Sheahan v Coolah Tourist Park Pty Ltd

1. [1]

   BASTEN AJ: The six plaintiffs appeal from a judgment in the Local Court ordering each to pay the defendant, Coolah Tourist Park Pty Ltd, an amount for site fees for rights of occupancy of caravan sites in a tourist park. Although the magistrate (Brender LCM) found that there was no contractual relationship between the plaintiffs and the defendant, he concluded that the defendant, having taken over ownership and operation of the park from its former operator, Coolah Home Base Pty Ltd (CHB), was entitled to enforce the obligations to pay site fees against the residents under village contracts entered into between the residents and the former operator, pursuant to s 40(1) of the Retirement Villages Act 1999 (NSW).

2. [2]

   The plaintiffs contended that s 40 provides for a village contract to be enforced “against” any operator for the time being of the village, but does not provide a reciprocal right of enforcement against residents. That is the primary issue raised on the appeal, and constitutes a question of law for the purposes of the Local Court Act 2007 (NSW), s 39(1).

3. [3]

   In the course of his reasons, the magistrate rejected a claim by the defendant that the village contracts with the former operator had been novated in favour of the defendant. Further, the magistrate declined to deal with a claim based on “unjust enrichment”, relied on by the defendant as a third basis of entitlement to recover the site fees. The defendant filed a notice of contention seeking to reagitate the issue of novation and assert its claim based on unjust enrichment.

Jurisdictional issues

1. [4]

   Section 39 of the Local Court Act confers a right of appeal to this Court on parties to proceedings before the Local Court sitting in its General Division who are dissatisfied with a judgment or order of the Court, “but only on a question of law”. There is no doubt that the plaintiffs’ appeal, which turns on a proper construction of the Retirement Villages Act, is an appeal only on a question of law. The defendant did not appeal, because it is not dissatisfied with the order made in the Local Court.

2. [5]

   A notice of contention is permitted by the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 50.11, where a defendant wishes to have a judgment affirmed on grounds other than those relied on by the court below. However, three issues arise as to the scope of the jurisdiction of this Court to consider a matter raised by way of contention.

3. [6]

   First, where the matter has been raised before the magistrate and rejected, the rejection may have been on a basis not limited to a question of law. Where the appellant is limited to relying on a question of law, it is unlikely that the Parliament intended that a defendant could seek to defend the decision below on broader grounds. The better view is that that course is not available, and the constraint imposed by s 39(1) should apply equally to a contention, absent a grant of leave pursuant to s 40(1), if that provision can be relied on by the party responding to the appeal. Whether it can seek to do so in circumstances where the appellant does not seek to rely upon that provision need not be addressed in this case because neither party sought such leave.

4. [7]

   Secondly, if the contention relies on a ground not addressed by the magistrate it may require findings of fact not made or conceded below. Similar reasoning would suggest that this Court does not have jurisdiction to make additional findings of fact. Authority supporting these conclusions will be addressed below.

5. [8]

   Thirdly, there is a general issue as to the nature of the appeal in this Court, which may affect the answers to the first two issues. It is convenient to commence with this issue, which will lead into the other issues.

6. [9]

   An appeal to this Court is governed by Pt 50 of the UCPR. The conduct of an appeal is governed by r 50.16:

7. [10]

   This provision, providing for an appeal by way of rehearing with power to make findings of fact, is inconsistent with the limited nature of the appeal provided by s 39(1) of the Local Court Act. Rule 50.16 mirrors s 75A(5)-(10) of the Supreme Court Act 1970 (NSW), which also applies generally to appeals to the Court (as well as to appeals in the Court). However, s 75A(4) states that “[t]his section has effect subject to any Act”, thus giving primacy to any statutory provision limiting an appeal in a manner inconsistent with s 75A. Rule 50.16 contains no express provision to that effect, but it should be read down to avoid such inconsistency. That is not achieved by reliance on so much of the empowering provision in s 9 of the Civil Procedure Act 2005 (NSW), which requires that the rules not be inconsistent with that Act. However, in its broadest aspect, the rule-making power in s 9 covers matters that are “necessary or convenient to be prescribed by rules for carrying out or giving effect to this Act”. The subject-matter of the Act is procedure governing the exercise of civil jurisdiction by the courts listed in Schedule 1 to the Act; it is not the conferral of jurisdiction. Accordingly, the UCPR should not be read as expanding the jurisdiction of any court.

8. [11]

   This reasoning conforms to that of Beech-Jones J, reaching the same conclusion, in Ken Wolf Real Estate Pty Ltd v O'Halloran. [1] It is also consistent with the general law principle that delegated legislation does not override the general law or other statute law, including earlier statutes, at least absent express reference. [2]

9. [12]

   In that case, Beech-Jones J also addressed and rejected an argument that s 75A itself permitted fact-finding once error of law had been established, in order to decide on appropriate relief. That issue is material here because, if correct, it could support a broader exercise in determining a contention than in determining the ground of the appeal. The reasoning was as follows: [3]

10. [13]

    In any event, French CJ limited his suggestion to the drawing of inferences based on primary factual findings made by the court or tribunal in the decision under appeal, or based on matters not in dispute. The functional justification for such an approach no doubt reflects the overriding guiding principle of just, quick and cheap resolution of the real issues in dispute, [10] but that principle is not thought to expand the jurisdiction or powers available to a court, but merely to guide their exercise. The result may need to be remittal, as Beech-Jones J concluded in Ken Wolf, in circumstances not dissimilar to the present case:

11. [14]

    There is a further jurisdictional issue raised by the contention based on unjust enrichment. The issue concerns the jurisdiction of the Local Court, rather than this Court. If the Local Court does not have jurisdiction to consider such a claim, this Court would not have jurisdiction to consider such a claim on an appeal from the Local Court. (This Court could, of course, set aside a judgment of the Local Court based on a claim which was outside its jurisdiction.) The relevant jurisdiction of the Local Court was that conferred by s 30 of the Local Court Act, which relevantly provides:

12. [15]

    The term “money claim” is defined in s 29A as meaning “a claim for recovery of any debt, demand or damages (whether liquidated or unliquidated)”. Limited attention was paid on this appeal to the nature of that language or the limits of the Local Court’s jurisdiction. However, it may be accepted for present purposes that the Local Court has jurisdiction to deal with the claim in quantum meruit by way of payment for services rendered, although, for reasons explained below, it is not necessary to determine that question.

13. [16]

    The reference to “unjust enrichment” in the notice of contention suggested that the claim made was equitable. This not being a claim for restitution of moneys had and received (a common law count) the issue cannot be disposed of on that basis. However, authority establishes that the statutory phrase is used to describe the nature of the relief and not the nature of the cause of action. Indeed, the limit to the jurisdiction expressed in monetary terms tends to confirm that approach. On that approach, the Local Court does not have jurisdiction to grant equitable relief in the nature of declarations or injunctions, but could award compensation or damages. Monetary relief could also arise as a result of a statutory cause of action.

14. [17]

    In Carricks Ltd v Pizzaro [11] there was discussion of the right of an employer to recover from a worker overpaid workers’ compensation. The right to compensation was then determined in the Compensation Court, but that Court did not have jurisdiction to order restitution. The question was whether the Local Court had such a jurisdiction. If it did, the entitlement arose under a statute and no issue of a cause of action in equity arose. Nevertheless, Cole JA expressed his reasons for upholding the jurisdiction of the Local Court in the following terms: [12]

15. [18]

    In Melesco Manufacturing Pty Ltd v Thompson, [14] a similar conclusion was reached by Sheller JA and Powell JA. Sheller JA recounted the reasoning of Cole JA in Carricks Ltd, set out above, and expressed his entire agreement. [15] However, he then referred to the claim which Melesco brought in a Local Court as one “for moneys recoverable at common law”.

16. [19]

    Despite the reference in Cole JA’s reasons to a passage in the judgment of High Court in David Securities, there was no suggestion in that passage that an equitable claim was at stake. The only reference in David Securities to restitution being granted as an equitable remedy for mistake of law or fact was in an extract from the American Law Institute’s Restatement of the Law of Restitution. [16]

17. [20]

    There can be no doubt that the Local Court has no power to grant equitable remedies, such as declarations, injunctions or accounts. Such relief would not fall within the phrase “debt, demand or damage (whether liquidated or unliquidated)” in the definition of “money claim”. What is less clear is whether that language encompasses claims for equitable compensation for breach of a purely equitable application, such as a remedy for breach of trust or for breach of a fiduciary obligation. [17] That seems implausible. A separate question arises with respect to claims for damages which may be available in lieu of other equitable relief. [18] The fact that Lord Cairns’ Act of 1858 is now to be found in s 68 of the Supreme Court Act 1970 (NSW) may suggest that Local Courts do not have power to grant damages in lieu of other equitable relief.

18. [21]

    The terminology used in the Local Court Act, was to be found in s 12(1) of the Courts of Petty Sessions (Civil Claims) Act 1970 (NSW) in force at the time of cases referred to above. However, the history is somewhat confused because that language was also employed in earlier legislation, including the Small Debts Recovery Act 1912 (NSW) [19] which, in s 7(1) conferred jurisdiction on courts of petty sessions:

19. [22]

    Both the history and construction of provisions directing a court to act “according to equity and good conscience” were explored in Daley v SAS Trustee Corporation [20] in considering the scope of s 142J of the District Court Act 1973 (NSW). These matters need not be reagitated here. There may, however, be a constraint implicit in the reference to “actions”. In Vezitis v McGeechan, [21] Taylor J held that an application for a declaration did not fall within a limitation provision applying to an “action or claim for damages”.

20. [23]

    The reason why this issue might have required resolution, had it not been necessary to dismiss the contention on other grounds, arises from a difficulty in characterising the cause of action on which the defendant sought to rely. It was not a money claim in the sense of a claim for money had and received to which it was entitled by way of restitution, which would be characterised as a cause of action at common law, and clearly within the jurisdiction of the Local Court. Rather, the claim was for some form of compensation from the residents on the basis that they had enjoyed, gratuitously, rights of exclusive occupation of allotments in circumstances where the right of occupation was not intended to be available gratuitously. If such a claim were available, it might well found in equity and not be justiciable in a Local Court.

Background circumstances

1. [24]

   In early 2012, Janet Kelly and her partner, Graeme Booker, decided to set up a business of providing a “home base” for itinerant caravaners, sometimes referred to as “grey nomads”. The site of the business was to be Coolah in central New South Wales. They incorporated a company, Coolah Home Base Pty Ltd (“CHB”) which purchased a property in Cunningham Street, known as the Coolah Caravan Park (“the Park”). The constitution of the company provided that class A shareholders would have a right to exclusive occupation of a specific site or allotment in the Park, subject to payment of site fees and levies. [22] (Two ordinary shares were also issued when the company was registered, and held by the promotors. [23] ) Further, in the event of the sale of the whole of the land, the class A shareholders were entitled to share in the proceeds, subject to apportionment according to the size of their respective allotments.

2. [25]

   Schedule 5 to the constitution was headed “By-laws and shareholder/residential site agreement”. CHB was identified as the owner of the Park, part of which was used as Coolah Home Base and part of which was a standard caravan park for tourists. Relevantly for present purposes, the bylaws provided:

3. [26]

   Site fees were to be paid weekly in advance, and “the shareholder site fee is payable for occupation of their purchased allotment only”.

4. [27]

   In late 2019 CHB entered a deed of company arrangement (DOCA) and administrators were appointed. The land owned by CHB was sold for $430,000 to a new company, Coolah Tourist Park Pty Ltd, the directors of which were Ms Kelly and Mr Booker. There were a number of special provisions attached to the standard clauses of the contract of sale. Importantly, cl 51 contained a number of acknowledgments by the purchaser (i) as to the current operation of the Park by the vendor and the use of the property as a “home base”; (ii) that the occupants were shareholders of the vendor; (iii) that the shareholders had constructed or placed improvements on their allotments, in which the vendor had no interest; and (iv) that the vendor was the owner of the common property. Clause 52 read as follows:

5. [28]

   The date for completion was 18 December 2019. The special conditions included indemnities given by the purchaser to the deed administrators in relation to any claims arising from “a Shareholder’s right and or entitlement to exclusively use of [sic] Allotments”: cl 33.3.2(i) .

6. [29]

   There has been extensive litigation between the shareholders of CBH and occupants of the allotments over the last 6 years, including proceedings in this Court and in the Civil and Administrative Tribunal (NCAT). Those proceedings included an appeal to the Court of Appeal. However, none of those proceedings determined the present dispute, nor did the parties consider that they bore upon the resolution of the present dispute in any material way. There is, therefore, no need to address those proceedings, decisions or judgments further.

7. [30]

   Relevantly, for present purposes, the plaintiffs in this Court were the owners of six allotments and were (and continue to be) class A shareholders of CBH. Each of the plaintiffs had entered into a share purchase agreement in respect of an allotment when CBH was the owner of the property, during a period from March 2012 to July 2014. They did not enter into leases with the purchaser, Coolah Tourist Park. The present proceedings were commenced in the Local Court by Coolah Tourist Park, seeking judgments against each of the plaintiffs for unpaid “shareholder’s site fees”, together with interest. Each was ordered to pay a specified amount by way of site fees, being an amount which fell short of the amount calculated by the Coolah Tourist Park. (The total amount of the claims (without interest and legal fees) was in the order of $47,000.) There is no challenge to the quantifications.

8. [31]

   The primary case pleaded by Coolah Tourist Park was that the terms of the shareholders’ agreements provided in schedule 5 to CBH’s constitution were enforceable as between Coolah Tourist Park and the plaintiffs.

Judgment of Local Court

1. [32]

   The hearing in the Local Court ran for two days on 11 April and 20 May 2024, with written submissions filed by the principal parties. Magistrate Brender delivered his decision on 9 August 2024, orders being entered on 14 August 2024.

2. [33]

   There was reference in the judgment to payments being made to a management company, Home Base Solutions Pty Ltd. Although the occupants on various occasions referred to it as the “operator” of the Park, it was in fact a separate company, operating under an agreement with CHB as the manager and as the entity to which site fees were paid. According to the liquidator, it was controlled by the same two directors as CHB, namely Ms Kelly and Mr Booker. [24] The liquidator recorded the management agreement having been dated 22 April 2012, noting advice from Ms Kelly that Home Base Solutions had ceased trading on 17 December 2019. It had no contractual relationship with the plaintiffs at any time.

3. [34]

   An earlier dispute, resolved in the appeal panel of NCAT, was whether the Park, insofar as it provided allotments to the shareholders of CHB, was a “retirement village” within the terms of the Retirement Village Act. An appeal panel determined that it was. [25]

4. [35]

   The magistrate identified the principal issue before him in the following terms:

5. [36]

   The contractual entitlement of Coolah Tourist Park to payment of the fees having been rejected, the magistrate turned to the operation of s 40 of the Retirement Villages Act, which states:

6. [37]

   The magistrate upheld the submission of Coolah Tourist Park. The reasoning, in full, was as follows:

7. [38]

   Having determined the case in favour of Coolah Tourist Park on that basis, the magistrate referred to the question of “unjust enrichment” and observed that it was “unnecessary to decide that issue as I have found a contractual entitlement”: at [51].

Appeal ground: statutory entitlement

1. [39]

   Despite referring at [51] to having found a “contractual entitlement”, the magistrate in fact expressly rejected the existence of a contractual entitlement, and was correct to do so. What he in fact upheld was an entitlement arising under s 40 of the Retirement Villages Act.

2. [40]

   However, the reasoning in relation to s 40(1) conferred on it an expanded operation inconsistent with the express language of the provision. The word “against” does not, in its ordinary meaning, mean “in favour of or against”. Two observations may be made in relation to the magistrate’s approach. First, there is nothing in the statutory context, including surrounding provisions, to warrant the conclusion that the one-way provision was meant to be a two-way provision. To rewrite a statute in this manner requires a strong justification based either upon a patently absurd result or upon an apparent clerical error. The Interpretation Act 1987 (NSW) does not support such an approach. The Act permits the reading of words other than in accordance with their ordinary meaning in s 34(1), which provides:

3. [41]

   The defendant’s purpose would not have been served by relying upon extrinsic material to confirm the ordinary meaning conveyed by the text, within par (a). As the language is not ambiguous or obscure, par (b)(i) would not have been relied upon. One is left with par (b)(ii), namely that the ordinary meaning leads to a result that is “manifestly absurd or is unreasonable”. In fact there was no attempt to support the reasoning in the Local Court by reference to any extrinsic material. Even on the assumption that s 34(1) is permissive and does not limit the scope of legitimate reliance on extrinsic material, it does not assist the defendant.

4. [42]

   Secondly, the first sentence of [49] set out above referred to the “particular mischief” to which s 40(1) was directed. That invokes the concept of statutory purpose, which requires identification of a “purpose or object underlying the Act”, determination of which is itself an exercise in statutory construction. That was not an exercise undertaken in the Local Court but is required by s 33 of the Interpretation Act, which states:

5. [43]

   The reasoning of the magistrate appeared to be based solely on the proposition that the ordinary meaning of the statute created an entitlement in residents for the provision of services for which they did not have to pay. However, it is clear from the Retirement Villages Act, read as a whole, that its singular purpose is to provide protection to residents. It will be appropriate to expand on that proposition shortly.

6. [44]

   In Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation, [27] Mason and Wilson JJ noted that a judge would apply the ordinary meaning of the text if there was no “reasonable alternative construction … because (a) the language is intractable or (b) although the language is not intractable, the operation of the statute, read literally, is not such as to indicate that it could not have been intended by the legislature”. [28] The joint reasons continued:

7. [45]

   The Retirement Villages Act states its primary objects in the following terms:

8. [46]

   The Act is evidently intended to be protective of the interests of “retired persons” occupying residential premises in a retirement village, under a contract. [30] A “residence contract”, is a contract which gives rise to a “residence right”, and includes a “right to occupy residential premises in a retirement village, being a right arising from a contract … under which the person purchased shares entitling the person to occupy the residential premises”. [31]

9. [47]

   The application of the Act is provided in s 11:

10. [48]

    The operation and management of retirement villages is highly regulated, not to protect owners and operators, but to protect the interests of vulnerable retired persons; evidently, owners and operators were expected to be able to look after their own interests. Thus, pre-contract representations and information about retirement villages are regulated in Pt 3; the formal content of village contracts in Pt 5; the general management of retirement villages through village rules in Pt 6 (which sets out particular rights of residents); the financial management of retirement villages in Pt 7 (including constraints on the variation of recurrent charges) and the termination of residence contracts in Pt 9.

11. [49]

    The Act provides (in Pt 6, Div 6) for the appointment of an administrator of a retirement village to exercise the functions of the operator of the retirement village. The administrator is given wide powers, including a power to vary village contracts: s 87B. The Act also provides for the circumstances in which a receiver or a receiver and manager is appointed to the operator of a retirement village, and requires that the person so appointed must “comply with the operator’s obligations under this Act as if that person were the operator”: s 89(1).

12. [50]

    Without seeking to deal comprehensively with the Retirement Villages Act as a whole, it must be accepted that the coverage is extensive. However, it does not purport to be a code, and there will be circumstances which it does not address. Nevertheless, to conclude that some particular provision is deficient in that it could have not been intended to operate in precisely the way in which the language suggests is not a conclusion to be reached lightly. Nor can it be assumed that conferral of a right enforceable “against” another party is intended to pick up the whole of a contract and make it enforceable by all parties.

13. [51]

    There are numerous sections which are clearly not intended to operate in that manner. For example, s 26 provides that, unless in writing, a village contract is not enforceable “against” a resident of the village. Part 10A provides protection for residents who have paid an “ingoing” contribution, a term defined in s 6. Section 182B creates a charge over land within the retirement village to secure a refund under the contract. That charge is said to be “binding on, and is enforceable against, the owner of the land from time to time”: s 182D. Section 197B confers power to make regulations dealing with the provision of “relevant village information”, a term including “any enforcement or disciplinary action taken against the operator of a retirement village”. Section 198 protects residents of retirement villages from liability to pay legal costs incurred by the operator, with exceptions, including where costs are awarded “in favour of the operator and against a resident”. In all these cases, the term “against” is used to identify the party on whom liability is imposed or against whom the proceeding may be taken: in no case could it be substituted by the phrase “against or in favour of”. Section 40(1) is not exceptional, and the inference that the drafter failed to use different language through oversight is not available. Accordingly, the magistrate’s conclusion that the new operator had a right of action against a resident under a contract to which it was not a party was an error. The error arising from an incorrect construction of a statutory provision is an error of law and the plaintiffs are entitled to succeed in their appeal.

Notice of contention

1. [52]

   As noted above, the magistrate expressly rejected the proposition that the residence contracts had been novated. Coolah Tourist Park challenged that finding, contending that there was a direct contractual relationship between the residents and it, because the residence contracts had been novated. The result was that the residents were entitled to continue to occupy their allotments but that, as the new operator, Coolah Tourist Park, was entitled to charge site fees for as long as the residents chose to continue to reside at the property.

2. [53]

   The defendant accepted the statement in ALH Group Property Holdings Pty Ltd v Chief Commissioner of State Revenue [32] that a novation “refers to a circumstance where new contract takes the place of the old”. However, there was more to it than that, as appears from the whole of the paragraph from which the first sentence has been taken, which reads:

3. [54]

   ALH Group and a later case referred to by the parties in which the Court of Appeal applied the principles in ALH Group, Fu Tian Fortune Pty Ltd v Park Cho Pty Ltd, [34] were cases involving the substitution of a purchaser under a contract for the sale of land. This case involved a sale of land, but the supposed substitution occurred not in the contract of sale, but in the contract between the vendor and the residents. Translated to that circumstance, it would not be sufficient to describe the purchaser (Coolah Tourist Park) as undertaking the obligations of the vendor (CHB) under the contracts with the residents. Rather, the obligations of both CHB and the residents must have been discharged and new residence contracts entered into between the residents and Coolah Tourist Park.

4. [55]

   As the defendant accepted, whether there had been a tri-partite novation depended on the intention of the parties which, it was submitted could be inferred from conduct. Reliance upon inference from conduct was necessary, there being no documented contract between the residents and the new operator and there being no statement as between the new operator and CHB demonstrating such an intention.

5. [56]

   The defendant relied upon three factors, the first being that CHB ceased to own the property and operate the Park “in late 2018 or early 2020”. It was further stated that the residents had not made any payment to CHB in relation to the site fees since late 2019, nor had CHB made any claim for such payment.

6. [57]

   Secondly, it was submitted that CHB had sold its business, being the administration and management of the plaintiffs’ allotments, “as part of the sale of the land to the defendant”. That was said to be inferred from the fact that the sale was expressed to be “subject to the plaintiffs’ existing rights to occupy” the allotments and CHB’s disclaimer of any ongoing responsibility or liability in relation to residence rights.

7. [58]

   Thirdly, the defendant relied on the fact that the plaintiffs had continued to occupy and enjoy exclusive rights to their allotments since the purchase of the property by the defendant. The residents had also accepted benefits of the services performed by the defendant and some had made payments of site fees to the defendant from time to time, but not all site fees claimed to be owing.

8. [59]

   These submissions were bold but untenable, for a number of reasons.

9. [60]

   First, the submissions paid no regard to the statutory scheme of the Retirement Villages Act. Thus, there was no attempt to determine whether the residence contracts between residents and CHB had been terminated in accordance with Pt 9. Assuming that they had been terminated in accordance with the Act, there was no new contract in writing and hence no contract enforceable by the operator against the residents, pursuant to s 26. Even if all other matters fell away, the defendant could have not sued on a new contract resulting from a novation.

10. [61]

    Secondly, the contract of sale between CHB and Coolah Tourist Park did not demonstrate an intention to novate the residence contracts, but indeed quite the contrary. Thus, the contract of sale expressly recognised the rights of the residents (referred to as “shareholders’ rights”) to exclusive use of the allotments. The contract of sale expressly excluded any liability of the administrators to the purchaser arising out or in connection with the shareholders rights. [35] The contract further dealt with improvements and shareholders’ rights in the following provisions:

11. [62]

    The residents were not party to this contract. Further, it is common ground that none of the plaintiffs entered into a “residential site agreement, including the conditions disclosed in the form attached hereto”, pursuant to cl 52.2. Further, cl 52 acknowledged (i) the existing rights of the residents (ii) the fact that there were no new contracts in place and (iii) that the residents might not agree to the new proposed agreements, against which eventuality, the deed administrators obtained an indemnity from the purchaser (the defendant).

12. [63]

    If it were open to this Court on the appeal to make a finding of fact with respect to the intention of the parties, which, in my view, it is not, the evidence relied upon could not support a finding of intention on the part of the residents to novate the existing agreement. Arguably, that is an available conclusion because the finding that an essential fact is not open on the evidence is a finding of law. In any event, ground 1 in the notice of contention must be rejected.

13. [64]

    The second ground in the notice of contention sought to rely upon a case presented in the Local Court but not determined by the magistrate. As will be explained, it requires findings of fact which the magistrate did not make and which, for reasons noted above, are not within the jurisdiction of this Court determining an appeal on the question of law. The ground was expressed on the following terms in the notice of contention:

14. [65]

    There are two concepts invoked in this ground, namely “unjust enrichment” and “restitution”, the latter being a form of relief dependent on establishing the former.

15. [66]

    As the residents submitted, this aspect of the defendant’s case has similarities with the facts in Lumbers v W Cook Builders Pty Ltd (in liq). [36] That case involved a construction of a house for Messrs Lumbers. They entered into an oral agreement with W Cook & Sons Pty Ltd (referred to as “Sons”). Without the knowledge of the Lumbers, the work in fact carried out on the house (including the engagement of subcontractors and supervision of their work) was performed by W Cook Builders Pty Ltd (in liq) (referred to as “Builders”). During the course of the construction, progress payments were made to Sons, as requested, which Sons on-paid to Builders. The dispute related to a final payment which the Lumbers had not made. The contract was not terminated, nor novated. There was a claim based on assignment, but it was dismissed by the courts below and not pursued in the High Court.

16. [67]

    One issue in Lumbers was whether Builders could bring a claim in quantum meruit on the authority of Pavey & Matthews Pty Ltd v Paul. [37] In Pavey & Matthews the claim based on quantum meruit was necessary because the contractual arrangement was unenforceable by the builder, not being in writing. A claim in quantum meruit was held to be available, consistently with the statutory prohibition on enforcing the contract. Gleeson CJ dealt in Lumbers with a claim in quantum meruit in the following terms:

17. [68]

    The facts in the present case differ from those in Lumbers: it will be necessary to say how more precisely in due course. It may be accepted that the residents were conversant with the change in ownership of the land, and sought to assert their rights of occupation, which differs from the position of the Lumbers who did not know of, nor acquiesce in the provision of services by Builders. Nevertheless, at one level the defendant’s case is that the residents have obtained an ongoing benefit which was not intended to be provided gratuitously.

18. [69]

    One other common factor was the possibility that the Lumbers remained indebted to Sons for the balance of the costs of constructions. [39] It is true that the residents in the present case have taken different stances at different times, but in this Court they accepted that they had continuing obligations to CHB, which was not a party to the litigation (just as Sons was not a party to the Lumbers’ litigation).

19. [70]

    The restitutionary claim in Lumbers failed, for reasons more fully explained in the joint judgment of Gummow, Hayne, Crennan and Kiefel JJ. The joint reasons noted that in the absence of any proof of a request by the Lumbers to Builders, the matter proceeded on the basis that “acceptance of a benefit, without a request, would be sufficient, at least in this case, to found an action by Builders for work and labour done or money paid”. [40] Pavey & Matthews was relied upon for the proposition that “the right to recover on a quantum meruit does not depend on the existence of an implied contract but on a claim to restitution or one based on unjust enrichment”. [41]

20. [71]

    Having observed that the issue in Pavey & Matthews was whether such a claim was defeated by a requirement that the agreement be in writing, the joint reasons continued:

21. [72]

    In the final analysis, Builders reliance on unjust enrichment required the Court to disregard the existence of the contractual relationship with its allocation of risks and obligations. The joint reasons identified the position accepted by Builders as sufficient, namely that it did the work and, if it were not paid for the work, the Lumbers would obtain the benefit of the work without paying for it. In rejecting that argument, two passages in the reasons are significant:

22. [73]

    The defendant relied upon an entitlement flowing from its “mistake”. (This reflected the approach taken in the Local Court.) The defendant’s written submissions in this Court stated:

23. [74]

    The concept of “mistake” as a basis for a claim for restitution is misconceived. First, the magistrate made no finding as to a “mistake”. Secondly, given the agreement entered into between the defendant and CHB, including the critical terms set out above, such a finding was simply not open. The defendant “knew” and expressly agreed in writing that it would have to enter into new agreements with the residents. It was not able to do that. There was no evidence that the defendant “believed” that if it failed to enter into new agreements, the old agreements would simply lapse. Such a belief would not have been consistent with its contractual undertaking to CHB; it would have been based upon a legal misconception. The factual premise for the claim was not open on the evidence.

24. [75]

    Ground 2 in the notice of contention must be rejected.

Conclusions

1. [76]

   For the reasons set out above, the appeal must be allowed and the judgment in the Local Court set aside. The defendant must pay the plaintiffs’ costs in this Court and in the Local Court.

2. [77]

   This result will probably not quell the disputes between the residents and the present operator of the Park. The history of unsuccessful attempts to resolve the disputes suggests that the parties have not been well served by their legal advice. The residents remain in occupation of their allotments subject to statutory protections. Subject to uncertainty as to the party entitled to recover any occupation fees, the residence contracts continue in force. It might be thought self-evident that the final resolution of the disputes is most likely to be achieved through a mediation involving a mediator familiar with the operation of the Retirement Villages Act.

3. [78]

   The Court makes the following orders:

   1. (1)

      Allow the appeal and set aside the judgment and orders in the Local Court entered on 14 August 2024.

   2. (2)

      Dismiss the proceedings commenced in the Local Court by the defendant.

   3. (3)

      Order that the defendant pay the plaintiffs’ costs in the Local Court and in this Court.