Ahmau Developments Pty Ltd v Preet [2025] NSWSC 604 | Case summary

Medium Neutral Citation: Ahmau Developments Pty Ltd v Preet [2025] NSWSC 604

Hearing dates: 13, 14, 15, 16, 21 May; 7 June; 24 July 2024; 9 May 2025

Date of orders: 12 June 2025

Decision date: 12 June 2025

Jurisdiction: Equity - Real Property List

Before: Parker J

Decision: See [633], [739]

Catchwords: BUILDING AND CONSTRUCTION — Contract — Specific performance – Where changes to zoning laws altered contractual parameters – Whether contract was frustrated by changes to zoning laws – No issue as to principle
BUILDING AND CONSTRUCTION — Contract — Termination — Frustration – Where changes to zoning laws altered contractual parameters – Whether contract was frustrated by changes to zoning laws – Whether frustration is impacted by statutory scheme – No issue as to principle
LAND LAW — Conveyancing — Contract for sale — Off the plan Contracts — Rescission – Where rescission of an off the plan contract for sale of land was sought – Where the Conveyancing Act 1919 s 66ZS creates requirements for rescission – Where changes to zoning laws altered commercial conditions – Whether developers acted unreasonably
COSTS — Party/Party — Exceptions to general rule that costs follow the event – Orders when proceedings involve multiple parties – How parties liable – Multiple claims in multiple proceedings – Where statutory scheme modifies the general rule that costs follow the event – Whether statutory scheme captures the entirety of the multiple claims – Held: Conveyancing Act 1919 s 66ZS(8) applies only to claims under s 66ZS, not the proceedings as a whole

Legislation Cited: Camden Local Environmental Plan 2010
Conveyancing Act 1919, s 66ZS, 66ZS(8)
Frustrated Contracts Act 1978
Real Property Act 1900
State Environmental Planning Policy (Sydney Region Growth Areas) 2006

Cases Cited: Akierman Holdings Pty Limited v Akerman (No 3); In the matter of Akierman Holdings Pty Limited (No 2) [2021] NSWSC 869
Ardee Pty Ltd v Collex Pty Ltd [2001] NSWSC 836
Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540
Bank Line Ltd v Arthur Capel & Co [1919] AC 435
Beoco Ltd v Alfa Laval Co Ltd [1995] QB 137
Burger King Corp v Hungry Jack's Pty Ltd (2001) 69 NSWLR 558
Chinatex (Australia) Pty Limited v Bindaree Beef Pty Limited [2018] NSWCA 126
DGF Property Holdings Pty Limited v Di Federico; DGF Property Holdings Pty Limited v Butros [2018] NSWSC 344
Embiricos v Sydney Reid [1914] 3 KB 45
Hillpalm Pty Ltd v Heaven's Door Pty Ltd 220 CLR 472
Jobema Developments Pty Limited v Zhu & Ors [2016] NSWSC 3
Martinus Rail Pty Ltd v Qube RE Services (No 2) Pty Ltd (No 3) [2024] NSWSC 1483
Metropolitan Gas Co v City of Melbourne (1924) 35 CLR 186
oOH! Media Roadside Pty Ltd v Diamond Wheels Pty Ltd & Anor (2011) 32 VR 255
Opera Properties Pty Ltd v The Uniting Church in Australia Property Trust (NSW) [2021] NSWSC 1436
Paolucci v Makedyn Pty Ltd [2020] NSWSC 1871
Paolucci v Makedyn Pty Ltd [2021] NSWCA 215
Pioneer Park [2006] NSWSC 1176
Plumor Pty Ltd v Handley (1996) 41 NSWLR 30
Roads and Traffic Authority of NSW v Dederer (2007) 234 CLR 330
Ryde Ex Services Memorial and Community Club Ltd v Kaloriziko Ryde Pty Ltd (No 2) [2018] NSWSC 317
Scanlan's New Neon Ltd v Tooheys Ltd; Caldwell v Neon Electric Signs Ltd (1943) 67 CLR 169
Shun Sheng Pty Ltd v Lei (No 6) [2024] NSWSC 1613
Silver Star Fashions Pty Ltd v Dal Broi [2018] NSWSC 1445
Southern Oil Refining Pty Ltd v Hydrodec Australia Pty Ltd (No 2) [2021] NSWSC 336
Thomas Brown & Sons v Fazal Deen (1962) 108 CLR 391
Van Eeden v Henry (2005) 62 NSWLR 301
Woolworths Group Ltd v Gazcorp Pty Ltd [2022] NSWCA 19

Texts Cited: Dyson Heydon, Heydon on Contract: The General Part (Thomson Reuters, 2019)
Dyson Heydon, Mark Leeming, and Peter G. Turner, Meagher, Gummow, and Lehane’s Equity: Doctrines and Remedies (LexisNexis, 5th ed, 2015)

Category: Principal judgment

Parties: Summons filed 28 August 2022
Ahmau Developments Pty Limited (Plaintiff)
Shabad Preet (First Defendant)
Amandeep Kaur (Second Defendant)
Aishwarya Bakshi (Fourth Defendant)
Ishita Bakshi (Fifth Defendant)
Cross-Claim filed 23 March 2023
Aishwarya Bakshi (First Cross-Claimant)
Ishita Bakshi (Second Cross-Claimant)
Ahmau Developments Pty Limited (Cross-Defendant)
Cross-Claim filed 14 March 2024
Shabad Preet (First Cross-Claimant)
Amandeep Kaur (Second Cross-Claimant)
Ahamu Developments Pty Limited (Cross-Defendant)

Representation: Summons filed 29 August 2022
Counsel:
M Fernandes (Plaintiff)
T Wong (First and Second Defendants)
H El-Hage SC (Fourth and Fifth Defendants) (13, 14, 15, 16, 21 and 7 June 2024)
A Bakshi (Self-represented) (24 July 2024)
Solicitors:
Centurion Lawyers (Plaintiff)
Byles Anjos Lawyers (First and Second Defendants)
Shad Partners (Fourth and Fifth Defendants) (13, 14, 15, 16, 21 and 7 June 2024)
Cross-Claim filed 23 March 2023
Counsel:
H El-Hage SC (First and Second Cross-Claimants) (13, 14, 15, 16, 21 and 7 June 2024)
M Fernandes (Cross-Defendant)
A Bakshi (Self-represented) (24 July 2024)
Solicitors:
Shad Partners (First and Second Cross-Claimants) (13, 14, 15, 16, 21 and 7 June 2024)
Centurion Lawyers (Cross-Defendant)
Cross-Claim filed 14 March 2024
Counsel:
T Wong (First and Second Cross-Claimants)
M Fernandes (Cross-Defendant)
Solicitors:
Byles Anjos Lawyers (First and Second Cross-Claimants)
Centurion Lawyers (Cross-Defendant)

File Number(s): 2022/256891

Publication restriction: Nil

JUDGMENT

These proceedings concern off the plan contracts for the sale of land in a sub-division development. The plaintiff, Ahmau Developments Pty Ltd “(Ahmau”), is the vendor. The defendants are purchasers.
This judgment concerns two contracts. In each case, the purchasers are a married couple.
Under the first contract the purchasers are Shabad Preet, the first defendant, and Amandeep Kaur, the second defendant. Ms Kaur is also known as Amandeep Preet. For convenience and without intending any disrespect, I will refer to her by that name. The Preets’ contract is dated March 2017.
The purchasers under the second contract are Ashwarya Bakshi, the fourth defendant, and Ishita Bakshi, the fifth defendant. Their contract is dated April 2017.
The contracts between Ahmau and the defendants are subject to the statutory regime for off the plan contracts in Part 4, Division 10 (ss 66ZL to 66ZU) of the Conveyancing Act 1919 (“CA”). That regime requires leave from the Court for the vendor to exercise a contractual right of rescission if the purchaser does not consent.
The sunset dates under the contracts passed in March and April 2021, before the subdivision plan had been registered, triggering a contractual right of rescission. Several months later there was a rezoning of the land which affected, or potentially affected, the number of dwellings which would be permitted in the subdivision. Ahmau sought the defendants’ consent to rescission of their contracts (as had been successfully negotiated for the other pre-sales), but they refused. The plan remains unregistered.

Claims for determination

The proceedings were commenced in August 2022. Ahmau as plaintiff sought the Court’s leave to rescind the defendants’ purchase contracts under CA s 66ZS. They resisted the grant of leave and cross-claimed for specific performance. The Bakshis’ cross-claim was filed in March 2023. The Preets’ cross-claim was filed in March last year.
Originally a third contract was the subject of the proceedings. The purchaser under that contract was the third defendant. The proceedings were settled as between Ahmau and that purchaser shortly before the trial.
The trial took place over five days between 13 and 21 May last year. The time allocated for the hearing was sufficient to complete the evidence but not the parties’ closing submissions.
The proceedings were adjourned until 7 June for this purpose. But prior to that hearing counsel for the Preets sought leave to supplement the expert town planning evidence which had been presented at the trial.
The supplementary evidence was to address one of the critical issues which had arisen in the proceedings, concerning the extent to which the 2021 subdivision had made it impossible to register a subdivision plan in the form attached to the purchase contract. Counsel suggested (and there was some justification for this) that the evidence at the trial had proceeded on an incorrect, or at least, an incomplete, basis.
Counsel for Ahmau wished to have its expert respond to the new evidence from the Preets’ expert. Counsel also sought to amend Ahmau’s claim so as to contend that the subdivision had had the effect of frustrating the contract. If this was correct, no leave was needed to rescind the purchasers’ contracts because the contracts had already been discharged by operation of law. Furthermore, no question of specific performance could arise.
In these circumstances, the parties recognised that the proceedings could not be completed on 7 June. Directions were made for supplementary evidence from the experts and for the amendment of the pleadings so as to raise Ahmau’s frustration claim. The proceedings were relisted for July.
Up to this point, the Bakshis had been represented by solicitors and counsel in the proceedings. But their instructions were withdrawn before the resumption of the hearing, which eventually happened on 24 July. On that day, the Preets’ and Ahmau’s planning experts gave supplementary evidence, and the parties’ closing submissions, which now addressed the frustration claim, were presented. Mr Bakshi attended and presented his submission orally. Mrs Bakshi was unrepresented, but no one suggested that there was any separate need for her to present submissions on her own behalf.

Summary and analysis of evidence

Chronology of key events

The land owned by Ahmau which is the subject of these proceedings is one of four parcels of land which together make up a larger block at Leppington at the southwestern outskirts of Sydney. That larger block, to which I will refer as “the Leppington Land”, is oblong in shape with its shorter sides running roughly north-south.
An aerial photograph showing the Leppington Land is reproduced below. The photograph dates from 2021 (or before), but, according to the evidence, the appearance of the site is more or less the same today:
The photograph is oriented with north at the top. On the eastern side, the Land is bordered by Camden Valley Way. This is a dual carriageway main road. To the south (bottom) is Dwyer Road and to the west (left) is Hulls Road. These are both smaller two-lane roads.
The four parcels making up the Leppington Land can be seen in the title diagram reproduced below.
The four parcels are owned by three companies which are, and have at all material times been, in common ownership. The parcel owned by Ahmau which is the subject of these proceedings, Folio Identifier 10/1172863, is the southernmost parcel (bordering Dwyer Road) and has the street address 14 Dwyer Road. The parcel immediately to the north, Folio Identifier 4/858010, has the street address of 1105 Camden Valley Way. It is owned by Allgood Projects (NSW) Pty Ltd (“Allgood”). The next parcel, Folio Identifier 5/858010, has the street address 14 Hulls Road and is also owned by Allgood. The northernmost parcel, Folio Identifier 11/1172863, has the street address 22 Hulls Road and is owned by McInnes Developments Pty Ltd (“McInnes”). I will refer to the parcels owned by the three companies as the “Ahmau Land”, the “Allgood Land” and the “McInnes Land”.
In 2017, when the parties entered into the contracts which are the subject of these proceedings, the Leppington Land was governed by the Camden Local Environmental Plan 2010. It was zoned “RU4 Primary Production Small Lots”, which zoning prevented its subdivision for residential purposes. It however formed part of the “Leppington Priority Precinct” which had been identified by the State Government as an area for future residential subdivision.
The Precinct was divided into five stages. The Leppington Land was part of stage 5. In May 2014 an Indicative Layout Plan (“ILP”) was published for the Precinct. The southernmost part of the Precinct, showing stage 5, is reproduced below.
The dark grey strip on the eastern side of the Precinct is the Camden Valley Way road corridor. The local roads shown in the plan (in light grey) included the existing extension of Dwyer Road across the Precinct on the southern side of the Leppington Land, and Hulls Road on the western side of the Land. The hexagonal green shape on the northeastern corner of the Leppington Land was designated in the ILP as open space.

This version of the ILP showed, in yellow, an area for drainage on the corner of Dwyer Road and Hulls Road which did not appear in the May 2014 version. It also did not show the internal roads proposed in the May 2014 version of the ILP.

Brian Garnet Wheadon is, and has since December 2020 been, the sole director and shareholder of Ahmau, Allgood and McInnes. But he holds his shares in trust for two property developers, or entities associated with them. Apparently, it is they who make all of the key commercial decisions. For the purposes of this judgment, I will call them “the Developers” and will treat them as if they were the owners of the Leppington Land, referring only to the interposed companies if it necessary to do so.
The Developers are Mr Ryan Strauss and Mr Andrew Kavanagh. Mr Kavanagh gave evidence before me. He is, and was at all material times, in day-to-day management control of the Leppington Land, with major decisions being made in consultation between him and Mr Strauss.
The Leppington Land is not the only property venture in which Mr Strauss and Mr Kavanagh are engaged as business partners. In his evidence, Mr Kavanagh stated that Mr Strauss’ skills lie principally in the acquisition and sale of properties. Mr Kavanagh himself is more concerned with the operational process of subdivision and development.
The contracts the subject of these proceedings resulted from a campaign by the Developers to pre-sell lots in a proposed subdivision of the Leppington Land. Some of these pre-sales were effected by way of contract for the sale of land, and others were effected by way of option agreement. For convenience, I will refer to all the sales, whether by formal contract or by option agreement, as “the Presale Contracts”.
In the usual way, the proposed lots were defined in a plan of subdivision annexed to the Contracts. I will refer to the plan as “the Presale Plan”, and to the proposed lots in it as “the Presale Lots”.
The Presale Plan is reproduced below.
The Plan depicted 133 Presale Lots in total. Of these, 42 were located on the Ahmau Land. One of those (Lot 1012) encroached onto the Allgood Land.
The campaign began in late 2016 or early 2017. In all, there were 93 pre-sales. The agent for Ahmau (and, I assume, for Allgood and McInnes) was Mr Bruno Sergi, whose firm was known as “Patrick York Real Estate” (PY).
The contracting work for the pre-sale campaign was undertaken in-house by Mr Dean Alcorn. His responsibilities were described by Mr Kavanagh as “negotiating contracts with various purchasers (or their legal representatives), for exchanging those contracts and for communicating with various purchasers (or their legal representatives)”. There was no direct evidence as to who gave Mr Alcorn instructions, but seemingly it was mainly Mr Kavanagh.
The relevant Presale Lots for the purposes of this judgment are Lots 1040 and 1064. Lot 1040 (shaded above in green) was the subject of the Presale Contract with the Preets. Lot 1064 (shaded above in blue) was the subject of the Contract with the Bakshis.

Lay witnesses

Evidence was given by Mr Preet on behalf of the Preets and by Mr Bakshi on behalf of the Bakshis. Each of them was cross-examined. I summarise their evidence below.
For Ahmau, evidence was given by Mr Wheadon, Mr Kavanagh and Mr Whitting. Mr Wheadon’s evidence was limited in scope and his cross-examination, although effective, was brief. Mr Kavanagh and Mr Whitting were cross-examined at length. I refer to their evidence, to the extent necessary, in more detail below.
Mr Alcorn did not give evidence. According to Mr Kavanagh, Mr Alcorn stopped working for the Developers in early 2022 upon being diagnosed with cancer. He died in 2023.

Planning instruments

As already noted, at the time the parties entered into the Contracts, the Leppington Land was zoned RU4 (Primary Production Small Lots) under the Camden Local Environmental Plan 2010. That zoning imposed a minimum lot size of two hectares on any subdivision of the Land. The RU4 zoning remained in place thereafter, including as at the sunset dates under both Contracts, until 16 July 2021, when it was altered by amendments to the relevant part (Appendix 9) of the Growth Centres SEPP. It is unnecessary for the purposes of this judgment to refer to the clauses of the SEPP itself. All references to clauses are to Appendix 9 (the Camden Growth Centres Precinct Plan).
The amendments had the effect of re-zoning Stage 5, including the Leppington Land (bordered in red), as shown in the zoning map reproduced below.
Most of the Leppington Land (coloured pink) was rezoned as R2 (Low Density Residential). Some on the southwestern corner (coloured yellow) was zoned SP2 (Infrastructure: Local Drainage). Some on the northeastern corner formed part of an area zoned RE1 (Public Recreation).
Part 2 of the Appendix dealt with permitted and prohibited developments. The Land Use Table incorporated therein relevantly provided, for land zoned R2:

1 Objectives of zone

• To provide for the housing needs of the community within a low density residential environment.

• To enable other land uses that provide facilities or services to meet the day to day needs of residents.

• To allow people to carry out a reasonable range of activities from their homes where such activities are not likely to adversely affect the living environment of neighbours.

• To support the well-being of the community by enabling educational, recreational, community, religious and other activities where compatible with the amenity of a low density residential environment.

• To provide a diverse range of housing types to meet community housing needs within a low density residential environment.

2 Permitted without consent

Home-based child care; Home occupations

3 Permitted with consent

Bed and breakfast accommodation; Boarding houses; Business identification signs; Centre-based child care facilities; Community facilities; Drainage; Dual occupancies; Dwelling houses; Earthworks; Educational establishments; Environmental facilities; Environmental protection works; Exhibition homes; Exhibition villages; Flood mitigation works; Group homes; Health consulting rooms; Home businesses; Home industries; Information and education facilities; Neighbourhood shops; Places of public worship; Recreation areas; Recreation facilities (indoor); Recreation facilities (outdoor); Roads; Secondary dwellings; Semi-detached dwellings; Seniors housing; Shop top housing; Studio dwellings; Veterinary hospitals; Waterbodies (artificial)

Clause 2.6 provided:

2.6 Subdivision—consent requirements

Land to which this Precinct Plan applies may be subdivided, but only with development consent.

Part 4 dealt with what were described as “principal development standards”. Three of those standards were the subject of argument by the parties. One of them concerned the minimum lot size. The other two concerned the dwelling density.
Minimum lot size: minimum lot sizes were dealt with in clauses 4.1 to 4.1AG. Clauses 4.1 and 4.1AA relevantly provided:

4.1 Minimum subdivision lot size

(1) The objectives of this clause are as follows—

(a) to ensure orderly and efficient use of land,

(b) to ensure a minimum lot size sufficient for development,

(c) to allow for a range of lot sizes that cater for a diversity of land uses and employment activities.

(2) This clause applies to a subdivision of any land shown on the Lot Size Map that requires development consent and that is carried out after the commencement of this Precinct Plan.

(3) The size of any lot resulting from any such subdivision of land to which this clause applies is not to be less than the minimum size shown on the Lot Size Map in relation to that land.

...

4.1AA Subdivision resulting in lots between 225–300m

(1) This clause applies to land in the following zones—

(a) Zone R2 Low Density Residential,

(b) Zone R3 Medium Density Residential.

(2) Development consent may be granted to the subdivision of land to which this clause applies resulting in the creation of a lot that has an area of less than 300m2 (but not less than 225m2), if the consent authority is satisfied that the lot will contain a sufficient building envelope to enable the erection of a dwelling house on the lot.

…

Apparently (and perhaps surprisingly), the Lot Size Map did not make any provision for the Leppington Land (or any other part of Stage 5). Instead, lot sizes for land zoned R2 were governed by cl 4.1AB which relevantly provided:

4.1AB Minimum lot sizes for residential development in Zone R2 Low Density Residential and Zone R3 Medium Density Residential

(1) The objectives of this clause are as follows—

(a) to establish minimum lot sizes for residential development in Zone R2 Low Density Residential …,

(b) to ensure that residential development in the [Leppington Precinct (among others)] results in the efficient use of land and contributes to the supply of new housing in the South West Growth Centre,

(c) to ensure that residential development has adequate usable areas for buildings and open space,

(d) to ensure that residential development in the Leppington Precinct (among others)] is compatible with the character of the locality and with surrounding residential areas,

(e) to facilitate and encourage the provision of a range of residential lot types, in particular, small lot housing.

…

(3) The minimum lot size for a dwelling house is 300m² if, on the Residential Density Map—

(a) the dwelling density (per hectare) in relation to the land is 15, 20 or 25, or

(b) the dwelling density range (per hectare) in relation to the land is 10–20, 20–25, 25–35 or 35–60.

Further sub-clauses provided for minimum lot sizes for dual occupancies, semi-detached dwellings, attached dwellings, multi-dwelling houses, “manor homes” and residential flat buildings.
The relevant Residential Density Map (RDM) is reproduced below:
The RDM included the following key:
That part of the Leppington Land which had been zoned R2 was labelled in the RDM as “O2” and coloured pale brown. Thus, the RDM prescribed a dwelling density range of 12.5 to 16.5 dwellings per hectare for the developable part of the Land.
Clause 4.1AD created an exception to the restraints in 4.1AB(3):

4.1AD Exceptions to minimum lot sizes for dwelling houses

(1) This clause applies to the following—

(a) a lot in Zone R2 Low Density Residential that has an area less than 300 m2 (but not less than 250m2) if, on the Residential Density Map—

(i) the dwelling density (per hectare) in relation to the land is 15, or

(ii) the dwelling density range (per hectare) in relation to the land is 10–20,

…

(2) Despite clause 4.1AB(3), development consent may be granted to the erection of a dwelling house on a lot to which this clause applies if—

(a) the lot results from a subdivision to which development consent has been granted in accordance with clause 4.1AA and, in determining the development application for the erection of the dwelling house, the consent authority considers any information that it considered for the purposes of that clause in determining the development application for that subdivision, …

When promulgated on 26 October 2021, the revised DCP addressed, among other things, the subdivision approval process for Leppington. The DCP specified various “controls”, which included (cl 3):

3. Subdivision applications that create lots smaller than 300m2 and larger than or equal to 225m2 must be accompanied by a Building Envelope Plan (BEP). An example of a BEP is included at Figure 3-8.

The BEP should be at a legible scale (suggested 1:500) and include the following elements:

• Lot numbers, north point, scale, drawing title and site labels such as street names

• Maximum permissible building envelope (setbacks, storeys, articulation zones)

• Preferred principal private open space

• Garage size (single or double) and location

• Zero lot line boundaries

…

4. Applications for subdivision using approval pathways A2, B1 and B2 require a Public Domain Plan (PDP) to be submitted as part of the application. The purpose of the PDP is to demonstrate how the public domain will be developed as a result of future development on the proposed lots. An example of a PDP is included at Figure 3-9.

The PDP should be a legible scale (suggested 1:500) and include the following elements:

• Lot numbers, north point, scale, drawing title and site labels such as street names.

• Indicative building footprints on the residential lots.

• Location of driveways and driveway crossovers.

• Verge design (footpath, landscape).

• Surrounding streets and lanes (kerb line, material surface where special treatments proposed).

• In laneways, indicative provision for bin collection

• Street tree locations. (Sizes and species list can be provided on a separate plan).

• Demonstrated provision and arrangements for on-street car parking particularly in relation to street tree planting, driveways and intersections.*

• Extent of kerb line where parking is not permitted.*

….

The sample BEP and PDP are reproduced below:
Dwelling cap: clause 4.1AB imposed a maximum number of dwellings for the purpose of residential developments in the Leppington Precinct. The clause relevantly provided:

4.1BA Maximum number of dwellings on land—Leppington Precinct

...

(2) Development consent must not be granted to development that would result in the number of dwellings on land being more than the maximum number of dwellings shown for the land on the Maximum Dwellings Map.

The relevant Maximum Dwellings Map (which need not be reproduced for the purposes of this judgment) specified a limit of 500 dwellings for Stage 5 of the Leppington Precinct (of which the Leppington Land formed part).
Dwelling density: Clause 4.1B dealt with residential density. There was a version of this clause in the Growth Centres SEPP as it stood, following amendment, on 16 July. That version only imposed a minimum density requirement, by reference to the bottom of the range shown in the RDM; there was no maximum density requirement. But that changed when a new version of the clause was substituted by further amendments to the SEPP on 30 September 2021. In its substituted form, that clause relevantly provided:

4.1B Residential density

(1) The objectives of this clause are—

(a) to establish density requirements for residential development, and

(b) to ensure residential development makes efficient use of land and infrastructure and contributes to the availability of new housing, and

(c) to ensure the scale of residential development is compatible with the character of the precinct and adjoining land.

(2) The consent authority must not grant development consent to residential development on land for which a dwelling density range is shown on the Residential Density Map if the development will result in the density of dwellings on the land being—

(a) less than the minimum density specified by the dwelling density range, or

(b) more than the maximum density specified by the dwelling density range.

(3) The consent authority must not grant development consent for the subdivision of land for which a dwelling density range is shown on the Residential Density Map if the subdivision would result in the dwelling density on a resultant lot being greater than the maximum dwelling density specified for the land by the dwelling density range.

(4) Subclause (3) does not prevent a subdivision that provides for individual dwellings to be on separate lots if the consent authority is satisfied the subdivision does not also involve the creation of additional dwelling entitlements.

(5) This clause has effect despite anything to the contrary in another provision of this Precinct Plan.

(6) In this clause— density means the ratio of the number of dwellings to the area of the land to be occupied by the residential development, including internal streets and half the width of the roads adjoining the development that provide vehicular access to the development, but excluding land that is not zoned for residential purposes.

Part 6 contained “additional local provisions”. Clause 6.1 relevantly provided:

Part 6 Additional local provisions

6.1 Public utility infrastructure

(1) The consent authority must not grant development consent to development on land to which this Precinct Plan applies unless it is satisfied that any public utility infrastructure that is essential for the proposed development is available or that adequate arrangements have been made to make that infrastructure available when required.

(2) In this clause, public utility infrastructure includes infrastructure for any of the following—

(a) the supply of water,

(b) the supply of electricity,

(c) the disposal and management of sewage.

…

The October 2021 DCP also dealt with density controls. Schedule 5, clause 4 relevantly provided:

4 Indicative Density Controls

Objectives

a. To ensure the Residential Density of development aligns with infrastructure capacity and amenity of Stages 2 and 5 of the Leppington Precinct.

b. To assist in achieving an equitable share of density across Stages 2 and 5 of the Leppington Precinct.

Controls

1. The clause applies to the area identified in the Indicative Residential Density Map (refer to Figure 2-13).

2. Residential Density should not be greater than the Residential Density shown on the Indicative Residential Density Map (refer to Figure 2-13).

3. A restriction may be placed on new lots to limit further development upon those lots to a single dwelling house. This restriction is to ensure compliance with the maximum number of dwellings allowed in stages 2 and 5 of the precinct.

The Indicative Residential Density Map was relevantly the same as the RDM in the Growth Centres SEPP ([65]-[66] above). It likewise prescribed a dwelling density range for the developable part of the Leppington Land of 12.5 to 16.5 dwellings per hectare.

Preets’ circumstances and dealings with Developers

Background and documentary evidence: Mr Preet was born in India and migrated to Australia in 2007. Since 2013 he has worked as a bus driver. Mrs Preet has since 2020 operated a business from home selling products on Amazon. Before that she appears to have been occupied full-time at home looking after the Preets’ young children.
According to Mr Preet, he first became aware of the Leppington Land subdivision when he saw it advertised in January 2017. At the time the Preets were living in a rented apartment at Granville in western Sydney with their son, who was born in 2015 or 2016.
The Preets were introduced to the subdivision through a business which traded under the name “Stroud Homes” (“Stroud”). Stroud was marketing house and land packages containing Presale Lots. Initially the Preets paid a $1,000 deposit for Lot 1043, but they were later told that this Lot had become unavailable and the Lot they eventually purchased (Lot 1040) was substituted.
The advertised price of the house and land package was $565,000. Stroud required the Preets to sign a standard form agreement to proceed. The agreement was styled “Housing Industry Association Preliminary Agreement”. It required the “client” to pay a sum of up to $3,900 to Stroud. Of this sum, one part was described as a “land holding deposit”, which was $1,000. The other part of the sum was described as a “preliminary agreement fee”. It was made up of six specified amounts for the carrying out of tests and surveys, preparation of drawings and the like which could be individually selected by the client. If all the amounts were selected, the fee was $2,900.
The Agreement was accompanied by a standard form building contract for the type of home selected by the client. But the Agreement stated that it was not a contract for Stroud to carry on any actual construction work. A fixed price construction contract would be entered into later. If so, the preliminary agreement fee would be built into the cost under that contract. But the client was not obliged to proceed with Stroud. The client could use the test results and proceed with another builder. The fee would be refunded if the client decided, before the tests began, not to proceed.
The agreement also contained a series of special conditions which could be ticked by the client if required. These were:

[Red type in original shown in bold]

Subject to finance

Subject to Land Registration

Subject to the Sale of Home

No Tests or Surveys Will Be Commenced Until Advised by Clients

Changes to Home Design and Inclusions Can Still Be Made, up to Contract Signing

100% Guaranteed Fee Refund Will Apply, If Client Doesn't Proceed, For Any Reason

The version of the Preets’ Preliminary Agreement which is in evidence is unsigned. The individual components of the $3,900 fee are not ticked, but the Preets paid the maximum fee amount of $2,900, so they must have chosen all the components. The last three special conditions (including the “guaranteed fee refund”) are ticked. There was no evidence about whether the “subject to finance” or “subject to land registration” special conditions were ticked in the executed version.
The Preets paid the $2,900 preliminary agreement fee in in mid-February. They were asked by Stroud’s office manager to provide the name of a solicitor to act for them so that the matter could be referred to “the developer” for preparation and execution of a formal contract for the purchase of the Lot. The Preets seem not to have had an existing solicitor, and they agreed to use Stroud’s.
As previously mentioned, the Preets’ Presale Contract was executed on 21 March 2017. The deposit under the Contract was 10% of the purchase price ($33,397), which was paid by the Preets (presumably including the $1,000 “land holding deposit” the Preets had earlier paid to Stroud). The Contract records Mr Alcorn as Ahmau’s representative and the Preets’ solicitor as Juris Australia Lawyers, a firm at Harris Park (presumably the solicitor identified by Stroud). There was no further evidence about the process of negotiating and executing the Contract.
On an ad valorem basis, the duty on the Contract was $10,500. But the Preets successfully applied for a ‘first home buyer’ concession, which reduced the duty to $5,500.
In their correspondence with Stroud, the Preets were told that the Presale Plan would be registered by June 2018. But there is no evidence of any of the further dealings, if any, between the Preets and Stroud. There was no suggestion that the Preets had ever entered into a building contract with Stroud, or would not be entitled to do so (at least at the original price) if they were to obtain specific performance of the Contract.
On the face of it, the Preets would have been entitled to a refund of the $2,900 preliminary agreement fee if they had asked for it and they had not in the meantime requested the tests covered by the fee to be carried out. Whether they in fact obtained a refund, or could now do so if their Presale Contract were rescinded or were found to have been frustrated, was not addressed.
After entering into the Contract, the Preets continued to live in their rented apartment at Granville. Their second child, a daughter, was born in 2017 or 2018.
In late 2019, the Preets moved to Spring Farm southwest of Sydney, having bought land in a subdivision there and built a house on it. They continue to live there. The suburb of Spring Farm is about 3km southwest of Leppington and also falls within the Camden local government area.

We are seeking an update on the progress of the registration.

We note that the contract was exchanged on 21 March 2017 and registration was due in 48 months of the contract which is due in March 2021.

We will appreciate if you can inform our office with the anticipated date of registration in order to organise loan.

Mr Alcorn replied by email at about 10pm the same day. He wrote:

Land has yet to be rezoned let alone any development consent or the like.

Even when the land is rezoned I wouldn't expect registration for 2 years after that at a minimum.

We keep asking when rezoning is likely and get stone walled every time.

Happy to agree to a mutual rescission if that is desired.

There was no response from Mr Shahzad to the proposal for rescission. The sunset date passed two months later. Four months after that, the Leppington Land was finally rezoned.
On 18 August Mr Alcorn wrote a formal letter to Mr Shahzad seeking rescission of the Preet Contract. The letter set out the provisions of SC cl 11.1 and continued (paragraph 3):

The Vendor has been unable to register the proposed Plan of Subdivision because:

a. the relevant authorities have rezoned the area that the proposed lot is proposed to exist only very recently, and within the past few week(s); and

b. there has been no opportunity to progress the development (such as by lodging a development application).

The letter then contained an offer, open until 25 August, to enter into a deed under which the parties were to agree to rescission with a “full refund” of the deposit; to mutual releases, and to bear their own costs. If the offer was not accepted, Ahmau would “proceed to rescission” pursuant to CA s 66ZS.
Again, there was no response from Mr Shahzad. On 16 September Mr Alcorn sent a further letter. He stated that if the Preets did not agree to rescission within 14 days Ahmau would have to instruct lawyers to make an application to this Court for leave to rescind the Contract under CA s 66ZS. In that application Ahmau would seek an order for costs against the Preets under s 66ZS(8).
Mr Alcorn explained the threat to seek costs as follows (paragraph 4):

Your clients are unreasonably withholding consent on the basis that:

a. the land was only rezoned in July 2021;

b. since rezoning it would have been impossible to:

i. lodge a development application, which would take at least 4 months to prepare and lodge;

ii. obtain a development consent which would take about 6 months for council to consider; and

iii. carry out the subdivision works which would take at least 9 months,

all by the sunset date under the contract.

Again, there was no response from Mr Shahzad. But a month later, on 19 October, one came from the Preets’ new solicitor, Mr Peter Anjos. His letter relevantly stated:

Your offer of rescission is rejected.

We note that our client is willing to extend the sunset date to enable the vendor to:

a. Lodge a development application;

b. Obtain development consent; and

c. Carry out the subdivision works.

We have made our client aware of the legislation and when costs may be awarded against him. In the circumstances we fail to see how our client’s consent to extend the sunset date is unreasonable.

If the Court agrees that our client has acted reasonably and even if your client is successful, the vendor will be liable for costs.

In addition to the above we put your client on notice that should an application be made to the Court our client will be seeking an order for compensation should the contract be rescinded.

Please be advised that we have instructions to accept service of any originating process with respect to this matter.

Mr Alcorn did not reply to Mr Anjos’ letter. This was despite follow-up letters from Mr Anjos in December and January. Mr Anjos lodged a caveat over the Ahmau Land to protect the Preets’ interest under the Contract. This appears to have been lodged after the December letter, and it was specifically referred to in the January follow-up letter.
Still there was no reply from Mr Alcorn. Mr Anjos sent three follow up letters in March and further follow up letter in April. Mr Alcorn never did reply. Instead the matter was taken over by an external firm of solicitors, Centurion Lawyers.
On 20 April, Mr Maroun Draybi of Centurion wrote to Mr Anjos with a fresh request for rescission. Mr Draybi began by setting out the changes to the planning instruments which had occurred in 2021. He made two points.
The first point was that delays in the planning process, over which Ahmau had had no control, had delayed the lodgement of a development application. The rezoning had not occurred until after the sunset date had expired. And even after the rezoning, the Council would not have been prepared to accept a development application until after the revised DCP was issued on 26 October.
Mr Draybi’s second point was that the changes to dwelling density limits and minimum allotment sizes made in the SEPP had rendered the Presale Plan “obsolete”. Mr Draybi set out the relevant provisions at some length to explain why this was so. These changes had been unforeseen.
Mr Draybi asserted that, following the issue of the revised DCP on 26 October 2021, and ignoring the density restrictions, a minimum period of 18 months, which he described as “optimistic but unrealistic”, would have been needed to register a plan of subdivision. That would have implied completion in late April 2023 at the earliest. But the new density restrictions would have further delayed registration at least by “some months”.
In support of these assertions Mr Draybi enclosed a report written by Mr Whitting for Mr Kavanagh in November 2021 (see [223]-[225] below). The report was described as a “planning and approvals precis”. It outlined the steps so far towards obtaining a subdivision of the Leppington Land; described the course of the planning process; and listed the further tasks required to complete subdivision, with an estimated timetable.
The report stated that the activities completed to date included:

• Ongoing liaison with Camden Council in relation to progress of the rezoning process

• Completion of land surveying and contouring

• Liaison with Sydney Water to confirm the availability of gravity sewerage infrastructure to service the Property

• Environmental assessment of select areas of the site for contamination

• Preliminary planning and subdivisional layouts

In his description of the planning process to date Mr Whitting reported:

Rezoning [in July 2021] was followed in early November [2021] by an updating of the Camden Council Growth Centre Precincts Development Control Plan. This was accompanied by unforeseen density and maximum dwelling controls imposed as a result of limitations on sewerage capacities.

It was therefore only in November 2021 that any development application could have been submitted via the NSW Planning Portal and even then, it would be unlikely to have been accepted absent a formal pre-lodgement meeting with Camden Council.

Whilst we had previously managed to gain confirmation from Sydney Water that it could service the Property, any subdivisional planning works undertaken to date were rendered obsolete by the imposed density controls.

Effectively therefore, it was only in mid-November 2021 that we were in a position to proceed with planning for submission of a development application for the Property.

The timetable for the remaining tasks estimated that registration of the subdivision plan would occur in February 2024. This was 27 months after the date of the report, although the estimates provided for the tasks in question totalled 30 months.
In his letter Mr Draybi referred to Mr Whitting’s report as “expert advice”. He summarised the main points in the report, describing the outline of tasks already taken as “the various activities which have been carried out … to progress the development up until November 2021”. He also stated that the 30 month timeline exceeded the 18 month timeline he had earlier provided, but that was because that timeline was, as he himself had stated, unrealistic. The 30 month timetable was the one a reasonable developer would adopt.
Under the heading “sunset date” the letter repeated that it had been impossible for Ahmau to obtain registration of the Plan by the sunset date and further that changes to the planning instruments had “effectively rendered the [Presale Plan] obsolete”. It added:

As at the date of this letter, only the Purchaser and 7 other purchasers (purchasing a proposed lot in the Proposed Subdivision Plan) are yet to provide their consent to rescission.

The letter went on, “[b]y reason of the matters set out” in it, to give formal notice under CA s 66ZS(4) of Ahmau’s intention to rescind the contract within 28 days after service. It stated that if consent was not given within that period, Ahmau would commence proceedings under CA s 66ZS. The Preets were invited to give consent to avoid unnecessary litigation. The letter asserted that the Court would be “comfortably satisfied” that rescission would be just and equitable, and that, in Ahmau’s opinion, the withholding of consent would be unreasonable.
Mr Anjos replied on the same day. He wrote:

At this time we do not propose to respond to the matters raised in your correspondence and ask you advise our office as a matter of urgency, whether or not your client intends to proceed with the subdivision. If your client intends to proceed with a subdivision then please submit the amended plan and our client may wish to consider whether to accept a comparable block of land under the new subdivision.

We believe that the above is a suitable alternative resolution to the current matter.

A week later Mr Draybi responded. He stated that Ahmau did not “view the proposal in your letter … as a suitable alternative resolution”. He repeated the invitation to rescind, and foreshadowed, if consent were to be withheld, an application for costs.
On 11 May Mr Anjos replied (emphasis added):

We note your correspondence and advise that our client is not prepared to rescind the contract on terms advanced by your client.

We have advised our client on the ramifications of S66ZS of the Conveyancing Act 1919 and are comfortable with the instructions received to date. It is firmly in your client's interest to put forward a proposal that would provide our client with compensation having regard to the significant change in the market. We note the circumstances of your letter dated 20 April 2022 and we are yet to be convinced that grounds exist for your client to rescind the contract without compensation being ordered.

There was no further communication (apart from without prejudice correspondence referred to below) between the parties before the proceedings were commenced three months later.
Mr Preet’s testimony: Mr Preet’s main affidavit was made in March 2023. In it, he deposed that he and his wife “started looking for property to purchase in Sydney” from “around 2016 onwards” because they wished to expand their family and the existing rented apartment at Granville was too small.
In his affidavit, Mr Preet explained the decision to purchase lot 1040 in the following terms:

I decided to purchase Lot 1040 because I thought it was a desirable area to grow my family and raise my children as it was in the same area as our then rental home in Granville, close to a shopping mall, close to my work, close to our extended family, close to schools and it was also close to a new airport that was under construction at the time. After researching property for over a year, I knew that Leppington was also one of the only areas that I could afford in Sydney.

In explaining his reasons for refusing to consent to rescission of the contract, Mr Preet deposed in his main affidavit that since entering into the Contract he had been looking forward to moving to Leppington with his family. He acknowledged that in the meantime he had bought the Spring Farm property, but stated that his plan was to live there only “until Lot 1040 settled”.
Mr Preet explained that the Spring Farm property is located between two other houses which are occupied by people with disabilities. The behaviour of the disabled residents frightens his children and at times creates disturbances which prevent him and his family from enjoying their home. He stated that he was not aware that this would be the case until after they had moved in. He described this as “a major factor” in the decision not to rescind the contract, and stated that the Spring Farm property was not suitable as a long term home for his family.
Mr Preet also stated that another “major factor” in his refusal to rescind was that Lot 1040 had greatly increased in value. He referred to the valuation he had obtained of $720,000 and asserted that if the contract was not completed he would “incur a significant loss” and Ahmau would receive a corresponding “windfall”.
Mr Preet stated:

On my family's income, I would not be able to purchase a similar parcel of land in Leppington at the price for which I purchased Lot 1040 in March 2017 nor could I afford to purchase a similar parcel of land in Leppington at all now given the steep rise in house values, increasing interest rates and increasing cost of living.

Mr Preet added that he was no longer eligible for the first home buyer’s concession and any duty on a new purchase would be levied at the full rate. On the $720,000 valuation the amount of duty would be $27,500. Mr Preet stated that “the rising interest rates and increasing house prices together with the requirement to pay the full amount of stamp duty will make it impossible for me to enter the market in Leppington”.
Mr Preet went on to state:

In the current housing market, I believe that in order to move my family to a home that suits our needs, I would have to relocate interstate or move to the regional and rural areas of New South Wales to find affordable housing which would be highly disruptive to the life I have built in Sydney for my family and especially for my children.

Mr Preet stated that he had seen what he described as “the amended plan of subdivision”, by which he appears to be referring to one of the layout plans prepared by Mr Whitting in 2021. He continued:

I have seen the amended plan of subdivision and I can see that a parcel of land similar in size to Lot 1040 is still depicted within the plan in a similar position within the subdivision. It is still contemplated that that parcel of land will form part of the subdivision. It is my belief that the Plaintiff will eventually commence subdivision of the land at 14 Dwyer Road, Leppington now that it has obtained approval for the subdivision. I am willing to wait as long as necessary to receive a parcel of land equivalent or similar to that in the Contract. It is very important for my future and my children's future that the investment that my wife and I made in Lot 1040 can continue. That land will continue to rise in value and I want my children to have this asset to on an ongoing basis.

Mr Preet also deposed that he “did not hear anything” from Ahmau between March 2017 and 11 January 2021. He referred to the correspondence between the parties up to May 2022 which I have summarised above. He said that it made him “extremely disappointed and stressed”. This stress had been compounded by the Developers’ “long period of unresponsiveness”.
In his supplementary affidavit, Mr Preet denied the allegation in Ahmau’s defence that the Preets’ “primary position” was that “they should be awarded some form of damages”. Mr Preet stated that he did not want the contract to be rescinded and he wanted the land at Lot 1040 “or a similar block”. He stated that he was “willing to consider” paying the difference for any larger block the plaintiff might have available once a subdivision was approved.
Ahmau’s defence to the Preets’ specific performance claim put in issue whether they were ready willing and able to complete the Contract. Mr Preet gave supplementary oral evidence in chief on this subject. He said that his annual earnings were about $60,000 and Mrs Preet’s current annual income from her business was similar. On his and his wife’s earnings, they could borrow up to $550,000.
Mr Preet also said that, in addition to the Spring Farm property, he and his wife owned an investment property in Queensland. They had about $400,000 in equity in the Spring Farm property, plus another $200,000 in the Queensland property.
It emerged in Mr Preet’s cross-examination that at the time the Preets entered into the Contract to buy Lot 1040, they owned an investment property at Shortland, Newcastle, which they were renting out. Their prior ownership of this property had not been disclosed in Mr Preet’s affidavits. It had been purchased in 2014 for about $380,000, also under an off the plan contract. At some point after March 2017 it was sold, presumably to fund the purchase of the Queensland property.
Further details about the purchase of the Spring Farm property also emerged. The land was in fact purchased pursuant to an off the plan contract similar to that which was applied to the Leppington purchase (it likewise contained a sunset clause). The land contract was signed in “2017 or 2018”. The price for the land was about $345,000. Following registration of the plan and completion of the purchase, the Preets entered into a building contract which took “4 or 5 months” to complete before they moved into the property in late 2019. Mr Preet said that the building work cost about $300,000.
Mr Preet was asked about the delay of almost four years between entry into the Presale Contract for Lot 1040 in March 2017 and the enquiry to Mr Alcorn about progress in January 2021. It was put to him that this showed that he did not care about the completion of the Contract. He denied this, and complained about a lack of action from his solicitor.

Bakshis’ circumstances and dealings with Developers

Background and documentary evidence: Mr Bakshi, like Mr Preet, was born in India. He is a software engineer who holds an Indian Post-Graduate qualification in computer science. In 2011, he “relocated” to Sydney to pursue post-graduate study in information systems at the University of New South Wales. There he met his now wife, who was completing a PHD in Medicine at the Garvan Institute of Medical Research (under the auspices of the University of New South Wales). They married in 2012.
Like the Preets, the Bakshis’ introduction to the Leppington Land came through Stroud. They too signed a Preliminary Agreement and paid Stroud a deposit of $1,000 and a preliminary agreement fee of $2,900. In their case, all of the special conditions were ticked except the one making the Agreement conditional on the sale of an existing home (which, of course, they did not then have).
The Bakshis paid the $3,900 to Stroud on 8 February and were similarly asked to identify their solicitor for the purposes of preparing their Presale Contract. They retained a firm named VS George Lawyers (“VSG”), to act for them on the purchase. Initially the matter was handled by Mr Jyotsna Singh of that firm.
Mr Bakshi wished to reduce the deposit payable to 5% and asked Mr Singh to pass the request on to Mr Alcorn. Mr Alcorn was prepared to agree to an instalment arrangement under which half of the deposit (5%) would be paid on exchange and the other half upon approval being granted for the development. This was acceptable to the Bakshis.
The following emails ensued between Mr Singh and Mr Alcorn:

Mr Singh to Mr Alcorn, 24 March 5:36pm

When do you anticipate to receive Development Application Approval? And will our clients receive some notice prior to approval so they can arrange their finance to pay the deposit?

Mr Alcorn to Mr Singh, 26 March 10:24am

The land is still zoned rural pending a rezoning to residential. I would expect a rezoning sometime in the next 12-15 months. I can then lodge a development application. Allow say 6 months for that to be assessed and approved then my best guess for development consent is 18-21 months. But that is only a guess.

I will give ample notice of approval for purchasers to arrange the balance of deposit. A regular update will be distributed so [they] are all kept in the loop along the way.

As already noted, contracts were exchanged between Ahmau and the Bakshis on 6 April 2017. The Bakshis thereupon paid the balance of the first instalment of the deposit (after taking account of the $1,000 deposit paid to Stroud). The total paid was thus 5% ($16,699). [1]
Like the Preets, the Bakshis claimed the benefit of the first home buyers’ duty concession on the Contract. They received a complete exemption. Why they received a greater benefit than the Preets was not explained in the evidence or addressed in the parties’ submissions.
As with the Preets, there is no evidence of the further dealings, if any, between the Bakshis and Stroud after they entered into the Presale Contract. Mr Bakshi said in cross-examination that they had never entered into a building contract with Stroud and he remained unsure about whether they would. What happened, or may yet happen, with the preliminary agreement fee is unknown.
From 2018 onwards, Mr Bakshi did make regular requests for information from Ahmau on the progress of the development. These requests were made to Ahmau’s agent Mr Sergi.
The first request for information came in March 2018, 11 months after the Presale Contract was signed. Mr Sergi told Mr Bakshi that development approval was expected at the end of 2018 and registration of the plan of subdivision (and hence completion) at the end of 2019.
Mr Bakshi’s next enquiry came in November 2018. He was told that there had been some slippage. Development approval was expected in mid-2019 and registration of the plan of subdivision at the end of 2020.
Mr Bakshi made further enquiries in March and May of 2019. His enquiries focused on the development approval. In March, he was told that it was still on track for mid-2019 and in May that it might be delayed for 6 months for the Council election in the “worst case” but that so far everything was on track.
In September 2019, the Bakshis bought a residential property at Hammondville. There is no evidence about where they had been living before this, but it was presumably in rental accommodation. The property consisted of an existing house containing three bedrooms. The purchase price was $785,000.
Three days after the purchase, Mr Bakshi made a further request of Mr Sergi about the progress of the Leppington subdivision. He was told that the development application was expected at the “start of 2020” and registration of the plan of subdivision by “mid-2021”. He made a further enquiry in December 2019 and was told that everything remained on track.
As most who are reading this judgment will recall, the Covid pandemic came to worldwide attention in February 2020 and restrictions on gathering and movements began in March. In July, Mr Bakshi made a further request for information and was told that as a result of the effect of the pandemic the site would not be ready (evidently for building, i.e. registration of the strata plan) until “2022”. This was clearly well beyond the sunset date on the contract, which was April 2021.

Mr Bakshi to Mr Sergi, 1 February 2021 8:27am

Given we had paid a deposit for the land back in 2017, could we please get a detailed timeline of if and when this land will be ready? We need to plan our finances accordingly and the moving target even pre-covid has been hard to navigate. Have the approvals been obtained?

Mr Sergi to Mr Bakshi, 1 February 2021 8:33am

Which lot did you purchase. Also an email was sent to your solicitor saying the timing has been pushed out to the end of 2023 & if you no longer want to wait you can cancel your contract and get your deposit fully refundable?

Mr Bakshi to Mr Sergi, 1 February 2021 8:39am

It was lot 1064. I have not heard from the solicitor yet but I’II give him a call. We still aren't sure what we will be doing with the contract but would you be able to tell us the reasons for the delay (other than covid)? Are the approvals still pending?

Mr Sergi to Mr Bakshi, 1 February 2021 8:54am

Unfortunately due to COV19 there was more than this site that got affected, all of stage 5 sites in Leppington got put on hold. Please contact your solicitor regardless as the sunset clause date needs to be extended regardless if you wish to keep this lot.

There followed an exchange of emails between Mr David Litfin, a solicitor at VSG, and Mr Sergi:

Mr Liftin to Mr Sergi, 3 February 2021 1:53pm

Our client informs us that the project has been delayed and that the vendors are allowing purchasers to pull out.

We do not appear to have received anything from you since February 2018.

Can you please confirm the current situation?

Mr Sergi to Mr Singh, 3 February 2021 9:01pm

As registration has been pushed out further than expected the vendor is saying each buyer can pull out & get a full refund. Please advise if you would like us to email you a deed of recission?

There was no reply from Mr Litfin for almost six weeks. On 15 March he emailed Mr Sergi stating that the Bakshis did not wish to pull out.
Almost five months passed. Then on 18 August Mr Alcorn wrote a letter to VSG asking the Bakshis to agree to rescind the contract. The letter appears to have been in almost the same, if not exactly the same, form as the letter sent to the Preets at about the same time ([94] above).
On the same day Mr Litfin responded:

Can you please provide more detail regarding paragraph 3 of your letter [quoted at [94] above], so that we can advise our client fully. You appear to be saying that the area has been rezoned and that now makes the Development Application possible, as the reason for now wanting to rescind the contract.

There was no immediate reply from Mr Alcorn and six days later Mr Litfin emailed him again. Mr Litfin noted that Mr Alcorn’s letter had given the Bakshis seven days to consent to rescission and had not responded to the request for information. The email went on to state that the offer of rescission in the letter was rejected.
On 16 September Mr Alcorn wrote again to VSG. The letter was in substantially the same form as the letter sent on the same date to the Preets ([96]-[97] above) and again, asked for consent to rescission within 14 days.
This prompted a response from Mr Litfin on 1 October. Mr Litfin wrote:

We are instructed that the value of the land has increased substantially over the last four years and that our client, apart from being significantly disadvantaged if the contract was rescinded, risks being priced out of the market completely.

The first time your client raised the issue of Zoning, was not until after the zoning had already changed. At no point during the preceding four years was it raised as a potential issue and it is no longer an issue. Furthermore, we are informed that the timeline outlined in paragraph 4.b of your letter dated 16 September is substantially different from the timeframe conveyed by the vendor's agent at multiple times.

Your client has had four years to prepare the Development Application. It appears that the vendor did not intend to prepare the Development Application until after the property was rezoned and that even after it was rezoned, they chose instead to try and rescind the contract rather than lodge the Development Application. This objectively appears to have been a commercial decision by your client to capture the financial gain that would flow to our client.

Our client rejects the vendor’s request to rescind the contracts.

There was no reply from Mr Alcorn. At the beginning of February the following year Mr Bakshi emailed Mr Sergi asking whether there was “any update on the status” of the Leppington subdivision. Mr Sergi replied that there was none “at this stage”.
A further two months passed before, on 20 April, Mr Draybi of Centurion wrote to VSG with a fresh request for rescission. Again, the letter from Mr Draybi was in substantially the same form as his letter Preets sent at the same time ([101] above).
Evidently the letter was passed on to Mr Bakshi but he decided to conduct the further negotiations himself. On 4 May, he emailed Centurion asking them to direct future correspondence to him and undertaking to respond to their letter of 20 April on his return from overseas at the end of the month.
On 18 April, whilst still overseas, Mr Bakshi sent a letter to Mr Draybi. The letter referred to the provision in the proposed deed of consent which stated that the purchasers had obtained legal advice about their rights. Mr Bakshi stated that the earliest he would be able to obtain such advice would be after his return, but set out a list of questions, by reference to the letter of 20 April and the report from Mr Whitting enclosed with it. Mr Bakshi stated that he was seeking the information was asked so as to be able to make his decision on his return.
The list of questions was extensive. It included:

[Mr Whitting’s November 2021 report] states that -

…

Activities completed to date have included:

• Ongoing liaison with Camden Council in relation to progress of the rezoning process

• Completion of land surveying and contouring

• Liaison with Sydney Water to confirm the availability of gravity sewerage infrastructure to service the Property

• Environmental assessment of select areas of the site for contamination

• Preliminary planning and subdivisional layouts

1. Could you please provide details as to the outcome of the Environmental assessment of select areas of the site for contamination?

2. Could you please provide a copy of the preliminary planning and subdivisional layouts?

[The memorandum] further states that

"This was accompanied by unforeseen density and maximum dwelling controls imposed as a result of limitations on sewerage capacities."

3. Please provide details as to the sewerage capacities that were used for the initial subdevelopment, and why these were deemed reliable at the time the development was sold?

4. Please provide details as to the revised, current sewage capacities, and what reasonable steps were taken to achieve provision of the original sewerage capacities?

Additionally, the following timeline is provided for subdivisional work-

Activities required to complete subdivisional works:

A list of the activities prerequisite to completion of subdivisional works are as follows:

Activity Duration Complete

Environmental studies 6 months Apr 2022

Subdivision design & planning 3 months June 20**22

5. Can you please provide us with a copy of the Environmental Studies?

6. Can you please provide a copy of the Subdivision design and planning work done to date, and confirm that this likely to be completed by June 2022?

Active Communications with Camden Council

In your letter at Point 16 you state

"16. Whilst the Vendor maintained regular, active communications with Camden Council in relation to progress of the rezoning, the nature of the statutory planning process meant it had no ability to influence the timing or nature of the outcome"

7. Can you please provide a timeline, and brief as to subject and response of each communication with Camden Council.

Minimum Lot Size

In your letter at Point 20 you state -

*20. By virtue of clause 4.1AB(*3) in Appendix 9 of the 2006 SEPP, the minimum Lot size for a dwelling house on the Land became 300m**2 : 4.1AB Minimum L**ot sizes for residential development in Zone R2 Low Density Residential and Zone R3 Medium Density Residential *(*3) The minimum Lot size for a dwelling house is 300m**2 *if, on the Residential Density Ma**p-(*a) the dwelling density *(*per hectare) in relation to the land is 15, 20 or 25, or *(*b) the dwelling density range (per hectare) in relation to the land is 10-20, 20-25, 25-35 or 35-60.

8. Our lot 1064 is for 313m2, therefore why do you consider this change significant reasons to request we rescind our contract, when it is not relevant to our lot purchase.

Just and Equitable

In your letter at Points 30, 33 and 34 you state

30. As at the date of this letter, only the Purchaser, and 7 other purchasers (purchasing a proposed lot in the Proposed Subdivision Plan) are yet to provide their consent to rescission.

33. If the executed Deed of Consent is not provided to us by the end of the 28-day period, the Vendor will commence proceedings in the Supreme Court of New South Wales under section 66ZS of the Conveyancing Act 1919 seeking an order that the Contract be rescinded pursuant to clause 11.1 of the Contract.

34. The Vendor invites the Purchaser to execute the Deed of Consent to avoid unnecessary litigation. The Court will be comfortably satisfied that rescission is just and equitable in these circumstances, especially considering that:

(a) the Vendor has not in any way delayed or prevented the approval of the Proposed Subdivision Plan;

(b) it was practically impossible for the Vendor to register the Proposed Subdivision Plan by or before the Sunset Date; and

(c) the Proposed Subdivision Plan has been rendered obsolete by legislative changes

9. Please provide in detail any calculations that are the basis of your statement that "Court will be comfortably satisfied that rescission is just and equitable".

10. Please provide your calculations and assumptions that support your statement.

11. Please provide a breakdown by lot identification of all sales, including the date and price of sale, and date any of the contracts where rescinded.

On 3 June, Mr Draybi responded. He took issue with the suggestion, said to be implicit in Mr Bakshi’s communications, that he (Mr Bakshi) had not been able to obtain legal advice. Notwithstanding this, the following responses to Mr Bakshi’s questions were provided:

(a) Could you please provide details as to the outcome of the Environmental assessment of select areas of the site for contamination?

We do not see how the outcome of the environmental assessment is relevant in relation to the rescission of the Contract.

(b) Could you please provide a copy of the preliminary planning and subdivisional layouts?

Please refer to the Contract which contains a copy of the Proposed Subdivision Plan.

(c) Please provide details as to the sewerage capacities that were used for the initial subdevelopment, and why these were deemed reliable at the time the development was sold?

This question misapprehends the report by Mr Whitting. At the time the Proposed Subdivision Plan was prepared, there was no way to know what legislative changes would be made that would affect the development. That is precisely why the Contract is conditional upon the Proposed Subdivision Plan being consented to and registered.

(d) Please provide details as to the revised, current sewage capacities, and what reasonable steps were taken to achieve provision of the original sewerage capacities?

Please refer to the response to (c) above. Sewerage capacities were not necessarily the sole reason why controls were imposed.

(e) Can you please provide us with a copy of the Environmental Studies?

This question misapprehends the report of Mr Whitting and our 20 April Letter. This document cannot be provided.

(f) Can you please provide a copy of the Subdivision design and planning work done to date, and confirm that this likely to be completed by June 2022?

This question misapprehends the report of Mr Whitting and our 20 April Letter. This document cannot be provided.

(g) Can you please provide a timeline, and brief as to subject and response of each communication with Camden Council.

The Vendor is not obliged to provide you with a timeline and brief of each communication with Camden Council.

(h) Our lot 1064 is for 313m2, therefore why do you consider this change significant reasons to request we rescind our contract, when it is not relevant to our lot purchase?

Please read our 20 April letter which sets out our client’s fulsome position.

(i) Please provide in detail any calculations that are the basis of your statement that “Court will be comfortably satisfied that rescission is just and equitable”.

The basis of that statement is set out in our 20 April Letter.

(j) Please provide your calculations and assumptions that support your statement.

Please refer to our 20 April Letter for the basis upon which the Vendor says that rescission of the Contract is just and equitable in all of the circumstances.

(k) Please provide a breakdown by lot identification of all sales, including the date and price of sale, and date any of the contracts where rescinded.

The Vendor is not obliged to provide you with this information. You have been put on notice, however, that at the date of the 20 April Letter, 7 other purchasers are yet to provide consent to rescission. As at the date of this letter, you and 5 other purchasers are yet to provide consent to rescission.

Mr Draybi went on to repeat the invitation to execute the deed of consent “to avoid unnecessary litigation”. He noted that the period set out in the 20 April letter had expired on 18 May.
On 8 August Mr Bakshi sent a reply. He began by complaining that Ahmau had failed to provide the regular update promised by Mr Alcorn in his email of March 2017. Mr Bakshi continued:

8. There is an imbalance of power and authority between me as Purchaser and the Developer, as all project-related information lies solely known and in the hands of the Developer.

9. Failing to share the information I have sought precludes me as the purchaser from making a fully informed decision about how to proceed and does not allow me to seek appropriate legal advice at this stage.

10. It is not lost on me that the entire issue at hand arises from the failure of the Developer, to execute clause 11, particularly clause 11.1 of the Contract dated 6th Apr 2017 …

Please note that clause 11.1 of the agreement makes the “completion” of the “Contract” subject and conditional upon “consent to the proposed plan of subdivision” by the “proper authority or authorities and registration of the Plan as required by law”.

Clause 11.1 further provides that:

“In the even that registration has not been effected within 48 months from the date of this Contract *(*or such further period as the parties agree), either party may by notice in writing to the other *(*but prior to registration) rescind this Contract.”

Clause 11.1 does make mention of consensus between both the Purchaser and Vendor to extend the timeline for the completion of the Contract.

It now appears that the developer is seeking to initiate unilateral supreme court action without attempting to seek mediation to resolve this issue.

Further, by deliberately choosing to withhold necessary data and critical information that would be required to be produced in any court process, you are denying my rights as a Purchaser.

The developers’ arbitrary decision not to share information requested by me, which will be required to be presented for any court action, is likely to be prejudicial to any case the developer chooses to pursue in the supreme court.

Mr Bakshi’s letter went on to refer to Mr Whitting’s report and the information requested in the letter dated 18 May 2022. He asserted that most if not all of the information requested remained relevant in the course of this part of the letter:

20. The Conveyancing Act 1919, Section 66ZS - Rescission under sunset clauses, (Section 66ZS) provides enhanced protections for the purchasers, such that delays alone, irrespective of reasons, are not sufficient to rescind a contract

The developer has not provided any evidence that they have made any genuine effort to accommodate my contracted lot into any brief for a revised compliant sub-divisional plan.

Among the points addressed was the change in the lot size. Mr Bakshi wrote:

25. In your letter dated 20th April 2020, you mention the following

At Point 20

“By virtue of entering into the Contract, it was anticipated that the size for a dwelling house on the Land became 300m²”

At Point 17

“At the time of entering into the Contract, it was anticipated that the proposed development would be able to be carried out in accordance with the Proposed Subdivision Plan, subject to minor alterations. The Proposed Subdivision Plan contains various lot sizes, with the minimum lot size being 248m²”

Given this planning change by Camden Council, the developer claims that lots under 300m2 in the original subdivision plan are no longer permissible.

This would indicate that the empty lots available from the rescission of existing contracts can easily accommodate the remaining live contracts over 300m2, such as ours.

Your failure to provide even the most basic of factual information as to the actual lot sales brings into question your client’s commitment to act as a diligent, honourable developer in bringing together all affected parties to seek a workable solution that is satisfactory to all.

My lot is 313m2, well above the minimums specified, rendering the claimed unforeseen minimum lot size requirements an irrelevant consideration for my contract.

Mr Bakshi also took issue with the conclusion that leave would be granted. He quoted the provisions of CA s 66ZS and continued:

30. The developer has not been proactive, open nor transparent in their dealings with me. Their failure to provide readily available supporting evidence, that they state they have relied upon to advise me to rescind, undermines any claim of open, good faith and timely communications.

31. The developer has provided no reason why they have failed to lodge a development application as per the contracted. Indeed, their own “expert report” states such an application would be lodged by June 2022, yet they still have failed to do so. They could and should have lodged a Development Application on any day since July 2021.

32. Whether the subject lot has increased in value, Leppington is a high-growth area and land values have increased substantially since the time the initial contract was signed.

33. The effect of the rescission on each purchaser, rescission of the contract will dramatically affect me, given the substantial price increases in land value in this area, and the lack of readily available bare land lots, I will be priced out of the market and not be able to secure my future home.

34. The developer has the opportunity to make substantial profits by reselling the lot if I were to rescind the contract at this stage.

There was no response from Mr Draybi to this letter. As previously noted, the proceedings were commenced on 29 August 2022.
Mr Bakshi’s testimony: Mr Bakshi’s main affidavit was made in February 2023. In it, he deposed that he and his wife “had a goal and a desire to design and build [their] own life-long home in Sydney”. In “about 2016”, they began to consider having children and had been “able to accumulate sufficient funds for a deposit”.
Mr Bakshi deposed that he and his wife shared, and continue to share, a “common vision” of what they were looking for in the property which they would purchase. These were:

a. It [was to] be eco-friendly and have sustainable features;

b. It [was to] provide a nurturing environment for our children to grow up in;

c. It [was to] have adequate space for [the Bakshis’ parents] both of whom were recently retired, to reside comfortably and securely. As our family expanded, it was our wish for both our parents to be able to spend as much time with us and our children; and

d. It [was to] be located in a Greenfields development with easy access to public transportation and nearby supermarkets.

In his affidavit, Mr Bakshi explained that this decision to buy into the Leppington Land subdivision was based on the following “key factors”:

a. The growing potential of the Leppington area due to the construction of the Western Sydney International Airport and the availability of nearby public transportation;

b. The ability to have complete control over the design and construction process by securing the land contract separately from any building contract;

c. Close proximity to supermarkets; and

d. Affordability for our extended family, and extra time to save funds for our dream home due to the expected delay in Development Application approval.

In two supplementary affidavits, Mr Bakshi deposed that he and his wife purchased the Hammondville property to provide more space to raise his daughter while “awaiting to build [their] long-term family home in Leppington”. They had decided to buy an “older and less expensive” existing home (on which the duty was $31,000) because they believed they had exhausted their first home buyers’ grant entitlement.
In explaining his reasons for opposing recission of the Presale Contract, Mr Bakshi stated that the Contract had accommodated his, and his wife’s, “dream” to design a “home that incorporates environmentally sustainable features, smart home technology, child-friendly designs, and safe and convenient layouts for our parents”. Mr Bakshi also deposed that he had noticed that the land value in Leppington had “risen dramatically” and that, if the contract were to be rescinded, he and his wife would effectively be priced out of similar opportunities in a location so proximate to surrounding train stations, the new Western Sydney Airport and local supermarkets.
A third supplementary affidavit addressed the Bakshis’ claim for specific performance. In this affidavit, Mr Bakshi deposed that he and his wife were ready, willing and able to complete the purchase and comply with an order for specific performance. In support of this, Mr Bakshi outlined various sources of funds, including savings, equity and borrowing options, that he could access for this purpose.
In cross-examination, counsel for Ahmau asked Mr Bakshi about his requests for information about the progress of the development. He was first taken to Mr Alcorn’s email of 26 March 2017 (above [144]) in response to which he agreed that it “wasn’t clear [to him] when the rezoning would occur and how long the process would take. There was uncertainty”.
Next, counsel sought an explanation for why he did not seek a further update before buying the Hammondville property in September 2019. Mr Bakshi said that he received all the necessary information about the timeline of the development in response to his May 2019 email and that the price of the Hammondville property was “very good”.
Then counsel asked about the letter of 1 February 2021, which indicated that registration of the Presale Plan was still a long way off. Mr Bakshi said that he was not concerned about the delay. In his words, he had a roof over his head at Hammondville and he was happy.
The cross-examination next moved to the two letters sent to VSG in August and September 2021 which sought agreement from the Bakshis to rescind the contract. In response to questioning from counsel about his interpretation of these letters, Mr Bakshi said that he did not believe that sufficient reasons had been provided by Ahmau in the letters to explain why the sunset event had not occurred before the sunset date for the purposes of s 66ZS. At least, he said that the provided reasons were not “just and equitable in all circumstances”.

Q. On page 1458, you see at the first sentence on paragraph 27 it says that there is a massive delay to completing the contract because of the very late rezoning. You see in paragraph 29 that the changes to the planning instruments have rendered the plan obsolete. You understood from that that the plaintiff now no longer wished to continue the development?

A. Yeah, that reason didn’t add up in my head because the lot that I was on it, like, the changes for - described in that letter did not add up to what was actually what the contract had said. So I think some of the things were like the minimum lot size and stuff, which was - it was not relevant to our contract. So the - so based on the information that was provided that was provided here I, I didn't see any - I didn't have enough information to make a call whether it was actually fair to rescind or not.

In response to questions from counsel about why, having purchased the Hammondville property two years before the Sunset date, he remained interested in the Leppington property, Mr Bakshi repeated the reasons set out in his affidavit. He added that “there’s a community” in Leppington and that “South West Sydney is one of the probably highest growing areas in Sydney right now”. Mr Bakshi also agreed that another reason he was not interested in recission was that it would forever deprive him of his entitlement to the first home stamp duty exemption.
It emerged at the hearing that since the proceedings had begun the Bakshis and their daughter had moved to New Jersey. They moved there in October 2022 after the software firm for which Mr Bakshi was working expanded into the United States. They had no immediate plans to return to Australia. Mr Bakshi said that they might do so in 12 or 18 months’ time. Their daughter would then be of primary school age. Mr Bakshi said he would want her to go to a “good school”, but apparently had not identified any particular school in that regard.
From Mr Bakshi’s evidence in cross-examination it clear was that the Bakshis were in a strong financial position. He repeated that the $785,000 they paid for the Hammondville property had been “a good price” from their point of view. His “best guess” was that the property had increased in value by 40% or so. The Bakshis had not purchased any property in America but had obtained suitable accommodation and in the meantime, presumably, would have been renting out the Hammondville property. Ms Bakshi was not in paid employment, but Mr Bakshi was earning USD$230,000 from his work.
Mr Bakshi presented, both as a witness and when arguing his case at the supplementary hearing, as astute and keenly focussed on building wealth for his family. I think, however, that his conduct since 2021 may have been coloured by the views he formed as a result of the research he conducted for himself into CA s 66ZS. Mr Bakshi seems to believe that the statute tilts the balance against the vendor much more than I think it actually does.
Like the Preets, the Bakshis have, since entering into their Presale Contract, bought a family home elsewhere. The delays with the Leppington subdivision have left them in a similar state of uncertainty. It may be accepted that the Bakshis had goals for their family home of the type that Mr Bakshi described, but either those goals were already being satisfied by living at Hammondville or they were not sufficiently important for them to move somewhere else. The goals were not specific to the Leppington area generally, far less to the Lot itself.
As with Mr Preet, I therefore found it difficult to accept when Mr Bakshi claimed that, despite the Hammondville purchase, he was, and remained, determined to build a family home at Leppington. The obvious course for him, as it was for Mr Preet, would have been to wait and see what happened with the Leppington subdivision. I cannot see how it could possibly have advantaged him to decide what he was going to do before he had to. All the more was that so when he moved, effectively indefinitely, to the United States. I am not satisfied that he had at the time of the trial, or indeed that he ever had, any settled intention to build a family home on Lot 1064 once the Presale Plan was registered. [2]

Steps taken by Developers with respect to Leppington Land

Documentary evidence: The documentary evidence before me began with the retainer of Mr Whitting in mid-April 2020. Mr Whitting described his initial role as having been to assist with the planning, approval and subdivision process for the Ahmau Land. In evidence were copies of Mr Whitting’s diary entries over the relevant period which recorded his day-to-day activities in relation to the Land. These entries were conveniently summarised in a table which was also before me as evidence.
Immediately after his appointment Mr Whitting made enquiries of the Council, DPIE and SWC. He was advised by the Council:

Currently, we are going out to get an independent open space analysis done as there is potentially shortages in open space across the Precinct. Until this is completed there is no set timeframe on when Stages 2 and 5 are going to be rezoned. We are looking to have the study back and analysed within the next few months.

Mr Whitting reported to Mr Kavanagh on 23 April:

… Have spoken to both [DPIE] and [the Council]. Missing puzzle piece is SWC; will update once (if) I hear from them.

Short answer is, looks like a rezoning towards the end of 2021. Density will be max 15 dw/ha [dwellings per hectare]. Likely to have a detention basin in the site.

Over the following seven months, Mr Whitting pursued SWC over the “missing puzzle piece”, namely sewerage facilities for the development. In the end, this required the lodgement of a feasibility application, which was lodged in November 2020 by a consultant retained for the Developers by Mr Whitting. The proposal was accepted by SWC in late January 2021 on 1 February, Mr Whitting wrote to Mr Kavanagh:

Some good news. We have finally managed to lever a response from Sydney Water on the sewer issue. We are able to connect sewer to the existing SPS [sewage pumping station] at Emerald Hills, approx 700m to the south along Camden Valley Way. …

Whilst this involves expenditure estimated at between $1.5 to 2 million, it will be reimbursable by Sydney Water …, plus this route enables us to get sewer to the entire site, meaning we no longer have issues with the lower end of the project and the two sub-catchments.

I have checked on the rezoning status with Camden Council: It is still looking like (very) late this year, though there is a risk this could be delayed if the planning study currently underway (looking at open space provision) recommended substantial changes to the existing plan.

Mr Whitting continued to monitor the status of the rezoning and to report regularly to Mr Kavanagh, but there was no apparent progress and getting a rezoning by the end of 2021 was “touch and go”. On 11 June, he reported:

Rezoning is still bogged down in bureaucracy. Latest (from Council this morning) is that there is likely to be a decision late this month for DPIE to take a stronger hand in progressing the process. I think there is sufficient pressure building in various quarters that they may finally be fed up with Camden Council’s procrastinations.

At around this time or soon afterwards, Mr Whitting began reconsidering the layout of the proposed subdivision. He undertook an analysis of the “mix” of lot sizes in recently approved development applications in nearby localities and sales data derived from a subscription-based property data web platform, RPData. He compiled his findings, which he referred to as the “local lot mix”, in a spreadsheet headed “Leppington: Lot Mix Analysis”. Using this analysis, he prepared an amended version of the subdivision plan. Mr Whitting’s draft layout is reproduced below:
On 3 July Mr Whitting sent his draft layout to a surveyor, Mr Simon Cheng, for him to draw up a subdivision plan based on it. Mr Whitting included a number of notes for Mr Cheng to keep in mind. These included: “The overriding control will be lot areas: we are looking to stay as close as possible to the actual lot areas shown on the plan” (presumably a reference to the Presale Plan).
Mr Whitting sent both the spreadsheet and draft subdivision plan by email to Mr Kavanagh on the following day, 4 July. He wrote in the covering email:

… I have drafted the attached layout (statistics for which are included in the spreadsheet). The mix is probably not quite right yet, but there is no point trying to be precise when my scaling could be inaccurate: it is best to wait until Simon scales what I have done and then we can see where we want to fine tune things.

I have sent this to Simon with a request for a fee to convert it into a DA style draft subdivision layout. Will let you know once I hear back from him, but welcome any comments in the meanwhile.

Long & short of it is if my work is anywhere near accurate(?), we are looking at a yield of 130-135 lots plus around 7,200sqm of public open space.

By this point, there was another matter on Mr Whitting’s plate. Between October 2019 and January 2020, a quantity of fill material had been placed on the parcel of Leppington Land which adjoined the Ahmau Land (1105 Camden Valley Way). It was believed that the fill material was clean but Mr Whitting wished to obtain confirmation of this. On 5 July he retained a consultant to test the fill for compaction and contamination. The consultant’s fees proposal was accepted and a report was eventually provided on 30 August.
As already noted, the rezoning changes to the SEPP were made on 16 July (a Friday). Mr Whitting became aware of them when he received a media release issued by DPIE on the morning of Monday 19 July (the media release, and the finalisation report, appear to have been issued to the public on that day).
Mr Whitting immediately sent copies of the zoning diagram and the Finalisation Report to Mr Kavangh. In his covering email he wrote:

… Faster than expected (a pleasant surprise).

Have not digested the final package yet, so leave that with me. What is clear is that whilst the overall structure is similar to what I had assumed in our draft layout, the road locations are different. Might require some modification of the draft layout...

Over the following days, presumably having further consulted the Council’s rezoning package, Mr Whitting refined his lot-mix analysis. In an email to Mr Kavanagh dated 22 July 2021 which attached his updated analysis, Mr Whitting stated:

The attached [lot-mix analysis] suggests we can get a total of 147 lots by increasing small lots (30 x 250sqm, 40 x 300sqm). I think this is a reasonable balance (note any lot below 300sqm will need to be integrated housing). The 10 x 500sqm lots are corner lots intended for dual [occupancy], while the 5 larger lots are backing Camden Valley Way and accessing via a ROW [Right of Way].

The structure plan produced as part of the LEP package shows a different road pattern and some changes in open space to what I had assumed. … I think it is worth pressing our preferred layout (noting it will produce more lots + less road).

So ...... if you are happy with my approach, I will get [Mr Cheng] to produce an amended layout keeping our preferred road design and aiming for the 147 lots (plus approx. 8,800sqm of open space).

The next day, Mr Cheng, instructed by Mr Whitting, finalised an amended version of the subdivision plan which included 145 lots. Mr Whitting sent this plan to Mr Kavanagh on the same day.
Mr Cheng provided a draft layout plan three days later, on 22 July. Mr Cheng’s plan included 135 lots**:**
In late July and early August 2021, Mr Strauss sent Mr Cheng’s 28 July subdivision plan to a variety of real estate agents, requesting quotes for the prices the lots might be sold at.
Responding to Mr Strauss, Mr Marshall Cobb of Stone New Projects, suggested some changes to Mr Whitting’s layout plan to improve the marketability of the lots created by the subdivision. Mr Cobb’s comments were sent by Mr Strauss to Mr Whitting. On 31 July Mr Whitting responded with his comments. One of those comments addressed what Mr Whitting had been trying to achieve with the layout plan (emphasis added):

All in all, I am of view we are aiming at around 145-147 lots from a layout fairly consistent with what has been produced. I can get a third iteration drawn if required, but I think this depends on what we are trying to achieve. My understanding was the plan purpose was to demonstrate an optimal potential yield: something I think it does fairly well. If however we are doing a DA, then that is a different issue and we will need to do more work (plus engage with Council).

Mr Aladdin Elmir of All Property People then provided a quoted price list to Mr Strauss on 4 August 2021. In the covering email to which the price list was attached, Mr Elmir stated that “[his] pricing had increased [Mr Strauss’] revenue by $4.4 million”. This increase was justified by Mr Elmir in a series of dot points comparing the Presale Lots to other comparable lots nearby.
On 6 August Mr Andrew Sukkar, of CBRE, provided his price list to Mr Strauss by way of email. Mr Sukkar projected the total price of all 145 lots in the development to be $90 million.
All three of the above quotes were respectively forwarded to Mr Kavanagh and Mr Whitting by Mr Strauss as he received them.
It was at this point, in early August, that the Developers’ attention seems have shifted to the preparation of a sales package for the Leppington Land. On 11 August 2021, Mr Whitting sent an email to Mr Kavanagh regarding the preparation of the sales package**.** In his email, Mr Whitting stated that asbestos testing should be obtained, and a “1-2 pager” summary of the property should be prepared to accompany the existing planning, survey and servicing documents relating to the land. The email continued:

I think if we can get the [asbestos] testing done… that substantially reduces the risk that others will assess when doing due diligence (it would certainly reduce my scepticism about the site if I were looking at it). This plus the revised layout plan (I sent markups to [Mr Cheng] last night) and you have the full package you need.

Mr Kavanagh replied to this email later on the same day instructing Mr Whitting to proceed with everything Mr Whitting had suggested.
Two days later, on 13 August, Mr Whitting provided a draft “Due Diligence package” to Mr Kavanagh. The package included a two-page summary document describing the ownership, zoning, and size of the parcels making up the Leppington Land as well as a list of further documents which could be accessed by prospective purchasers upon request. Both the revised subdivision plan and the asbestos testing report, which was still in the process of being prepared, were included in that list. In his email to Mr Kavanagh, referring to the provided package, Mr Whitting relevantly stated:

…The final layout [prepared by Mr Cheng] is attached FYI. 149 lots plus the two open space zoned areas. Not a bad outcome (albeit yet to be tested…).

…

The only outstanding document is the [Asbestos] contamination report, which can follow when available in a week or two.

So, the questions for you are:

Do you have any comments on the subdivision layout.

When (and to who) do you want the [Due Diligence] package issued to.

Do you want any briefing…sent to your conveyancer.

In early September, the Due Diligence package was finalised and Mr Strauss began sending it to prospective purchasers.
Notwithstanding the finalisation of the Due Diligence package, discussions about the structure of the subdivision plan between Mr Whitting and Mr Kavanagh continued into September. By 18 September, Mr Whitting’s proposed subdivision plan had a lot yield of 145.
At some point over the next few days, Mr Whitting became aware of the dwelling density limit of 16.5 dwellings per hectare (it was not in fact formally introduced by the amendment to the SEPP on 30 September). On 24 September, Mr Whitting emailed Mr Kavanagh about the effect of the new limit:

I have spoken to Council today, and think I have got to the bottom of this. Short answer is the density control is not quite as bad as thought. See following:

• The density controls are a result of limitations on sewer capacity: this will probably change (improve) over time, but until there is certainty on new infrastructure, this is all we are getting.

• There is a disparity between the maximum permissible density (16.5dw/ha) and maximum total dwelling yield (500). Council and I agree that under the density control, only around 425-430 dwellings are achievable.

• Council have stated that the density cap will prevail: in other words, the lower yield will result (for now).

• I queried Council on whether we could do a subdivision that achieved the 16.5dw density cap, but had 500sqm lots that could then be subject of dual occ's. The response was (at least initially), the density cap would prevail and these would not get through.

• That said, my view is if we are below the 500 total cap, there is no good reason not to approve them. No certainty of course, but worth a go.

• If we do ultimately manage to access our 'share' of the 500dw cap, this translates to 137-138 dwellings in total: not that far off our current 145.

Distilling all this, I have done the calculations and we are looking at around 118 lots to meet the 16.5dw cap. As the site 'area' takes in some of the adjoining roads, we are going to need to get Simon Cheng to measure this and produce a statistical analysis in support of the calculation.

Whilst this is 27 lots short of the most recent plan I drew, counterbalancing this is the fact it will see a commensurate increase in lot sizes.

It is also apparent that there is no 'rush' to get the density on offer. Racing to get a DA in is not important.

If I was (now) designing a subdivision, I would:

● Go for the maximum 118 lots.

● Make sure all corner lots were min. 500sqm to accommodate future duplexes, plus probably throw a few more in to hit our 'share' of the 500 total yield cap (if we ultimately are able to utilise it). Essentially ensuring there are enough 500's to get to (say) 140 total dwellings, whilst only actually showing 118 (ie. make sure we have 22 x 500sqm lots).

I hope this all makes sense, and you are happy the news has not diluted value substantively. Let me know where to from here.

Seems we either:

Proceed with a DA, or

Redraft the subdivision plan and sell (you know my thoughts on the market).

As already noted, the revised DCP was issued on 26 October. Mr Whitting became aware of it on or shortly after that date. On 1 November, DPIE issued a media release announcing the DCP update, which it described as “new planning controls”.
Later that day, one of the agents consulted by the Developers about the sale of the Leppington Land, Mr Marshall Cobb, became aware of the media release. He forwarded it to Mr Strauss, who in turn forwarded it to Mr Whitting, who then replied to Mr Strauss. The email chain included:

Mr Cobb to Mr Strauss, 1 November 2021 at 3:32 pm

New controls implemented today in this area of Leppington.

Max 110 lots now permissible on your site.

Increases the size and price of each lot, however, a lot less buyers in the higher price range.

Mr Strauss to Mr Whitting, 1 November 2021 at 4:40pm

[A]nything new here?

Mr Whitting to Mr Strauss, 1 November 1 at 6:31pm

No, all known.

My estimates are that we are limited to 118 lots maximum. Plus there ls potential to get duplexes on 500sqm comer lots, but that is based on some assumptions that can't at this stage be proved.

Three days later, Mr Whitting wrote to Mr Kavanagh in the following terms (emphasis added):

Just had a call from [Mr Strauss]. He wants the [12 August subdivision plan] amended to reflect the reduced density controls (the 110 lots). It currently shows 145 lots (was done before the density controls came out).

This would involve me redrawing it and getting the Surveyor to recalculate and redraw it. Given we have done a deal on the sale price and yield is really now simply a statistical calculation rather than endeavouring to prove you can squeeze as many lots in as possible, I am not sure this work is needed or appropriate.

Can you please advise? ….

It is not clear from the evidence whether there was any further change to the layout plan.
At some point during the following weeks, Mr Whitting got to work preparing a “precis” document for the Leppington development. An early version (maybe the first) of the “precis” was sent by Mr Whitting to Mr Kavanagh on 18 November 2021. It summarised the new density controls implemented by the DCP and concluded that “the maximum permissible yield [for the Leppington development was] 116 [dwellings]”.
An amended version of the precis was sent by Mr Whitting to Mr Kavanagh on 26 November 2021. The introduction read, “[t]his document provides a precis of the planning, approvals and subdivisional process relevant to [the Leppington Land].” The document was then divided into three parts, each with its own heading. The first part, headed “[a]ctivities completed to date”, set out in dot point form the various surveys, preliminary plans and environmental reports which had been obtained by the Developers. Under the second heading, “planning process to date” the following summary was provided:

Rezoning of the Property … was completed with the release in July, 2021 of the 'Finalisation Report - Leppington Precinct - Stages 2 and 5' by the Department of Planning, Infrastructure and Environment.

Rezoning was followed in early November by an updating of the [DCP]. This was accompanied by unforeseen density and maximum dwelling controls imposed as a result of limitations on sewerage capacities.

It was therefore only in November 2021 that any development application could have been submitted via the NSW Planning Portal and even then, it would be unlikely to have been accepted absent a formal Pre-lodgement meeting with Camden Council.

Whilst we had previously managed to gain confirmation from Sydney Water that it could service the property, any subdivisional planning works undertaken to date were rendered obsolete by the imposed density controls.

Effectively therefore, it was only in mid November 2021 that we were in a position to proceed with planning for submission of a development application for the Property.

In the final section of the precis was the below table which set out the remaining required activities necessary to complete the subdivisional works:

Mr Kavanagh responded to this version of the Precis by way of email to Mr Whitting on 26 November 2021. Mr Kavanagh’s feedback was solely in relation to the required activities table in the third section of the precis. He stated:

My thinking, given that its all academic anyway in respect of the presales is we should retweak the timeline to compress the process to say 2 years max rather then 3 years – finishing by say late Q4/2023. It will make things look a lot more reasonable. Also can any of the major milestones you have listed in the precis be carried out concurrently with each other? If so we should try to prepare something akin to a flowchart showing the critical path so that others can easily deduce that the sunset dates could never have been achieved, through no fault of ours.

This feedback was duly incorporated by Mr Whitting who returned an amended version of the precis**,** and a separate Gantt chart indicating the “critical path” towards registration of the subdivision, to Mr Kavanagh the next day. In response to Mr Kavanagh’s feedback, Mr Whitting wrote, “all agreed. [I] was being a little conservative (though now, probably the other way)”.
The revised version of the timeline for completion was presented in the following table:

Five months later, in April 2022, the Developers received an offer from a company named New Horizons Pty Limited to purchase the Leppington Land. During the following months, the terms of the sale were negotiated. Because of the then six outstanding pre-sale contracts, an option deed was drafted which required the Developers to use “reasonable endeavours” to rescind the pre-sale contracts prior to the end of a specified call option period, and, in circumstances where a certain period of time had elapsed since entry into the deed without recission being achieved, there was to arise an obligation on the purchasers to “immediately commence legal proceedings” against the purchasers to achieve such recession.
Multiple iterations of this deed from the period between May and July 2022 are in evidence in which the negotiation of certain terms can be observed. But, for present purposes, it is not necessary to go any further into the proposed transaction with New Horizon other than to say that there is no evidence before me that any deed was ultimately entered into between the parties.
Rescission data: As already noted, there were originally 93 Presale Contracts in total. Of these, 56 (including the Preet and Bakshi Contracts) were conventional sales contracts and 37 were option contracts.
By the time these proceedings were commenced in late August 2022, all except three of the sales contracts had been the subject of an agreed recission. Of the option contracts, 13 had likewise been rescinded by agreement, and the remaining 24 had lapsed without the options being exercised by either party.
In evidence was a summary prepared in December 2022, setting out particulars of the 90 sales contracts which were the subject of agreed rescission (or lapse in the case of options). In the case of the agreed rescissions, the particulars included the date of rescission and the additional amount which was paid out by the Developers, ranging between $660 and $55,000, in consideration of the purchaser’s agreement to rescind.
The rescission dates for the 66 agreed rescissions up to August 2022, and the additional amounts paid by the Developers to procure some of those agreements, can be seen (cumulatively) in the following graph.
The graph does not include the lapsing dates for the 24 option contracts which lapsed; this information was not provided in the evidence. However, 12 of the 13 option contracts which were rescinded were rescinded in December 2020 (the other was rescinded in July 2020). I think it is safe to assume that the option contracts which terminated by lapse would have lapsed at about the same time, or soon afterwards.
Developers’ internal plans for the Leppington Land: The documentary evidence and the rescission data allow the following conclusions to be drawn about the Developers’ internal plans for the Leppington Land over time.

36. Before any sunset dale, no application for development consent could be made to [the Council] in relation to the PPoS until the Development Site was rezoned from RU4 Primary Production.

…

38. On or about 15 April 2020, I instructed [Mr Whitting] to make enquiries about the zoning of the Development Sile and certain critical infrastructure, such as the supply of water and sewer to the Development Site.

39. On about 19 July 2021, Mr Whitting advised me that the Development Site had been rezoned.

40. After receiving Mr Whitting's advice, I reviewed all the sunset dates under the contracts relating to the Development Site. After determining that most of those contracts were past the sunset date, I caused Mr Alcorn lo send correspondence to those purchasers, including the Ahmau Lots, asking for their consent to rescind their respective contracts.

41. After receiving various replies from the Ahmau Lots, I caused Mr Alcorn to send further correspondence to the Ahmau Lots in September 2021.

42. After those letters were sent, in late September 2021 Mr Whitting advised me that there were density controls put in place that affected the Development Sile due to sewerage limitations. Mr Whitting also advised me that this would lower the amount of lots that could be yielded from the Development Site, and that if an application was made immediately it would only yield around 118 lots instead of his previous estimate of 145.

43. On 1 November 2021, Mr Whitting advised me that [the DCP] had been updated to include Stages 2 and 5. The DCP imposed additional development controls on the Development Site, and rendered it impractical to have prepared or submitted any development application before that time.

44. In around November 2021, I asked Mr Whitling to report to me on what had happened since his engagement, and what was required if the subdivision works were to be completed. Mr Whitting provided me with [the Whitting Report].

45. After reading the Whitting Report, it became apparent that it was not financially feasible to carry out the proposed development at the Development Site. It would require significant amounts of subdivision planning work to be redone, and it would not complete until early 2024.

46. I then made a decision to wait until the sunset dale under the Lot 1043 Contract to lapse, and instruct a lawyer to issue all of the Ahmau Lots a detailed letter explaining why recission was required.

Mr Kavanagh made a further affidavit in June 2023, responding to the affidavits of Mr Preet and Mr Bakshi. The affidavit contained some further information about the development project.
Mr Kavanagh acknowledged that PY acted as agent for Ahmau and the other vendor companies in dealing with the Purchasers. But he said that he had not been involved in that firm’s engagement by the Developers nor in determining the terms of its retainer.
Mr Kavanagh deposed that the Developers had made no arrangements (at least directly) with Stroud. Indeed, according to Mr Kavanagh, he had never heard of that firm before. He deposed that the firm appeared to have been retained by PY, which was a usual commercial practice. But this had not been done at the request, nor with the permission, of the Developers.
Mr Kavanagh also addressed the future of the development:

(a) there are no current plans by the Vendor or other Owners, or by me, to develop the Land in accordance with the PPoS or any amendment to it. That is because, among other things:

(i) following the re-zoning, Mr Whitting received advice from Council that the density and dwelling controls were imposed as a result of limitations on sewerage capacities …. I considered that the limitations on sewerage capacities was an impediment to the commercial feasibility of the development, and that it was best to wait for the emerging Sydney Water sewerage infrastructure to be carried out to the Land before carrying out any type of subdivision work; and

(ii) the cost of subdivision work has significantly increased, further reducing the commercial feasibility;

(b) there have been no development applications or approvals made in respect of subdivision works to the Land. There is no plan on foot to develop the Land, and there are no development applications being prepared for the development of the Land, or consultants engaged to prepare such development application.

Mr Kavanagh’s account of the development was at best an incomplete one. None of the steps in the evolution of the Developers’ internal plans was disclosed. Instead, Mr Kavanagh referred only to the planning instrument changes, as if to suggest that these were the only things which had influenced the course of events.
The documentary evidence which established much of what was going on behind the scenes, although not referred to by Mr Kavanagh, was exhibited to Mr Whitting’s affidavit. Mr Kavanagh therefore cannot be accused of actually trying to conceal the rest of the story. But Mr Kavanagh’s description of how Mr Whitting’s report came to be prepared was positively misleading.
Mr Kavanagh presented the report as having been commissioned so as to give the Developers information on which to decide what to do about the subdivision. In fact, as Mr Kavanagh well knew, it was prepared to bolster the case for rescission. It was simply not true that as a result of receiving the report Mr Kavanagh decided not to proceed with the proposed development. By that time, the decision had already been made. The Developers had been working on a different layout for more than four months.
Mr Kavanagh was cross-examined at length by counsel for the Bakshis, followed by counsel for the Preets. In all, the cross-examination lasted for more than a day. It focused on the period from July 2021 onwards. Mr Kavanagh was thus not called upon to explain the Developers’ thinking during the period leading up to the expiry of the sunset dates.
Much of the cross-examination involved taking Mr Kavanagh through the documentary evidence which I have already summarised. Mr Kavanagh was also cross-examined at length about the correspondence passing between the parties from August 2021 onwards concerning rescission, and especially the correspondence in April 2022.
There was no dispute about the content of the relevant documents, and some of the cross-examination involved putting to Mr Kavanagh propositions which were ultimately matters of argument or interpretation, and thus matters for the Court. I set out below what I consider to be the important points which arose. I otherwise do not find it necessary to go into Mr Kavanagh’s cross-examination in detail.
It is convenient to begin with the revised layout plans prepared from July 2021 onwards by Mr Whitting (assisted by Mr Cheng). Counsel suggested that the terms of the Presale Contracts allowed Ahmau to alter the sizes of Presale Lots by up to 5% and Mr Kavanagh accepted that interpretation.
It was put to Mr Kavanagh that the revised layouts were new subdivision plans but Mr Kavanagh responded:

I wouldn’t call them draft subdivision plans, they weren't that. They were, they were concepts designed to flesh out the yield and the density on the site. So nothing is advanced as a draft subdivision plan. It was more a plan that and it was speculative, between July and November whilst the controls were unknown. [Mr Whitting’s] estimates of yield jumped all over the place from I think about mid 140 blocks down to about 110, so it was a process of refinement over about six months.

…

we were in that process between July and November. It was a, you know, it was a fact gathering period of time where control plans hadn't been finalised.

Mr Kavanagh accepted that from late July onwards the Developers had been exploring a potential sale. Counsel suggested that this was the only course which they were contemplating but Mr Kavanagh did not agree:

Q. It's well and truly the case that by 13 August 2021 Ahmau had decided to pursue the sale of its lot and the other three lots without undertaking a subdivision itself, correct?

A. No. We, we wanted to pursue the marketing and potential sale but we didn't want to - we didn't rule out coming back and, and doing a DA. So we, we had both options on the table at that point but we were keen to market the land and see what, you know, what offers we could achieve for it.

Q. The question of whether or not then you would develop the land would be dependent upon what offers you received?

A. Not necessarily, no. A number of factors and the yield and how it stacked up. We hadn't done that process at that point. We were in the process of it. And part of, you know, producing a lot yield and looking at the contributions was part of what was informing that process. But we hadn't taken it off the table. It was, it was still there.

Counsel then asked Mr Kavanagh about the steps required to make a development application:

Q. I take it at this stage you hadn't issued any instructions to Mr Whitting to prepare any documents for the purposes of a development application. Correct?

A. We'd done some that were, that would be relevant to it. We'd gone through a process. We certainly needed the, the contamination and we certainly needed the detail survey, and we certainly needed to, to start working up and developing a lot layout that was compliant with the, you know, the, the LEP structure plan.

Mr Kavanagh accepted that the Developers were “focused” on marketing the Land but “not to the exclusion of all else”.
Mr Kavanagh accepted that the Developers were “committed” to rescinding the remaining Presale Contracts. The decision was made in late July. Counsel suggested that this was linked to the lack of action in making a development application but again Mr Kavanagh did not agree:

Q. Insofar as at that point you had left the door open for the possible lodgement of a DA, assuming you got the rescissions that would have been a DA for the subdivision of land which would then be sold to new purchasers. Correct?

A. We'd still always want to get the D - irrespective of whether we had presales we'd still always want to pursue a DA and find out the yield and, it, it helps a lot towards whether we sell it or whether we don't sell it. You, you want to know those things, you know, in respect of the land in terms of the yield and, you know, the compliance with the, what's required.

Counsel for the Bakshis put to Mr Kavanagh, and Mr Kavanagh accepted, that there was no mention of any plan to sell the Land in the letter sent to the Purchasers on 18 August 2021 (see [94] above). Mr Kavanagh responded:

A. It’s not, it’s not the sole reason we wanted to rescind. It’s one of the reasons. We would’ve wanted to rescind anyway. They’d passed the sunset clause, the sunset dates, we’d acted reasonably and we felt, you know, that was something that we were entitled to do.

Counsel for the Preets asked Mr Kavanagh about the email exchange between Mr Strauss and Mr Whitting on 1 November about the revised DCP and the effect of the density limits announced in that DCP:

Q. I want to suggest to you that what really was happening in around September 2021 was that Ahmau was focused on selling 14 Dwyer Road, Leppington, and was not interested in progressing the subdivision any longer, and by subdivision I'm referring to the subdivision that's marked A in the contract [the Presale Plan].

A. We could never progress the subdivision that was marked A in the contracts that didn't comply with the controls.

In the same vein, counsel for the Bakshis asked Mr Kavanagh about his email to Mr Whitting of 26 November 2021 concerning the draft of Mr Whitting’s report. The following evidence ensued:

Q. When you say in that email in the second paragraph, "My thinking, given it's all academic anyway in respect of the presales", what did you mean by that?

A. I meant that our pathway was, you know, we were committed to bringing about ideally mutually rescissions of, of the contracts. We, we'd well and truly passed the sunset clause. I know the operations of 66ZS, we were still subject to that. But, you know, this was, you know, we wanted to show that, you know, produce a timeline to show that it was just - we'd just gone way and beyond the sunset clause.

Q. When you say, "given it's all academic anyway" you used those words because at that point you had no intention to lodge a development application. Correct?

A. No, that's not right. No, we still hadn't got to that point. We still had that option on the table because we hadn't sold it and we, you know, as landowners with zoned land we always want to do that. If we'd sold it then it might be a different issue.

Q. You certainly hadn't taken any steps to lodge, sorry, you had not lodged a DA at that point?

A. Well, we hadn't lodged a DA at that point, no. But, there was reason, there was good reason for that.

Counsel pressed Mr Kavanagh on the suggestion in the same email to reduce the estimated time for completion from 36 months to 30 months, which Mr Whitting accepted and included in the final report. Counsel put to Mr Kavanagh that he had effectively overborne Mr Whitting but Mr Kavanagh would not agree.
Counsel then suggested that Mr Kavanagh must have thought that the 30 month period allowed was the right one. In response, Mr Kavanagh made it clear that the estimate would not have been his central estimate. It was a “best case”, and the period allowed was “very tight”.
Counsel for the Bakshis also cross-examined Mr Kavanagh on the terms of Centurion’s rescission letter of 20 April 2022. Counsel suggested that the Developers wanted to hide information about their sales efforts from the Purchasers. Mr Kavanagh did not accept this interpretation. He said it was simply not their concern.
In his final submissions, counsel for the Bakshis criticised both the form and content of Mr Kavanagh’s evidence. Counsel submitted that I should not accept him as a credible witness.
While I have criticised aspects of Mr Kavanagh’s affidavit evidence I do not propose to descend into a detailed analysis of his credit. Mr Kavanagh’s cross-examination was not the sort of cross-examination which presented clear issues of objective fact. Having said that, I think there is no good reason to doubt Mr Kavanagh’s honesty in giving the cross-examination testimony which I have set out above.
Mr Wheadon**’s testimony:** Mr Wheadon’s affidavit was made shortly before the proceedings began in May last year. On the face of it, as the sole director and shareholder of Ahmau, Allgood and McInnes, decisions about the development of the land and contractual dealings with the land would have been matters for him. His affidavit confirmed that impression. He deposed:

I confirm that Mr Andrew Bruce Kevin Kavanagh is authorised by me to make decisions on behalf of the Owners [Ahmau, Allgood and McInnes], including in relation to the Development Site, and give evidence on their behalf. However, I remain the director of the Owners.

It is the position of McInnes and Allgood that they do not wish to and will not be undertaking any development on the parts of the Land that they own in the foreseeable future, including because:

(a) of their own commercial reasons;

(b) the parts of the Land owned by McInnes and Allgood have no proposed purchasers (that is, there are no pre-sales for the lots owned by McInnes and Allgood and the only pre-sales for the entire development that remain are the two contracts still not rescinded); and

(c) it is not commercially feasible for McInnes and Allgood to carry out the proposed development, or any development, on the Land.

But Mr Wheadon’s evidence unravelled spectacularly in cross-examination. He agreed that he was not involved in the “day-to-day” matters and instead would “take instructions” from Mr Strauss or Mr Kavanagh or both of them on such matters, or indeed on any “matters affecting” the companies. He had not been involved in the decisions to rescind the Contracts, for example it was clear that he was not making business decisions for the companies, but rather was acting on instructions from Mr Strauss and Mr Kavanagh. He agreed that they would be the people to tell the Court about whether the companies would be in a position to develop the Leppington Land or not.
Mr Whitting’s testimony: Mr Whitting’s primary affidavit in the proceedings was made in August 2022, a few days before Mr Kavanagh’s. Most of the affidavit was taken up with a recitation of the emails and other documentary evidence, a bundle of which were exhibited to Mr Whitting’s affidavit.
Those documents covered Mr Whitting’s reports to Mr Kavanagh from April 2020 onwards; his dealings with SWC and the consultants retained on behalf of the Developers concerning sewerage for the site in 2020-2021; his instructions to Mr Cheng and reports to Mr Kavanagh concerning the revised layout from July 2021 onwards; and his reports to Mr Kavanagh on 19 July, 24 September and 1 November concerning the rezoning of 16 July, the imposition of the 16.5 dwellings per hectare limit in September; and the issue of the DCP on 1 November.
Mr Whitting also referred to his November 2021 report, which he described as having been prepared on instructions from Mr Kavanagh to advise him “of how long it would take to complete subdivisional works in relation to the Development Site”. Having agreed to be bound by the expert witness code of conduct applicable to giving of expert evidence in this Court, Mr Whitting confirmed the opinions expressed in his November 2021 report.
The affidavit did not describe or exhibit the correspondence between Mr Whitting, Mr Kavanagh, Mr Strauss and the valuers concerning the valuation of the property or the preparation of the due diligence material. However, the possibility of sale was referred to in Mr Whitting’s report to Mr Kavanagh of 24 September, and perhaps other documents in Mr Whitting’s exhibit.
In May last year, just before the trial began, a further affidavit was filed from Mr Whitting. In the affidavit, Mr Whitting set out his experience in property development and (having again agreed to be bound by the Expert Witness Code of Conduct) referred to his email to Mr Kavanagh of 24 September 2021 concerning the 16.5 dwelling per hectare limit ([218] above). He expressed the opinion that the subdivision of the Leppington Land in accordance with the Presale Plan (that is, containing 133 lots) would be impossible.

Valuation experts

Ahmau and the Preets each obtained expert evidence from a qualified valuer concerning the value of the Presale Lot (Lot 1040) which was the subject of the Preet Contract. The valuers conferred and produced a joint report in which they agreed on valuation figures for the Lot at various dates. The report was admitted without objection and there was no need for oral evidence.
The valuers arrived at their valuations by determining an agreed figure per square metre, based on the sales evidence for the locality at the relevant dates, and applying that figure to the area of the proposed lot (313m2). This resulted in valuations as follows:
August 2021 - $525,000;
December 2022 - $690,000;
May 2023 - $670,000.
These valuations may be compared with the price struck in March 2017 for the purposes of the Preet Contract of $333,971. They can be expressed in terms of percentage increase over the contract price, as follows:
August 2021 – 57%;
December 2022 – 107%;
May 2023 – 101%.
These increases are well above the rate of inflation prevailing over the period since the first half of 2017. The increase between August 2021 and December 2022 was particularly high. The valuers’ explanation for this was:

In 2021 the Sydney property market experienced a boom, attributable to a multitude of factors including low interest rates, government stimulus, limited supply, favourable economic conditions (low unemployment etc.) and a strong sense of urgency among buyers (Fear of Missing Out), which was further fuelled by rising property prices.

In Leppington, house prices increased sharply between early 2021 and mid-2022. From mid-2022 the local market stabilised because of rising interest rates, which began in May 2022.

There was no valuation evidence concerning the Bakshis’ Lot (Lot 1064). But it was agreed as a fact that the value of that Lot was the same as the value of the Preets’ Lot. I assume that this meant that each of the valuations by the valuers was agreed as between Ahmau and the Bakshis to apply also to Lot 1064 as at the relevant valuation date.

Town planning experts

Ahmau and the Preets likewise both obtained expert evidence from qualified town planners. Ahmau’s planner was Ms Jillian Sneyd. The Preets’ was Ms Katrina Hodgkinson.
In the usual way, Ms Sneyd prepared a report, dated June 2023 and Ms Hodgkinson responded with a report of her own, dated October 2023. Ms Sneyd and Ms Hodkinson then conferred and produced a joint report in May last year, just before the trial began.
The day before the joint report from the planners was finalised, Mr Whitting’s further affidavit was filed on behalf of Ahmau. On the following day, Ms Hodgkinson responded with two supplementary reports.
During the May hearing, Ms Sneyd and Ms Hodgkinson gave evidence in a concurrent session. Mr Whitting did not participate in the concurrent session, but, as we have seen, was cross-examined individually on his evidence, and this included the opinions expressed in his further affidavit.
As already noted, following an adjournment part of the way through the final submissions, a further supplementary report was produced by Ms Hodgkinson in June last year (it was described as the fourth supplementary report; there is no third supplementary report in evidence). In this report Ms Hodgkinson resiled from some of the opinions that she had earlier expressed. The change of position was followed by the frustration claim being formally raised on Ahmau’s behalf. This was the subject of a further report from Ms Sneyd in July last year, replying to Ms Hodgkinson’s fourth supplementary report. Ms Sneyd and Ms Hodgkinson then gave further concurrent evidence at the supplementary hearing later in July.
The planners’ evidence ranged over a number of questions, not all of which are, on the views which I have formed, relevant. Rather than summarising the evidence here, I will address the relevant parts at the appropriate points later in the judgment.

Frustration

Counsel for Ahmau submitted that the changes to the applicable planning instruments in July 2021, although the parties did not realise it at the time, had made it impossible to subdivide the Land in accordance with the terms of the Contracts. If so, the submission ran, the subdivision condition in the Contracts could not thereafter be satisfied and the Contracts had thereby been frustrated.
I did not understand the Purchasers to dispute that, if the planning changes had truly made it impossible to satisfy the subdivision condition in the Contracts, then frustration would follow. However, they did not accept that such subdivision had become impossible.

Contractual provisions

As already mentioned, the vendor under the Preet and Bakshi Contracts was Ahmau alone. The subject land was described in each case as the relevant Presale Lot “in proposed subdivision of” the Ahmau Land (giving the title reference to the Ahmau Land). Attached to the Contract, following the Presale Plan, was the title diagram reproduced at [18] above, showing each of the four parcels making up the Leppington Land, but the title search and planning certificate attached to the Contracts were for the Ahmau Land alone.
Each Contract used the Law Society standard form Contract for the Sale of Land – 2005 Edition which included 29 standard form (“SF”) clauses. There were also 13 special condition (“SC”) clauses (the Bakshi Contract had a fourteenth SC clause, which provided for the payment of the deposit by instalments).
SF cl 28 provided:

28 Unregistered plan

28.1 This clause applies only if some of the land is described as a lot in an unregistered plan.

28.2 The vendor must do everything reasonable to have the plan registered within 6 months after the contract date, with or without any minor alteration to the plan or any document to be lodged with the plan validly required or made under legislation.

28.3 If the plan is not registered within that time and in that manner-

28.3.1 the purchaser can rescind; and

28.3.2 the vendor can rescind, but only if the vendor has complied with 28.2.

SF cl 29 relevantly provided:

29 Conditional contract

29.1 This clause applies only if a provision says this contract or completion is conditional on an event.

…

29.4 If anything is necessary to make the event happen, each party must do whatever is reasonably necessary to cause the event to happen.

29.5 A party can rescind under this clause only if the party has substantially complied with clause 29.4.

…

29.8 If the parties cannot lawfully complete without the event happening -

29.8.1 if the event does not happen within the time for it to happen, either party can rescind;

29.8.2 if the event involves an approval and an application for the approval is refused, either party can rescind;

29.8.3 the completion date becomes the later of the completion date and 21 days after either party serves notice of the event happening.

29.9 A party cannot rescind under [clause] 29.8 after the event happens.

SC cl 4 dealt with completion. It relevantly provided:

4.1 Subject to special condition 11 hereof and unless this Contract has in the meantime been rescinded, completion of this Contract shall take place on or before the later of the date which is:

(1) 35 days from the date of making this Contract, and

(2) 14 days following notification of registration of the Deposited Plan of Subdivision lodged by the Vendor which affects the Property ("Completion Date").

SC cl 11 was headed “deposited plan of subdivision”. It relevantly provided (emphasis added):

11.1 Completion of this Contract is subject to and conditional upon consent to the proposed Deposited Plan of Subdivision in accordance with the layout plan attached and marked with the letter "A" ("Plan") by the proper authority or authorities and registration of the Plan as required by law. The Vendor agrees to pay such moneys as may be necessary to obtain consent at its own expense and to register the Plan. In the event that registration has not been effected within 48 months from the date of this Contract **(**or such further period as the parties agree) either party may by notice in writing to the other (but prior to registration) rescind this Contract.

11.2 The Vendor reserves the right to make alterations to the area, measurements or boundaries of the Property as considered necessary or desirable by the Vendor in its sole discretion, or as required by the local Council or LPI NSW as a condition precedent to its endorsement of the Plan or registration of the Plan as the case may be. The Purchaser agrees that it will not make any objection, requisition, claim for compensation nor seek to rescind or terminate this Contract in respect of any minor alteration made to the Plan prior to registration. For the purposes of this special condition an alteration is to be deemed minor if it is less than 5% of the total area of the Property.

It will be noted that there were two separate sunset clauses in the Contract which permitted rescission if the Presale Plan was not registered by a specified date. The sunset date under SF cl 28.3 was six months after the date of the Contract. Under SC cl 11.1 it was forty-eight months (four years). There was also an overlap between the right of rescission conferred by SF cl 28.3, which applied to unregistered plans, and the right conferred by SF cl 29.8, which applied to unsatisfied conditions generally.
Similarly, there was an overlap between the obligation on Ahmau under SF cl 28.2 to “do everything reasonable” to have the Plan registered and its obligation under SF cl 29.4 to do “whatever [was] reasonably necessary” to cause any event on which completion was conditional to happen, registration of the Plan being such an event. There was a further partial overlap with Ahmau’s obligation under SC cl 11.1 to pay for the obtaining of consent to the subdivision and for the registration of the Plan. I say “partial overlap” because the making of such payments would have been only some of the steps which would have been reasonably necessary for registration.
All parties proceeded on the basis that the only relevant sunset clause was SC cl 11. It was effectively treated as having displaced SF cl 28. It is indeed difficult to see how cl 11 could have left any room for cl 28 to operate. I will likewise proceed on the basis that cl 28 was displaced by cl 11.
In other circumstances, the overlap between SF cll 28.2 and 29.4 (and, similarly, the overlap between SF cll 28.3 and 29.8) might have led to an argument, based on the maxim generalia specialibus non derogant, that the general provision in cl 29 should be read down so as not to apply to registration of an unregistered plan of subdivision. Those responsible for the wording of the Law Society standard form contract may wish to consider clarifying this in the next edition.
No such question arises in the present case. It was not suggested that the maxim applied, and cl 28 was treated as having fallen out of the Contract. I will therefore proceed on the basis that Ahmau was obliged under cl 29.4 to do whatever was reasonably necessary to cause the Presale Plan to be registered. I will, for convenience, refer to this obligation as the “reasonable endeavours” obligation. It is unnecessary to say anything more about the payment obligations in SC cl 11.1.

Satisfaction of registration condition

A preliminary question arose as to what the subdivision condition in the Contracts required by way of registration of the Presale Plan. Counsel for Ahmau contended that the Contracts would be frustrated if registration of a plan of subdivision over all four parcels of the Leppington Land could not be achieved. Counsel for the Purchasers disagreed. They contended that frustration would only arise if it would be impossible to subdivide the Ahmau Land to the extent shown in the Plan.
Counsel for Ahmau submitted that, in referring to the registration of the Presale Plan, SC cl 11.1 was referring to registration of the Plan as a whole. Counsel submitted that what each purchaser was buying was a plot in a residential subdivision. The Plan depicted that subdivision as a whole. Although the boundaries of the four individual lots were identified (and could be discerned from the searches annexed to the Contracts) some of the lots extended across more than one parcel. Furthermore, the access roads were an integral part of the Plan and only made sense in the context of the plan as a whole.
Counsel for the Bakshis disputed this analysis. Counsel emphasised that the Contracts were for the sale of specified Presale Lots in the Plan. Both the lots the subject of the Contracts in the present case were well within the boundaries of the Ahmau Land. Changes to, or even the absence of, the lots and other features outside the boundaries of the land owned by Ahmau would not affect those lots.
Counsel also pointed out that, as at the date of the Contracts, Ahmau did not own the other three parcels making up the Leppington Land. The Plan could not be registered as a whole without the consent of the other owners. Counsel’s submission, as I understood it, was that, in these circumstances, the reference to the Presale Plan in cl 11.1 should be read as a reference to that part of the Plan which covered the Ahmau Land.
Counsel for the Preets supported these submissions but advanced a further argument. Counsel submitted that the obligations owed to the Purchasers under the Contract were “distinct in character” between the Ahmau Land (where Ahmau could provide the necessary consent) on the other hand and the Allgood and McInnes Land (where it could not) on the other. Counsel characterised the annexing of the Presale Plan to the Contracts as “a convenient but confusing way of presenting those obligations together in one graphic”.
Counsel contended:

In fact, the promise to subdivide [the Ahmau Land] as depicted in the proposed plan of subdivision was a separate promise, the performance of which was independent of the promises made to cooperate with Allgood and McInnes in relation to the balance of the [Leppington Land].

I do not accept the submission that the reference to the Presale Plan in SC cl 11.1 is, as a matter of interpretation, confined to that part of the Plan which depicts the Ahmau Land. It is true that the Contract is for the sale of a lot in the Plan. But as a matter of language, cl 11.1 refers to the Plan, not to a lot or lots depicted on the Plan.

Nor do I see why cl 11.1 should be read down because Ahmau only owned one of the Leppington Land parcels at the time the Contracts were entered into. The clause was looking forward to registration of the Presale Plan in the future. Ahmau might by then have acquired the other parcels, or, if it did not then own them, it might have procured the owners’ consent to registration. The clause was perfectly workable whether Ahmau owned all the parcels, or only some of them, or none of them.

Furthermore, I accept that, for the reasons identified by counsel for Ahmau, it would be unrealistic and uncommercial to read cl 11.1 down to refer to only the part of the Plan depicting the Ahmau Land. The subdivision depicted on the Plan was plainly designed as a whole. A subdivision confined to the Ahmau Land was not contemplated. In particular, it would have left the lots on the northern side of that Land (numbers 1050 to 1069) without any access, since the internal road servicing those lots was on the adjoining parcel of land.
For similar reasons, I do not agree that the Contract should be construed to create two separate obligations, one concerning the Ahmau Land and the other concerning the Allgood and McInnes Land. In my view, cl 11.1 clearly imposes a single condition by reference to the Plan as a whole.
Counsel for the Preets submitted that the test for determining whether there were separate contracts was, or was analogous to, the test applied by the High Court in Thomas Brown & Sons v Fazal Deen (1962) 108 CLR 391 for whether an obligation can be severed, namely whether the severance would change the “extent” but not the “kind” of contract (at 411). But in my opinion, confining the registration condition would produce a contract of a different nature for the purposes of the severance test (assuming that test to be applicable).
I conclude that SC cl 11.1 required the registration of the Presale Plan as a whole; that is, the registration of all parts of the Plan depicted over the four parcels making up the Leppington Land, whether or not owned by Ahmau at the date of the Contract.

Town planning evidence

In this section of the judgment, I summarise the town planning evidence on the effect of the planning instruments on the viability of the subdivision of the Leppington Land in accordance with the Presale Plan. The evidence focussed on the provisions of the Growth Centres SEPP and the October 2021 DCP concerning minimum lot sizes and permissible numbers of dwellings which I have set out earlier. As already noted, the Presale Plan contained 133 lots. Of those, a total of 40 lots (1013, 1019-1028, 1095-1104, 1107-1116, 1119-1124, and 1129-1131) were less than 300 m2.
The earliest opinion in evidence which concerns the viability of the subdivision is found in Mr Whitting’s email to Mr Kavanagh on 24 September 2021 ([218] above). As already noted, Mr Whitting was operating on the basis of a cap of 16.5 dwellings per hectare, although this was not formally introduced into the G**rowth Centres SEPP until a few days later when amendments were made to cl 4.1B. Mr Whitting evidently considered that the number of dwellings would define the number of permissible lots, and on this basis, he considered that the maximum lot yield was “around” 118.
In giving this figure, Mr Whitting thought that some of the lots might eventually be used for duplexes, thus increasing the dwelling yield up to the maximum dwelling cap, which he put at “say” 140 dwellings. But nothing further is mentioned about this idea in the evidence, and I assume that in the end it was not permissible.
In Ms Sneyd’s June 2023 report, she noted the 500 dwellings limit in Growth Centres SEPP cl 4.1BA, but did not express any opinion about the effect of that limit on the viability of the subdivision. Instead, she focused on the reasonableness of the Developers’ conduct (her evidence on this subject is addressed later in this judgment). She did not refer to any per hectare density limits, or to minimum lot sizes at all.
The topic was, however, addressed by Ms Hodgkinson in her October 2023 report. Ms Hodgkinson was specifically asked to consider the comments made by Mr Whitting in his September 2021 email and to express an opinion on the maximum number of dwellings which could be obtained on the Leppington Land.
In her report, Ms Hodgkinson accepted that G**rowth C**entres SEPP cl 4.1AB applied to the Leppington Land and therefore imposed a minimum allotment size of 300m2. But she noted that none of the allotments in the Presale Plan with an area of less than 300m2 were on the Ahmau Land. She concluded therefore that cl 4.1AB did not present an obstacle to the registration of the Plan so far as it applied to the Ahmau Land.
Ms Hodgkinson also accepted that the dwelling limits (which she described as emanating from the November 2021 DCP) imposed limitations on the lot yield which could be obtained in developing the Leppington Land. Her estimate, based on 16.5 dwellings per hectare, was 124 lots, but she noted that Mr Whitting’s figure of 118 was within her “tolerance”.

In all cases, the Maps contained in the Growth Centres SEPP do not define the permitted number of lots for 14 Dwyer Road or the development site; the Maps only define the permitted number of dwellings. These are not the same thing. Once the maximum number of dwellings is reached, any residual lot may be used for a non-residential purpose permitted in the R2 Low Density zone, such as a centre-based childcare facility; community facility; educational establishment; health consulting rooms; information or education facility; neighbourhood shop; places of public worship; recreation facility (indoor) or (outdoor); veterinary hospital. Therefore, the Growth Centres SEPP, the Camden LEP amendment and the Growth Centres DCP do not impose any control or standard that means that 133 lots are impossible on the development site.

Ms Hodgkinson also changed her position on the 300m2 minimum lot size. She argued that cl 4.1BA did not actually apply to the Leppington Land. This was because the RDM depicted a dwelling density range of 12.5-16.5 in area O2 and the text of cl 4.1AB (and cl 4.1AD) referred to a dwelling density range of 10-20. She argued that cll 4.1AB and 4.1AD therefore did not pick up area O2 (or indeed any area) in the RDM.
Ms Sneyd responded in her supplementary report. Some of her evidence was admitted on an interim basis subject to further submission, but no such submission was made. There was no further submission on the admissibility of these passages, and I have therefore proceeded that there was ultimately no objection to them.
On the dwelling density issue Ms Sneyd stated:

5.1 KH [Ms Hodgkinson] is seeking to differentiate between lots and dwellings. I agree with KH that a dwelling and a lot are distinct as a matter of overall or total dwelling numbers for an area. Each lot may result in more than or less than one dwelling. ….

5.2 The difference in this situation is that the proposal is for a subdivision of residential land. In my opinion, a dwelling as a permissible use is the likely result of development of a lot created pursuant to a development consent for subdivision of this development site.

5.3 Planning controls in NSW operate as a suite of controls and to that effect here there are multiple State Environmental Planning Policies (most relevantly the current SEPP) and a Development Control Plan that operate to control all types of development. KH, in interpreting the provisions of Clause 4.1AB(3) of the 2006 SEPP and current SEPP as not applying to the land, fails to consider the manner in which Council would apply the controls and assess a development application seeking consent for subdivision.

5.4 A key consideration for Council when determining development consent for the subdivision of this development site would be characterising of the land use for which the resultant lots will be used and the anticipated development. In the absence of any other clear proposed use, the lots would be assumed to be future dwellings.

5.5 A dwelling house is permissible (with development consent) on each residential zoned lot once a new lot is registered. I agree with KH that other land uses are permissible in the R2 zone, however the lot sizes proposed in Plan ‘A’ do not support other permissible land uses. The Camden DCP establishes controls, and for example, a child care centre would require a minimum lot size of 900m2. …

5.6 Council is required, assessing any development application for subdivision of the development site (or only 14 Dwyer Road) against the current SEPP controls, to consider the resultant form of the development in order to ensure that:

a) The dwelling density range of 12.5-16.5 ha is achieved and not exceeded as required by Clause 4.1B (and noting that the control cannot be varied under Clause 4.6(8)(c) of the current SEPP).

b) The maximum number of dwellings within Stage 5 of the Leppington Precinct does not breach Clause 4.1BA being 500 dwellings.

5.7 Of the permissible uses in the R2 zone extracted below under the current SEPP, the uses identified in bold are the only uses that would not contribute to dwelling numbers. The demand for such uses (as shown in bold and underlined) within the development site has not been indicated in any of the material I have reviewed and as it pertains to Plan ‘A’ appears to be unrealistic

Bed and breakfast accommodation; Boarding houses; Business identification signs*;* Centre-based child care facilities; Community facilities; Drainage*; Dual occupancies; Dwelling houses;* Earthworks*;* Educational establishments; Environmental facilities; Environmental protection works; Exhibition homes; Exhibition villages; Flood mitigation works*; Group homes; Health consulting rooms; Home businesses; Home industries;* Information and education facilities; Neighbourhood shops*;* Places of public worship*;* Recreation areas; Recreation facilities ***(*indoor); Recreation facilities (outdoor); Roads; Secondary dwellings; Semi-detached dwellings; Seniors housing; Shop top housing; Studio dwellings; Veterinary hospitals; Waterbodies (artificial)

5.8 The range of permissible uses that could be approved in the R2 zone is limited and non residential land uses would give rise to different considerations in relation to Camden DCP provisions including locational considerations, setbacks, parking and traffic that are not anticipated in Plan ‘A’.

Ms Sneyd then addressed the lot size restriction:

5.9 I do not agree that the provisions of Clause 4.1BA(3) do not apply to the development site … for the following reasons:

a) At the time of the making of the 2006 SEPP, the Residential Density Map Sheet RDN- 008 (Attachment 3)2 did not reference a range of 10-20 dwellings per ha and the 12.5-16.5 dwellings identified on the map fell with the 10-20 dwellings per ha range.

c) The flexibility of the controls contained as the Principal Development Standards under Part 4 of the Camden Growth Centres Precinct Plan under the current SEPP are designed to control the number of dwellings by the approval of lot sizes for which a development standard applies for the construction of different dwelling types. If, as KH contends, Clause 4.1AB(3) did not apply to the land, there would be no effective lot size control for different dwelling types for land subject to the 12.5 – 16.5 per ha dwelling density range. All other land in the Growth Centres Precinct is subject to a clause to the same effect as Clause 4.1AB that determines lot sizes for different dwelling types. Alternative dwelling forms of more than one dwelling could be achieved on each lot. KH has not considered the effect of Clause 4.1AB(4). Notably, on the interpretation of KH, not only would there be no minimum lot size for dwelling houses, but there would also be no minimum lot size for dual occupancy development in the R2 zone.

d) The number of dwellings is effectively controlled by the number of lots approved and so the Council, in considering a development application for subdivision, will apply the development standards as contained in Part 4 of the current SEPP.

e) In my experience, the practice of Council is to apply the provisions applicable to the 10-20 dwellings per ha range to the consideration of land that falls within the 12.5- 16.5 dwellings per ha range.

f) Any other interpretation would be inconsistent with the planning approach within Sydney Residential Release areas.

Ms Sneyd continued:

Plan ‘A’ [the Presale Plan] does not identify any other type of land use for Council to consider in a Development Application lodged and so it must be that Plan ‘A’ would be assessed by Council as a residential subdivision. In my experience in undertaking development assessment, in the absence of any supporting written reports or information, I would characterise the development as a residential subdivision.

Council in granting a development consent must ensure that the development to which consent is being granted is certain. KH’s interpretation of the controls would give rise to uncertainty and likely criticism of Council by subsequent purchasers, if they were not appropriately informed as to the restrictions of the land. There are numerous examples of paper subdivisions where a lot does not have a dwelling entitlement. Such an approach would create both unrealistic and unrealised development potential for land which would be inequitable. Such an approach would be inconsistent with Council’s established practice in my experience, as well as contrary to best planning practice.

…

Noting the “mismatch” between 114 dwellings under Clause 4.1B and an apportionment of 131 dwellings of the dwelling cap under Clause 4.1BA, the provisions of Clause 4.1B would prevail as the achievable dwelling yield. The provisions of Clause 4.1B are a minimum and maximum dwelling yield that cannot be varied by way of Clause 4.6 under the current SEPP.

This calculation renders irrelevant KH’s argument that any additional lots could be put to an alternative non-residential use. The maximum number of lots that could be registered is 114. As Plan ‘A’ proposes more lots (ie: 133 lots) any DA lodged in respect of Plan ‘A’ could simply not be approved by Council under Clause 4.1BA of the current SEPP ….

The proposed subdivision requires development consent to be obtained from Council. In my experience, Camden Council has applied to dwelling density range controls of 10- 20 dwellings per ha to land identified as 12.5-16.5 dwellings per ha to development applications lodged by GLN Planning in Leppington. Even if that legal interpretation of Clause 4.1AB(3) is incorrect, which in my view is very unlikely, a challenge of the interpretation would be required in the Land and Environment Court in the first instance.

Later Ms Sneyd made a further point about Council approval, based on provisions for “complying developments”, for which approval is not required, in State Environmental Planning Policy *(*Exempt and Complying Development) 2008 (“Complying Development SEPP”):

Once a lot is approved there is no means by which the Council could prohibit future residential development. Notably, the provisions of Part 3C Greenfield Housing Code 3 of [the Complying Development SEPP] apply to the land and would permit the construction of a dwelling house on any lot greater than 200m2. The control of lots in granting development consent is the only means by which Council can effectively ensure that any development consent granted maintains compliance with the maximum number of dwellings. …

In her report Ms Sneyd also undertook precise calculations of the numerical consequences of the density restrictions. Those consequences (to the extent the restrictions are applicable, which remains a matter for argument) are now common ground. The cap in cl 4.1BA yields a maximum of 131 dwellings for the Leppington Land. The 16.5 dwellings per hectare in cl 4.1B yields (if applicable) a maximum of 114 dwellings (and a minimum of 87) for the Land.
The issues still in dispute were addressed in the concurrent evidence given by Ms Sneyd and Ms Hodkinson at the supplementary hearing. The evidence included the following, given in response to questions which I asked:

HIS HONOUR: If I wanted to get [the Presale Plan] through, what do I do?

WITNESS SNEYD: Put in a development application.

HIS HONOUR: What does the development application have to say about the use?

WITNESS SNEYD: Under the Act it has to describe the development. To that extent it would say it is a residential or industrial subdivision and for what purpose it would be intended and would have all required supporting documents we spoke of in our earlier evidence and it would be described as 133 residential lots - if I was to describe the plan A, I would describe it as 133 residential lots and two residue lots, one being for SP2 zoned land and the other RE1 zoned land.

HIS HONOUR: How would you describe it if you wanted to have at least a possibility of some other use other than residential?

WITNESS SNEYD: If I was - for example, with a childcare centre, that childcare centre lot would reflect the minimum lot size required in the DCP for a childcare centre and whether it is - it would not need to be a full-blown development building and operational requirements, but it would need to be sufficient to indicate a childcare centre can be accommodated on that land. That does not preclude the opportunity for somebody coming later and buying four lots and turning them into a childcare centre, if that gets them to the 5 minimum lot size.

But in the first instance, council want to be satisfied as to the form the use of the land they are subdividing will be put to.

HIS HONOUR: Do you agree with that, Ms Hodgkinson?

WITNESS HODGKINSON: Not entirely, no. The application that has been made, if it is an application for subdivision it does not necessarily have to describe the use as part of that application. The use of the land moving forward is, for example, when you lodge a development application for residential dwelling on the site, council are required to consider the objectives of the zone with a subdivision application, which in this case clearly extends to residential and non-residential uses.

As part of making that application to council, it is those objectives for the purpose of the subdivision that have to be addressed. As Ms Sneyd rightly said, it may identify certain lots for a separate purpose or it may be done at a later stage. At the end of the day what you are applying for is subdivision of the land on the plan. It does not have to be specified at that point whether it is residential and non-residential. The use and the subdivision are two separate, discrete elements.

WITNESS SNEYD: Could I add to that: I agree that the terms of the subdivision is development for the purposes of the Environmental Planning and Assessment Act and the use is also development for the purposes of the Act and they can be two separate things but in the event, and in my experience, council would not approve the application for subdivision for which they were not satisfied it will comply with the rest of their provisions moving forward.

If the application were lodged for the plan A subdivision, I would anticipate the council would say: Every single one of those lots has no approved use and would have a restriction on each title to say - it would have to be subject to a future development application because we would be effectively approving - council would be approving something that is akin to a paper subdivision of years gone by, where landowners and, generally, when they are cut up into smaller sizes, the potential future land owners are less able to understand the provisions potential.

And it should be a reasonably well understood premise that if I buy a residential lot, I can put a house on it. And to that extent, because of the density provisions in the SEPP, which limit the number between 12.5 and 16.5 per hectare, you need to identify which lots in plan A would not be subject to a house, or identify all of them and require subsequent development consents till you get to a point where - at that point you would say to the land owners who come forth after that: I am sorry, you cannot build a house on your land, you need to join up with your adjoining landowners and build a childcare centre, for example, because we have reached our residential density in this area.

…

… I would argue that as a practising [planner] that to approve land that looks like a residential subdivision that can't be - or residential lot that can't be used as a residential lot because of density standard is not the orderly and economic development of land, and would be almost the anthesis of what the growth centre process is seeking to apply, which is planned precinct wide development such that if - that all of the services, all of the roads, all of the infrastructure can be funded, delivered, that you don't end up with lots that can't be developed, and that means that roads don't interlink within a precinct, so there is good reason for it to be done holistically.

Ms Hodgkinson responded:

HIS HONOUR: How would [the council] take [density] into account?

WITNESS HODGKINSON: They would take that into account on the basis of the application is made for subdivision having regard to the R2 low density residential objectives, and they would look at the minimum dwelling per hectare requirements, obviously to ensure that the number of dwellings would not be exceeded, but there isn't anything that restricts the number of lots; and that's the difference.

HIS HONOUR: Well, so they would look at it and say well it's a dwelling restriction, not a lot restriction so it's irrelevant?

WITNESS HODGKINSON: I [believe] they would.

HIS HONOUR: And that's the extent to which you say they would look at it?

…

WITNESS HODGKINSON: When a development application is progressed for an individual lot at a later stage it would either be done through a development application or a complying development certificate process. Both of those sets of controls for a dwelling house would require you to did consider what's permitted on the land. There is s 10.7 certificate that can be issued under the Environmental Planning and Assessment Act of which specific matters can be set out that you have to go and take into consideration things like previous development consents as it relates to permissibility. That is the point at which council had the opportunity to nominate as part of that overall subdivision where there is a restriction on lots - dwellings in a particular area that they would therefore have to check whether or not there is sufficient capacity located within the subdivision.

…

HIS HONOUR: You're saying because it's a dwelling restriction, then it's just something that's left and dealt with later, council's not going to be concerned with it?

WITNESS HODGKINSON: I think it probably, in some respects concerned about it, but it's a question of what's actually in the legislation that they're required to consider.

HIS HONOUR: "Concerned" is the wrong word. It's not going to stop them from [approving] it?

WITNESS HODGKINSON: Possibly not, no.

HIS HONOUR: When you say "possibly not", are you saying that some councils might look at that?

WITNESS HODGKINSON: Yes, some councils may, others may not.

HIS HONOUR: Do you have any experience that you can refer to assist me in deciding whether it would be applied in this situation or not?

WITNESS HODGKINSON: I haven't lodged any applications in this particular precinct to know at a practical level.

HIS HONOUR: So I think - I think I'm understanding you to say that some councils might take Ms Sneyd's approach and look ahead to development down the track?

WITNESS HODGKINSON: They may.

HIS HONOUR: You do accept that is something that they might do?

WITNESS HODGKINSON: Yes I do.

HIS HONOUR: And that they could legitimately do?

WITNESS HODGKINSON: Yes.

HIS HONOUR: But you say they don't, and they might not do it?

WITNESS HODGKINSON: That's correct. It would depend on, to some extent, the person assessing the application.

…

HIS HONOUR: … What Ms Sneyd is contending for is she's saying, true it is that at the subdivision stage, just looking at the number of lots, that some councils will look forward to the actual development and will say we're not going to approve … a plan showing 133 residential lots, if you can't build 133 dwellings on separate lots. That is what Ms Sneyd is arguing.

WITNESS HODGKINSON: They may do that.

HIS HONOUR: And you are accepting that that is something that the council might - that is an approach the council might take, but you say it wouldn't necessarily take that approach?

WITNESS HODGKINSON: That's right.

HIS HONOUR: Are you able to point to any case in your experience where that has happened, that is the council has approved - a council has approved a subdivision providing for 133 residential lots even if the - even though the dwelling density won't allow each of them to be developed?

WITNESS HODGKINSON: Not on my experience of development applications, no.

HIS HONOUR: Have you got any experience of the contrary of a council knocking one back for that reason?

WITNESS HODGKINSON: No.

The issue was pursued further with Ms Sneyd:

HIS HONOUR: So it would be possible, would it not Ms Sneyd, for a plan such as the one we're talking about, plan marked 'A' across the four lots, it would be possible for such a plan to be submitted as part of a development application where the developer identifies, or at least - identifies that for example I intend of these 133 lots that 113 of them shall be dwellings, and the remainder shall not be. If that was the indication on a development application would the council accept a plan that looks like the one in plan A?

WITNESS SNEYD: They may well accept it. I think it's highly unlikely that it would be approved. Because you would - the end development would be fragmented land ownership patterns potentially, because the subdivision enables the sale of the land to unrelated individuals, and that that would then - the resultant development may be large. It could be a block here and there, it could be a number of blocks together that are sterilized, and cannot be used for any purpose because the density has been reached.

…

WONG: … let's go back to what I was asking about, which is the viability of this plan, plan A. What I'm hearing from you is - and this is the question I want to ask you: That plan A with 133 little squares on it, if that was given to council there's a number of things - sorry, one possibility is that council could say, no, I've assumed that you want 133 houses on it, the 133 dwellings, I'm going to say no. That's one possibility isn't it?

WITNESS SNEYD: That's one possibility.

WONG: And another possibility is the council might come back and say, according to your evidence, you've got 133 little squares on this picture, you can only have 113 of them for dwellings, the rest of them will be for something else, so it is possible that the council could come back with conditions imposed upon that plan A; do you agree with that?

WITNESS SNEYD: If plan A were deemed to be sufficient to be approved, which I anticipate it's not, because of the extent of variation in the density, I would expect that the council would either, you know, if the applicant were to put forward a particular argument that they needed land ownership to be broken up, because essentially that's all that the subdivision is would be permitting, is alternate land ownership, separate parcels, they would either restrict the title of those by restriction on the title, or they would alternatively, which is the most common practice, ask for the plan to be amended such that there are no more than 114 residential lots, and that would be by reconfiguration of the boundaries of all of the lots. And if a childcare centre future, may well be that that land is identified as a larger parcel, and that would have a condition on it to the effect that land is to be used for a childcare centre and not for residential dwelling purposes.

…

WONG: What I'm trying to understand Ms Sneyd is when you say the council may require the plan to be amended to show 114 potential dwellings, I'm trying to understand if that means that is there an indication on the map marked A that only 114 of those lots to be subdivided can be used for potential dwellings, or if you are thinking of a more significant amendment?

WITNESS SNEYD: It could be a complete redrawing of the boundaries to eliminate … the additional potential house lots. Or it could be that if there's potentially a block that they say this one block could be used for a childcare centre, so if - so it's more than, you know, if there was a block for example that had 19 in it, that you could say, takeaway all of those internal boundaries, and say that's a future childcare centre site, or a future other use …. A future church, or a mosque, or something along those lines, yes, that may answer council's concerns. But I would not anticipate that council would accept a plan that shows lots that look like residential lots and approve them. Well they can't because of the operation of the density clause.

WONG: … It's possible that the council could put restrictions onto the plan so that any person who wanted to use one of the lots in the subdivision for a dwelling would have to apply for further consent?

WITNESS SNEYD: I agree that they could do that. That is contrary to practice. Part of the precinct planning process in the growth centres is the delivery of housing. Essentially its primary objective is the provision of housing. And with the associated uses that go with creating communities. And the delivery of residential lots to the market in a manner that can be readily put into effect is one of the principal outcomes of the precinct planning process. So to have a situation where, because a particular applicant has chosen to divide up in contrary to the density requirements, and have to have one, everybody has to come in with a subsequent DA when they could use the complying development provisions, or otherwise, would seem to be an additional step in a process that's already ridiculously long-winded, slow, and I would imagine would frustrate potential home owners who, when they buy their lot, what they want to put on it is their house.

WONG: But Ms Sneyd you agree that it is a possibility?

WITNESS SNEYD: It is a possibility. But to further explain that, there's probably a legal argument that to prohibit the development of land for something that is otherwise permissible may well be a condition beyond power. I haven't looked at that. I think it's a step too far to be putting on a condition that says you can't use a residential lot for a house. But, you know, that doesn't stop council from doing those sorts of things. But I would not - it's not good practice, and it's not something in my experience that council have broadly done.

Counsel for the Preets also asked Ms Sneyd about the opinion expressed by her in [5.7] of her supplementary report concerning other permissible uses under the R2 zoning. The following evidence ensued.

WITNESS SNEYD: The nonresidential uses that are a permissible R2 zone lands are largely - require a residence with them. So a home occupation, a home industry, they require a house. So there are - the childcare centre, a place of public worship is probably the obvious ones that don't necessarily require a dwelling house.

WONG: Or veterinary hospitals?

WITNESS SNEYD: Veterinary hospitals often do require a dwelling because they need - it depends, because if you keep animals overnight you have to have - there has to be somebody living with them. So it varies.

Mr Bakshi followed up by raising the question of use of the surplus lots as “pocket parks”. This resulted in the following evidence:

FOURTH DEFENDANT: One of the things that is permitted with consent is recreational facilities for outdoor, would it be possible for them to have small little parks nooks in the development application, you don't need the lots to be combined together, you could have them up to - every five residential dwellings could have small little park, would that be a use of the correct use of the lands and could that be approved?

WITNESS HODGKINSON: I would need to clarify if there is a separate definition of a park, but otherwise if it falls within the scope of being a recreational facility outdoor, yes you could have a little pocket park in between other lots.

WITNESS SNEYD: If I can just go to that. So on the premise that we need of these, and we have 19 pocket parks throughout plan A, the question would be that council would put is who will maintain this land, who will own this land, and they would expect that there would be rates payable on it. They won't - councils simply wouldn't accept dedication of it, because it's not part of their - and they wouldn't be prepared to buy it for park purposes either.

FOURTH DEFENDANT: But may be possible?

WITNESS SNEYD: But very unlikely that a private landowner will provide parks for the benefit of others.

FOURTH DEFENDANT: I'm sure it is possible because obviously it will lead to general - make it more attractive to potential buyers, private development. If the developer chose to say he would have to pull up his 19 lots, go to council-- can we make parks which we will maintain and go to the council—

HIS HONOUR: When you say we will maintain, who is maintaining—

FOURTH DEFENDANT: The developer. My question is: Would it ever be - could it be approved based on the plan, taken every 19 lots to facility - retain it.

…

WITNESS HODGKINSON: There's nothing to prevent those individual lots being used for that purpose.

WITNESS SNEYD: But I would anticipate it would be highly unlikely, and in my experience a developer develops land, sells it, and moves onto their next development site.

HIS HONOUR: It's a question of council approval. Ms Sneyd has suggested that the council has to be satisfied that someone's - there will be somebody there to maintain these pocket parks in perpetuity; do you agree with that?

WITNESS HODGKINSON: Council will want to understand how it's being maintained. That element is usually addressed by a plan of management over a particular parcel of land where it's used for a recreational purpose.

HIS HONOUR: All right, and I think Ms Sneyd has suggested that the council would be expecting to levy rates on it in the ordinary way.

WITNESS HODGKINSON: Yes they would.

...

FERNANDES: So Ms Sneyd, as to Mr Bakshi's suggestion, leaving aside possibility, because anything is possible, is it a realistic possibility?

WITNESS SNEYD: No it's not. Recreation facilities, like pocket parks, permissible in a residential zone, because that is part of the delivery of a residential subdivision, and in part there will be land within that precinct that is identified for - may well be used for park purposes. I can think of examples where land under a residentially zoned land is dedicated to council, or is used for - is left as a residue because it's not attractive residential land, and it can be landscaped as a park.

FERNANDES: You say there would be two residues lots, in that order. There is already an RE1 lot--

WITNESS SNEYD: There is an RE1 lot and an SP2.

FERNANDES: It already takes up a fair bit of the development site, the RE1 lot?

WITNESS SNEYD: Yes it does.

Interpretation of planning instruments

Counsel for Ahmau submitted that I should accept the views expressed by Ms Sneyd concerning restrictions on the proposed subdivision of the Leppington Land in terms of lot size (cl 4.1AB) and lot numbers (cll 4.1AB and 4.1B). Counsel invited me to accept those conclusions as a matter of interpretation of the relevant planning instruments, or, alternatively, as restrictions arising from the practice which would be followed by the Council in assessing any development application.
In particular, counsel submitted that, for the purposes of cll 4.1B and 4.1AB, the reference to dwellings would operate as a reference to lots. Counsel submitted that the Presale Plan plainly depicted a residential development, any in that context it would be unrealistic to treat dwellings as distinct from lots.
It followed, in counsel’s submission, that the Leppington Land was subject to restrictions:
under cl 4.1AB, preventing the creation of lots less than 300m² in area, except subject to compliance with cl 4.1AD (which would at least require the creation of a building envelope plan);
under cl 4.1BA, restricting the maximum number of lots to 131; and
under cl 4.1B, further restricting the permissible number of lots to 118.
There was no dispute concerning the application of the maximum dwelling limits under cl 4.1AB. But counsel for the Preets invited me to accept the argument by Ms Hodgkinson concerning the other restrictions. In summary, these were:
there was no limitation on the creation of lots less than 300m², because cl 4.1AB did not apply;
the limit imposed by cl 4.1BA (and the per hectare dwelling limit under cl 4.1B, if applicable) applied only to restrict the number of dwellings, and did not prevent the registration of a plan containing 133 lots.
Counsel also challenged the argument from Ms Sneyd, based on the Exempt Development SEPP, that if the Council once approved a subdivision of 133 lots it would be powerless to prevent the construction of a residential building on the lot thereafter. Counsel pointed out that under cl 1.18(b) of the SEPP, in order to qualify as a complying development the development must be permissible with consent. Counsel argued that if, say, 133 lots were subdivided, but 114 lots had already had a residential dwelling constructed on them, then cl 1.18(1)(b) would automatically prevent the development from being a complying one. The applicant would be forced to seek consent in the ordinary way, which the Council could (and indeed would be obliged to) refuse because of cl 4.1B of the Growth Centres SEPP.
In this section of the judgment I deal with these arguments to the extent that they involved the interpretation of the relevant provisions. I will address questions of practice, to the extent necessary, later.

Compliance with registration condition

The next question is whether imposition of the planning restrictions identified above actually prevented registration of the Presale Plan in accordance with SC cl 11.1 in such a way as to frustrate the Contracts.
There was no dispute between counsel as to the general principles which govern frustration of contract. The Court of Appeal has endorsed (Chinatex *(*Australia) Pty Limited v Bindaree Beef Pty Limited [2018] NSWCA 126 at [42]; Woolworths Group Ltd v Gazcorp Pty Ltd [2022] NSWCA 19 at [215]) the following statement by Nettle JA, speaking for the Victorian Court of Appeal, in oOH! Media Roadside Pty Ltd v Diamond Wheels Pty Ltd & Anor (2011) 32 VR 255 at [70]:

… I take the law to be that a contract is not frustrated unless a supervening event:

a) confounds a mistaken common assumption that some particular thing or state of affairs essential to the performance of the contract will continue to exist or be available, neither party undertaking responsibility in that regard; and

b) in so doing has the effect that, without default of either party, a contractual obligation becomes incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract.

Both parties also referred me to the following further statement by Nettle JA concerning foreseeability at [72]-[74] ([74] was quoted with apparent approval in Woolworths v Gazcorp at [218]):

… where a supervening event is not only foreseeable but actually foreseen at the time of entry into a contract, it is more difficult to conceive of the parties as having entered into the contract on the basis of a common understanding that the event could not occur during the life of the contract. Where, however, a supervening event, although foreseeable, was not foreseen at the time of entry into the contract, the fact that it was foreseeable may not be of much significance unless the degree of foreseeability is particularly high.

Consequently … it is important to be precise about the nature and degree of foresight. So far as foreseen events are concerned, the parties to a contract may have foreseen an event but not foreseen the nature or extent of it. In The Sea Angel, Rix LJ gave as an example, based on The Nema, a case where the possibility of an industrial strike was foreseen, and actually provided for in the contract, but lasted so long as to go beyond the risk assumed under the contract. It was held to have frustrated the contract. Cheshire and Fifoot’s Law of Contract suggests that in some cases it may also appear that, “Failure to provide expressly for an event that was foreseen [is] due to … a deliberate decision to leave matters to be sorted out by the parties, or by the law”.

In the case of foreseeable but unforeseen events, the nature and extent of foreseeability is critical. Since most events are foreseeable in one sense or another, the parties to a contract will not ordinarily be taken to have assumed the risk of an event occurring during the life of the contract unless the degree of foreseeability of that event is very substantial.

Submissions: Counsel for Ahmau submitted that the imposition of each of the minimum lot size, maximum dwelling number and maximum dwelling density restrictions had independently made registration of the Plan impossible and thereby frustrated the Contracts. Counsel identified the date of frustration as 16 July 2021, the date on which the rezoning was affected by amendments to the Growth Areas SEPP. Strictly speaking, the maximum dwelling density restriction was imposed by the later amendments to the SEPP on 30 September, but no point was taken about this in the argument.
Counsel argued that the conditions stated by Nettle JA were satisfied in the present case. The parties had not merely assumed that the Leppington Land would be rezoned; they had assumed that the Presale Plan would be registered. The imposition of the restrictions prevented this and was not the result of any default on the part of Ahmau. Even if foreseeable in a general sense, those restrictions were not so highly foreseeable that Ahmau should be taken to have assumed the risk, in the sense discussed by Nettle JA in oOH! M**edia Roadside at [74].
In submitting that the restrictions rendered the registration of the Presale Plan impossible, counsel invited me to accept Ms Sneyd’s conclusions to that effect. Counsel focused in particular on the maximum dwelling density restriction. Counsel acknowledged that the restriction could be overcome by modifying the Plan so as to show only 114 lots. This, in counsel’s submission, would amount to registration of an entirely different plan from that specified in the Contracts. It would not satisfy cl 11.1.
Counsel for the Preets submitted that the restrictions did not prevent registration of the Presale Plan (or at least a plan sufficiently similar to the Presale Plan) to satisfy the requirements of cl 11.1. Counsel urged me to accept Ms Hodgkinson’s evidence in preference to Ms Sneyd’s. In particular, counsel disputed Ms Sneyd’s evidence that as a matter of practice the Council would not be prepared to register the Plan. Counsel described this evidence as “unsubstantiated”.
Counsel also referred me to the decision of Darke J in Opera Properties Pty Ltd v The Uniting Church in Australia Property Trust *(*NSW) [2021] NSWSC 1436. That case concerned a contract under which the owner of land granted an option to the owner of neighbouring land to subdivide and transfer part of the land (referred to in the judgment as the “Church Land”). Pursuant to the contract, the neighbour paid $160,000 in option fees. Three years later, the local planning instruments were changed, which, it was agreed, made subdivision impossible.
The option contract contained a special condition, referred to in the judgment as Additional Clause 39, which provided that if the subdivision had not taken place within three years of the date the option contract was entered into, the owner would instead grant to the neighbour an easement allowing access over the owner’s land (referred to in the judgment as the “Road Easement”). The neighbour commenced proceedings against the owner, alleging that the change to the planning instruments had completely altered the commercial circumstances in which the option had been granted, and had frustrated the option contract. On this basis, the neighbour sought return of the option fees.

At the time the Deed was entered into the parties evidently turned their minds to the possibility that registration of the Subdivision Documents may not be achieved even three years after the exercise of an option (which itself might not occur for several years). The potential cause or causes of such a failure to achieve registration are various, and obviously include changes in applicable planning laws. The parties stipulated that there would be a transfer of the Road Easement if such a failure to achieve registration occurred “for any reason whatsoever”. It is not correct that the Deed and the Contract were predicated on the assumption that consent to the subdivision of the Church Land has either been obtained or will be obtained.

In these circumstances I do not think it can be concluded that the parties entered into the Deed on a common assumption that there would be no change to applicable planning laws that would preclude a subdivision of the Church Land so as to create the Property. Or, put another way, that there was a common assumption that it would continue to be the case that consent could be given to such a subdivision.

…

It seems to me that the preclusion of a subdivision of the Church Land, brought about by the commencement of the 2014 LEP, did not give rise to such a fundamentally different situation that the Deed should be held to be frustrated. I do not think that the continued performance of the obligations under the Deed was rendered a thing radically different from that undertaken under the Deed. The parties evidently appreciated that advancement of the Project depended upon various consents being given. The parties made provision against the possibility that one or more of the consents might not be forthcoming.

… upon the exercise of the option, a contract would come into existence which would oblige the defendant to grant the Road Easement if for whatever reason the subdivision was not registered within three years. Again, the parties envisaged that, for whatever reason, registration of the subdivision might not be achieved. I do not accept the plaintiff’s submission to the effect that the benefit of the Road Easement that would be granted in those circumstances is illusory or of only minor significance. It is a tangible property right, and in the context of a proposed residential development comprising 71 residential lots that lacked suitable road access, an easement of that character may be of considerable value. The Road Easement can be seen as an alternative means of achieving the broad objective that is referred to in Recital B to the Deed.

Counsel argued that the present case was the same. Counsel pointed out that at the time the Contract was made the zoning did not permit the subdivision. Counsel submitted that the parties had clearly contemplated the possibility of changes to the subdivision, and it could not necessarily have been assumed that the subdivision could be possible. In effect, in counsel’s submission, the allegedly frustrating event had been foreseen by the parties and this excluded the possibility of frustration.
Counsel emphasised that Ms Sneyd in the evidence extracted above (at [338]) ultimately accepted that there was a possibility that the Plan could be registered with 133 lots. Ms Hodgkinson was also of the view that registration was possible.
In this regard, counsel emphasised that the density limits could be complied with by imposing a condition that the “surplus” lots be used for non-residential purposes such as a place of worship or a childcare centre, or even left vacant. The lots less than 300m2 in area could be the subject of a building envelope plan. In neither case would this require any alteration to the Plan itself for the purposes of registration. While this might result in additional expense to the Developers, and reduce the total amount which they might receive from the sale of the Land, it would not actually prevent them from registering the Plan and conveying the lots the subject of the Contracts with the Purchasers.
Counsel went on to point out that the Plan was not a survey plan which complied with the requirements of the Real Property Act 1900 (“RPA”). For that reason alone it could never have been registered in the precise form in which it was annexed to the Contract. Counsel submitted that the parties had clearly understood that this was so.
In presenting this submission, counsel emphasised the words “as required by law” in cl 11.1. Counsel submitted that the addition of these words underlined that the final form of the Plan had to be in accordance with the requirements of the law, which in the context included, so counsel submitted, the requirements of the Council as consent authority.
Counsel also picked up submissions made earlier by counsel for the Bakshis, that the plan as registered did not need to correspond exactly with the Presale Plan annexed to the Contracts in order to satisfy cl 11.1. Counsel described the Plan as an “indicative” or “proposed” plan. Counsel pointed out that cl 11.2 expressly contemplated the possibility of the Plan being registered despite “minor” alterations to the area, measurements or boundaries of the subject lot.
In her closing submissions, counsel summed up:

The Contract has not been frustrated. .... The obligation is upon [Ahmau] to take all steps reasonably necessary. It has not taken a single step. The attitude of the Council to any subdivision of any of the [Leppington Land] is as yet unknown. The [Purchasers] are entitled to the performance of the bargain.

In similar vein, counsel said during her oral submissions:

“There has been a lot of debate as to what the Council would or would not do. Because there is no absolute answer to that, [reasonable steps] should be taken [towards registration] now that the zoning measures are now in place”.

In his submissions on the frustration issue Mr Bakshi likewise would not accept that changes to the planning instruments rendered the registration of the Presale Plan, or at least some similar plan, impossible. Mr Bakshi acknowledged that the changes might necessitate “some adjustments” to the Plan but that any such adjustments would fall within cl 11.2 and did not “amount to a radical change in obligations”. Mr Bakshi also pointed out that only 93 of the 133 lots depicted in the plan had been the subject of Presale Contract. That, together with the agreed recission of nearly all the Contracts, left the Developers with ample scope for altering the Plan so as to accommodate the remaining Purchasers.
Mr Bakshi made two further points based on the conduct of the Developers.
First, Mr Bakshi picked up the point that the Presale Plan, in the form attached to the Contract, was not registrable, if only because it did not contain the markings and features required for registration. In truth, in his submission, it was only a preliminary effort. He asserted that the Developers had failed to engage in appropriate consultation and preparation in preparing the Plan. As a result, any impossibility in complying with the Plan would be self-induced and could not be relied upon by the Developers.
Mr Bakshi’s second point was that the Developers had not, at the time the relevant planning instruments were changed, or thereafter, relied on those changes to justify their failure to register the Plan. In fact they had abandoned the Plan (by adopting Mr Whitting’s revised plan and then pursuing the sale of the Land) for quite different reasons. Mr Bakshi submitted that the Developers’ attempt to use frustration to get out of the Presale Contracts was based on commercial, not planning, considerations.
Conclusions: It is convenient to begin with the limitation in SEPP cl 4.1B. I have concluded that the clause prevents the Council from approving a subdivision of the R2-zoned part of the Leppington Land into 133 lots, except subject to a condition that no more than 118 of them are used for dwellings. The question is whether the Council would, in fact, be prepared to approve such a conditional subdivision, if one were sought.
I have set out the evidence of the planners on this question above. I appreciate that the economics of a proposed subdivision application are, in the first instance, a matter for the applicant. But I think the starting point for present purposes is that the Council must exercise its powers in accordance with what it perceives to be the public interest. Private commercial arrangements between developers and their customers can have little if any weight that context.
It follows, I think, that I should proceed on the assumption that the Council would be guided by considerations of good planning practice, rather than any concern to ensure that the sunset clause in the Contracts would be satisfied. I understood this to be implicit in Ms Sneyd’s evidence and I did not understand Ms Hodgkinson to disagree.

The question must be considered at the trial as it had to be considered by the parties, when they came to know of the cause and the probabilities of the delay and had to decide what to do. ... Rights ought not to be left in suspense or to hang on the chances of subsequent events. The contract binds or it does not bind, and the law ought to be that the parties can gather their fate then and there. What happens afterwards may assist in showing what the probabilities really were, if they had been reasonably forecasted, but when the causes of frustration have operated so long or under such circumstances as to raise a presumption of inordinate delay, the time has arrived at which the fate of the contract, falls to be decided. That fate is dissolution or continuance and, if the charter ought to be held to be dissolved, it cannot be revived without a new contract. The parties are free.

See also Embiricos v Sydney Reid [1914] 3 KB 45 at 54, per Scrutton J.

Lord Sumner’s statement of principle refers to the question of frustration or no frustration being determined according to how the situation appeared to the parties at the relevant time. Ordinarily the parties will be aware of the supervening event and its effects, or potential effect. But even if the parties are not aware of the supervening event, frustration can occur. As elsewhere in the law of contract, the doctrine is be applied by the court according to circumstances as they are objectively ascertained. I take it therefore that in such cases the test must be what the reasonable inference would have been from the circumstances which in fact existed at the relevant time.
If that is so, there may be some scope for its application in the present case. Following the introduction of SEPP cl 4.1B the attitude of the Council, while it could be guessed at, was not certain. The revised DCP had not yet been published. Even when it was published, on 26 October, it contained no information as to whether the Council would equate the number of dwellings with the number of lots in a subdivision in a case such as the present. Certainty could only have been achieved, as submissions by counsel for the Preets which I have quoted above acknowledge, by actually making an application and seeing whether the Council refused it.
In my view, the nature of the contract in the present case is a relevant circumstance. Ahmau was subject to an ongoing obligation to do all that was reasonable to register the subdivision. It was not entitled to “wait and see” what the Council’s approach to the exercise of its powers would be in the context of the new restriction.
On this analysis the question would not be whether Ahmau had established on the probabilities that the Council would not have consented to registration of the Plan. The question would be whether there was sufficient doubt about consent being forthcoming to make it unreasonable, in a business sense, to have required the parties to go on with the Contract. If the test were stated in the latter terms, Ms Sneyd’s views, supported as they were by Mr Whitting’s conduct, would tend even more strongly to a finding of frustration.
I turn now to the suggestion by the Purchasers that, if the Plan could not be registered in exactly the form annexed to the Contracts, it could be registered in modified form under SC cl 11.2.
The starting point in evaluating this suggestion is that satisfaction of the condition in SC cl 11.1 in terms required registration of “the Plan”, not “a plan substantially similar to the Plan” (or some other form of words denoting less than complete identity with the Plan). No doubt registration of a plan containing a “minor” alteration to the Plan under cl 11.2 would still be “the Plan” for the purposes of satisfying that condition. To that extent the need to register “the Plan” was qualified. But in my view the qualification created by cl 11.2 was a very limited one.

Restitution in favour of Purchasers

Frustration of a contract discharges the contract from the date of the frustrating event. The discharge is automatic and does not require any action from the parties or from the court. In New South Wales, remedies arising on discharge are provided by the common law, as supplemented by the Frustrated Contracts Act 1978 (“FCA”).
It was common ground that if the contracts had been frustrated the deposits payable by the Purchasers were repayable pursuant to FCA s 12. FCA s 15 relevantly provides:

(1) Where the court is satisfied that the terms of a frustrated contract or the events which have occurred are such that, in respect of the contract:

(a) Divisions 1 and 2 are manifestly inadequate or inappropriate,

(b) application of Divisions 1 and 2 would cause manifest injustice, or

(c) application of Divisions 1 and 2 would be excessively difficult or expensive, the court may, by order, exclude the contract from the operation of Divisions 1 and 2 and, subject to subsection (8), may, by order, substitute such adjustments in money or otherwise as it considers proper.

(2) Orders which the court may make under subsection (1) include:

(a) orders for the payment of interest, and

(b) orders as to the time when money shall be paid.

In his submissions in chief on the frustration issue, counsel for Ahmau acknowledged that the Purchasers would be entitled under s 12 to repayment of their deposits. Counsel also stated that Ahmau “[did] not oppose” orders for payment of interest on the deposit “from the time of the payment of the deposit”. Counsel invited the Court to make an order to this effect.
In her submissions, counsel for the Preets submitted that if the Court found the Contract had been frustrated the Court should make orders for repayment of the deposit together with interest. But counsel submitted that this would not be enough. In addition, the Court should make an order under s 15 “to allow for a portion of the unexpected windfall to be payable to [the Preets] to avoid unjust enrichment on the part of” Ahmau.
Mr Bakshi likewise submitted that repayment of the deposit together with interest would not be sufficient to do justice between the parties. He put his submission in the following way:

Frustration of contract would enable the Plaintiff to capitalise on the increased value without fulfilling any of their original obligations, resulting in a substantial windfall gain for the Plaintiff while leaving the defendant without the contracted lot and stuck in a significantly more expensive market.

It must be also noted that a developer's profits are primarily dictated by the total development area, not the number of lots. Any reduction in lot count is compensated by the subsequent increase in average lot sizes.

Mr Bakshi submitted that the Purchasers should be compensated for the “difference in land value from the date of the contract to the present”. This compensation would allow them “to re-enter the market and purchase a similar lot in the area, thereby putting them in the position they would have been in had the contract been performed”.
In reply, counsel for Ahmau characterised the claim as “some order for damages or money at large”. In counsel’s submission, this was not permissible. Loss of bargain damages were not available because the contract had not been terminated for breach. Moreover, the notion of the gain being a windfall was misconceived. Counsel pointed out that the Presale Lots had not yet (and would if the Contracts were found frustrated, would never) come into existence. Counsel submitted that the only relief should be the repayments of the deposits with interest.
It seems to me that, in inviting the Court to award interest on the deposit amounts, counsel for Ahmau was effectively conceding that merely to order repayment of the principal amounts of the deposits would be “manifestly inadequate or inappropriate” or would “cause manifest injustice”. Counsel was recognising that, as the contract had come to an end without any fault on the part of the Purchasers, they should receive appropriate restitution for the financial commitment which they made in entering into the contract, over and above return of their deposits.
I agree with counsel that no question arises of awarding damages or compensation. The contract has not been terminated for breach and awarding an expectation loss is out of the question. Nor is an allowance for some type of reliance loss appropriate. It was clear to the Purchasers that the sale might not ultimately occur. They were always at risk that, in entering the Contracts, they would be giving up other opportunities and would be incurring costs which might in the end be wasted.
But this does not mean that merely awarding interest on the deposits would be sufficient. I think that the Purchasers should be seen as effectively having been investors in a subdivision project proposed by the Developers. The economics of that project were based on a subdivision of a certain design, containing 133 lots. There has been a change to the planning environment which has made such a subdivision impossible, and thereby altered the economics of any subdivision which might now take place. But in the meantime, the subject land has increased in value by far more than the rate of inflation (or interest).
Looking at the matter in that way, I think it would be wrong not to make some allowance by way of restitution in the Purchasers’ favour for the increase in value of the land after 2017. But the allowance should not extend to the whole of the increased value of the Land over the relevant period. The Developers provided the Land and this would have been the lion’s share of the “capital” contributed to the project.

Specific performance

My conclusion that the Contract was frustrated in September 2021 means that the Purchasers’ claims for specific performance must be dismissed. There is no contract to be enforced. But in case I am wrong on frustration, I will consider whether specific performance would be ordered if the Contracts were still on foot.
In its defences to the Purchasers’ cross-claims for specific performance, Ahmau alleged that specific performance should be refused because it would be impossible for it to obtain registration of the Presale Plan. Specific performance was also resisted on other grounds, including hardship and a need for continuing supervision by the Court.
One reason given for the alleged impossibility was that Ahmau did not own all of the Leppington Land to which the Plan related. The defences alleged that Allgood and McInnes did not wish to proceed with the subdivision and would not provide the consent required for Ahmau to lodge a development application for the subdivision of their parts of the Land.
In her submissions, counsel for the Preets sought to meet this point by narrowing the claim for specific performance to a claim requiring the Plan to be lodged only insofar as it covered the Ahmau Land. Counsel referred to this claim as one for “partial specific performance”. The form of the order sought was that Ahmau: “do all things reasonably necessary to obtain consent for the subdivision of [the Ahmau Land] depicted in the [Presale Plan] and, thereafter, to cause registration of that plan”.
The general principle applicable to contracts for the sale of land is that any particular piece of land is unique and that damages are therefore an inadequate remedy, and specific performance should usually be granted. Counsel submitted that this principle applied and should result in the making of the “partial” order sought.
Counsel for the Bakshis, in their written submissions, likewise pressed for an order for specific performance on a “partial” basis. The form of order they proposed was somewhat different from that proposed by counsel for the Preets. It was an order requiring Ahmau to “do whatever is reasonably necessary, and to pay such moneys as may be necessary, to obtain consent and cause the registration of lot 1064 (or alternatively a materially similar lot comprising 313m2) at [the Ahmau Land]”.
In the course of the closing submissions from counsel for the Bakshis (who addressed first), I pressed him on the form of order which he sought. I pointed out that, under the RPA, what is registered is a plan not a lot in a plan. I also put to counsel that the phrase “materially similar lot” raised questions about whether re-dimensioning or relocating the lot would be permissible for the altered lot to remain “materially similar” to that depicted in the Plan.
Counsel asked for an opportunity to reconsider the formulation of the precise terms of the order sought. But this never eventuated before his instructions were withdrawn. In Mr Bakshi’s final submissions, he simply repeated the reference to the form of order sought in the closing submissions.

In Ryan v Mutual Tontine Westminster Chambers Association Ltd, Lord Esher MR referred to a rule that ‘when the Court cannot compel specific performance of the contract as a whole, it will not interfere to compel specific performance of part of a contract’. Thus, Ogden v Fossick involved an agreement for lease, but the agreement also contained a provision that the lessee would employ the lessor in his business. An agreement for lease is specifically enforceable. An agreement for services, at least if it is an executed agreement, is not. Specific performance was refused, because, specific performance of the whole agreement not being possible, the court would not partially enforce it. But if a contract is severable, or divisible, so that it can be said to be not one contract but several agreements in one document, then one or more of those agreements may, if there is no other objection to a decree, be separately specifically enforced ….

I have already concluded that SC cl 11.1 referred to registration of the Plan as a whole, not merely registration of the part of the Plan covering the Ahmau Land. To the extent that the clause involved any obligation at all, it involved the performance of a single obligation rather than the performance of a series of separate contractual obligations. It follows that, “partial” specific performance confined to the Ahmau Land is not permissible.
However, it does not necessarily follow that specific performance must be refused because Ahmau is not the owner of the whole of the Leppington Land. The impossibility point was based on affidavit evidence from Mr Wheadon to the effect that Allgood and McInnes would not cooperate with the subdivision shown in the Presale Plan. But any force that evidence might have had was lost when Mr Wheadon conceded in cross-examination that he was not the one making the decisions.
Ahmau’s reasonable endeavours obligation would at least extend to seeking the consent of Allgood and McInnes to registration of the Plan. I do not think that it should necessarily be assumed that if specific performance were ordered against Ahmau, the Developers, who control all three companies, would necessarily cause Allgood and McInnes not to cooperate. There is no direct evidence from them to that effect (Mr Kavanagh said only that there were “no current plans” on their part to subdivide the Land). To take that course might expose the Developers to ongoing disputes about compliance, including, possibly, an argument that Ahmau was required, by way of reasonable endeavours, to buy the rest of the Leppington Land itself.
For reasons which I gave in Ryde Ex Services Memorial and Community Club Ltd v Kaloriziko Ryde Pty Ltd *(*No 2) [2018] NSWSC 317, I think the Court should be slow to decline specific performance on the grounds of alleged impossibility, at least where the alleged impossibility may depend upon how far the defendant is willing to go to make performance possible. In such cases I think it is generally better to put the defendant to the test by ordering specific performance. The Court can then “wait and see” whether performance is truly as impossible as the defendant claims. If it is, then the contract may be terminated, and damages awarded at that point.
Applying that approach here, I would not have been prepared to refuse specific performance on the ground of alleged impossibility arising from the fact that Ahmau does not own the whole of the Leppington Land.
It is convenient to refer next to the argument from counsel for the Preets that the Contracts should be seen as contracts for the sale of land, and accordingly that there is a prima facie entitlement to specific performance on the ground that damages cannot be an adequate remedy. I am not sure that this argument is correct. It seems to me that there is a difference in principle between a contract for the sale of an existing separate parcel of land and a contract which will result in a parcel of land (subject to “minor” alterations) being created by subdivision and then sold.

Statutory leave to rescind

My conclusion that the Contracts were frustrated in September 2021 means that rescission cannot be granted. According to the ordinary principles of contract law, frustration terminated the contract and there is nothing to rescind. It was not suggested by any party that CA s 66ZS altered the position.
Ahmau’s application for leave to rescind must therefore be dismissed. But again, in case I am wrong in my conclusion on frustration I will consider whether or not I would have ordered rescission had I concluded that the Contracts were still on foot.
Of course, a conclusion that the application for rescission would be refused does not affect my decision on specific performance. But if I had found that the Contracts were still on foot and had decided to refuse rescission, it would have been possible for the Purchasers to recover loss of bargain damages.

Legislation and case law

CA Part 4 Division 10 was originally enacted in 2010. I was referred by the parties to the Second Reading Speech by the relevant Minister (Mr Ajaka MLC). In his introductory remarks, the Minister stated:

…

In these cases the purchaser is not buying an asset that can be seen and inspected. Instead, they are buying an idea that relies on the terms of the contract plus the goodwill and expertise of the developer to complete.

...

An important feature of most off the plan contracts is the sunset clause. ... [It] has important benefits for both parties. It prevents a purchaser being tied to the contract indefinitely and allows a developer to end the arrangement if they cannot proceed due to factors beyond their control.

However, the rise in the property market has seen increased reports of developers using the clause to obtain an unjust enrichment at the expense of homebuyers. There has been an increased incidence of developers delaying projects until the sunset date is reached. The developer can then rescind the contract and resell the property, sometimes for hundreds of thousands of dollars more. The purchaser will eventually receive their deposit back, but they lose any capital appreciation their lot has accrued. In addition, they are prevented from purchasing another property while their funds are tied up in the developer's hands.

Whether a developer is entitled to rescind the contract will depend on the contract terms, the reason for the delay and the extent to which the developer has acted reasonably. But to test these factors the purchaser must take court action. As well as being costly and time consuming, the purchaser must prove the delay was unreasonable based on facts they are not able to access. The prospect of protracted litigation is often too daunting for purchasers so the action of the developer is often unchallenged.

After giving a broad description of the proposed enactment, the Minister continued:

This new regime does not arbitrarily intrude into existing contractual arrangements or impose an unusual obligation on vendors. Rather, it reinforces existing consumer law and well accepted common law and equitable principles.

At the centre of this Bill is our resolve to prevent a developer manufacturing delays to obtain an unjust benefit. This reform will ensure developers are unable to unjustly benefit at the expense of homebuyers through the sunset clause.

It is accepted that in seeking to rescind a contract a vendor must not act arbitrarily or capriciously or unreasonably. Section 66ZL [the original version of the present s 66ZS] supports these equitable principles by removing any incentive a vendor may have to manipulate the progress of a development, in a manner not available to the purchaser, to take advantage of windfall profits in a rising market.

…

If the value of the lot has increased significantly, the exercise of the sunset clause is prima facie unfair. In these cases the developer has received an unjust enrichment in the form of the lot's capital appreciation at the expense of the purchaser.

This provision will help prevent developers using manufactured or false delays to justify an intention to rescind to the court. The notice provisions and the need to obtain purchasers consent will encourage better communication between the parties. If it is clear that a development will not be finalised or will take significantly longer to complete than predicted, purchasers are unlikely to want to remain tied to the contract with their deposit lying dormant.

If the developer has acted reasonably, rescission of a contract in these circumstances should be in the interests of both parties. The consent of the purchaser should be easily obtained.

It is only where the rescission is dubious that a need should arise for court action. Under this legislation, in these questionable cases, it is the vendor who will be required to go to court to justify their actions rather than the purchaser being forced to take action to prevent an injustice.

To further even the balance of power between the parties, the vendor will be liable to pay the purchaser's costs of the proceedings, unless it can be shown that the purchaser's refusal to consent to the rescission was unreasonable.

CA s 66ZS in its present form relevantly provides:

(1) In this section—

subject lot means the residential lot being sold under an off the plan contract.

sunset clause means a provision of an off the plan contract that provides for the contract to be rescinded if the sunset event does not occur by the sunset date.

sunset date means the date set out in the off the plan contract as the latest date (subject to any extension provided for in the contract) by which the sunset event must occur.

sunset event means the creation of the subject lot, the issue of the occupation certificate in relation to the subject lot or another event prescribed by the regulations.

(2) For the purposes of this section—

(a) rescind includes terminate or otherwise bring to an end, and

(b) a lot is created when the plan creating the lot becomes a registered plan.

(3) A vendor may rescind an off the plan contract under a sunset clause, but only if—

(a) each purchaser under the contract, at any time after being served with the notice under subsection (4), consents in writing to the rescission, or

(b) the vendor has obtained an order of the Supreme Court under this section permitting the vendor to rescind the contract under the sunset clause,

…

(4) It is a term of an off the plan contract that a vendor who is proposing to rescind the contract under a sunset clause must serve each purchaser under the contract notice in writing at least 28 days before the proposed rescission that specifies why the vendor is proposing to rescind the contract and the reason for the sunset event not occurring by the sunset date.

(5) A sunset clause cannot automatically rescind an off the plan contract and, if it purports to do so, it is to be read as if it instead permits the contract to be rescinded on or after the sunset date in accordance with this section.

(6) The Supreme Court may, on the application of a vendor under an off the plan contract, make an order permitting the vendor to rescind the contract under a sunset clause, but only if the vendor satisfies the Court that making the order is just and equitable in all the circumstances.

(7) In determining whether it is just and equitable in all the circumstances, the Court is to take the following into account—

(a) the terms of the off the plan contract,

(b) whether the vendor has acted unreasonably or in bad faith,

(c) the reason for the sunset event not occurring by the sunset date,

(d) the likely date on which the sunset event will occur,

(e) whether the subject lot has increased in value,

(f) the effect of the rescission on each purchaser,

(g) any other matter the Court considers to be relevant,

(h) any other matter prescribed by the regulations.

(8) The vendor is liable to pay the costs of a purchaser in relation to the proceedings for an order under this section unless the vendor satisfies the Court the purchaser unreasonably withheld consent to the rescission of the off the plan contract under the sunset clause.

…

(10) A provision in an off the plan contract has no effect to the extent that it is inconsistent with this section.

(11) Nothing in this section limits—

(a) the Court’s power to award damages against the vendor if an order permitting the vendor to rescind the contract under a sunset clause is made under subsection (6), or

(b) any right that a purchaser may have to rescind an off the plan contract under a sunset clause.

I was referred to the parties to four first instance decisions on CA Part 4, Division 10. It is convenient to say something about those cases at this point.
The first decision is Jobema Developments Pty Limited v Zhu & Ors [2016] NSWSC 3 (Black J). That case concerned an off-the plan contract made in 2013 for the purchase of a unit in a residential development. The sunset date was December 2015. In 2014, the plaintiff company bought the development site from the original developer and assumed its obligations under the contract in question. Owing to delay by the original developer, the development was not completed by the sunset date. The plaintiff company, which had not itself been responsible any further delay, applied for leave to rescind.
At the time the application was heard, in January 2016, completion was not expected until mid-2017. The plaintiff relied, in addition to the delay by the original developer, on various other factors. These were: increased construction costs; inability to obtain construction finance without entering into new off the plan contracts which would reflect the increase in market prices; and the intervening introduction of the then-new legislative regime governing off the plan contracts. But his Honour pointed out that the plaintiff would have been aware of the original developer’s delay; the financial factors were not substantiated on the evidence; and the new legislation was an ordinary business risk. Leave to rescind was refused.
The second decision is DGF Property Holdings Pty Limited v Di Federico; DGF Property Holdings Pty Limited v Butros [2018] NSWSC 344 (Emmett AJA). That case concerned eight off the plan contracts each of which was for the purchase of a lot in a rural subdivision. Part of the land in the subdivision was being acquired by the developer under a contract with the existing owners, the Di Federicos. Disputes arose about that other contract, which resulted in the subdivision being delayed. The developer applied for leave to rescind. The dispute between the developer and the Di Federicos was heard at the same time.
In the rescission proceedings against the purchasers, the developer blamed the delays on the Di Federicos. The purchasers alleged that the developer itself had been to blame, at least in part. Their allegations included allegations of bad faith and unreasonableness. There were also issues as to the financial effect of rescission on the developer and on the individual purchasers.
What was common ground was that the lots had increased significantly in value and that the subdivision could be completed “quickly”. Late in the proceedings, the developer offered the purchasers an undertaking, if leave to rescind were granted, to complete the subdivision as soon as reasonably possible; to re-sell the lots; and to give the purchasers a 40% share of the difference between their purchase prices under the contracts and the price achieved on re-sale.

Town planning evidence

In her initial report Ms Sneyd was asked a number of questions which formed the basis of the ensuing debate between her and Ms Hodgkinson. Three of those questions are relevant for present purposes.
The first question was whether the four-year period allowed in the Contracts for the sunset event (the registration of the Presale Plan) to occur was “reasonable”. Ms Sneyd thought that it was. In saying this, she gave the qualification that the timing of construction works was outside her area of expertise. It seems that she assumed that the construction works would take twelve months, and each of the other steps (the land being rezoned; obtaining development approval and registration of the plans) would take twelve months or so each. The registration of the plan could then be completed in the remaining twelve months.
Ms Hodgkinson accepted that she also lacked expertise on construction timelines. She pointed out that the rezoning might well take more than twelve months; and obtaining development approval would have likely taken more than twelve months. Nevertheless, she seems to have accepted that four years was a reasonable time to have allowed to complete the process, looking forward from 2017. In the joint report Ms Sneyd and Ms Hodgkinson agreed that the four-year period was “capable of providing sufficient time for registration”. The question was not pursued further when the experts gave concurrent evidence on 13 May last year.
The second question was why registration of the plan was not achieved prior to the sunset date. Ms Sneyd’s response was that the plan of subdivision could not be registered until the rezoning had taken place and the Council would have lacked power to approve the development application until that had happened. It did not happen until after the sunset date. Until that point, the Council lacked power.
Ms Sneyd also pointed out that the amendments to the SEPP were not publicly known or exhibited during the public consultation process which took place before the rezoning. Later in her report she stated that there was nothing which Ahmau could have done to bring the rezoning date forward.
After referring to the Council’s lack of power to approve a subdivision of the Leppington Land until after rezoning had occurred, Ms Sneyd added:

5.19 There is nothing within the Environmental Planning and Assessment Act. 1979 and associated Regulation that applied to prevent a development application (DA) being lodged for prohibited development awaiting amending legislation to permit the development proposed. However, in my experience, all Councils will choose not to accept a DA until such time that the amending legislation is in effect. Councils choose not to accept DA’s to avoid the impact of what is an anticipatory DA and impact of such DAs on the DA processing time of Council.

5.20 I am aware that Camden Council had adopted this very position in relation to DAs within Stages 2 and 5 of the Leppington Precinct. GLN Planning, my employer, was at the time acting for and continues to act for clients within the Leppington Precinct. Whilst applications were prepared and submitted to the NSW Planning Portal on and after 16 July 2021 upon the commencement of the Stages 2 and 5 Growth Centres SEPP amendments, a number were returned by Council or required amendment of the DA to address the provisions as published on 16 July 2021.

In her oral evidence, Ms Sneyd provided further information the dealings between her firm and the Council to which she had referred in her report. She explained that, although the amendments to the SEPP were made on 16 July, they would not have been publicised for a day or so (in fact, in the present case, the media release was issued the following Monday, 19 July). The updating of the maps referred to in the rezoning might take a few days longer.
The DAs for other clients to which Ms Sneyd referred were lodged on 16 July, without reference to the rezoning which was effected on that day. They were accepted by the Council but when the Council became aware of the rezoning, the Council asked that they be withdrawn and not re-lodged until after the new DCP had been issued.
Ms Hodgkinson accepted that if an application had been lodged for approval of the Presale Plan prior to 16 July, the Council would have had no power to grant it. This was common ground in the joint report. It was also common ground that the changes made to the SEPP on 16 July 2021 (and 30 September 2021) had not been publicly foreshadowed.
Ms Hodgkinson in her report, while she accepted that Council had no power to approve the rezoning, observed that this would not prevent a development application from being lodged, or at least prepared, before the rezoning took effect. But ultimately, she appears to have accepted that, that while, in theory the Council would have had power to receive a development application based on a foreshadowed rezoning prior to 16 July, in practice the Council would not do so. She maintained, however, that it would be possible for preparatory work to have been done.
This point was put to Ms Sneyd during her concurrent evidence. She accepted that parts of the supporting reports could be prepared. However, those reports all, to a greater or lesser extent, depended on the nature of the application and there was always a risk of work being wasted if it was undertaken prior to the rezoning. When asked, based on her experience, of what preparatory work of this kind she would expect a developer to have done prior to rezoning, she said:

Some people do, some people don’t. It depends on your appetite for risk.

The third question upon which Ms Sneyd was asked to advance an opinion concerned Mr Whitting’s November 2021 report ([223]-[225] above). For convenience I set out the critical paragraphs in the report, which I have numbered one to four, again:

[1] Rezoning was followed in early November by an updating of the [DCP]. This was accompanied by unforeseen density and maximum dwelling controls imposed as a result of limitations on sewerage capacities.

[2] It was therefore only in November 2021 that any development application could have been submitted via the NSW Planning Portal and even then, it would be unlikely to have been accepted absent a formal Pre-lodgement meeting with Camden Council.

[3] Whilst we had previously managed to gain confirmation from Sydney Water that it could service the property, any subdivisional planning works undertaken to date were rendered obsolete by the imposed density controls.

[4] Effectively therefore, it was only in mid November 2021 that we were in a position to proceed with planning for submission of a development application for the Property.

For the purposes of her report Ms Sneyd was asked to comment on Mr Whitting’s point (at [3]) concerning the practicability of lodging a development application for the subdivision contemplated by the Presale Plan before November 2021. She responded that she disagreed but explained:

The extent to which I disagree is the accuracy of the statement but not as to the outcome. In my opinion a development application could have been lodged following the Stage 2 and 5 Amendments of the Growth Centres SEPP in July 2021 and without a pre DA Meeting. I do however acknowledge that Council would have resisted and may have returned a DA lodged on the portal without a prior Pre DA meeting and ahead of the November 2021 DCP Amendments. Any DA that was successfully submitted on the Portal would have likely been returned by Council. In the event that a DA was successfully lodged, the assessment would have resulted in a Request for Information (RFI) requiring amendment of the application to address the Growth Centres SEPP and DCP. The density and maximum dwelling controls imposed to enable the release whilst addressing the servicing capacity of Sydney Water would have required amendments to the proposed subdivision plan and resulting yield. …

... I agree with Mr Whitting that it was not until the release of the DCP in November 2021 that a detailed design could be developed for the subdivision of the development site.

In her report, Ms Hodgkinson disagreed with Mr Whitting’s statement (at [2]) that the rezoning and updating of the DCP was accompanied by density and maximum dwelling controls which were “unforeseen”. Ms Hodgkinson pointed out that as early as 23 April the previous year Mr Whitting had understood that there would be a maximum of 15 dwellings per hectare (see [196] above).
Ms Hodgkinson also disagreed with the statement (at [5]) that it was only in mid-November 2021 that the Developers were in a position to proceed with planning for submission of a development application. Because, in her view, the density restrictions did not create any obstacle to the registration of that part of the plan which covered the Ahmau Land, she did not agree that subdivision or planning works undertaken to that point were rendered obsolete. She also stated that any environmental studies required in support of the development application could have been completed while the rezoning was being undertaken, or, indeed, at any time from the commencement of the contract.
In her oral evidence, Ms Sneyd agreed that the Developers had an opportunity to progress the subdivision after 16 July 2021. They would not necessarily have had to wait until the DCP was available:

WITNESS SNEYD: Well no, because … you would have enough information. There is a chance that … the design provisions of the DCP [might later] require amendment because it might identify a road as a different road width or require a cycleway or something like that. But … it is not necessarily a reason why you couldn’t lodge your DA. Council will ask that you wait, that these provisions become available and so that they can ensure that everything is consistent because they won’t want to be in a position where they’re … being asked to determine something when the DCP is not in place. But … but there is nothing to stop you lodging and application and … I think you should be able to lodge an application whether it is successful or not, whether it is prohibited or not, you should be able to lodge an application and council should have to make a decision on the application ….

Ms Sneyd however accepted, when it was pointed out by counsel for Ahmau, that the DCP required that the development application take the DCP into account. The following evidence ensued:

WITNESS SNEYD: Look, there's a - there was a reasonable chance that … after 16 July council would accept … a DA because it was permissible development under the, the zoning map. Council was resisting determining applications and, and in my firm's experience … the only DA that we lodged prior to the DCP was withdrawn to be resubmitted to address the provisions of the DCP.

FERNANDES: One of the reasons for that is … they don't want to be blamed for delays in DAs. Is that fair?

WITNESS SNEYD: … they don't want to be blamed for delays in DAs because the longer a DA sits without provisions that they can assess it against, that's counting against their, their DA determination dates 10 … and that's one of council's KPIs.

FERNANDES: But also council expects as part of the DA process that there's consultation beforehand?

WITNESS SNEYD: In … fact … they want consultation. They wouldn't even hold a pre-DA meeting pre the … DCP coming out.

Counsel for Ahmau also put to Ms Hodgkinson that the DCP ultimately required that its terms be taken into account in formulating the development application, and she agreed. She did not, however, agree with counsel that there was no practical, rather than theoretical possibility council accepting a development application prior to the issue of the revised DCP. She stated that “the balance of the DCP could have been used to substantially inform and assess a development application”.
But when asked about Camden’s Council’s attitude Ms Hodkinson said:

Certain councils have regard to the time frames, others don't. Camden, in Ms Sneyd's view, obviously did have a view that they didn’t want that as what one would call a black mark against their assessment time frames. Hence the reason they took a position that they weren't accepting them.

Ms Hodkinson agreed that Ms Sneyd had more experience in dealing with Camden Council than she did.

Later Ms Sneyd was taken back to the question by counsel for the Preets. The following evidence ensued:

WONG: So, in your experience it's normal for developers to start creating the development applications using whatever information is revealed in a SEPP in anticipation of whatever DCP might be issued?

WITNESS SNEYD: It … depends. … that's a developer decision that … depends on how much you want to expend before … the answers … to something else. … I personally would prefer to be, as a planner, putting in one application that gets it right. Because then the next time Council picks up an application from me they'll know, "She got it right last time. She's probably on the ball this time". … I might get an easier pathway through.

… I don't recommend to clients to put in … an ambit claim … and see how it goes. … they are informed applications. In the instance … of this land, … the finalisation report all indicated that a DCP was coming. So too … there was a letter that came out to landowners that said there's a DCP coming, and Council were actively saying … "Hold back until the DCP is here because then we'll have all of the information and, and we can assess them".

WONG: Your company still lodges one on 16 July--

WITNESS SNEYD: We … still lodged.

Statutory factors for consideration

Counsel for each of the parties presented their submissions by reference to the factors listed in the subparagraphs of s 66ZS(7). In what follows I will adopt a similar approach, discussing the application of each of the subparagraphs (except subparagraph (h): it was common ground that no further matters for consideration had been prescribed by regulation). I will then deal with the balance between the different factors before expressing my conclusion on whether Ahmau I would grant leave to Ahmau to rescind if the Contracts were still on foot.
Terms of the Contracts (s 66ZS(7)(a)): I have described the relevant provisions of the Contracts at [293]-[303] above, and at [304]-[314] and [400]-[405] I have addressed the questions which arose concerning the interpretation of SC cll 11.1 and 11.2. In summary:
Each Contract was a contract for the sale of a proposed Presale Lot depicted in the Presale Plan, but completion of the Contracts was conditional on the registration of the Plan as a whole (that is, extending across the whole of the Leppington Land).
Ahmau was obliged to do whatever was reasonably necessary to cause the Plan to be registered.
Ahmau had a right, but no obligation, to alter the area, measurements or boundaries of the subject Lots, but otherwise the Contract did not provide for any variation of the Presale Plan.
A further issue arose between the parties as to the interpretation of the Contracts which I will address at this point. The question was whether Ahmau’s obligation with respect to registration of the Plan ceased once the sunset date passed without registration of the Plan, or continued thereafter.
A similar question was referred to by Emmett AJA in DGF. As in the present case, the contracts in question incorporated both the Law Society standard conditions (including SF cll 28 and 29) and bespoke special conditions (including a clause providing for a right of rescission if the plan of subdivision was not registered by a specified sunset date). The clause (cl 42.5 in all of the contracts except for one, which was numbered 29.5) provided:

42.5 The Vendor shall at its own cost and expense prepare the Plan [depicting the proposed subdivision] and seek registration of the Plan at the office of the LPI and do all things reasonably necessary to achieve registration of the Plan as expeditiously as possible.

One of the arguments for the Purchasers was that the vendor had no contractual right of rescission. That right depended, under the terms of each of the contracts, on the vendor having complied with its ‘reasonable endeavours’ obligation. The Purchasers alleged that the vendor had not done so. His Honour stated (at [203]-[205]):

[203] … a distinction must be drawn between breach of the provision prior to the Sunset Date and breach after the Sunset Date. I do not understand the Purchasers to contend that the right to rescind was lost by breach of the provision after the Sunset Date, putting aside the possible relevance of that matter in the exercise of discretion under s 66ZL.

[204] Three questions of construction arise in relation to special condition 42.5 and cl 29.5. The first is whether the provision operates after the sunset date. The second is the effect of a failure by DGF to comply with the provisions. The third is the content of the obligation imposed by the provisions.

[205] In relation to the first question, there is nothing in the language of special condition 42.5 to suggest that the obligation ceases upon the occurrence of the sunset date. Each of the Contracts for Sale remains on foot, notwithstanding the passing of the sunset date, until such time as either party elects to exercise the right to rescind. Having promised to do all things reasonably necessary to achieve registration of the plan as expeditiously as possible, that promise continues to bind DGF.

His Honour returned to the question at [234]:

[234] In so far as the contractual right to rescind is dependent upon DGF’s performance of its obligations under printed cl 28 and special condition 42, the obligation is relevant only up to the time at which the contractual right to rescind arose. The obligation did not cease, in that, unless it exercised the right to rescind, DGF continued to have the obligation to do the things described in cl 28 and special condition 45. However, failure to perform after the date when the contractual right to rescind arose, (namely, the sunset date), would not affect DGF’s right to rescind unless it amounted to a waiver or abandonment of that right. It may well be … that failure to perform after the sunset date is relevant to the question of whether it would be just and equitable to permit DGF to rescind. That, however, is a different question.

His Honour ultimately concluded that there had been no breach by the vendor which had prevented the registration of the plan by the relevant sunset date, nor even a breach which had delayed the registration of the plan during that period. Accordingly, the Purchasers’ argument failed.
A similar point was referred to by Rein J in Paolucci. Again the relevant contract incorporated both the Law Society standard term and bespoke provisions permitting rescission if the subdivision plan was not registered by the sunset date. Clause 31 of the special conditions relevantly provided:

31.1 Com****pletion subject to conditions

The Lots are sold subject to and conditional upon:

(a) the Vendor obtaining consent to the registration of the Plan by Council and other proper authorities; and

(b) the registration of the Plan by the Registrar General.

(c) the completion of Works; and

(d) the issue of an Occupation Certificate,

called the “Conditional Matters”.

32.1 Sunset Date

32.1.1 The Vendor will use its reasonable endeavors to ensure that the Conditional Matters [which included the obtaining of consent for registration of the plan, and its actual registration] completed within eighteen months of the date of this Agreement (the “Sunset Date”).

…

32.1.4 In the event the preconditions specified in 31.1 are not met by the Sunset Date or, within such further period as may be agreed by the parties, then either party may at any time thereafter serve written notice to the other party or their solicitor rescinding this Agreement …

Again it was argued that the vendor had no contractual right of rescission because of alleged breaches of its reasonable endeavours obligation. Those breaches were said to have occurred after the sunset date; it was not alleged there had been any breaches prior to that date. It was argued for the vendor (or the purchaser so perceived it) that there was no obligation to comply with the obligation after the sunset date.
Rein J stated (at [54] and [59]):

…. To the extent that the argument advanced was that once the Sunset Date had passed Makedyn [the vendor] was not required to establish that it had used reasonable endeavours after that date to rely on cl 32.1.4, Makedyn referred to authority to the effect that a general clause, i.e. cl 29.4, will not derogate from a specific clause … I agree that cl 32.1.4 stands on its own in relation to rescission, but this would not relieve Makedyn from using reasonable endeavours to achieve the Conditional Matters whilst ever the Reconveyance Contract was still on foot after the Sunset Date.

…

… I think that there are good reasons to think that Makedyn must use reasonable endeavours to complete the Conditional Matters whilst ever the Reconveyance Contract is on foot (see cl 29.4), but I am not persuaded that failure to do so is a reason why it cannot rely on a failure to have met requirements by the Sunset Date if it had made reasonable endeavours up to that date. …

The sunset date was in May 2017. Neither party sought to rescind, however, and the subdivision plan was registered in May 2018. His Honour found that there had been a later failure by the vendor to provide layout plans required for the completion of the building works (cl 32.1(c)) in a timely way. They should have been provided well before October 2018 but were not in fact provided until December 2018.
The application to rescind was not made until June 2019. It was not suggested that there had been any default which had prevented the registration of the plan before May 2018. His Honour rejected a further argument that the vendor had, by its subsequent conduct, agreed to an extension of the rescission date, and proceeded on the basis that the vendor therefore still had a contractual right to rescind.
In the present case, counsel for the Bakshis took the lead in presenting the Purchasers’ arguments on this point. Counsel proceeded on the basis that the general provisions of SF cl 29.4 applied to the condition imposed by clause 11.1, thus subjecting Ahmau to an obligation to “do whatever [was] reasonably necessary to cause” registration to take place. As already noted, this appears to have been common ground.
In his submissions, counsel invited me to apply the conclusion expressed by Rein J in Paolucci. Counsel noted that there had been no criticism of that conclusion on appeal. Counsel also referred me to what Emmett AJA had said in DGF.
Counsel for Ahmau submitted that, while SF cl 29.4 may have picked up the condition in cl 11.1 prior to the sunset date, it did not do so thereafter. This was because “the event” for the purposes of cl 29.4 was not merely the registration of the Presale Plan. It was registration of the plan by the date specified in cl 11.1. Once the sunset date had passed, the cl 29.4 obligation was spent.
Counsel submitted that Rein J’s conclusion in Paolucci related to the special condition in the contract in that case, not to SF cl 29.4. At least this was so for the reasoning in [54]. Counsel also submitted that the conclusion was obiter, because it was not essential to his Honour’s ultimate disposition of the case. But if this was not so, I should reject his Honour’s view as incorrect.
I think it is clear that Emmett AJA’s reasoning in DGF was addressed to the terms of the special condition in that case. The reasonable endeavours obligations in that special condition was different from the reasonable endeavours obligations in the present case, and more onerous from the vendor’s point of view. It obliged the vendor, not merely to take reasonable endeavours to register the plan by the sunset date, but to use all reasonable endeavours to achieve registration as soon as possible. Arguably, it is more difficult to interpret a clause in that form as expiring on the sunset date. Furthermore, his Honour’s reasoning was clearly obiter.

… no conclusion of negligence can be arrived at until, first, “the mind conceives affirmatively what should have been done”.

The same starting point would appear to be appropriate when determining whether a defendant who owes a contractual obligation to take reasonable endeavours to achieve an objective has breached that obligation.

This point is important for present purposes. The evidence really went no further than generalised statements that some preparatory work could have been done. There was no identification of specific tasks. Nor was there any analysis of the critical path for the project which might have made it possible to draw conclusions about how much time the Developers would have expected to save by undertaking the preparatory work in question before the rezoning had taken place.
It is true that Mr Whitting’s report allowed six months for the undertaking of “environmental studies” before the development application process was to begin, and Ms Hodgkinson said that there was no reason why such studies needed to wait for the rezoning. But Mr Whitting wrote his report after the rezoning had been effected (and the DCP had been published). It remains unclear exactly what “studies” could have been undertaken before rezoning and how much time the Developers might have expected to save, and at what cost, by doing so. Mr Whitting would have been ideally placed to answer these questions when he gave evidence, but he was not asked.
I turn now to whether, once the rezoning had been effected on 16 July 2021, the Developers should have proceeded to lodge their development application (or at least undertake preparatory work to that end) as counsel for the Purchasers contended.
The evidence of Ms Sneyd about the Council’s attitude to dealing with such applications at the time creates a preliminary obstacle for counsel’s contention. I understood it to be common ground between the parties that, for an application of the type under consideration, the first step would be a pre-DA meeting. How could the Developers pursue an application if the Council was refusing to engage in such meetings? This question went unanswered by Ms Hodgkinson.
Even if this obstacle could be overcome, there was another factor at work. Until the revised DCP was issued, the Developers could not have been certain that they had all the relevant planning instruments to work from. There was an obvious risk that when the revised DCP did come out, the application would have to be reconsidered, which could make earlier work redundant.
That this risk was not merely theoretical is shown by subsequent events. The change to cl 4.1B which imposed a maximum density of 16.5 dwellings per hectare on the site was not in fact introduced until 30 September 2021 and, it seems, did not become clearly known until it was incorporated in the revised DCP at the end of October.
As already noted, the statement in Mr Whitting’s report that the change was “unforeseen” is somewhat strange in the light of the advice he had given to Mr Kavanagh in April 2020, but in the end, there is no reason to reject it. In any event, Mr Whitting could hardly have advised the Developers, before 30 September 2021, to prepare and lodge a development application based on a dwelling per hectare density limit which did not at the time actually exist.

I do not agree that unreasonable conduct for the purposes of s 66ZL(7)(b) is confined to conduct that occurs in the course of the construction of a development. That limitation is not found in the terms of the legislation, and the parts of the Second Reading Speech referred to by the vendor do not convince me that the provision should be read so narrowly. In my opinion, s 66ZL(7)(b) encompasses any unreasonable conduct engaged in by the vendor in relation to the off the plan contract. That would include, but is not limited to, unreasonable conduct in the performance of the contract. So, for example, conduct in the course of communicating with a purchaser under such a contract about the performance of the contract or rights under the contract can fall within the provision.

His Honour considered that (at [163]-[164]):

In my opinion, the vendor can be considered to have acted unreasonably within the meaning of s 66ZL(7)(b) by the sending of the letters to purchasers on 18 August 2016 and 16 September 2016, and the service of the s 66ZL(4) notices on about 28 January 2017. Those communications contained misleading statements.

The vendor can also be considered to have acted unreasonably within the meaning of s 66ZL(7)(b) by failing to discharge its obligations under cl 54.2 of the contracts, with the result that the development was significantly delayed. That is so even if, as I have found, the evidence does not enable a conclusion to be reached that the breaches relevantly caused the failure to have the Strata Plan registered by 31 December 2016. I would add that even if the breaches were not considered to be unreasonable conduct for the purposes of s 66ZL(7)(b), they are in any case relevant matters to be taken into account.

I respectfully agree with his Honour that there is no reason to limit the reach of subsection 7(b) to conduct occurring in the course of construction (or, in this case, subdivision). But I am not sure that s 7(b) covers any conduct whatsoever “in relation to” the contract which is, in a general sense, unreasonable or in bad faith. That would risk turning an application under CA s 66ZS into a Royal Commission into the vendor’s conduct under the contract.
I think that there must be a connection between the conduct and the vendor’s power of rescission. That connection may be direct (such as where the power is exercised for an improper purpose) or indirect (such as where the conduct is used to manufacture a ground for rescission). Breach of the term implied by s 66ZS(4) would be covered, because that term governs the manner in which the right to rescind must be exercised. But conduct having no effect on the accrual or exercise of the right would not be, although it could be relevant under other sub-paragraphs.
Returning to the complaints made by counsel for the Purchasers about Ahmau’s conduct, there is a sense in which it is correct to say that the Developers “shunned” or “abandoned” their obligation to proceed with the subdivision. I have concluded that on the true interpretation of the Contracts, SF cl 28.4 obliged Ahmau to do all that was reasonably necessary to procure registration of the Presale Plan, not some plan similar to that Plan. But from early July 2021, even before the rezoning, the Developers were proceeding on the basis that it would be sufficient compliance with the Contract if Ahmau were to convey to each of the Purchasers a lot of equivalent size to the one which was the subject of their Contract, and were located somewhere or other on the Leppington Land. From that point onwards they effectively abandoned the Presale Plan.
Had the Developers ultimately proceeded to seek approval for a subdivision based on Mr Whitting’s revised layout plan, they would have been in breach of, and, could be said at least to have neglected, Ahmau’s contractual obligations. But to act on a mistaken interpretation of the Contracts could not be described as acting in bad faith, or even unreasonably. Certainly, it would not have been open to the Purchasers to have made that contention, having themselves adopted the same interpretation of the Contracts in the course of negotiations about rescission and in their arguments at trial.
Mr Kavanagh was no doubt correct in saying that the benefit of obtaining an environmental report on the fill at 1105 Camden Valley Way was not confined to the marketing of the Leppington Land. It might have helped with a development application if the Developers had ultimately decided to pursue one. I do not agree that, simply because it may have been motivated by a potential sale to a third party, it should be ignored. Objectively, it benefited both courses of action.
But that is not so clear for the work on developing Mr Whitting’s layout plan. Mr Whitting’s advice was that pursuing a development application would have required work of a different nature. More importantly, any benefit for development application purposes would have concerned an application for approval of a subdivision different from that depicted in the Presale Plan. It would not, on the interpretation I have adopted, have assisted with discharging Ahmau’s reasonable endeavours obligation.

For most of the purchasers, losing the benefit of the contract would … cause considerable disappointment, given that they entered into the contracts with a view to living in the apartment, having chosen it as suitable for their own personal requirements. In some cases disappointment would also arise from the fact that the purchasers have waited a long time for the building to be constructed.

…

I agree that none of the purchasers demonstrated an inability to obtain a suitable replacement apartment. However, the upward movement in the market since 2014 cannot be ignored. I accept that this factor renders it more difficult than it otherwise would be for purchasers to re-enter the market to acquire a comparable property. It is also true that the purchasers can be taken to have been aware of the possibility that the vendor could rescind if the Strata Plan was not registered by 31 December 2016. The purchasers should be taken to have been generally aware of the terms of the contracts. Nevertheless, I accept that for most of the purchasers, the contract was more than a mere financial transaction where risks and rewards are assessed on that basis alone. For these purchasers, entry into the contract was rather a means of pursuing social as well as economic goals, or what might be referred to as “lifestyle” choices. In a society where property ownership is highly valued and affords status to those who attain it, these considerations cannot be dismissed as insignificant or trivial. Considerations of that kind are present in various ways and to different degrees in relation to most of the purchasers.

Counsel submitted that the present case was the same. The Purchasers had been deprived, so counsel had contended, of the intended locations of their family homes. It was also argued that if the Contracts were rescinded, the Purchasers’ conveyancing costs and first home buyers’ duty concessions would be wasted.
I have already analysed the evidence on this question from Mr Preet and Mr Bakshi earlier in my judgment. In my view the case was quite different from Silver Star. The evidence showed that, contrary to their claims, both the Preets and the Bakshis were at the time the sunset date expired, and remained, well established in the Sydney property market.
Nor do I accept that the Purchasers had any settled expectations that they would use their Presale Lots to build their ‘dream homes’. It would be more accurate to see the Purchasers as effectively having invested their deposits in a proposed subdivision where they might ultimately choose, depending on the circumstances, to build homes for themselves. The effect of rescission on them would be to require them to cash out of those investments.
In this regard, it is important to recognise that the Purchasers’ investments in the Contracts should not be equated with the valuations agreed for the purposes of these proceedings. Even if Ahmau could be compelled to complete the subdivision, completion would be a long way off and there would still be many contingencies to be satisfied. The process might easily take longer than the currently projected 2.5 years. Over that time much might happen in the property market. It certainly could not be assumed that the value of the Lots would continue to increase.
But of course, on my findings Ahmau cannot be compelled to complete the subdivision the subject of the Contracts. The real effect of rescission on the Purchasers would therefore be to deprive them, assuming the Contracts remain on foot, of the opportunity to force the Purchasers into repudiatory breach and then to sue for loss of bargain damages.
For reasons just given, the agreed valuations would not necessarily be an accurate measure of the Purchasers’ expectation losses. Damages would be calculated on the basis of the value of the Presale Lots as at the date they would have been conveyed to the Purchasers had Ahmau complied with its contractual obligations (less any further conveyancing costs to complete the Contract).
On the estimate in Mr Whitting’s November 2021 report, completion would have occurred between February and May last year if Ahmau had begun work on a development application immediately. But it has not been established that Ahmau was continuously in breach of its reasonable endeavours obligations from November 2021 onwards; on one view the breaches only lasted until April 2022. That would result in an estimated time for completion (if circumstances had not changed in the meantime) of at least two years from the date of delivery of this judgment. Any loss of bargain damages the Purchasers might recover now would have to be discounted to reflect future completion and valuation risks.

Balancing of factors

Counsel for Ahmau submitted that the analysis under s 66ZS(7) should be focused on the point at which the sunset period expired. The critical question was why the sunset condition had not been satisfied by that date. Counsel pointed out that this was the question posed by s (7)(c), not the broader question of why the condition had not been satisfied as at the date of the application.
In this context, Counsel emphasised the reference in the second reading speech to a desire to prevent developers manufacturing delays in order to obtain an unjust benefit from rescission. Counsel submitted that nothing of the sort had occurred in the present case and leave to rescind should accordingly be granted. Counsel also argued that the changes to the planning instruments had made registration of the Presale Plan impossible, and that was a further reason for rescission.
Finally, in his submissions counsel addressed the possibility of imposing terms on the grant of leave so as to require Ahmau, as a condition of rescission, to pay compensation to the Purchasers. This had apparently been foreshadowed prior to the hearing; indeed, counsel submitted that it was clear from the rescission correspondence that was really what the Purchasers had been seeking all along, rather than conveyance of the Presale Lots in specie.
Counsel submitted that the power under s 66ZS could not be used for such a purpose. Counsel acknowledged the decision of Emmett AJA in DGF, but noted that Parliament had subsequently amended s 66ZS so as to introduce s (11)(a), which expressly preserves the Court’s power to award damages. Counsel submitted that this provision would not have been introduced, at least in that form, if Parliament had contemplated that the Court would effectively award such damages as a condition of rescission.
Counsel submitted that the leave should simply be granted to rescind, presumably on the basis that this would result in the deposit being repaid. Counsel said nothing about interest being paid on the deposit.
Counsel for the Purchasers submitted that the state of affairs as at the sunset date was not the exclusive, or even necessarily the predominant, consideration. Counsel pointed out that the contract remained in force until and unless rescission was granted. In their submission, breaches of the reasonable endeavours clause, and conduct by Ahmau that was unreasonable or in bad faith, even occurring after the sunset date, remained relevant and important. So too did other factors mentioned in s 66ZS(7), principally the effect on the Purchasers.
Counsel did press for relief by way of specific performance. But it was made clear that, if this was not available, or, perhaps, even if it was, the Purchasers would be satisfied with compensation along the same lines as had been sought by way of relief from frustration, namely compensation for the loss of profit on the Lot together with a refund of the costs incurred in entering into the Contracts.

Conclusions

I have concluded that:
the Preet and Bakshi Contracts were frustrated, at the latest, by the introduction on 30 September 2021 of the new version of clause 4.1B in the Growth Areas SEPP;
as a consequence of frustration, Ahmau should be ordered to pay to the Purchasers a sum of money calculated by indexing their respective deposits in the manner set out in [428] above;
the Purchasers’ cross-claim for specific performance should be dismissed;
so too should Ahmau’s alternative claim for statutory leave to rescind the Contracts under CA s 66ZS.
On 4 April, I circulated to the parties a draft of the judgment to this point. I invited them to consider what orders were required to give effect to my conclusions and what orders should be made as to costs. The parties were unable to agree on these issues and a further hearing took place before me on 9 May, with the benefit of supplementary evidence and written submissions.
The balance of this judgment deals with these supplementary issues. When circulating the judgment, I also invited the parties to identify any errors or omissions in it which could conveniently be corrected (that is, without the need for an appeal). I received from counsel for Ahmau some typographical corrections which I have made. I have also further reviewed the draft and made further corrections to it. These corrections are not confined to typographical ones. I have reworked some areas so as to express them better or provide them with more supporting detail. None of the changes affect my reasoning or alter my conclusions.
In his submissions, Mr Bakshi asked me to make alterations to two other paragraphs of the draft ([145] and [193] above). While he said that he did not challenge my conclusion on frustration, he argued that the findings in question were incorrect and should be modified.
I have considered Mr Bakshi’s points, but I am not persuaded that, having regard to the evidence and the submissions which I received at the trial, my conclusions were incorrect. I have added a footnote to each of the paragraphs in question explaining why I consider that is so. Mr Bakshi will of course be free, if the findings are material for the purposes of any appeal which may be brought, to pursue his arguments about them at that stage.

Agreed orders

It was common ground that the Court should declare that, in accordance with my conclusion, each of the Contracts had been frustrated. The form of the declaration proposed by counsel for Ahmau was not disputed by the other parties. It was also common ground that Ahmau’s summons should otherwise be dismissed, and so should the Purchasers’ cross-claims.

Quantum of restitution

In my draft judgment ([1]-[633] above) I expressed the view that proper restitution required more than Ahmau simply refunding the deposits paid by the Purchasers, even with interest. I thought that an indexation factor should be applied to the deposits, calculated by reference to the increase in value of the Lots since the contracts were entered into.
In his further submissions, Mr Bakshi invited me to reconsider the view that the application of such an indexation factor would yield sufficient restitution. Instead, he argued that a still greater level of restitution was required in order to achieve justice.
Mr Bakshi pointed out that he did not merely pay a deposit under the terms of their Contract. He also obliged himself to pay the full contractual price when the time arrived for completion. This was a significant financial commitment which might (and, indeed, would usually) have to be funded by borrowing.
Earlier in my judgment ([425]-[430] above), I expressed the view that the award of compensation (assessed on a loss-of-bargain basis) was not a proper measure of the Purchasers’ entitlement to restitution. This was because the Contracts came to an end without being terminated for any breach on Ahmau’s part. Mr Bakshi expressly accepted this. But he argued that some allowance should nevertheless be made for his contingent liability to pay the balance of the purchase price. He suggested 40-50% of the purchase price as the appropriate figure.
Counsel for the Preets did not go so far as this. But she did contend for more extensive restitution than I had contemplated.
Counsel’s calculation of the restitution sum had three components. The first was a refund of the deposit. The second was interest on the deposit at Court rates. The third was a sum calculated by indexing the deposit by reference to the increase in value of the Preets’ lot in the manner which I had suggested.
As I had contemplated, there was also some debate about fixing the indexation factor. Counsel for Ahmau and counsel for the Preets put forward rival contentions in this regard. Mr Bakshi did not present any further submissions on the question, stating that he was content to accept whatever indexation rate the Court considered appropriate.
Counsel for Ahmau submitted that the appropriate factor to use would be calculated by reference to the increased value of the Lots to August 2021 (57%), plus 5% per annum thereafter. The August 2021 valuation should be used because it was a reasonable proxy for the date on which frustration of the Contracts occurred. That was when the Contracts came to an end and the Purchasers’ rights to restitution accrued. Counsel submitted that further increases in market value after that date were irrelevant.
For her part, counsel for the Preets proposed calculating the indexation factor by reference to increase in value to May 2023 (101%), plus 5% per annum (compounded) thereafter. The May 2023 valuation was the latest one, and was the closest to the date of the trial. In fact, the frustration claim had not been advanced by Ahmau until the end of the trial ([12]-[13] above). Furthermore Ahmau continued to retain the deposit after frustration, and after the frustration claim was made. Counsel submitted that it would be artificial to cut the indexation off at the date of termination of the Preets’ Contract, as determined retrospectively.

Costs

Prior to the hearing I drew the parties’ attention to previous decisions of mine on costs in proceedings involving multiple claims for relief or multiple issues on which there is mixed success. I indicated that, subject to any submissions the parties might make, those earlier decisions would represent my starting point in dealing with costs in the present case.
In summary, I have taken the approach that in general the rule that costs follow the event should be applied distributively between distinct claims for relief in the proceedings. This means that where a party succeeds on one claim and fails on another that party will receive a costs order in its favour for the costs solely referable to the successful claim and be ordered to pay the costs solely referable to the unsuccessful one. General costs of the proceedings which are common to both claims then follow one or other of the claims according to the significance of those claims in the proceedings as a whole.
This approach involves distinguishing between a claim for relief on one hand and an issue which arises in the course of determining a claim on the other. Where a party succeeds on a claim but fails on an issue arising in that claim (for instance, in the case of a successful defendant, succeeding on one defence and failing on another) then that party will generally not be required to pay the costs on the issue on which it failed unless those costs are “clearly dominant or severable”: Akierman Holdings Pty Limited v Akerman *(*No 3); In the matter of Akierman Holdings Pty Limited *(*No 2) [2021] NSWSC 869 at [67]-[85]; Shun Sheng Pty Ltd v Lei *(*No 6) [2024] NSWSC 1613 at [25]-[26]; Martinus Rail Pty Ltd v Qube RE Services *(*No 2) Pty Ltd *(*No 3) [2024] NSWSC 1483 at [158].

Offers made by the parties

For the purposes of the arguments about costs, reference was made to various offers which were put the parties prior to and during the proceedings. It is convenient to set these offers out chronologically before returning to the parties’ submissions.
The first relevant offer was the open request for agreed rescission of the Contracts made by Mr Draybi, Ahmau’s solicitor, to each of the purchasers on 20 April 2022. The Purchasers were invited to consent to the rescission of their Contracts and return of their deposits, but without any allowance for interest or other compensation. The request provoked correspondence from the Purchasers but in neither case was consent to rescission given.
On 3 June, Mr Draybi made a Calderbank offer to each of the Preets and the Bakshis. The offer provided for the execution by the Purchasers a deed of consent to rescission, and the repayment of the deposit together with a further sum of $20,000.
On 16 June, Mr Anjos, the Preets’ solicitor, responded. He advised that the offer was rejected but the Preets were prepared to “resolve the matter by acquiring a block of land of similar size in the new subdivision”. There was no formal response from Mr Bakshi; his open correspondence with Mr Draybi in which he was requesting further information continued.
On 29 July, Ahmau made a further Calderbank offer which followed substantially the same terms as the offer of 3 June. Mr Draybi noted that only three purchasers remained. The additional payment on offer was increased from $20,000 to $35,000.
Again, the offer was not accepted. As already noted, the proceedings were commenced on 29 August.
On 3 November, Mr Draybi made further Calderbank offers to the Purchasers. The offers followed an informal settlement conference between the parties which took place on 19 October. Mr Draybi stated:

In that conference, our client made clear that:

(a) at this stage, and in the foreseeable future, there are no plans to develop the subject property;

(b) only 3 lots remain under contract, and there are not enough potential purchasers to fund a development; and

(c) it is not the right economic climate for our client to carry out the development, including that:

(i) it is unlikely that our client will be successful in a marketing campaign to sell the lots due to recent monetary policy decisions to increase interest rates; and

(ii) it is unlikely that our client will obtain bank funding to carry out the development.

The offer proposed an increase of the amount payable on top of the deposit to $55,000. With consent orders granting Ahmau leave to rescind and dismissing the proceedings as against the Purchasers with no order as to costs.
Again, this offer was not accepted. This appears to have put an end to the negotiations for the time being.
On 19 April 2023 Mr David Shad, a solicitor acting for the Bakshis, made a Calderbank offer to Mr Draybi. The offer was a complex one. It involved a choice of three options. The first option involved completion of the existing contract for a 313m² block with a 10-metre frontage for a revised price of $60,000 more to accommodate additional development costs. The second involved the substitution of a different lot in the “proposed development”, with an area of not less than 380m² and a frontage of between 10 and 12 metres, for the same increased price. The third option involved rescission of the existing contract with payment of compensation of $298,000. This offer also was not accepted.
Further offers were made to the Purchasers by Ahmau in April 2024. Unlike the prior offers, these were formal offers under the Rules.
The offers followed a mediation which had taken place between the parties. The offer provided for Ahmau to have judgment in its favour in the form of an order granting statutory leave to rescind, together with judgment in favour of the Purchasers on their cross-claims for Lord Cairns’ Act damages in the sum of $150,000 each. The parties were to bear their own costs.
The final offer to which reference was made by the parties in the costs argument was a Calderbank offer made to the Preets on 2 July last year. By this time the frustration claim had been formally raised on behalf of Ahmau. The covering letter expressed the view that the frustration claim would succeed, and the cross-claim for specific performance would fail.
The offer was for Ahmau to return the deposit, pay interest at Court rates (approximately $13,000) and make a further payment of $50,000. In return the Preets were to be “taken to have provided express consent to rescind” their Purchase Contract. The parties were to bear their own costs.
This offer was refused, and a counteroffer was made to provide consent to rescission on payment of $100,000 plus the Preets’ costs as agreed or assessed.

Submissions

The parties took diametrically opposed positions on costs. Ahmau’s claim was for an order that the Purchasers pay its costs of the proceedings on an indemnity basis. For their part, the Purchasers sought costs orders in their favour against Ahmau for the whole of the proceedings on an indemnity basis.
As between the Purchasers, counsel for the Preets took the lead in presenting submissions on costs. Counsel’s submissions were adopted by Mr Bakshi, who made some further submission of his own. In what follows I will only refer separately to Mr Bakshi’s submissions where it is necessary to do so.
Counsel for Ahmau began by contending that, as a matter of substance, Ahmau had been entirely successful in the proceedings. Ahmau had succeeded in its frustration claim. Had it not succeeded on that claim, Ahmau would have obtained an order for statutory rescission in its favour. The cross-claims had failed.
Counsel submitted that there was no reason to analyse the outcome on a claim-by-claim basis in accordance with my approach in Akierman. Counsel characterised the case as concerning a single question: whether Ahmau should be discharged from the contract. To the extent that Ahmau had failed on any issues, these were subordinate issues which were not “clearly dominant of severable”.
Counsel submitted that, as a result, Ahmau was prima facie entitled to the whole of the costs of the proceeding on the basis that costs followed the event: UCPR Rule 42.1. The onus thus shifted to the Purchasers to demonstrate a good reason why the Court should order otherwise. He submitted that the Court would not ultimately be satisfied that it should do so.
Counsel next contended that the costs order in favour of Ahmau should be on an indemnity basis. Counsel relied in particular on the Calderbank offer of 3 November 2022 and the formal offer of 15 April 2024, submitting that the offers were more favourable to the Purchasers than the eventual result of the proceedings. Counsel argued that rejection of the offers had been unreasonable.
Counsel submitted that the correspondence showed that the Purchasers proceeded on the basis that they would be entitled to compensation, effectively on a contractual basis, for the increased value of the land. This was rejected. It was this unrealistic and erroneous assumption which had been the real cause of the litigation proceeding to hearing.
Counsel for the Preets submitted, as counsel for Ahmau had submitted, that the proceedings should be seen as having involved a single claim. Counsel therefore agreed that the claim-by-claim analysis in Akierman was not appropriate.
But counsel characterised the outcome of the claim differently. Although Ahmau’s claim for frustration succeeded to the extent that the Court was satisfied that frustration had occurred, Ahmau was not successful in its further contention that this should result only in the return of the deposits (or the return of the deposits together with interest). And the claim had been a belated one; the claim for statutory leave to rescind which had been the whole focus of the proceedings up until July last year, failed.

… There is nothing in the language of the section to indicate that the legislature intended a departure from the ordinary principles relating to costs beyond the stated position as to the identity of the party generally liable for costs. That is to say, the provision does not affect the principles concerning the basis of assessment of costs awarded. It seems to me that the plaintiff is attempting to read into the section a limitation which is not apparent from its language. ...

Counsel identified two main types of allegedly unreasonable conduct on Ahmau’s part. The first was associated with the way in which the frustration issue came to be presented to the Court. Counsel pointed out that I had myself raised the question at two earlier stages of the proceedings, and had been told by counsel for Ahmau that no claim was to be made that the contract had been frustrated.
Counsel submitted that, as a result, much of the evidence which had been led concerning the application for leave for statutory rescission was, including the individual circumstances of the Purchasers and the reasons for which rescission had been sought, were irrelevant. Counsel submitted that if the frustration claim had been made at an earlier point, different forensic decisions might have been made about which issues to contest.
Counsel also relied, in my understanding by way of analogy, on the frequently cited Court of Appeal for England and Wales in Beoco Ltd v Alfa Laval Co Ltd [1995] QB 137 at 154:

…As a general rule, where a plaintiff makes a late amendment as here, which substantially alters the case the defendant has to meet and without which the action will fail, the defendant is entitled to the costs of the action down to the date of the amendment…

The second basis for the indemnity costs order sought by counsel was the allegedly unreasonable conduct of the proceedings by Ahmau. This included the failure by Ahmau to provide a full and proper statement of the reasons for which rescission was sought. Counsel also relied on my findings that some of the evidence given by Mr Kavanagh was at best misleading, and the evidence given by Mr Wheadon was incorrect, and embarrassingly so.
Counsel also relied on allegedly unreasonable refusal of an offer made on 17 July. That offer was for payment of $100,000 including the deposit but with no order as to costs. The offer was calculated on the basis of return of deposit; interest at Court rates; and $53,000 for “restitution or equitable damages”.
The Bakshis’ cross-claim was brought in March 2023, a relatively early stage of the proceedings and well before the Preets’ cross-claim. I did not understand Mr Bakshi to make the same submission about the belated nature of the cross-claim as was made by counsel for the Preets. But he otherwise supported the submissions made by counsel. He further identified two additional features of Ahmau’s conduct, which, in his submissions, had been unreasonable. The first was, so he alleged, that as an experienced developer Ahmau should have been aware that the contract had been frustrated. This lent additional weight, in his submission, to the complaint about the delay in propounding the frustration claim. Mr Bakshi also relied on the failure to accept the offer made on the Bakshis’ behalf in April 2023, which he characterised as an offer to pay $60,000 more than the Contract price. Thirdly, Mr Bakshi complained about the way in which the pre-trial steps had been conducted. He submitted that there had been numerous breaches and delays on behalf of Ahmau’s part in complying with the timetable, which had lengthened the proceedings and made them more expensive.
In reply, counsel for Ahmau disputed the Purchasers’ reliance on s 66ZS(8). Counsel submitted that the Ahmau had succeeded on frustration. This was said to be the ratio for the Court’s decision. The special provision in s 66ZS(8) related to proceedings for a statutory leave to rescind and was not engaged.
Alternatively, counsel submitted that the rule in s 66ZS(8) was not absolute. It was only a “presumption” just like the “presumption” that costs generally follow the event. Counsel also relied, by analogy on the costs power where a compulsory easement is granted under CA s 88K(5). It is established that in dealing with the costs of such an application, the plaintiff will usually have to bear the costs, but the Court has power to depart from that and either deny costs to the defendant or even order the defendant to pay costs if the defendant’s conduct and the circumstances are such as to warrant it doing so: Civil Procedure Act 2005 s 98**.**
Counsel further submitted that to treat s 66ZS(8) as a binding rule would give rise to a “moral hazard”. Purchasers facing such an application, once their initial opposition had not been unreasonable, would not be subject to any costs sanctions, and would have no incentive to conduct the litigation sensibly and economically. Counsel referred to passages in the correspondence between the parties prior to the litigation to submit that this in fact had been the attitude of the Purchasers all along.

The principled approach to dealing with costs requires the Court to focus upon and only upon, the conduct of the actual proceedings which have taken place. Conduct anterior to the commencement of the proceedings may be remediable if that conduct exposes a cause of action, in which event success on that cause of action is in general, the mode and the only mode, by which the innocent party receives redress from the Court.

Counsel also focussed on the offers made in June and July 2022. But counsel submitted that unreasonable behaviour did not end there. Counsel pointed to the other offers made in the course of the proceedings, particularly the offers of November 2022 and April 2024. Counsel submitted that when s 66ZS(8) refers to consent being unreasonably refused, it was wide enough to encompass those offers. Consent was what had been asked for.
Finally, counsel submitted that if any costs order was to be made against Ahmau, Ahmau should only have to pay one set of costs. Counsel submitted that the Preets and the Bakshis ran virtually identical cases counsel submitted that where double representation is involved, the Court should only exercise its discretion to award costs in a way which accepts double representation where the requirements of justice require that to be done, and such cases will only arise rarely: Van Eeden v Henry (2005) 62 NSWLR 301 at [33]. Counsel submitted there was no justification for double representation in the present case.

Conclusions

Operation of CA s 66ZS**(**8): The first question for determination is whether s 66ZS(8) displaces the provisions of the Rules which would ordinarily apply to these proceedings, in particular the rule that costs generally follow the event.
In my view it does. My reasons are as follows.
The rule that costs follow the event is only a general one created by subordinate legislation. It must give way to inconsistent statutory provisions.
Subsection (8) in terms creates a rule concerning “liability” for the Purchasers’ costs “in relation to” proceedings for statutory leave. The use of this phrase creates imprecision, but it clearly must include the Purchasers’ costs of the proceedings themselves.
The comparison with CA s 88K(5), relied upon by counsel for Ahmau, is instructive in this regard. That provision is worded so as to create a general entitlement in favour of the defendant, but allows the Court to make a different order in some circumstances. There is no equivalent power to dispense with the “liability” created by s 66ZS(8).
The departure from the usual rule was seen as a significant factor in levelling the playing field between developers and purchasers, which was part of the rationale for the relevant statutory provisions. It was expressly referred to in the Minister’s second reading speech ([458] above)
The points made by counsel for Ahmau concerning “moral hazard” would potentially be relevant to the interpretation of s 66ZS(8) if the language or purpose of the enactment were unclear. But on this issue, I do not think it is. Such considerations therefore do not justify the Court in refusing to give effect to the rule laid down by Parliament, although, as will be seen, they may be relevant to the scope of that rule.
It follows, I think, that s 66ZS(8) displaces inconsistent provisions of the Rules (this was also the assumption made by Darke J in Silver Star). Unless the Purchasers were unreasonable in refusing consent to rescission of the Contracts, Ahmau is obliged to pay the costs of the s 66ZS proceedings and there is no discretion to be exercised.
It does not however follow that the costs of the cross-claims and of Ahmau’s frustration claim must be dealt with in the same way. Those claims for relief were legally and factually different from the s 66ZS application. They could have been brought in separate proceedings. The fact that they were included in the s 66ZS proceedings is a procedural accident which should not determine the parties’ costs entitlements so far as they are concerned.
I think that the statutory language reflects this view. Sub-section 66ZS(8) refers to costs in relation to “proceedings for an order under this section”. The costs of Ahmau’s frustration claim do not answer that description. And no question of consent to rescission arose, so the liability rule created by s 66ZS(8) could not meaningfully be applied. The same is so for the costs of the cross-claims.

Orders

The orders of the Court are:
Declare that the contract for the sale of land between the plaintiff and the first and second defendants dated 21 March 2017 was frustrated by 30 September 2021 at the latest.
Order that Ahmau pay the first and second defendants $74,000 by way of restitution.
Declare that the contract for the sale of land between the plaintiff and the third and fourth defendants dated 6 April 2017 was frustrated by 30 September 2021 at the latest.
Order that Ahmau pay the fourth and fifth defendants the amount of $37,000 by way of restitution.
Otherwise dismiss Ahmau’s claims for relief.
Dismiss the cross-claim of the first and second defendants and the cross-claim of the fourth and fifth defendants.
Order that each of the first and second defendants and the fourth and fifth defendants pay the plaintiff’s costs solely referable to:
(a) their cross-claim; and
(b) the plaintiff’s claims for relief as against them concerning frustration.
Order that the plaintiff otherwise pay the costs of each of the first and second defendants and the fourth and fifth defendants of the proceedings as between it and them.

**********

Endnotes

The figure of $16,699 was in the draft judgment issued to the parties and was challenged by Mr Bakshi (see [636]-[637] below). Mr Bakshi submitted that the figure should have included the initial deposit of $1,000 paid to Stroud ([141] above), giving a total of $17,699. It is true that there is documentary proof of payment of $1,000 to Stroud and a receipt issued on behalf of Ahmau for $16,699. But that does not mean the two amounts should be aggregated. I assume that under the terms of the Preliminary Agreement Stroud was obliged to account for the $1,000 to Ahmau when the Contract was signed, and did so; the Purchasers would have paid the balance to make the deposit up to the agreed figure, and the receipt would issued from Ahmau for that amount. In any event, Ahmau was only accountable for the amount shown in its receipt; if Stroud retained the $1,000 paid to it, that was not Ahmau’s responsibility.

I have retained the concluding sentence in the form in which it was circulated to the parties in draft, despite a challenge from Mr Bakshi in his supplementary written submissions (see [636] below). His argument was that my conclusion, and the supporting observations in the preceding paragraphs of the judgment, were “premised on an incomplete view” of his evidence, which, he argued, demonstrated a “genuine and longstanding intention to build a family home at Lot 1064”. Mr Bakshi went on in his submissions to make supplementary comments about his and his wife’s intentions when purchasing the Lot and about his future plans, so far as residence and education of his daughter were concerned. He complained that only one question was asked in cross-examination and that “no opportunity was afforded” for supporting evidence from family, friends and advisors. But I remain of the view that it is highly unlikely that Mr Bakshi would have made any final decision on the future of the Lot before he needed to. Furthermore, for the purposes of my judgment it is not open to me to accept factual assertions in his submissions which were not tested at trial.

Ahmau Developments Pty Ltd v Preet

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Frustration

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