability of Mr Pinney’s evidence

cannot be sustained in view of the evidence which supports his statement

that he did not sign the First Right of Refusal Deed . Ms Griffiths was not

confused about nor did she conflate the two documents . She clearly saw

both the Undertaking signed on 6 September 2000 and a copy of First Right

of Refusal Deed which was not signed by the Northern Territory. At least

one of her emails contained a quote from cl 2 of the First Right of Refusal

Deed and she stated that the document was not signed by the Northern

Territory. Even if Mr Blake’s evidence is accepted , and Mr Pinney did not

tell the Board of the Northern Territory Land Corporation that he did not

sign the First Right of Refusal Deed, the rejection of Mr Pinney’s evidence

on the basis that his memory had been infected by Ms Griffiths view of the

situation does not prove that he signed the document . Rejection of

Mr Pinney’s evidence in this regard does not provide positive support for

the proposition that he signed the document.13

[160] The finding of Kelly J in this regard was correct and this ground of appeal

should be dismissed.

Ground 6

[161] As to ground 6 of the appeal, it was submitted by Legune Land that Kelly J

erred in finding that there was no agreement by conduct between Legune

13

Brok en Hi l l Co Pty Ltd v Waugh (1988) 14 NSW LR 360 at 365 -366; Steinberg v Federa l

Commissioner o f Taxa t ion (1975) 134 CLR 640 at 694; Lee v Russel l [1961] W AR 103 at 109

97

Land, on the one hand, and the Northern Territory, on the other hand. This

ground is an alternative ground to ground 5 of the appeal.

[162] At par [33] of her judgment Kelly J found that the words and conduct of

Ms Menz and Ms Blackley only gave rise to an agreement that if the

appellant provided Ms Blackley with an executed Surrender document and

the signed First Right of Refusal Deed the Northern Territory would provide

the Minister’s consent to the transfer of Legune Station to Legune Land.

The documents stipulated by Ms Blackley were delivered at Settlement and

the Northern Territory delivered the Minister’s consent to the transfer of

Legune Station at settlement.

[163] In my opinion, Kelly J’s characterisation of the agreement was cor rect. It is

consistent with how the parties conducted themselves. Ms Blackley did not

have the authority to grant or transfer an interest in land held by the

Northern Territory. Her sole interest was to preserve the obligations that

rested on the previous lessee and ensure that the Northern Territory did not

have to pay anything more by way of compensation. Ms Blackley’s

evidence-in-chief, which was largely unchallenged, was that only the

Secretary of the Department Land Planning and Environment could commit

the Territory to an arrangement such as that proposed in the new agreement.

She had simply required an executed surrender of Areas 1, 2 and 3 and an

agreement in which Legune Land assumed the responsibilities of Legune

Station Pty Ltd which she could put to the Secretary of her Department.

Whether the agreement was to be accepted and signed by the Northern

98

Territory was a matter for the Secretary. Ms Blackley could not bind the

Northern Territory. This was known to Ms Menz and recognised by the

signature clause contained in the First Right of Refusal Deed which

contemplated that it had to be signed by somebody who had an appropriate

delegation under the Contracts Act (NT). Ms Blackley’s only interest was in

protecting the Northern Territory not gr anting any interest to Legune Land.

[164] Ms Blackley only received notice of the transfer of Legune Station on

6 September 2000 and a facsimiled copy of the First Right of Refusal Deed

very shortly before settlement on 7 September 2000. Ms Blackley was not

provided with a copy of the document that contained an original signature of

Legune Land prior to settlement and she was not asked to arrange for the

Northern Territory to execute the document prior to settlement so that it

could be exchanged at settlement. The Secretary of the Department had not

seen the document prior to settlement and had not been afforded an

opportunity to take any advice about the document. It was clear from the

face of the First Right of Refusal Deed that any agreement was cont ingent

upon the document being signed by the Minister’s delegate.

[165] No witness was called on behalf of the appellant to give evidence that at the

meeting at 1 .00 pm on 7 September 2000 Mr Pinney acknowledged that an

agreement had been made between the Northern Territory and Legune Land.

No evidence was led from Ms Menz that she regarded production of the

consent at settlement as giving rise to a concluded contract . Indeed, she

sent a further copy of the First Right of Refusal Deed to Ms Blackley on

99

13 September 2000 and requested that the document be executed by the

Northern Territory. At settlement, Legune Land was still proceeding on the

basis that it was necessary to obtain an assignment of the Excision Deed.

This was unnecessary if an agreement had been made between Legune Land

and the Northern Territory in terms of the Excision Deed.

[166] Ground 6 of the appeal is not made out . Ground 7 of the appeal see ms to be

an extension of ground 6 and must fail for the same reasons.

Ground 8

[167] As to ground 8, the appellant submitted that Kelly J erred in finding that the

Excision Deed was not validly assigned from Legune Station Pty Ltd to

Legune Land. It is important to note that this ground of appeal does not

plead that the licence granted to Legune Station Pty Ltd under cl 2.1.1 of the

Excision Deed was assigned to Legune Land and that Kelly J had erred in

finding that the licence granted to Legune Station Pty Ltd was not properly

assigned to Legune Land.

[168] Although it was never clearly stated by senior counsel for Legune Land, the

submission about the assignment of the Excision Deed, that is, of both its

benefits and burdens, appears to have been based on special conditions 6.2

and 6.4 of the Contract of Sale and the document entitled Deed of

Assignment which was executed by Legune Station Pty Ltd on 7 September

2000.

100

[169] The operative part of the Deed of Assignment executed by Legune Station

Pty Ltd stated:

1. The Assignor does hereby assign to the Assignee the full

benefits held by the Assignor pursuant to the [Excision Deed].

2. The Assignee agrees to assume the obligations of the Assignor

and will indemnify and keep indemnified the Assignor against any obligations of the Assignor pursuant to the [Excision Deed].

3. To the extent necessary, this Deed of Assignment shall be

conditional upon obtaining the consent of the Northern Territory

of Australia.

[170] In contrast to cl 3 of the Deed of Assignment , special condition 6.4 of the

Contract of Sale expressly stated that the assignment of any benefits under

the Excision Deed was subject to the consent of the Northern Territory.

[171] Special condition 6.4 of the Contract of Sale and clause 3 of the Deed of

Assignment recognise that there can be no valid assignment without the

consent of the Northern Territory. The consent of the Northern Territory

was required for three reasons: first, the provisions of the Pastoral Land Act

(NT); second, the provisions of cl 2.1 .1 (d) of the Excision Deed; third, as

the Excision Deed involved the imposition of both benefits and burdens on

the Northern Territory and Legune Station Pty Ltd , there could not be a

unilateral assignment of the Excision Deed by Legune Station Pty Ltd.

There had to be a novation. Legune Station Pty Ltd had to be released from

the Excision Deed by the Northern Territory and Legune Land had to be

introduced as a new party to the Excision Deed. This, at the very least ,

101

required the consent of the Northern Territory. Where under an agreement,

such as the Excision Deed, a party owes obligations to the other party to the

agreement the obligations cannot be assigned without the consent of that

other party.14

The obligations owed by Legune Station Pty Ltd to the

Northern Territory under the Excision Deed were incapable of assignment

without the consent of the Northern Territory.

[172] Legune Land attempted to overcome the above requirements for the consent

of the Northern Territory and, in particular , cl 2.1.1(d) of the Excision

Deed15

by arguing that the Excision Deed granted Legune Station Pty Ltd a

lease over Areas 1, 2 and 3 and, as a consequence , under s 134 of the Law of

Property Act the Northern Territory could not unreasonably withhold its

consent to the assignment of the Excision Deed. Further, it was said that

cl 5.1(g) of the Excision Deed contemplated that there may be an assignment

of the Excision Deed. Finally, it was submitted that the Northern

Territory’s provision of the Minister’s consent to the transfer of Legune

Station at settlement also amounted to consent to the assignment of the

Excision Deed.

[173] These submissions are without any merit for the following reasons. First,

the submissions do not deal with the ground of appeal that has been pleaded.

Second, s 134 of the Law of Property Act has no application to this case.

Clause 2.1.1 of the Excision Deed grants a licence not a lease and, in any

14

Olsson v Dyson (1969) 120 CLR 365 at 388; ALH Group Property Hold ings Pty Ltd v Chief

Commissioner o f S ta te Revenue o f New South Wales (2012) 245 CLR 338 at pars 12, 26 and 27. 15

Cl 2.1.1 p rov ided that Legune Stat ion Pty Ltd s hall no t t rans fer o r d is pos e o f in any way Areas 1, 2

and 3 during the period o f the licence g ran ted by cl 2.1.1.

102

event, the specific provisions of the Pastoral Land Act govern the situation

here, not s 134 of the Law of Property Act . Third, there is no evidence that

Legune Land or Legune Station Pty Ltd, or anyone on their behalf , ever

sought the Minister’s consent to the assignment contemplated by special

condition 6.4 of the Contract of Sale.

[174] Examination of the evidence reveals the following. As late a s 6 September

2000 Legune Land did not know if Legune Station Pty Ltd or its solicitors

had sought consent to the assignment referred to in special condition 6.4 of

the Contract of Sale. Settlement proceeded on the basis that consent to such

an assignment was something which remained to be dealt with after

settlement. Neither Legune Station Pty Ltd nor Legune Land bothered to

obtain consent to the assignment of the benefits that Legune Station Pty Ltd

had under the Excision Deed after settlement. Consent of the Northern

Territory was never obtained.

[175] There is no letter from either Cridlands or Clayton Utz16

to the Department

of Land Planning and Environment enclosing the Deed of Assignment

prepared under special condition 6.4 and seeking the Min ister’s consent to

the assignment contemplated by that document. On 6 September 2000,

which was the original day for settlement of the Contract of Sale ,17

Ms Simone Menz at Cr idlands prepared a checklist of all of the matters to be

attended to before completion of the Contract of Sale. Item 13 in the

16

The s o licito rs fo r Legune Stat ion Pty Ltd 17

As mat ters t rans p ired the Contract o f Sale was completed on 7 Sep tember 2000.

103

checklist is, “Written confirmation of the status of the [Excision Deed] with

the Northern Territory referred to in Spec ial Condition 6 of the Contract”.

At 11.10 am on 6 September 2000 Mr Fox18

sent an email to Ms Menz which

contained a draft email to Clayton Utz which stated, among other things:

“6. Would you please advise whether your client has applied for consent of

the Northern Territory under special condition 6.4 [emphasis added] and, if

so, advise whether their consent has been given and, if so, provide us with a

copy of the Deed of Assignment prior to settlement. 7. If the consent of the

Northern Territory has not been given under special condition 6.4, please

urgently advise and submit to us a draft of the Deed of Surrender for our

approval before settlement under Clause 6.5.” Later on 6 September,

Mr Fox telephoned Ms Menz. During that telephone call it was no ted that

the Department of Land Planning and Environment had been told

(presumably by Mr Riley at Clayton Utz) to register the partial surrender

now. If this occurred there would be no assignment of Legune Station Pty

Ltd’s benefits under the Excision Deed.

[176] Ms Menz then received a telephone call from Ms Blackley who was then the

Manager of the Lands Acquisition Branch of the Department of Lands

Planning and Environment. Ms Blackley advised Ms Menz that the

Department preferred not to register the partial surrender at that point in

time. Ms Menz did not speak to Ms Blackley about the special conditions of

the Contract of Sale. Nor did she ask Ms Blackley if the Minister woul d

18

Legune Land’s p rin cipal s o licito r at Fox & Thomas

104

consent to an assignment to Legune Land of the benefits that Legune Station

Pty Ltd had under the Excision Deed. At 4.12 pm on 6 September 200 0

Mr Fox sent an email to Mr Riley at Clayton Utz asking Mr Riley to confirm

their agreement to proceed to sett lement on the basis of Mr Riley

undertaking on behalf of Legune Station Pty Ltd that the company will

execute both a Deed of Assignment of Benefit and a Deed of Surrender of

Benefit of the benefits that Legune Station Pty Ltd had under the Excision

Deed and that he would deliver those documents as soon as possible after

settlement [emphasis added].

[177] On 7 September 2000 Ms Menz faxed to Mr Riley a Deed of Assignment and

a Deed of Surrender. She advised him that Cridlands had provided the

Department of Land Planning and Environment with an executed Partial

Surrender and the First Right of Refusal Deed. The Deed of Assignment and

Deed of Surrender were executed by Legune Station Pty Ltd on 7 September

2000. However, at no stage was either of those documents delivered to the

Northern Territory.

[178] Finally, it follows that there is no evidence that the consent of the Northern

Territory to the assignment of the Excision Deed was unreasonably

withheld.

Ground 9

[179] Legune Land submitted the First Right of Refusal Deed amounted to a

surrender of Areas 1, 2 and 3 by Legune Land subject to the c ondition set

105

out in cl 2.2 of the document and that Kelly J erred in finding the contrary.

In my opinion, this ground of appeal cannot succeed because it is dependent

upon there being an agreement in terms of the First Right of Refusal Deed

and this was not established by Legune Land. Further, Legune Land only

ever obtained a bare legal title to Areas 1, 2 and 3. It never obtained a

beneficial interest in the land which comprised those areas . It undertook to

perfect the acquisition of Areas 1, 2 and 3 when required to do so by the

Northern Territory and Legune Land ultimately did what it was required to

do in order for the acquisition of Areas 1, 2 and 3 to be completed. At no

stage during that process did it assert any right based on cl 2.2.

Ground 10

[180] As to ground 10 , senior counsel for the appellant submitted that Kelly J

ought to have found that that the Northern Territory engaged in acts of part

performance from the time of apparently approving the First Right of

Refusal Deed, to providing its consent at settlement to the transfer of

Legune Station to Legune Land, to allowing catt le to remain on Areas 1, 2

and 3 after 1 September 2001 , and by charging Legune Land rent on the

basis of the total area of Legune Station (including Areas 1, 2 and 3 ) until

the acquisition of those areas was perfected. This ground of appeal is

another alternative ground of appeal to the grounds of appeal about the

alleged failure of Kelly J to find that the First Right of Refusal Deed had

been signed by the Northern Territory.

106

[181] In my opinion, Legune Land’s submission in support of this ground of

appeal appears to be misconc eived because it refers only to acts of part

performance by the Northern Territory, not acts of part performance by

Legune Land. A plaintiff who seeks to rely on part performance must show

three things. First, there must be acts by the plaintiff in performance of the

contract. It is not sufficient to point to conduct of the defendant as evidence

of the contract alleged.19

Second, the acts performed by the plaintiff , or on

behalf of the plaintiff , must referrable to the contract that is alleged. The

acts of the plaintiff must of their own nature be unequivocally referrable to

the contract. Third, the act or acts relied on by the plaintiff must have been

done upon the faith of the agreement and must have involved , on the part of

the person doing it , a change of position in relation to the subject matter of

the contract of such a character that he or she would be unfairly prejudiced

if the other party were to take advantage of it.

[182] The acts of Legune Land sought to be relied on as part performance were

identified Mr Grant QC as the execution of the partial surrender document,

the taking of possession or the grazing of cattle on Areas 1, 2 and 3, and the

payment of rent for the whole of Legune Station without any deduction

being made for the surrendered areas. I accept Mr Grant’s submission that

these acts are not unequivocally and of their own nature referrable to the


19

Ferguson v Hul lock [1955] VLR 202; Maddison v Alderson (1883) 8 App Cas 467 at 475

107

[183] Special condition 6.2 of the Contract of Sale provided that if the acquisition

of Areas 1, 2 and 3 had not been effected prior settlement of the Contract of

Sale then Legune Land would accept title to the whole of Legune Station

and assume the obligations of Legune Station Pty Ltd under the Excision

Deed and would, if requested by the Northern Territory, execute a further

surrender document to be registered after settlement. If this occurred, then

Legune Land would be required to pay rent for the whole of Legune Station

calculated in accordance with the Pastoral Land Act . Cattle which were

already on Legune Station were part of the Contract of Sale and it may b e

inferred that some of those cattle were already grazing on Areas 1, 2 and 3

at the time that Legune Land took possession of the station and the cattle

simply continued to graze o n those areas . Further, the obligations of Legune

Station Pty under the Excision Deed, which were assumed by Legune Land

under the Contract of Sale , included the maintenance of all boundary

fencing and other fixed improvements within Areas 1, 2 and 3. Further still,

Legune Land never paid a licence fee of $1 per annum for the use of Areas 1

and 2 in accordance with cl 2.1.1(a) of the First Right of Refusal Deed.

There is no evidence of any acts by Legune Land that are unequivocally and

of their own nature referrable to the First Right of Refusal Deed.

[184] Even if Legune Land were entitled to the benefit of the doctrine of part

performance, the licence granted by cl 2.1.1 of the First Ri ght of Refusal

Deed expired on 1 September 2001 and it was necessary for Legune Land to

108

establish that it had acquired an interest under cl 2.2 of the First Right of

Refusal Deed in accordanc e with its terms and Legune Land did not do so.

Ground 11

[185] As to ground 11 of the appeal, senior c ounsel for Legune Land submitted

that Kelly J erred in failing to find that Legune Land and the Northern

Territory had adopted the First Right of Refusal Deed as the conventional

basis of their relationship from September 2000 onwards. It was submitted

that her Honour ought to have found that there was no evidence of any other

arrangement in place between the Northern Territory and Legune Land for

the continued occupation of Areas 1 and 2 . This argument is yet another

alternative basis of trying to establish a concluded agreement in terms of the


[186] At first instance , Legune Land relied on the following matters to support

this contention.

1. Legune Land remained in possession of and continued to graze

cattle on Areas 1, 2 and 3 after 1 September 2001 .

2. Legune Land continued to pay the full rental under the Pastoral

Land Act based on the total area of Legune Station.

3. The Northern Territory gave serious consideration to allowing

Legune Land to sublease Legune Station. The proposed

sublease was sent to the Northern Territory. The proposed

sublease document contemplated the sublease of the whole of

Legune Station from 1 November 2002 to 31 October 2004.

4. Mr Fowlestone’s letter to Povey Stirk dated 2 July 2003.

109

5. The telephone discussions between Mr Fowlestone and

Mr Wiemers between 18 and 22 February 2008.

6. On 22 February 2008 Mr Fowlestone wrote to Ms Griffiths in

the following terms:

[Mr McLean] and the company solicitor, Bob Wiemers, have

asked about the “leasing” arrangement which allows the

company to run cattle on the land bei ng acquired. According

to Mr McLean the company pays $1 per year, any fixed improvements they put on the land becomes the property of

the Northern Territory and the Northern Territory is able to

give them one month’s notice . Do you know if this is in

writing?

7. The ministerial briefing of 16 April 2008

8. Legune Land signed the further surrender documents when

requested to do so by the Northern Territory in 2010.

[187] Kelly J rejected this contention of Legune Land on the following grounds.

1. There was no evidence that Legune Land remained in possession

of Areas 1 and 2 in any sense other than grazed cattle on those

areas with the acquiescence or tacit consent of the Northern

Territory. The agistment of cattle on those areas was more

consistent with a bare licence terminable at will than the adoption of First Right of Refusal Deed.

2. Payment of the full rental over the whole of Legune Station was

not consistent with the First Right of Refusal Deed. The deed

provided for the payment of only $1 per annum (if demanded)

for the right to graze cattle on Areas 1 and 2 .

3. The fact that the Northern Territory gave serious consideration

to consenting to a sublease is neither here nor there. There is no

evidence that either side made any reference to the First Right

of Refusal Deed or asserted any rights under that document

during the 2003 negotiations.

110

4. The fact that Mr Fowlestone wrote to Ms Griffiths in the above

terms does not support the contention that at the time the parties

adopted the First Right of Refusal Deed as the basis of their

relationship. It shows that Mr Fowlestone was not aware of the

existence of such an agreement. The assertions attributed to

Mr McLean in the email are different to the provisions of the

First Right of Refusal Deed. In her response to Mr Fowlestone

Ms Griffiths unequivocally denied that there was any such agreement.

5. There is no need to adopt the First Right of Refusal Deed as the

basis of why Legune Land signed the fresh surrender document

when requested to do so by the Northern Territory. Legune

Land had a contractual obligation to do so under the Contract of

Sale of Legune Station.

[188] Senior counsel for the appe llant submitted that to find as Kelly J did that

Legune Land and the Northern Territory had not adopted the First Right of

Refusal Deed as the conventional basis of their relationship was in error. He

submitted that the finding should be rejected by this Court on the following

basis.

1. There was no evidence that the Northern Territory acquiesced in

Legune Land grazing cattle on Areas 1 and 2.

2. The continued charging of rent by the Northern Territory and the

payment of the same was consistent with the adoption of the

First Right of Refusal Deed and in particular the rights

conferred on Legune Land by clause 2.2 of that document.

3. Her Honour’s analysis of Mr Fowlestone’s correspondence was

incomplete. His correspondence expressly referenced each of

Mr McLean and Mr Wiemers enquiring of the lease in place and

Mr Fowlestone attributed to each person certain terms of the

lease.

111

4. Mr Fowlestone ultimately concluded in the Ministerial that he

prepared that there was an agreement between the Northern

Territory and Legune Land.

5. It is more likely that Legune Land executed the further

acquisition documents because the parties were acting in

accordance with the terms of the First Right of Refusal Deed

which had been executed by Legune Land at the request of the

Northern Territory.

[189] In considering Legune Land’s submission it again needs to be born in mind

that Legune Land had the burden of proof as to this contention; and at no

stage were any of the directors or owners of Legune Land called to give

evidence about the basis on which they dealt with t he Northern Territory or

operated Legune Station until the acquisition of the surrendered land was

perfected.

[190] Neither the continued grazing of cattle on Areas 1 and 2 nor the charging of

rent for the whole area of Legune Station is referrable to the First Right of

Refusal Deed. Legune Land was charged rent under part IV of the Pastoral

Land Act . A consequence of accepting legal title to the whole of Legune

Station in accordance with special condition 6.2 of the Contract of Sale was

being subject to the ordinary operation of the Pastoral Land Act including

the payment of rent assessed under that Act . At the time of settlement on

1 September 2000 , cattle which were subject to the Contract of Sale were

already grazing on Areas 1 and 2 . Cattle have continued to graze on these

areas ever since, that is, apart from those cattle which have been turned off

in the course of the ordinary operation of the cattle station. None of the

112

directors or owners of the appellant were called to give evidence that th e

only reason that they continued to graze cattle on Areas 1 and 2 was because

they assumed that there was an agreement between Legune Land and the

Northern Territory in terms of the First Right of Refusal Deed. None of the

directors or owners of Legune Land were called to give evidence that they

purchased additional cattle, or built, purchased or constructed structural

improvements or water improvements or infrastructure within Areas 1 and 2

on the assumption that Legune Land had a lease of Areas 1 and 2 which only

terminated upon the surrendered areas being acquired for use in the

expansion of the Ord River Irrigation Scheme. Nor was there any evidence

that Legune Land only purchased Legune Station because it knew it had a

lease over Areas 1 and 2 until those areas were acquired for the expansion of

the Ord River Irrigation Scheme. The Contract of Sale expressly provided

that Areas 1, 2 and 3 were not included in the sale. The price paid by

Legune Land was for the balance of the area of the perpetual pastoral lease.

[191] There is no evidence that the Northern Territory ever communicated to

Legune Land that the company had a lease of Areas 1 and 2 until the areas

were required for the expansion of the Ord River Irrigation Scheme or at all.

There is no evidence that the Northern Territory exercised rights against

Legune Land that would only exist if Legune Land’s alleged assumption

about the existence of the First Right of Refusal Deed were correct. There

is no suggestion that Legune Land informed the Northern Territory that it

was building any infrastructure or improvements within Areas 1 and 2 or

113

that it was purchasing additional cattle or capital items because it had a

lease of Areas 1 and 2. All the Northern Territory has done is complete the

acquisition of Areas 1, 2 and 3 once the native title issues were sufficiently

clarified in circumstances where Legune Land had not purchased those areas

and did not object to the completion of the acquisition of that land.

[192] There is no evidence that the Northern Territory entered into any form of

relationship with Legune Land at all. It simply required Legune Land to

undertake to abide by the obligations that Legune Station Pty Ltd had for the

surrendered areas before it provided the consent to the t ransfer of Legune

Station. There is no suggestion or evidence that, knowing Legune Land was

labouring under some mistake, the Northern Territory refrained from

correcting Legune Land when it was the Nor thern Territory’s duty to do so.

Nor is there any evidence that the Northern Territory made representations

to Legune Land that were founded on the First Right of Refusal Deed being

in place.

[193] In my opinion, Kelly J’s conclusions , which are set out in par [188] above,

about the dealings between the Northern Territory and Legune Land when

Legune Land was considering subleasing Legune Station in 2003 and when

Legune Land was considering selling Legune Land in 2008 , are correct.

Those dealings are set out in par [73] to par [81] and par [90] to par [113]

above. None one of those dealings demonstrate that the Northern Territory

and Legune Land adopted the First Right of Refusal Deed as the

conventional basis of their relationship. There was no mention of the First

114

Right of Refusal Deed in any discussions or correspondence between the

Northern Territory and Legune Land. Legune Land never asserted any

entitlements based on the First Right of Refusal Deed. If anything, Legune

Land was uncertain of its position in respect of Areas 1, 2 and 3. In 2003

the Northern Territory was prepared to consider the sublease if its position

was protected by a variation of the perpetual pastoral leas of Legune Station

and the inclusion of a condition that the lessee surrender Areas 1, 2 and 3 at

no cost when requested to do so by the Northern Territory. In 2008 the

Northern Territory started taking steps to perfect the acquisition of Areas 1,

2 and 3 before Legune Station was sold. As matters transpired Legune

Station was neither subleased nor sold.

[194] Neither the telephone conversations between Mr Fowlestone and

Mr Wiemers and Mr McLean nor the draft Ministerial prepared by

Mr Fowlestone amount to an acknowledgement that the relationship between

the Northern Territory and Legune Land was governed by the terms of the

First Right of Refusal Deed. The upshot of the discussions between

Mr Fowlestone and Mr Wiemers and Mr McLean was that Mr Fowlestone

informed them that Areas 1, 2 and 3 were being acquired by the Northern

Territory and inc luded in Spirit Hills Station and once that occurred Legune

Land would need to negotiate with the Northern Territory Land Corporation.

[195] The draft Ministerial was an internal Northern Territory document which

recommended that Areas 1, 2 and 3 be offe red to the Northern Territory

Land Corporation. It said nothing about recognising or preserving any

115

rights that Legune Land claimed it had under the First Right of Refusal

Deed.

[196] As Mr Grant QC pointed out, it is significant to note that the rights now

sought to be relied on by Legune Land were not asserted at the time Legune

Land and the Northern Territory were facilitating the transfer of Areas 1 and

2 to Spirit Hills Station. Secondly, Mr McLean was not called to explain

what he meant in his telephone discussion with Mr Fowlest one in February

2008 where he asserted a lease terminable on one month’s notice. There is

no evidence from any principal of Legune Land as to why they did not

instruct Mr Wiemers in 2008 in terms of the existence of the ri ghts now

asserted by Legune Land. No principal from Legune Land gave evidence

about the discussions with Ms Blackley in 2003. No principal of Legune

Land gave evidence as to the assumptions made by Legune Land regarding

the existence of an agreement in t erms of the First Right of Refusal Deed.

There was no evidence about any conduct being predicated on the existence

of such an agreement . There was no evidence , at all , directed to a purported

exercise of the rights contained in cl 2.2 of the First Right of Refusal Deed.

There was no evidence from the principals of Legune Land about the

discussion which took place with Mr Pinney at 1pm on 7 September 2000.

[197] Estoppel by convention is founded on the conduct o f relations between the

parties on the basis of an agreed or assumed state of facts, which both will

116

be estopped from denying.20

There is no estoppel unless it can be shown

that the alleged assumption has in fact been adopted by the parties as the

conventional basis of their relationship.21

In the absence of proof of custom,

there is no evidence that the parties adopted the alleged assumption.

Estoppel by convention requires an assumed state of affairs to be an

assumed state of fact.22

The evidence in this case does not go anywher e near

establishing any of the elements of estoppel by convention.

Ground 12

[198] As to ground 12, it was submitted on behalf of Legune Land that either

cl 2.3 of the Excision Deed or cl 2.2 of the First Right of Refusal Deed

conferred on Legune Land a conditional right to acquire a further lease (or

profit a`prendre) of Areas 1 and 2. The right was conditional on the

happening of two events. The first event was the expiry of the term

specified by cl 2.1.1 of both the Excision Deed and the First Right of

Refusal Deed. The second event was the Northern Territory’s determination

that the surrendered areas be used for grazing purposes only. Legune Land

asserted that upon the happening of these two events , the Northern Territory

was under a positive obligation to grant Legune Land a first right of refusal

on terms. The positive obligation arose in consequence of the phrase “will

grant” which appears in cl 2.2 and cl 2.3 and is mandatory in its terms . This

20

Con-S tan Industries o f Austra l ia Pty Ltd v Norwich Win terthur Insurance ( Austra l ia ) Ltd (1986)

160 CLR 226 at 244-245 21

ib id . 22

ib id .

117

phrase is sufficient to refute any notion that only a negative promise arises

under the clauses.

[199] This ground of appeal cannot be sustained. Properly characterised, cl 2.2 is

simply a right of pre -emption and that form of first right of refusal does not

contain an interest in land. The distinction was explained in Mackay v

Wilson23

as follows:

Speaking generally, the giving of an option to purchase l and prima

facie implies that the giver of the option is to be taken as making a

continuing offer to sell the land, which may at any moment, be

converted into a contract by the opti onee notifying his acceptance of

that offer. The agreement to give the option imposes a positive

obligation on the prospective vendor to keep the offer open during

the agreed period so that it remains available for acceptance by the

optionee at any moment within that period. It has more than a mere

contractual operation and confers on the optionee an equitable

interest in the land, the subject of the agreement; ….

But an agreement to give “the first refusal” or “a right of pre -

emption” confers no immediate right on the prospective purchaser. It

imposes a negative obligation on the possible vendor requiring him

to refrain from selling the land to any other person without giving the

holder of the right of first refusal the opportunity of purchasing in

preference to any other buyer. It is not an offer and in itself it

imposes no obligation on the owner of the land to sell the same. He

may do so or not as he wishes. The right is merely contractual and

no equitable interest in the land is created by the agre ement.

[200] In their terms cl 2.3 and cl 2.2 impose a negative obligation on the Northern

Territory requiring it to refrain from leasing the land to any other person

without giving Legune Land the first opportunity of leasing the land. The

obligation only arises if (1) the Northern Territory decides that it wants to

23

(1947) 47 SR (NSW ) 315

118

use the land for grazing stock and no other purpose; and (2) the Northern

Territory wants to lease the land.

[201] As to the use of the word “will” in cl 2.3 and cl 2.2, I accept Mr Grant QC’s

submission that the use of the word “will” does not alter the fact that the

operation of these clauses does not commence until such time as the

Northern Territory determines that the land is required for grazing sto ck and

no other purpose and it determines that it wants to lease the land. To the

extent that the word “will” carries any compulsion with it, the co mpulsion

only arises after the Northern Territory has made the two relevant

determinations. The Northern Territory remains completely free to make or

not make any such determinations and therefore has not lost the freedom of

alienation. As the operation of each clause is constrained in this manner ,

the right granted by those clauses only extends to impose a personal

obligation on the Northern Territory to make an offer if the relevant events

occur. No proprietary right is created.

[202] In Beneficial Finance Corporation Ltd v Multiplex Constructions Pty Ltd24

the following clause fell for consideration by the Supreme Court of New

South Wales:

4.2 If the Bank decides at any time during the exclusivity period or the second period or such extended periods as may be agreed not to

proceed with the Project, then i t wi ll allow Multiplex a first right of

refusal during the exclusivity period or the second period (as the case

may be) either to purchase the Site or to arrange for a third party to

purchase the Site at a price and upon terms acceptable to the Bank in

24

(1995) 36 NSW LR 510

119

its absolute discretion. Multiplex shall not be entitled to any fee from

the Bank for arranging the purchase whether to itself or any other

entity or party. Multiplex acknowledges that the right granted by this

clause is not exclusive to Multiplex and nothing in this clause or this

Agreement may be read as preventing the right of the Bank to market

the Site or the Project to any other party during the exclusivity period

or second period or thereafter.”

[203] The New South Wales Supreme Court determined that cl 4.2 only granted a

right of pre-emption or a first right of refusal. Young J stated:25

If on the true construction of the documents […], one can see that

contingently or unconditionally the proprietor of property has put it

out of his or her control to prevent the grantee from acquiring the

property, then a proprietary right is conferred on the grantee. If,

however, the right of the grantee only extends to impose a personal

obligation on the grantor to make an offer, then there is no

proprietary right conferred. As Sappideen and Butt say in their work

on the Perpetuities Act […] at 138: “A right of pre -emption differs

from an option in so far as the grantor of an option has parted with

his freedom of alienation and is obliged to sel l to the grantee at the

request of the latter.

[204] Likewise, neither cl 2.3 of the Excision Deed nor cl 2.2 of the First Right of

Refusal Deed, deprive the Northern Territory of its freedom of alienation.

[205] In support of its submission about the construction of cl 2.3 and cl 2.2

Legune Land relied on Penrith RSL Club Ltd v Cameron & Anor26

and the

following statement of Bryson J:

The rights created by the Deed are not easy to understand or state

concisely. In my opinion the right created by the Deed was an option

to purchase, notwithstanding the reference in cl2 to the first Right of

Refusal. I have been guided by observations of Fullagar and Kitto JJ

relating to the document under consideration in Woodroffe v Box & Anor (1954) 92 CLR 245; there are some similarities in the

25

(1995) 36 NSW LR 510 at 524 per Young J. 26

(2001) 10 BPR 18,621 at 18,623.

120

expressions used in that document and in the Deed. As one of the

events which could activate the obligation to offer the land for sale

was Mr Hector Cameron's death and the Deed is said by cl1 to be

binding on his executors it must be understood that there was a

contractual promise that the executors of his estate would make the

offer. Notwithstanding the use of the inept expression "first Right of

Refusal" the option conferred by cl3 is the only mechanism by which

the Club had an opportunity to purchase the land. Except in relation to the offer which the grantor was to make under cl3 the Club did not

have a right of refusal under which the grantor could not sell the land

to any other person without first making an offer to the Club. The

plaintiff 's case was not presented on any such basis and in any event

there is no evidence that Mrs Amy Cameron or her executors have

ever proposed to sell the land to any other person. According to the

form of words used the Club's right under cl3 was to have the

executors make an offer to the Club; the Club could then decide

whether to accept the offer or not to accept it. As executors had an

obligation to make the offer the substance of the rights involved is to

be ascertained by treating them as actually having made it, and the

effect of doing so is that on Mr Hector Cameron's death the Club had

an option to purchase the land at a price to be established in the way

stated.

[206] Penrith RSL Club Ltd v Cameron & Anor is distinguishable from this case

because the operative effect of the clause under consideration in that case

was different to the operative effect of cl 2.3 and cl 2.2. The first right of

refusal in the clause being considered in Penrith RSL Club Ltd v Cameron &

Anor was triggered upon the death of the grantor. Once the grantor died

there was an express positive obligation on the executors to offer the land to

the grantee for purchase. It was not a negative obligation as is created by

the clauses which are the subject of this appeal. The observations made by

Bryson J are directed to the situation where there was an express positive

obligation conferred by the clause in question . There is no such obligation

created by cl 2.3 and cl 2.2 unless the Northern Territory decided that it

wanted to use the land for grazing purposes only and it wanted to lease the

121

land. The Northern Territory could not lease Areas 1, 2 and 3 in those

circumstances without first offering a le ase to Legune Land.

[207] Further, the breadth of the discretion that is given to the Northern Territory

in cl 2.2 and cl 2.3 is inconsistent with the grant of a proprietary interest.

Both clauses are uncertain. So that no interest in land is created by either

cl 2.3 or cl 2.2.

[208] Further, the arrangements on which Legune Land now relies do not satisfy

the essential requirements of a leasehold interest. The essential terms that

require the parties’ agreement will vary depending on the nature of the

particular agreement .27

In the case of a lease or an agreement to lease

[emphasis added], the essential terms will usually be the parties, the

premises, the term and the rent .28

[209] There is a well-recognised exception to the requirement for an agreement on

all essential terms. That is, where the agreement provides a mechanism for

the determination of the omitted matter and the operation of that mechanism

does not require the further agreement of the parties .29

In this case there

was neither an agreed rent nor an agreed term nor an agreed mechanism for

determining the rent or the term.

27

Vroon BV v Foster’s Brewing Group Ltd [1994] 2 VR 32 at 68; Pagnan SpA v Feed Products Ltd

[1987] 2 Lloyd’s Rep 601 at 619; Foote & Ors v Acceler8 Technolog ies Pty Ltd and Ors [2012]

NSW SC 635 at [21]. 28

NZI Insurance Austra l ia Limi ted v Baryzck a (2003) 85 SASR 497 at 506; Harvey v Pra t t [1965] 1

W LR 1025 at 1026-1027; Copperart Pty Ltd v Bayside Developments Pty Ltd (1996) 16 W AR 396

at 408; Foote & Ors v Acceler8 Technolog ies Pty Ltd and Ors [2012] NSW SC 635 at [21]. 29

Book er Industries Pty Ltd v Wi lson Park ( Qld) Pty Ltd (1982) 149 CLR 600; Toyota Motor Corp

Austra l ia Ltd v Ken Morgan Motors Pty Ltd [1994] 2 VR 106 at 202; Foote & Ors v Acceler8

Technolog ies Pty Ltd and Ors [2012] NSW SC 635 at [22].

122

[210] The term of the lease asserted by Legune Land is until such time as the

surrendered land is required for the Ord River Irrigation Scheme. The term

of the lease is therefore uncertain.30

[211] Legune Land’s submissions about a profit a`prendre cannot be sust ained

either. There is nothing in the First Right of Refusal Deed which provides a

mechanism for the company to obtain a profit a`prendre of open ended

duration. Nor is there any evidence of any sort of dealings outside of the

terms of the First Right of Refusal Deed that gave rise to an interest in

Areas 1 and 2 in the nature of a profit a`prendre. The most that can be

established on the evidence is a bare licence based on the Northern Territory

suffering Legune Land to use the surrendered areas.

Ground 13

[212] As to ground of appeal 13, Legune Land submitted that the conditions

precedent to the exercise of the rights that Legune Land was granted under

either cl 2.3 of the Excision Deed, or cl 2.2 of the First Right of Refusal

Deed, were (1) the license granted by cl 2.1.1 had expired and (2) the

Northern Territory desired at that time that Areas 1 and 2 were to be used

for grazing stock and no other purpose. As neither cl 2.3 nor cl 2.2 provided

any mechanism for the exercise of the option, there was no requirement that

any such communication, or election, be in writing or any specified period

for its exercise. On the evidence , it could be inferred that as at 1 September

30

Bishop v Taylor (1968) 118 CLR 518; Lace v Chandler [1944] KB 368; Mangio la v Costanza

(1980) A & NZ Conv R 331.

123

2001 the Northern Territory desired that Areas 1 and 2 be used for grazing

stock and no other purpose. There was no sign of the expansion of the Ord

River Irrigation Scheme being ac tivated, Legune Land was using Areas 1

and 2 for grazing purposes and the Northern Territory had not given any

indication that it wanted to use the surrendered land for any other purpose.

By the statement made by Legune Land’s principals to Mr Pinney on

7 September 2000 that Legune Land would be interested in leasing Areas 1

and 2 if the expansion of the Ord River Irrigation Scheme was delayed , and

by its continued occupation of Areas 1 and 2 after 1 September 2001 Legune

Land by its conduct evinced an intention to exercise the option.

Consequently, the conditions for the grant of the first right of refusal were

met.

[213] Legune Land’s submissions on this ground of appeal are lacking in

substance. There is no evidence from which it could be inferred that, as at

1 September 2001, the Northern Territory desired that Areas 1 and 2 be used

for grazing stock and no other purpose. The reason t he Northern Territory

had taken no steps to perfect the acquisition of the surrendered areas as at

1 September 2001 was that the Northern Territory was uncertain about the

impact that completion of the acquisition would have on the native title

claim over the whole of Legune Station. The Northern Territory still wanted

the surrendered land for the expansion of the Ord River Irrigation Scheme

and the Keep River National Park or alternatively to use in negotiating a

settlement of the native title claim. The re is no evidence that the Northern

124

Territory ever considered leasing the surrendered land to any other party.

There is no evidence that the Northern Territory ever offered Legune Land a

lease over the surrendered areas and Legune Land never accepted or asked

for a lease over Areas 1 and 2 . Simply continuing to graze cattle in the

same manner that cattle had been grazed on the surrendered areas since

before the time of purchase of Legune Station by Legune Land does not

evince an intention to do anything o ther than graze the cattle on that land.

There was no evidence about the terms and conditions of any lease.

Ground 14

[214] As to ground 14, senior c ounsel for Legune Land submitted that the

Northern Territory Land Corporation held Areas 1 and 2 on cons tructive

trust for Legune Land because the Corporation had notice of Legune Land’s

unregistered interest in Areas 1 and 2 and undertook to respect that

interest.31

Senior counsel submitted that Kelly J erred by failing to find that

the Northern Territory Land Corporation acknowledge d to the Northern

Territory as transferor, in the relevant sense, Legune Land’s interest in

Areas 1 and 2, and that the Northern Terr itory Land Corporation held the

land on trust for Legune Land.

[215] Legune Land faced two major problems in maintaining this ground of

appeal. First, Legune Land f ailed to establish that it had an interest in Areas

1 and 2. Second, Legune Land had grave difficulty establishing that there

31

Bahr v Nicho lay (No 2) (1988) 164 CLR 664; Presbyterian Church ( NSW) Property Trust v Sco ts

Church Development Ltd [2007] NSW SC 676 at [114].

125

was some evidence from which an inference could be drawn, on the balance

of probabilities, that the Northern Territory Land Corpo ration was aware of

Legune Land’s alleged interest in Areas 1 and 2.

[216] Senior counsel for Legune Land submitted in his written submissions that

the evidence which established that the Northern Territory Land Corporation

had notice of Legune Land’s interest in the land may be summarised as

follows.

First, the telephone conversations between Mr Wiemers and

Mr Fowlestone in February 2008 and Mr Wiemer’s diary notes made

contemporaneously with those conversations…

Second, the contents of the Ministerial Briefing note dated 16 April

2008 and the investigations Mr Fowlestone made over the preceding

two months.

Third, and most significantly, the rejection that was compelled of

Mr Pinney’s evidence that he did not sign the Legune Land First Right of Refusal [Deed] on behalf of the Northern Territory meant

that not only must Mr Pinney be taken to have had knowledge of

Legune Land’s interest in the land, but so did the [Northern Territory

Land Corporation] given his seat on the Board. That he did not

communicate that knowledge to Mr Blake or other Board members is

of no moment.

[217] As to the telephone conversations between Mr Wiemers and Mr Fowlestone,

at par [49] to par [62] and par [78] of his written submissions Senior

Counsel for Legune Land stated the following.

49. The next events which are critical occurred in February 2008.

Ultimately they involve competing recollections of

Mr Wiemers and Mr Fowlestone, so it is important to set out a

126

little of what those gentlemen had available to them 4 years

later when giving their evidence.

50. Mr Wiemers was admitted as a solicitor in 1971, having

commenced practice as a five year clerk in 1966. He has been

in continuous practice since that time and practiced as a

principal of a firm continuously since 1973. He had a practice

of making a diary note, usually in hand, of the nub of the

matters discussed by him on the telephone on behalf of a

client, attempting to ensure that he recorded all of the essential

matters discussed, but not recording every word spoken. He

had an independent recollection of his discussions with

Mr Fowlestone. He also refreshed his independent recollection

from his diary notes.

51. Mr Wiemers was not challenged in cross -examination on the

accuracy or contents generally, of those diary no tes.

52. On the other hand, Mr Fowlestone had no contemporaneous

notes of those discussions.

53. The above notwithstanding, the learned trial judge accepted

Mr Fowlestone’s evidence where he denied speaking to

Mr Wiemers of any proposal to give a pastoral lease to Legune

Land, discussed below. That evidence was contradicted by the

contemporaneous diary note of Mr Wiemers.

127

54. On 14 February 2008 Mr Wiemers was contacted by a

marketing agent for Legune Land and initiated discussions

with Mr Fowlestone, with whom he had previously dealt with

regarding possible sub-lease, ultimately the proposed sale did

not proceed.

55. Mr Wiemers had four telephone discussions with

Mr Fowlestone on 18 February 2008.

56. The first of those telephone discussions, from Mr Wiemers’

independent recollection refreshed by his diary notes, was a

general discussion about the continued use of the excised areas

and Mr Fowlestone informing Mr Wiemers that the excision

had not been perfected at that stage because of something to do

with native title.

57. In the second telephone discussion on 18 February 2008, from

Mr Wiemers’ independent recollection refreshed by his diary

notes, Mr Fowlestone informed Mr Wiemers that Areas 1 and 2

were to be added to the Spirit Hills Pastoral Lease and that the

Northern Territory could do that pursuant to s 66 of certain

legislation given those areas were less than eight per cent of

the station. Mr Wiemers responded with the words to the

effect that they were in fact about a third of the area of the

station. Mr Fowlestone responded that the Northern Territory

128

could get urgent authorisation and Legune Land should tell any

prospective buyers the government will want the land back.

58. In their third telephone conversation on that day, again fro m

Mr Wiemers’ independent recall refreshed by his diary note,

Mr Fowlestone said words to the effect that the Northern

Territory Land Corporation would need to make a decision

regarding leasing the areas in question to Legune Land and

that arrangements were in place to transfer title of Areas 1 and

2 from the Northern Territory to the Northern Territory Land

Corporation.

59. Mr Wiemers contacted one of the directors of Legune Land,

Mr McLean, and recommended that he contact Mr Fowlestone

which appears to have occurred.

60. Mr Wiemers last conversation with Mr Fowlestone on

18 February 2008 appears to have been after Mr McLean had

contacted Mr Fowlestone. In the course of that discussion,

again from Mr Wiemers’ independent recollection refreshed by

his diary notes, Mr Fowlestone informed Mr Wiemers that he

felt the Northern Territory could acquire Areas 1 and 2 by an

acquisition by agreement document.

61. Of particular relevance, Mr Wiemers recalls Mr Fowlestone

saying words to the effect that Mr Fowlestone t hought that the

129

current arrangements regarding Legune Land agisting its cattle

can continue regarding Areas 1 and 2 and that he had spoken to

Mr McLean and a lady in the acquisitions area of the

Department in which he worked.

62. Mr Wiemers and Mr Fowlestone speak by telephone again on

21 February 2008. In the course of that telephone discussion,

from Mr Wiemers’ independent recollection refreshed by his

diary notes, Mr Fowlestone says to Mr Wiemers:

(a) The proposal of the Northern Territory would be to

take the excised areas and give a pastoral lease to

Legune Land. That part would be taken for park

purposes and at that end it may not be available to

Legune Land.

(c) The Northern Territory was aware of the current

arrangements that Legune Land had with the

Northern Territory regarding the excised areas and

would endeavour to keep those arrangements in

place when it transferred the excised areas to the

Northern Territory Land Corporation.

78. Mr Wiemers and Mr Fowlestone also speak on 22 February

2008 at 3.54 pm. In that discussion, from Mr Wiemers’

130

independent recollection refreshed by his diary notes,

Mr Fowlestone says to Mr Wiemers:

(a) That Mr Fowlestone had been talking to the

Chairman of the Northern Territory Land

Corporation;

(b) That in his conference with the Chairman of the

Northern Territory Land Corporation it was

discussed that the excised land would become part

of Spirit Hills Pastoral Lease;

(c) In those discussions Mr Fowlestone was informed

that the Northern Territory Land Corporation had

arrangements in place regarding the agistment of

cattle within the existing boundaries of the Spirit

Hills Pastoral Lease with another adjoining

landowner;

(d) That if the excised areas were held by the Northern

Territory Land Corporation and Le gune Land was

still the owner of the station it would need to talk to

the Northern Territory Land Corporation;

(e) The Northern Territory could get an approval within

three weeks or so for the excision to be completed;

131

(f) In the first instance the Northern Territory Land

Corporation was not the owner so Mr Wiemers

should talk to Mr Fowlestone as the Northern

Territory may have an offer at the time that the

perfection of the excision occurred;

(g) That Legune Land’s agistment of cattle over the

excised area should be able to be managed in the

same way as Spirit Hills Station already had in place

with another adjoining land owner to the existing

Spirit Hills Station perpetual pastoral lease

[emphasis added].

[218] In his oral submissions, senior counsel for Legune Land submitted that the

critical evidentiary matters for establishing that the Northern Territory Land

Corporation had acknowledged Legune Land’s interest in Areas 1 and 2

were the draft Ministerial Briefing, which was emailed to Ms Griffiths at

3.05 pm on 22 February 2008 and appears at pages 229 and 230 of trial

exhibit P1, and the discussion that it records with Mr Blake:

The Department of Justice has been consulted about the most

appropriate way to complete the acquisition of the three parcels of

land from Legune Station before the lease is transferred to a new lease. It has been agreed the acquisition could be completed and the

land included in the perpetual pastoral lease with the land currently

contained in Spirit Hills Station without native title being affected.

The land can be held in the perpetual pastoral lease until native title

issues are resolved to enable the land to be used for the purposes it is

being acquired for. The three parcels of land have been surveyed as

NT Portions 5774, 5775 and 5776.

132

The matter has been discussed with Mr Peter Blake, Chairman of the

NTLC, who has no objection to the proposal and indicated that the

land could be managed in the same way land on Spirit Hill Station is,

i.e. land for Ord Stage 2 is subleased to an adjoining pastoral lessee

and land for the Park is managed by Parks and Wildlife.

[219] Senior counsel for Legune Land submitted that the above quote recorded the

conversation between Mr Blake and Mr Fowlestone which occurred before

Mr Fowlestone spoke to Mr Wiemers on 22 February 2008 and that , when

taken in conjunction with Mr Fowlestone’s statement to Mr Wiemers on

22 February 2008 that “Legune Land’s agistment of cattle over the excised

area should be able to be managed in the same way as Spirit Hills already

had in place with another adjoining land owner to the existing Spirit Hills

Pastoral Lease” constitute the necessary acknowledgement by the Northern


[220] In my opinion, none of the matters referred to in par [216] to par [219]

above suggests that Mr Blake or any other member of the Board of the

Northern Territory Land Corporation were told anything at all about any

arrangements between Legune Land and the Northern Territory as to the use

of Areas 1, 2 and 3, let alone acknowledged the existence of any rights

alleged to have been acquired by Legune Land. The two passages of the

draft Ministerial Briefing which are relied on by Legune Land simply state

that the acquisition of Areas 1, 2 and 3 could now be completed and the land

incorporated in Spirit Hills Station and that Mr Blake told Mr Fowlestone

that the land could be managed in the same way as the existing land

comprised in Spirit Hills Station (which was by a grazing licence or

133

sublease to Laverton Nominees Pty Ltd) . There is no suggestion at all that

Legune Land is to given a sublease by the Northern Territory Land

Corporation or that Mr Blake was told anything about Legune Station other

than that advice had been received that the acquisition of the land could now

be completed. Even if Mr Wiemers ’ version of his conversation with

Mr Fowlestone on 22 February 2008 is accepted, the statement attributed to

Mr Fowlestone is nothing more than an expression of his opinion about what

should occur in the future. There is no evidence about what Mr Fowlestone

said to Mr Blake; and, apart from what is contained in the draft Ministerial

Briefing, there is no evidence about what Mr Blake said to Mr Fowlestone.

That is, there is no evidence that Mr Blake said to Mr Fowlestone words to

the effect that Legune Land could continue to agist cattle on Areas 1 and 2

after the land had be incorporated in Spirit Hills Station in the same manner

that the other adjoining pastoralist did.

[221] There was considerable evidence led by the Northern Territory and the

Northern Territory Land Corporation which contradicted the submissions

that were made on behalf of Legune Land. Mr Blake, the Chairman of the

Northern Territory Land Corporation, gave evidence that he was not aware

that Legune Land had any interest in Areas 1 and 2. He recalled receiving a

telephone call in February or early March 2008. He thought it was a woman

who telephoned; however, he had no reason to doubt that the conversation

with Mr Fowlestone occurred. The person, who he spoke to , gave no advice

about any continuing commitment to the owners of Legune Station or any

134

continuing interest by them and there was no discussion on previous or

existing use of the three areas of land proposed to be transferred.

Mr Pinney, who had been the Chief Executive Officer of the Department of

Lands Planning and Environment and a member of the Corporation, gave

evidence that he told the other members of the Board of the Corpo ration that

he did not sign the First Right of Refusal Deed. As to the conversation that

he had with Mr Blake before he spoke to Mr Wiemers on 22 February 2008,

Mr Fowlestone gave evidence that at no time during that discussion with

Mr Blake, or on any other occasion, did he indicate to Mr Blake that Legune

Land made any claim of a right or entitlement in respect of the surrendered

areas, or that there might be circumstances giving rise to the possibility of

such a claim if the areas became vested in the Northern Territory Land

Corporation. In addition, at no time during that discussion with Mr Blake

did Mr Blake suggest to Mr Fowlestone that Legune Land would be granted

a right to use the surrendered areas. Mr Fowlestone understood Mr Blake to

be referring to the possibility that a sublease might be granted to an

adjoining pastoral lessee rather than to Legune Land in particular.

[222] Mr Blake’s evidence was consistent with his conduct which is set out in par

[110] to par [134] above.

[223] Further, Mr Fowlestone gave evidence that during his telephone

conversation with Mr Wiemers on 22 February 2008 he would not have said

anything to Mr Wiemers that indicated Legune Land could have any right to

use the surrendered areas after they were ve sted in the Northern Territory

135

Land Corporation. Nor did he tell Mr Wiemers that Legune Land would be

granted a similar right to the excised land as the other adjoining land owner

had been granted over land within Spirit Hills Station perpetual pastoral

lease. At all times, Mr Fowlestone’s position was that Legune Land would

have to deal with the Northern Territory Land Corporation about any future

use of Areas 1, 2 and 3.

[224] Having reviewed the evidence, I am satisfied that the findings made by

Kelly J at par [50] to par [53] of her Honour’s Reasons for Decision are

correct. This ground of appeal fails to be established.

Concl usi on

[225] The appeal should be dismissed and the parties should be heard further as to

costs.

BLOKLAND J:

[226] I agree with Justice Southwood’s reasons and agree the appeal should be

dismissed.

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Legune Land Pty Ltd v Northern Territory Land Corporation ... · NORTHERN TERRITORY LAND CORPORATION AND ... Northern Territory Land Corporation acknowledge Legune Land’s ... the