Mehmet v Carter

BATHURST CJ: I have had the advantage of reading the judgment of the President in draft. Her Honour’s judgment sets out the background facts and relevant legislation and the reasoning of the primary judge in terms which I gratefully adopt. Her Honour, with respect, correctly notes that the appeal, as ultimately argued, only involves one issue, namely, whether the primary judge erred in concluding that the alleged Aboriginal objects were not capable of constituting a defect in title. This issue arose under Question 1 of the separate questions.

There are a number of powerful reasons why Question 1 should not have been answered. First, the question is both vague and hypothetical. It is vague in its reference to the alleged Aboriginal objects. It may be assumed that the objects which were identified in the agreed facts are the alleged objects, as set out in the judgment of Beazley P at [33] below. In these circumstances, the question is presumably based on the assumption that all the alleged items are present on the land. However, the descriptions of some of the items themselves are cast in extremely wide terms: for example, “lots of other burials/remains”. The answer to the question may have no relevance depending on which, if any, of the alleged objects are found ultimately to exist on the land. For the same reason, the question is hypothetical.

Further, any utility in answering the question may depend upon the manner in which the case is ultimately conducted at trial. In the letter purporting to terminate the contract, which is referred to in the judgment of Beazley P at [51] below, the solicitors for the appellants stated that, in terminating, they were relying on “all grounds, whether or not previously disclosed and whether known or unknown”.

In these circumstances, it is entirely unclear whether the appellants were seeking to terminate because of a failure to show good title, or because of repudiatory conduct by the respondent in failing to deal with the appellants’ objections and insisting on completion, in circumstances which demonstrated an intention either not to be bound by the contract or an intention to fulfil it only in a manner inconsistent with their obligations: Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 at 634, 647, 657-658; [1989] HCA 23.

If the appellants are relying on a defect in title, then the question arises whether they were entitled to rescind irrespective of the magnitude of the defect, or because the case fell within the principle in Flight v Booth (1834) 1 Bing NC 370; 131 ER 1160 and the other cases to which Beazley P refers in her judgment. In that context, it must be remembered that, at common law, a purchaser was entitled to rescind for any defect in title, however trivial, although the harshness of this principle was ameliorated in equity, which granted the vendors specific performance where the defect was not substantial, subject to the payment of compensation: see the discussion by Menzies J in Travinto Nominees Pty Ltd v Vlattas (1973) 129 CLR 1 at 27-28; [1973] HCA 14. In the present case, however, no question of specific performance arises.

While it is true that cl 6 of the contract did not state expressly that no error or misdescription, whether as to property, title, or otherwise, could “annul the sale”, as did cl 7 of the “General Form of Conditions of Sale of Land, 1988 edition” considered in Batey v Gifford (1997) 42 NSWLR 710, it may well be arguable that cl 6 has the same effect: see Christopher Rossiter, Principles of Land Contracts and Options in Australia (LexisNexis Butterworths, 2003) at 324 [8.78] ff. If that is correct, then the nature of any defect ultimately identified will be of critical importance.

Further, the answer to Question 1, whether it is in the affirmative or in the negative, will not finally determine the proceedings. That is shown from paragraph [3] of the “agreed outcomes” set out in the judgment of Beazley P at [16] below, which provides for the proceedings to continue irrespective of the answer to Question 1.

Finally, the considerations referred to by Kirby and Callinan JJ, with whom Gaudron J agreed on this point, in Tepko Pty Ltd v Water Board (2001) 206 CLR 1; [2001] HCA 19 at [168]-[171] tell powerfully against the determination of this issue by way of a separate question.

For these reasons, it was not appropriate for the primary judge to answer Question 1. The appeal should be allowed.

In reaching this view, it should not be taken that I disagree with the analysis of Beazley P. It is clear from the cases to which Beazley P has referred that a defect in title is not limited to a failure to convey something which was contracted to be conveyed: see also the cases summarised by Professor Butt in The Standard Contract for Sale of Land in New South Wales (Law Book Co, 1985) at 383-386.

In my opinion, Borda v Burgess [2003] NSWSC 1171; (2003) 11 BPR 21,203 does not decide to the contrary. The issue in that case was whether an undisclosed mining lease for coal gave a right to the purchaser to terminate the contract. Provisions in the contract expressly excluded a right to rescind on this ground. It was in that context that Young CJ in Eq held that there was no contract to sell the coal. His Honour also rejected the claim that there was a defect in title because the lessee had a statutory right to enter the premises conferred by s 164 of the Mining Act 1992 (NSW), on the basis that no such right existed at the time of the contract, since the preconditions under the relevant regulations for the existence of such a right had not been fulfilled: at [23]-[33]. His Honour was not seeking to lay down any general principle as to what constituted a defect in title.

In the result, I would make the following orders:

BEAZLEY P: On 6 July 2015, the respondents, the vendors, and the appellants, the purchasers, entered into a contract for the sale of certain land and a business near Byron Bay for a purchase price of $3 million. On 10 July 2015, the appellants were advised of a report which referred to the Aboriginal significance of the land the subject of the sale, being the burial site of two Aboriginal elders, Harry and Clara Bray. Aboriginal remains fall within the definition of “Aboriginal object” under the National Parks and Wildlife Act 1974 (NSW). The possible existence of these remains gave rise to a dispute between the parties as to whether there were Aboriginal objects in or on the land and, if so, whether their existence constituted a defect in title to the land.

The appellants alleged that the existence of Aboriginal objects on the land constituted a defect in title and requested that the respondents remedy the defect before settlement. The respondents denied the existence of any Aboriginal objects on the land and, in any event, denied that the existence of such objects on the land constituted a defect in title. After the completion date passed, the respondents issued notices to complete and claimed interest on the purchase price. The appellants purported to terminate the contract when the respondents refused to withdraw their claim for interest.

On 16 December 2016, the Supreme Court made orders by consent for the separate determination of the following questions:

The matter proceeded before the primary judge, Darke J, on the basis of a schedule of agreed facts and on the assumption that there were Aboriginal objects on the land. The matter also proceeded on a number of agreed outcomes depending upon the answers to the separate questions. Those outcomes were as follows:

The primary judge held that questions 1 and 4 should be answered “No”. His Honour held that questions 2 and 3 did not arise: Mehmet v Carter [2017] NSWSC 1067.

The appellants seek leave to appeal from the primary judge’s decision, pursuant to the Supreme Court Act 1970 (NSW), s 103. The matter has proceeded on the basis of a concurrent hearing of the appellants’ summons seeking leave to appeal and, if leave be granted, the appeal.

Leave to appeal should be granted. There are considerable difficulties with the separate questions as framed, not the least of which is that question 1 is strictly hypothetical, in that it is not known whether there are Aboriginal objects on the land. However, as the matter was fully argued as if on appeal, I consider that it is appropriate to grant leave to appeal. I will turn later to the question whether this Court should determine the answers to the separate questions in circumstances where the essential matter in issue, as formulated in question 1, is hypothetical.

The issues raised by the appellants’ notice of appeal were as follows:

The appellants contended that questions 1 and 4 of the separate questions should have been answered “Yes”, and that questions 2 and 3 should be remitted to the Supreme Court to be answered in accordance with question 1 and the reasons of this Court.

It should be noted that on the hearing of the appeal, it was suggested that given the agreed outcomes, the primary judge should not have answered question 4. This would appear to be so. Accordingly, it is only necessary to consider appeal grounds 1 and 2, which challenge his Honour’s determination of separate question 1.

The respondents filed a notice of contention which raised a third issue, namely, whether the appellants were entitled to terminate the contract on the basis of any established Aboriginal objects on the land. They contended that the appellants were not entitled to do so by reason of a number of special conditions of the contract.

The contract for sale identified the subject of the sale as follows:

The contract provided that:

“Property” was defined in cl 1 to mean “the land, the improvements, all fixtures and the inclusions, but not the exclusions”. The improvements consisted of: a house; nine cabins, a cabana, a shed, a swimming pool and an office. The inclusions were identified by reference to an inventory which was attached to the contract for the sale of the business, the Byron Bay Rainforest Resort. The only exclusion specified was the “Furniture from Managers Home”.

Clause 6 of the contract provided:

Clause 10.2 provided:

As noted earlier, the contract date was 6 July 2015. The completion date was the “30th day after the contract date”, that is, 5 August 2015. Clause 15 of the contract provided:

Clause 16 provided, relevantly:

Clause 29 provided, relevantly:

The contract was supplemented by special conditions, which were stipulated to prevail in the event of a conflict with the printed terms. Relevantly, they provided as follows:

The hearing of the separate questions proceeded before the primary judge on the basis of a schedule of agreed facts, as follows:

The primary judge noted, at [28], that it also appeared from the pleadings that the appellants alleged “that the rock and plaque … is itself an Aboriginal object located within the land the subject of the sale”.

On 28 July 2015, the appellants wrote as follows to the respondents, claiming that the existence of the Aboriginal objects in or on the land constituted a defect in title:

The respondents replied in a letter sent by facsimile to the appellants on 5 August 2015 at 9:34 am (which had previously been sent to an incorrect facsimile address) as follows:

Settlement did not take place on 5 August 2015.

On 17 August 2015, the appellants wrote to the respondents again, claiming that there was a defect in title on the following bases:

The appellants also requested the removal of the defect in title, “so that good title can be provided on settlement”.

On 20 August 2015, the respondents requested further details of the appellants’ claim, including evidence of the continuing existence of the remains of Harry and Clara Bray on the land, and an explanation of how the remains, if any, affected the title to the land as distinct from the quality of the land.

The appellants responded on 27 August 2015, addressing the respondents’ enquiries and noting that it may be necessary to approach the court for declaratory relief. Later that day, the respondents served on the appellants a notice to complete, which called for completion to take place by 2 pm on 10 September 2015. The respondents also attached draft settlement figures, which included an amount of interest calculated from 5 August 2015 to 10 September 2015 at a rate of 10 per cent per annum.

On 28 August 2015, the respondents sent further correspondence to the appellants, denying the existence of any Aboriginal objects in or on the land and stating that the notice to complete would not be withdrawn. In response, the appellants, in a letter from their solicitors to the respondents’ solicitors dated 2 September 2015, contended that the respondents had proceeded on the wrong assumption that the onus rested on the appellants to disprove the respondents’ title. Rather, they stated “it is the obligation of the vendors to first show and then prove, by sufficient evidence, and prior to completion, a good title to the land promised to be sold”. The letter referred to the respondents’ obligations under the contract for sale, stating as follows:

The letter concluded:

Between 8 and 10 September 2015, the parties exchanged further correspondence concerning the alleged defect in title and the settlement scheduled for 10 September 2015. The respondents provided revised settlement figures, which again included an amount of interest calculated from 5 August 2015 to 10 September 2015.

On 10 September 2015, representatives of both parties attended the scheduled settlement conference. During the meeting, the appellants’ solicitor asked if there was a deed of assignment of title in relation to the Aboriginal objects or some other evidence of title in the Aboriginal objects. An agent for the respondents’ solicitor responded that there was not and that he would seek further instructions. In his file note of what occurred at this meeting, the agent recorded that he had said “only an undertaking could be given at this stage”. The settlement was called off.

The following day, the respondents withdrew their notice to complete served on 27 August 2015 and served on the appellants a second notice to complete by 2 pm on 28 September 2015. On 17 September 2015, the respondents sent revised settlement figures to the appellants, which included an amount for interest calculated from 5 August 2015 to 28 September 2015 at a rate of 10 per cent per annum.

The appellants responded by letter dated 23 September 2015, in which they disputed the inclusion of interest, stating as follows:

The appellants also objected to the issue of the second notice to complete, stating that the respondents were not entitled to issue the notice and that, pursuant to the contract for sale, the parties were obliged to complete within a reasonable time. The letter concluded:

In response, in a letter dated 24 September 2015, the respondents stated that, having regard to special condition 8 of the contract, they would not waive the interest included in the revised settlement figures as the appellants were in default. The respondents also rejected the appellants’ demand that they withdraw their second notice to complete.

In response to the appellants’ further demands, the respondents stated that they did not admit that they were required to comply with the notice given by the appellants in their letter dated 2 September 2015, that “[t]he vendor has provided all responses that he is required to make” and that “[t]he vendor has done all things required to settle this matter”. The respondents also denied the appellants’ claim that they had repudiated the contract.

On 25 September 2015, the appellants wrote to the respondents purporting to terminate the contract, stating as follows:

In response, on 6 October 2015, the respondents claimed that the appellants’ purported termination of the contract amounted to a repudiation, which entitled the respondents to terminate the contract. The respondents stated as follows:

On 29 November 2015, the respondents entered into resale contracts for the land and the business. Special condition 47 of the resale contracts expressly disclosed the existence of Harry and Clara Bray’s burial site.

The National Parks and Wildlife (Amendment) Act 1969 (NSW) introduced Pt IVA, headed “Relics”, into the National Parks and Wildlife Act 1967 (NSW), which provided, relevantly:

The National Parks and Wildlife Act 1967 was repealed by the National Parks and Wildlife Act 1974, which commenced on 1 January 1975 and provided, relevantly, as follows:

The issue before the primary judge in relation to question 1, as identified by his Honour at [74]-[75], was whether, if, as the appellants alleged, the Aboriginal objects, or some of them, were the property of the Crown, the affectation of the land by their presence in or on the land was a defect in title, because it vested in the Crown part of the subject matter which the respondents contracted to sell. Further, whether, if such Aboriginal objects were “deposits” in the land, they formed part of the land vested in the Crown notwithstanding the provisions of the Real Property Act 1900 (NSW).

On the appellants’ argument before his Honour, an Aboriginal object that is “permanently affixed to land” is: (a) an affectation which prevents the vendor from giving good marketable title; and (b) an interest in the land comprised within the certificate of title. The appellants contended that either basis was capable of constituting a defect in the registered proprietor’s title to the land.

The opposing argument before the primary judge was that even if there were Aboriginal objects in or on the land, those objects did not form part of the subject matter of the sale: see Borda v Burgess (2003) 11 BPR 21, 203; [2003] NSWSC 1171.

The primary judge noted, at [87], that the contract for sale described “the land” by reference to its street address and the title details. In his Honour’s opinion, the contract was not to be construed in such a way that any Aboriginal objects not owned by the respondents were included as part of the subject matter of the sale.

His Honour referred to the principles of construction of a commercial contract, namely, that the terms of the contract are to be understood objectively, by what reasonable business persons would have understood them to mean. His Honour said that the court was entitled to approach the task of construction on the basis that the parties intended to produce a commercial result which makes commercial sense: see Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 343 ALR 58; [2017] HCA 12 at [16]-[17]; Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at [35].

His Honour considered, at [88], that reasonable business persons in the position of the parties would not have understood the contract to have contained an obligation on the part of the respondents to sell any Aboriginal objects in and on the land that they did not own. In his Honour’s opinion, the legislative background told against such a construction. As his Honour explained:

His Honour concluded, at [89], that the property the respondents promised to convey to the appellants did not include any Aboriginal objects in or on the land that the respondents did not own, including any Aboriginal objects that were the property of the Crown. His Honour rejected, at [90], the appellants’ argument that because the Aboriginal objects were embedded within the soil or were otherwise affixed to the land, they formed part of the subject matter of the sale. In his Honour’s view, any Aboriginal objects in or on the land not owned by the respondents retained an independent identity from the land which surrounded or supported them, even if they might be considered more in the nature of fixtures rather than chattels.

His Honour also considered that ownership of an Aboriginal object was divorced from the surrounding or supporting land, in that, even if there were Aboriginal objects in or on the land, the rights of property in them did not confer an interest in the surrounding or supporting land such that the respondents were required to cause the legal title to the land to pass to the appellants free of any such rights, pursuant to cl 16.3 of the contract.

His Honour acknowledged, at [92], that the presence of Aboriginal objects could have an effect on the use or enjoyment of land. His Honour referred, for example, to the possibility that the development of land could be restricted or made more difficult as a consequence of the presence of such objects in or on the land. However, his Honour did not consider that this affected the title to the land that the respondents promised to convey to the appellants. It followed that the respondents would not, by reason of the existence of any Aboriginal objects not owned by them, be precluded from satisfying their obligation to show a good title to the property: see Travinto Nominees Pty Ltd v Vlattas (1973) 129 CLR 1; [1973] HCA 14 at 27.

Accordingly, on the primary judge’s view, the alleged Aboriginal objects were not capable of constituting a defect in title for the purposes of the contract for sale. His Honour therefore answered question 1, “No”.

The appellants’ argument on the appeal, as it was at trial, was that the presence of immoveable objects on land which are owned by somebody other than the vendor, who has some ability to exercise powers that limit the use of the land, or over which somebody other than the vendor has control, is a defect in title which gives rise to a common law right to rescind: Flight v Booth (1834) 131 ER 1160; Torr v Harpur (1940) 40 SR (NSW) 585; Micos v Diamond [1970] 3 NSWR 407; Liberty Grove (Concord) Pty Ltd v Yeo (2006) 12 BPR 23,709; [2006] NSWSC 1373 (Tr 9, 21).

Although it was part of the appellants’ case that the ownership of the objects, should they exist, was in the Crown, they argued that it was not necessary, in order to establish a defect in title, that the ownership of the objects be known. Rather, they submitted that what was relevant was whether there were any objects on the land that the respondents did not own and which they had no ability “to get rid of”.

The appellants submitted that it was this inability that detracted from the complete and free use of the land, which is implied in an estate in fee simple. It did not matter, on their argument, whether the impediment imposed by the object or objects was substantial or not, although that would be relevant to the relief that a court might give. They accepted, however, that the principles on which they relied were limited to a vendor’s suit for specific performance.

The appellants submitted that the presence of the objects on the land would have a significant effect on any redevelopment. They pointed out that the process of obtaining an Aboriginal heritage impact permit was cumbersome and the outcome uncertain. Even if a permit was obtained, it was likely to be restrictively conditioned.

In support of the argument that the Aboriginal objects were, for all relevant purposes, immovable, the appellants relied upon: the importance of the objects to the local Indigenous community, the Arakwal people; the impact of their importance on the likelihood that a permit for removal would be granted; the fact that it is an offence of absolute liability to harm the objects, including by moving them without a permit; the fact that it is an aggravation of the offence if the objects are moved for commercial purposes; and the limited defences available in a prosecution for harming Aboriginal objects.

The respondents’ principal submission was that the objects not having been the subject of the conveyance did not constitute a defect in title. They submitted that there was nothing in the National Parks and Wildlife Act 1974 that operated to make the existence of Aboriginal objects on land a defect in title. The respondents relied in particular on s 83(2), which provides that s 83, which broadly speaking, conveys title of Aboriginal objects in the Crown, does not restrict the lawful use of land. They submitted that although subs (b) of the definition of “harm” imposed a restriction on moving objects from the land on which they had been situated, the relocation of objects within the bounds of particular land was not restricted. They also relied upon the fact that the Director-General does not have a right of entry under the Act.

The respondents also argued that the appellants should be confined to the way they conducted the matter at trial, which was based upon the agreed facts. The respondents said that the case as conducted before the primary judge was based on the proper construction of the contract. They submitted that no attempt was made by the appellants to put before the primary judge evidence which would have enabled his Honour to determine whether or not the Aboriginal objects gave rise to a substantial interference that was not bargained for.

However, in the way the separate questions were framed, whether there were Aboriginal objects on the land was not under consideration. The respondents submitted, nonetheless, that the primary judge was correct in determining that on the proper construction of the contract, any Aboriginal objects on the land were not the subject of the sale. It followed on this argument that the case was not governed by the principles in Flight v Booth or Torr v Harpur. The respondents conceded, however, that in determining question 1 the way that he did, that is, on the basis of construing the contract, the primary judge did not directly answer question 1.

It is necessary at the outset to understand the principles governing the right of a purchaser, at common law, to rescind a contract for the sale of land.

The common law principle, as laid down in Flight v Booth, at 1162-1163, is that where an error or misdescription of the property the subject of a sale:

In that case, the contract contained an ‘error and misdescription clause’, which provided that any error or misstatement of the property did not vitiate the sale, but compensation was payable. It was held that the misdescription in that case was material such that the purchaser was not bound to resort to the compensation clause.

The principle was applied in Torr v Harpur to uphold a purchaser’s rescission of contract in circumstances where a large stormwater drain ran underneath the surface of the land and passed under a substantial part of the foundation of a number of cottages on the land which were in the course of construction. The contract provided that no error or misdescription of the property annulled the sale, but compensation, if demanded, was payable (the error or misdescription clause). The question in issue was whether the existence of the drain fell within that clause.

In applying the principle in Flight v Booth, Williams J held that the existence of the drain meant that the purchaser would not be obtaining substantially what he had contracted for. Williams J stated, at 594, in a passage upon which the appellants placed particular reliance:

Williams J considered that the principle of law was clear. His Honour observed, at 591, if the underground drain was situated “where its presence would not be a serious disadvantage”, then the purchaser would have “obtain[ed] substantially what he contracted for”. His Honour instanced a number of examples, such as if the drain had been located under part of the property where building was prohibited because of a restrictive covenant, or if the drain had been along a boundary which would not have prevented the erection of the relevant structure.

His Honour further observed, at 591, that if the drain had not been under some part of the land adapted for building purposes, he did not think that the purchaser would have been entitled to succeed. However, the strength of the purchaser’s case was that the drain was “situated beneath part of the foundations of the cottages”. In this regard, there was evidence that the walls of the cottages could crack and should that occur, it “would be a very expensive job” to underpin the walls to maintain the stability of the cottages. There was also evidence, which his Honour accepted, at 593, that the presence of the drain “would be an extremely grave defect if the purchaser desired to resell or to mortgage the property”.

His Honour concluded that the misdescription, in a material and substantial point, seriously affected the subject matter of the contract. His Honour stated, at 594, that if he refused relief, he would be forcing upon the purchaser something which “by reason of a departure from the terms of the contract, is so materially altered in character as to be in substance a different thing from that contracted for”.

In Micos v Diamond, the purchasers sued their solicitor for negligence in failing to inform them before completion of the existence of the sewer drain on the property and the rights of the relevant statutory body, the Metropolitan Water, Sewerage and Drainage Board (the Water Board).

In Micos v Diamond, it was held, at 410, that the existence of a sewer drain, in respect of which it was an offence to build over or otherwise interfere with or obstruct, and which was located close behind the house on the property, was “a defect of title in the full sense and not in the somewhat special sense of Torr v. Harpur”. As the Court stated:

It is apparent from this passage that the distinction drawn between a “defect of title in the full sense”, as opposed to the “special sense of Torr v. Harpur”, was a reference to the statutory powers of the Water Board that could be exercised. This was not the case in Torr v Harpur, where the only question was the existence of the drain under the cottages under construction on the land.

In Liberty Grove v Yeo, Palmer J, applying the principle in Flight v Booth as summarised in Torr v Harpur, found that the existence of a drain underneath a property amounted to a substantial latent defect in title entitling the purchaser to rescind. In that case, the ownership of the drain had not been ascertained. In rejecting the vendor’s argument that the drain may have existed by right of a revocable licence which was not a defect in title, his Honour found that the evidence disclosed that it carried a substantial volume of water and its continued existence on the land was necessary. His Honour concluded, however, that the purchaser had irrevocably elected to affirm the contract by demanding compensation for the defect such as to have lost the common law right to rescind.

In Dainford v Lam, Powell J recognised, at 265, that the principle in Flight v Booth was not affected by the existence of an error and misdescription clause. As his Honour observed, at 265-266:

In Dainford v Lam, the purchasers bought a home unit ‘off the plan’. When the strata plan was registered, the unit they had contracted to buy, amongst other problems, had different boundaries from those stated on the plans annexed to the contract. The effect of the changed boundaries was to exclude ledges which had been shown on the plan, representing about 9 per cent of the area depicted on the plan annexed to the contract as being within the lot. The vendor commenced and then discontinued proceedings for specific performance. The purchasers subsequently gave notice of rescission, which the vendor treated as a repudiation and proceeded to resell the property. The vendor argued, inter alia, that the omission of the ledges was an error or misdescription, but that even if it constituted a defect in title, the deficiency was not substantial and thus was a matter for compensation only, and did not give rise to a right to rescind.

Powell J rejected that there had been an error or misdescription. Rather, there was an accurate description of something in respect of which, when the time for completion arrived, the vendor was not in a position to give complete title. That being so, there was no provision in the contract which bore upon the matter. His Honour observed, at 265, and again at 266, that at common law, a deficiency or error in the smallest portion or interest in the subject matter of the sale, either as to quantity or otherwise, was equivalent to a total want of title and entitled the purchaser to annul the sale. His Honour, at 268, then explained the position in equity in a suit for specific performance as follows:

The Conveyancing Act, s 13 referred to in this passage provides that contractual clauses that would not have been deemed to have been of the essence in a court of equity are to receive the same construction after the commencement of the Act. Powell J had earlier noted, at 267, that this rule did not affect the common law rule. In other words, the common law principle applied except in circumstances where there was a suit for specific performance.

Based on these authorities, the appellants submitted that, as there was no suit for specific performance and could not be as the property had been re-sold, given the significant restrictions on the use of land where there are Aboriginal objects, their existence has the capacity to constitute a defect in title.

However, the respondents contended that the primary judge was correct in finding that the Aboriginal objects were not part of what was conveyed by the contract of sale: see Borda v Burgess. In that case, the property the subject of the sale was subject to a consolidated mining lease for coal which was not disclosed in the contract. The purchaser purported to rescind the contract on the basis that the mining lease constituted a defect in title. The vendor later purported to terminate the contract and commenced proceedings seeking a declaration that the termination was valid. The purchaser cross-claimed, seeking a declaration that the rescission was valid. All coal on the land was vested in the Crown.

Young CJ in Eq held that as the vendor never contracted to sell the coal and the mining lease was not an interest in land, there was no defect in title, only a defect in the quality of the land.

This was essentially the approach of the primary judge in the determination of question 1 in the present case. However, as the authorities I have discussed indicate, whether or not objects on or within property are the subject of sale does not determine whether there is a defect in title.

In the present case, whether the alleged existence of Aboriginal objects on the land is capable of constituting a defect in title depends upon applying of the National Parks and Wildlife Act 1974 in the event that there are such objects on the land. The provisions of that Act are set out above. The operation of the Act as it is relevant to question 1 commences with the definition of “harm”. “Harm” to an object is defined in s 5 to mean destroying, defacing or damaging an object or moving the object from the land on which it has been situated.

“Aboriginal objects and Aboriginal places” are dealt with in Pt 6 of the Act. By the combined operation of s 33D of the 1967 Act and s 83(1) of the 1974 Act, any Aboriginal objects are the property of the Crown. In this case therefore, if there are Aboriginal objects on the land the subject of the contract for sale, those objects are the property of the Crown.

Notwithstanding that ownership of any such objects is in the Crown, s 83 does not restrict “the lawful use of land”, and nor does it authorise “the disturbance or excavation of any land”: see s 83(2). The second part of s 83(2) is directed to the requirement to obtain an Aboriginal heritage impact permit in order to, for example, move an Aboriginal object from land upon which it is situated: see s 85. Pursuant to s 85, the Director-General is the authority for the protection of Aboriginal objects and Aboriginal places in New South Wales, and is responsible for the proper care, preservation and protection of any Aboriginal object or place on any land reserved under the Act. The Director-General is also responsible, subject to Pt 6, Div 2, for the proper restoration of any land that has been disturbed or excavated in accordance with an Aboriginal heritage impact permit.

Section 86 provides for two offences for harming an Aboriginal object, the distinction between the two being whether a person has knowledge that the object is an Aboriginal object: s 86(1), or whether the person does not have that knowledge: s 86(2). The latter offence is an offence of strict liability, but is subject to a defence of honest and reasonable mistake: s 86(5). Differential penalties apply to the two offences. Another important aspect of the offence provisions is found in s 86(3), which provides that it is a circumstance of aggravation if the offence was committed in the course of carrying out a commercial activity, with a consequential increased penalty. It is also an offence to harm or desecrate an Aboriginal place: s 86(4).

It is a defence to a prosecution for an offence under ss 86(1), (2) or (4) if the harm or desecration concerned was authorised by an Aboriginal heritage impact permit and the conditions to which the permit was subject were not contravened: s 87(1). Thus, the holding of an Aboriginal heritage impact permit is of particular importance should a person harm or desecrate an Aboriginal object, even if done accidentally or unintentionally.

The provisions for obtaining an Aboriginal heritage impact permit are found in Pt 6, Div 2, and are set out above at [55]. I consider that there is merit in the appellants’ submission that the undoubted necessity to obtain a permit if they were to develop the land was likely to significantly impact the use they could make of the land. In this regard, they pointed to the onerous application process for a permit, the uncertainty as to whether a permit would be granted and the restrictive nature of any conditions that might be imposed considering, in particular, the significance of the alleged Aboriginal objects this case: see s 90K(e).

Having regard to the matters to which I have referred, namely, that if there are Aboriginal objects on the land, their preservation is the responsibility of the Director-General; that it is an offence of strict liability to harm an Aboriginal object to which significant penalties attach; that it is a more serious offence to harm or desecrate what is known to be an Aboriginal object; that an Aboriginal object cannot be moved from the land unless in accordance with an Aboriginal heritage impact permit; and that obtaining a permit is onerous and its grant is uncertain, I am of the opinion that should there be Aboriginal objects on the land, their presence is capable of constituting a defect in title.

In this regard, I consider the case to be analogous to Micos v Diamond. I would add that it is not an answer that the statutory prohibition is only on the removal of an object from the land and that there is no prohibition on moving an object within the boundaries of the land. If, during the course of removal within the land, an Aboriginal object is destroyed, defaced or damaged, which is not a fanciful proposition, the person who did so will have committed an offence to which penalties apply, as has been described. I am also of the opinion that it is not an answer that the National Parks and Wildlife Act 1974 does not authorise the Director-General to enter upon the land. The interference with the use of the land should there be Aboriginal objects on the land, having regard to the extensive and onerous statutory regime to which I have referred, is such as to be capable of constituting a defect in title.

This leaves the question as to what relief should be granted on the appeal. As my reasons indicate, if it were appropriate to answer the separate questions, then I am of the opinion that his Honour erred in answering question 1 in the negative. However, as I have indicated, and as the Chief Justice makes clear in his reasons, which I have had the opportunity of reading in draft, the separate question raised a purely hypothetical issue. That raises the question whether it is appropriate for this Court to determine the appeal and answer question 1 in the affirmative, or whether the separate questions should not be answered and the matter returned to the primary judge for a hearing on the real issues in the case.

My concern in not answering question 1 is that when regard is had to his Honour’s reasons, the question whether, if there were Aboriginal remains on the land, there was a defect in title has been determined by the manner in which his Honour approached that question. However, given that the question as framed was hypothetical, and given that whatever answer was given to question 1, there remained substantive matters to be determined in the proceedings, I have come to the conclusion that it was not appropriate for his Honour to determine the separate questions and this Court ought not to do so.

It follows that I agree with the orders proposed by the Chief Justice.

The respondents accepted during the hearing that their notice of contention was not relevant to any of the separate questions before the primary judge and this Court. Accordingly, it is not necessary to address the question whether the special conditions of the contract precluded the appellants from terminating the contract.

The appellants should be granted leave to appeal against the decision of the primary judge. The answer to question 1 should be set aside. In lieu thereof, the questions should be answered in the terms proposed by the Chief Justice.

McCOLL JA: I agree with Bathurst CJ’s reasons and the orders his Honour proposes. I also agree with Beazley P’s reasons.