Case: Barba v Gas &amp; Fuel Corporation [1976] HCA 60 ; (1976) 136 CLR 120
Outcome: followed
significant point of contention at trial was whether, if the retirees' interests fall within the s 42(2)(e) or s 40(3)(d) exception, the retirees have proven their case or whether the section then requires a further step: a comparison of the two competing interests. Burke v Dawes (1937) 59 CLR 1 at 13, 18 and 25 and Barba v Gas &amp; Fuel Corporation [1976] HCA 60 ; (1976) 136 CLR 120 at 140-141 were referred to by Perpetual in support of the proposition that a comparison of the competing interests is still required to be undertaken by the Court even if the retirees were tenants in possession. I do not consider that the difference in wording of s 40 and s 42(2)(e) affects my conclusion on this contention, and thus both the TLA and LTA can be dealt with together. It is convenient to deal with the competing interests issue by reference solely to the decision in Barba 136 CLR 120. In Barba , by an instrument dated 21 July 1975 C, the registered proprietor of certain land, gave G an option for easement over the land. The purpose of the easement was to enable G to construct a pipeline through the land. The consideration for the grant was expressed to be 'the sum of $10.00 now paid to the Grantor (the receipt whereof is hereby acknowledged)'. Clause 3 of the instrument read as follows: This option may be exercised by [G] in either of the following manners:&#8212; (a) by notice in writing that this option is exercised, signed on behalf of [G] by its Secretary or Substitute Secretary for the time being, which notice may be delivered to the Grantor by hand or forwarded to the Grantor at his address herein specified by ordinary prepaid letter at any time on or before but not after the option date: or (b) by commencing operations upon the said land for the laying of the pipeline before but not after the option date. The instrument provided by cl 1 that: ... The location and dimensions of the said strip of land upon the Grantor's said land are to be approximately in the position as located as a result of the above work or in such other position upon the Grantor's said land as [G] may with the prior consent of the Grantor determine .... Perpetual relied upon the above passage and the principle that s 42(2)(e) and s 40(3)(d) do not give a tenant in possession any greater protection than he or she would have had if the land were under the general law. My view is that if the retirees come within the terms of s 42(2)(e) or s 40(3)(d) , then no comparison of the competing interests is required of the type suggested by Perpetual. In Downie v Lockwood [1965] VR 257 , Smith J undertook no comparative examination of the equities, as submitted by Perpetual should occur in this proceeding. Barba , in reliance on comments in Burke v Dawes , merely decided that effect had to be given to special condition 8, and to that extent the application of the general law applied, and the person claiming to come under the exception to indefeasibility could have no greater rights than he or she would have under the general law. It will be recalled that special condition 8 made the sale subject to the easement to be granted, which special condition the High Court gave effect to by applying the general law. Another line of argument in certain of the retirees' cases arose because there was an option to repurchase the relevant property in the Deed of Agreement. This was, in the retirees' submission, an equitable interest in line with Barba [1976] HCA 60 ; 136 CLR 120 , where Gibbs J stated (at 137-138): ... it is clear that an option to purchase gives the grantee an equitable interest in the land. In London and South Western Railway Co. v Gomm (1882) 20 Ch.D. 562 , at p.581 Jessel M.R. said: The right to call for a conveyance of the land is an equitable interest or equitable estate. In the ordinary case of a contract for purchase there is no doubt about this, and an option for repurchase is not different in its nature. A person exercising the option has to do two things, he has to give notice of his intention to purchase, and to pay the purchase-money; but as far as the man who is liable to convey is concerned, his estate or interest is taken away from him without his consent, and the right to take it away being vested in another, the covenant giving the option must give that other an interest in the land. See also Wright v Dean [1948] Ch. 686 , at 693; In Re Button's Lease; Inman v. Button [1964] Ch. 263 , at p.271; and Commissioner of Taxes (Q.) v. Camphin [1937] HCA 30 ; (1937) 57 C.L.R. 127 , at pp.132-4. The equitable interest so created is a contingent interest which will become an absolute interest when the contingency is fulfilled: Griffith v. Pelton [1958] Ch. 205, at p.225; Du Sautoy v. Symes [1967] Ch. 1146 , at p.1163. It was held in Morland v. Hales and Somerville (1910) 30 N.Z.L.R. 201 , that the equitable interest which passes to the grantee when an option is granted prevails over the rights of a person who, after the grant of the option but before its exercise, has contracted to purchase the land without notice of the existence of the option. It may be assumed that the principles stated in those cases apply to the case of an option to acquire an easement. However, until the option is exercised the interest which it confers remains contingent and the grantee cannot call for a conveyance or demand to exercise any of those rights to which he is contingently entitled.