Al Achrafi v Topic

Supreme Court of NSW|2016-08-31|Before: Robb J

ralia Bank Ltd (1989) NSW ConvR 55-461 Joseph Constantine Steamship Line v Imperial Smelting Corporation [1942] AC 154 Joyce v Realm Marine Insurance Co (1872) LR 7 QB 580 Kayserian Nominees (No 1) Pty Ltd v JR Garner Pty Ltd [2008] NSWSC 803 Maganic v Ravagnani [2003] NSWSC 1063 Masterton Homes Pty Ltd v Executive Builders & Developers Pty Ltd [2003] NSWSC 908 Masters v Belpate Pty Ltd [2001] NSWSC 169 Mitchell v Pattern Holdings Pty Ltd [2002] NSWCA 212; (2002) 11 BPR 20,241 Munro v Bodrex Pty Ltd [2002] NSWSC 122; (2002) 10 BPR 19,403 New Zealand Shipping Co Ltd v Societe des Ateliers et Chantiers de France [1919] AC 1 Nina's Bar Bistro Pty Ltd v MBE Corporation (Sydney) Pty Ltd [1984] 3 NSWLR 613 Pelly v Tebran Pty Ltd [2006] NSWSC 1072 Plumor Pty Ltd v Handley (1996) 41 NSWLR 30 Rivat Pty Ltd v B & N Elomar Engineering Pty Ltd [2007] NSWSC 638; (2007) 13 BPR 24,473 Schenk v ACN 081 123 140 Pty Ltd [2002] NSWSC 123; (2002) 11 BPR 20,375 Sharjade Pty Ltd v Commonwealth [2009] NSWCA 373; (2009) 15 BPR 28,443 Suttor v Gundowda Pty Ltd (1950) 81 CLR 418; [1950] HCA 35 The City of Gosford v Marim Pty Ltd (1990) 6 BPR 13,871 Walker v Chanrich Properties Pty Ltd [2003] NSWSC 1064; (2003) 11 BPR 21,289 Wang v Kaymet Corporation Pty Ltd [2015] NSWSC 1459 Woodcock v Parlby Investments Pty Ltd (2014) 251 CLR 640; (1998) 4 BPR 9568 Yeung v Densor Pty Ltd (1989) 5 BPR 11,343 Zieme v Gregory [1963] VR 214 Texts Cited: JD Heydon; Cross on Evidence (10 ed) Professor P Butt; The Standard Contract for Sale of Land in New South Wales (2 ed) Ritchie's Uniform Civil Procedure NSW Category: Principal judgment Parties: Ayman Al Achrafi (first plaintiff) Rana Al Achrafi (second plaintiff) Vlajko Topic (first defendant) NedeljkaTopic (second defendant) Representation: Counsel: H W Somerville (first and second plaintiff) D M Loewenstein (first and second defendant)

Introduction

On 16 January 2014, the plaintiffs, Ayman and Rana Al Achrafi, entered into a contract for the sale of land with the defendants, Vlajko and Nedeljka Topic, for the purchase of proposed Lot 215 in a subdivision of Lot 1013 Plan 1126014 at Thistle Circuit, Green Valley, in this State (Lot 215). The purchase price was $385,000, of which the plaintiffs paid $38,500 as a deposit on exchange of contracts.
At the time the contract for sale was entered into, the defendants had not yet registered the plan of subdivision of which the subject property, Lot 215, was to be a part. Various works were required to be completed before the defendants could lodge the plan of subdivision for registration.
The defendants' son, Mark Topic, who I will call Mr Topic, acted on behalf of his parents in all matters concerning the conduct of the works necessary to achieve registration of the plan of subdivision, as well as in their dealings with the plaintiffs. The evidence was somewhat obscure on the issue of Mr Topic's authority to act for his parents, but it is clear that he had their authority to do so in all respects. In practical and legal terms, for all relevant purposes, Mr Topic's acts were the acts of the defendants, as were his omissions.
The contract for sale contained terms which, subject to certain requirements, permitted both the plaintiffs and the defendants to rescind the contract for sale, if the plan of subdivision was not registered within 12 months from the date of the contract.
One year passed and, on 16 January 2015, the plan of subdivision was still not registered. On 31 March 2015, Mr Topic on behalf of the defendants purported to rescind the contract for sale.
The primary issue in these proceedings is whether the rescission of the contract for sale by the defendants was effective.

The plaintiffs' claim

The plaintiffs filed a summons on 4 June 2015, in which they sought the following final relief: 4 A declaration that the Contract for Sale of Land dated 16 January 2014 is not rescinded. 5 An order for specific performance of clause 28.2 of the Contract for the Sale of Land dated 16 January 2014.
Clause 28.2 of the contract for sale imposed upon the defendants an obligation to do everything reasonable to have the plan of subdivision registered within 12 months after the date of the contract. Depending upon the nature and extent of the work remaining to be done, before the defendants could submit the plan of subdivision for registration, an order for specific performance, as sought in par 5 of the summons, might require the court to supervise the work to be done, and other steps to be taken by the defendants. During the course of the hearing, I raised with the parties the difficulties that might be involved in the application to the court to make the order in par 5 of the summons. The parties agreed to give their attention to those difficulties, and I will return to that issue below.
At this stage, the primary question for the court is whether it should make the declaration sought in par 4 of the summons.
Pleadings have not been filed in this matter. Accordingly, the plaintiffs were not required to formally specify the steps that they allege the defendants failed to take that were required if the defendants were to do everything reasonable to have the plan of subdivision registered within the 12 month period. The defendants have apparently been content to go to trial on that basis. This has had the effect of introducing an element of imprecision in the determination of the issues in dispute between the parties.

Contract for sale

The contract for sale was in the form of the 2005 edition published by The Law Society of New South Wales and the Real Estate Institute of New South Wales.
The Vendor's Solicitor was expressed to be Lyn's Conveyancing Pty Ltd, which operated as a registered conveyancer. The Purchaser's Solicitor was described as Johnsons Solicitors.
The Land the subject of the contract for sale was described in the following terms: Land Lot 215, Thistle Circuit Green Valley NSW 2168 (Address, plan details Proposed Lot 215 in a subdivision of Lot 1013 Plan 1126014 and title reference) Folio: part 1013/1126014
The terms of the contract for sale that are most relevant to the present dispute are the terms that deal with the need for the plan of subdivision to be registered, and the consequences of the plan not being registered within 12 months.
Clause 28 in the printed contract for sale relevantly provides: 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 clause 28.2…
The copy of the contract for sale that is in evidence is the copy signed by the defendants. In clause 28.2, the number "6" in the expression "6 months" has been struck through with a diagonal line. The number "12" has been written on the contract for sale immediately above the word "unregistered" in clause 28.1. Neither amendment to the contract of sale was initialled. The defendants accepted that the amendments formed part of the contract. The amendments are consistent with a special condition to which I will refer shortly.
The contract for sale did not in specific terms describe the Land as a lot in an unregistered plan. However, it is clear that, in substance, the description of the Land that has been set out above is a description of a lot in an unregistered plan. The defendants accepted that clause 28.1 of the contract for sale was engaged.
Under the heading "Special Conditions", under which the special conditions of the contract for sale were set out, the following words appear: In the event of there being any inconsistency between the printed form of Contract and the Special Conditions then these Special Conditions shall prevail.
The first of the Special Conditions, however, dealt with "Amendments to the Printed Conditions". Special condition 30 relevantly provides: 30. Amendments to the Printed Conditions The standard printed conditions (clause 1 to 29 inclusive) of this contract are amended as follows: … 30.11 Clause 28.2 Delete "6 months" and replace it with "12 months".
It may also be significant that special condition 30, in addition to making amendments to various other clauses in the printed form, also expressly omitted a number of the terms in the printed form; being cll 3, 7.1.1, 14.4.1, 14.4.2, 16.8, 23.14 and 23.18. The content of these terms is not material to the resolution of the present dispute. However, it may be legitimate, when seeking to determine how the parties objectively intended the terms in the printed form to be read with the special conditions, to note the fact that the parties expressly omitted terms in the printed form, when they did not want them included in the contract for sale.
Special condition 48 provides as follows: 48. The purchaser acknowledges the sale is subject to registration of plan of subdivision, a copy of which is annexed to this contract (the Plan). If the plan has not been registered within twelve (12) months from the date of this contract either party may rescind this contract in writing to the other party, clause 19 shall apply.
Clause 28 and special condition 48 are superficially inconsistent. Special condition 48 does not impose any obligation on the defendants to do anything to have the plan of subdivision registered, while cl 28.2 obliges the defendants to do everything reasonable to have the plan registered within 12 months. Special condition 48 appears to give both the plaintiffs and the defendants an unfettered right to rescind the contract for sale, if the plan of subdivision has not been registered within 12 months; while cl 28.3.1 gives an unfettered right only to the plaintiffs. Clause 28.3.2 gives the defendants a right to rescind, but only if they have complied with the requirement in cl 28.2 that they have done everything reasonable to have the plan of subdivision registered within the allotted time.
I will return to the question of the proper construction of the contract for sale below.

The contending arguments

The plaintiffs delivered a written outline of submissions before the commencement of the hearing and final written submissions after its completion.
The position adopted by the plaintiffs, as I understand it, was that cl 28.3.2 gave the defendants a right to rescind the contract for sale, but only if they satisfied the condition that they had complied with cl 28.2. As such, the defendants had the burden of proving that they had satisfied the condition. Clause 28.2 required the defendants to do everything reasonable to achieve registration, and not just that the defendants act reasonably. If a particular step was reasonable at the time it could have been taken, then it had to be taken, and it is immaterial that it can retrospectively be shown that registration would not have taken place within the 12 months, even if the steps had been taken. Even if the plaintiffs had the legal burden of proving that the defendants did not comply with cl 28.2, the great disparity in the availability of relevant evidence and information to the parties meant that a burden of adducing evidence would readily shift to the defendants. Finally, on the evidence in this case, the purported rescission of the contract for sale by the defendants was ineffective, because the evidence establishes that the defendants did not comply with the condition in cl 28.3.2.
The defendants delivered a short written outline of submissions before the hearing, which they supplemented by an outline of submissions in reply. The defendants also delivered written submissions on the evidence after the conclusion of the hearing.
The defendants varied their position in this sequence of documents. In the initial outline, the defendants appeared to put the submission that special condition 48 is inconsistent with cl 28.2, as it does not expressly impose upon the defendants any condition to the exercise of the right to rescind. The defendants suggested that the only restriction on the right of the defendants to rescind the contract for sale, if registration of the plan of subdivision had not been achieved within the 12 month period, was that they had complied with an implied duty of good faith.
That position subsequently changed. The defendants appear to have admitted the possibility that special condition 48 and cl 28.2 could be read together. They said in their reply that the plaintiffs' position that the two clauses may be read together is well open to the court. The defendants' final written submissions would appear to accept that it is a reasonable and proper construction of the contract for sale that cl 28.1 was imported into the special conditions by special condition 30.11, and may be read with, and is not in conflict with, special condition 48.
The primary position of the defendants appears to be that, even if the contract for sale requires the defendants to have done everything reasonable to have the plan of subdivision registered within the 12 month period, as a condition to their entitlement to rescind, if the plan is not registered within that period, the plaintiffs had the burden of proving that the defendants' had not satisfied the condition.
In relation to the proper satisfaction of the burden of proof, the defendants emphasised that the plaintiffs had not taken up an offer made on behalf of the defendants to produce whatever evidence they required to be satisfied that everything reasonable had been done. The plaintiffs only called one subcontractor, Mr Colussi. They did not seek discovery from the defendants. They did not adduce evidence from any authority or instrumentality, either by the issue of subpoenas to give evidence or for the production of documents.

Construction of cl 28 and special condition 48

If I have understood the defendants' submissions as finally made correctly, they accept that the right of rescission given to the vendors by special condition 48 is qualified by the condition imposed by cl 28.3.2 that the right may only be exercised by the vendors if they have complied with their obligation in cl 28.2 to do everything reasonable to have the plan registered within 12 months after the date of the contract for sale.
In my view, the defendants were correct to make that concession as to the proper construction of the contract for sale, although it must be said that the printed terms and the special conditions do not always fit neatly together, and the drafter of the contract has not addressed all possible inconsistencies.
The present is not a case for the straightforward application of the principle that specifically negotiated clauses will prevail over printed clauses forming part of a standard form of contract to the extent of any consistency. This principle was explained by Lord Bingham of Cornhill in Homburg Houtimport BV v Agrosin Ltd [2004] 1 AC 715; [2003] UKHL 12 at [11] in the following way: It is common sense that greater weight should attach to terms which the particular contracting parties have chosen to include in the contract than to pre-printed terms probably devised to cover very many situations to which the particular contracting parties have never addressed their minds.
As the printed terms in the present case consist of the 2005 edition of the standard contract for the sale of land, they perhaps have a generality of application that would accord them a higher status than the pre-printed terms referred to by Lord Bingham. Further, the special conditions themselves have the appearance in some respects of a standard form; albeit limited perhaps to contracts for sale prepared by the vendors' solicitor for use in the sale of lots in a proposed subdivision whose plan has not yet been registered.
The special conditions in the present case were probably not directly negotiated between the parties in any real sense. Rather, the drafter of the contract appears to have combined a printed form of contract containing standard terms and a precedent containing special conditions; and to have regulated the relationship between the two forms by the terms of special condition 30.
However, the chapeau to the special conditions, in providing for the special conditions to prevail over the printed terms in the event of there being any inconsistency, gives effect to the principle referred to by Lord Bingham.
As special condition 30 is itself a special condition, the effect it has in amending the printed terms will be given prevalence by the chapeau, in the sense that special condition 30 may amend a printed term in a way that shows that the term was intended to have effect as amended, which is a result that cannot be inconsistent with the special conditions.
If the proper construction of the contract of sale were an issue between the parties, the first question would have been whether cl 28.3.2 and special condition 48 are inconsistent.
Are two terms of a contract inconsistent where one term gives an unfettered right to both parties to rescind the contract if an event does not occur within a specified period, and another term creates an obligation on one party to do everything reasonable to cause that event to happen within the period, and makes rescission by that party conditional upon the obligation being satisfied?
There is no simple answer to this question. As Hamilton J said in Rivat Pty Ltd v B & N Elomar Engineering Pty Ltd [2007] NSWSC 638; (2007) 13 BPR 24,473, in relation to the resolution of a possible inconsistency between cl 28 of the standard contract and a special condition that only gave the purchaser a right of rescission: [45] The last of his Lordship's words must be treated with some caution. It is clear that if the written or typed words are really inconsistent with the printed form, then the written or typed words must prevail. But his Lordship should be taken to be emphasising that the written words should not lightly or automatically prevail and that the contract should be read so as to give effect so far as possible to all its provisions. [46] This last principle was stated as follows by Lord Romilly LR in Re Strand Music Hall Co Ltd (1865) 35 Beav 153 at 159; 55 ER 853 at 856: The proper mode of construing any written instrument is, to give effect to every part of it, if this be possible, and not to strike out or nullify one clause in a deed, unless it be impossible to reconcile it with another and more express clause in the same deed. I think that I must, if possible, give effect to both these clauses in the articles in question… More recently, in Lewis v Barnett (1982) 264 EG 1079 at 1080 Stephenson LJ said: I have not the smallest hesitation in saying that no principle of construction and no authority of any court compels or even justifies a judge in finding one paragraph in a written document (in this case a sealed lease) to have effect. Effect must be given to the paragraph if it possibly can be. [47] In my view, what flows from these principles is that, whilst clearly inconsistent provisions of the printed form must be treated as excluded by the typed provisions, the operation of the printed clauses should be preserved so far as is possible. The Court should not lightly accede to a submission that the typed provision covers the field and excludes in whole the corresponding printed clause, if parts of that provision can coexist with the typed clause and still be given effect. In this regard, I note the decision of Ashdown v Kirk [1999] 2 Qd R 1, in which McPherson JA said at 8:For all these reasons, there is no basis for supposing that Special Condition 3 was designed to be exhaustive or in some way to 'cover the field' of non-payment of the deposit moneys to the exclusion of the detailed provisions of Standard Condition 13.3. Indeed, in at least two instances (cll 2 and 8) where it was intended to displace provisions of the Standard Conditions, the Special Conditions expressly so provide.
Hamilton J's reference to "The last of his Lordship's words" in [45] is to a statement by Blackburn J in Joyce v Realm Marine Insurance Co (1872) LR 7 QB 580 at 583, where his Lordship referred to the same principle explained by Lord Bingham.
In accordance with the approach discussed by Hamilton J, the superficial appearance that an unfettered right of rescission and a term that makes the exercise of that right conditional are inconsistent may not have the effect that the proper construction of the contract requires a finding of inconsistency, if the consequence is that a significant part of the agreed wording of the contract will be given no effect at all. The better construction may be that the apparently unfettered right of rescission should be construed simply as a right of rescission that continues to have effect, even if another term of the contract qualifies that right by imposing a condition on its exercise.
The proper construction of the contract will depend on the effect to be given to the relevant wording of the contract in the context of the contract as a whole, and the general principles that are applicable to the proper construction of contracts: see for example Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7, where the majority (French CJ, Hayne, Crennan, and Kiefel JJ) said at [35]: [T]his Court has reaffirmed the objective approach to be adopted in determining the rights and liabilities of parties to a contract. The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding "of the genesis of the transaction, the background, the context [and] the market in which the parties are operating". As Arden LJ observed in Re Golden Key Ltd, unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption "that the parties … intended to produce a commercial result". A commercial contract is to be construed so as to avoid it "making commercial nonsense or working commercial inconvenience". [Footnotes omitted.]
In the present case, special condition 30.11 expressly amended cl 28.2, by varying the period from six months to 12 months. The special conditions therefore recognised the effectiveness of cl 28.2, albeit as amended by special condition 30.11. It is implicit from special condition 30.1 having conformed the period in cl 28.2 to that contained in special condition 48, that at least cl 28.2 was intended to have continuing effect. If the intention had been that special condition 48 was to prevail over cl 28.2, special condition 30.11 would have been unnecessary. The express conformance of special condition 48 and cl 28.2 as to the length of the period carries with it the implication that at least the balance of cl 28.2 was intended to have effect. The balance consists of the obligation on the vendors to do everything reasonable to have the plan registered within 6 months after the contract date.
If cl 28.2 is amended and impliedly confirmed by special condition 30.11, it cannot be inconsistent with the special conditions for the purposes of the chapeau to those conditions.
Special condition 30.11 only refers to and amends cl 28.2. The question is whether the partly express and partly implied confirmation that cl 28.2 is to have effect extends to cl 28.3.2, which creates the condition governing the exercise of the right to rescind by the vendor.
One textual consideration in support of an affirmative answer to that question is that special condition 30.11 is headed "Amendments to the Printed Conditions", and the chapeau to special condition 30 reads: "The standard printed conditions (clauses 1 to 29 inclusive) of this contract are amended as follows". That wording suggests that special condition 30 was intended to make amendments to the printed terms, and impliedly that any part of the printed terms that was not amended was intended to take effect.
Furthermore, special condition 30 is not limited to making amendments to the text of the printed terms. Special condition 30.2, 30.3, 30.5, 30.6, 30.8, 30.9 and 30.10 all provide that particular printed terms are omitted. Most of the omitted terms are in fact sub-clauses of printed terms. This approach to the printed terms supports an inference that, if the parties had wanted a printed term to be omitted, that printed term would have been listed in special condition 30. That approach would leave the chapeau to the special conditions as a whole to have effect where there are textual differences between the printed terms and the special conditions, but not have the effect of wholly omitting a printed term that is not expressly listed in special condition 30 as being omitted.
There is then the question of why the parties would have confirmed the obligation on the vendor created by cl 28.2, without also impliedly intending to confirm the effect of cl 28.3, which creates a right of rescission, and in the case of cl 28.3.2, stipulates the consequences of the failure by the vendor to comply with its obligation in cl 28.2. That question may be put another way. Special condition 48 grants both parties a right to rescind, without obliging the vendor to do anything before exercising that right. Once the parties have confirmed the effect of cl 28.2 in obliging the vendor to do everything reasonable to have the plan registered within 12 months after the contract date, why would the parties want to stop there, and not confirm the effect of cl 28.3.2 in providing for the consequence of the vendor not having performed the vendor's obligation?
The better view is, in my opinion, that on its proper construction the contract for sale included cl 28.3.2; and that it was a condition of the defendants' right to rescind the contract that they had done everything reasonable to have the plan of subdivision registered within 12 months after the contract date. There is no apparent reason why the parties would have intended to confirm the effect of cl 28.2, notwithstanding its superficial inconsistency with special condition 48, but not have intended to confirm the effect of cl 28.3.2, which stipulates the consequence of a failure on the part of the vendors to comply with cl 28.2.

The burden of proof

The question therefore, is whether the attempt by the defendants to rescind the contract for sale was ineffective because they did not satisfy the condition of the contract in cl 28.3.2 that they do everything reasonable to have the plan registered within 12 months after the date of the contract.
The defendants have put at the forefront of their submissions the argument that the plaintiffs have not carried the burden of proving that the defendants are not entitled to exercise the right in cl 28.3.2 of the contract for sale to rescind the contract.

Basis of defendants' argument

The defendants supported this submission on two bases. First, they relied upon the following statement of the relevant principles as set out in The Standard Contract for Sale of Land in New South Wales (2 ed), by Professor Peter Butt, at [28.16]: The onus of proving whether or not the vendor has complied with the obligation to do "everything reasonable" it will depend on the way the issue arises. Since compliance with the obligation to do "everything reasonable" is a pre-condition of the vendor's right to rescind, a vendor who brings action to justify rescission normally bears the onus of proving compliance. However, a purchaser/plaintiff who brings an action that involves challenging the validity of the vendor's rescission bears the onus of proving the vendors non-compliance.
They also relied upon the decision of McClelland CJ in Eq in Plumor Pty Ltd v Handley (1996) 41 NSWLR 30, and the many authorities that have followed that decision, including the recent decision of Stevenson J in Wang v Kaymet Corporation Pty Ltd [2015] NSWSC 1459 at [71] to [73].
The defendants relied specifically upon the following statement of principle by McClelland CJ in Eq in Plumor Pty Ltd v Handley at 36 and 37: … it should be held in the present case that the onus of proof on the issue of whether the non-obtaining of the requisite consent or advice within the period stipulated in special condition 28 resulted from a breach by the defendant of his contractual obligations, rests on the plaintiff. In other words, the relevant principle can be briefly formulated as: "Non-fulfilment of the condition will justify rescission unless it is proved to be self-induced", rather than as: "Non-fulfilment of the condition will not justify rescission unless it is proved not to be self-induced".
The defendants recognised the observation made by McClelland CJ in Eq in Hunyor v Tilelli (1997) 8 BPR 15,629 at 15,631: It is necessary however to bear in mind that all evidence is to be weighed according to the proof which it was reasonably within the means of one party to produce or of the other to contradict. This has particular significance in respect of the evidentiary facts which are peculiarly within the knowledge of one party rather than the other…
It should be noted that there is some contradiction involved in the reliance by the defendants on the principles as stated by Professor Butt on the one hand, and by McClelland CJ in Eq on the other. The former places the burden of proof on the moving party, so that, if the vendor is the plaintiff, the vendor has the onus of proving compliance with cl 28.2, but if the purchaser is the plaintiff, it is the purchaser who must prove non-compliance by the vendor. McClelland CJ in Eq, on the other hand, in the passage relied upon by the defendants, appears to place the onus always on the party who claims that the rescission was ineffective, because the basis for the entitlement to rescind was "self-induced".
It will be convenient to consider first the authorities that are relevant to the placement of the burden of proof, before I deal with the significance of Professor Butt's statement of principle.

Summary of applicable legal principles

First, I will outline the nature of the problem and state my conclusions concerning the general principles that are relevant to the determination of the present dispute.
Clause 28.3.2 gives the vendors a right to rescind. The right of rescission is conditional on compliance by the defendants with cl 28.2. Clause 28.2 obliges the defendants to do everything reasonable to have the plan registered within 12 months after the contract date. The acts required to be done are not specified. They are described by reference to (a) a defined purpose, being to achieve registration within a specified time, and (b) an indefinite qualifier to identify those actions that are required, being that they are reasonable to achieve the purpose. The criteria for judging reasonableness are not specified.
In the present case, the Council had exercised its administrative discretion to grant the development approval for the plan of subdivision before the date of the contract for sale. It did so on certain conditions, which had to be fulfilled before the plan of subdivision could be lodged for registration. Satisfaction of the conditions would, in broad terms, require development work by the defendants on the property to be subdivided. This would require the defendants to obtain all necessary approvals of the adequacy of the works done by relevant authorities; and for them to lodge the plan of subdivision in time for it to be registered within the 12 month period. Some of the actions necessary could be done by the defendants, but others would require the actions of specialist contractors. Some of the actions required by this process could be carried out independently of others. Some actions would be dependent on the prior completion of other actions. Some series of actions could be carried out sequentially in parallel, but of all the actions necessary to be done, some might be on the critical path; meaning that the completion of the actions was an essential pre-requisite to further necessary actions being completed. All of this gives rise to a complex problem in identifying reasonable actions required of the defendants by cl 28.2 that were not undertaken by them.
The authorities that will be considered below support the following principles, and related considerations: 1. Where a contract for the sale of land gives a party a right to rescind the contract upon the occurrence or non-occurrence of a particular event, the party is subject to an implied obligation to do, or cooperate in doing, what is reasonably necessary to avoid the right to rescind arising, in order to permit completion of the contract. 2. The party is precluded from exercising the right to rescind if (a) the party has not performed its implied obligation; and (b) the failure has caused the event which entitles the party to rescind. Mere breach of the implied obligation is insufficient to preclude the right of rescission. 3. The same result arises where there is an express obligation upon a party to take steps to avoid the event that gives rise to the right of rescission, provided that performance of the obligation is not made a condition to the exercise of the right to rescind. Where performance of the obligation is not made a condition of the right to rescind, mere breach does not preclude rescission, but only does so if the breach has caused the right to rescind to arise. 4. The burden of proof falls on the party who denies the right of the party who has rescinded to do so, to prove both the breach of the implied or express obligation by the rescinding party, and that the breach caused the event that has given rise to the right to rescind. 5. Notwithstanding the placement of the legal burden of proof, the tender of limited evidence by the party subject of that burden may cause a burden of adducing evidence to shift to the other party, because relevant facts are peculiarly within the knowledge of the rescinding party, to lead evidence as to what happened, because otherwise inferences may be drawn against the rescinding party. 6. The rules that are applicable are materially different where, as in the present case, the contract makes the right of one party to rescind conditional upon the performance by that party of an obligation to take action intended to avoid the right to rescind arising. 7. If an action required by the obligation imposed on the rescinding party is not done, the right to rescind is lost, and it is immaterial that the breach of the obligation did not cause the right to rescind to arise. 8. If an action is required by the obligation imposed on the rescinding party, it must be done, even if the doing of that action would not necessarily avoid the right to rescind arising. 9. The issue of where the burden lies depends upon an analysis of the effect of the contract, to determine the substance of what must be proved by the parties to establish, or negate, the right to rescind. It should not depend solely on the fortuity of who is the plaintiff and who is the defendant. 10. In principle, the substance of the obligations should require the party who resists the validity of the rescission to prove that the right of rescission was conditional, and to establish the terms of the condition. It should then fall upon the rescinding party to prove that the condition has been satisfied, as the right to rescind will only exist in that event. 11. The possible shifting of the evidentiary onus may also arise in this context.

The Plumor Pty Ltd v Handley line of authority

In Plumor Pty Ltd v Handley, a term of the contract for the sale of residential property provided that the contract was subject to the purchasers obtaining the consent of the Foreign Investment Review Board (FIRB) within 14 days, and if that consent was not obtained within time, either party was entitled to rescind the contract. The contract contained an express term that required the purchasers to apply for the consent of the FIRB within 24 hours of the time of the contract, but did not impose any other express obligation on the purchasers to prosecute the application. The contract did not impose a positive obligation on the purchasers to do everything reasonable to obtain FIRB approval, or any similar obligation. The contract did not contain a condition that the purchasers could only rescind if they had complied with such an obligation.
This case may be distinguished from the present, as there was no express obligation on the purchasers to take steps to obtain the required FIRB approval, and further, the performance of such an obligation was not a condition of the purchasers' right to rescind.
His Honour found, at 34: There is a further difficulty with both these submissions. Compliance with the express obligation imposed on the defendant to "apply for the said consent within twenty four (24) hours of the date of this contract" is not, by the terms of special condition 28, made a condition of the exercise by the defendant of the right of rescission conferred by that provision, nor should there be any implication to that effect. It is only if non-compliance with that obligation had a sufficient causal relationship with the defendant's failure to obtain the requisite consent within the 14 day period that the defendant would be precluded from exercising the right of rescission arising by virtue of that failure, in accordance with the principle to be later discussed. If that failure would have occurred in any event, non-compliance with the obligation would not affect the defendant's right of rescission (see Nina's Bar Bistro v MBE Corporation 1983 3 NSWLR 613 at 614F, 620E-621F, and 631G-632D; Italo-Australian Club v National Australia Bank 1989 NSW Conv R 58328 at 58336-7). The plaintiff's third submission is based on the proposition that in addition to the express obligation to apply for the requisite "consent" within 24 hours of the date of the contract, special condition 28 imposed on the defendant an implied obligation to take all reasonable steps available to him to obtain that "consent" within the stipulated 14 day period. That proposition is undoubtedly correct (see e.g. Butts v O'Dwyer 87 CLR 267 at 279-80). If the failure by the defendant to obtain "consent" within the 14 day period resulted from any default by him in the performance of either his express or implied obligations, then the defendant was not entitled to exercise the right of rescission of the contract otherwise available to him under special condition 28 (see Suttor v Gundowda 81 CLR 418 at 440-3 applying New Zealand Shipping Co v Societe des Ateliers et Chantiers de France 1919 AC 1). This is an application of the principle that a party to a contract is not entitled, as against the other party, to rely on an event resulting from the first party's wrongful act.
His Honour therefore held that the purchasers were not entitled to rescind the contract, if the consent of the FIRB was not obtained within the 14 day period, as a result of a default in compliance with the implied obligation to take all reasonable steps to obtain that consent. The right to rescind would be lost if (a) the purchasers did not take all reasonable steps, and (b) the failure to take all reasonable steps caused the consent not to be obtained within the 14 days.
McClelland CJ in Eq, in reaching this conclusion, applied the following aspect of the judgment of Latham CJ, Williams and Fullagar JJ in Suttor v Gundowda Pty Ltd (1950) 81 CLR 418; [1950] HCA 35 at 441: … The provision in question is to be construed as making the contract not void but voidable. The question of who may avoid it depends on what happens. If one party has by his default brought about the happening of the event, the other party alone has the option of avoiding the contract. If the event has happened without default on either side, then either party may avoid the contract…
His Honour dealt with the issue of who had the burden to prove these matters at 35 and 36. He recognised that conflicting opinions on these issues had been expressed in the cases, and said at 35: The question of where the onus of proof lies on the issue of whether an event, on the happening of which an entitlement by a party to rescind or avoid a contract arises, has resulted from that party's breach (unless, as in Yeung v Desnor (1989) 5 BPR 11343, the terms of the contract make this sufficiently clear), has been the subject of conflicting opinions in the cases. Favouring the view that the onus lies on the party seeking to establish an entitlement to rescind or avoid the contract are Brauer and Co v James Clark 1952 2 AER 497, Barber v Crickett 1958 NZLR 1057, Zieme v Gregory 1963 VR 214, Adina Constructions v Whitehead (1976) 1 BPR 9173, and Earle Cameron v Comprador Properties (1987) 3 BPR 9657. Favouring the view that the onus lies on the party resisting rescission or avoidance are Strati v JAG Investments (1980) 1 BPR 9600, Nina's Bar Bistro (supra) and City of Gosford v Marim (1990) 6 BPR 13871. Nina's Bar Bistro was a decision of the NSW Court of Appeal in which all three Judges expressed themselves in terms which appear to me to support the proposition that the onus of proof lies on the party alleging the absence of an entitlement to rescind (Glass JA at 614F, Mahoney JA at 621A, Priestley JA at 631G-632D), but I do not think that that case could properly be regarded as a binding decision on the point. None of the other decisions referred to is binding on this Court.
The parenthetical reference by McClelland CJ in Eq to the decision of Yeung v Densor is significant, although not explained by his Honour, and it will be necessary to return to it below.
McClelland CJ in Eq followed the following cases, in preferring the line of authority that imposed the burden of proof on the party challenging the validity, over the authorities that supported the principle that a party for whose benefit a right of rescission is inserted into the contract should have the burden of proving that the party's conduct has not caused the right to arise.
In Nina's Bar Bistro Pty Ltd v MBE Corporation (Sydney) Pty Ltd [1984] 3 NSWLR 613, a contract for the sale of a restaurant business was conditional upon the consent of the lessor of the premises from which the business was conducted being obtained by a stipulated date. The parties covenanted to use their best endeavours to obtain the lessor's consent. The lessor required guarantors for the assigned lease, but after the intended guarantors withdrew, the purchaser did not seek to obtain the lessor's consent to the assignment without guarantors of the obligations of the assignee. As the lessor's consent had not been obtained by the relevant date, the purchaser exercised the right to terminate the contract, which the vendor treated as a repudiation of the contract for sale.
This case differed from Plumor Pty Ltd v Handley in that both parties were subject to an express covenant to use their best endeavours to obtain the lessor's consent. The contract did not expressly make performance of that covenant a condition to each party's right to rescind, if the lessor's consent was not given.
Glass JA relevantly agreed, at 614, with the judgments of Mahoney and Priestley JJA.
Mahoney JA found, at 620, that, in doing nothing towards obtaining the lessor's consent, after the intended guarantors withdrew, the purchaser had breached its obligations under the contract and continued: The question to be determined therefore is whether the purchaser's failure to seek consent in the time between 21 and 27 September 1982 deprived it of the right which otherwise it would have had to terminate the agreement, under cl 5(f) or for failure to complete. … I do not think that compliance with such obligations constitutes a condition precedent, as such, to the exercise either of the right to terminate for failure to complete on the specified date, or the right to terminate under cl 5(f) of the agreement. Thus, for example, if it appeared clearly that, if the obligations had been performed in full, the lessor's consent would not have been obtained, the fact of non-compliance with them would not, in my opinion, have prevented the exercise of the right to terminate under cl 5(f).
Mahoney JA then raised the question of who had the onus of proving the necessary relationship between the purchaser's non-compliance and the failure of the lessor to give its consent. His Honour then said, at 620 and 621: Mr Bennett QC, for the purchaser, submitted that the onus lay on the vendor to show that, had the purchaser performed the relevant obligations, the lessor's consent would have been obtained and/or completion would have taken place on the specified date. The question of onus is, the submission suggested, of particular importance in this case because the parties at the trial directed little or no attention to this question and there was little or no evidence relating to the matter. I am not satisfied that, if the purchaser had set about obtaining the lessor's consent when, e.g., the first telephone conversation between the solicitors took place, the consent would have been obtained. As a matter of probability, I think that it would not.
It is clear that Mahoney JA held that compliance by the purchaser with its obligation to use its best endeavours to obtain the lessor's consent was not a condition to its right to rescind the contract; and also that the purchaser's default was not the cause of the failure of the lessor to consent. Mahoney JA did not deal explicitly with the issue of the onus of proof. However, in expressing his conclusion (contained in the extract set out immediately above) in the form that he was not satisfied that, if the purchaser had taken steps to obtain the lessor's consent, the consent would have been obtained, his Honour appears implicitly to have placed the burden of proof on the vendor. If his Honour had considered the purchaser to bear the onus of proof, it would have been more natural for Mahoney JA to have expressed his conclusion in the form being: "I am satisfied that, if the purchaser had performed its obligations, the consent would still not have been obtained". Mahoney JA concluded at 621: In arriving at this conclusion, I am conscious that, in general, inferences should not be drawn in favour of a defaulting party and that, accepting that the purchaser was in default, it is not to be assumed that, had it done what it should, the purpose of its obligations would not have been achieved. However, in the end, the question is whether, had those obligations been performed, the consent would in fact of been obtained. I do not think that it would…
Priestley JA, who was in dissent, noted, at 632, that counsel for the purchaser had submitted that "the onus is on the vendor to show that the purchaser's default caused the non-obtaining of the consent and that either there is no evidence to support the appropriate finding or that the vendor has not discharged the onus of showing that the purchaser by its default caused the non-obtaining of the consent". Priestley JA then set out the substance of the purchaser's submission as to why its conduct was not responsible for the failure of the lessor to give its consent to the assignment, and said, at 632: "To this point I agree with the purchaser's argument". Priestley JA then proceeded to decide that the purchaser was not entitled to rescind the contract, because other conduct of the purchaser constituted a repudiation of its obligations.
In Italo-Australian Club Ltd v National Australia Bank Ltd (1989) NSW ConvR 55-461, the Court of Appeal was concerned with an appeal from a decision of Bryson J. The case concerned a contract for sale of land which contained a term to the effect that completion of the agreement was conditional upon the purchaser obtaining from the Council development approval to use the property as a club. It was anticipated that any approval would be conditional upon the purchaser obtaining a lease from the State Rail Authority (SRA), of sufficient land adjoining the property to be used as a car park. The term required the purchaser to use its best endeavours, and do all things required by the SRA, to obtain such a lease. If the development approval was refused, or if the SRA declined to grant the lease, either party was entitled to rescind the contract. Bryson J found that the purchaser had breached its obligation to apply for a development approval, and to pursue such application diligently and expeditiously, and do all things required by the Council for the granting of development approval.
The purchaser, who was the appellant, relied upon a submission that, even if it had failed to use its best endeavours to obtain the lease from the SRA that the conditions of the development approval required, that would not prevent it from exercising the right to rescind the contract, unless its default was the cause of the SRA not granting the lease.
Kirby P and Samuels JA agreed with the judgment of Mahoney JA. Mahoney JA found that the appellant was in default, and that the default was a cause of the failure of the SRA to grant the required lease in time. On the issue of whether the existence of a default precluded the appellant from rescinding the contract; or whether it was also necessary that the default was a cause of the failure of the condition to be satisfied, his Honour referred to the Nina's Bar case and said, at 58,336 to 58,337: Upon the construction of the agreement there in question, I held that compliance with the purchaser's obligation in that regard did not constitute a condition precedent, as such, to the exercise of its right to terminate for failure to complete on the specified day or its right to terminate under the relevant clause of the agreement. I said: Thus, for example, if it appeared clearly that, if the obligations had been performed in full, the lessor's consent would not have been obtained, the fact of non-compliance with them would not, in my opinion, have prevented the exercise of the right to terminate under CL5(f). Therefore, if non-compliance with such obligations is to take away the purchaser's right to terminate, it must be because there is a relationship between that non-compliance and the failure to settle on the due date or to obtain the lessor's consent. The effect of a "best endeavours" clause is to be determined in the context of the document in which it appears. In the Nina's Bar case the relevant clause was, in my opinion, not a condition precedent as such to the purchaser's right to terminate under the relevant clause in the sense that compliance with it, as such, destroyed that right. There was, in that case, an unexpressed assumption in the relevant clause that if default under the "best endeavours" clause resulted in the consent not being obtained, then because the purchaser was in default, it could not rely upon what its own default had produced. There is, I think, to be found in the present clause an assumption of that kind. As I have said, it is not necessary to pursue, by way of conceptual analysis, the formulation of that assumption. That, in my opinion, is the basis of the operation of the "best endeavours" clause in the present case. And it would, I think, be part of that assumption that if the Club's failure to use its best endeavours did not result in the lease not being obtained, that would not deprive the Club of its right to rely on the fact that the lease was not obtained.
On the issue of which party had the burden of proof, Mahoney JA noted, at 58,342, that the appellant had conceded before the trial judge that the appellant, being the purchaser who had purported to rescind the contract, had the burden of proving that any default by the purchaser was not a cause of the failure of the condition.
The next case referred to by McClelland CJ in Eq was The City of Gosford v Marim Pty Ltd (1990) 6 BPR 13,871. The plaintiff, as purchaser, and the defendant, as vendor, entered into a contract for sale dated 22 April 1988. The contract was subject to and conditional upon registration of a plan of subdivision within six calendar months of the date of the agreement. If registration was not achieved within that time, either party could rescind the agreement by notice. The vendor was required to do all things and take all necessary steps to have the subdivision approved and registered as quickly as possible.
The contract did not contain a term that made it a condition of the vendor's right to rescind that the vendor had complied with its obligation concerning the registration of the plan of subdivision.
The vendor rescinded the contract, on the ground that the plan of subdivision had not been registered by the required date. The purchasers sought an order for specific performance of the contract for sale. That order could only be made on the basis that the rescission of the contract was ineffective.
Powell J (as his Honour then was) said at 13,874: I accept that, in a case such as this, where a contract provides that one, or other, or both, of the parties to it may terminate the contract in futuro if an event does not occur, and where that event is one, the non-occurrence of which may well be due to the default of one, or other, of the parties to the contract, if it appears that a party to the contract has defaulted in his obligations under the contract, and if that default has a direct, and substantial, causal relationship to the non-occurrence of the relevant event, the party in default is not entitled to invoke the provisions of the condition so as to terminate the contact in futuro. It is, however, to be observed that the reason why this is so is that the law sets its face against a party taking advantage of a situation which has been brought about by his own default; that is to say, the law sets its face against permitting someone to take advantage of a provision in a contract in circumstances in which it would be unconscionable for him to do so. I turn, then, to the question of the onus of proof. With respect, it seems to me that it is not sufficient to dispose of this question merely to refer, as did Mr Davison, to what was said by a particular judge in a particular case. Rather, it seems to me that this question must be looked at in terms of basic principle, and the cases examined to determine whether the result in each was in accordance with basic principle. It seems to me that in each of the cases to which reference has been made in the course of argument, the statement of the presiding judge as to who bore the onus of proof in the particular circumstances is readily explicable by reference to what was the ultimate issue for determination in the particular case, and who was the person who propounded that issue for determination. Thus it seems to me the question is ultimately a very simple one: what are the issues propounded in the present case, and who is it who propounds the ultimate issue upon which success or failure depends? In the present case, the Plaintiff seeks specific performance of an Agreement for Sale. That being so, the Plaintiff must, in effect, plead, and prove, that there was an Agreement for Sale, and it is still on foot, and that it is, and at all time has been, ready, willing and able to carry that Agreement for Sale into effect. The Defendant then seeks to rebut that case by, in effect, pleading the provisions of Special Condition 1, the non-occurrence of the relevant event, and that it has delivered a Notice of Rescission. To meet that case, the Plaintiff then, in effect, pleads that, by reason of its actions, the Defendant had disqualified itself from relying upon the provisions of Special Condition 1. In these circumstances, the non-occurrence of the relevant event, and the delivery of the Notice of Rescission being admitted, the Plaintiff must prove that, by reason of the Defendant's default, it is disentitled to rely on the non-occurrence of the relevant event so that the Agreement for Sale remains on foot. I therefore conclude that, whatever may be the position in any other Vendor and Purchaser case, in this case the Plaintiff bears the onus of proving that it was the Defendant's default which led to the non-occurrence of the relevant event.
The approach adopted by Powell J was to deal with the issue of burden of proof as a function of which party was required by its pleadings to put particular matters in issue. His Honour held that, once the purchaser pleaded that the contract was on foot, the vendor could allege in its defence that it had rescinded the contract, and it would then be necessary for the purchaser to reply that the vendor had lost the right to rescind, because it had breached its obligation to take reasonable steps to cause the event to happen, the failure of which event to occur was the basis of the vendor's entitlement to rescind.
Powell J's finding, that it would be necessary for the purchaser to reply that the vendor had lost the right to rescind, is consistent with the principle established by the two Court of Appeal cases, and accepted by McClelland CJ in Eq, that where the contract does not impose a condition on the exercise of the right of rescission, the party who asserts that the right has been lost because the wrongful conduct of the rescinding party has caused the right to arise, has the burden of proving those matters.
In Plumor Pty Ltd v Handley, McClelland CJ in Eq resolved the difference of judicial opinion between the two lines of authority in the following way, at 35: In Joseph Constantine Steamship Line v Imperial Smelting Corporation 1942 AC 154 the House of Lords, in a case involving an event alleged by one party to a contract to have brought the contract to an end by frustration, held that on the issue of whether the alleged frustrating event resulted from that party's breach (ie was "self-induced"), the onus of proof lay on the other party. The question of where the onus of proof lay was the sole issue in the appeal, being starkly defined by Lord Russell of Killowen (at 177) as follows: "The rival contentions may be stated thus: (1) The appellants say: 'Frustration will excuse unless it is proved to be self-induced'. (2) The respondents say: 'Frustration will not excuse unless it is proved not to be self-induced'." It was the former contention that was held to propound the preferable formulation of the principle. That is a decision of great persuasive weight: there was a strong bench of five members, each of whom gave a separate reasoned speech, the decision was unanimous, and to my mind the reasoning carries conviction. The analogy between the application of the relevant principle in cases of frustration and in cases of rescission is very close indeed. None of the other decisions mentioned above refer to Joseph Constantine, nor, with one exception, do they include any analysis of the question of onus as a matter of principle. The exception is the decision of Powell J in City of Gosford, in which his Honour did deal with that question as a matter of principle, on the basis of which he decided (consistently with Joseph Constantine) that the onus of proof rests on the party resisting rescission. In my opinion, the decision in Joseph Constantine should be applied, and the dicta in Nina's Bar Bistro and the decision in City of Gosford should be followed…
The judgment of McClelland CJ in Eq has been consistently followed: see Hunyor v Tilelli (unreported 24 April 1997, McClelland CJ in Eq); Chopard v Vamiso Pty Ltd (1998) 9 BPR 16,813 per Young J at 16,820; Masters v Belpate Pty Ltd [2001] NSWSC 169 per Hodgson CJ in Eq at [58]; Schenk v ACN 081 123 140 Pty Ltd [2002] NSWSC 123; (2002) 11 BPR 20,375 per Bryson J at 20,380; Munro v Bodrex Pty Ltd [2002] NSWSC 122; (2002) 10 BPR 19,403 per Bryson J at [52]; Pelly v Tebran Pty Ltd [2006] NSWSC 1072 per Hall J at [155]; Kayserian Nominees (No 1) Pty Ltd v JR Garner Pty Ltd [2008] NSWSC 803 per Brereton J at [27]; Sharjade Pty Ltd v Commonwealth [2009] NSWCA 373; (2009) 15 BPR 28,443 per Hodgson JA (with whom Young JA and Sackville AJA agreed) at [56]; and Wang v Kaymet Corporation Pty Ltd [2015] NSWSC 1459 per Stevenson J at [31].

An historical diversion

It may now only be of historical interest, but it will be instructive to consider briefly the authorities considered by McClelland CJ in Eq in Plumor Pty Ltd v Handley (see par 68 above), which supported the proposition that the burden of proof lay on the party who claimed a right to rescind the contract by reason of the non-occurrence within time of an event, which that party was required to take reasonable steps to cause to occur, to prove that the reasonable steps had been taken, and any breach did not cause the non-occurrence of the event.
In Brauer & Co (Great Britain) v James Clark (Brush Materials) Ltd [1952] 2 All ER 497, Denning LJ (as his Lordship then was) said in the English Court of Appeal, in a case in which a contract for the shipping of goods was subject to the sellers obtaining an export licence, at 501: … The answer to all these questions is, I think, that this clause is a special exemption inserted in favour of the sellers. In order to enable them to take advantage of it they must show that, notwithstanding that all reasonable steps were taken by them, they could not obtain a licence to export during any part of the shipment period, or, alternatively, that it was useless for them to take any such steps, or any further steps, because it was quite impossible for them to obtain a licence.
Denning LJ, in using the words "notwithstanding that all reasonable steps were taken by them" required that, not only were the sellers required to prove that they had taken all reasonable steps, but also that the export licence had not been granted "notwithstanding" the taking of those steps. Thus, the sellers were required to prove that their breach did not cause the failure of the export licence to be issued. Singletons LJ appears to have adopted a similar position, at 500, and Romer LJ agreed with the two other Lords Justices.
The contract in this case also provided that it was "subject to" the relevant export licence being granted. The granting of that licence was likely to be a matter of administrative discretion.
Cleary J, in the Supreme Court of New Zealand, followed Brauer & Co in Barber v Crickett [1958] NZLR 1057 at 1060. The contract was expressed to be conditional on the purchaser arranging the necessary mortgage finance to purchase the property, and was to be null and void if the finance could not be secured. The decision by any bank or finance company to which the purchaser applied for finance will have been a matter for the commercial discretion of the relevant company.
In Zieme v Gregory [1963] VR 214, the Full Court of the Supreme Court of Victoria (Lowe, Smith and Gowans JJ) found, at 223, that the right of the purchaser to rescind for non-occurrence of the event that the purchaser was obliged to take reasonable steps to achieve, being the obtaining of a first mortgage loan for a specified amount, was "conditional upon the purchaser not being in default". Their Honours, at 223, followed Brauer & Co and Barber v Crickett.
In Adina Constructions Pty Ltd (in liq) v Whitehead (1976) 1 BPR 97,013, Needham J, without referring to the above authorities, found that the plaintiff could not rely upon non-fulfilment of the relevant condition without showing that it was not in default in respect of its obligations under it. His Honour derived that result from the principle in New Zealand Shipping Co Ltd v Societe des Ateliers et Chantiers de France [1919] AC 1 at 9, as cited by the High Court in Suttor v Gundowda Pty Ltd (1950) 81 CLR 418; [1950] HCA 35 at 441. The contract was not expressed to be conditional. The plan of subdivision which was annexed to the contract had not been registered as a deposited plan at the Land Titles Office. If the plan of subdivision was not registered within 12 months, either party could rescind the contract.
I infer, from the brief report, that the plan of subdivision in question had been approved by the relevant local government authority, and what was required to occur was that the vendor take all of the steps necessary to satisfy the conditions of the approval, in order for the plan of subdivision to be registered at the Land Titles Office.
In Earle Cameron (Industrial) Pty Ltd v Comprador Properties Pty Ltd (1987) 3 BPR 97,235, Hodgson J (as his Honour then was) noted various authorities that suggested that it was incumbent on the party who claimed that the rescission was ineffective to prove that the party who was under the obligation to take reasonable steps to avoid the event occurring that gave rise to the right to rescind had breached the obligation. Hodgson J concluded: … However, the cases to which I earlier referred seem strongly to suggest that in the absence of any clear indication to the contrary, the onus does lie on the party seeking to take advantage of the condition to escape from the contract. I think I should follow those cases, and find that the onus lay on the plaintiff in this case. If the decision in Strati cannot be distinguished on the basis of the terms of the particular contract being there considered, I consider that I should not follow that decision.
In Plumor Pty Ltd v Handley, McClelland CJ in Eq resolved the difference of judicial opinion in the following way, at 35: In Joseph Constantine Steamship Line v Imperial Smelting Corporation 1942 AC 154, the House of Lords, in a case involving an event alleged by one party to a contract to have brought the contract to an end by frustration, held that on the issue of whether the alleged frustrating event resulted from that party's breach (that is, was "self-induced"), the onus of proof lay on the other party. The question of where the onus of proof lay was the sole issue in the appeal, being starkly defined by Lord Russell of Killowen (at 177) as follows: "The rival contentions may be stated thus: (1) The appellants say: 'Frustration will excuse unless it is proved to be self-induced'. (2) The respondents say: 'Frustration will not excuse unless it is proved not to be self-induced'." It was the former contention that was held to propound the preferable formulation of the principle. That is a decision of great persuasive weight: there was a strong bench of five members, each of whom gave a separate reasoned speech, the decision was unanimous, and to my mind the reasoning carries conviction. The analogy between the application of the relevant principle in cases of frustration and in cases of rescission is very close indeed. None of the other decisions mentioned above refer to Joseph Constantine, nor, with one exception, do they include any analysis of the question of onus as a matter of principle. The exception is the decision of Powell J in City of Gosford, in which his Honour did deal with that question as a matter of principle, on the basis of which he decided (consistently with Joseph Constantine) that the onus of proof rests on the party resisting rescission. In my opinion, the decision in Joseph Constantine should be applied, and the dicta in Nina's Bar Bistro and the decision in City of Gosford should be followed…
In the extract from Plumor Pty Ltd v Handley that is set out above at par 88, McClelland CJ in Eq resolved the choice as to which line of authority should prevail in part by relying on the decision of the House of Lords in Joseph Constantine Steamship Line v Imperial Smelting Corporation [1942] AC 154.
The Joseph Constantine case involved frustration of a charter party as a result of an unexplained explosion aboard the ship that had the effect of frustrating the commercial object of the venture. As Viscount Simon LC noted at 158, it was not disputed that the time needed to repair the damage and to make the ship fit for her voyage was so great as to frustrate the commercial object of the venture. The charterers had sued the shipowner for damages for breach of the contract, and the issue was whether the shipowner was not entitled to rely upon the fact that the charter party had been frustrated, because the event that frustrated the contract had been brought about by the default of the shipowner. Their Lordships held that, where a contract is frustrated by events, the contract is automatically brought to an end, and it is not a requirement for a party to be entitled to rely upon the fact of the frustration of the contract, that the party first prove that the event causing the contract to be frustrated was not caused by that party's breach of the contract. The automatic effect of the frustrating event was of particular significance to Viscount Simon LC at 163 ("It kills the contract itself and discharges both parties automatically"), Viscount Maugham at 170 ("… I attach so much importance to these conclusions, and especially to the conclusion as to the automatic effect of the event which prima facie effects a frustration…") and Lord Wright at 187 ("Frustration operates automatically"). Lord Wright at 187 went so far as to distinguish the automatic effect of the frustrating event from the case where it is the act of the party who rescinds the contract: This position must, accordingly, the distinguished from a somewhat analogous, but really quite different, position, which arises when a contract is terminated by the injured party, who rescinds it on the ground of a fundamental breach by the other party and who further claims damages for the breach while treating it as no longer binding for the future. Such a procedure involves a choice or option by the party who rescinds. But in the case of frustration the contract is ended and dead, simply by the frustrating event.
Their Lordships were concerned with the frustration of a charter party in time of war, and they held that the shipowner who sought to rely upon the contract being frustrated should not have had the burden of proving the negative that the frustrating event was not caused by the default of the shipowner's servants. As Viscount Simon LC said at 161: I may observe, in the first place, that, if this were correct, there must be many cases in which, although in truth frustration is complete and unavoidable, the defendant will be held liable because of his inability to prove a negative - in some cases, indeed, a whole series of negatives. Suppose that a vessel while on the high seas disappears completely during a storm. Can it be that the defence of frustration of the adventure depends upon the owner's ability to prove that all his servants on board were navigating the ship with adequate skill and that there was no "default" which brought about the catastrophe? Suppose that a vessel in convoy is torpedoed by the enemy and sinks immediately with all hands. Does the application of the doctrine require that the owners should affirmatively prove that those on board were keeping a good look-out, were obscuring lights, were steering as directed, and so forth?
McClelland CJ in Eq said in Plumor Pty Ltd v Handley at 35: "The analogy between the application of the relevant principle in cases of frustration and in cases of precision is very close indeed".
His Honour thus resolved the differences in judicial opinion that appeared to have arisen from the authorities by analogy with the principle of frustration. Plumor Pty Ltd v Handley was, it will be remembered, a case involving a contract that was expressed to be subject to the consent of the FIRB being obtained. The failure of that consent to be given may well be treated as having a materially equivalent effect to the occurrence of a frustrating event, as ultimately the decision to grant or withhold approval was a matter of administrative discretion.
As the decision of McClelland CJ in Eq in Plumor Pty Ltd v Handley has come to be accepted as stating the correct principle to be applied in all cases where a party to a contract challenges the validity of the rescission made by the party subject to an obligation to take reasonable steps to avoid the event that gives rise to the right to rescind occurring, the burden of proof now falls on the party challenging the rescission not only in cases where the relevant event depends upon the election of some third party (and thus is equivalent to a frustrating event), but also in cases where it is in the practical control of the rescinding party to avoid the event, and where the rescinding party may be the only one who has the requisite knowledge to be able to establish that it performed the obligation to take reasonable steps.
This development in the law may at least be partly responsible for the outcome that purchasers, with the benefit of an obligation on vendors to take reasonable steps to cause plans to be registered, find themselves unable to prove that the plans were not registered because of a breach of the obligation by the vendors, by reason of the inadequacy of the information available to the purchasers concerning the reasons for the failure of the plans to be registered in time.

Shifting evidentiary burdens

The difficulties caused by this approach to parties who resist the rescission of contracts for sale by parties, who are required by the contract to take steps to avoid the right to rescind arising, may be ameliorated, in particular cases, by the principles concerning the shifting of the burden of adducing evidence.
As I have noted above, defendants accept that the principle stated by McClelland CJ in Eq in Hunyor v Tilelli (see par 56 above) applies in the present case.
In Masters v Belpate Pty Ltd, immediately after Hodgson CJ in Eq (as his Honour then was) had accepted, at [58], the rule concerning the burden of proof stated in Plumor Pty Ltd v Handley, his Honour said at 18,539: However, because the relevant facts are peculiarly within the knowledge of the vendor, there may be an evidentiary onus on the vendor to lead evidence as to what happened, because if the vendor does not do this, inferences may be drawn against the vendor, for example by unexplained delays: see Apollo Shower Screens Pty Ltd v Building and Construction Industry Long Service Payments Corp (1985) 1 NSWLR 561 at 565-6; Hawes v Cuzeno Pty Ltd (1999) 10 BPR 18,011 at [41].
As will be seen, his Honour's observations, concerning the possible significance of unexplained delays, will be relevant to the determination of the present case.
As Stevenson J explained in Wang v Kaymet Corp Pty Ltd, the source of this principle is the well-known case of Blatch v Archer (1774) 1 Cowp 63; 98 ER 969.

Position where the right to rescind is conditional

It is now appropriate to consider the authorities which deal with the situation (which is relevant to the present case) where compliance with the obligation to avoid the right to rescind arising is a condition to the entitlement to exercise that right.
It will be remembered that, in the extract from the judgment of McClelland CJ in Eq in Plumor Pty Ltd v Handley, set out above (at par 68), his Honour effectively excluded the decision in Yeung v Densor Pty Ltd from the field of the conflicting opinions to which he referred, on the basis that, in that case, the contract made the issue of where the onus of proof lies "sufficiently clear".
In Yeung v Densor Pty Ltd (1989) 5 BPR 11,343, Waddell CJ in Eq was concerned with a claim by the plaintiffs for specific performance of contracts, which the vendor had purported to rescind on the ground that the contracts gave the vendor a right to do so, because completion of the contracts was subject to the registration of a strata plan, in the Land Titles Office, annexed to the contracts that was intended to create the units the subject of the contracts for sale. The relevant special condition obliged the vendor to use its best endeavours to procure the early registration of the strata plan. The special condition also provided that, if the strata plan was not registered within 12 months from the date of the agreement "the Purchaser shall and provided that there is no default on the part of the Vendor, the Vendor shall… have the right to rescind this agreement". In effect, the vendor's right to rescind was subject to the same qualification as is contained in cl 28.3.2 in the present case.
His Honour found, on the facts, that the vendor was not entitled to rescind, because it had not satisfied the condition concerning the use of its best endeavours; but added at 97,356: Finally, although it is not necessary to do so, in case the matter goes further, I should express my opinion on some other matters. As to the question of onus, it seems to me that, having regard to the terms of condition 42, the defendant carried the onus of proving that there has been no default on its part because lack of default is expressed to be a condition of its entitlement to rescind. Apart from this consideration I would respectfully adopt what was said by Hodgson J in Earle Cameron (Industrial) Pty Ltd v Comprador Properties Pty Ltd (1986) NSW Conv R 56826 at 56832-3…
By his reference to this decision in Plumor Pty Ltd v Handley, McLelland CJ appears implicitly to have accepted this statement by Waddell CJ in Eq concerning the burden of proof.
In Hawes v Cuzeno Pty Ltd [1999] NSWSC 1167; (1999) 10 BPR 18,011, the plaintiffs, as purchasers, agreed to buy home units from the vendors "off the plan"; before construction of the building had begun, and therefore before the strata plan had been registered, or certificates of title for strata lots had been issued. The contracts contained a special condition to the effect that the contracts and completion thereof were subject to, and conditional upon, the registration by the Registrar General of the strata plan within 24 months from the date of the contract. Another special condition required the vendor, as soon as possible, to take steps to have the plan registered by the Land Titles Office. The contracts contained a printed term that was a precursor to cl 28 of the 2005 standard contract for sale. Clause A6.1 required the vendor to do everything reasonably necessary to have the plan registered within the planned registration time. Clause A6.2 provided "normally, either party can rescind if the plan is not so registered".
Bryson J said at 18,012 and 18,013: [9] In cl A6.2 "normally" refers to what the vendor may do if the vendor complies with A.6.1; the normal course is that contractual obligations are complied with. The right to rescind is conferred by printed condition A6. The reference in special condition 24 to "that right to rescind" is a cross-reference to the right to rescind in printed condition A6. If the contract meant that the vendor could commit a breach of cl A.6.1 and then rescind there would be an absurdity because there would be no remedy for breach of A6.1. In the plain and ordinary meaning of these provisions, the right to rescind can only be exercised by the vendor in normal circumstances where the vendor has complied with cl A6.1. … [12] In my view printed cl A6 has both the character which appears from its express terms of a promise the breach of which would give rise to a liability for damages and also the character of a condition for the exercise of the vendor's right of rescission; breach of the promise is also the failure of the condition in which the vendor can rescind. [13] The plaintiffs' counsel referred me to observations of McLelland CJ in Eq in Plumor Pty Ltd v Handley (1996) 41 NSWLR 30 at 34C-E; 7 BPR 14,735. The operation of printed cl A6 as a condition makes inapplicable to the present case his Honour's observations which relate to the need to show a causal relationship. In any event there is in this case a causal relationship.
Bryson J therefore distinguished Plumor Pty Ltd v Handley, on the basis that the presence of printed cl A6 justified a conclusion, based upon the construction of the contract in question, that compliance with the vendor's obligation to do everything reasonably necessary to have the plan registered within the required time was a condition to the vendor's right to rescind. The vendor was not prevented from rescinding only by the operation of a rule of law that the vendor could not exercise the right to rescind, if the vendor's default was a cause of the right to rescind to arise.
Hawes v Cuzeno Pty Ltd was considered by the Court of Appeal in Mitchell v Pattern Holdings Pty Ltd [2002] NSWCA 212; (2002) 11 BPR 20,241. The plaintiffs, as purchasers, had sought an order for specific performance of a contract for the sale of a lot in a strata plan that had not been registered by the date of the contract for sale. The claim was dismissed by the trial judge, and the plaintiffs appealed. The contract for sale contained a special condition that made completion of the contract subject to and conditional on registration by the Registrar General of the strata plan. The vendor was required to use all reasonable endeavours to procure the registration of the strata plan. If the strata plan was not registered within 12 months of the date of the contract, either party could rescind.
Powell JA, with whom Stein JA and Rolfe AJA agreed, set out, at [54], the extract from the judgment of Bryson J in Hawes v Cuzeno Pty Ltd that has been set out above, and said at [55]: [55] I must say that I have difficulty in accepting as correct the approach taken by Bryson J in Hawes v Cuzeno Pty Ltd, above, both as to the construction accorded by his Honour to condition A6 and as to the appropriateness of implying into the contract thereunder consideration a term making compliance by the then vendor with condition A6.1, a condition of exercise of the right of rescission…
His Honour then set out reasons for his difficulty and, at [56], stated his view that "in order that a party be held disentitled to exercise a right of rescission, it must appear that it was his default which brought about, or at least materially contributed to, the occurrence of the relevant event". At [57], Powell JA found support for his preference in the Nina's Bar case.
Ultimately, however, Powell JA said, at [58], that "it does not appear to be open to me to give effect to the views which I have set out above", because the respondent vendor had admitted on the pleadings that it had the burden of proving that it had complied with its obligations in the special condition to use all reasonable endeavours to procure the registration of the strata plan, before it was entitled to rescind the contract.
Mitchell v Pattern Holdings Pty Ltd was not a case where the contract included an express term to the effect of cl 28.3.2. The Court of Appeal expressed doubt as to the correctness of Bryson J's construction of the contract of sale in question, as making the vendor's compliance with its obligation to procure registration a condition of its right to rescind the contact. It did not reject his Honour's conclusion that, if the right to rescind was conditional, it was unnecessary for the purchaser to prove that the failure of the condition to be satisfied was a cause of the strata plan not being registered within time.
In Masterton Homes Pty Ltd v Executive Builders & Developers Pty Ltd [2003] NSWSC 908, Bryson J himself noted at [8]: "…my decision in Hawes v Cuzeno was the subject of adverse observations, although not in a clear way disapproved of, in the Court of Appeal in Mitchell v Pattern Holdings Pty Ltd [2002] NSWCA 212; 11 BPR 20,241".
Bryson J's decision in Hardy v Wardy [2001] NSWSC 1141; (2001) 10 BPR 19,055, appears to be the first case that required consideration of the effect of cl 28 of the present standard contract for sale.
The case does not provide guidance on the question of which party has the burden of proving that the vendor was not entitled to rescind, because it had not complied with the condition in cl 28.3.2. The reason is that, in that case, Bryson J had already, at an earlier stage of the proceedings, ordered that the vendor specifically perform the contract for sale. At a later stage, the vendor raised his entitlement to rescind, and for that purpose he needed the leave of the court. As Bryson J recorded at [2], it therefore followed that the vendor had "the onus of proving that he had performed the condition in cl 28.2".
Bryson J said: [8] It will be seen that under cl 28.2 it is a contractual obligation of the vendor, expressed in imperative terms, to do everything reasonable to have the plan registered within 6 months. The effect of this is that if some step is reasonable and is necessary for registration within 6 months the vendor must take that step; the obligation is not that the vendor must do everything reasonable to take the step. The vendor's personal circumstances, knowledge of or ignorance of what is required, reliance on servants, agents or independent contractors, and the skill, knowledge and assiduity of any such agents are all irrelevant to the vendor's obligations; if a step is reasonable, the vendor must take it. My view of the meaning of cl 28.2 is produced by the express terms of the clause, and is reinforced by the consideration that if cl 28.2 is complied with, compliance can work adversely to the purchaser, who has no control over or influence on what the vendor does, or on the vendor's selection of courses to follow or selection of servants agents or contractors, and has no control over the conduct or effectiveness of any such agents, but is bound by the vendor's decision if the vendor rescinds after compliance. The only protection the purchaser has against rescission is the stringency of the condition which the vendor must fulfil if he is to have a right to rescind. It would be inconsistent not only with the express terms of cl 28.2 but also with the purpose of cl 28 as a whole if inefficient or ineffective measures by the vendor or someone by whom the vendor acted could contribute to the vendor's gaining a right to rescind. … [10] Clause 28.3.2, which makes the vendor's right to rescind conditional on the vendor's having complied with cl 28.2, deals expressly with a subject which courts had considered before cl 28.3.2 or clauses to similar effect appeared in standard forms of contract. Agreements for sale of home units "off the plan" before construction have incorporated clauses similar in effect to cl 28 dealing with sales of lots in unregistered plans of subdivision. The vendor has control over or the opportunity to influence the steps which it is necessary to take between selling a home unit off the plan and obtaining registration of the plan, including the building work, preparing the strata plan, obtaining local government approval and formal steps recording the approval and registering the plan. The purchaser has no opportunity to influence these and may well feel dissatisfied if the contractual time for them passes and the vendor rescinds…
Bryson J therefore expressly stated that compliance by the vendor with its obligations in cl 28.2 was a condition to its right to rescind the contract for sale under cl 28.3.2.
This case was primarily concerned with the issue of whether compliance by the vendor with its obligation in cl 28.2 to do "everything reasonable to have the plan registered" imposed personal obligations on the vendor to take every reasonable step; such that the vendor would not be absolved if reasonable steps were not taken by its independent contractors. Bryson J compared the effect of cl 28.2 with clauses that simply required the vendor to make reasonable endeavours, or the equivalent, which were considered in cases such as Woodcock v Parlby Investments Pty Ltd (2014) 251 CLR 640; (1998) 4 BPR 9568; and Masters v Belpate Pty Ltd (above). That is not an issue that arises in the present case.
Bryson J's decision was upheld by the Court of Appeal in Wardy v Hardy [2002] NSWCA 215; (2002) 11 BPR 20,227.
It must be noted that in Walker v Chanrich Properties Pty Ltd [2003] NSWSC 1064; (2003) 11 BPR 21,289, Young CJ in Eq suggested, at [13], that the decisions of the Court of Appeal in Wardy v Hardy (above) and Mitchell v Pattern Holdings Pty Ltd (above) were inconsistent; and concluded that he should follow the former case because it was more favourable to the plaintiffs. With respect to his Honour, however, it does not appear that the two Court of Appeal decisions are inconsistent. In Mitchell v Pattern Holdings Pty Ltd, Powell JA doubted Hawes v Cuzeno Pty Ltd (above), insofar as, in that case, Bryson J had found, as a matter of construction or implication, that compliance with the vendor's obligation to do everything reasonably necessary was a condition to the vendor's right to rescind; so that non-compliance would prevent rescission, even if the breach was not a cause of the failure of the plan to be registered. The Court of Appeal in Mitchell v Pattern Holdings Pty Ltd did not mention the decision in Wardy v Hardy (above), which was founded on a contract that contained an express condition in the form of cl 28.3.2.
Bryson J returned to the same subject in Maganic v Ravagnani [2003] NSWSC 1063. The contract of sale contained printed cl 28. The specific issue was whether the failure by the vendor to comply with cl 28.2 prevented the vendor from rescinding the contract; even if it was not shown that the breach was a cause of the failure of the plan to be registered in time. Bryson J said: [6] Clause 28.2 is the subject of an authoritative decision of the Court of Appeal in Wardy v Hardy [2002] NSWCA 215. Particularly significant for the present case are passages in the judgment of Mason P, with whom other members of the Court of Appeal concurred, at paras 62, 63 and 64 from which it appears that compliance with cl 28.2 is a condition precedent to availability of the vendor's right to rescind. [7] This is not a case in which it is alleged that the vendor has broken any promise contained in cl 28.2 or has incurred any liability in respect of failure to have the plan registered; the present issue is rather simpler and is to the effect that the condition precedent to rescission was not fulfilled.
Burchett AJ considered the different lines of authority that have emerged, depending upon whether, or not, the vendor's obligation to take steps to cause the plan of subdivision or the strata plan to be registered, is expressed in the contract to be a condition of the vendor's right to rescind, in Actall Pty Ltd v Pacific Bay Development Pty Ltd [2005] NSWSC 1067. In that case, the contract for sale contained cl 28.
His Honour noted, at [8] and [9], that in decisions such as Plumor Pty Ltd v Handley (above), the Nina's Bar case (above) and the Italo-Australian Club Ltd case (above), the contracts for sale did not make compliance with the relevant obligation by the vendor a condition of the power of rescission. Burchett AJ extracted the part of the judgment of McClelland CJ in Eq in Plumor Pty Ltd v Handley, which is set out above (at par 65), at which his Honour said that compliance by the defendant with its obligations was "not, by the terms of special condition 28, made a condition of the exercise by the defendant of the right of rescission conferred by that provision, nor should there be any implication to that effect".
Burchett AJ expressed his conclusions in the following terms: [10] The distinction between (a) the position where a right of rescission by one party is expressly made subject to compliance with a precondition, and (b) the position where, the power of rescission not being subject to any such precondition, a challenge to any rescission must be mounted in reliance upon the general principle that a party to a contract may not take advantage of his own default, was emphasised too by Young CJ in Eq in Walker v Chanrich Properties Pty Ltd (2003) 11 BPR 21 , 289 at paras 9, 15 and again in Executive Builders & Developers Pty Ltd v Roddam (2003) 11 BPR 21 , 305 at para 28. The point was also noted by Santow JA in Churnin v Pilot Developments Pty Ltd (2003) 11 BPR 21,603, where his Honour made it clear (at para 52) that Wardy v Hardy created a binding precedent so far as the effect of cl 28 of the standard form of contract is concerned. He stated the conclusion (in para 56) that cl 28.3 had the effect of "making compliance with [the obligation in cl 28.2] an express condition precedent to the [scil. vendor's] right of rescission". He distinguished the case before him as depending upon a different principle, the principle of Plumor Pty Ltd v Handley, that a party is not entitled to rely on an event resulting from that party's wrongful act. In a very recent case involving cl 28 of the standard form contract, Palmer J held that the vendor had not "done everything reasonable to procure registration of the plan of the subdivision within the period provided in cl 28.2 of the contract" and that "[a]ccordingly, the [vendor] was not entitled to rescind… under cl 28.3": Kierzkowski v Goldsbrough [2005] NSWSC 597 at para 42. [11] The conclusion reached in Ante Maganic v Guido Ravagnani, in my respectful opinion, is not only consistent with the authorities I have discussed; it is also consistent with what fair and reasonable contracting parties might be thought to have wished to achieve in the drafting of their contract. For it is clear that the purchaser of a lot in an unregistered plan is to a significant degree in the hands of the vendor. It is the vendor who will have responsibility for the necessary applications and the performance of the necessary work. If the vendor is dilatory, in the absence of a provision such as cl 28.3.2, a purchaser who would rather settle late than never may find it necessary to accept the hazards of a costly proceeding fated to turn on difficult issues of causation. It seems to me that the express provision of cl 28.3.2 is designed to avoid these issues by laying down a clear condition precedent with which the vendor must comply in order to be able to rescind. That strict and literal compliance not only follows from the nature of a condition precedent as a matter of principle, but was actually intended when the clause was drafted, is confirmed by the contrast, in its immediate context in the document, with cl 29 which would apply to any other condition than the critical one expressed in cl 28. Clause 29 also seeks to put a limit on the power of rescission that would arise in a case where it applies, but notably softens the stringency of the condition by the insertion of the word "substantially"; cl 29.5 provides that "[a] party can rescind under this clause only if the party has substantially complied with cl 29.4".
This decision was upheld by the Court of Appeal in Actall Pty Ltd v Pacific Bay Development Pty Ltd [2006] NSWCA 190.
In my view, these authorities establish that compliance with printed cl 28.2 is made, by cl 28.3.2, a condition of the vendor's right to rescind the contract for sale.

Professor Butt's statement of principle

It will now be necessary to deal with the defendants' argument that the plaintiffs had the legal onus of proving non-compliance with cl 28.2, because they, as plaintiffs, were the moving parties.
This argument was based upon a number of observations by Professor Butt, who is, with respect, an acknowledged expert on the meaning and effect of the standard contract for sale.
In The Standard Contract for Sale of Land in New South Wales (2 ed), Professor Butt considers the effect of cl 28.3, relevantly at [28.12] to [28.17]. In relation to the effect of the condition contained in cl 28.3.2, Professor Butt, correctly in my respectful view, says at [28.14]: … Hence, under the present contract, a vendor who has breached clause 28.2 cannot exercise the right to rescind for non-registration of the plan, irrespective of any lack of causal connection between the vendor's failure to comply with clause 28.2.
Professor Butt then, at [28.16], deals with the issue of the onus of proving that the condition has not been satisfied in the following way (footnotes omitted): The onus of proving whether or not the vendor has complied with the obligation to do "everything reasonable" will depend on the way the issue arises. Since compliance with the obligation to do "everything reasonable" is a pre-condition of the vendor's right to rescind, a vendor who brings action to justify rescission normally bears the onus of proving compliance. However, a purchaser/plaintiff who brings an action that involves challenging the validity of the vendor's rescission bears the onus of proving the vendor's non-compliance.
Thus, according to Professor Butt, if the vendor seeks to prove that the rescission was effective, the vendor has to prove that the condition was satisfied; whereas if the purchaser seeks to establish that the vendor's rescission was ineffective, the purchaser has to prove the condition was not satisfied.
The issue is whether the authorities upon which Professor Butt relied in his footnotes to [28.16] justify his conclusion that, in cases where the contract for sale gives a particular party a right to rescind if a particular event does not occur, but only on the condition that that party complies with an obligation in the contract to take particular steps to achieve the occurrence of the event, the burden of proof lies on that party, if it seeks an order confirming the rescission (footnote 50); but lies on the other party, if it seeks an order that the rescission was ineffective (footnote 51).
The cases listed by Professor Butt in footnote 50 are Adina Constructions Pty Ltd v Whitehead (above); the Brauer & Co Case (above) and Zieme v Gregory (above).
It is true that, in each of those cases, the courts found that the burden of proving default lay on the party who had rescinded the contract, and whose obligation it was to try to cause the relevant event to occur within the required time. However, in none of those cases was it a condition of the contract that there be an absence of default by the rescinding party. Each of those cases supported the existence of a substantive rule that was not accepted by McClelland CJ in Eq by Plumor Pty Ltd v Handley; and thus the later cases that have followed that authority; see pars 90 to 106 above. The cases cannot, with respect, properly be regarded as authority that the vendor bears the legal onus of proof, where the vendor is the plaintiff, and the vendor has rescinded a contract for sale that includes a term in the form of printed cl 28, which makes it a condition of the right to rescind that the vendor has performed the obligation in cl 28.2.
It will now be convenient to consider the authorities listed in footnote 51, in support of the proposition that the burden of proof falls on the purchaser, where the purchaser is the plaintiff.
The cases are Cameron (industrial) Pty Ltd v Comprador Properties Pty Ltd (above); Woodcock v Parlby Investments Pty Ltd (above); The City of Gosford v Marim Pty Ltd (above); Graeme Webb Investments Pty Ltd v Soerpyk (1993) NSW ConvR 55-661; Plumor Pty Ltd v Handley (above); and Hunyor v Tilelli (above).
Each of these cases, other than the Graeme Webb Investments Pty Ltd case, has been considered above, albeit only briefly in some cases.
In none of the cases already considered did the contract make it a condition to the right of the party to rescind the contract upon the non-occurrence of a particular condition that that party not be in default of the term of the contract requiring that party to attempt to cause the condition to occur within a relevant time.
In the Cameron (industrial) Pty Ltd case, Hodgson J held that the onus of proof was "on the party seeking to take advantage of the condition to escape from the contract" (see par 98 above). That conclusion was not followed in Plumor Pty Ltd v Handley. It is true that the plaintiff had the burden of proof, but in that case it was the plaintiff that was the party that had the obligation to try to cause the condition to occur within the relevant time. The case is not, with respect, authority for the proposition that footnote 51 is intended to support.
In the other cases that have already been dealt with in these reasons, it is true that the plaintiff was found to have the burden of proof, but that was because the right to rescind was not conditional on the absence of default, and, as a matter of law, the onus fell on the plaintiff, who was required to prove both that there had been a default, and that the default was a cause of the condition not occurring within time.
The fourth case mentioned by Professor Butt in footnote 51 was Graeme Webb Investments Pty Ltd v Soerpyk (1993) NSW ConvR 55-661. In that case, Hodgson J was concerned with a contract for sale, which contained a term that completion of the contract was subject to and conditional upon the registration of a plan of subdivision. The contract obliged the vendor to make all reasonable endeavours to achieve registration of the plan as soon as possible, and in the event that registration was not effected within nine months, either party could elect to compel the other to sell or acquire, as the case may be, the balance of the relevant lot. Unlike the majority of cases, where the contract gave the parties a right to rescind the contract, if the plan of subdivision that was to create the lot the subject of the contract had not been registered by the stipulated date, this contract allowed either party to elect to buy or sell the whole lot that was the subject of the plan of subdivision.
This judgment followed an earlier judgment by Hodgson J in the same proceedings: Graeme Webb Investments Pty Limited v Soerpyk (1992) 6 BPR 97518. The defendant vendor had purported to exercise the right to oblige the plaintiff purchaser to purchase the whole of the un-subdivided land, because the plan of subdivision had not been registered by the due date. The plaintiff claimed that the defendant could not exercise that right.
The defendant filed a cross claim for a declaration that the contract for sale had been validly terminated.
Hodgson J recorded, at 13,878, that it was common ground between the parties that the subdivision was not registered within the relevant period because the defendant did not, within the meaning of the special condition, make all reasonable endeavours to achieve such registration as soon as possible.
The plaintiff submitted that the defendant was accordingly not entitled to exercise its option to require the plaintiff to purchase the whole of the un‑subdivided land.
Hodgson J said at 13,881: I accept Mr Coles' submission that there is no rule of law to the effect that a party cannot rely on its own wrongdoing in seeking to enforce a contract. I accept Mr Coles' submission that it is in each case a matter of considering whether or not there should be the implication of a term or, in some cases, simply a question of construction of the contract, without the implication of the term. However, in my view, in this case the question can be decided as a question of construction without the necessity of the implication of the term. It seems to me that the court can take the words actually used by the parties, and ask whether the intention of the parties, as disclosed by those words, was such that the vendor was to be given a right to exercise the option in circumstances where the non-registration of the plan, after the expiration nine months, was brought about by the vendor's failure to make all reasonable endeavours to achieve that registration as soon as possible. In my view, the natural meaning of the words is such that they disclose an intention that the vendor not be able to exercise the option, in circumstances where the occasion for exercise has come about because the vendor is in breach of that very same condition. If I am wrong on that aspect, so that it is necessary to actually imply an additional term, in my view it would be appropriate to imply a term that the vendor should not be able to exercise the option given by special condition 1, where the non-registration of the plan after nine months was brought about because the vendor did not make all reasonable endeavours to achieve the registration as soon as possible. It is true that the option is not an option to terminate the contract, but merely to substitute a different contract; but, in my view, in the context of this contract, that is a valuable right which one should not expect the vendor to be able to exercise, where the vendor's own breach of contract has brought about the situation in which the right could otherwise be exercised.
Hodgson J therefore held that the defendant had not validly obliged the plaintiff to purchase the un-subdivided land. He held that the plaintiff was, in principle, entitled to an order for specific performance against the defendant, which obliged the defendant to make all reasonable endeavours to achieve registration of the plan of subdivision.
Hodgson J did not make any final orders. For reasons that do not require consideration, the contract for sale was not in evidence before his Honour, because the requisite stamp duty had not been paid. Hodgson J said that it would not be appropriate for the court to specify what was required for the defendant to make all reasonable endeavours. He handed down his judgment, in which he indicated in principle his findings, and adjourned the matter. That left open the determination of what was required to satisfy the 'reasonable endeavours' obligation.
The matter came back before Hodgson J in an application that led to the judgment relied upon by Professor Butt, and referred to above. Hodgson J said at 9: Before turning to the submissions made by Counsel, I note that it is common ground that the onus lies on the plaintiff to satisfy me that the relevant payment to the Water Board is within the "reasonable endeavours" required of the defendant. It may be, as I held in Earle Cameron (Industrial) Pty Ltd v Comprador Properties Pty Ltd (1987) 3 BPR 9657 at 9963, that if the defendant were seeking an order that its obligations were at an end, the onus would be on the defendant to prove that it had made all reasonable endeavours. However, where the plaintiff is seeking an order that the defendant do a particular act, it is my view that the onus lies on the plaintiff to show that this act is within the reasonable endeavours which the contract requires.
Hodgson J ultimately did not make any order in this judgment, as the issue was whether reasonable endeavours on the part of the defendant would require him to pay a particular large sum of money to the Water Board in order to obtain the certificate that was required before the plan of subdivision could be registered. The evidence did not satisfy his Honour that the amount claimed by the Water Board was justified under the Water Board Act.
As appears from the extract from Hodgson J's second judgment, which is set out above, the parties agreed that the onus lay on the plaintiff to establish that the payment by the defendant of the amount demanded by the Water Board fell within the defendant's obligations under the contract to make all reasonable endeavours to achieve registration of the plan of subdivision.
This decision may be of little assistance on the point upon which it was relied by Professor Butt. This was also not a case where the contract contained an express condition that the vendor could not rely upon the particular right, unless the vendor had complied with the obligation to attempt to obtain registration of the plan of subdivision. Furthermore, the parties had agreed for the purposes of the first judgment that the vendor had not made all reasonable endeavours. That caused Hodgson J to be satisfied that the vendor could not exercise the relevant right, without his Honour having to consider the issue of burden of proof. Hodgson J decided in principle that the purchaser was entitled to an order for specific performance, subject to it being worked out precisely what the vendor should be ordered to do to achieve registration of the plan of subdivision. The agreement between the parties that the purchaser had the obligation to prove that it was reasonable to require the vendor to pay a particular, substantial sum required by the Water Board was in the context of the purchaser having to establish what it was that the court should order the vendor specifically to perform.
With great respect to Professor Butt, this analysis of the cases upon which he relied, as set out in footnote 51, shows that none of those cases were cases in which one of the parties was prohibited by an express condition from exercising the right of rescission, unless that party had complied with an obligation imposed upon it by the contract to take steps to cause the relevant plan to be registered by the stipulated time.
In principle, as the vendor's right to rescind does not arise unless and until the condition has been satisfied, a vendor who purports to rescind the contract should bear the legal onus of proving that the right to rescind existed at the time it was exercised.
In my view, the decision of Waddell CJ in Eq in Yeung v Desnor Pty Ltd (above) to that effect was correct, and should be followed. It was impliedly accepted by McClelland CJ in Eq in Plumor Pty Ltd v Handley, or at least it was not doubted.
Determining the burden of proof by reference to whether a particular party is a moving or a defending party is unsatisfactory in principle for a number of reasons. The first reason is that, if the burden of proof falls on the party resisting the validity of the rescission, that party may fail to satisfy the burden because of inadequate evidence concerning the steps taken by the rescinding party to perform its obligations, which may have the result that a right to rescind that does not in fact exist will nonetheless be effective. The second reason is that the burden of proof will depend upon irrelevant fortuities, such as who is the moving party, the relief sought, and the positive allegations necessary to support that relief. Thirdly, as a practical matter, in cases where it is the vendor who has rescinded the contract, it will not be satisfactory that a vendor who has not in fact complied with the obligation in cl 28.2 may be able to outlast the purchaser, by not commencing any proceedings so that the purchaser is compelled to commence proceedings, with the consequence that the burden of proving the inadequacy of the vendor's conduct is imposed on the purchaser.
In the present case, the plaintiffs have sought a declaration that the contract for sale was not validly rescinded by the defendants, and an order for specific performance of the defendants' obligation in cl 28.2 of the contract. If the factual basis for these orders had been pleaded in a statement of claim, it would have been necessary for the plaintiffs to make a positive allegation that the defendants were not entitled by cl 28.3.2 to rescind the contract for sale. That is clear in respect of the claim for a declaration that the rescission was invalid. In support of their claim for an order for specific performance of the obligation in cl 28.2, the plaintiffs would have had to plead the terms of that clause, from which it would be immediately apparent that the time for performance of the obligation by the defendants had passed. For practical reasons, the plaintiffs would have been drawn into the need to plead the facts comprehensively, which would have exposed the need to allege that the defendants had not complied with cl 28.2, with the result that they were not entitled to rescind under cl 28.3.2. The position would have been no different, if the plaintiffs had sought an order for specific performance of the contract. As the plan of subdivision has not been registered, specific performance of the contract as a whole would not be possible. For practical reasons, it would have been necessary for the plaintiffs to allege non-compliance by the defendants with cl 28.2 within the 12 month period.
On the other hand, if circumstances had required the defendants to commence the proceedings, it would obviously have been necessary for them to plead an entitlement to rescind under cl 28.3.2, and as that entitlement is expressly conditional, the defendants would have had to plead the satisfaction of the condition by alleging that they have complied with cl 28.2.
In my view, the proper way to resolve this issue is to apply the solution suggested in JD Heydon Cross on Evidence (10 ed). There, the solution is suggested by reference to the facts of the Joseph Constantine case (which entirely coincidentally was the case upon which McClelland CJ in Eq relied by way of analogy in deciding between the two competing lines of authority in Plumor Pty Ltd v Handley). As the former Justice Heydon explained, at [7065], a party has a burden of proving an issue, if it is in an essential element of that party's cause of action, or defence. At [7075], the following is said concerning how "the question whether an assertion is essential to a party's case or that of his adversary" is "strikingly illustrated" by the Joseph Constantine case: … If the rule were that charterparties cease to be binding when the vessel, without default of either party, is disabled by an overpowering disaster, the negation of fault would be an essential aspect of the defendant's case. On the other hand, proof of fault would be an essential of the plaintiff's case, if the rule were that charterparties cease to be binding when the vessel is disabled by an overpowering disaster, provided that disaster is not brought about by the fault of either party. The House of Lords decided that the latter was the correct formulation, and accordingly held that the plaintiff has the legal burden of proving fault when frustration is pleaded as a defence to an action to a contract. There Lordships' speeches referred to principles, such as the difficulty of proving a negative and the presumption of innocence, but Stone has suggested that general considerations of public policy probably constituted the decisive factor. If such considerations are the guide where there is no governing precedent, it is obviously vain to seek for any set formula determining what facts are essential to a party's case. Hence the incidence of the legal burden of proof can only be ascertained by consulting the precedents concerned with the various branches of the substantive law…
The decision as to what is an essential element of a party's case may not be straightforward in situations which do not involve well-established causes of action, with recognised elements. A judgment must be made as to whether proof of a particular issue is in substance an essential part of a party's claim or defence.
In the present case, the defendants claim that they validly rescinded the contract for sale. Their right to rescind arises under cl 28.3.2 of the contract for sale (in conjunction with special condition 48), and that right is subject to an express condition precedent. As a matter of substance, the law should not permit the defendants to exercise a right that does not exist, so the defendants should have to prove that it does exist. The defendants should therefore be required to prove that the condition has been satisfied. That will require the defendants to prove that they complied with the obligation imposed upon them by cl 28.2. That is not only an appropriate result in principle, but it is fair and reasonable because a substantial part of the information relevant to the issue of whether the defendants complied with cl 28.2 will be known only by them, and they will be the parties who will be able, by reference to their comprehensive knowledge of all relevant events concerning the performance of the obligation, to compile an effective case that deals with all relevant factual issues.
The basis upon which the line of authority exemplified by Plumor Pty Ltd v Handley was decided is not inconsistent with this reasoning. In those cases, the right to rescind is not conditional upon the rescinding party having complied with an obligation imposed upon that party by the contract. The preclusion of the rescinding party from exercising a right to rescind does involve breach by that party of an implied or express term of the contract, but only if that has had the result of causing the circumstance that gives rise to the right to rescind. The disqualification of the rescinding party does not depend upon the non-performance of a condition, but depends upon the application of a rule of law that a party will be precluded from benefiting from a state of events brought about by its own wrongful conduct. The burden of proof of that wrongful conduct and its consequences naturally falls upon the party who alleges that it has occurred.
It is appropriate to consider whether there is a flaw in the conclusion that the rescinding party has a burden of proving the satisfaction of the condition upon which the right of rescission depends, because that will put the rescinding party in the position of being required to prove in an open-ended way that all steps were taken by that party that were reasonable to have the plan of subdivision registered within the specified period. In theory, the rescinding party could be faced with the need to exclude all possible failures to take reasonable steps.
In practice, however, this unsatisfactory outcome is excluded by the procedural rules that govern the way that the rescinding party must plead the existence of its right to rescind. The following extract from Ritchie's Uniform Civil Procedure NSW, concerning Uniform Civil Procedure Rules 2005 (NSW) r 14.11 applies: [r 14.11] Conditions precedent presumed to have been met (cf SCR Part 15, rule 11; DCR Part 9, rule 7) If it is a condition precedent necessary for a party's case in any pleading that: (a) a thing has been done, or (b) an event has happened, or (c) a state of affairs exists, or has existed at some time or times, or (d) the party is ready and willing, or was at all material times ready and willing, to perform an obligation, a statement to the effect that the condition has been satisfied is taken to be implied in the party's pleading. [14.11.5] Conditions precedent The effect of this rule is that a pleading is to be construed as if it contains an implied allegation of the due performance of any conditions precedent to which the rule applies: Galluzzi v Linfox Transport (Aust) Pty Ltd (NSWSC, McLelland CJ in Eq, 15 June 1995, unreported, BC9504824); Dalswinton Pastoral Company Pty Ltd v Cole [2006] NSWSC 570; BC200604270 at [5] …(allegation of willingness to complete in specific performance suit) However, and despite the terms of the rule, where the relevant allegation is an essential ingredient of the cause of action (such as the making of a demand in detinue, or notice of dishonour in the case of a bill of exchange), it must still be pleaded: May v Chidley [1894] 1 QB 451 … Roberts v Plant [1895] 1 QB 597 ... Similarly, if the plaintiff is an assignee, the material details of the assignment must be pleaded: Seear v Lawson (1880) 16 Ch D 121 ... And a similar allegation must be pleaded by a trust beneficiary who brings proceedings on behalf of a trustee: Lewis v Nortex Pty Ltd (in liq) [2005] NSWSC 482; BC200503384 ... A defendant who wishes to allege non-performance of a condition precedent must specifically plead that allegation and the terms of the condition: Abbs v Matheson & Co (1898) 104 LT Jo 268. But, once the matter has been put in issue in the proceedings, the present rule does not affect the onus of proof at the trial: Gates v WA & RJ Jacobs Ltd [1920] 1 Ch 567...
Consequently, a party in the position of the defendants in the present case should be able to plead that they have exercised a contractual right to rescind the contract, without having to plead how they have satisfied a contractual pre-condition to the existence of that right. The other party must plead the existence of the condition precedent, and the basis of the allegation of non-performance. That will not disturb the burden of proof placed upon the rescinding party to establish that it has satisfied the pre-condition upon which the right to rescind depends at the trial.

The evidence

In the present case, as I have noted above, the parties did not require pleadings, so the plaintiffs have not identified by the terms of a statement of claim the particulars in which they allege the defendants failed to comply with their obligations under cl 28.2 of the contract for sale.
The basis of the plaintiffs' claim and the defendants' response must therefore be gleaned from their respective written submissions.
It will be convenient to consider the effect of the evidence, before the cases put forward by the parties are addressed.

The evidence of Mr Makrinakis and Mr Whittle

Mr Michael Makrinakis, who was the licensed real estate agent retained by the defendants to sell the lots in the subdivision, including Lot 215, gave evidence that, in December 2013, about the same time as he received his retainer, he had a conversation with Mr Topic, in which he asked Mr Topic when he thought the plan of subdivision would be registered. Mr Makrinakis recounted the conversation as follows: The ones up the top (which included the Subject Property) won't take long. Everything is pretty much ready to go. I think 3 to 4 months. When we get a few sales on these ones, I will get these registered. After that, I will give you the next stage at San Christobal Drive to sell.
Mr Makrinakis' evidence was corroborated by one of his employees, Mr Scott James Whittle, who gave evidence that Mr Makrinakis had informed him of the subject matter of the conversation with Mr Topic at about the time when it occurred. Mr Whittle said that, in around January 2014, before the plaintiffs entered into the contract for sale, he passed on to Mr Al Achrafi the information that it was only likely to take three to four months for the plan of subdivision to be registered.
In his principal affidavit, Mr Topic denied that he had the conversation to which Mr Makrinakis deposed.
In the cross-examination of Mr Makrinakis, he admitted that he was not able to produce any note of the conversation with Mr Topic. Asked whether the conversation may not in fact have occurred, he responded: "Well, it did occur".
Mr Whittle was not required for cross-examination.
Mr Makrinakis was an independent witness, and as the real estate agent retained by the defendants, he could not be said to be in the plaintiffs' camp. The evidence he gave was brief, and he was not cross-examined at length. He appeared to be a truthful witness, who gave his evidence from recollection. Significantly, his evidence was corroborated by the evidence of Mr Whittle, who was also an independent witness. There is an inherent probability that a real estate agent, who was retained to find purchasers of lots in a subdivision that had not been registered, would seek instructions from his principal as to when it was expected that registration would occur. That would be a significant piece of information to the real estate agent, as it would be likely that potential purchasers would want to know when settlement could take place, and it would be difficult for the real estate agent to conduct the sale program successfully, if the agent was not able to respond clearly and promptly to questions asked by potential purchasers on that subject. The information provided by the principal as to the expected time it would take to register the subdivision would be inherently important to the agent, and thus a matter likely to be remembered.
I am satisfied that I should accept the evidence given by Mr Makrinakis and Mr Whittle that establishes that Mr Topic told the former that it would not take long to achieve registration of the part of the subdivision that included to Lot 215; that everything was pretty much ready to go; and that three to four months should be sufficient to achieve registration.
Accordingly, as of December 2013, Mr Topic made an admission to the defendants' real estate agent that the circumstances of the development of the subdivision necessary to be carried out before the plan could be registered were such that it was reasonable to expect registration to occur within three to four months.
Mr Makrinakis also gave evidence that, after contracts for sale were exchanged between the plaintiffs and the defendants, his office placed a "sold by" sticker on the advertising board located at the property, and also changed the status of the listing on the website "realestate.com.au" to "sold".
On 10 April 2014, Mr Topic sent an email to Mr Makrinakis in which he made the following request: A request is made to withdraw from Realestate.com in the SOLD section Lot 215 and Lot 216 Thistle Ct.
On 12 April 2014, Mr Topic send a further email to Mr Makrinakis, which repeated this request, and added: The lots cannot be re-marketed until you take the above advertisement off realestate.com.
Mr Topic sent to Mr Makrinakis a further email on 14 April 2014, which said: I am not going to send you no more requests to take off the advertising from Real estate.com, if you are not going to co-operate I will cancel our Agreement.
Mr Makrinakis replied on the same day by saying that he had been working on Mr Topic's request, but it was not a simple matter, as it needed to be done by the "back end" of realestate.com.au. Mr Makrinakis expressed the hope that the matter could be fixed up by Wednesday afternoon.
Mr Topic thanked Mr Makrinakis by an email dated 14 April 2014, but later, on 23 April 2014, Mr Topic sent a further email to Mr Makrinakis in which he said that he had just checked in the SOLD section of realestate.com.au and asked: "how come the property in Thistle Ct is still listed".
Taken at face value, these emails suggest that Mr Topic wanted Lot 215 to be removed from the sold section of realestate.com.au's website, because the lot could not be re-marketed until that was done. Mr Topic felt so strongly on the subject that he threatened to terminate the defendants' retainer of Mr Makrinakis, if his instruction was not promptly carried out.
This evidence would support an inference, although perhaps not strongly, that Mr Topic did not want Lot 215 to be advertised as sold, because he had planned to re-market the property, without being inhibited by the market being informed that it had already been sold.
Mr Makrinakis was not asked any questions on this subject in cross-examination.
In his cross-examination, Mr Topic was asked to explain the contents of his 12 April 2014 email to Mr Makrinakis, in which he requested that lots 215 and 216 be withdrawn from the sold section of realestate.com.au, as the lots could not be re-marketed until that was done (T 152.25 to 155.18). The cross-examination was as follows: Q. Can you explain why you would possibly be directing a real estate agent handling that property to remove it from the sold section of a web site so that it can be remarketed? A. Sir, I believe you're a bit confused. Those two paragraphs are two separate issues. You're reading it as one issue. It should have been point 1, it should have been point 2, and if you indulge me to explain the reasons … WITNESS: First of all, I'd like to apologise for saying that you were confused, but they're two separate issues. I said, "I request to withdraw from realestate.com in the sold section lot 215, 216 Thistle Circuit." That's in response the advertising having the list price in the sold section. I was never against the actual site being marketed. I was against, according to the verbal conversation with Mr Makrinakis, the actual price be listed, being advertised, which gives the future buyers of the other lots privileged information, and that would be confirmed in Mr Makrinakis' paragraph 11. I never raised a issue of a removal of the actual physical site sign on the lot 215. I'll give an explanation, sir. SOMERVILLE Q. This is the explanation you've given: you didn't ask Mr Makrinakis to have the price removed. Your issue was with the price. You didn't ask him to have the price removed from the web site, which you say was privileged. We'll come back to that. A. It was discussed verbally. Not in the email. Q. It was discussed verbally? A. Yes, sir. Q. It was discussed verbally with Mr Makrinakis. Let's be clear. When did you discuss it with Mr Makrinakis verbally? A. I cannot give you a time, but there was several discussions. Q. Where did those discussions take place? A. Over the phone. Q. You asked Mr Makrinakis over the phone to remove the price? A. Absolutely. Q. When did that occur? Prior to this email or after this email? A. It would have been prior to this email. Several times. Q. Prior to the email? A. Yep. Q. Yet you make no reference in this email to those conversations, do you? A. Not in this email. Q. And you make no reference in this email to having asked for the price to be removed, do you? A. I've already answered that question, sir. Q. I'm asking you again. You make no reference, do you, having already asked on the telephone, as you say, for the price to have been removed, do you? A. No. Q. In fact, all that you say is a request is made to withdraw from realestate.com in the sold section lot 215. How can you explain that based on the evidence that you've just given when your only issue was the price? A. I did explain it. I don't believe you listened, sir. Q. Let's move to the next part of your explanation. "The lots can be remarketed." The lots that you're referring to there are the lots that you've referred to just above, aren't they? A. No. Q. No? A. No. You're making that assumption. The lots were Q. It's a reasonable assumption to make. A. It's not a reasonable assumption. Q. If I may finish the question. You've referred to two lots in the sentence before, lot 215 and lot 216, and you followed, "The lots cannot be remarketed until you take the above advertisement off realestate.com." A. Sir, as I understand earlier, the two separate paragraphs, there should have been a point 1, point 2. It would have made it more clear. The lots Mr Makrinakis was advertising 18 residential lots, and that way, as I indicate, it refers to a particular lot or pair of lots. Q. You've referred to the particular lots just above, but why didn't you say the other lots then in your email? A. Well, I can't explain why I didn't include other. Q. If that was the meaning of what you were trying to convey to Mr Makrinakis, that would have been quite a straightforward way of doing it, wouldn't it? A. Yeah. It was over the telephone as well. Q. Just to be clear as well, let's just move to the next little part of that phrase, "The lots cannot be remarketed." It's "remarketed" that you've said; not "marketed". Can you explain why you would say, "remarketed"? Why would you have used the word "remarketed" if the properties hadn't yet been sold that you're referring to you say in that email. Can I answer that question? A. Yes, I can, sir. Q. Yes? Well, please do. I don't think it requires you to read through the whole email. Can you explain to me why you say you used the word "remarketed" in relation to properties that you say had not yet sold? A. It's quite possibly about the some of the lots could have been withdrawn or Q. Well, were they withdrawn? Were any of the lots withdrawn? A. There's a possibility. Q. Can you say that it's any more than a possibility? A. No, sir. Q. Looking now at what I've asked you, noting that we have lot 215 and 216 referred to above, and that the following sentence says, "The lots cannot be remarketed until the A. Sir, I believe you inserted the word "above". Q. I beg your pardon? A. I believe you inserted the word, "The lots above". The memo doesn't contain that script. Q. I'm not suggesting your email says that, but I'll be as clear as possible. I think we both know what the email says. A. I Q. So you maintain, do you, that your evidence is that when you referred to these lots as you say in that second point that I've taken you to, being remarketed, your evidence is that that was not in relation to lot 215 and 216. A. Absolutely, sir. Q. I'd like to suggest to you that that's untrue. A. That's a false statement, sir. Q. Mine is a false statement, or yours is a false statement? A. Yours is a false statement, sir.
Mr Topic's explanation was, first, that he did not want the two lots to be withdrawn from the sold section; rather he wanted to suppress the purchase price of those lots, so that potential purchasers of neighbouring lots would not know the prices of earlier sales.
Mr Topic said that he had many oral conversations with Mr Makrinakis to that effect, but as I have noted, the occurrence of those conversations was not put to Mr Makrinakis in cross-examination.
If Mr Topic indeed had meant to convey only that the sale prices should be suppressed, his choice of language was inept, as the clear meaning of the first paragraph is that reference to the two lots should be removed completely from the sold section of the website.
Mr Topic then said that the two paragraphs were intended to refer to two separate subjects, and that the second paragraph was not intended to refer to Lots 215 and 216, but was intended to refer to the other lots in the subdivision that remained unsold.
The difficulty with this explanation is that it does not gel with the use of the word "re-marketed" in the second paragraph. Mr Topic said that he had an explanation for the use of this term, which was that it was possible that some of the lots could have been withdrawn. Asked whether any of the lots were withdrawn, he said it was a possibility. Asked whether he could say that it was any more than a possibility, he answered: "No".
I do not find Mr Topic's explanation of what he intended to mean by the two paragraphs of his 12 April 2014 email to be persuasive. The meaning of the two paragraphs in question is relatively clear. The term "lots" in the second paragraph seems to refer to the two Lots 215 and 216 referred to at the end of the immediately preceding paragraph. The term "re-marketed" seems clearly to refer to those lots. There was no evidence that any other lots had been marketed and were intended to be re-marketed.
This evidence supports an inference that Mr Topic did not want the market to be notified that Lot 215 had been sold for the sale price specified in the contract for sale. In fact, he did not want the market to be told that Lot 215 had been sold at all. He entertained the thought that there may be an opportunity to re-market Lot 215. This inference is not in any way decisive; but it does support a finding that Mr Topic conducted the development on behalf of his parents having in mind continuing price escalation in the market, and the possibility that an opportunity might arise for existing contracts for sale to be terminated; and the subject properties resold at a higher price. The strength of the inference must be tempered having regard to the fact that, as at 12 April 2014, the defendants would only become entitled to rescind the contract for sale if the plan of subdivision had not been registered by 16 January 2015, about nine months later.
It is clear that on 2 April 2015, after Mr Topic had purported, on behalf of his parents, to rescind the contract for sale of Lot 215, Mr Topic gave the following instruction to Mr Makrinakis: You are invited to approach the previous vendor [an error for purchasers] if they are interested in the same lot for a market price of $559k.
That represented an increase in the price of $174,000, or 45%. The instruction to Mr Makrinakis was made two days after Mr Topic purported to rescind the contract for sale.

The evidence of Ms Johnson

The plaintiffs' solicitor, Ms Roxanne Johnson, gave evidence of a continuing series of attempts to obtain information from the defendants' conveyancer, as to the progress of the defendants' efforts to achieve registration of the plan of subdivision, within the year provided by the contract for sale. Ms Johnson made enquiries on 1 and 15 April 2014. The conveyancer replied on 17 April 2014, to say that the plaintiffs would be advised. Further enquiries were made on 19 May and 10 June 2014. In the second of these enquiries, Ms Johnson asserted that cl 28.2 of the contract for sale had the effect that the plaintiffs were entitled to require evidence of the defendants' efforts to procure registration of the plan, and Ms Johnson requested details of any instances of delay. On 16 June 2014, Ms Johnson spoke to the defendants' conveyancer by telephone. The conveyancer said that the defendants had not given her instructions, so she did not know where registration was up to. A further enquiry was made on 2 July 2014. Subsequently, Ms Johnson made numerous attempts to contact the conveyancer by telephone, but the calls were unanswered. On 14 October 2014, Ms Johnson finally managed to speak to the conveyancer, who merely said: "I am just unable to get instructions from my client". She said further: "Our client is refusing to provide us with any information". Ms Johnson wrote a further letter to the conveyancer on 9 January 2015, in which she sought urgent advice as to whether the conveyancer had been able to obtain any instructions. Ms Johnson said that, if the defendants intended to terminate the agreement, the plaintiffs would require evidence of the defendants' efforts to procure registration of the draft plan in accordance with cl 28.2 of the contract for sale.
Mr Topic purported to rescind the contract for sale by email sent directly to Ms Johnson's firm on 31 March 2015. The rescission was confirmed by a letter dated 2 April 2015 from the defendants' conveyancer.
On 14 April 2015, in a letter to the defendants' conveyancer, the plaintiffs' solicitors demanded to be provided with evidence of the defendants' efforts to procure registration of the draft plan, so that they could give proper advice to the plaintiffs as to the validity of the purported rescission. The solicitors made a more detailed demand by letter dated 20 May 2015.
Mr Topic responded personally to the latter demand. The response was combative, and the only statement made by Mr Topic concerning the reason why the plan was not registered within the year was: … All land developments are subject to the performance and reliance of third parties to complete the project, that is, designers, authorities, contractors, subcontractors and unforeseen events such as weather. It has always been in the strong interest of the Developer to complete the land development and move forward to the next project…
There was further correspondence and an email by Mr Topic to the plaintiffs' solicitors, on 22 May 2015. This response was even more combative, but no further explanation was given by Mr Topic as to why the plan of subdivision was not registered within time.
The plaintiffs tendered a further email from Mr Topic to their solicitors dated 9 June 2015 (Exhibit B). The email is not dealt with in Ms Johnson's affidavit. It was sent after the commencement of these proceedings. The email attached a document described as containing "the timesheet between January 2014 and March 2015". I will return to this document below, after I have considered Mr Topic's evidence concerning the work that was done on the property in order to enable the plan of subdivision to be registered.
The parties did not deal with the issue of whether there was any implied obligation in the contract for sale for the defendants to provide information to the plaintiffs, concerning the progress of the development required to be carried out before the plan of subdivision could be registered.
It is reasonable to conclude that the defendants' response to the many requests for information made on behalf of the plaintiffs was unreasonable and unhelpful. However, the failure to respond reasonably does not per se mean anything to the determination of the question as to whether the defendants failed to do everything reasonable to have the plan registered within the 12 month period.
It is potentially of some forensic significance that the defendants failed to respond to the request made on behalf of the plaintiffs on 10 June 2014 to be given details of any instances of delay. It might in principle be available to the plaintiffs to argue that the absence of any response constituted an admission that no instances of delay were known to the defendants up to that time. Whether or not the defendants' conduct constituted such an admission would depend upon the conclusions required to be drawn from an examination of the whole of the evidence. The whole of the evidence would appear to suggest that the absence of a response from Mr Topic on behalf of his parents meant no more than that Mr Topic's behaviour was consistently rude and unhelpful.
It would not be safe for the court to place any great significance on the failure of the defendants to reply to the frequent requests for information made on behalf of the plaintiffs.
However, the response made by Mr Topic to the plaintiffs' solicitors on 20 May 2015 may be of greater significance. That response is set out above at par 211. The response plainly implied that the cause of the failure of the plan of subdivision to be registered within the 12 months was due to the failure of third parties to complete the project. That claim may have forensic significance, if upon an examination of all of the evidence concerning the development work, the claim made by Mr Topic appeared to be false. That is a question that must be deferred until the evidence has been considered.

The evidence of Mr Colussi

The plaintiffs called evidence from one contractor who was retained by the defendants to carry out works for the subdivision of the land that included Lot 215. He was Mr Ezio (Ed) Silverstre Colussi, who was at the time the works were carried out, the owner of a company known as E C Civil. The company had the contract to carry out the electrical and lighting works for the subdivision. Mr Colussi had 40 years' experience in the electrical, gas and telecommunications and construction fields.
E C Civil entered into the electrical works contract with Mr Topic on 21 August 2013, a little more than four months before the date of the contract for sale.
Mr Colussi gave evidence that the electrical works were delayed by a series of matters concerning the condition of the site. Mr Colussi indicated that he made repeated requests to Mr Topic to level the site, make it safe, and have the site properly prepared so that his company could commence work. The site was said to often be disorganised and messy. Mr Colussi asked Mr Topic to clear the site on a weekly basis, but the site invariably remained uncleaned. The works were constantly delayed as Mr Colussi's workers had to clear the site and clean the site in addition to doing their own work. Mr Colussi said that it was Mr Topic's responsibility to provide pegs for the site to set the levels, course and boundaries of his company's work. The pegs were essential to enable the company to accurately complete the electrical reticulation work. Mr Colussi frequently had to ask Mr Topic to provide pegs. Without the pegs, the company could not continue working. This happened on multiple occasions and there were delays for days, and sometimes weeks, at a time as the company waited for Mr Topic to have the pegs marked. Mr Colussi repeatedly made requests to Mr Topic to arrange for rock removal so that the electrical works could continue. The works were held up for two to three weeks before Mr Topic retained an excavation company to remove the rock.
Mr Colussi gave evidence that his company issued five invoices to Mr Topic, which were not paid within payment terms, and which were paid long after payment was due. Mr Colussi did not say that any of these delays in payments of invoices caused delay in the conduct of the works, but he did give evidence that the delay in payment caused a delay in the provision by E C Civil of a declaration required to be given to Endeavour Energy, which I take to be the company responsible for the provision of electricity to the lots in the subdivision. I will return to this issue below.
Mr Colussi said that he was never made aware by Mr Topic that he had sold any of the lots, or that he was in the middle of a contract period that required him to cause the plan of subdivision to be registered by a deadline. Mr Colussi did not give any evidence as to what the consequences of his being given this information by Mr Topic would have been.
According to Mr Colussi, the electrical works on the site were all completed on 28 May 2014. That was about three months after the contract for sale was entered into.
Mr Colussi's evidence was not specific as to which of the delays he described in his evidence occurred after the date of the contract on 16 January 2014.
Mr Topic annexed to his principal affidavit (Annexure U) a form under the letterhead of Endeavour Energy. Mr Topic said of this document, that on or about 22 July 2014, his electrical works contractor provided him with a document entitled "Works Complete Declaration and Handover of Assets to Endeavour Energy". He also said that, on about 20 November 2014, he received an email from the Contestable Works Administrator of Endeavour Energy disputing that the electrical works had been completed (Annexure V). There is no date on the email.
The Works Complete Declaration and Handover of Assets document has the effect of advising Endeavour Energy that all of the necessary works have been completed in accordance with drawings and Endeavour Energy's standards, and that the assets have been handed over to Endeavour Energy.
One of the declarations contained in the form was as follows: I declare that the assets are free of all encumbrances. All payments to employees, agents, contractors including Level 1 ASP's, subcontractors and suppliers associated with the works have been made in full and we indemnify Endeavour Energy from all claims from anyone claiming any lien or interest in the works arising from any debt.
The evidence was that E C Civil was a Level 1ASP (or Accredited Service Provider), so this declaration could not be given until the company had been fully paid by Mr Topic.
The declaration was signed by an employee of E C Civil on 22 July 2004, and the signature was witnessed by Mr Colussi.
Mr Colussi's evidence was that the last three of the late-paid invoices were paid on 4 August 2014. Mr Colussi said that, notwithstanding that the declaration was signed on 22 July 2004, he asked Endeavour Energy to defer acting upon the declaration until his company received final payment. When the final payment was received, an employee of the company, in Mr Colussi's presence, advised Endeavour Energy that the declaration could be acted upon.
Mr Colussi said that, if Mr Topic had paid all of the invoices by the due dates, Endeavour Energy could have been given the declaration soon after 28 May 2014, when the works electrical were completed. The document was therefore provided to Endeavour Energy about two months after it could have been provided, and Mr Colussi caused Endeavour Energy to defer acting upon the document for another two weeks.
The implication in this evidence is that the plan of subdivision could not be registered until after Endeavour Energy had received the declaration, and was satisfied that it was acceptable. There is no direct evidence to that effect. The email issued by the Contestable Works Administrator contained a statement that Endeavour Energy would issue a Notification of Arrangements within 10 business days of satisfactory compliance with the requirements in that email.
Mr Colussi said that, after the declaration had been provided to Endeavour Energy, he was advised that they would not sign off on the declaration until the Council confirmed that it had received its restoration costs of $2,000. Payment of the restoration costs, according to Mr Colussi, was an obligation of Mr Topic under the contract with E C Civil.
Finally, Mr Colussi noted that the email from the Contestable Works Administrator of Endeavour Energy stated that it would require a signed duct declaration. Mr Colussi said that, at that time, all of the electrical conduit works were complete. All that was required to obtain a duct declaration was for the surveyor to attend the site to complete a survey. On the basis of Mr Colussi's experience, that exercise should only have taken up to one week.
Mr Topic affirmed an affidavit on 11 August 2006, in response to Mr Colussi's affidavit.
While Mr Colussi had said the contract was made on 21 August 2013, Mr Topic suggested that it may have been made by means of a different document dated 19 August 2013. This dispute does not appear to be consequential.
Mr Topic said that he provided certified drawings to Mr Colussi on 30 July 2016. (This was a typographical error, as the email is dated 30 July 2013). In response to evidence by Mr Colussi that was ultimately not admitted into evidence, Mr Topic agreed that the certified drawings provided to Mr Colussi contained some errors, although he said that the drawings could have been amended at the end of the works, and submitted as Works as Executed Drawings.
Mr Topic denied Mr Colussi's claim that the site was in a state that was inappropriate or unsafe, as Mr Topic said "as a consequence of any act or omission on my part". This denial is equivocal as it is not clear whether Mr Topic has denied that the site was inappropriate or unsafe, or simply denied that the state of the site was a consequence of any act or omission on his part.
In response to Mr Colussi's claim that the site was disorganised and messy, Mr Topic countered by saying that E C Civil scattered spoil from the electrical trenches in multiple areas of the site, and that he observed the company dumping spoil from their other jobs onto the site.
Mr Topic denied Mr Colussi's claim that the electrical works were delayed as a consequence of Mr Topic failing to provide pegs.
Mr Colussi said that the electrical works were held up for two to three weeks, because Mr Topic did not respond to his repeated requests to arrange for rock removal so that the electrical works could continue. Mr Topic did not deny this claim, and merely responded by saying that it was common practice for contractors to perform rock excavation as a variation to the contract.
Mr Topic responded to Mr Colussi's claims that a number of his company's invoices had been paid very late by saying either that the invoices were received by Mr Topic on dates substantially later than the dates asserted by Mr Colussi, or that the invoices were not paid because E C Civil had left the site without Mr Topic's consent. Mr Topic said that he received an invoice that Mr Colussi said was forwarded on 29 October 2013 only on 4 February 2014. Mr Topic supported this claim by annexing to his affidavit an incomplete copy of an email, apparently dated 4 February 2014, headed "First invoice and 2nd variation", which stated: "Attached is the first invoice and variation that was discussed". However, the actual invoice was not annexed to the affidavit.
The period that Mr Topic claimed E C Civic was offsite without his consent was from 12 November 2013 to 29 January 2014, and 24 February 2014 to 7 April 2014.
Mr Topic simply denied Mr Colussi's claim that he was never made aware that Mr Topic had sold any of the lots, and that he was in the middle of a contract period. Mr Topic did not give any positive evidence of telling Mr Colussi, or any other representative of E C Civil, of these matters.
In response to Mr Colussi's claim that the processing by Endeavour Energy of the declaration signed by E C Civil was delayed by the failure of Mr Topic to pay the amount of $2,000 to the Council for restoration costs, Mr Topic made the unexplained statement that, on 14 February 2014, he saw employees of E C Civil removing the existing footpath and barricading the affected area with temporary fencing approximately 150 metres east of the subject site. The significance of this response is unclear. Mr Topic annexed a tax invoice dated 15 August 2014 from the Liverpool City Council addressed to Endeavour Energy, which claimed an amount of $2,211.60 for "concrete footpath restoration at 72 Thistle Circ, Green Valley".
Mr Colussi was cross-examined about the inconsistencies between his evidence and that given by Mr Topic. Mr Colussi adhered to his evidence. He accepted that he was annoyed about certain things that occurred between him and Mr Topic, but said that the annoyance was due to Mr Topic not taking any notice of information given to him by Mr Colussi as to what the relevant procedures were (T 52.5). Mr Colussi denied that, in giving his evidence, he deliberately provided a negative impression of Mr Topic's work in relation to the site (T 52.12).
Mr Colussi rejected the suggestion that his company did not send a tax invoice to Mr Topic until 4 February 2014 (T 57.37). Mr Colussi annexed tax invoices to his affidavit dated 29 October 2013 ($14,642), 12 November 2013 ($54,788), 19 February 2014 ($36,313.08), 17 March 2014 ($14,372.80), and 3 April 2014 ($6,023.93). He also annexed an MYOB sales register of closed invoices, which recorded that Mr Topic paid a total of $126,139.81 on dates in February and August 2014. Mr Colussi said that he personally prepared the invoices, and sent them by post on the date of preparation to Mr Topic (T 58.6 to 58.45). Mr Colussi gave evidence that he had conversations with Mr Topic in which the latter claimed not to have received invoices, which was why Mr Colussi sent additional copies of the invoices to Mr Topic as email attachments.
Mr Colussi was an independent witness, who gave his evidence in a direct and credible way (although to a limited extent, he sought to go further than to answer the questions directly asked of him and to provide the information that Mr Colussi apparently thought was warranted).
It is improbable that, if Mr Colussi was entitled to send out invoices on about the dates the invoices bear, he would not have sent them out. To fail to do so would have represented a high degree of mismanagement, and there is no reason to expect that an electrical contractor of Mr Colussi's experience would have been so incompetent.
Furthermore, it is significant that the email dated 4 February 2014, upon which Mr Topic relies, does not actually attach what is described as the first invoice and variation. Accordingly, the court has no confirmation that the attachment was dated on about 4 February 2014, rather than 29 October 2013.
This finding is significant, in that it confirms the evidence given by Mr Colussi to the effect that there was a substantial delay between the payment due date of E C Civil's last email of 18 April 2014 (being 15 days after 3 April 2014), and the final payment of 4 August 2014. That is a period of almost four months.
I prefer the evidence given by Mr Colussi to the denials of that evidence given by Mr Topic.

The evidence of Mr Topic

In his principal affidavit, Mr Topic explained that he obtained a bachelor's degree in construction management in 1994, and a Masters in Property Development from the University of Technology, Sydney, in 2004.
The defendants purchased the property located at 248 North Liverpool Road, Green Valley, in about 1977. The total area was approximately 27,000 m². It was rezoned from rural to residential in the mid-1980s. Mr Topic explained the history of the steps taken by him to obtain a development approval for the subdivision of the property into 36 residential lots. The development approval was given on 8 April 2004, subject to conditions of consent, by means of a successful appeal to the Land and Environment Court.
Mr Topic, on behalf of the defendants, planned to subdivide the land in two stages. The first stage was completed in 2006; an application to register the subdivision was made in about March 2006, and Land and Property Information (LPI) issued certificates of title to each Stage 1 lot on about 30 May 2006.
That provides some evidence that LPI could issue certificates of title within about two months of the application for registration of the plan of subdivision.
Lot 215 was part of the second stage of the development. Mr Topic received a construction certificate for the Stage 2 residential subdivision on 14 March 2013.
In his affidavit, Mr Topic set out the work required before the plan of subdivision could be registered under 11 headings, the last of which was registration of subdivision. He explained whether each category of works had been started, or started but not completed, on 16 January 2014, the date of the contract for sale. Mr Topic then dealt separately with most of the categories of works, and explained the events relevant to the completion of those works.
The first category of works dealt with by Mr Topic was the potable water works. Mr Topic explained in some detail the steps that were taken, including some events that led to delays.
As at 30 March 2014, there was a need to redesign the water main. The detail of the required change is not material for present purposes. By about 30 June 2014, Sydney Water had approved the amended plan. An issue arose concerning who should pay for the increased cost of works that resulted from the design change; and in particular whether Sydney Water would agree to bear part of the cost, or whether Mr Topic would have to, as the developer. Mr Topic said that the issue of whether Sydney Water would agree to bear part of the cost has not yet been settled. The amount of the increase in cost is not clear. It appears that Sydney Water agreed to an increase of $650, bringing its total to $6,150, although the significance of this evidence is not clear. Sydney Water appears to have notified a rejection of Mr Topic's claim that it pay a higher share of the increased cost on 3 July 2014. On 4 July 2014, Mr Topic instructed the potable water contractor to commence the works on site to complete the water main, chlorination, connections, and mains to metre as per the latest drawing; and that the increase in costs would be borne by the developer; i.e. Mr Topic, if Sydney Water would not accept any obligation to pay an increased amount. On 11 July 2014, the potable water contractor sent an email to Sydney Water, which noted that the project had been on hold because of the variation for over 12 weeks, and that Mr Topic had agreed to bear the cost, if Sydney Water would not. The email sought advice as to whether the design variation was acceptable, so that the work could proceed for construction. Sydney Water advised, on 11 July 2014, that the change in the scope of works was acceptable; the design variation was accepted; and that Sydney Water had no issue with the works continuing on site, given that the developer had acknowledged that the funding may not be forthcoming. On 10 October 2014, Mr Topic sent an email to Sydney Water, in which he noted that the contractor had completed the mains to metre connection over three weeks previously, and enquired as to the status was of the chlorination and potable water main connections. It appears that Sydney Water confirmed on 10 October 2014 that the contractor was in control and would coordinate the connection process. Various steps were then taken by Sydney Water, and Mr Topic said that, on about 25 November 2014, he observed the contractor taking steps that had the effect that all potable water works had been completed.
Mr Topic said that, as at the 30 October 2015 date of his affidavit: "I am now waiting for Sydney Water to approve the s 73 Compliance Certificate". However, he also said that, on about 23 March 2015, he received the Compliance Certificate from Sydney Water. The Compliance Certificate states that it was given under s 73 of the Sydney Water Act 1994 (NSW), and that the original of the certificate must be presented to the appropriate consent authority, so that the condition of the development approval could be satisfied.
Mr Topic did not explain when the application for the issue of the Compliance Certificate was made to Sydney Water, or why, if the potable water works were completed by 25 November 2014, the Compliance Certificate was not issued for a further four months.
The second category of works dealt with by Mr Topic was the electrical and lighting works.
Mr Topic said that, between 29 January 2014 and May 2014, he observed the contractor recommencing the electrical and lighting works on the site. The contractor remained on site until late May 2014.
This evidence is inconsistent with the evidence in Mr Topic's later affidavit (considered above in relation to Mr Colussi's evidence), where Mr Topic said that the contractor was not on site between 24 February 2014 and 7 April 2014.
Mr Topic said that Endeavour Energy forwarded interruption plans to the electrical contractor on 31 March 2014 and 15 May 2014. The documents annexed to Mr Topic's affidavit to explain this evidence (Annexures S and T) do not convey any useful information, in the absence of an explanation.
Mr Topic said that the electrical contractor completed all of the electrical and lighting works on about 28 May 2014. That agrees with Mr Colussi's evidence.
E C Civil provided Mr Topic with the Works Complete Declaration and Handover of Assets to Endeavour Energy on 22 July 2014. Mr Topic said that, on 22 November 2014, he received an email from Endeavour Energy disputing the completed electrical works. Endeavour Energy said that it would issue a Notification of Arrangements within 10 business days upon satisfactory completion of the work, and receipt of certain documents "and payment". I have referred to this email above when considering Mr Colussi's evidence. Endeavour Energy required a signed duct declaration.
The next step identified by Mr Topic was that, on 25 March 2015, his surveyor completed a duct declaration and forwarded it to Endeavour Energy. Two days later, on 27 March 2015, Endeavour Energy sent an email to Mr Topic rejecting the duct declaration. Mr Topic said that he queried Endeavour Energy as to the reason behind the rejection, and also asked his surveyor to liaise with Endeavour Energy. Mr Topic received a Notification of Arrangement for the Provision of Distribution of Electricity from Endeavour Energy on about 14 May 2015. That document was addressed to Liverpool City Council, and confirmed that Mr Topic had made satisfactory arrangements relating to the provision of electricity to the proposed subdivision.
The first point to note is that Mr Topic did not explain why it took four months from 20 November 2014 to 25 March 2015 for his surveyor to complete the duct declaration. Mr Colussi gave evidence that this task should generally have only taken one week to complete.
Secondly, Mr Topic did not explain the nature of his query to Endeavour Energy, or the result of any liaison between the surveyor and Endeavour Energy. Accordingly, it cannot be known why it took almost two months for that problem to be solved.
The third category of works dealt with by Mr Topic was the waste water works. He said that, on about 30 March 2014, he observed the waste water contractor connecting the new main to the existing waste water main pipes. That completed the waste water construction works.
Mr Topic then said that he received the s 73 Compliance Certificate from Sydney Water on 23 March 2015. That is the same Compliance Certificate as Sydney Water issued in relation to the potable water works. It appears that the delay of almost one year between completion of the waste water works and the issue of the Compliance Certificate was a consequence of the need for Mr Topic also to have the potable water works completed.
The fourth category of works was the civil works. Mr Topic said that he sent to the civil works contractor text messages on 25 November 2014 and 26 February 2014, which stated: "Hello Barney, the water connection was completed today the site is ready to recommence regards Mark" and "Hello Barney when you are passing thru Greenvalley so that we can discuss when McIntyres complete the regrade and the kerb/asphalt, site is ready to go asap regards Mark".
The dates on the annexure that contains the terms of the text messages are illegible. I infer that Mr Topic intended to say 26 February 2015, rather than 26 February 2014, as the next date he referred to was 26 March 2015, as the date that he observed the civil works contractor "had recommenced civil works on the Site".
The date of recommencement of the civil works was after the expiration of the 12 month period from the date of the contract for sale.
Mr Topic then explained steps that were taken in the civil works that led to the receipt of an interim Final Compliance Certificate for the civil works from the certifier on about 28 August 2015.
I infer that the civil works were interrupted at some stages because of the need for other contractors to complete various other works before the civil works could be recommenced.
However, Mr Topic did not provide any evidence that explained the chronological implementation of the civil works contract as a whole. He did not explain the delay between the text message dated 25 November 2014 and the recommencement of the civil works on 26 March 2015. Mr Topic gave no evidence of taking any steps to ensure that the Compliance Certificate for civil works could have been received at a time early enough to ensure registration of the plan of subdivision before 16 January 2015.
Mr Topic gave evidence about the completion of the gas works and telecommunication works, but as these works were completed on 10 April 2014 and 15 August 2014 respectively, they were completed well within the time necessary for the plan of subdivision to be registered before 16 January 2015. It is not necessary to consider them further.
Mr Topic said that the surveyor commenced to survey the executed works on about 28 May 2015, and completed a services declaration, and forwarded it to the certifier, on about 17 August 2015. Mr Topic observed the surveyor carrying out fieldwork on the linen plans between 10 and 18 September 2015. Mr Topic received from the surveyor amendments to the work as executed drawings and an 88B instrument on about 8 October 2015.
All of these works carried out by the surveyor were done after the end of the 12 month period from the 16 January 2014 date of the contract for sale.
Finally, Mr Topic said that, on about 1 September 2015, he lodged the application for the subdivision certificate with the Liverpool City Council and paid the fee. On about 19 September 2015, he attended a site inspection with engineers from the Council.
As Mr Topic did not mention in his affidavit that the Subdivision Certificate had been issued by the Council, I infer that it had not been issued by the 30 October 2015 date of the affidavit.
Exhibit B, as described above, attached a document prepared by Mr Topic, which he described as a timesheet of work done on the development between January 2014 and March 2015. The document takes the form of a table in which Mr Topic has set out dates, a short description of the work done, and, in the third column, a note for Mr Topic's purposes (the information in the third column is generally not meaningful in the absence of explanation).
The timesheet shows that work was done on the site on many days, but not all days. Broadly, work was done relatively continuously between 29 January 2014 and 14 April 2014 (albeit still with no entries for many of the days and some significant gaps; for example between 24 February 2014 and 19 March 2014). There is a gap of almost one month between 14 April 2014 and 5 May 2014. There is a gap of almost three months between 22 June 2014 and 15 September 2014. There is a gap of almost two months between 16 September 2014 and 5 November 2014. Finally, there is a gap of almost four months between 2 December 2014 and 26 March 2015 (although only two of those months elapsed before the end of the 12 month period after the date of the contract for sale).
In total, between January 2014 and January 2015, there were about nine months in which no work was apparently carried out on the site.
Mr Topic did not provide any comprehensive explanation for the apparent cessation of works for such a long period in aggregate.
Mr Topic claimed, in his cross-examination, that the timesheet that forms part of Exhibit B only records part of the work that was performed during that period of time (T 86.10). He said that there was work done by other "consultants" during the time period but not recorded on the timesheet (T 88.12). It emerged that what Mr Topic was trying to convey was that he was on site every day (T 88.24), and he recorded the physical work done on site in the timesheet (T 89.40, T 92.5, T 93.31, T 95.41, T 130.47), but there were additional times unrecorded when consultants were doing other work off-site, days lost where work could not continue because of rain, and instances where Mr Topic was waiting for things such as regulatory approvals (T 91.6).
Mr Topic tried to explain the absence of more evidence in his affidavit about work done on the property that was not recorded in the timesheet by suggesting: "I did write down a lot of items in my affidavit and a lot was deleted out as well" (T 96.37). Yet, Mr Topic could not recall any work that was done on-site that he had left out of his affidavit when asked to recount them (T 97.15).
Mr Topic conceded that he did not discuss with any contractor the need for the subdivision to be registered within 12 months of the date of the contract for sale between the plaintiffs and the defendants (T 105.32).
In his cross-examination, on a significant number of occasions, Mr Topic was taken to apparent delays, in the sense of periods when no work by a particular contractor appeared to have been done on site. These questions primarily related to the potable works contract and the civil works contract. Mr Topic claimed that he frequently made telephone calls to the relevant contractors to encourage them to hurry up; but he was forced to concede that he had not referred to these telephone conversations in his affidavits.

The defendants' evidence

The defendants both swore affidavits, but only the affidavit of the male defendant, Mr Vlajko Topic, was read. The affidavit of Ms Nedeljka Topic was not read. A medical certificate by what appears to be Ms Topic's general practitioner was tendered. It certified that Ms Topic was receiving medical treatment for headaches, and that she was unable to attend court.
Mr Topic Snr did not say anything significant in his affidavit in support of the defence, save that he made it clear that all dealings by the defendants concerning the subdivision of their property were dealt with by Mr Topic Jnr. Mr Topic Snr was cross-examined. There is a real question whether he understood the terms of his affidavit, given that the affidavit is written in English, and Mr Topic Snr did not appear to be competent in the English language. Mr Topic Jnr had an involvement in the preparation of his father's affidavit that would cast some doubt on whether the father's affidavit was based solely upon his independent recollection.
I do not, however, consider the manner in which Mr Topic Snr prepared his affidavit, and the failure of the defendants to read the affidavit of Ms Topic, to be of great significance. In my view, it is clear that the defendants had left the whole of their affairs in relation to the subdivision of their property in the hands of their son, and gave him effectively plenary authority to do what he thought was appropriate on their behalves.

Consideration

In their outline of submissions delivered before the commencement of the hearing, the plaintiffs identified the following particulars of alleged breaches by the defendants of their obligation in cl 28.2 of the contract for sale: a. Failing to provide the contractors with instructions and information which were essential to those contractors performing their tasks in a timely manner and without delay (particularly by reference to pars 12 to 18 of Mr Colussi's affidavit). b. Failing to diligently arrange contractors to undertake required works as a necessary step for registration of the plan (particularly by reference to pars 13 to 16 and 35 of Mr Colussi's affidavit). c. Excessive delays in paying contractors' invoices (particularly by reference to pars 19 to 26 of Mr Colussi's affidavit). d. Failing to adequately monitor the progress of relevant contractors (particularly by reference to pars 28 to 80 of Mr Topic's principal affidavit). e. Failing to address council conditions required to be completed as a pre-requisite to obtaining certificates to enable the registration of the plan (particularly by reference to pars 29 to 30 of Mr Colussi's affidavit).
In their final written submissions, the plaintiffs distinguished between the position of the defendants and their son, Mr Topic. They submitted that the defendants had failed to take reasonable steps by failing to make certain enquiries of Mr Topic; by failing to give necessary directions to Mr Topic to expedite the development works; by failing to keep themselves up to date with the progress of the registration of the plan; by failing to replace Mr Topic as project manager; by failing to ensure that Mr Topic provided all necessary information to contractors; and by failing to ensure that Mr Topic provided contractors with adequate instruction as to the timelines within which work was to be completed.
In my view, the case as presented in this way is inconsistent with the case presented by the plaintiffs in their outline submissions before the commencement of the hearing. Those outline submissions effectively treated Mr Topic as the amanuensis of his parents. That is the way, to my observation, in which the case was conducted. Mr Topic was not treated as if he was an arm's length project manager for the defendants, but he was treated as if he was their plenary agent. That treatment was in my view, in accordance with the reality of the situation.
The plaintiffs repeated in their final submissions their claim that Exhibit B established that there were inordinate, unexplained gaps in the progress of the development works where nothing was done to progress the registration of the plan.
Clause 28.2 of the contract for sale required the defendants to do everything reasonable to have the plan registered within 12 months after the contract date.
The word "everything" is as all-encompassing a term as could have been used.
It contemplates that the defendants were required to have a development plan designed to achieve registration of the plan of subdivision within 12 months. That plan was not necessarily required to be detailed or sophisticated, but it would have to provide for the scheduling of the various contractors in an order that gave the defendants a reasonable prospect of achieving registration within the allotted time. The plan would have to allow for possible delays for obtaining approvals from authorities, testing the works, the provision of certificates, surveying, final certification, and the lodgement of the plan for registration. The plan would have required some reasonable allowance for unforeseen contingencies, and delays caused by natural events.
Such a plan was required by cl 28.2 because reasonable conduct in attempting to achieve registration of the plan of subdivision within 12 months plainly required an attempt on the part of the defendants to achieve that outcome, which was not left to chance and the vagaries generally involved in development projects.
There is no evidence in the present case that Mr Topic, on behalf of the defendants, had any such plan. He did not say he had a plan in his head, and no written form of plan was tendered.
As building programs are almost inevitably subject to unforeseen delays and variations, an obligation to do everything reasonable to cause the plan of subdivision to be registered within 12 months would necessarily require an appropriate level of monitoring of the fulfilment of the plan, to make any adjustments reasonably necessary to correct the effect of unforeseen delays. That is, if the plan of subdivision must be registered within a given time, an appropriate level of proactive management may be required to ensure that everything reasonable is done to achieve that goal.
There is no evidence that Mr Topic managed the works by adjusting the program or taking any other steps directed to achieving registration of the plan of subdivision within 12 months of the date of the contract for sale.
Management of the works could take many forms, depending upon the circumstances. It may be necessary for contractors to be given deadlines, and to be told that all works must be completed in time to allow the plan of subdivision to be registered within the time required by the contract for sale. It may be necessary for new contractors to be employed. It may be necessary to follow up certifying authorities to ensure that time is not lost through inertia. There may be many other types of action that may be required in order to manage the works to achieve registration of the plan of subdivision within the required time.
The actions that may be necessary will depend upon the circumstances, but any reasonable attempt to comply with cl 28.2 would require positive actions appropriate to developing circumstances to make adjustments in the plan.
Mr Topic conceded in evidence that he did not ever inform any contractors that the defendants were operating under a deadline, in order to encourage the timely completion of works by the contractors.
Reasonable conduct would require Mr Topic, on behalf of the defendants, to personally respond expeditiously in any situation calling for response by the developer wherever any delay in response might cause an avoidable, overall delay in the achievement of the registration of the plan of subdivision.
I have found that Mr Topic informed Mr Makrinakis, before the contract for sale was entered into, that registration of the plan of subdivision could be achieved within about three to four months. That was an admission that registration of the plan of subdivision within that time was achievable, but the estimate was necessarily subject to a host of contingencies. It must also be remembered that the printed conditions initially allowed six months for registration of the plan of subdivision. The six-month period was, by agreement, changed to 12 months. That shows that the parties turned their minds to the period that would be necessary in order to achieve registration, and thought that registration would be possible within the 12 month period. The achievement of registration within the 12 month period required by the contract for sale should have been possible provided reasonable diligence was exerted by Mr Topic on the defendants' behalf; unless unforeseen events occurred which prevented registration within the time required, notwithstanding all reasonable steps being taken on behalf of the defendants to cause registration to take place.
I find that the defendants did not comply with cl 28.2, because they have not shown that Mr Topic managed the development project in a proactive way by adopting a reasonable plan to schedule all of the various works, in a manner that would achieve registration of the plan of subdivision within the 12 month period; Mr Topic did not proactively manage the various contractors in a manner reasonably likely to cause the plan to be registered on time; Mr Topic did not tell the contractors of the deadline, or insist that they complete their works by the times necessary to enable the overall development works to be completed in a timely way; and Mr Topic did not personally act in the manner reasonably necessary to ensure that unnecessary or prolonged gaps in the completion of the development works did not occur.
Much of the evidence provided by Mr Colussi provides an unsound basis for concluding that the defendants did not comply with cl 28.2 of the contract for sale.
The contract between Mr Topic and E C Civil was signed on 26 August 2013, and the electrical and lighting works were completed on 28 May 2014. That is a period of about nine months. The contract for sale was made almost exactly in the middle of that period. Conduct by Mr Topic, on behalf of the defendants, before the date of the contract for sale, could not constitute a breach of cl 28.2, even if it unreasonably jeopardised the plan of subdivision being registered within the period of 12 months after the date of the contract. Much of Mr Colussi's evidence is indefinite as to the date to which it related. There is reason to suspect that a considerable part of the conduct of Mr Topic, of which Mr Colussi complained, occurred before the date of the contract for sale. It is a matter for speculation when most of the conduct of Mr Topic occurred.
Furthermore, cl 28.2 required the defendants to take every step reasonably necessary to have the plan of subdivision registered within 12 months. It did not require the defendants to take every step necessary to ensure that the works proceeded with reasonable expedition, irrespective of the relationship between the timing of the completion of parts of the works and the objective of achieving registration of the plan of subdivision within the 12 month period. Particularly early in the 12 month period, delays in the completion of parts of the works may not have put the registration of the plan within the 12 month period in jeopardy, if the part of the works in question was not a pre-requisite to the commencement or completion of other parts of the works.
To establish breaches of cl 28.2, it is therefore not sufficient for the plaintiffs to do no more than to show sundry unnecessary delays caused by Mr Topic, without showing that those delays had relevance to the registration of the plan of subdivision within the 12 month period that made it reasonable for Mr Topic to avoid those delays.
The parties did not provide detailed submissions concerning the relevance of particular delays in the achievement of the program of works to the registration of the plan of subdivision within the 12 month period.
The evidence on this issue primarily consists of Mr Topic's explanation of the history of the works in his principal affidavit, and the timesheet prepared by Mr Topic that became Exhibit B.
Mr Topic divided the works that were required to be completed into potable water, electrical, waste water, gas, telecommunication works and civil works. After the completion of those works, surveying was required. Certificates had to be obtained from statutory authorities. Thereafter, a compliance certificate was required from the certifier. Then, a subdivision certificate had to be obtained from the Council. It is only then, that the application could be made for the registration of the plan of subdivision by the LPI.
Mr Topic gave evidence that the waste water works were finished on 30 March 2014, the gasworks on 10 April 2014, and the telecommunication works on 15 August 2014. There is no evidence of any conduct by Mr Topic in relation to these works that put in jeopardy the plan of subdivision being registered by 16 January 2015. On the face of it, all of these works were finished early enough to enable any necessary subsequent steps to be taken in a timely way to permit registration.
The electrical and the lighting works were finished by 28 May 2014. Although it is possible on the evidence that Mr Topic failed to take some reasonably necessary steps that would have permitted those works to be completed at an earlier time, for the reasons I have given above, the evidence is not sufficient to enable the court to make positive findings of breach of cl 28.2 in that regard.
However, as I have accepted Mr Colussi's evidence concerning the late payment by Mr Topic of E C Civil's invoices, I find that E C Civil could have forwarded the Works Complete Declaration and Handover of Assets form to Endeavour Energy so that it was effective soon after 28 May 2014 rather than about 4 August 2014, if Mr Topic had caused the invoices to be paid in a timely way. Reasonable conduct by the defendants for the purposes of cl 28.2 required Mr Topic to pay all invoices received from contractors within the agreed payment terms. Mr Topic's conduct caused an unnecessary delay of about two months.
I infer from the evidence of Endeavour Energy's response to the document delivered by E C Civil, that Endeavour Energy was required to respond to the document. It did not do so until 20 November 2014, at which time it asserted that the electrical works were not completed. The only step required was the provision of a signed duct declaration. Endeavour Energy also required copies of the final linen plan, the deposited plan administration sheet signed by the surveyor, and copies of any s 88B instruments. I infer that the documents would ordinarily be provided to Endeavour Energy after the surveying work had been completed, and that the only step immediately required of Mr Topic was that he provide the signed duct declaration.
The duct declaration was not provided to Endeavour Energy until 25 March 2015.
Mr Topic did not give any explanation of why he waited from about 4 August 2014 to 20 November 2014, which was a period of about 3 ½ months, without following up Endeavour Energy for a response to the document delivered by E C Civil. He did not give any explanation about why the duct declaration was not provided to Endeavour Energy until 25 March 2015. That is a further delay of about four months.
I accept Mr Colussi's evidence that a proper duct declaration could be prepared within one week. Mr Colussi's evidence on this issue was not challenged by the defendants.
Although Mr Topic's conduct after 16 January 2015 cannot constitute a breach of cl 28.2 by the defendants, evidence of what occurred may permit proper inferences to be drawn that are relevant to the reasonableness of Mr Topic's conduct before 16 January 2015.
Mr Topic said that he received an email from Endeavour Energy rejecting the duct declaration on about 27 March 2015; that is, two days after it was submitted. Mr Topic said that he proceeded to query Endeavour Energy as to the reason behind the rejection of the duct declaration. He did not say what he or his surveyor did in relation to communicating with Endeavour Energy. Endeavour Energy ultimately provided the required certification on 14 May 2015.
It is not necessary for the plaintiffs to prove that any breach by the defendants of cl 28.2 actually caused the plan of subdivision not to be registered within the 12 month period. However, it might be relevant to a consideration of whether a particular action was reasonably required to achieve registration within the period, whether taking that action was reasonably likely to promote that outcome being achieved. I find, in view of the absence of explanation by Mr Topic, that it was sufficiently likely that the electrical and lighting works could have been completed and certified at a time early enough to permit registration of the plan of subdivision by 16 January 2015, that the defendants failed to do everything reasonably required to have the plan registered by that time, in breach of cl 28.2, by reason of Mr Topic's delay of about two months in paying the invoices, his not following up Endeavour Energy for about three months after E C Civil's document was delivered, and by his failure to cause the duct declaration to be prepared by the surveyor and delivered by 16 January 2015; a further two months.
Mr Topic gave evidence that the potable water contract works were finished by 25 November 2014.
Delays were caused to the completion of those works, because of a water main design issue, which required a revision to the water main extension plan, which required the approval of Sydney Water, and some agreement as to how the additional costs would be shared as between Mr Topic and Sydney Water. The period of the delay that was caused by the need to revise the water main extension plan is not clearly delineated by the evidence. It appears that problems arose in about March 2014. After some inconclusive communications between Mr Topic's water servicing co-ordinator and Sydney Water, Mr Topic instructed the contractor on 4 July 2014 to commence works on site to complete the water main, chlorination, connections, and mains to meter as per the latest drawing, and that if Sydney Water would not agree to fund any variations, payment would be made by Mr Topic. The contractor informed Sydney Water, on 11 July 2014, that the project had been on hold because of the variation for 12 weeks, and asked for advice as to whether the design variation was acceptable. Sydney Water advised, on 11 July 2014, that it accepted the design variation, and consented to the works continuing, given that Mr Topic had acknowledged that Sydney Water might not fund the variation.
Annexure B shows that there was no work by contractors on site between 14 April and 5 May 2014, and for three months between 22 June 2014 and 15 September 2014. There was also no work on site for almost two months between 16 September 2014 and 5 November 2014. In the absence of any detailed explanation in the evidence, it is not possible to relate these periods to the delays caused by the necessary revision of the design of the water mains, as dealt with in Mr Topic's principal affidavit and the annexed correspondence.
As at 20 June 2014 (the beginning of the three months period when no work was apparently done on site, referred to in the preceding paragraph) the work by the electrical and lighting, waste water and gas contractors had been completed. The telecommunications works were not completed until 15 August 2014. Apart from those works, the only works that remained to be completed, before the civil works could be recommenced, were the potable water works.
As I have noted above, Sydney Water advised on 11 July 2014 that the potable water works could proceed.
On 10 October 2014, Mr Topic sent an email directly to Sydney Water, in which he complained that the contractor had completed the mains to meter connection over three weeks previously, and asked what the status was of the chlorination and potable water main connections. This would suggest that the relevant connection had been done by about mid-September, and that some action was required by Sydney Water.
Mr Topic sent his first text to the civil works contractor to recommence the civil works on 25 November 2014. That was the day on which the potable works contractor finished on site. I infer that the civil works could not be recommenced and completed until after the potable works were completed. That inference is justified by the timing of the first text, and the statement in it that "the water connection was completed today the site is ready to recommence".
It follows, apparently, that the completion of the potable water works was on the critical path so far as the completion of the civil works was concerned.
As I have noted above, there is no evidence that Mr Topic had a plan to try to ensure that the plan of subdivision was registered before 16 January 2014, or that he proactively intervened in the progress of the works to attempt to ensure that outcome (subject to the exception to which I will refer below). These conclusions have specific relevance to the potable water works. There were extensive periods when there was apparently no works on site, which are not readily explained by Mr Topic's evidence concerning specific reasons for delays in the completion of the potable water works. Furthermore, generally, there is no evidence that Mr Topic caused his water servicing co-ordinator to intervene with Sydney Water to expedite the steps required of it in order to progress the potable water works. There is some evidence that Sydney Water responded quickly when prompted of the need to do so (see the correspondence dated 11 July 2014 referred to above). The exception to which I referred is Mr Topic's 10 October 2014 email directly to Sydney Water.
The evidence satisfies me that the defendants breached cl 28.2 of the contract for sale, by failing to act with reasonable expedition in ensuring that the potable water works were completed in a time that would enable the plan of subdivision to be registered by the 16 January 2015 deadline. I am reinforced in that conclusion by my finding that the burden lay on the defendants to prove that they had satisfied cl 28.2. The evidence does not permit precise findings as to what Mr Topic should have done on particular days in order to expedite the potable water works. The breach of cl 28.2 that he committed on behalf of his parents primarily consisted of his continuously allowing (save for the one, late exception that I have noted) nature to take its course in relation to the completion of the potable water works, without taking any steps specifically directed towards achieving registration of the plan of subdivision within the required period.
There is also some justification for a conclusion that Mr Topic acted too slowly in waiting until 4 July 2014 to end the stalemate as to whether he or Sydney Water would have to pay for the variation in the potable water works, given that the problem arose in about March 2014. However, I do not think that the evidence is sufficiently clear to warrant this conduct being found to be the subject of a separate breach of cl 28.2 of the contract for sale.
As of 25 November 2014, slightly less than two months remained of the 12 month period in which the plan of subdivision was required to be registered.
Mr Topic did not did not send another text to the civil works contractor until 26 February 2015.
The civil works contractor did not recommence works on site until 26 March 2015, some two months after the 12 month period had expired.
Mr Topic claimed in cross-examination that he had telephone conversations with the civil works contractor in order to try to persuade him to recommence the civil works, but he gave no evidence on that subject in his principal affidavit. Mr Topic simply did not deal in his evidence with the issue of why he was unable to cause the civil works contractor to recommence works on site soon after 25 November 2014.
It is difficult to assess whether, had the civil works contractor recommenced the civil works soon after 25 November 2014, those works could have been completed, surveyed, and certified in a period that would have permitted the plan of subdivision to be registered by 16 January 2015.
As I have said, the civil works were recommenced on 26 March 2015, and according to Mr Topic's evidence, were not completed until 20 July 2015, after a number of items had been rectified as required by the certifier. Mr Topic did not receive an interim final compliance certificate for the civil works from the certifier until 28 August 2015.
On the evidence, Mr Topic, acting on behalf of the defendants, waited too long after 25 November 2014 to follow up his request to the civil works contractor to recommence the civil works. There is no evidence of any follow up until 26 February 2015, which is more than a month after 16 January 2015. After such delays, it is doubtful that the civil works could have been completed in the remaining time, to allow the surveying and certification steps to be taken, in order for the Council to issue the required certificate, and for the plan of subdivision to be lodged in time to enable registration to occur by 16 January 2015. However, cl 28.2 of the contract for sale may be breached by the failure to take a reasonably necessary step, even if that failure was not a cause of the plan of subdivision not being registered within time.
The principal cause of the failure of the plan of subdivision to be registered by 16 January 2015 was probably dilatoriness on Mr Topic's part in failing to cause the potable water works to be completed at an earlier time, but it was nonetheless unreasonable for him not to follow up the civil works contractor soon after 25 November 2014, by which time the need for the completion of the works had become urgent. In particular, Mr Topic did not inform the civil works contractor of the urgency.
Mr Topic gave evidence that the surveyor commenced surveying the work as executed on about 28 May 2015. The surveyor completed services declaration and forwarded it to the certifier on about 17 August 2015.
In my view, the surveying, certification, and the following steps in the completion of the development works necessary before the plan of subdivision could be registered are not relevant to the issue of whether the defendants failed to comply with cl 28.2, for the simple reason that the delays that occurred in the completion of aspects of the works that were required to be completed before those steps could be commenced had the result that those steps could not be commenced until after the expiration of the 12 month period from the date of the contract for sale.
I therefore conclude that when, on 31 March 2015 and 2 April 2015, the defendants purported to terminate the contract for sale, they were not entitled to do so, because they had not satisfied the condition contained in cl 28.3.2 of the contract for sale, and accordingly the termination was ineffective.
As I have noted above, Mr Topic gave evidence that, on about 1 September 2015, he lodged the application for the subdivision certificate with the Liverpool City Council and paid the fee. He said that, on about 19 September 2015, he attended a site inspection with engineers from the Council. There was no evidence of the subdivision certificate having been issued by the Council.
I infer that, if the subdivision certificate is issued by the Council, it should only be an administrative exercise for the necessary documents to be lodged with the LPI to enable the plan of subdivision to be registered. When that occurs, there should be no impediment to the parties completing the contract for sale in this matter.
As it has turned out, even if, in the period since 1 September 2015, the subdivision certificate has not been issued by the Council, and the plan of subdivision has not been registered, it should be possible for those steps to be effected by relatively administrative arrangements, that would not involve the court being required to supervise the completion of any complex development works.
As I have decided that, on the proper construction of the contract for sale, cl 28.3.2 imposed a condition on the defendants' right to rescind the contract that they had satisfied cl 28.2, and that the defendants had the burden of proving that they had satisfied the condition, I have decided this case on the basis that the defendants have not satisfied the burden of proof. Had I not found that cl 28 qualified the defendants' right to rescind under special condition 48, the burden would have fallen on the plaintiffs to prove both that the defendants had not taken all steps reasonably necessary to cause the plan of subdivision to be registered within 12 months from the date of the contract, and also that their failure to take those steps was a cause of the plan of subdivision not being registered in time. If I had been required to decide the question of whether, on the evidence in the present case, the plaintiffs had carried that burden of proof, I would have held that they have. First, I would have held that the conduct and actions of Mr Topic on behalf of the defendants that I have described above amounted to a failure by the defendants to take steps reasonably necessary to cause the plan of subdivision to be registered within time. The real question would have been whether the plaintiffs had also proved that, if the defendants had taken all of the steps that were reasonably necessary, the plan of subdivision would have been registered within the 12 months. That would have been a conceptually difficult question to resolve, because I have found that Mr Topic acted in a dilatory way in relation to a number of aspects of the development works, and also did not have an overarching plan to proactively cause the works to be done as soon as reasonably possible. On balance, I would have held, however, that the plaintiffs had carried the burden of proof, and that the plan of subdivision could have been registered within the 12 month period, if Mr Topic had taken all reasonable steps on behalf of his parents to achieve that outcome. That is primarily because of the substantial number of days upon which no work was carried out on the property; the absence of any satisfactory explanation for those delays; and the failure on the part of the defendants to respond to the evidentiary burden that I think shifted to them to establish a positive reason why the plan of subdivision could not have been registered within the 12 months in any case.

Orders

In these circumstances, the plaintiffs are entitled to the declaration sought in order 4 of their summons, that the contract for sale dated 16 January 2014 has not been rescinded.
It is not appropriate that the court make an order for specific performance of cl 28.2 of the contract for sale, because the content of that order would not be sufficiently specific.
I propose to give the plaintiffs an opportunity to find out what specific steps, if any, remain to be taken to cause the plan of subdivision to be registered. If the defendants cannot, or will not, provide satisfactory information to the plaintiffs in that regard, I will be prepared to make appropriate directions to ensure that the plaintiffs receive the information they require. The court could then frame orders to require the defendants to take any specific steps that are required to cause the plan of subdivision to be registered.
The court should also make an order for specific performance of the contract for sale, in the conventional way, as well as the usual consequential orders to ensure that Lot 215 is transferred to the plaintiffs, after registration of the plan of subdivision has occurred.
The plaintiffs are also entitled to an order for payment of their costs of the proceedings on the ordinary basis.
I will invite the parties to bring in short minutes of order to give effect to these reasons for judgment. I will also hear the parties, if they wish to submit that the order for costs should be other than the order suggested in the preceding paragraph.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 10 January 2017

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