Bondi Beach Astra Retirement Village Pty Limited v Hohman [2010] NSWSC 260 | Case summary

Bondi Beach Astra Retirement Village Pty Limited v Hohman [2010] NSWSC 260 | Case summary | Zoe

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Ainsworth v Criminal Justice Commn (Qld) [1992] HCA 10; (1992) 175 CLR 564 Aussie Airlines Pty Ltd v Australian Airlines Ltd (1996) 68 FCR 406; (1996) 139 ALR 663 Bondi Beach Astra Retirement Village Pty Limited v Hohman [2010] NSWCA 38 Bondi Beach Astra Retirement Village Pty Ltd v Gora [2010] NSWSC 181 Bondi Beach Astra Retirement Village Pty Ltd v Noon [2009] NSWSC 461 Brandling v Weir [2003] NSWSC 723 Chiodo v Murphy & Doherty [1996] ANZ ConvR 160 Coles v Wood [198l] 1 NSWLR 723 Commonwealth of Australia v BIS Cleanaway Limited [2007] NSWSC 1075 Cypjane Pty Ltd v Rodskog [2009] NSWSC 301 Forster v Jododex Australia Pty Ltd [1972] HCA 61; (1972) 127 CLR 421 Go-Tell Nominees Pty Ltd v Nichols (unreported, VSC, Cummins J, No 4247 of 1997, 7 February 1997, BC9700713) Hanson v Radcliffe UDC [1922] 2 Ch 490 Ibeneweka v Egbuna [1964] 1 WLR 219 CASES CITED : Integrated Lighting & Ceilings Pty Limited v Phillips Electrical Pty Limited (1969) 90 WN (Pt 1) (NSW) 693 Laybutt v Amoco Australia Pty Limited (1974) 132 CLR 57 Lohar Corp Pty Ltd v Dibu Pty Ltd (1976) 1 BPR 9177 Mackay v Wilson (1947) 47 SR (NSW) 315 Marra Developments Ltd v B W Rofe Pty Ltd [1977] 2 NSWLR 616 Moraitis Fresh Packaging (NSW) Pty Limited v Fresh Express (Australia) Pty Limited [2008] NSWCA 327 Neeta (Epping) Pty Ltd v Phillips [1974] HCA 18; (1974) 131 CLR 286 Neoform Developments and Interiors Pty Ltd v Town & Country Marketing Pty Ltd (2002) 49 ATR 625 Northern Star Agriculture Pty Ltd v Morgan and Banks Developments Pty Ltd [2007] NSWSC 98 Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589 Re Judiciary and Navigation Acts (Advisory Opinions Case) [1921] HCA 20; (1921) 29 CLR 257 Redglove Projects Pty Ltd v Ngunnawal Local Aboriginal Land Council (2004) 12 BPR 22319; [2004] NSWSC 880 The Estate of Rita Borthwick v Bondi Beach Astra Retirement Village Pty Limited [2008] NSWCTTT 1160 Townsend v Coyne (1995) 6 BPR 13,935 Trans Realties Pty Ltd v Grbac [975] 1 NSWLR 170 Troncone v Aliperti (1994) NSW ConvR 55-103

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3 The late Mrs Rita Borthwick purchased a unit in the Bondi Beach Astra Retirement Village in 1987. She died in 2005. Her estate is now represented by her niece, Ms Julie Hohman (the defendant in these proceedings), following the death of Ms Hohman's mother who was named as executor under the will and to whom probate had been granted. 4 This is by no means the first set of contested proceedings in relation to Mrs Borthwick's unit in the retirement village (the history of which I set out below). Nor is this the only unit in the retirement village in respect of which questions as to the construction or enforceability of the buy-back provisions under the standard form documents entered into with BBAstra have arisen. (I refer in this regard to the recent decisions of Smart AJ in Bondi Beach Astra Retirement Village Pty Limited v Noon [2009] NSWSC 461 and Bryson AJ in Bondi Beach Astra Retirement Village Pty Limited v Gora [2010] NSWSC 181.) 5 BBAstra filed a summons in October 2006 in which it sought a declaration as to the existence of an enforceable agreement (under the terms of a Buyback Deed dated 18 December 1987 it had signed with the late Mrs Borthwick) between itself and Ms Hohman (as executor by representation of the estate of the late Mrs Jean Edith Hohman, who had been the executor of Mrs Borthwick's will). The said agreement was described as one under which, should Ms Hohman wish to sell or dispose of the late Mrs Borthwick's unit, she must procure any incoming purchaser to enter into an Occupancy Agreement on the same terms as that entered into by BBAstra and the late Rita Borthwick on 18 December 1987 (including the buy-back provisions under clause 8 of the said Occupancy Agreement) and to procure the incoming purchaser to include the following covenant in such agreement: The proprietor may sell, transfer or otherwise dispose of the Unit to a purchaser who is a Qualified Occupant provided that the purchaser enters into an Occupancy Agreement with the Service Company [ie BBAstra] on the same terms and conditions as this Occupancy Agreement. 6 BBAstra wishes to clarify whether it has remaining rights to this effect under the said documents in the event of a sale of the unit by Ms Hohman, there having been a determination by the Consumer Tenancy and Trader Tribunal in 2008 that certain of the clauses of the respective agreements BBAstra entered into with the late Mrs Borthwick are void. 7 BBAstra has lodged a caveat over the title to the relevant unit (no objection having been raised thereto by Ms Hohman) to protect the equitable rights that it asserts. Included in paragraph 2 of the Summons, as relief sought by BBAstra in these proceedings, is a declaration that it may maintain its caveat over the late Mrs Borthwick's unit pending completion of any sale by Ms Hohman. 8 The summons was heard by me on 17 February 2010. In the course of oral submissions, during which I expressed some doubts as to the breadth of the declaration sought in paragraph 1 of the Summons, an application was made by BBAstra, to which I have acceded, for leave to file an Amended Summons seeking alternative declaratory relief to that claimed in paragraph 1. (Ms Hohman did not oppose leave being granted for BBAstra to amend its Summons but made submissions briefly as to the costs consequences which should follow if the declarations originally sought in paragraphs 1 and 2 of the Summons should be refused (ie even if declaratory relief by way of a combination of declarations 1 and IB, or simply by way of declaration 1A, should be made), on the basis that the proceedings had, up to and including the hearing, been prosecuted by BBAstra seeking an unconditional declaration to the effect that the agreement was "enforceable".) 9 The alternative declaratory relief now claimed is as follows: 1A A declaration that: (a) notwithstanding the findings of the Consumer Trade and Tenancy Tribunal of New South Wales that the plaintiff failed to serve a valid Default Buyback Notice pursuant to clause 8 of the Occupancy Agreement between the plaintiff and Rita Borthwick dated 18 December 1987 "the Borthwick Occupancy Agreement", or a valid Buyback Notice pursuant to clause 1 of the Buyback Deed between the plaintiff and Rita Borthwick dated 18 December 1987 ("the Buyback Deed"), (b) in the events that have happened and on the true construction of clause 2 of the Buyback Deed; (c) should the defendant wish to sell, transfer or dispose of [the property] to any purchaser, (d) she is obliged to procure: (i) that the purchaser, who must be a Qualified Occupant, enter into a new Occupancy Agreement on the same terms as the Borthwick Occupancy Agreement, including the right of the plaintiff to serve a Default Buyback Notice pursuant to clause 8 of the new Occupancy Agreement; (ii) the purchaser to include the following covenant in such agreement: "the proprietor may sell, transfer or otherwise dispose of the unit to any purchaser who is a Qualified Occupant provided the purchaser enters into an Occupancy Agreement with the Service Company (the plaintiff) on the same terms and conditions as the Occupancy Agreement. 1B Alternatively, make declaration 1A and further declare that enforcement of the parties' rights in respect of the Buyback Deed of any Occupancy Agreement entered or proposed to be entered is subject to any later valid order of the Consumer Trade and Tenancy Tribunal of New South Wales or any other court or tribunal of competent jurisdiction. 10 As part of the relief now sought in the Amended Summons, BBAstra also seeks "such remedy, by way of declaration, pursuant to s 63 of the Supreme Court Act 1970 (NSW), as the plaintiff appears to be entitled, being any narrower or different declaration from those formulated in orders 1, 1A and 1B that the court considers will declare the true construction of or contractual rights of the parties pursuant to the Buyback Deed". 11 Broadly speaking, the basis on which Ms Hohman resists the claims for declaratory relief is that the issue raised by BBAstra as to the enforceability or construction of the relevant contract is purely hypothetical (and may never arise) and that it will leave unresolved issues which may later arise between the parties. Questions have also been raised as to the appropriateness of this Court entertaining matters relating to the construction of a contract such as this, which is subject in many respects to the jurisdiction of another tribunal (the Consumer Trader and Tenancy Tribunal) which may not be constrained to enforce the contract as construed by this Court in any event. Issues 12 The issues for determination are within a narrow compass. First, should the court grant declaratory relief in relation to clause 2 of the Buyback Deed (or is this a case in which there is insufficient utility in so doing, as the issue as to which declaratory relief is sought is hypothetical)? Secondly, if declaratory relief as to clause 2 should be granted, in what form should that relief be? Thirdly, should there be a declaration as to the maintenance of the caveat which has been lodged by BBAstra? Summary 13 Even had I otherwise been inclined to make a declaration as to the enforceability of the clause in question (and I was not), the fact that another judge of this Court (in the Gora case to which I refer later) has held that a buyback option in this form amounts to an invalid restraint on the freedom of alienation of property would lead me to conclude that I should not exercise my discretion to make such a declaration in a case such as the present where the issue of enforceability arises in a vacuum. 14 The real question before me is whether there is sufficient utility in a declaration of a more narrow kind as to the construction of clause 2 of the Buyback Deed. It seems to me, although this is a finely balanced question, that there is some utility in so doing - particularly, when doubts have already been raised, but not considered further, by the Court of Appeal as to the breadth of the relief granted when the Tribunal first came to consider the operation of the buyback provision in this very contract (the Tribunal holding that the relevant clauses of the Buyback Deed and Occupancy Agreement were void, the right to exercise the option having lapsed). I do not think that this uncertainty should be compounded by a doubt as to the effect of such a declaration of voidness on the operation of clause 2 of the Buyback Deed, even if it be the case that for other reasons such a clause might not later be held to be enforceable in the particular circumstances in which it was sought to be enforced. 15 I therefore propose to grant declaratory relief of a limited kind. I do not consider it appropriate to grant any of the declarations in 1, 1A, 1B or 2 of the Amended Summons in the terms as sought. Facts 16 As noted briefly above, the present dispute involves a consideration of the arrangements made in 1987 by the late Mrs Rita Borthwick for her ownership and occupation of a unit in the Bondi Beach Astra Retirement Village. The late Mrs Borthwick entered into a contract to purchase her unit on 13 October 1987. On completion of that sale agreement on 18 December 1987, she entered into an Occupancy Agreement and a Buyback Deed with BBAstra. It appears that these were in the form of the standard form documents commonly used by BBAstra in the period from the 1980's through to early 1998 (per affidavits sworn 16 February 2010 by Mr Stephen Wawn, the solicitor acting for BBAstra from around February 1998, and sworn 26 August 2009 by Ms Adina Lockett, a solicitor in his employ).

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17 Under both the Occupancy Agreement and the Buyback Deed, BBAstra was given an option to buyback the unit, in certain specified circumstances, at the price for which Mrs Borthwick paid for the unit in 1987 ($95,000). Not surprisingly, it appears that the market value for units in the retirement village which are not subject to any such buy-back arrangement is now considerably higher (say around $350,000-$400,000). 18 Basten JA, in Bondi Beach Astra Retirement Village Pty Limited v Hohman [2010] NSWCA 38, at [2] (an unsuccessful appeal by BBAstra from Harrison J's dismissal of an appeal from the Tribunal's decision to declare void certain provisions of these agreements; Bondi Beach Astra Retirement Village Pty Ltd v Jean Edith Hohman as Executor of the Estate of the late Rita Doreen Borthwick [2009] NSWSC 340), notes that the practical effect of this arrangement was to allow BBAstra to obtain any capital appreciation on the unit but to let any capital depreciation be borne by the owner. 19 The buy back option was described, by Counsel for BBAstra (Mr Brender), in the proceedings before me, as the way in which BBAstra derives value from the arrangements into which it entered back in the 1980's. 20 Clause 8 of the Occupancy Agreement provided that: (a) On the happening of any of the events referred to in clause 7 hereof the Service Company [ie BBAstra] shall have the option at any time thereafter by notice in writing (hereinafter called the "Default Buyback Notice") served upon the Proprietor to require the Proprietor to transfer the unit to the Service Company or its nominee for ninety-five thousand dollars ($95,000) or such lesser amount determined by the provisions of the Buyback Deed. 21 One of the events referred to in clause 7 was the permanent vacation of the unit by the proprietor; another was the death of the proprietor. 22 Clause 1 of the Buyback Deed provided that the proprietor shall not sell, transfer or otherwise dispose of the unit otherwise than pursuant to that deed and that the 'following procedures' were to apply to such a sale or transfer. Under those procedures, the proprietor was obliged to give one month's notice in writing of intention to sell, transfer or otherwise dispose of the unit and, upon the expiration of that period, either the proprietor or the service company had the option by notice in writing (the Buyback Notice) to require the transfer by the proprietor to the service company or its nominee for the original purchase price (or for such reduced amount as provided for in condition 7). 23 It is not in dispute that, in this case, no Default Buyback Notice was issued by BBAstra under clause 8 of the Occupancy Agreement within the requisite time (as provided under the Act) nor was there any instigation of the procedures in clause 1 of the Buyback Deed. 24 Clause 2 of the Buyback Deed provided as follows: 2. Should for any reason neither the Proprietor nor the Service Company serve on the other of them the Buyback Notice referred to clause 1(b) of this deed then the Proprietor may sell, transfer or dispose of the unit to any purchaser who is a Qualified Occupant provided that the Proprietor procures such purchaser to enter into an occupancy agreement with the Service Company on the same terms and conditions of the occupancy agreement entered into by the Proprietor upon purchase of the unit and procures such purchaser to include the following covenant in the occupancy agreement [that being the covenant set out earlier in this judgment] (my emphasis)

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34 The caveat, as then lodged on 25 August 2009 (that being the caveat which BBAstra now seeks a declaration that it may maintain), claims the following interest: A specifically enforceable right to compel the registered proprietor of the land to require any purchaser of the land to enter into a Occupancy Agreement on the same terms and conditions as the Occupancy Agreement entered into by Mrs Borthwick upon her purchase of the land. Alternatively, an estoppel preventing the registered proprietor from denying the interest claimed. 35 (More accurately, perhaps, the asserted right might be described as a right to restrain the proprietor from selling or disposing of the unit other than on terms including those as required by clause 2 of the Buyback Deed, although this may be unduly semantic.) 36 On 27 August 2009, these proceedings were commenced. 37 By letter dated 3 September 2009, Ms Hohman's solicitors advised that their client had no intention of selling the property at that stage; that she wished to refurbish and let the property out in accordance with the Occupancy Agreement; and noted that if their client 'ever' decided to sell the property they were instructed that she would provide 21 days' notice of such decision prior to offering the property for sale. Quite candidly, in submissions, Counsel for Ms Hohman (Mr Fagan SC) indicated that one could infer his client was deferring any decision in relation to the unit pending the outcome of this and the appeal court proceedings then on foot. 38 It was not until a letter dated 12 November 2009 that the solicitors acting for Ms Hohman provided any substantive response to the request for an indication of the reasons why they considered that BBAstra's construction of the respective agreements would not succeed. Relevantly, for present purposes, the letter stated that: At least a part of the defendant's case will be that clause 2 of the Buyback Deed is ineffective insofar as it purports to require the Borthwick estate to procure any purchaser from it to enter into an occupancy agreement containing a clause 8 (that is, an option for buyback) in the terms which have been declared void under the existing orders. (my emphasis) Further, your client's claim for a declaration is premature and hypothetical. It should be refused on discretionary grounds. Rights and obligations associated with units in retirement villages, such as this, are the subject of close regulation under legislation which has on occasion been amended substantially. Even if clause 2 of the Buyback Deed continues to have any operation with respect to requiring our client to procure a purchaser to enter into an occupancy agreement containing clause 8 in the terms of the occupancy deed of 18 December 1987, the precise operation of those contractual provisions will be affected by the legislation as in force from time to time. At some future time when our client proposes to sell the unit it is entirely conceivable that the legislation will be in a form amended from its present terms. For your client to seek a declaration at present, when no sale is intended or imminent is futile. If the court were to make a declaration based on the current state of the legislation, it may well be that by the time our client proposes to sell the unit, it will be necessary for her to approach the court to seek a different declaration having regard to an altered state of the statute law. 39 The response from BBAstra's solicitors to this was that the import of the Tribunal's orders was simply that, in the case before it, clause 8 of the Occupancy Agreement had lapsed and that, if BBAstra's construction of clause 2 of the Buyback Deed were to be upheld, it would operate in the future such that a new Occupancy Agreement with a new occupier would be entered into which would contain a valid clause 8 (ie, one that would not, ex hypothesi, have lapsed).

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44 Mr Brender submits that the present dispute (as to the construction of the BBAstra's rights under clause 2) is not hypothetical; it is real, as has been debated in correspondence; and its resolution will affect the value both of Ms Hohman's property holding and BBAstra's balance sheet. 45 In that regard, Mr Brender notes that the previous executor wished to sell the unit in 2006; that there was an apparent change of mind as to any such sale on the part of her successor in 2009; and that, in effect, it is inevitable that one day there will be a sale. At that point, it is said that BBAstra will have the commercial opportunity to profit from the unit in the operation of its retirement village business. 46 Accordingly, it is said that both parties would benefit from knowing their rights and the terms of the sale. Mr Brender submits that a declaration as to the position in relation to clause 2 of the Buyback Deed will quell potential further disputes (although in relation to this last point, this could necessarily only relate to the quelling of potential further disputes as to that limited issue). The possibility of later amendments to the relevant retirement villages legislation, or of applications which might be made to the Consumer Trader and Tenancy Tribunal, does not, he submitted, detract from the utility of a declaration as to the operation of clause 2. 47 In Forster v Jododex it was said that (at 435 - 436): The jurisdiction to make a declaration is a very wide one. Indeed, it has been said that, "under O. XXV, r. 5, the power of the Court to make a declaration, where it is a question of defining the rights of two parties, is almost unlimited; I might say only limited by its own discretion": Hanson v. Radcliffe Urban District Council ; and see Barnard v. National Dock Labour Board ; and Ibeneweka v. Egbuna . … It is neither possible nor desirable to fetter the broad discretion given by s. 10 by laying down rules as to the manner of its exercise. It does, however, seem to me that the Scottish rules summarized by Lord Dunedin in Russian Commercial and Industrial Bank v. British Bank for Foreign Trade Ltd , should in general be satisfied before the discretion is exercised in favour of making a declaration: "The question must be a real and not a theoretical question; the person raising it must have a real interest to raise it; he must be able to secure a proper contradictor, that is to say, some one presently existing who has a true interest to oppose the declaration sought." Beyond that, however, little guidance can be given. As Lord Radcliffe said in Ibeneweka v. Egbuna : After all, it is doubtful if there is more of principle involved than the undoubted truth that the power to grant a declaration should be exercised with a proper sense of responsibility and a full realisation that judicial pronouncements ought not to be issued unless there are circumstances that call for their making. Beyond that there is no legal restriction on the award of a declaration. 48 In Forster v Jododex the question was as to whether Jododex held a valid exploration licence. This was said to be in no way hypothetical, as Jododex had a real interest to establish the validity of the licence there in question (and to ensure that the warden would not grant the rights which Forster had sought) and Forster had a real interest to contest Jododex' claim which, if upheld, would result in the refusal of Forster's application. The availability of an alternative remedy, it was said, did not require the court to refuse to make a declaration. 49 That said, it is recognised that if substantive remedies can be sought which will be of more utility than a declaration, then the court should not entertain proceedings for declaratory relief alone. In Coles v Wood [1981] 1 NSWLR 723, Hutley JA, with whom Samuels JA agreed, said (with reference to s 63 of the Supreme Court Act 1970; Neeta (Epping) Pty Ltd v Phillips [1974] HCA 18; (1974) 131 CLR 286; (1974) 3 ALR 151; Trans Realties Pty Limited v Grbac [1975] 1 NSWLR 170; Marra Developments Ltd v B W Rofe Pty Ltd [1977] 2 NSWLR 616; and pointing out that in Lohar Corp Pty Ltd v Dibu Pty Ltd (1976) 1 BPR 9177 the majority had not said otherwise), at 728-9: Where substantive remedies can be sought, the Supreme Court should insist on their being sought in addition to declarations. Where money is owing, a mere declaration is of less utility than a judgment. For example, it does not carry interest, as does a judgment, and will have to be followed by further proceedings to enable the remedies available to a judgment [creditor] to be obtained ... The Supreme Court, in my opinion, should refuse to entertain proceedings for declarations in a case of this kind, unless the appropriate substantive remedies are sought in the proceedings. 50 In Trans Realties, Glass JA had said, at 176: … the High Court has emphatically laid down that the practice of incomplete adjudication requires reconsideration: Neeta (Epping) Pty Ltd v Phillips . The declaratory jurisdiction now derived from s 75 of the Supreme Court Act, 1970 is subject to the admonition in s 63 that, in the interest of avoiding multiplicity of proceedings, all matters in controversy should be finally determined. Where equitable relief is concerned, in particular, the public interest in finality will generally override the private interest in selective litigation.

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51 Here, it is submitted by Mr Brender that the fact that no substantive relief is sought is not relevant, since no such application would have been possible at this stage. 52 In response, Mr Fagan says that the orders sought by BBAstra relate to factual circumstances (ie, an intended sale) which have not yet happened and may never happen. As to this, he submits, first, that there is no positive obligation on Ms Hohman under the Act to sell the unit, whether now or at any stage in the future; secondly, that under s 174 of the Act Ms Hohman may lease the premises for at least a period of 3 years (and thereafter for a further term subject to the consent of BBAstra which, if not forthcoming, would require BBAstra itself to commence proceedings in the Tribunal under s l74(6) of the Act for an order declaring that it is not obliged to consent to the agreement); and, thirdly, that the correspondence between the parties' solicitors in 2009 confirms that Ms Hohman intends to lease out the unit and will have the consent of BBAstra so to do. 53 As to the prospect of proceedings if and when any request for consent to a further lease is concerned, Mr Brender notes that the current position is that there is no indication that any further leases will be refused; that there is a procedure under s 174 for the details of a proposed tenant to be given, and that, if consent is refused, the Tribunal may adjudicate the dispute. It is submitted by Mr Brender that the possibility of Tribunal proceedings over the terms of any future lease are quite separate from, and irrelevant to, the declarations now sought (which relate to the parties' contractual rights on a third party sale). The analogy drawn by Mr Brender was to a dispute over the existence of a lease - it being said that a potential later argument about a sub-lease or assignment that had not yet arisen would not prevent a court from determining the former. I think there is force in that submission. 54 As to the possibility of a future sale, it is submitted by Mr Fagan that declaratory relief is not available for mere future possibilities and that, if the declaratory relief is for the purpose of defining a right or liability in anticipation of future events, then unless BBAstra shows that those future events are at least likely to occur the relief sought can only be in respect of a 'purely hypothetical' question (citing in this regard the observation of Gibbs J (as his Honour then was) in University of New South Wales v Moorhouse Angus & Robertson (Publishers) Pty Ltd [1975] HCA 26; (1975) 133 CLR 1, at 9 - 10; (1975) 6 ALR 193, as to the existence of many examples of cases in which a declaration has been refused because it was claimed in relation to circumstances that had not occurred and might never happen.) 55 In that regard, it is difficult not to form the view that it is inevitable that at some stage the question of sale of the unit must arise. (It seems to me this is implicitly conceded by the suggestion that the court may infer that a decision in this regard has to date been deferred pending the outcome of the litigation.) Indeed, for Ms Hohman, as executor, to wind up the late Mrs Borthwick's estate it will surely be necessary at some point to transfer title to the property. 56 On the legislation at present, the relevant possibilities are: that the unit remains vacant indefinitely; that Ms Hohman (once she satisfies the definition of a Qualified Occupant) occupies the unit herself; that the unit is leased for three years and perhaps (with the consent of BBAstra or pursuant to an order from the Tribunal) beyond the period of three years; and that the unit is sold. I accept, however, that it is uncertain when any such sale may in the future occur. 57 Mr Fagan submits that when and if there is a sale, BBAstra could only insist on entry by the incoming owner into an Occupancy Agreement containing clause 8 if the contract to be procured from the purchaser contained terms and conditions not substantially different (to the detriment of the purchaser) from the terms and conditions of sample contracts available for inspection within the retirement village (pursuant to s 20 of the Act), relying on s l72(2) of the Act. It is submitted that, to the extent that the proposed service contract did not accord with other sample contracts at that time, then the resident could apply to the Tribunal for an order directing the operator to enter into a service contract with the purchaser that is substantially in accordance with the sample contracts (s 172(2) of the Act). 58 In that regard, in these proceedings, production was sought of examples of village contracts into which an incoming resident might be required to enter as held by the operator of BBAstra in accordance with s 20(1)(e) of the Act. Those documents, as produced, did not contain similar buyback provisions to clause 8. No doubt this is because of the change in policy of BBAstra from about 1998 to which Mr Wawn, the solicitor acting for BBAstra, has deposed (namely that from about the time he was instructed to act for BBAstra, in or about February 1998, his instructions were that, after repurchasing units in the retirement village pursuant to buyback agreements (such as those in this case) BBAstra no longer wished to enter into fresh buyback agreements with incoming purchasers and instead would resell those units at market value, and that this is what has occurred on about 21 transactions since that time). As I understand it, it is now the practice of BBAstra that once it exercises its right to buy back a unit under one of the older contractual arrangements, at the original purchase price, its new sale arrangements with incoming purchasers are at 'market value' and not subject to any fresh buyback arrangement. For this reason, Mr Wawn says that in the case of any sale by Ms Hohman in these proceedings to a third party, different documents would necessarily be required from the documents which BBAstra has executed on the more recent resales.

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59 Mr Brender submits that even the current documents (applicable to sales where there is no buyback in place, as set out at pages 874 and following in the court bundle) are subject to change, depending among other things on changes that may occur in the retirement village which must be referred to in the disclosure statement (such as to sales of units in the village, changes in the facilities provided, change of chairperson of the resident committee or the like) even apart from the obvious changes in respect of particular units. Mr Brender intimated that if the absence of similar buyback provisions were perceived to cause a difficulty, then there would be a change to the pro forma sale documents to meet that difficulty (though I am not certain how that would be achieved, without a change in the buy back policy, unless BBAstra is contemplating some sort of alternative provision in the new pro forma documents). 60 The reliance which Mr Fagan places on the issue is that he submits it is likely that, should Ms Hohman in due course wish to sell the unit, and apply to the Tribunal for an order directing BBAstra to enter into a service contract with the purchaser that is substantially in accordance with the (current) sample contracts, such an order (if granted) would negate or circumvent the effect of any declaration by this Court of the kind which BBAstra seeks in paragraph 1 of the Summons and that in those circumstances it would be premature for this Court now to make any declaratory orders in relation to the enforceability of the "buy back" provision. Mr Fagan submits that in the event of a sale by Ms Hohman there will likely be a proceeding in the Tribunal in which all aspects of controversy over the "buy back" would be resolved. It is further submitted by Mr Fagan that declaratory relief will not be granted where it would be a mere anterior step to further litigation. 61 In Meagher, Gummow and Lehane (4th ed), the authors observe that the fact that a declaration might not finally conclude the dispute between the parties can hardly ever be, of itself, a proper ground for not making a declaration. The authors (citing Hope J in Integrated Lighting & Ceilings Pty Limited v Phillips Electrical Pty Limited (1969) 90 WN (Pt 1) (NSW) 693) state that the likelihood of further litigation is something which should affect, but does not determine, the exercise of the court's discretion and go on to say (at [19-130]): It will be otherwise if the declaration will leave unsettled issues between the parties consequent upon it; for example it is one step to declare that a contract for the sale of land is on foot, but this will be inconclusive if the parties are then clearly in dispute as to whether specific performance or damages is the consequential remedy, and are agreed only that the declaration still leaves matters at issue between them. And it would be inefficacious to declare that specific performance was available without administering that remedy: Lucas and Tait (Investments) Pty Limited v Victoria Securities Limited [1975] 1 NSWLR 170. In such a case the appropriate course is to administer the final remedies in the same proceedings as those in which the declaration is made. Of course, the plaintiff may have sought a declaration and no other relief. In such a case it appears that the court should refuse to make the declaration unless the plaintiff seeks or submits to the final relief.

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63 In Neeta it was held that a party seeking a declaration concerning rescission (where no other relief was sought) should at the same time demonstrate readiness and willingness to perform the contract and hence submit to performance or in the alternative be ready to pursue its damages claim for breach of contract, as to fail to do so would leave open the opportunity to pursue one or such other remedies in future proceedings which would be contrary to s 63 of the Supreme Court Act. Barwick CJ and Jacobs J said at 168: Unless the parties are agreed on the consequences which flow from a declaration that such a contract has or has not been validly rescinded it is generally undesirable that a court should so declare without any orders for consequential relief. If a party to such a contract claims that a contract has not been validly rescinded such a judicial declaration is proper if that party continues ready and willing at the conclusion of the litigation to perform the contract. A consequence of the declaration should be that the party submit to the performance of the contract on his part and to an order for specific performance of the contract if that is appropriate. If such an order is not or cannot be made, nor an inquiry into damages ordered, then a declaration that on a certain day the contract had not been validly rescinded serves no purpose in the litigation. Before such a declaration is made the party seeking the declaration may already have elected to treat the other party's purported rescission as a repudiation and may have himself rescinded the contract. All that has then been achieved is an issue estoppel if and when the claim for damages for breach of contract is pursued in other proceedings. This was not the intention of the legislation as appears from s 63. Conversely, if a declaration be made that a contract has been validly rescinded but no consequential orders for damages or for return or retention of the deposit are made in those proceedings the purpose of s 63 is not achieved. In these circumstances we are of the opinion that the matter should be remitted to the Supreme Court of New South Wales for further hearing in the light of these reasons so that as far as possible all matters in controversy between the parties may be completely and finally determined. 64 In Lohar Corp Pty Limited v Dibu Pty Limited, Street CJ defended the utility of declarations in conveyancing cases and stated that: Where a vendor and a purchaser have come to issue in connection with their contract and its fulfilment, and where the Court can see that real utility will attach to resolving that issue on a summary application for a declaration, a court of first instance need not anticipate that an appellate court will fail to recognise the width of the declaratory jurisdiction as established by Foster v Jododex Aust Pty Limited (1972) 127 CLR 421 or that the discretion to exercise that jurisdiction will be too freely reviewed. 65 Mr Fagan submits that cases such as Neeta and Lohar must be seen as arising in the vendor/purchaser context, in which there may well be utility in a declaration as to the subsisting contractual position, but suggests that these are distinguishable from cases arising in other contexts. 66 Turning then to a case arising in a different context, in Commonwealth of Australia v BIS Cleanaway Limited [2007] NSWSC 1075, Brereton J, when considering a submission by the Commonwealth that the proceedings before his Honour afforded an opportunity to decide a discrete question in a cost effective way, said, at [34]-[35]: This amounts, in effect, to an application to the court to decide a preliminary question, in the absence of any proceeding to which it is preliminary. Accordingly, granting the declarations sought would not completely and finally determine any controversy that may arise between the parties. The present litigation is essentially an anterior step to further litigation, in which further issues will necessarily arise. If the declarations were made, then should the Commonwealth subsequently seek to obtain substantive relief, there would remain a range of factual and legal issues that would not have been addressed during the proceedings for declaratory relief, in respect of which liability would still have to be proved. This would probably necessitate revisiting at least some of the evidence that would be adduced in the proceedings for a declaration. The declarations if granted would therefore not finally resolve the issues between the parties. In the absence of any claim for substantive relief, it is not apparent that there is any utility in deciding the "preliminary question" raised by the claim for declaratory relief. 67 His Honour said, at [28]: ... it is generally inappropriate to grant declaratory relief if it will be inconclusive, in the sense that the proposed declaration would leave unresolved issues, with the parties still in dispute as to the consequences so that further litigation would be required to resolve the controversy [ Smart v Allen (1970) 91 WN(NSW) 241; Integrated Lighting & Ceilings Pty Ltd v Phillips Electrical Pty Ltd (1969) 90 WN (Pt 1) (NSW) 693, 702]. 68 His Honour considered the case to be practically indistinguishable from Neeta, saying that, at [35]: Nothing appears which makes it such an exceptional case as to warrant the exercise of the discretionary jurisdiction to grant a declaration, despite Supreme Court Act, s 63: granting the declarations would not resolve a potential future dispute, because they would leave subsequent issues unresolved. 69 (I note, however, that in dismissing leave to appeal from his Honour's judgment in BIS (Commonwealth of Australia v BIS Cleanaway Limited [2008] NSWCA 170), Hodgson JA expressed the view (at [4] - [5]) that there was some force in the contentions that the trial judge had erred (first) in applying s 63 of the Supreme Court Act, because there were no claims that had been brought forward which the court would not be determining and (secondly) in considering that the cases of Neeta and Coles v Wood dictated that the only proper exercise of discretion would be refusal of declaratory relief. Hodgson JA said that he did not wish to be taken as endorsing everything which had been said as to those points. A similar qualification was made by Ipp JA (at [21] - [22]), it would seem as to whether the appropriate test for exercise of discretion was whether other issues would be left unresolved.) 70 Brereton J in Cypjane Pty Ltd v Rodskog [2009] NSWSC 301 again considered the issue of declaratory relief in circumstances where it was said to be hypothetical, and said at [16]: This is not a case of resolution of only one step in litigation … there may be a further dispute, but it will involve issues different from those immediately under consideration. Absent intervention, the partners cannot progress their negotiations with the Adelaide Bank. The declaratory relief sought at this stage will, if granted, permit the negotiations with the Adelaide Bank to move forward.

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71 His Honour there held that even if there might be such a further dispute, the declaration was not hypothetical and would have utility because there was a live controversy and its resolution would have practical consequences, at [59]. 72 In that regard it seems to me that this case is closer to Cypjane than to BIS. There is no certainty (although given the current stances of the parties it must be likely) that further litigation will eventuate, such that the present dispute could not be said simply to be anterior to that litigation. As Mr Fagan has articulated, there are a number of possibilities which may arise, depending on the position Ms Hohman takes as to what she wishes to do with the unit in the future and the position which BBAstra then takes in relation thereto. However, that does not mean that the present controversy is not a live issue as to which there would be utility in the making of a declaration. 73 In essence, Mr Fagan has raised a number of issues in relation to what is said to be the hypothetical nature and lack of utility of the declaratory relief as sought by BBAstra. To my mind, these issues go broadly to the inappropriateness as to a declaration as to the enforceability of clause 2, not its construction having regard to the particular events which have happened. 74 First, it is said that there is no sale currently in contemplation. (That seems to me to be a matter very much dependent on the outcome of the present (and perhaps future) application(s).) 75 Secondly, Mr Fagan says that if and when any sale is contemplated the enforceability of the buyback provision may be governed by a different or amended legislative regime. (That is so, but the spectre of future legislative amendment can surely not preclude a declaration based on the state of the law at the present time). 76 Thirdly, it is said that the definition of issues as to the construction or enforceability of the buyback provision will not resolve future disputes. The legislature has evinced, he says, an intention under the retirement villages legislation for issues in relation to contracts such as these to be dealt with in a uniform and non-discriminatory manner. Mr Fagan submits that a genuine, justiciable dispute as to whether Ms Hohman is "obliged to procure" execution of a service contract incorporating a buyback clause from her purchaser will only arise when and if Ms Hohman sells the unit. It is submitted that (assuming the legislation remains in its present form up to that time) such a dispute would likely arise in the following manner - Ms Hohman would be obliged to notify BBAstra that she wished to sell to a particular purchaser (s 171(1)); if BBAstra then wished to enter into a service contract with Ms Hohman's purchaser, stipulating for a buyback option in favour of BBAstra at $95,000, Ms Hohman would likely resist such a term being imposed upon her purchaser (as it would depress the sale price); if BBAstra refused then to enter into a service contract without the buyback clause, Ms Hohman would be entitled to apply to the Tribunal under s l72(l) for an order directing that a service contract be made, her sale contract being conditional on a service contract being made (s 171(2)). 77 It is said that there would then be brought to a head the issues whether, for the purposes of s 172(2), there could only be one "sample" service contract; whether whatever service contract which is that future time offered by BBAstra in respect of the majority of units, assuming it has no buyback stipulation must be considered the standard of comparison; and whether BBAstra's buyback requirement would render a service contract offered to Ms Hohman's purchaser "substantially different [from the sample], to the detriment of the purchaser". It is said the issue would also arise as to whether, and by reference to what grounds and considerations, the Tribunal should order BBAstra to enter into a service contract with Ms Hohman's purchaser that is "substantially in accordance with the sample contract" (ie contracts in accordance with whatever are the then sample contracts in use in relation to the retirement village). 78 It is submitted by Mr Fagan that the Tribunal, resolving these issues in the exercise of the broad discretion conferred by s 172(2), may well conclude that Ms Hohman is not "obliged" to procure from her purchaser a buyback clause to be incorporated in the service contract (whether on the basis of a policy that there should be no discrimination amongst the purchasers of units in this regard or otherwise). Accordingly, it is said that a declaration now made by this Court that Ms Hohman is so "obliged" to procure a contract containing the buyback provision would purport to pre-empt the Tribunal's decision making. That is said to be sufficient reason, in the 'unusual circumstances of this case', for not making either the declaration sought under paragraph 1 of the Amended Summons or the alternative declaratory relief which contemplates Ms Hohman being "obliged" to procure a particular term in a service contract to be made at some future date. 79 It is submitted by Mr Fagan that, exercising its proper legal authority in respect of a dispute about a buyback provision, if an issue as to the entry into a particular occupancy agreement containing such a clause were to arise the Tribunal would decide the matter unfettered by any declaration this Court might make as to whether, on the terms of the contract, Ms Hohman is "obliged" to procure execution by a purchaser of a contract containing such a buyback provision. Hence, it is said that a declaration of the court in these terms would, at the least, be futile and, at worst, be an embarrassment to the Tribunal in exercising its discretionary jurisdiction. 80 As to the further alternative declaration sought in paragraph 1B of the Amended Summons, it is submitted by Mr Fagan that this proposal amounts to asking the court first to make a declaration that the relevant clause of the Buyback Deed is enforceable and then to contradict itself by declaring that enforcement is subject to later adjudication in another place. It is said that this amounts to inviting the court to acknowledge, on the face of its own orders, that it is incapable of giving finality or certainty to the question of enforceability of the relevant contractual clause. It is said that the net effect of a declaration of the kind sought in paragraph 1 combined with that in paragraph 1A would be complete cancellation of the effect of the former declaration, and that the court should not make either of the orders. 81 In response, Mr Brender says that the question of a Tribunal proceeding in which the Tribunal was asked to order BBAstra to enter into a service contract substantially in accordance with a sample contract (of the kind recently provided) is itself hypothetical and that in any event such a possibility would not provide a discretionary reason for refusing the declaration sought in this case, since there is no requirement for the grant of declaratory relief that the declaration must solve every conceivable dispute between the parties about a particular subject matter (provided the declaration which is sought has utility and is not purely hypothetical). 82 It seems to me that the third of the issues raised by Mr Fagan, as I have outlined them in paragraph 74 - 76 above (namely as to the possibility, or perhaps likelihood, of future disputes coming before the Tribunal and the potential for embarrassment to be caused to the Tribunal when entertaining such disputes), is one which goes in essence to a declaration as to the enforceability of clause 2 of the Buyback Deed, not its construction. 83 As to the position of the Tribunal, it will be a matter for it in due course to exercise the jurisdiction it has, in accordance with its statutory powers, if such a matter comes before it (whether on an application in relation to a refusal to consent to a lease or an application for refusal to enter into a service agreement without the buyback provision or otherwise). Section 128(1) provides that the Tribunal has power, upon the application of a resident or an operator, to set aside a provision of a retirement village contract that conflicts with the Act or Regulations. Section 128(2) makes it clear that s 128(1) does not limit the orders that the Tribunal may make under the Act. 84 If it is open to the Tribunal under the jurisdiction and with the powers conferred on it to disregard or act otherwise than in accordance with what might be the proper construction of the parties' contract (or, as postulated by Mr Fagan, to order that BBAstra enter into a service contract with an incoming purchaser on other than on the terms which someone in the position of Ms Hohman had previously agreed to procure), and I make no comment on that issue, then whatever construction this Court may place on the contract in question cannot be said to be likely to cause any embarrassment of the kind Mr Fagan has envisaged. I do not consider that the making of a limited declaration of the kind I propose to make (as to the construction of clause 2) in any way trespasses on the jurisdiction of the Tribunal nor do I consider it should cause any embarrassment to the Tribunal. In the meantime, the parties (and any proposed incoming purchaser) will have at least some degree of certainty as to the status of clause 2 of the Buyback Deed, namely that it is not invalidated by the existing findings of the Tribunal or has been alleged by Ms Hohman. Therefore, speculative or not, the possibility of future Tribunal proceedings does not in my view lead to the conclusion that no declaratory relief at all would be appropriate. 85 Finally, in terms of the declaratory relief which has been sought, my attention was drawn to the fact that on 19 February 2010, after I had reserved judgment in this matter, Bryson AJ handed down his decision in Gora, in which case BBAstra had sought a declaration as to the enforceability of what seems to have been a very similar (and perhaps even identical in all material respects) buyback provision in an Occupancy Agreement and in a Buyback Deed in relation to another unit in the Bondi Beach Astra Retirement Village. The only difference seems to be that the relevant buyback consideration in the case before Bryson AJ was $107,000 whereas in the case presently before me the amount is $95,000. 86 At [79]-[93], his Honour considered whether the buyback provisions in clause 8 of the Occupancy Agreement and clause 1 of the Buyback Deed were invalid on the grounds that they purported to impose "a total restraint on the alienation of the freehold estate in fee simple" (at [82]). His Honour's conclusion in this regard, at [94], was as follows: In my opinion, both the Occupancy Agreement and the Buy-back deed impose invalid restraints on alienation, the provisions relating to the option are not effective for that reason and provisions requiring buy back have no operation [Bondi Beach Astra Retirement Village Pty Ltd's claim] should be dismissed for this additional reason.

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90 For BBAstra, it is said (as is apparent from his Honour's judgment) that in Gora his Honour declined to permit the enforcement of the buy-back provision in the similar document on two bases - first, on the basis of laches, abandonment and analogous doctrines, and, secondly, as an invalid restraint on alienation. 91 It is submitted by Mr Brender that that decision ought not be relied upon to refuse relief in this case because the arguments in Gora were not made or considered in the hearing before me; and because the declaration now sought here (other than in paragraph 1) is one limited to a declaration concerning the proper construction of the terms of the agreement and questions of enforceability are expressly (if declaration 1B is made) or implicitly (if declaration I or 1A is made) not part of the decision. It is submitted that if Ms Hohman wishes later to rely upon Gora, that will only arise after the construction point has been resolved. It is therefore said that this possibility is no more relevant than Ms Hohman's professed intention to contest enforcement by making an application to the Tribunal under whatever provisions of the Act might then be available. 92 Mr Brender submits that a declaration in this case (notwithstanding the decision in Gora) will have the same utility as it had when the case was argued before me - namely, in removing one live issue (of contractual construction) from future debate and giving the parties some certainty on this point. The possible Gora point is said to be simply another possible future point these parties might choose to litigate. (It is further intimated that BBAstra proposes to appeal from the decision in Gora.) Conclusion as to Issue 1 93 I accept that the making of a declaration as to the enforceability of clause 2 of the Buyback Deed, in the absence of the circumstances of any particular sale having arisen (unlike the situation in Noon) in which that issue has an immediate relevance, is hypothetical and inappropriate. I was of that view before my attention was drawn to the Gora decision and that decision has simply strengthened that view. 94 If and when Ms Hohman wishes to sell the unit, there may be a number of factors to take into account in deciding whether the provision in clause 2 of the Buyback Deed should be enforced by a court of equity. The position was different in the Noon case where there was a particular fact situation before the court in which BBAstra was asking for (and obtained) such a declaration. 95 There is an argument that the making of a declaration as to the construction of clause 2 of the BuyBack Deed (having regard to the orders made by the Tribunal) in the manner envisaged by declarations 1A and 1B is also hypothetical in the sense that the import of such a declaration may not be of consequence for the foreseeable future (if Ms Hohman, for example, chooses not to sell the unit at all but simply chooses to retain it and perhaps occupy it herself when she reaches the age at which she would be a Qualified Occupant (assuming that can be done consistently with her duties as an executor of the estate) and in the sense that, depending on what future litigation ensues, it may well be that the Tribunal (assuming this is the forum in which such litigation were to be brought) would have the power to adjust the parties' contractual rights or to make orders which would operate inconsistently with them, having regard to the circumstances in which (for example) the retirement village legislation then operated (whatever might be the proper construction of the contract). 96 It seems to me likely (bearing in mind some of the submissions made by both sides before me) that the making of a declaration of the narrower kind which I am minded to grant (as to the effect of the existing Tribunal orders on the operation or effectiveness of clause 2 of the Buyback Deed) will not quell all possible disputes between these parties. BBAstra (understandably) wishes to preserve the commercial benefit to it of the buyback option (that presumably being the basis on which it was prepared to enter into the service agreement on the terms it did with the late Mrs Borthwick in the first place); equally, Ms Hohman seemingly wishes to take the benefit, for the estate, of what in one sense might be said to be a windfall gain (insofar as the appreciation in the capital value of the unit was not something for which the late Mrs Borthwick had bargained to receive in the first place). There may also be policy factors which, if the matter were again to come before the Tribunal, may need to be taken into account by it and, as the issues considered by Bryson AJ in Gora show, there may be other difficulties for BBAstra in attempting to enforce clause 2 so as to include a buyback obligation in any future service contract with an incoming purchaser. 97 However, there is little doubt that BBAstra has a commercial interest in having certainty as to at least the issue which has been raised (as to the construction or effectiveness of clause 2 of the Buyback Deed), namely as to whether its continuing operation is affected by the Tribunal's earlier judgment in proceedings involving this contract, given that if clause 2 were to have been rendered invalid by the findings already made by the Tribunal this would impact on its balance sheet. Indeed, if there were any doubt as to BBAstra's concern to have clarity as to its rights in this regard, this would be quickly dispelled by reference to the seeming plethora of cases in which BBAstra has already sought to clarify aspects of, and/or assert its rights in relation to, this and similar clauses in other agreements (Noon, Gora, and the various iterations of the Hohman disputes in the Tribunal, before Harrison J, before the Court of Appeal and now before me). 98 I accept that the scope of any future dispute, whether as to a refusal to consent to a lease or as to a refusal to execute a service contract without a particular buyback clause (or indeed as to whether the provision of a contract containing a clause in the form of clause 8 of the Occupancy Agreement would be discriminatory or would offend the principles on which the legislature has or may be taken to have indicated that retirement village service contracts are to be proffered to residents), is speculative; and may or may not eventuate. 99 While I am not satisfied that it is appropriate, in isolation of an actual dispute as to the enforceability of this particular clause, to make any declaration as to its enforceability (of the kind initially sought or as sought in part of the alternative relief now claimed), I am of the view that there is some (albeit perhaps limited) utility in a declaration that the effect of the earlier judgment in the Tribunal is not of itself such as to preclude the operation, in an appropriate case, of clause 2. 100 I say this because the very first (and only substantive, as opposed to procedural) objection taken by Ms Hohman in late 2009 to the contractual construction which had been advocated by BBAstra was that the effect of the Tribunal judgment was to render clause 2 effectively unenforceable (on the basis, which I consider cannot be sustained, that clause 8 of the Occupancy Agreement had been held by the Tribunal to be void and for that reason could not be included in any future purchaser's occupancy agreement). I consider that position to be incorrect as a matter of law (and I note that in the hearing before me there was no suggestion otherwise, Ms Hohman having seemingly abandoned any such contention or else resting her defence solely on the issue as to the hypothetical nature of the dispute). In those circumstances I consider that there is some utility in quelling future controversy on that point. 101 (But for the contentions raised for Ms Hohman in December 2009, I might have been inclined to the view that there was insufficient utility to grant the limited form of declaratory relief which I propose to grant. To my mind, however, the fact that this was squarely put in issue by Ms Hohman means that there is some utility in resolving that issue at this stage.) 102 As to the construction of clause 2, there seems no real dispute but that, as no party has served a Buyback Notice, clause 2 on its terms is triggered. I cannot see how the fact that an option, as between BBAstra and the original proprietor of the unit, has lapsed (as held by the Tribunal) prevents clause 2 from operating according to its terms in effect to incorporate such a clause by reference into the terms of a future contract if required to be entered into by Ms Hohman if and when she decides to sell the unit (even though there may be other reasons why that clause as so construed might not be enforced at that time).

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104 Mr Brender pointed out that there was no suggestion that any Anshun estoppel (Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589), issue estoppel or res judicata had arisen to preclude BBAstra from seeking to rely on clause 2. 105 Taking the orders of the Tribunal as read, the fact that (as between BBAstra and Ms Hohman) the lapse of the option rights has led to an order by the Tribunal that the clauses making provision for the buyback option are void and should be set aside does not support a conclusion that an agreement (which on its face requires a clause, to similar effect as that held to be void for quite separate reasons, to be included in a future contract with a third party in certain circumstances) is (for that reason alone) itself void or unenforceable. 106 In effect, clause 2 is doing no more than requiring Ms Hohman in certain circumstances to procure a purchaser to enter into an agreement which is to contain a term (conferring a right such as that which has already lapsed as between Ms Hohman and BBAstra) identified by reference to another document. The validity of that term as between BBAstra and Ms Hohman seems to me to be wholly irrelevant to the question whether Ms Hohman is prima facie obliged to include it in a document which clause 2 provides she must procure an incoming purchaser to sign. (It would be another matter if the term(s) sought to be included were a term (or terms) of a kind which a court of equity would not enforce in the first place - hence the potential relevance of the Gora decision on any ultimate claim to compel the procurement of execution of such an agreement). 107 In those circumstances, the appropriate declaration is one limited to the effect of the Tribunal's orders, as a matter of construction, on clause 2 of the Buyback Deed. 3 Caveat 108 Mr Fagan submits that, in circumstances where no lapsing notice has been issued and Ms Hohman has acquiesced to date in the lodgement of the caveat, it is premature to make any declaration as to whether the caveat is maintainable. He says that as there is 'no dispute whatsoever' about the caveat there is no basis for the court embarking on this issue. Mr Brender, however, pressed for a declaration in relation to the caveat and says that the caveatable interest is an equitable right to compel something in relation to an interest in the land. 109 I have set out earlier the interest claimed under the caveat. Mr Brender also took me to clause 1(c) of the Buyback Deed in which the parties acknowledged that the rights conferred on BBAstra or its nominee pursuant to the clause could properly be the subject of a caveat. It is said that this clause gives rise to an interest in land insofar as it gives an entitlement to procure the execution of a contract under which an option to acquire the land would be given. Clause 2 of the Buyback Deed is said to be one of the processes contemplated in clause 1 as required to be followed for a sale of the property. (The Occupancy Agreement itself contemplates that there may be a caveat lodged in respect of a charge over the unit for the payment of moneys but that is not the interest the subject of the present caveat.) 110 I note that in Gora, Bryson AJ expressed a doubt (at [78]) as to whether in that case BBAstra had an equitable interest (and hence a caveatable interest) in the unit when the caveat was lodged but said that "these doubts cease to apply when one of the conditions in which the option may be exercised has occurred; the option then has some claim to be regarded as a conditional contract to sell the land; see Laybutt v Amoco Australia Pty Limited (1974) 132 CLR 57 at 76 Gibbs J." His Honour was of the view that the Buyback Deed itself did not create an equitable interest (referring to Mackay v Wilson (1947) 47 SR (NSW) 315, at 325; Moraitis Fresh Packaging (NSW) Pty Limited v Fresh Express (Australia) Pty Limited [2008] NSWCA 327 at 72, 73 (Giles JA)). 111 Further, although Troncone v Aliperti (1994) NSW ConvR 55-103, might suggest that the right (by the enforcement of an express or implied negative covenant) to restrain a dealing with land is an interest in land within this branch of the law, and accordingly a caveatable interest (at 60,020), this decision has been distinguished as being limited to the situation where there is an agreement to grant a caveat to protect or enforce covenants restricting dealings with land, such as to give rise to an implied charge over the land. 112 Mackay v Wilson (1947) 47 SR (NSW) 315 and Moraitis Fresh Packaging v Fresh Express, to which Bryson AJ in Gora at [78] referred, are authority for the proposition that a negative covenant restricting dealings with land is merely a contractual obligation and will not confer equitable interests in land (as opposed to a right to purchase, which confers an equitable interest in land on the optionee).

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113 Troncone v Aliperti, where Mahoney JA said that: Second, there is in my opinion no rule of law which prevents the creation of a limited equitable interest of this kind. Thus, if the registered proprietor of land covenants by deed that, until a loan be repaid, he will not sell or deal with the land, that covenant would, in my opinion, create in favour of the covenantee an interest in the land to the extent at least that an injunction would go to restrain the covenantor from dealing with the land in a manner inconsistent with the covenant . It is not necessary for this purpose to pursue the nature of the estates or interests in land which, under the conventional law of real property, it was or is possible to create. Nor is it necessary to distinguish between an estate and an interest in land. The right, by the enforcement of an express or an implied negative covenant, to restrain a dealing with land is in my opinion an interest in land within this branch of the law. Accordingly, such an interest would, in my opinion, be within the words "a legal or equitable estate or interest in land" within s 74F(1) . There is accordingly nothing to prevent the implication from the terms of cl 5 of the grant of an interest sufficient to support such a caveat as was contemplated by cl 5 … has mostly been characterised as relating to the situation where the equitable interest to support the caveat is an implied charge: Townsend v Coyne (1995) 6 BPR 13,935 at 13,940; Chiodo v Murphy & Doherty [1996] ANZ ConvR 160, at 162; Go-Tell Nominees Pty Ltd v Nichols (unreported, VSC, Cummins J, No 4247 of 1997, 7 February 1997, BC9700713), at 6; Neoform Developments and Interiors Pty Ltd v Town & Country Marketing Pty Ltd (2002) 49 ATR 625, at 627 [21]; Brandling v Weir [2003] NSWSC 723, at [53]. 114 The proposition that Troncone v Aliperti is binding authority for the principle that where a party is entitled to equitable relief by way of injunction to enforce a negative covenant to restrain certain dealings with land that person has a caveatable interest was rejected by White J in Redglove Projects Pty Ltd v Ngunnawal Local Aboriginal Land Council (2004) 12 BPR 22319; [2004] NSWSC 880. There, his Honour distinguished Troncone v Aliperti on the basis that in that case the agreement in question specifically authorised the creditors to lodge a caveat on any property owned by the debtor to protect their interests. White J stated:

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[22] Mahoney JA [in Troncone v Aliperti ] did not decide that the clause in question created an equitable charge. His Honour's first finding was that by applying the principle of construction that there is an implied grant of all that is necessary to make an express grant effectual, the agreement in question created by implication whatever interest was sufficient to create an equitable estate or interest in land, without deciding what that estate or interest was: see Jones v Baker (2002) 10 BPR 19,115 at [89]-[90]; Nguyen v On (2003) 12 BPR 22,199; (2004) NSW Conv R 56-065 at [19], [22]; Brandling v Weir at [53]; [2004] NSWSC 142 at [9]. That finding has no implication for the present case. Mahoney JA expressly said that it was unnecessary to determine the precise nature of interest that was impliedly granted. [23] Although his Honour went on to say that the right to enforce by injunction an express or implied negative covenant to restrain a dealing with the land was an interest in land for the purposes of this branch of the law, I do not think that this was part of the ratio of his Honour's decision, let alone part of the ratio of the court's decision. Neither Priestley JA nor Meagher JA endorsed that reasoning. Priestley JA clearly did not do so. Although Meagher JA at one point agreed with the reasons of Mahoney JA, he later gave reasons of his own which were inconsistent with such a view of the law. 115 White J found that the ratio decidendi of Troncone v Aliperti was that on the proper construction of the agreement in question (that is where there was an express right to lodge a caveat), the creditors could lodge caveats on the debtor's land and thus the debtor had impliedly granted an equitable charge to the creditors. 116 White J found that an express contractual promise not to deal with land did not necessarily create an equitable estate or interest in land capable of supporting a caveat, as the willingness of equity to enforce a negative covenant by injunction "does not transmute a purely personal claim into a proprietary interest" (at [26]). White J stated:

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[26] … There have been numerous instances where the courts have held that no equitable estate or interest in land is created by an express or implied promise not to deal with the land except in conformity with a contract. The fact that equity will enforce the negative promise by injunction does not transmute a purely personal claim into a proprietary interest. Equity does "nothing more than give the sanction of the process of the court to that which is already in the contract between the parties": Doherty v Allman & Dowden (1878) 3 App Cas 709 at 720. [27] An injunction operates in personam. The grant of an injunction does not create an equitable interest which does not otherwise exist: Craftsman Colour Newcastle Pty Ltd v Scotman (unreported, NSWSC, McLelland CJ, No 4049 of 1993, 6 September 1993, BC9302087) at 2. If the right created by contract is merely personal, the fact that a breach may be restrained by injunction and does not sound only in damages cannot convert a personal right into a proprietary interest. [28] A party who is given a right of first refusal to buy land can enforce a contractual claim to restrain a dealing with land, but before the conditions for the exercise of the right have been satisfied, he has no equitable interest in the land. In Mackay v Wilson (1947) 47 SR (NSW) 315 Street J said (at 325): But an agreement to give "the first refusal" or "a right of pre-emption" confers no immediate right upon the prospective purchaser. It imposes a negative obligation on the possible vendor requiring him to refrain from selling the land to any other person without giving to the holder of the right of first refusal the opportunity of purchasing in preference to any other buyer. It is not an offer and in itself it imposes no obligation on the owner of the land to sell the same. He may do so or not as he wishes. But if he does decide to sell, then the holder of the right of first refusal has the right to receive the first offer, which he also may accept or not as he wishes. The right is merely contractual and no equitable interest in the land is created by the agreement. [29] When the conditions for the exercise of the right of first refusal have been satisfied then the mere contractual right to enforce the right of first refusal by restraining a dealing in land can be transmuted into an equitable interest in the land: see the cases reviewed by Campbell J in Sahade v BP Australia Pty Ltd (2004) 12 BPR 22,149; [2004] NSWSC 512 at [41]-[43]. But before then, it is clear that the mere contractual right as described by Street J does not create an equitable interest in the land which is the subject of the right of first refusal.

[44]

[57] In any event, it is fairly clear, as Hall J noted, that there is no equitable charge in the instant case. The decision of the Court of Appeal in Troncone v Aliperti (1994) 6 BPR 13,291 does not support the proposition that whenever there is the grant of a right to lodge a caveat, there is automatically a grant of an equitable charge. At its highest it says that in the ordinary case, if there is nothing more, a court can presume such a grant... 119 In circumstances where there is no dispute at present as to the maintainability of the caveat; where there is doubt as to the enforceability of the buyback provision, in light of the Gora decision as to the validity of a very similar if not identical buyback option; where what has been caveated is an equitable right to compel Ms Hohman to procure a future purchaser to enter into a contract containing such a provision and a claim that she is estopped from denying such an obligation; and where this issue was not fully argued before me, I do not think it appropriate to grant the declaratory relief sought in paragraph 2 of the Amended Summons. Costs 120 Insofar as costs issues have been raised by Mr Fagan on the amendment to the summons, I note that it is submitted by Mr Brender that a narrower declaration than that primarily sought by a plaintiff can always be made by the court and that normally the grant of such a declaration would also carry a costs order. The court has power, under s 63 of the Supreme Court Act and under r 36.1 of the Uniform Civil Procedure Rules 2005 (NSW), to grant all such relief to which a party may be entitled, whether or not a specific claim for that relief has been made in the originating proceedings. 121 Further, it is said by Mr Brender that the impact of the Gora decision, being a case on a point not taken by Ms Hohman until after the hearing had concluded, may also have costs consequences and that if it provides the decisive reason why a declaration is refused, costs ought not follow the event. 122 In the circumstances I propose to hear Counsel on the question of costs before making any order as to costs. Orders 123 For the reasons set out above:

Bondi Beach Astra Retirement Village Pty Limited v Hohman

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