Broulee Developments Pty Limited v Mackay

Lysaght v Edwards (1876) 2 ChD 499 Fullwood v Fullwood (1878) 9 ChD 176 Summers v The Commonwealth [1918] HCA 33; (1918) 25 CLR 144 Fitzgerald v Masters [1956] HCA 53; (1956) 95 CLR 420 Lamshed v Lamshed (1963) 109 CLR 440 DTR Nominees Pty Limited v Mona Homes Pty Limited [1978] HCA 12; (1978) 138 CLR 423 Air Great Lakes Pty Limited v KS Eastern Pty Limited (1985) 2 NSWLR 309 CASES CITED : Harvela Investments Limited v Royal Trust Company of Canada (CI) Limited [1986] AC 207 Wollondilly Shire Council v Picton Power Lines Pty Limited (1994) 33 NSWLR 551 CIC Insurance Limited v Bankstown Football Club Limited (1995) 8 ANZ Ins Cas 61 Plumer v Handley (1996) 41 NSWLR 30 Commonwealth of Australia v SCI Operations Pty Limited (1998) 192 CLR 285 Savage v Lunn (CA) NSW, 9 March 1998, (unreported) BC 9800548 Wallera Pty Limited v CGM Investments Pty Limited [2003] FCAFC 279 Marminta Pty Limited v French [2003] QCA 541 Ryder v Frohlich [2004] NSWCA 471

TEXTS CITED : Meagher, Gummow, Lehane, Equity Doctrines and Remedies (4 ed., 2002)

PARTIES : Broulee Developments Pty Limited (Plaintiff) Angus Hugh Mackay as administrator of the estate of the late Kenneth Laurie Mackay (Defendant)

COUNSEL : Mr P. Gray SC and Ms P. Koroknay (Plaintiff) Mr B. Coles QC and Mr S. Wells (Defendant)

SOLICITORS : Barker & Barker (Plaintiff) Arthur Anthony Carney (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

3053 of 2005 BROULEE DEVELOPMENTS PTY LIMITED -v- ANGUS HUGH MACKAY AS ADMINISTRATOR OF THE ESTATE OF THE LATE KENNETH LAURIE MACKAY JUDGMENT 1 HIS HONOUR: By summons filed on 19 May 2005 Broulee Developments Pty Limited claims substantively relief for specific performance of an agreement for sale of land dated 22 October 1990 between Kenneth Laurie Mackay as vendor and the Plaintiff as purchaser. (I shall refer to Kenneth Laurie Mackay as "the Deceased.") 2 The land which was the subject of the aforesaid agreement was Lot 2 in a proposed plan of subdivision of Old System land owned by the Deceased in the Broulee area on the South Coast of New South Wales. The purchase price was $60,000, of which a deposit of $15,000 was paid by the Plaintiff and was released to the Deceased. 3 The Deceased died between 10 and 13 February 2004, and the present proceedings have been brought against Angus Hugh Mackay (who is the son of the Deceased) as administrator of the estate of the Deceased. 4 It should at the outset be recorded that on 22 June 2006 Justice White, as Duty Judge in the Equity Division, ordered that the trial or hearing of these proceedings be referred to an Associate Judge. In consequence, the matter has come before me for final determination of the proceedings. 5 The essential questions which must be decided are, first, whether the contract between the Plaintiff and the Deceased has been abandoned; and, second, whether, in any event, the Plaintiff's delay in bringing the proceedings is such that the relief sought should, in the exercise of the Court's discretion, be refused. 6 It is appropriate that I should set forth, at least in summary, the factual and evidentiary background to the Plaintiff's present claim. 7 Before January 1990 the Deceased owned Old System land in the Broulee area on the South Coast of New South Wales. His land holdings included Portion 8 (being 640 acres) and also Portions 24 and 32. The Deceased intended to make application to the Land Titles Office for possessory title to Portion 8 and to develop Portions 8, 24 and 32. A subdivision of part of Portion 8 into three lots was originally approved by Eurobodalla Shire Council on 6 December 1983, plan number 1449 being released on 4 December 1985. During 1990 the Deceased was involved in proceedings in the Supreme Court which had been instituted against him by the National Australia Bank. 8 As has already been recorded, on 22 October 1990 the Deceased as vendor entered into an agreement for the sale of Lot 2 in the proposed plan of subdivision, Broulee Developments Pty Limited being the purchaser. The purchase price was $60,000 and a deposit of $15,000 was paid by the purchaser and released to the vendor. 9 The directors and shareholders of Broulee Developments Pty Limited ("Broulee") were William Ian Fraser (known as and referred to as Ian Fraser) and his wife Lorraine Blair Fraser. Ian Fraser was also a director and shareholder of Fraser-Gray Pty Limited, an estate agent, which was acting for the Deceased on the sale of Lots 1, 2 and 3 in the proposed plan of subdivision of Portion 8. Not only did the Deceased have a business relationship with Ian Fraser, but they were friends of long standing. 10 The deposit of $15,000 which was paid by the Plaintiff represented 25 per cent of the purchase price of $60,000. That deposit was acknowledged by the Deceased to have been received by and released to him. The deposit included $300 paid to the Deceased by Ian Fraser on behalf of Broulee on 24 September 1990 and $2,700 paid to the Deceased by Ian Fraser in the form of various temporary unsecured loans. The agreement for sale discloses the vendor's agent as being Fraser-Gray Pty Limited. 11 It will be appreciated that at the time when the Deceased and Broulee entered into the agreement for sale on 22 October 1990 the proposed plan of subdivision had not been registered. 12 That fact was recognised by various special conditions in the agreement, including special conditions 1(a), 1(b)(ii) and 4. Those special conditions envisage that the plan of subdivision might not be registered within 24 months from the date of the agreement. They cast upon the vendor the obligation to pursue the lodging and registration of the proposed plan of subdivision with all due diligence, provided that if the plan had not been registered as a deposited plan within 24 months of the date of the agreement either party might rescind the agreement. Special condition 4 provides that completion shall take place within 24 months from the date of the agreement or within 14 days from the date of service of notice of registration on the purchaser, whichever shall be the later to occur. 13 Although the linen plan had not been registered as a deposited plan within 24 months of the date of the agreement (and has not been so registered to the present time) neither party has purported to rescind the agreement. 14 Although the proposed plan of subdivision had originally been approved by the Eurobadella Shire Council in 1983 and released in 1985, a fresh plan of subdivision was endorsed by the Council on 29 October 1990, apparently a result of the earlier plan having been lost. 15 Not long after entering into the subject agreement with Broulee the Deceased on 5 November 1990 entered into an agreement for the sale of Lot 3 in the proposed plan of subdivision and simultaneously entered into certain mortgage arrangements with Broulee and the purchasers of Lot 3 (in consideration of the sum of $15,000 to be lent to him by Broulee and $50,000 to be lent to him by the purchasers of Lot 3). 16 On 4 March 1991 the Deceased entered into a deed with the National Australia Bank, which settled the proceedings brought against him by that bank. 17 Thereafter, until the time of his death almost 15 years later, the Deceased had various communications with Ian Fraser, and others, concerning the subject agreement. It should also here be recorded that Ian Fraser himself died on 27 March 2004, only about six weeks after the death of the Deceased. It is not necessary that I should rehearse the details of those various communications. They are set forth, in summary form, in the Plaintiff's chronology. However, I would draw attention to one particular communication, being a Christmas card sent by the Deceased to Ian Fraser in December 1993. The message contained in that card included the following, I am sorry it has been so long since I was last in touch. It just has not been possible though as my health has been so low for so long; I am lucky to still be alive. With any sort of luck, I now expect to rejoin the world about the middle of next year and will have a viable plan to progressively meet my outstanding obligations. I am very conscious of and embarrassed by them, especially where they have caused you problems.

18 I have had the benefit of receiving various sets of written submissions and outlines of submissions and a chronology from Counsel for the respective parties, as well as a dramatis personae on behalf of the Plaintiff. Those documents will be retained in the Court file. 19 It was the primary submission of the Plaintiff that, despite the lapse of almost 15 years, the contract between the Plaintiff and the Deceased remained on foot at the time of the institution of the present proceedings, and still remains on foot. The Defendant, however, submits that the Plaintiff abandoned the contract at some time between 17 February 1998 and 27 November 2002. The significance of those dates is that on 17 November 2008 Ian Fraser in a communication to the Deceased referred to the "inordinate amount of time elapsed". On 27 November 2002 the solicitor for the Deceased made a file note which records a communication addressed to Ian Fraser from one Ron Pomering (who, apparently, for a period, had some form of authority from the Deceased) in respect to the Deceased's proposals for subdivision and development of the entirety of the Deceased's land holding in the Broulee area. 20 The parties were in agreement that the relevant law relating to the abandonment of a contract was set forth in the judgment of McColl JA (with whom Hodgson and Ipp JJA agreed) in Ryder v Frohlich [2004] NSWCA 471, where Her Honour said, at [135]-[137]: Where it is plain from the conduct of parties to a contract that neither intends that the contract should be further performed the parties will be regarded as having so conducted themselves as to abandon or abrogate the contract: DTR Nominees Pty Limited v Mona Homes Pty Limited [1978] HCA 12; (1978) 138 CLR 423 at 434 (per Stephen, Mason and Jacobs JJ with whom Aickin J agreed); Summers v The Commonwealth [1918] HCA 33; (1918) 25 CLR 144 at 151 - 152 per Isaacs J. The inference of abandonment will be drawn where "an 'inordinate' length of time has been allowed to elapse, during which neither party has attempted to perform, or called upon the other to perform, a contract made between them … What is really inferred in such a case is that the contract has been discharged by agreement, each party being entitled to assume from a long-continued ignoring of the contract on both sides that … 'the matter is off altogether' ": Fitzgerald v Masters [1956] HCA 53; (1956) 95 CLR 420 at 432 per Dixon CJ and Fullagar J.

Whether there is abandonment or abrogation of a contract is a matter of fact to be inferred from an objective assessment of the conduct of the parties: see CIC Insurance Limited v Bankstown Football Club Limited (1995) 8 ANZ Ins Cas 61 - 232 per Kirby P; Wallera Pty Limited v CGM Investments Pty Limited [2003] FCAFC 279 at [2] per Ryan J, at [30] - [32] per Kiefel J; at [57] per Gyles J; Marminta Pty Limited v French [2003] QCA 541 at [22] per Jerrard JA, Williams JA and Philippides J agreeing.

The underlying premise of the abandonment cases is that a period of time elapses during which neither party to the contract manifests any intention to perform the contract, leading to the inference that the contract has been abandoned. It is clear that the question whether an "inordinate length of time has been allowed to elapse" is relative. In DTR Nominees Pty Limited v Mona Homes Pty Limited the High Court was prepared to infer abandonment after a period of less than five months had elapsed during which neither party took any steps to perform the contract. In Fitzgerald v Masters it was held that a contract for the sale of land had not been abandoned even though proceedings for its specific performance were not commenced until 26 years after its execution. 21 In Fitzgerald v Masters Dixon CJ and Fullager J, in a passage which has long been regarded as the locus classicus in this area of the law, said, at 432, There can be no doubt that, where what has been called an "inordinate" length of time has been allowed to elapse, during which neither party has attempted to perform, or called upon the other to perform, a contract made between them, it may be inferred that the contract has been abandoned. 22 It will be appreciated that, consonant with the foregoing passage from the judgment of McColl JA in Ryder v Frohlich, the question whether there is abandonment of a contract is a matter of fact to be inferred from an objective assessment of the conduct of the parties, and accordingly, it is not necessary for the Court to examine whether the parties themselves actually had the intention of abandoning the agreement. The question for the Court is only whether their conduct, when viewed objectively, manifests such an intention. (See CGM Investments v Chelliah (2003) 196 ALR 584 at [18]; Wallera Pty Limited v CGM Investments Pty Limited [2003] FCAFC 279; see also, Air Great Lakes Pty Limited v KS Eastern Pty Limited (1985) 2 NSWLR 309; where Mahoney JA observed, at 330, the existence of a contract is "a consequence which the law imposes upon, or sees as a result of, what the parties have said and done"). 23 In Wallera Pty Limited v CGM Investments Pty Limited, a decision of Full Court of the Federal Court of Australia, Kiefel J (with whom Ryan and Gyles JJ agreed), said, at [40], While the Australian cases may not have discussed the theoretical basis for abandonment to any great extent it is clear that regard is to be had to the conduct of the parties and what might be inferred from it. Abandonment may be seen as a conclusion that parties have no further interest in a contract continuing, even though they may have said nothing to that effect. It may nevertheless be clear that they both regard it as at an end. This can more readily be discerned where one or more of the parties have ineffectively attempted to bring the agreement to an end and both behave as if it was ended as occurred in Summers v The Commonwealth (1918) 25 CLR 144 and DTR Nominees Pty Limited v Mona Homes Pty Limited (1978) 138 CLR 423. 24 In Summers v The Commonwealth Isaacs J (as he then was), at 151 - 152, considered that, whatever the terms of a contract may be, it is possible for the parties so to conduct themselves as mutually to abandon or abrogate it, regardless of whether there had been something in the nature of rescission. 25 It will be appreciated that each of the relevant authorities in which the question of whether or not there has been abandonment or abrogation of a contract has been considered is, essentially, a decision upon its own facts. Similarly, the concept of "inordinate" delay must be a relative one, to be considered in the context of the circumstances of the particular case. It has already been observed that a period of less than five months has been treated as an "inordinate length of time" (DTR Nominees Pty Limited v Mona Homes Pty Limited), whilst a period of 26 years has been regarded as not falling within that description (Fitzgerald v Masters). 26 In the instant case it has been submitted on behalf of the Defendant that there has been inordinate delay. The Defendant points to the fact that the contract was entered into 17 years ago. The time frame stipulated for plans to be registered expired 15 years ago. Communications directly between the Plaintiff and the vendor ceased in 1995, twelve years ago. Communications between the Plaintiff and Mr O'Neil (who in the 1990s was the Deceased's solicitor and held his power of attorney) ceased in 1997, some ten years ago. It was not until 28 September 2004 that the Plaintiff (through its solicitors, Barker & Barker) communicated that it had a valuation of the land at $255,000 and that the Plaintiff's strong preference would be to complete the contract for sale rather than to exercise its rights as mortgagee to recover the $15,000 that was advanced in 1990. That communication (which took place six months after the death of Mr Fraser and seven months after the death of the Deceased) was responsive to communications which had been initiated by the solicitors for the Defendant concerning the mortgage. 27 The Defendant submits that the inactivity of the Deceased produces the clear inference that the Deceased did not wish to proceed with the contract and that the Plaintiff, by its silence and its failure to call upon the vendor to perform the contract, consented to this situation. 28 The Plaintiff, however, in recognising the various authorities relied upon by the Defendant, pointed to the passage in the joint judgment of Dixon CJ and Fullager J in Fitzgerald v Masters at 432, What is really inferred in such a case is that the contract has been discharged by agreement, each party being entitled to assume from a long-continued ignoring of the contract on both sides that (in the words of Rowlatt J) "the matter is off altogether". It is impossible, in our opinion, to infer a discharge of the contract in the present case…. Here the contract had been partly performed by the respondent. Before he left the property, he had paid more than half of the purchase price, and he had an equitable interest in the land…. As Taylor J observed during argument, if he had at any time regarded the contract as at an end, the first thing one would have expected him to do was to demand repayment of his money. The truth is, we think, that the equitable interest in the land, which the respondent had acquired, could not be lost or destroyed by mere inaction on his part. It could only be lost or destroyed by release or express agreement on his part, or if the deceased lawfully rescinded the contract. 29 The Plaintiff, upon entering into the contract with the Deceased, acquired an equitable interest in the land which was the subject of the contract. (As to the nature and enforceability of such an interest, see Peter Butt, Land Law (5 ed., 2006), [729] - [733].) 30 Further, it will be appreciated that the Plaintiff paid to the Deceased by way of deposit, which was then released to the Deceased, 25 percent of the purchase price. It will be recognised, in passing, that that was an amount considerably more than the normal deposit of 10 percent of the purchase price payable in respect to a contract for the sale of land in New South Wales. 31 The Plaintiff relied upon the following passage from Meagher, Gummow, Lehane, Equity Doctrines and Remedies (4 ed., 2002) [36-070], In Fitzgerald v Masters equitable relief was granted after an inordinate length of time had elapsed. On the point under discussion, there was a divergence of views. Dixon CJ and Fullager J at 433 held that there were no circumstances apart from delay for refusing relief, thereby (and it is submitted, correctly) holding that mere delay of itself cannot constitute laches. McTiernan, Webb and Taylor JJ, on the other hand, at 440-441 seemed to favour the view that mere delay would be sufficient to bar the plaintiff's right, although on the exceptional facts of that case they held that because of the operation of the Moratorium Acts no relevant delay had taken place. In Fullwood v Fullwood (1878) 9 ChD 176 Fry J held that mere lapse of time affords no bar in equity. And in Lamshed v Lamshed (1963) 109 CLR 440 at 445, Kitto J was careful to emphasise that relief was not withheld simply because of the antiquity of the claim. His Honour said: "The case is therefore not one of bare delay", hinting that the result would have been otherwise if it were. 32 The learned authors also point out in paragraph [36-080] that the view that mere delay does not constitute laches is consonant with principle, is supported by the old authorities and has now been endorsed by the New South Wales Court of Appeal (constituted by Handley, Sheller JJA and Sheppard AJA) in Savage v Lunn (CA) NSW, 9 March 1998, (unreported) BC 9800548 (at paragraph 58) ("…delay, without more, is not a defence to a claim for equitable relief"). 33 In Wallera the Full Court of the Federal Court of Australia accepted and relied upon the foregoing passage from the judgment of Dixon CJ and Fullager J in Fitzgerald as stating the law. In Wallera Kiefel J said, at [54], The evidence, such as it was, did not suggest that the parties regarded the contract as abandoned. At most it suggested they were not presently interested in its performance. 34 Her Honour also said, at [49], Whilst there had been some performance of the agreement at an early point, Wallera had not paid for and did not obtain any proprietary interest which is subject to being divested were the contract held to be abandoned. It merely had a licence, albeit one which extended over a long period of time. 35 It was submitted on behalf of the present Plaintiff that if the plaintiff in Wallera had obtained a proprietary interest which would have to be divested if the contract were held to have been abandoned, a finding of abandonment would not have been made by Her Honour. 36 In the instant case it is significant that the Plaintiff does have a proprietary interest in the land, which interest is subject to being divested if the agreement be held abandoned. The Plaintiff has both an equitable interest as purchaser (since it has partly performed the contract by paying 25 percent of the purchase price), and also a legal interest as mortgagee (the land being under the Old System) under a registered mortgage (subject to the right of the mortgagor to repay the mortgage, a right which has never been exercised). Those interests cannot be lost or destroyed by mere inaction on the part of the purchaser. 37 The concept of abandonment imports a degree of mutuality in the attitude manifested by each of the parties. 38 In support of the abandonment the Defendant relied upon an incident where the Deceased was said to have purported to act regarding the subject land in a manner inconsistent with the Deceased treating the contract as still being on foot. That incident was the alleged conduct of the Deceased in signing a document, bearing date 6 December 2002, which purported to evidence an agreement between the Deceased and Ron Pomering regarding, inter alia, the sale of land (said to include the subject land) to Mr Pomering. 39 Concerning that alleged incident I would make the following observations. First, I did not regard the evidence of the Defendant on this matter (his being the sole evidence concerning this alleged incident) as being entirely reliable. However, in any event, it was the Defendant's evidence that there never was an agreement between the Deceased and Mr Pomering, only that there was an offer by the Deceased and that the offer was never accepted, and that the offer was rescinded three days later, on 9 December 2002. 40 Second, even if I were to accept unquestioningly the Defendant's evidence concerning this incident and the document bearing date 6 December 2002, there is no suggestion that the Plaintiff was ever informed by the Deceased of this incident or of the document, or that the Plaintiff otherwise became aware of them. 41 The incident and the asserted intention of the Deceased manifested thereby cannot result in the contract being abandoned by this unilateral conduct of the Deceased. 42 The incident might be treated as evidence of an intention on the part of the Deceased to repudiate the contract, or not to carry out its terms. But that is something entirely different from an abandonment of the contract by both parties - and it is abandonment which is here being asserted by the Defendant. 43 It must be emphasised that abandonment of a contract cannot be effected by one party alone. The abandonment, if it occurs, is an abandonment by both parties. (See Summers v The Commonwealth, at 151-152; Fitzgerald v Masters, at 432; Ryder v Frohlich at 135-137.) 44 I do not see how the conduct of the parties in the instant case can be regarded as manifesting mutual abandonment in circumstances where, if there were abandonment, the Plaintiff would, in consequence, be divested of its equitable interest in the property, and the Plaintiff would be entitled to repayment of the deposit. As was recognised by Taylor J during argument in Fitzgerald v Masters, if a party in the position of the present Plaintiff were by its inaction to be regarded as having abandoned the contract, then the first thing one would have expected the Plaintiff to do was to demand repayment of the deposit of $15,000. Similarly, if the Deceased were to be treated as manifesting an intention to abandon the contract (whether by reason of the letter of 6 December 2002 addressed to Mr Pomering or for some other reason), then such abandonment would require that he repay the $15,000 and, further, that he discharge the mortgage over the subject land which he had given to the Plaintiff. 45 It should not be overlooked that Ian Fraser, the principal of the Plaintiff company was an old and close friend of the Defendant. The so-called "inactivity" attributed to the Plaintiff in the submissions of the Defendant appears essentially to have resulted from the willingness of the Plaintiff, through Mr Fraser, to help the Deceased through his financial difficulties and his health problems, including giving to him the latitude of time and forbearance (and the use of the deposit money, free of interest, over many years). Indeed, there was nothing that the Plaintiff needed to do, or even could do, to enable the contract to be completed. It was the Deceased, by his "inactivity" (resulting, in part, from his financial difficulties and later from his ill health) in failing to effect the registration of the deposited plan, who essentially caused the problem in this regard. 46 I am not satisfied that the evidence objectively discloses an abandonment of the contract by either party, let alone by both parties. Here I again emphasise that abandonment of the contract cannot result from the conduct (be it active or passive) of only one of the parties. For there to be abandonment there must be conduct (be it active or passive) by both parties which manifests that "neither intends that the contract should be further performed" (Ryder v Frohlich at 135). At most, the evidence relied upon by the Defendant suggests merely, in the words of Kiefel J in Wallera, that the parties "were not presently interested in performance [of the contract]". 47 Since I am not persuaded that the contract has been abandoned by the Plaintiff and the Deceased, and since I am satisfied that, in consequence, the contract presently remains on foot, it is necessary now to proceed to the question of whether the relief by way of specific performance (which is in the nature of discretionary relief) should be refused, on account of what is asserted to be laches on the part of the Plaintiff.

48 It has been submitted on behalf of the Defendant that the delay of more than sixteen years since the parties entered into the contract constitutes laches, and that in consequence, the Court should not grant to the Plaintiff relief by way of specific performance. Further, the Defendant submits that he has suffered significant prejudice by the delay, since the persons who would have been best placed to give evidence on matters going directly to the transaction and what occurred thereafter are now both dead; that as both the Deceased and Mr Fraser died before the commencement of the proceedings, it has not been possible for the Defendant to take proper instructions, properly gather and prepare evidence, or challenge the Plaintiff's evidence.

49 The Plaintiff, however, submits that, for the reasons upon which I have based my conclusion that the contract remains on foot, mere delay does not constitute laches. I am in agreement with that submission, which accords with settled authority (see Savage v Lunn). 50 It should here be recognised that the foregoing prejudice asserted by the Defendant is prejudice which, if at all, goes to the question of whether the Defendant, in an evidentiary fashion, can establish the abandonment of the contract. I have already expressed my conclusion upon that question. The asserted matters of prejudice which the Defendant attempts to identify do not go to the consequent question of whether there is any ground upon which the Court, in the exercise of its discretion, should refuse to grant the relief sought.

51 However, in any event, as to the prejudice asserted to arise consequent upon the death of the Deceased and of Ian Fraser, the Plaintiff points to the following matters. · The High Court in Fitzgerald evidently did not regard the death of the party asserting abandonment as relevant prejudice (and there it was only that party who was already deceased: the plaintiff remained alive and indeed gave evidence of conversations with the deceased principal, which, presumably, could not be contradicted). · There has been no prejudicial alteration of his position by the vendor or (after his death) by his estate. · There is no third party whose interests may be affected. · The Plaintiff relies upon what was said by Dixon CJ and Fullager J in Fitzgerald, at 433, Equity does not refuse specific performance… unless it thinks that the Plaintiff ought to be regarded as having abandoned any rights he ever had. And… no abandonment can be inferred here. 52 I am not persuaded that the delay in the instant case constitutes laches. Neither am I persuaded that the death of the Deceased before the institution of the present proceedings and during the period between the date of the contract and the institution of the present proceedings constitutes prejudice of the nature upon which, the Court, in the exercise of its discretion, should deprive the Plaintiff of its entitlement to relief by way of specific performance. 53 It has further been submitted on behalf of the Defendant that if, contrary to his earlier contentions, specific performance is granted to the Plaintiff, that relief should be granted subject to the following conditions: (a) The Plaintiff should pay interest on the purchase price of $60,000 from 17 February 1998 to date. (b) The price ought to be adjusted, or the Defendant compensated, to take into account the increase in value of the land over the last 16 years and the increase in the costs to connect the electricity. The Plaintiff asserts a present value of $255,000. (c) As the Defendant would presumably be required to comply with any requisitions issued by Land and Property Information consequent upon lodgement of the plan of subdivision for registration and as the estate of the Deceased has no assets other than those indicated in Exhibit 2, it is submitted that justice requires that the Plaintiff pay the costs of and incidental to complying with any such requisition. (d) The Plaintiff ought to reimburse the Defendant for rates paid in 2004 by the Defendant. 54 The Plaintiff has responded to the foregoing submissions first by pointing to the fact that those claims of the Defendant for interest, compensation and costs would have the effect of altering the terms of the contract, and by observing that those claims were first made at about 3 pm on the second day of the hearing which had been specially fixed more than five months previously. 55 I am in complete agreement with the submission of the Plaintiff that there is no basis whatsoever for "compensation" to be paid to the Defendant, when it was the delay of the Deceased which led to the present situation: see Plumer v Handley (1996) 41 NSWLR 30 at 34. 56 In the instant case the the fact that no date has ever been able to fixed for the completion of the contract has been due to the inactivity of the Deceased in carrying out the terms of the contract. From the date of the contract to the present time the Plaintiff has never had the benefit of, or possession of, the subject land, which at all times has been possessed by the Deceased and subsequently by his estate. 57 The Defendant in support of its claim for interest relied upon the decision of the House of Lords in Harvela Investments Limited v Royal Trust Company of Canada (CI) Limited [1986] AC 207 and Commonwealth of Australia v SCI Operations Pty Limited (1998) 192 CLR 285. The grounds upon which interest in each of those cases was awarded are clearly distinguishable from the circumstances of the instant case and from the legal principles applicable to the instant case. 58 If anyone is entitled to interest in the instant case, it is the Plaintiff, which could assert an entitlement to interest upon the 25 percent of the purchase price, since the Deceased and his estate have had the benefit of that sum for the past 17 years. 59 Since September 1990 the Deceased (and after his death, his estate) has had the use and benefit of both the subject land and part of the purchase price in the amount of $15,000. The Plaintiff has calculated that interest on that amount of $15,000 (in accordance with the scales and rates set forth in Schedule 5 to the Uniform Civil Procedure Rules 2005) from the date of the contract, 22 October 1990, to 5 December 2006 is $26,050. 60 I reject the claim of the Defendant for interest. 61 The Defendant seeks an adjustment in the purchase price (or compensation) to take into account the increase in the value of the land since the date of the contract and an increase in the costs for the connection of electricity. The Defendant seeks an order that the Plaintiff pay the costs of and incidental to complying with an expected requisition by Land and Property Information, and the Defendant seeks reimbursement for municipal rates which he has paid. 62 The effect of those orders is that the Defendant is asking the Court, in substance, to vary the express terms of the contract. 63 I have held that the contract remains on foot, and that the Plaintiff is entitled to specific performance of that contract. I have not held that the Plaintiff is entitled to specific performance of some other contract. 64 I have already observed that the relief by way of specific performance is discretionary relief. The discretion of the Court in that regard is, however, a judicial discretion which must be exercised in accordance with settled principles. I do not consider it to be an appropriate exercise of such discretion that the Court, having held the Plaintiff to be otherwise entitled to specific performance of the contract, should then impose upon that relief conditions which would have the effect of altering in significant ways the express contract entered into between the Plaintiff and the Deceased (that being the contract which I have held the Plaintiff, prima facie, to be entitled to have performed). 65 But in any event, the various conditions which the Defendant now seeks to have imposed upon an order for specific performance in favour of the Plaintiff are conditions to which the Defendant cannot possibly be entitled. 66 The connection of electricity is the subject of special condition 14 of the contract, which requires that the vendor shall connect the electricity to the subject lot prior to completion. 67 Since the Deceased (and subsequently the Defendant) has had the benefit of occupation and possession of the subject property, it is only proper that the Deceased and his estate should pay the cost of the municipal rates. I can see no basis upon which the Plaintiff should be required to pay those rates. 68 As to the suggestion that some increase in value of the land should result in either a variation in the purchase price (such variation being to impose a new and unwarranted term in the contract between the parties) or to provide some compensation as a result of an asserted increase in the value of the land, it is relevant to quote what was said by Handley JA in Wollondilly Shire Council v Picton Power Lines Pty Limited (1994) 33 NSWLR 551, where the respondent vendor submitted that on the facts in that case the Court should, in the exercise of its discretion, refuse specific performance on the ground of hardship. That hardship was said to flow from the resulting loss by the respondent of the difference between the resale price and current value of the land. Handley JA (with whom Clarke and Meagher JJA agreed said, at 557 D, In general an unearned increase in the value of land can never, in itself, be a basis for refusing specific performance on the ground of hardship: see Fitzgerald v Masters (1956) 95 CLR 420. This is because under a contract which is capable of specific performance any such increase accrues to the purchaser. The vendor's equitable entitlement under such a contract is not to the land but to the balance of the purchase money: see Lysaght v Edwards (1876) 2 ChD 499. For similar reasons an order for specific performance in this case will not operate against the respondent as a forfeiture. 69 The foregoing comments of His Honour have equal application to the situation of the Plaintiff and the Deceased in the circumstances of the instant case. 70 In the instant case there has been no breach of the contract. Any delay is the result of the vendor's inaction, with the result that the vendor has no entitlement to rescind (otherwise than in accordance with special condition 1 (a) of the contract, of which the Deceased did not choose to avail himself). The Plaintiff has pointed out, what is perhaps obvious, that the sum of $15,000 was worth more in 1990 than it is today. 71 As to the costs of any future requisitions, condition 1 (a) is a special condition that requires the vendor to pursue registration of the plan of subdivision. There is no evidence from the Defendant as to the nature of the costs likely to be incurred on lodgement of the plan of subdivision. The evidence shows that the Defendant has already had the plan redone by his surveyor and has otherwise been taking steps towards the registration of the plan. 72 As to municipal rates, clause 13 (a) is an express term that provides that the vendor shall pay or bear all rates, taxes and outgoings, up to and including the date of completion. 73 The Defendant is not entitled, as a term of the granting to the Plaintiff of specific performance, to have the foregoing variations to the contract which he seeks. 74 I am satisfied that the Plaintiff has established an entitlement to relief by way of specific performance of the contract in its terms. 75 The Plaintiff has prepared a document headed "Proposed Declarations and Orders". I am satisfied that the Plaintiff is entitled to relief in the terms of that document, and I propose to grant such relief. 76 I make a declaration and orders in accordance with the document headed "Proposed Declarations and Orders", initialled by me and filed in Court this day. **********

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