Birchill & Ors v Premier Holdings Pty Ltd & Anor

The legislation 5Section 3 of the Act sets out its objects as including: (a) to set out particular rights and obligations of residents and operators of retirement villages... 6Part 10 of the Act is entitled "Matters relating to vacation of premises". Section 149, contained in that Part, relevantly provides: Application of Part (3) This part has effect despite the provisions of any village contract. 7"Village contract" is defined in s 4 as meaning a residence contract, a service contract, a contract under which a resident of a retirement village obtains the right to use a garage or parking space or storage room in the village, or any other contract of a kind prescribed by the regulations. The deeds for provision of services are within the definition of a "village contract" in s 4. 8Division 5 of Part 10 is entitled "Sale or letting of premises by certain residents". Section 166, contained in that Division, relevantly provides: This Division applies only to a resident of a retirement village who is a registered interest holder in respect of his or her residential premises in the village. 9It is not in issue that all the plaintiffs are all registered interest holders in respect of their residential premises in the village, as their interests are as owners of lots in a strata plan. 10Section 168 relevantly provides as follows: Sale of premises (1) A resident of a retirement village may: (a) set the sale price of his or her residential premises in the village, and (b) appoint a selling agent of the resident's choice (who may be the operator of the village if the operator is eligible to be appointed). (2) If the operator is appointed under subsection (1), the resident may also (but is not obliged to) allow the operator to set the sale price of the premises. (3) Any appointment of the operator of a retirement village, or a person chosen by the operator, as: (a) a selling agent of residential premises in the village, or (b) the person who sets the sale price of the premises, being an appointment made as part of the consideration for the resident's entering the village, or otherwise at the operator's request, terminates on the commencement of this section. (4) Any such appointment made on or after the commencement of this section is void. 11Section 169 relevantly provides as follows: Operator not to interfere in sale (1) An operator of a retirement village who is not appointed a selling agent for residential premises in the village must not interfere with the sale of the premises. Maximum penalty: 50 penalty units. (2) Without limiting subsection (1), an operator interferes with the sale of the premises if the operator interferes with any "For Sale" sign relating to the premises. 12Part 13 of the Act contains miscellaneous provisions. Section 199 relevantly provides as follows: Contracting out prohibited (1) The provisions of this Act and the regulations have effect despite any stipulation to the contrary in any agreement, contract or arrangement, and no agreement, contract or arrangement, whether oral or wholly or partly in writing, and whether made or entered into before or after the commencement of this section, operates to annul, vary or exclude any of the provisions of this Act or the regulations. (2) Subsection (1) applies in relation to the constitution of a corporation in the same way as it applies in relation to an agreement, contract or arrangement. (3) A person must not enter into any agreement, contract or arrangement with the intention, either directly or indirectly, of defeating, evading or preventing the operation of this Act. Maximum penalty: 100 penalty units. 13It is pertinent at this point to make some observations about some aspects of the provisions to which I have referred. First, as to s 168(3) and (4), no question of having to be satisfied that a provision of an arrangement is "illegal" arises. The question is simply whether there has been an appointment of the operator of a retirement village of the type described in those sections under the conditions referred to in them; if so, such appointment is void. No further requirement to be satisfied of "illegality" is required. There is therefore no occasion to apply the doctrine of illegality, as explained in cases such as Nelson v Nelson (1995) 184 CLR 538. 14As to s 199, while s 199(3) creates an offence in respect of intentionally contracting to defeat, evade or prevent the operation of the Act, it stands apart from s 199(1). Section 199(1) does not expressly avoid contracts inconsistent with the Act. It simply provides that the provisions of the Act and the regulations have effect notwithstanding any stipulation to the contrary in any agreement, contract or arrangement; and that no agreement, contract or arrangement operates to annul, vary or exclude any of those provisions. The practical consequence is that insofar as an agreement, contract or arrangement would otherwise annul, vary or exclude a provision of the Act, such agreement, contract or arrangement is deprived of effect. Again, this is not a question of concluding on policy grounds, that a provision of a contract is void for illegality; it is simply a question of asking whether the agreement, contract or arrangement operates or would operate to annul, vary or exclude a provision of the Act; if so, it is deprived of effect. Perhaps a better way of looking at it is simply that the provisions of the Act have and retain effect regardless of what is written or provided in any agreement, contract or arrangement.

The Deeds 15It is convenient to use what has been called the "Birchill" deed for provision of services as the starting point for further analysis. There are other forms of deed; some, for example that, known as the "Baker and Luchowski deed", are different in enumeration and structure, but contain provisions relevantly identical to those of the Birchill deed. Others, in the form referred to as the "Teague deed", contain provisions in a somewhat different form, that require separate consideration. 16In the Birchill deed, clause 1.1 defines "Actual Sale Price" as the sale price on any agreement for sale entered into by the proprietor, and "Management Profit" as meaning: (a) 10% of the difference between the Sale Price and the Purchase Price provided that the difference is positive. (b) Expenses occasioned by the Manager in the exercise of its power. (c) Sales commission at the rate of 2% of the sale price. (d) Any reasonable expenses necessarily incurred by the Manager on the sale of the Lot. 17"Purchase Price" is defined meaning the purchase price paid by the proprietor when he or she purchased the lot, and "Fair market value" as follows: ... the value determined by agreement between the Proprietor or his legal personal representative or failing agreement then same shall be determined by a qualified independent valuer nominated by the President for the time being of the Australian Institute of Valuers and Land Adminstrators (Inc.) (New South Wales Division), and any party may approach such President for such nomination to be made and for such valuation to be made forthwith. 18It will be observed that such value is to be determined either by agreement between the proprietor or their legal personal representative and (presumably), the manager; or , in default of agreement, by a qualified independent valuer. 19"Sale price" is defined as the greater of the current Fair Market Value, or the Actual Sale Price. 20Clause 2 obliges the manager, if requested by the proprietor, to provide or cause to be provided to the proprietor certain services - including provision of meals, hairdressing services, podiatry services, specialised nursing care, and transport for outings - for which the proprietor agrees to pay. Clause 3 provides that the manager shall issue a fee for the provision of the availability of such services, to the proprietor quarterly in advance. 21Clause 7, which is central to the present dispute, requires a proprietor to notify the Manager of any decision to sell its lot, and obliges the proprietor to give the Manager an exclusive sale agency, as follows: 7.1 The Proprietor covenants with the Manager: ... (c) Not to sell or contract to sell the Lot or any interest therein unless he shall first have notified the Manager, in writing, of his desire to sell the Lot. (d) Not to offer his Lot for sale without first having given to the Manager or its nominee (if the Manager or its nominee is a licensed real estate agent) an exclusive sole agency in writing in accordance with the requirements of the Auctioneers and Agents Act, 1980 and if the Lot shall be sold pursuant thereto the Proprietor shall pay a commission equal to 2% of the sale price. Such sole agency agreement shall provide that if the Lot has not been sold within 90 days of the date of the agency agreement then the Proprietor shall be entitled to nominate another real estate agent or agents as conjunction agents with the Manager. (e) No sale of the Lot or any interest therein shall be completed unless prior to completion the proposing purchaser enters into and deliver to the Manager a Deed for Provision of Services in the same form as this Deed with only such amendments as may be agreed to by the Manager. No sale of the Lot or any interest therein shall be completed except upon the basis that, at the time of delivery of any transfer thereof, the person entitled by virtue thereof to be registered as Proprietor of the Lot delivers to the Manager a duly executed and registrable Charge in favour of the Manager in accordance with the form of that annexed hereto and marked "A" or otherwise as reasonably required by the Manager. 22Clause 8, which is also central, gives the Manager a right of sale of the proprietor's lot, as follows: Right to Sell 8.1 In the event of: (a) the death of the Proprietor or surviving proprietor or surviving authorised occupier; or (b) the Proprietor notifying the Manager in writing of his desire to sell the Lot; or (c) the Proprietor, if only one, or the surviving proprietor or surviving authorised occupier being no longer capable of self care and has vacated the premises; or (d) the authorised occupier or surviving authorised occupier ceasing to occupy the lot and the Proprietor is under 55 years at the date of this Agreement; or (e) the authorised occupier or surviving authorised occupier ceasing to occupy the lot and the proprietor is a company; or (e) termination of the right to occupy the premises in accordance with the provisions of the Retirement Villages Act, 1989. The Manager is hereby granted the right (which it shall use its best endeavours to exercise) to sell or cause to be sold the Lot at not less than the Fair Market Value. 8.2 It is hereby agreed and declared that the aforesaid right and power conferred upon the Manager is irrevocable and shall persist and continue notwithstanding the death of the Proprietor, and shall not be revoked or otherwise terminated and remain effective notwithstanding: (a) Anything done by the Proprietor without the concurrence of the Manager; (b) The bankruptcy of the Proprietor; (c) Mental incapacity of the Proprietor; (d) The Proprietor becoming a patient, a protected person or an incapable person within the meaning of the Mental Health Act or Regulations or any other event happening whereby the property or affairs of the Proprietor become or becomes subject to care, management, collection, administration, charge or control under the Act or any equivalent Act or Regulations. 23Clause 9 gives the Manager an entitlement to the Management Profit on sale, as follows: Management Profit The Manager is and shall be entitled upon completion of any sale of any lot in the Strata Plan which may occur pursuant to this Deed to the payment of the Management Profit and the Proprietor hereby for himself and his legal personal representative covenants to pay the Management Profit. 24Clause 10 obliges the proprietor to charge the lot in favour of the Manager to secure the Manager's entitlement to the Management Profit, as follows: The Manager's entitlement to receive the Management Profit shall be secured in favour of the Manager by a registered Charge over the Title of the Lot, such Charge to be in the form annexed hereto and marked with the letter "A". 25Although it does not appear that a form of charge was in fact annexed to any deed for provision of services in accordance with that clause, each registered interest holder executed a charge in favour of the manager from time to time, in which they charged all their estate and interest in the lot securing the payment referred to in the annexure, which defined the "sum of money secured" as "the aggregate of all sums that shall become payable by the charger to the chargee pursuant to the deed for provision of services", and provided "the sum of money secured shall be paid at the times and in the manner provided in the deed for provision of services".

The exclusive agency clauses 26Clause 7.1(d) in the Birchill deed has the effect that a resident cannot appoint an agent of his or her choice, without first having given the manager an exclusive sole agency for 90 days, and thereafter conjointly with the manager. It therefore has the effect of obliging the proprietor to give an initial exclusive agency and thereafter a conjoint agency, to the manager. In my view, it is an appointment of the Manager as selling agent. As a provision in the deed for provision of services, it was procured as part of the consideration for entry into the village. Insofar as it has the effect of appointing the manager as an agent, it would be void by operation of s 168(4). In any event, s 199, when coupled with s 168(1)(a), has the effect that regardless of clause 7.1(d), the resident is entitled to appoint a selling agent of the resident's choice, unconstrained by clause 7.1(d), and clause 7.1(d) is deprived of effect to the contrary.

The sale clauses 27The Act does not expressly confer on a registered interest holder the right to sell the premises or relevant interest. In this respect, it is to be distinguished from the provision for letting provided by s 174, which expressly gives a resident the right to let the premises. Nonetheless, in the context of the object expressed in s 3(a) the effect of s 168 and s 169, when coupled with the ordinary rights of the proprietor of an interest in land (such as that of a proprietor of a strata lot), is that the registered interest holder is entitled to sell his or her interest at a price determined by him or her, free from interference by the manager, unless - independently of the arrangements made in connection with acquisition of the residential right and voluntarily on the part of the resident - he or she chooses to appoint the manager as the selling agent. Although s 168(1) does not explicitly include a right to sell, its references to a right to set the sale price and to appoint a selling agent import the intention that the resident has the right to control the selling process. While the section uses the word "may", in the context of the objects of the Act, it is clear that this section was intended to confer on residents the right to control the process of sale, if they wished to do so. 28Clause 8.1 in the Birchill deed grants to the manager a right to sell the lot in certain events. By clause 8.2, that right is made irrevocable. The relevant events include, as per clause 8.1(b), "the proprietor notifying the Manager in writing of his desire to sell the lot". As clause 7.1(c) prohibits a sale without prior notice to the manager of the proprietor's desire to sell, this means that clause 8.1 captures every sale by a resident. It gives the manager a right to sell, and to do so at a price not set by the resident, albeit subject to the qualification that it be not less than fair market value. In that way, it appoints the manager as selling agent of the premises and as the person who sets the sale price. As it was obtained in connection with, and as part of the consideration for, the resident entering the village, it is void by operation of s 168(4). 29It is in this respect, however, that a distinction must be drawn with the corresponding provision in the Teague deed, in which clause 7 does not include any requirement that the manager be given an exclusive agency, and clause 8 is as follows: In the event of: (a) the death of the Proprietor or surviving proprietor or surviving authorised occupier; or (b) the Proprietor notifying the Manager in writing of his desire to sell the Lot; or (c) the Proprietor, if only one, or the surviving proprietor or surviving authorised occupier being no longer capable of self care and has vacated the premises; or (d) the authorised occupier or surviving authorised occupier ceasing to occupy the lot and the Proprietor is under 55 years at the date of this Agreement; or (e) the authorised occupier or surviving authorised occupier ceasing to occupy the lot and the proprietor is a company; or (f) termination of the right to occupy the premises in accordance with the provision[ s ] of the Retirement Vaillages Act, 1999 and its Regulations the Lot is to be placed on the market for sale at not less than the Fair Market Value. 30It will be seen that that clause does not appoint the manager to conduct the sale, nor does it appoint the manager, or empower the manager, to fix the selling price. It does contain a constraint on the resident's ability to fix the selling price, and to that extent the resident would, as a result of s 199, be entitled to fix the selling price notwithstanding its provision. But subject to that qualification, the provision in the Teague deed does not suffer from the defects in the Birchill deed. It does not fall within s 168(3) or (4), and as it does not appoint any person other than the resident to fix a selling price, it is not void. 31It was argued for the Manager, that despite any invalidity or voidness that might be found in the deed, the fact that such provisions were required to be included in such a deed by an instrument under (NSW) Conveyancing Act, 1919, s 88B, registered in conjunction with the strata plan, had the effect of validating them. Mr Sneddon, for the second defendant, invoked in support of this proposition the decision of the Court of Appeal in Karacominakis v Big Country Developments Pty Ltd [2000] NSWCA 313, (2000) 10 BPR [97842]. 32There are numerous answers to this submission. First, Real Property Act, s88 (3), provides that the recording in the register of a restriction gives it no greater effect than it would have had otherwise. Secondly, in the leading judgment in Karacominakis , Giles JA referred to his Honour's earlier judgment in PT Ltd and Another v Maradona Pty Ltd and Others (1992) 25 NSWLR 643, and in particular to the observation (at 679): That which is attained by registration is, in the words of s 42, an estate or interest in the land. Registration does not validate all the terms and conditions of the instrument which is registered. It validates those which delimit or qualify the estate or interest or are otherwise necessary to assure that estate or interest to the registered proprietor. 33In my view, the provisions the subject of this litigation are not provisions that "delimit or qualify the estate or interest" of the registered proprietor. Thirdly, as in Conveyancing Act, s 88, the instrument has the same practical effect as the deed for provision of services, by requiring some provisions to be included in it, is itself "an arrangement" within the meaning of s 199, and is thus overridden by s 199, the Retirement Villages Act of 1999 being legislation later in time than the Conveyancing Act of 1919 [ Goodwin v Phillips (1908) 7 CLR 1].

The Management Profit clause 34As has been seen, clause 9.1 of the Birchill deed confers on the manager an entitlement on completion of any sale which may occur "pursuant to this deed" to the payment of the management profit. As I have said, nothing in the Act disentitles a manager from sharing in the capital gain upon sale, and the Act plainly contemplates that that may happen. In this respect, the argument is not that it is illegal or inconsistent with the Act for the manager to receive such a benefit, but simply that there are no circumstances in which, on the proper construction and application of clauses 7 and 8, there can be a sale "pursuant to this deed". This is a question of construction of clause 9.1, and in particular the words "pursuant to this deed". 35I have not found this easy of resolution. In Mercantile Mutual Life Insurance Co Ltd v Australian Securities Commission (1992) 40 FCR 409, Lockhart J said (at 424): In my opinion, upon its true construction, the instrument of authorisation by use of the words "the Australian Securities Commission, pursuant to the provisions of subsection (1) of s 597 of the Corporations Law , hereby authorises ..." is not stating that s 597 is the relevant source of power to authorise the third respondents to apply to the courts; rather, the words "pursuant to" are used in the sense of consequent to or conformable to or in accordance with. These three meanings are accepted meanings to the words "pursuant to" attributed by the Dictionaries, including the Oxford English Dictionary : meanings which accord with ordinary English usage in this country. This is, in my view, an accurate use of the words "pursuant to". Although s 597(1) is not the source of the ASC's power to authorise persons to apply to the court under s 597; it is the section which, for the reasons given earlier, determines the function of the ASC to which the power conferred by s 11(4) of the ASC Act attaches, and thereby enlivens the functions. Without a function of the ASC there is nothing to which the power conferred by s 11(4) can attach. The two are inevitably intertwined, though it is important to bear in mind that one is the function and the other the power. But without the function, the power has no operation. It is not therefore inaccurate for the second paragraph of the instrument of authorisation to use the language which it does. 36In Brisbane City Council v Mainsel Investments Pty Ltd (1989) 2 Qd R 204, Kelly SPJ, with whom Matthews J agreed, said (at 222): The learned judge found that it had not been established that Mainsel's proposed use was not use pursuant to and in accordance with the terms of the lease insofar as they disclose the particular use to which the land may be put and he found that the carrying out of the development as proposed by Mainsel would be done "pursuant to and in accordance with" the lease. The ordinary meaning of "pursuant to" in this context as appears from the Oxford English Dictionary, and as referred to in Garbin v Wild [1965] WAR 72 at 76, is "following upon, consequent and conformable to, in accordance with". In my opinion it could be said that the development the subject of the application by Mainsel was "in accordance with" the draft lease and it is not to the point that cl 3.11 is expressed as a negative covenant. 37Those authorities indicate that while a relatively broad view may be taken of the words "pursuant to" (so that a lesser connection is required than the source of the power be the authority for the act), at least some connection between the act and the source of the power to which it is said to be pursuant is necessary. 38There is a strong argument that the reference to "pursuant to this deed" in clause 9.1 was intended to catch a sale by the manager pursuant to the provisions of clause 8. This view is reinforced by the definition of "management profit", which incorporates expenses occasioned by the manager in the exercise of its powers, and reasonable expenses incurred by the manager on the sale of the lot. But, even if the concept of "pursuant to this deed" extends beyond that to catch a sale by the proprietor, either without an agent or through an agent acting in conjunction with the manager under clause 7.1(d), it could not extend to a sale that takes place without reference to the deed or its provisions. 39As the Act preserves the right of a proprietor to sell, to fix the sale price, and to select the agent - all of which can be done without reference to the provisions of the deed, except insofar as there is an obligation to notify the manager of the desire to sell the lot - I cannot see how such a sale can be said to be one pursuant to the deed. A sale without reference to the deed has no sufficient connection to the deed to be one pursuant to the deed. 40I have not overlooked the argument that, as originally drafted, the words "pursuant to this deed" would have caught all sales of the property, so that and it might well have been the objective intention of the parties that the management fee be payable in the event of any sale. 41But to disregard the words "pursuant to this deed" would involve the court in rewriting the contract. Those words must be given some effect, and I am unable to apply them to a sale that takes place without reference to the deed. 42That does not mean that there are no circumstances in which the manager might be entitled to a management profit. For example, under the Teague deed, a sale pursuant to the requirements of clause 8.1 would be a sale "pursuant to this deed" - notwithstanding that the selling price was fixed by the proprietor at below fair market value, because the occasion for the sale triggered by one of the events referred to in that clause: it would still be a sale required by clause 8, and would therefore be a sale pursuant to the deed. It may be that in some circumstances, which have not yet occurred to me, there could still be a sale "pursuant to this deed" under the Birchill deed - but, as I have said, a sale by a proprietor without reference to the provisions of the deed would not be a sale pursuant to the deed.

The Deed of Charge 43I turn, finally, to the deed of charge. The words of the deed of charge are wider than those of clause 10.1 of the deed for provision of services. I accept that the deed of charge is to be construed together with the deed for provision of services, which compels its execution by the resident. But in my view, there is no inconsistency between clause 10.1 and the deed of charge. Clause 10.1 requires execution of the charge in the form annexed. It does so expressly, but not necessarily only, for the purpose of securing the manager's entitlement to the management profit. The terms of the charge are apt to catch the service fees payable under clauses 2 and 3 of the deed for provision of services. The references in clause 2 of the charge to payment of the money secured "at the times and in the manner provided in the deed for provision of services", contemplate that there might be multiple occasions for payment. In my view, there is no warrant for reading down the definition of "sum of money secured" to be limited to the management profit. Accordingly, even if there were no circumstances in which the manager could become entitled to the management profit, the deed of charge would still have work to do in securing other payments for services payable under the deed for provision of services.

Conclusion 44Accordingly, to summarise my conclusions, notwithstanding the terms of the deeds of services, the residents are not obliged to give the manager (or manager's nominee) an exclusive sole or any other agency, before or conjointly with selecting their own agent. Nor does the manager have a right of sale in the circumstances described in clause 8.1. While there may be some circumstances in which the manager remains entitled to a management profit, there is no sale "pursuant to this deed" where a resident sells without reference to the deed for provision of services. Regardless of whether or not there are any circumstances in which the manager may be entitled to management profit, the deed of charge secures other payment obligations and is not liable to be discharged as securing no obligation. 45I direct that the plaintiffs bring in Short Minutes to give effect to these reasons.

Monday, 22 August 2011 46The plaintiffs seek an order that the first and second defendants pay the plaintiffs' costs of the proceedings. As noted above, the status of the first defendant is somewhat unclear. It is said to be in receivership, but whether it is in a form of administration such as would have the consequence that leave to proceed was required, is not apparent. In the absence of evidence of its status, I will proceed on the basis that it is in administration and therefore make a costs order against it. If it turns out that it is not in administration, then that order will be of no effect in the absence of leave to proceed. 47So far as the second defendant is concerned, two main issues arise. The starting point is that the plaintiffs, though they have not been entirely successful in the proceedings, have obtained a substantial measure of success, the key aspect being the practical consequences so far as entitlement to the management profit is concerned. Ordinarily where a plaintiff achieves a substantial measure of success, albeit that it falls short of achieving all the relief claimed, in the absence of an offer that betters the degree of success obtained, the court does not deprive the plaintiff of its costs. Generally, the court will not apportion costs according to the respective success of the parties on particular issues, except where the matters on which the plaintiff failed were dominant or manifestly separate from the matters on which the plaintiff succeeded [ Waters v PC Henderson (Aust) Pty Ltd (Court of Appeal, Kirby P, Mahoney and Priestly JJA, 6 July 1994, unreported)]. 48The first issue that needs further consideration is the consequences of a Calderbank offer, made "without prejudice save as to costs" on 2 June 2011 by the defendant's solicitors to the plaintiffs' solicitors, in the following terms: We advise that our client has made a commercial decision and has instructed us to make the following offer of compromise:

1. Our client will agree to relinquish all management rights for the village forthwith. Accordingly, all owners will be released from their existing charges and both parties will be released from the obligations under the Deeds for the Provision of Services. However this is conditional on the following: a. The Owners Corporation ratify and endorse all necessary documentation to cause the registration of the linen plan for the subdivision of the display villa. This includes forms 10, 11 and 12 on the Strata Plan Administration Sheet. These documents were previously submitted by the former manager, Premier Holdings Pty Ltd. b. The parties agree that an independent valuer be engaged to assess and determine the Unit of Entitlement for the current development application for the remainder of the site. c. The cost associated with engaging the valuer will be borne by our client. d. The Owners Corporation and our client agree to be bound by the valuer's assessment of Unit of Entitlement. e. The owners and the Owners Corporation agree to do all acts and things required to allow the registration of the remaining strata plans. f. Proceedings No. 2010/245833 and 2010/337148 to be discontinued. g. Each party to pay their own costs in relation to the proceedings. We would suggest that a meeting be held at Castle Pines retirement village to discuss this offer. We await your reply. 49The plaintiffs' solicitors replied on 6 June 2011 as follows: We refer to your letter of 2 June 2011. We note that your client's offer contained under cover of that letter, relates to both the proceedings in which we act and proceedings no. 2010/337148, relating to the Management Deed, in which we do not represent any party. To the extent your client's offer relates to our clients' proceedings, we are instructed to reject your client's offer entirely. 50A Calderbank offer, if not bettered by the offeree at trial, is relevant to the exercise of the court's discretion as to costs, but unlike a formal offer of compromise under (NSW) Uniform Civil Procedure Rule 2005, r 20.26, it does not have mandatory costs consequences. UCPR, r 42.13, provides that Division 3 of Part 42 (which relates to offers of compromise), applies only if an offer of compromise is made in accordance r 20.26. Rule 20.26 mandates that offers must contain certain particulars, including that the offer bear a statement to the effect that the offer is made in accordance with the rules [see The Uniting Church v Takacs (No 2) [2008] NSWCA 172, at [6]-[7] (Hogdson JA)]. The rules of court impose certain requirements for, amongst other purposes, ensuring that offers are readily comparable with the measure of success obtained in the proceedings, and to provide for mandatory costs consequences for the non-acceptance of reasonable offers. 51A party who wishes to rely on an offer in order to avoid an adverse costs order is ordinarily well advised to proceed by formal offer of compromise under the rules, rather than by the much less sure means of a Calderbank offer. In short, the consequences of a Calderbank offer, even if bettered, are discretionary rather than automatic. 52It is significant that the present offer could not have been made as an offer of compromise because, amongst other things, it provides that each party is to pay their own costs in relation to the proceedings, thereby purporting to exclude the costs consequences that would attach to a formal offer of compromise under the rules. The fact that it contained such a provision is one reason for concluding that it is not readily comparable with the measure of success that the plaintiffs secured in the proceedings. 53Secondly, the offer was conditional on a number of matters, not all of which were in the power of the plaintiffs to submit to, or if within their power, may not necessarily have accorded with the respective wishes of all of them. The second defendant has not, at least in these proceedings, secured the conditions subject to which the offer was made. For that reason also, I do not think it is possible to conclude that the offer has not been bettered by the plaintiffs. 54Accordingly, I do not accept that the offer provides sufficient reason for departing from the usual costs order. 55The other issue that requires consideration is whether the second defendant should be liable for the whole of the costs of the proceedings, including those incurred before it was joined as a defendant on 13 March this year. For a time, it seemed to me that the second defendant was in effect the successor of the first defendant as the manager, and as the defendant in the litigation, and ought therefore to be regarded as having adopted the conduct of the proceedings by its predecessor. But, on further consideration, had the proceedings gone by default in the absence of a defendant following the effective withdrawal of the first defendant, the plaintiffs could have obtained a costs order only against the first defendant. It is difficult to see why the plaintiffs' position should improve, just because the second defendant took up the responsibility of being a contradictor. 56It is not in issue that the second defendant should be liable for the costs incurred after its joinder, but on reflection I do not see why it should be responsible for the costs incurred prior to its joinder because of the position adopted by the first defendant and which, but for the second defendant's later intervention, would have been recoverable against the first defendant only. 57My orders are as follows: A. In relation to the deeds falling into the same category as those referred to in the judgment as the Birchill deeds: Declare that:
2. The respective Sale Clauses which provide that the manager is granted the right to sell a lot, or to cause it to be sold, at not less than fair market value, are provisions that would, if enforced, operate to annul, vary or exclude the following provisions of the Retirement Villages Act 1999: (a) section 168(1)(a), which provides that a resident of a retirement village may set the sale price of his or her residential premises; (b) section 168(1)(b), which provides that a resident may appoint a selling agent of the resident's choice; and (c) section 169(1), which provides that an operator of a retirement village, if not appointed as selling agent for residential premises in the village, must not interfere with the sale of the premises.
3. The respective Sole Agency Clauses by which the proprietors covenant with the manager not to offer their lots for sale without first having given to the manager or its nominee an exclusive sole agency agreement, are provisions that would, if enforced, operate to annul, vary or exclude s 168(1)(b) of the Act, which provides that a resident may appoint a selling agent of the resident's choice.
4. Because of s 199(1) of the Act, which provides that no agreement, contract or arrangement operates to annul, vary or exclude any of the provisions of the Act, the respective Sale Clauses and the respective Sole Agency Clauses are unenforceable.
5. For the purposes of the respective Management Profit Clauses, which provide that the Manager is entitled to the "Management Profit" upon completion of any sale that might occur pursuant to the deed, any sale of a lot in which the resident sets the sale price, appoints a selling agent of their choice and otherwise conducts and completes the sale independently of the manager: (a) is not a sale that occurs pursuant to the deed; and (b) does not entitle the manager to the "Management Profit" upon completion. B. In relation to the deeds falling into the same category as those referred to in the judgment as the Teague deeds: Declare that:
6. The respective Sale Clauses, which provide that if, inter alia, the proprietors notify the manager of their desire to sell a lot, the lot is to be placed on the market for sale at not less than fair market value, are provisions that would, if enforced, operate to annul, vary or exclude s 168(1) of the Act, which provides that a resident of a retirement village may set the sale price of his or her residential premises.
7. Because of s 199(1) of the Act, the respective Sale Clauses are unenforceable to the extent that they require the sale price of the lots to be not less than fair market value. C. In relation to costs:
8. Order is that the first defendant pay the plaintiffs' costs of the proceedings up to and including 12 March 2011, and the second defendant pay the plaintiffs' costs of the proceedings on and from 13 March 2011.

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: 12 September 2011