DGF Property Holdings Pty Limited v Di Federico; DGF Property Holdings Pty Limited v Butros

DGF Property Holdings Pty Limited v Di Federico; DGF Property Holdings Pty Limited v Butros - [2018] NSWSC 344 - NSWSC 2017 case summary — Zoe

[6]

Judgment

Each of these two proceedings is concerned with a proposed subdivision of land situated at Horsley Park, New South Wales being undertaken by DGF Property Holdings Pty Limited (DGF), the plaintiff in both proceedings. The defendants in proceedings 105403 of 2015 (the Specific Performance Proceedings) are Mr Enzo Di Federico and Mrs Franca Di Federico (together the Di Federicos), who owned part of the land in the proposed subdivision and will be the owners of two of the lots in the proposed subdivision. The defendants in proceedings 246532 of 2016 (the Rescission Proceedings) are persons (the Purchasers) who have entered into eight separate contracts with DGF for the purchase of lots in the proposed subdivision (the Contracts for Sale). The Di Federicos are also defendants in the Rescission Proceedings.
In the Specific Performance Proceedings, DGF claims damages from the Di Federicos on the basis that have acted in breach of a deed made between DGF and the Di Federicos on 17 December 2013 (the 2013 Deed) and an agreement made between DGF and the Di Federicos on 22 October 2015 (the 2015 Agreement). Each of the 2013 Deed and the 2015 Agreement was entered into in order to resolve disputes between DGF and the Di Federicos in connection with the proposed subdivision.
Each of the Contracts for Sale contained a clause entitling each party to rescind it if the subject lot was not created by a date set out in the contract as the latest date by which the subject lot must be created (the sunset date). A relevant effect of s 66ZL of the Conveyancing Act 1919 (NSW) (the Conveyancing Act) is that, despite such express contractual provisions, DGF may not rescind any of the Contracts for Sale unless it has obtained an order of the Court permitting it to do so. In the Rescission Proceedings, DGF asks the Court to make orders under s 66ZL permitting it to rescind each of the eight Contracts for Sale.
Section 66ZL was inserted into the Conveyancing Act by the Conveyancing Amendment (Sunset Clauses) Act 2015 (NSW) (the Amending Act). It had retrospective effect on the Contracts for Sale and the rights of the parties thereunder. Accordingly, before dealing with the scheme of s 66ZL, it is desirable to say something about the object of the amendment.

[7]

Object of s 66ZL [1]

In the Minister's speech on the second reading of the Conveyancing Amendment (Sunset Clauses) Bill 2015, pursuant to which s 66ZL was inserted into the Conveyancing Act (the Second Reading Speech), the Minister began by observing that an increase in demand for housing, particularly in Sydney, in the previous four years had caused a marked rise in the number of off the plan contracts, whereby land can be sold before the developer has finished constructing roads and installing services, or a strata unit can be sold before the strata plan is drawn, approved and registered. He observed that, in those cases, the purchaser is not buying an asset that can be seen and inspected but is buying an idea that relies on the terms of the contract and the goodwill and expertise of the developer to complete. To guarantee the sale, the purchaser will pay a deposit and then wait for the land to be developed or the units to be constructed.
The Minister said that an important feature of most such contracts is "the sunset clause", which allows either the vendor or purchaser to rescind or terminate contractual obligations if the development is not completed by a specified date. Such a clause has important benefits for both parties, in that it prevents a purchaser being tied to the contract indefinitely and allows a developer to end the arrangement if the developer cannot proceed due to factors beyond the control of the developer. The Minister said, however, that the rise in the property market had seen increased reports of developers using such a clause to obtain an unjust enrichment at the expense of homebuyers. He said that there had been an increase in incidents of developers delaying projects "until the sunset date is reached" at which time the developer can rescind and resell the property, sometimes for hundreds of thousands of dollars more. While a purchaser will eventually have the deposit returned, the purchaser would lose any capital appreciation of the lot that had occurred in the meantime. In addition, a purchaser will be prevented from purchasing another property while "funds are tied up in the developer's hands".
The Minister observed that whether a developer would be entitled to rescind the contract will depend on the contract terms, the reason for the delay and the extent to which the developer had acted reasonably. However, to test those factors, a purchaser would be required to take court action in which the purchaser would be required to prove that the delay was unreasonable based on facts that the purchaser would not be able readily to access. He said that the prospect of protracted litigation was often too daunting for purchasers, with the consequence that the actions of developers remained unchallenged. The Minister observed that he had heard of many instances where the rise in property prices since the date of the original purchase, combined with legal costs, meant that raising another deposit was no longer possible for a particular purchaser.
The Minister said that the proposed 66ZL would protect purchasers by allowing developers to rescind a contract only when the sunset date is reached and requiring the Court to review the circumstances to make sure the rescission is just and equitable in all of the circumstances. The Minister referred to the proposed requirement for a vendor to give 28 days' notice before the proposed rescission, thereby giving a purchaser time to consider his, her or their position and to provide information that will help the purchaser assess whether the vendor has acted reasonably or whether the vendor's actions have been arbitrary and capricious. In stating the matters that the Court is to take into account when deciding if a rescission is just and equitable, the Minister stressed the importance of increase in value.
The Minister stated that the new regime would not arbitrarily intrude into existing contractual arrangements or impose unusual obligations on vendors. Rather, he said, it would reinforce existing consumer law as well as accepted common law and equitable principles. At the centre of the Bill was a resolve to prevent a developer manufacturing delays to obtain an unjust benefit, ensuring that developers would be unable to benefit unjustly at the expense of home buyers through the use of a sunset clause.
The Minister asserted that it was accepted that, in seeking to rescind a contract, a vendor must not act arbitrarily or capaciously or unreasonably, and that s 66ZL "supports these equitable principles" by removing any incentive that a vendor may have to manipulate the progress of a development, in a manner not available to the purchaser, to take advantage of windfall profits in a rising market. Importantly, therefore, the Minister said that the Court will be required to consider any rise in value of the lot from the original purchase price. If the value of the lot has increased significantly, the exercise of the right of rescission under a sunset clause would be "prima facie unfair". The Minister said that, in those cases, the developer receives an unjust benefit in the form of the capital appreciation of the lot at the expense of the purchaser. He said that the provision was an important measure to prevent developers using "manufactured or false delays" to justify to the Court an intention to rescind. He said that the notice provisions and the need to obtain a purchaser's consent would encourage better communication between the parties and that if it was clear that a development would not be finalised or would take significantly longer to complete than predicted, a purchaser would be unlikely to want to remain tied to the contract with the deposit lying dormant.
The Minister said that, if a developer has acted reasonably, rescission of a contract in such circumstances should be in the interest of both parties and the consent of the purchaser should be obtained easily. He said it is only where the rescission is dubious that a need should arise for Court action. In such "questionable cases" it would be the vendor who will be required to go to Court to justify its actions rather than the purchaser being forced to take action to prevent an injustice. The Minister said that, in order to even the balance of power between the parties further, the vendor developer would be liable to pay the purchaser's costs of the proceedings unless it can be shown that the purchaser's refusal to consent to a rescission was unreasonable.
The Minister emphasised that the proposal was not intended to affect any rights of a purchaser, who would be able to exercise whatever rescission rights the purchaser had under the existing contract. The Minister stated that an important feature of the amendment was that it was to apply to any rescission purported to have been made from the date when the legislation was announced on 2 November 2015. No rescission made by a vendor after that day will have been made in accordance with the contract unless the required notice has been served on the purchaser and the rescission otherwise complies with s 66ZL.
The Minister asserted that "this retrospective provision" was the strongest protection that the government could provide for home buyers in that it would prevent any developer from rushing to use a sunset clause on existing contracts to obtain an unjust benefit over a purchaser. He asserted that the amendment would ensure that developers doing the right thing can access the finance they need to get projects off the ground.

[8]

Scheme of s 66ZL

For the purpose of s 66ZL, an off the plan contract is a contract for the sale of a residential lot that has not been created at the time that the contract is entered into. A residential lot is a residential property within the meaning of s 66Q of the Conveyancing Act. It is common ground that the subject lot of each of the Contracts for Sale is a residential lot within the meaning of s 66Q. For the purpose of s 66ZL, a sunset clause is a provision of an off the plan contract that provides for a contract to be rescinded if the subject lot is not created by the sunset date, being the date set out in the off the plan contract as the latest date by which the subject lot must be created. It is common ground that each of the Contracts for Sale is an off the plan contract and that each contains a sunset clause within the meaning of s 66ZL.
Under s 66ZL(3), a vendor may rescind an off the plan contract under a sunset clause if the subject lot has not been created by the sunset date, but only if the purchaser consents in writing to the rescission or, relevantly, the vendor has obtained an order of the Court under s 66ZL permitting the vendor to rescind the contract under the sunset clause. Under s 66ZL(6), the Court may, on the application of a vendor under an off the plan contract, make an order permitting the vendor to rescind the contract under a sunset clause but only if the vendor satisfies the Court that making the order is just and equitable in all of the circumstances.
In determining whether it is just and equitable in all of the circumstances to make an order, the Court is required by s 66ZL(7) to take into account the following: (a) the terms of the off the plan contract; (b) whether the vendor has acted unreasonably or in bad faith; (c) the reason for the delay in creating the subject lot; (d) the likely date on which the subject lot will be created; (e) whether the subject lot has increased in value; (f) the effect of the rescission on each purchaser; and (g) any other matter that the Court considers to be relevant. Under s 66ZL(8), the vendor is liable to pay the costs of a purchaser in relation to the proceedings for an order under s 66ZL unless the vendor satisfies the Court that the purchaser unreasonably withheld consent to the rescission of the contract under the sunset clause.
Other provisions of s 66ZL have the effect of varying the contractual arrangements between a vendor and purchaser. Thus, s 66ZL(4) makes it a term of an off the plan contract that a vendor who is proposing to rescind the contract under a sunset clause must serve notice on the purchaser before the proposed rescission. The notice must specify why the vendor is proposing to rescind the contract and the reason for the delay in creating the subject lot. It is common ground that such a notice was given to each of the Purchasers, although there may be a question as to whether the notice adequately specified the reason for the delay in creating the subject lots. Section 66ZL(5) provides that a sunset clause cannot automatically rescind an off the plan contract. That provision has no application in the present proceedings. Under s 66ZL(9), nothing in s 66ZL limits any right that a purchaser may have to rescind an off the plan contract under a sunset clause.
Before dealing with the application of s 66ZL, it is necessary to say something about DGF and the history of the proposed subdivision. That history began in 2004. I will also be necessary to deal with DGF's claims against the Di Federicos and their claims against DGF.

[9]

DGF

DGF was registered on 17 February 2002 with a paid up share capital of $2.00. Its initial directors were Mr Sylvano Frassetto (Mr Frassetto) and Mr Frank Gelonesi (Mr Gelonesi). Mr Graziano De Bortoli (Mr De Bortoli) is a chartered accountant. His accountancy practice, GDC Tax Pty Ltd (GDC), prepares and maintains the accounts and financial records for DGF and is the tax agent for DGF. GDC has maintained the financial records for DGF since its inception. Totu Pty Ltd (Totu) is now a shareholder of DGF. The shareholder of Totu is Saltnpepper Pty Ltd, of which Mr Gelonesi is a director. Mr Gelonesi's wife is the only director of Totu.
Mr De Bortoli is a director of Sunrise Corporation Pty Ltd (Sunrise), which owns the building from which GDC is conducted. Mr Gelonesi is also a director of Sunrise. Mr Frassetto used to be a director and shareholder of Sunrise but sold out some years ago. Mr De Bortoli has been a friend and business associate of Mr Gelonesi and Mr Frassetto for many years. Mr De Bortoli previously held an interest in DGF but has since sold that interest.
Mr De Bortoli was responsible for the incorporation of DGF in his capacity as an accountant. DGF was incorporated for the purpose of undertaking property development. The proposed subdivision at Horsley Park the only development undertaken by DGF thus far. Since no sale has been completed, DGF has not yet realised any sales revenue.
DGF had no funds of its own and all of its working capital was provided by loans from its shareholders and other investors as well as $13,000 earned in interest on its capital. The other investors included small business clients of GDC's practice who deposited their surplus funds with GDC for investment. However, there are no loan agreements in writing with any of the lenders.
In 2003, Mr Frassetto identified the land at Horsley Park as land that that he wished to develop. He approached Mr De Bortoli to see if he might be interested in investing in the proposed development. Mr De Bortoli approached Mr Gelonesi and another friend, Mr Michael Remaili. In approximately 2003, a meeting took place involving Messrs Frassetto, Gelonesi, De Bortoli and Michael Remaili, together with Mr Peter Remaili, Michael Remaili's brother, to discuss the proposed operations of DGF. Mr De Bortoli said that they were all going to have to inject money into DGF and proposed that interest at the rate of 8% per annum be paid unless the investors agreed to change the interest rate at a later time. All of those present agreed. After the meeting, on 13 January 2003, DGF received an initial injection of funds amounting to $2,357,759.33. Those funds were paid into DGF's bank account and were applied in the purchase by DGF of part of the land at Horsley Park.
After that initial investment, Mr De Bortoli was involved in the negotiation of all of the other loans with other investors on behalf of DGF. He had separate conversations with each of the principals of those investors other than the investors of which he is a principal, being Sunrise, GDC, Pinti Pty Ltd and GDC Partnership. It was Mr De Bortoli's standard practice to say to each prospective investor that any funds that might be advanced would be used in the development that DGF was undertaking at Horsley Park and that DGF would pay interest at the rate of 8% per annum. He told each investor that the payment of interest and the repayment of principal would not occur until completion of the sale of the lots after the proposed subdivision had been completed. Each of the investors or their principals agreed to that proposition. Each of the investors provided funds to DGF after such discussions.
When DGF required further funding from investors, Mr De Bortoli had a practice of saying to the investors that DGF needed another loan on the same terms. He asked each lender for a specified sum. No investor refused to provide further funds in the amount requested. Shortly after each conversation, the funds requested were paid to DGF.
From time to time some investors requested repayment. In each case DGF repaid an investor who requested repayment. Some of the early investors have been repaid in full. Mr De Bortoli arranged loans from other clients of GDC's accountancy practice to enable DGF to repay loans from investors who wished to be repaid. Details of the advances and repayments are recorded in the financial records maintained by GDC, as recorded in a tax schedule prepared by GDC, including a loan reconciliation summary, which is a primary record and has been maintained for a large part of DGF's existence. Liability for interest has been recorded in the 2015 and 2016 tax returns. The total amount of loans as shown in the document is $9,664,201.
DGF's present assets include eight hectares of land situated between Horsley Road and Delaware Road, Horsley Park the land and a debt of $3,569,110.85 owing to it by Nelson Bay Developments Pty Ltd (Nelson Bay), a company owned by Mr Frassetto, . Nelson Bay borrowed funds from DGF to purchase land at Nelson Bay in about 2004 for a price of $2,836,000. The terms of that loan are unclear. It appears that it is repayable on demand.
The records of DGF leave a great deal to be desired. There appear to have been no formal meetings of directors and no formal recording of the arrangements with investors briefly summarised above. Mr De Bortoli agreed in cross-examination that the shareholders of DGF have never resolved to pay interest on loans made by investors and he is not aware of any formal resolution of the directors of DGF to enter into any loan agreement with any of the investors. Mr De Bortoli did not think it was necessary to have any form of written record of agreements with investors. He confirmed that investors or principals of the investors could, if asked, give evidence about the terms of the arrangements.
Mr De Bortoli accepted in cross examination that DGF's accounts are not properly prepared. While there are several separate investors, the investors are linked by shareholding to one or other of Messrs De Bortoli, Gelonesi and Remaili. The only exception is Ms Maureen Towe. DGF contends that the close relationship of the investors explains the lack of formality in relation to the loans and that informality should not diminish the reliability of DGF's accounts. Despite the absence of written loan agreements or resolutions of the directors authorising the making of such agreements, I am prepared to accept the amount of the loans and the dates upon which they were made as shown in that summary.
Bank statements of DGF in evidence show expenses incurred by DGF in connection with the proposed subdivision development. However, they do not show amounts expended on buying the land in the first place.

[10]

The History of the Proposed Subdivision

By 2004, DGF had become the registered proprietor of the rural land situated between Horsley Road and Delaware Road, Horsley Park (the DGF land). At that time, the Di Federicos owned 2.4 hectares adjoining the DGF land (the Di Federico's land). A further 8 hectares were owned by John and Nina Galea and Paul and Maria Scarfone.
On 21 June 2004, the Di Federicos, as vendor, and DGF as purchaser, entered into a contract for the sale of a portion of the Di Federicos' land for a total price of $170,000. The subject of the contract was described as "the access triangle", which was required by DGF in order to construct a public access road for the purpose of the proposed subdivision. The price was apparently paid on or around 21 June 2004. Completion of the contract was conditional upon grant of consent to a proposed plan of subdivision, a copy of which was annexed to the contract.
The contract was also expressed to be conditional upon all parties executing, within seven days of the date of the contract, a joint venture agreement annexed to the contract, whereupon the sum of $170,000 was to be released to the Di Federicos. The contract provided that, should the joint venture agreement not be signed, either party was to be entitled to rescind the contract.
The parties to the joint venture agreement annexed to the contract were:

DGF;
the Di Federicos;
John and Nina Galea; and
Paul and Maria Scarfone.

The draft joint venture agreement recited that the parties had agreed to form a joint venture for the purpose of subdividing various parcels of land situated in Delaware Road and Horsley Road, Horsley Park into rural residential lots, largely in accordance with a plan annexed to the draft joint venture agreement. That plan provided for the subdivision of all of the land into 15 lots. At the conclusion of the proposed joint venture, lots 1 to 8 were to be registered in the name of DGF, lots 9, 10 and 15 in the name of John and Nina Galea, lots 11 and 12 in the name of Paul and Maria Scarfone and lots 13 and 14 in the name of the Di Federicos.
The draft joint venture agreement provided for contribution by the parties to development costs. DGF was to be responsible for the works required to complete the development and the parties agreed to allow DGF a period of two years from the date when the agreement was executed by all parties to complete the development. Each of the parties had specific responsibilities, such as filling in dams situated on parts of the land, as well as contribution of their share of costs. However, the draft joint venture agreement was not executed by all parties and ultimately John and Nina Galea and Paul and Maria Scarfone did not join in the proposed joint venture.
On 12 September 2006, Fairfield City Council (the Council), gave notice of determination of development application 134 of 2005 for subdivision of various parcels in Delaware Road to create 14 non-urban residential lots and a new road. The consent operated from 13 September 2006. On 29 January 2007, the Council consented to development application 1580 of 2005 for subdivision of various parcels of land to create three non-urban residential lots.
On 8 July 2010, the Council approved development application 1171.1 of 2009 for the creation of 12 non-urban residential allotments and the construction of a new road (Consent 1171.1). Condition 1 of Consent 1171.1 required that the development was to take place in accordance with the approved development plans drawing No 11253/10 dated October 2009 (the Approved Drawing) as prepared by DGF's surveyors, Britten & Associates Pty Ltd (Britten and Associates), except as modified by the Council or any conditions of the consent. Condition 10 provided that any fill imported to the site was to be validated in accordance with "the EPA's Contaminated Sites Sampling Design [G]uidelines 1995".
Conditions 34 to 57 of Consent 1171.1 incorporated conditions imposed by the NSW Office of Water (NSW Water). Under those conditions, Consent 1171.1 was to apply only to the controlled activities described in the plans and associated documentation relating to Consent 1171.1 and provided by the Council. Any amendment or modification of the proposed controlled activities was to be notified to NSW Water and any amendments or modifications could render Consent 1171.1 invalid. On 8 May 2012, NSW Water sent an email to Britten and Associates saying that before controlled activity approval could be issued, the applicant needed to submit a bond that reflected the cost of the implementation of "the VMP and its maintenance". The email said the security bond could be in the form of a bank guarantee.
On 6 August 2012, NSW Water determined to issue a controlled activity approval under the Water Management Act 2000 (NSW). Condition 6 required that the approval holder comply with the requirements of the plans identified in the notice of determination. Condition 7 required the approval holder to submit any amendments to a plan for approval by NSW Water prior to carrying out any works. On 7 August 2012, NSW Water registered the provision of security by DGF in the sum of $70,000 by way of bank guarantee.
On 12 February 2013, Mr Frassetto sent an email to Enzo Di Federico confirming that DGF had agreed to:
Construct a new concrete driveway crossing and a new driveway to existing residences in a location as agreed on site and as marked in pink on an identified plan.
Reconstruct the creek in accordance with plans approved by the Council.
Landscape a 10 metre wide riparian zone along the creek in accordance with NSW Water approval marked in green on the plan.
Fill and regrade areas marked blue on the plan with a minimum fall of 0.5% towards the creek.
Make a new connection to existing water main in locations marked in yellow on the plan.
Connect new underground electricity supply to existing ducts at the rear of the residence in locations marked in yellow on the plan. Mr Frassetto asserted that the Di Federicos had confirmed that the above proposal would be accepted in principle subject to the following additional conditions:
Locating some benchmarks on site to determine the level of fill along the new driveway.
Making inquiries as to the naming rights of the new street.
Making a contribution towards the legal costs paid to Mark Marando. Mr Frassetto confirmed that, provided all documents were signed and executed within seven days, including an attached transfer and joint venture agreement, DGF would be prepared immediately to:
Instruct the surveyor to provide benchmarks on site to determine the level of fill along the new driveway.
Instruct surveyor to make inquiries as to the naming rights of the new street.
Contribute a total of $8,000 towards the legal costs paid to Mark Marando.
On 8 August 2013, DGF commenced proceedings 241896 of 2013 (the 2013 Proceedings) seeking a declaration that, despite the fact that the other parties had not executed the draft joint venture agreement, DGF and the Di Federicos had entered into a joint venture agreement on or about 21 June 2004 for DGF to develop the Di Federicos' land and surrounding land, and for the Di Federicos to permit construction of the roadway over their land and join in a development application to be lodged by DGF and others. The 2013 Proceedings also claimed orders for specific performance by the Di Federicos of the alleged joint venture agreement and for execution of all necessary documents to enable lodgement of a final linen plan with the Council and to do all things necessary to enable registration of the final linen plan with Land and Property Information New South Wales (LPI).
On 25 September 2013, the Di Federicos filed a defence and a cross-claim in the 2013 Proceedings. By the cross-claim, the Di Federicos alleged that DGF was in breach of the contract for sale dated 21 June 2004. The cross-claim also alleged breach of an agreement whereby DGF would use fill from the subdivision to raise the ground level of the Di Federicos' land. It appears that that allegation was intended to refer to the agreement evidenced by Mr Frassetto's email of 12 February 2013. In its defence to the cross-claim, DGF admitted that an agreement was entered into to raise part of the ground level of the Di Federicos' land but did not admit the allegation that it would use fill from the subdivision to raise the ground level.
On 17 December 2013, DGF and the Di Federicos entered into the 2013 Deed to resolve the disputes that were the subject of the 2013 Proceedings. By cl 3.1 of the 2013 Deed, the Di Federicos promised to execute and return to DGF all documents requested by DGF to enable the development to progress consistently with Consent 1171.1. [2] The documents were to be returned within seven days of delivery of them to the Di Federicos. By cl 3.4, the parties acknowledged that the contract for sale of 21 June 2004 had been rescinded and was of no force and effect. However, by cl 3.5, DGF promised to provide to the Di Federicos a transfer of the "access triangle" that had been the subject of that contract. The transfer was to show a consideration of $170,000 and the parties acknowledged that this consideration had been paid by DGF to the Di Federicos.
By cl 4.1 of the 2013 Deed, DGF agreed to use its best endeavours to cause tradesmen to undertake levelling works on the Di Federicos' property and the driveway on their land. By cl 4.2 of the 2013 Deed, the tradesmen were to be retained by DGF as agent for the Di Federicos, but engagement was at the cost of DGF. By cl 4.3 of the 2013 Deed, DGF agreed to cause to be carried out such works to fill and regrade the areas in lots 11 and 12 within the blue boundaries on the A3 plan annexed to the 2013 Deed (the 2013 Plan). A copy of the 2013 Plan is contained in Appendix 2 to these reasons.
The work referred to in cl 4.3 of the 2013 Deed was to be carried out so that:

the ground level between the driveway to the west and the creek to the east would, using the driveway as a starting reference point, be subject to a fall of approximately 0.5% towards the creek; and
the ground level between the eastern boundary of Lot 12 to the east and the creek to the east would, using the said boundary as a starting reference point, be subject to a fall of approximately 0.5% towards the creek. That requirement appears to reflect the promise contained in the email of 12 February 2013 that the areas marked blue on the plan would be filled and regraded with a minimum fall of 0.5% towards the creek.

By cl 4.4 of the 2013 Deed, the levelling works were to be undertaken in a manner that was consistent with "the general lie" of the Di Federicos' surrounding land and otherwise in accordance with "the Council approved plans" with respect to the development. The Di Federicos also acknowledged and agreed that levelling did not mean obtaining a flat, level surface but would require DGF to use its best endeavours to grade the land in accordance with the existing plans but not to cause any deviation from the natural flow or to cause any gradation away from the creek on the Di Federicos' land.
By cl 4.5 of the 2013 Deed, DGF agreed to construct a new concrete driveway crossing and a new asphalt driveway, with a width of 3.5 metres, from the road running along the northern side of each of lots 11 and 12 in the 2013 Plan to a brick cottage on lot 11 in which the Di Federicos resided, in locations marked in the 2013 Plan. By cl 4.6, the driveway was to be constructed as closely as possible to follow the pink line in the 2013 Plan and to conform with identified specifications. Those provisions appear to reflect the promise contained in item 1 of Mr Frassetto's email of 12 February 2013.
By cl 4.8 of the 2013 Deed, the Di Federicos agreed to do all necessary acts and things and give all necessary consent to enable tradesmen to undertake the levelling and driveway works, and otherwise to access the Di Federicos' land. That promise has some significance as will appear below. Clause 4.9 provided that, if the Di Federicos were dissatisfied with any course proposed or taken by tradesmen undertaking the levelling work or the driveway, they were to contact one of the directors of DGF in which event the director was to liaise with the tradesmen "to attempt to sort out any differences".
Clause 4.10 of the 2013 Deed provided that, on completion of the levelling works and the driveway, DGF was to engage Britten and Associates to certify that the levelling works and driveway had been carried out in accordance with "the Council approved plans" and in a proper and workmanlike manner. If Britten and Associates did not so certify, DGF was to use its best endeavours to cause its tradesmen to cause the levelling works and driveway to comply with any reasonable recommendation by Britten and Associates. If Britten and Associates certified the levelling works and the driveway as being compliant with "the Council approved plans" and in a proper and workmanlike manner, that certification was to be final.
By cl 4.11 of the 2013 Deed, DGF agreed to cause water and electricity services to be connected to the Di Federicos' land at locations marked on the 2013 Plan. That was to be done at the same time as it connected electricity and water services to the rest of the proposed development. That appears to reflect the promises contained in items 5 and 6 of Mr Frassetto's email of 12 February 2013.
Clauses 4.12 and 4.13 of the 2013 Deed dealt with the creek and reflect items 2 and 3 of Mr Frassetto's email of 12 February 2013. By cl 4.12, DGF agreed to reconstruct the creek in accordance with all applicable existing conditions of the Council. By cl 4.13, DGF agreed to landscape the 10 metre wide areas of lot 12 on either side of the creek marked in green on the 2013 Plan in accordance with all applicable approvals of NSW Water relating to lot 12.

section 88B instrument;
deposited plan administration sheet;
transfer; and
copy linen plan. Simone Legal noted that DGF was to make arrangements for the execution of the documents by all parties and return to them as soon as possible.

On 18 November 2014, Mr Frassetto delivered to the Di Federicos the following transfer documents for their execution:

section 88B instrument;
deposited plan administration sheet;
linen plan;
the letter to DGF dated 14 November 2014.

Carlo saw those documents in the possession of Enzo Di Federico shortly after 14 November 2014. Carlo agreed that, unless or until DGF paid the Di Federicos $140,000, the documents would not be signed. He also agreed that there has never been any suggestion that the resolve of the Di Federicos in not signing the documents without being paid for the fill had changed. It is not entirely clear whether the $140,000 demanded by the Di Federicos is referable to the $142,000 worth of work outlined in the 15 June 2014 email, of which the fill and levelling works were to cost $80,000. Carlo gave evidence that the Di Federicos expended $140,000 in completing certain works, but that this $140,000 was "just the cost of the fill", and not the cost of doing other work as well.
Mr Frassetto communicated with Enzo Di Federico on 21 November 2014, 1 December 2014, 4 December 2014, 5 December 2014, 10 December 2014, 11 December 2014 and 12 December 2014, seeking signature of the documents.
On 27 November 2014, Mr Frassetto received an email from Mr Armstrong saying that he had completed a pre and post development flood model and had found that there would be an increase in flood levels along the southern property boundary. Mr Armstrong said that the Council would sometimes accept minor changes of the level, so it may be worth having a discussion with the Council. He said that the only other alternative was to remove some of the additional fill material so that there was a zero change in level at the property boundary. He suggested that that may only need some additional regrading to flatten the batter along the south western side of the channel, just upstream of the new road culverts.
On 2 December 2014, Mr Frassetto forwarded Mr Armstrong's email to Mr Vince Morizzi (Mr Morizzi), saying that he would need to discuss with Mr Wayne Pope of the Council whether the Council would accept minor changes to the flood level of the boundary. Mr Frassetto said that, if that was rejected, the only option would be for the Di Federicos to remove some of the additional fill material to ensure that there was zero change in the flood level at the boundary.
On 4 December 2014, Simone Legal wrote to Marando Solicitors saying that their instructions were that approximately three weeks previously DGF had provided the transfer and plan of sub-division to the Di Federicos for execution. The letter asserted that the Di Federicos were under an obligation to do all that is necessary to enable registration of the plan of subdivision and that the continued delay was "unacceptable". Simone Legal requested Marando Solicitors to arrange for execution of the documentation within seven days. Mr Frassetto and Enzo Di Federico met on 17 December 2014. However, the documents were not signed.
On 24 February 2015, Mr Armstrong of SEEC had sent an email to Mr Frassetto saying that he would be "back onto the reports" the following day and was sorry for the delay. On 27 February 2015, Mr Frassetto enquired of Mr Armstrong as to whether there had been any progress in the flood study report which, he said, DGF urgently needed to submit to Council. The draft report was sent by Mr Armstrong via email on the afternoon of 11 March 2015. Mr Frassetto forwarded the draft to Carlo and Mr Morizzi on the morning of 16 March 2015.

chain of custody information in relation to the fill material;
an amended and updated flood study; and
a final updated SOEE.

Still later on 25 March 2015, Carlo sent an email to Mr Frassetto to confirm that the USB stick and the s 96 modification application had been with the Council that day. Mr Frassetto replied to Carlo informing him that he had met with Mr Pope to submit the s 96 modification application, which was not accepted. He said that Mr Pope had kept the USB stick for consideration but said that he still needed:

chain of custody documentation;
a statement of environment effects, as discussed in the Council meeting; and
an updated flood study report, as discussed in the Council meeting. Mr Frassetto said that Mr Pope would arrange a meeting with all the departmental heads on the following day to discuss the contents of the USB stick and would take advice as to whether they would accept the s 96 modification application.

On 9 April 2015, Mr Frassetto met with Carlo and handed to him the s 96 modification application that had been signed previously together with the two cheques that had been signed by the Di Federicos. Since that time, the s 96 modification application and the two cheques have remained in the possession of the Di Federicos at their home. Mr Frassetto told Carlo that Mr Pope had rejected the s 96 modification application until they could get all of the documents together but that the USB stick with the reports would be retained.
Also on 9 April 2015, DGF commenced the Specific Performance Proceedings against the Di Federicos. By the Specific Performance Proceedings, DGF sought specific performance of the 2013 Deed. At that time, the Di Federicos had still not signed the transfer documentation provided to them by Mr Frassetto on 18 November 2014.
DGF contends that, by commencing the Specific Performance Proceedings, it demonstrated a commitment to finalising the proposed subdivision despite the fact that, at that time, it was entitled to rescind all but one of the Contracts for Sale. It contends that the attitude of the Di Federicos had been flagrant and intransigent in that, in the absence of payment for the filling, they would not permit a resolution of the problem that DGF asserts was created by the Di Federicos.
However, the Di Federicos maintain that at that time DGF had failed to comply with its obligations under cl 4.3 of the 2013 Deed. They also suggest that DGF should have negotiated an agreement with them in accordance with the Council's suggestion made on 11 March 2015 or should itself have lodged the s 96 modification application that had been signed by them.
Carlo was present when Mr Morizzi said to Mr Frassetto that, if DGF paid the money for the fill, the documents would be signed. However, Carlo was unable to point to any correspondence or bills or invoices sent to DGF in 2015 calling for payment of the sum of $140,000 as a condition of signing the relevant documents. Carlo agreed that the documents were not signed because the Di Federicos wanted a payment of $140,000. He accepted that no request for such a payment was made as a condition of signing the documents. Carlo was aware that Mr Frassetto had asked for the documents to be signed. He agreed that the reason they were not signed was because the Di Federicos wanted to be paid a sum of money from DGF in exchange for signing them, being the sum of $140,000. Carlo agreed that there had never been any suggestion that the resolve of the Di Federicos in not signing the documents without being paid had ever changed.
On 16 March 2015, SEEC provided a post-development flood study for the proposed subdivision determining the flood planning level for future dwellings to be constructed on the flood affected area, being lots 1, 2, 3, 11 and 12 adjoining Reedy Creek. The report concluded that flood modelling had been done for the "as built" conditions and provided relevant flood information necessary so that future dwellings can be appropriately located.

redefine table drains;
spoils and mounds of soil to be removed;
general clean-up of site;
landscaping - replace trees as required;
cul-de-sac to be resealed;
access handle to be resealed;
road heading north approaching bridge has dipped. Need to investigate and make good. The email ended by saying that, once that work was completed, another inspection would be required.

Mr Frassetto accepted that none of the work which is the subject of the email has yet been completed. He also agreed that there was no reason why the work could not be done. He asserted that he did not cause those things to take place because if registration of the proposed plan of subdivision did not happen they would have to redo some of the work and he wanted to leave it to the last possible minute. However, he agreed that certain aspects of the work, if done, would not have to be done again and that the majority of the items on the list would only have to be done once.
Mr Frassetto did not accept that it was a matter of choice that the work was not done, but asserted that DGF needed additional funds and would have had to mortgage something to borrow more money to complete the works. He denied that the reason why DGF took no action was because it was actively seeking an opportunity to rescind the Contracts for Sale, and asserted that DGF is still trying to get the subdivision approved.
Mr Frassetto also agreed that, on 2 March 2016, Mr Panuccio offered to pay an additional $150,000 to assist DGF to complete the works that related to Mrs Panuccio's lot. That offer was not accepted by DGF.
On 21 October 2015, Ms Diacopoulos sent an email that came to Mr Frassetto's attention. The email said that she had been contacted by the legal representatives of Enzo Di Federico and had advised their solicitor as follows: "On the 8th October 2014 Council officers advised Mr Di Federico to stop the unauthorised earthworks on the site … a letter was sent to Mr Enzo Di Federico advising of the stop work request and information to be submitted with the possibility of a Section 96 Modification Application being lodged. No information was submitted and the risk to life and property due to possible flooding issues resulted in a meeting at Council on 11 March 2015. [A]nother letter dated 23 March 2015 highlighted that a final date was set 20 March 2015 to submit the required information but since nothing has been received Mr Di Federico was advised that he will have to remove the unauthorised fill. A Notice of Council's Proposal to serve an order was issued 12 June 2015. As a response, Documentation was submitted to Ken Collins … I can advise that compaction tests are inadequate, fill appears on average 900 mm. Flooding and contamination are still being assessed. I expect another week will be required. As I advised Mr Di Federicos' solicitor, Council considers the issue of the unlawful fill and the subdivision as separate issues. If the subdivision certificate is sought prior to the resolution of the fill, I propose a restriction on use be imposed on Mr Di Federico's lots, restricting further development on the proposed lots until such time as the unlawful fill matter is resolved. I advised the way to move forward with the unlawful fill is to remove it."
The Specific Performance Proceedings were listed for hearing on 22 October 2015, the hearing having been expedited on DGF's application. On that day, orders were made by consent (the 2015 Orders) that: (i) within seven days the Di Federicos execute and deliver to DGF certain documents identified in the orders; (ii) the Di Federicos forthwith take all steps necessary to have their mortgagee produced to LPI, the certificate of title to the Di Federico land referred to in the 2013 Deed; (iii) the Di Federicos forthwith do necessary acts and things and execute all necessary documents to obtain the consent of any mortgagee to the production of the certificate of title to the Di Federico land; (iv) the Di Federicos execute and return to DGF within seven days of any request to do so any document provided by DGF that is reasonably required to obtain the consent of the Council or any other government department whose consent is required to enable the registration of the development that is subject of development application 1171.1/2009; (v) in default, the Registrar in Equity be authorised to execute all such documents on behalf of the Di Federicos; (vi) DGF's claim for specific performance was otherwise dismissed. The Specific Performance Proceedings were otherwise stood over to the Registrar's list for further directions.

the 2013 Deed was confirmed as remaining in effect;
the Di Federicos were to do all necessary acts and things to seek withdrawal, annulment or quashing of the s 121B Order;
to the extent that the s 121B Order remained in effect after reasonable avenues of appeal have been exhausted, the Di Federicos were to comply with the s 121B Order;
DGF and the Di Federicos were to seek advice from NSW Water and the Council as to whether or not riparian works undertaken on the western side of the creek would be approved;
pending any decision in relation to any application to the Council or to any Court or tribunal, the Di Federicos were to permit DGF to enter upon the Di Federico property to undertake riparian works in respect of the creek or river located on the property including the planting of trees or other works required by the Council or any government department in order to facilitate the approval of any government body or council to the works undertaken pursuant to Consent 1171.1;
in so far as any riparian work is undertaken on or in any fill which is subsequently determined by Council or any government department to be required to be removed, the Di Federicos will cause the removal of the riparian work at their cost and will indemnify DGF in respect of all claims made against it by the Council or any other government body in respect of construction of the driveway and will forthwith reinstate the riparian works to the satisfaction of the Council;
notwithstanding that DGF was of the view that the Di Federicos' property has been unlawfully filled, DGF was to construct the driveway on the property in the location contained in the Development Application and such construction was to be deemed to be satisfaction of its obligations under the 2013 Deed;
the Di Federicos were to do all necessary acts and things and execute all documents as may be reasonably required to sever the Development Application and the proposed subdivisions to provide for any restriction on use being imposed on the Di Federico land restricting further development on the property until such time as the question of fill on the property is resolved to the satisfaction of the Council.

As at 22 October 2015, the time for rescission of all but one of the Contracts for Sale had passed. However, DGF took no steps to rescind any of them. Mr Frassetto said that at that time, DGF was not considering rescission.
As at 22 October 2015, some work was still required, as indicated in the Council's email of 13 October 2015. However, it was still necessary to resolve the question of the unauthorised fill. It was also necessary to obtain certification of electrical services.
After the execution of the 2015 Agreement and the making of the 2015 Orders, DGF's representatives met with the representatives of NSW Water and with the Council. On 29 October 2015, DGF paid a renewal invoice to NSW Water.
The Di Federicos failed to comply with the 2015 Order requiring execution of documents. On 16 November 2015, the Registrar in Equity executed the documents pursuant to the authorisation contained in the 2015 Order.
All of the defendants contend that, on and from 22 October 2015, it was open to DGF to complete the subdivision untroubled by the unresolved issue in relation to the unauthorised fill placed on the Di Federicos' land. DGF disputes that contention. DGF contends that the unauthorised fill increased the level of the Di Federico land that forms part of the proposed subdivision. Thus, by its letter of 13 October 2014, DGF contends that the Council had required a s 96 modification application. Section 80 of the Planning Act imposes a strict regime for development consents and s 109J imposes a strict regime for compliance with the conditions of any consent.
On the other hand, the Di Federicos contend that there is no evidence that the Council ever resolved that a s 96 modification application was required to bring the fill onto the land, or for it to remain there. Rather, they assert, on 13 October 2014, the Council advised that a s 96 modification application in relation to Consent 1171.1 should be submitted "to resolve Council concerns with regard to this matter". They contend that these two "concerns" were the impact of the fill on potential flooding and the validation of the fill used.
On 23 October 2015, Mr De Bortoli sent an email to Ms Diacopoulos confirming that the Council would not accept or approve any riparian works on either side of the creek unless the soil levels were returned back to the original level or a level that was acceptable in a flood study report. The email went on to say: "Any other works will be meaningless, and [C]ouncil will not issue any compliance certificate in respect of this development. Consequently, all illegal fill is to be removed off site (not stockpiled), certificates to be provided with respect to where the illegal fill was removed to. Once this is done, [C]ouncil will inspect and authorise the commencement of the riparian works. Once the riparian works on are carried out and clearance is obtained from the Office of Water, [C]ouncil will sign off on the release of the linen plan." Ms Diacopoulos responded on the same day agreeing with Mr De Bortoli saying that with regard to waiting to see if the flood study is satisfied "contamination/validation report assessment must also be completed".

[11]

DGF's Claims against the Di Federicos

The allegations made by DGF against the Di Federicos in the Specific Performance Proceedings may be relevantly restated as follows:

By cl 3 of the 2013 Deed, the Di Federicos promised that they would execute and return to DGF such documents as were requested by DGF to enable the proposed subdivision to progress consistently with Consent 1171.1.
On 18 November 2014, DGF caused certain documents to be delivered to the Di Federicos consistently with cl 3 of the 2013 Deed.
The Di Federicos failed and refused to execute the documents, which failure and refusal constituted breach of the 2013 Deed.
The s 121B Order requires that unauthorised fill placed on the Di Federicos' land be removed.
Clause 5 of the 2015 Agreement provided that, if the s 121B Order remained in effect after reasonable avenues of appeal had been exhausted, the Di Federicos would comply with the s 121B Order within such reasonable time as the Council may determine.
A reasonable time has elapsed for the Di Federicos to challenge the s 121B Order.
The s 121B Order remains in full force and effect.
The Di Federicos were under a statutory duty to comply with the s 121B Order and remove the unauthorised fill from the Di Federicos' land (the statutory duty).
The Di Federicos failed to remove the unauthorised fill from the Di Federicos' land.
The said failure or refusal either to appeal from the s 121B Order or remove the unauthorised fill constituted breach of cl 5 or cl 12 of the 2015 Agreement and was a breach of the statutory duty.
On 23 October 2015, NSW Water and the Council determined that riparian works be undertaken in a zone on the western side of the creek on the Di Federicos' land as a result of which the Di Federicos were obliged by cl 6 of the 2015 Agreement to create such riparian zone.
In breach of the 2015 Agreement, the Di Federicos failed to create the riparian zone.
On 21 October 2015, the Council advised DGF that the fill deposited on the Di Federicos' land was illegal and would be required to be removed and that a stop work request had been issued as a result of which DGF was precluded from constructing the driveway on the Di Federicos' land.
By cl 13 of the 2015 Agreement, the Di Federicos' agreed to do all necessary acts and things as may reasonably be required to sever the development application and proposed subdivision to provide for a restriction on use on the Di Federicos' land restricting further development until such time as the question of unauthorised fill was resolved to the satisfaction of the Council.
In breach of cl 13 of the 2015 Agreement, the Di Federicos failed to make such an application.
As a result of the said breaches, DGF has suffered loss and damage and will suffer further loss and damage as follows: (a)&(b)progression and registration of the proposed plan of subdivision was delayed; (c) delay in the progression of the plan of subdivision meant that sunset clauses in the Contracts of Sale approached; (d) DGF was denied access to settlement funds payable under the Contracts of Sale, which it would have had available to it to engage in other developments or business activities; (e) the said failure and refusal exposed DGF to damages claims by the Purchasers; (f)&(g) the said failure and refusal has exposed DGF to costs orders against it in the Rescission Proceedings; (h) DGF has incurred increased interest and other holding expenses in relation to the lots in the proposed subdivision; (i) deposits lodged by DGF with various statutory authorities will not be refunded; and (j&k) DGF has incurred legal costs in having the documents executed;

DGF contends that, as a result of the placement of the unauthorised fill on the Di Federicos' land, the levels were altered such that they do not comply with the plan referred to in Condition 1 of Consent 1171.1. It asserts that the letters from the Council to the Di Federicos did not constitute permission for DGF to complete the development in contravention of condition 1 of Consent 1171.1.
The Di Federicos respond that it is not a question of whether DGF is liable for a prosecution because of the fill placed on the Di Federico land or whether a s 96 modification application is required to accommodate the fill. Rather, they assert, the only issue is whether DGF has established that the existence of the unauthorised fill meant that it could not have the plan of subdivision registered. They assert that DGF has failed to discharge that onus and that, if it was established that DGF was liable for prosecution, it should have lodged a s 96 modification application in respect of Consent 1171.1.
DGF contends that the statement by Ms Diacopoulos in her email of 21 October 2015 that "if the subdivision certificate is sought prior to the resolution of the fill, I propose a restriction of use being imposed on Mr Di Federico's lots" is no more than a statement of future intention and a matter of considerable uncertainty. It asserts that the statement does not address the question as to the levels and does not suggest that such a solution would work if that approach were to be opposed by the Di Federicos.
DGF says that it is not even certain whether Ms Diacopoulos had power to make such a decision and, if the Council did make such a decision, whether it would be opposed by the Di Federicos. DGF says that the availability of such a solution is speculative and that, in any event, it raises an issue as to why the Di Federicos did not pursue that course as they were obliged to do under cl 13 of the 2015 Agreement. DGF asserts that, in those circumstances, the mere statement by Ms Diacopoulos in her email does not establish on the balance of probabilities that DGF could have proceeded with the registration of the plan of subdivision.
Further, DGF contends, an inference should be drawn from the fact that the Di Federicos retained lawyers upon receiving notification of a penalty infringement notice that the Di Federicos would likely not have allowed the imposition of a restriction on title, particularly as they challenge the very foundation of the penalty infringement. The Di Federicos respond that no such inference should be drawn in circumstances where DGF did not ever ask the Di Federicos to agree to the imposition of such a restriction or to consent to an amendment. More importantly, the Di Federicos assert, DGF, pursuant to cl 13 of the 2015 Agreement, could have forced the Di Federicos to sign any necessary documents to "sever the development". That appears to be a slightly curious submission in so far as it seems to suggest that DGF was at fault in failing to take steps to enforce the contractual obligation undertaken by the Di Federicos.

Land tax incurred as at 31 December 2015, 31 December 2016 and 31 December 2017 in the sums of $35,890.65, $41,866.65 and $48,224 respectively. Those amounts total $125,981.30. DGF has not pro-rated the amount to exclude part of 2015 since there will be some period in 2018 for which land tax will be incurred. It seeks to offset those items.
Fencing hire costs in the amounts of $415.80 and $277.20, which are not complete.
The sum of $913 paid to Sydney Water for an extension of the permit on 29 October 2015, as the works had not been completed.

In addition, DGF claims as damages the costs that it has incurred in relation to the Rescission Proceedings. Under s 66ZL, DGF must pay the costs of the Purchasers, unless it can establish that their conduct has been unreasonable. In addition, DGF seeks an order for costs in the Rescission Proceedings against the Di Federicos. DGF claims as damages the costs that it itself has incurred in relation to the rescission proceedings, as well as any costs that is required by the Court to pay to the Purchasers pursuant to s 66ZL. I shall refer below to the question of whether the Court should, in the exercise of its discretion, order the Di Federicos to pay costs in the Rescission Proceedings, to which they have been joined as defendants.
The 2013 Deed included an obligation that the Di Federicos not do anything that would prevent completion of the agreed works. Such obligation arose in part out of the Di Federicos' promise under cl 4.8 to facilitate the works to be undertaken and the further assurances in cl 11 to do all things necessary or desirable to give full effect to the 2013 Deed. I consider that the conduct of the Di Federicos constituted a breach of the 2013 Deed. The conduct of the Di Federicos also constituted a breach of the 2015 Agreement in so far as they failed to take any steps to challenge the s 121B Order and failed to comply with the s 121B Order.
That conduct has caused delay in the completion of the subdivision. Had the unauthorised fill not been brought onto the Di Federicos' land in the way that it was, it is more likely than not, subject to DGF complying with the other requirements of Council, a subdivision certificate would have been issued in the second half of 2015. I consider that it more likely than not that, but for the unauthorised fill, DGF would have completed all of the other prerequisites for the issue of a subdivision certificate.
However, the quantification of any loss or damage suffered by DGF by reason of the delay is not straightforward. While the statement of claim in the Specific Performance Proceedings alleged that DGF had lost the opportunity of engaging in other developments or business activities, it has made no effort to establish loss or damage in that regard. Rather, it has limited its claim to damages in the nature of holding charges incurred during the times when it asserts it would have received the proceeds under the Contracts for Sale but for the conduct of the Di Federicos.
DGF formulates four alternative claims for interest, based on two alternative starting dates and two alternative end dates. The periods are as follows:

1 November 2014 to 30 November 2017, being from the time when documentation was provided to the Di Federicos to the date of the hearing, on the basis that the issue as to the unauthorised fill still constitutes an impediment to the grant of a subdivision certificate because of the non-compliant levels of the Di Federico land;
1 November 2014 to 30 May 2017, being from the time when documentation was provided to the Di Federicos until shortly after the Council's letter of 16 May 2017 indicating that the Council was satisfied that the s 121B Order had been complied with;
22 October 2015 until 30 November 2017, being from the day after the email from the Council indicating that a subdivision certificate could be given before resolving the question of the fill if a restriction on use were to be placed on the Di Federicos' land until the date of the hearing; and
22 October 2015 to 30 May 2017, being from the day after the email from the Council indicating that a subdivision certificate could be given before resolving the question of the fill if a restriction on use were to be placed on the Di Federicos' land until shortly after the Council's letter of 16 May 2017 indicating that the Council was satisfied that the s 121B Order had been complied with.

The earliest date is 1 November 2014, being the time when documentation was first provided by DGF to the Di Federicos. The basis for that date appears to be that, had the documents being returned duly executed, the proposed plan of subdivision could have proceeded on the basis that the Council would have provided a subdivision certificate soon thereafter. However, that does not follow at all.
The alternative starting point is 22 October 2015, being the day after Ms Diacopoulos sent an email on behalf of the Council indicating that a subdivision certificate could be given before resolving the question of the unauthorised fill if restriction on use were to be placed on the Di Federicos' land. The basis appears to be that the Di Federicos should have consented to such a restriction on use.
The earlier of the end dates is 30 May 2017, said to be a reasonable time after the Council's letter of 16 May 2017 indicating that the Council was satisfied that the s 121B Order had been complied with. There was no impediment thereafter to the issuing of a subdivision certificate and DGF complied with the Council's outstanding requirements.
The later of the alternative end dates is the date of the hearing. That formulation is advanced on the basis that the issue as to unauthorised fill continues to constitute an impediment to the grant of a subdivision certificate by the Council because the levels of the Di Federicos' land do not comply with condition 1 of Consent 1171.1.
I consider that the preferable view to be taken of somewhat unsatisfactory evidence is that the progress of the subdivision was delayed by the introduction of unauthorised fill on to the Di Federicos' land. That resulted in the stop work direction on 8 October 2014 and the s 121B Order made on 3 July 2015. At the time when the unauthorised fill was brought onto the Di Federicos' land, the documents had not been signed by them. It is reasonable to conclude that, so long as the Di Federicos' land remained as part of the subdivision, a subdivision certificate would not be issued by the Council so long as the stop work direction was in place or the s 121B Order was outstanding.
However, on 16 May 2017, the Council indicated that it was satisfied that the s 121B Order had been complied with. I am not persuaded that the change in levels by the importation of the unauthorised fill was an impediment to the grant of a subdivision certificate. I was not directed to any evidence which indicated that the Council considered that such a change in levels was an impediment to the grant of a subdivision certificate. Accordingly, there is no reason why the subdivision could not have proceeded after 16 May 2017.
On that basis, DGF would be entitled to damages to compensate it for holding charges incurred during the period from 3 July 2015 (when the s 121B Order was made) to 16 May 2017 (when the Council indicated it was satisfied that the s 121B Order had been complied with).
In addition, DGF incurred a liability for land tax in respect of the Horsley Park land held by it as at 31 December 2015 and 31 December 2016. It would not have done so had the Contracts for Sale been completed before 31 December 2015. It would probably be reasonable to conclude that completion would have taken place before 31 December 2015 had there been no impediment to the issue of a subdivision certificate by reason of the stop work direction and the s 121B Order.

[12]

Cross claim by the Di Federicos

The Di Federicos claim recovery of the costs incurred consequent upon the alleged breach by DGF of cl 4.3 of the 2013 Deed. In their cross-claim, they assert that costs totalling $174,512 were incurred in performing and completing work consisting of the sourcing, placing and regrading of fill on the Di Federicos' land. The allegations made in the cross-claim filed by the Di Federicos may be re-stated as follows:

Under the 2013 Deed, DGF promised to: (a) carry out works on the Di Federicos' land so as to fill and re-grade identified areas with a specified fall (fill works); (b) construct a new concrete driveway crossing and a new asphalt and driveway (driveway works); (c) connect electricity to the home (electricity works); (d) pay to the Di Federicos compensation in the sum of $30,000 on settlement of the sale of the second of the lots within the proposed subdivision (compensation payment);
The obligations to perform the driveway works, the electricity works and to make the compensation payment were previous obligations that DGF had undertaken but had failed to perform.
In 2014 the Di Federicos sought to enforce the obligation of DGF under 2013 Deed to perform the fill works.
When DGF refused to perform the fill works, the Di Federicos offered to assist DGF to carry the fill works by acting as DGF's agent in procuring the sourcing, placement and regrading of fill on the land at DGF's cost (agency works).
DGF accepted that offer and subsequently supervised the agency works.
The Di Federicos incurred costs in the performance and completion of the agency works in the sum of $174,512.
DGF has refused or failed to reimburse that amount to the Di Federicos. By the cross claim, the Di Federicos claim the sum of $204,512 being the costs referred to above of $174,512 plus the compensation payment of $30,000.

In their final submissions, Di Federicos appear to limit their claim to $142,000 particularised in the email from Carlo to Mr Frassetto of 15 June 2014 as follows:

driveway works at a cost of $38,000;
reconnect water mains to Di Federico residence at a cost of $8,000;
electricity works at a cost of $16,000;
fill works at a cost of $80,000.

In its defence to the cross-claim, DGF did not admit that the alleged costs were incurred in purported compliance with DGF's obligations under the 2013 Deed or that the costs were reasonable. Otherwise, the allegations were denied. DGF admitted that it had not reimbursed the costs to the Di Federicos but denied any obligations to do so. In their written submissions, the Di Federicos assert that DGF has no defence to the claim that it be ordered to construct the driveway in accordance with cl 11 of the 2015 Agreement.
I accept DGF's contention that, to the extent that it did not comply with its obligations under the 2013 Deed, the calculation of damages in relation to the fill works is impossible for several reasons. First, the 2013 Deed, to the extent that it required the importation of fill, did not specify to what level and there is no datum point identified. Further, no measurements had been taken of the levels that would have been required to comply with the 2013 Deed. The mere fact that a very large quantity fill has been brought in to obtain some level of satisfaction for the Di Federicos does not mean that that was the contractual obligation. Finally, there is no evidence to support the amounts claimed in the particulars in the cross-claim.
Further, there is no evidence that the concrete driveway crossing was not constructed and no evidence that the Di Federicos constructed it. In addition, there is no evidence as to the cost to construct a concrete driveway crossing. It is common ground, however, that the asphalt part of the driveway has not been constructed. I accept DGF's contention that the reason is the action of the Di Federicos in bringing unauthorised fill and failing to remove it, coupled with their breach of the 2015 Agreement. The Di Federicos are precluded from relying upon their own unlawful conduct. In any event, there is no evidence of the cost of laying an asphalt driveway on top of the fill, quite apart from the absence of evidence as to whether or not the driveway has been laid. DGF asserts that it has established that it connected the electricity and in any event there is no evidence of the cost of connecting the electricity. Mr Frassetto also gave uncontested evidence that the water had been connected.
The claim for compensation is not yet due. The compensation of $30,000 is payable only after sales have been completed and none has yet been completed. DGF contends that the allegation of agency "was confected" to legitimise the conduct of the Di Federicos in placing unauthorised fill and attempting to make DGF a collaborator in that endeavour. I accept that contention.
It follows that the Di Federicos' cross claim should be dismissed.

[13]

Terms of the Contracts for Sale

Appendix 1 to these reasons contains a schedule setting out the following in relation to each of the eight Contracts for Sale:

The date of the Contract for Sale;
The name of the Purchaser or Purchasers under the Contract for Sale
The lot number in the proposed subdivision that is the subject of the Contract for Sale;
The sunset date provided for in the Contract for Sale;
The price shown in the Contract for Sale;
The value of the lot as at 18 October 2017; and
The value of the lot as at 22 April 2016.

Each of the Contracts for Sale is in relevantly the same terms, except for minor variations to which I shall refer below. Each was in the form of the 2005 edition of the standard form published by the Law Society of New South Wales and the Real Estate Institute of New South Wales, plus special conditions. The standard form contains printed clauses that formed part of each of the Contracts for Sale with some variations. The pivotal clause of the Contract for Sale in the printed form provided as follows: "The Vendor sells and the purchaser buys the property for the price under these provisions instead of Schedule 3 Conveyancing Act 1919, subject to any legislation that cannot be excluded."
It is convenient to describe the contract between DGF and Mr and Mrs Butros, who are the first named defendants in the Rescission Proceedings. The cover page of the Contract for Sale specifies DGF as the vendor and the name of the Purchasers. It also specifies the price, deposit and contract date, as well as particulars of the "vendor's agent", "vendor's solicitor" and "purchaser's solicitor". The subject matter of the Contract for Sale is described as "proposed lot in a plan of subdivision" of land at Horsley Park, which is identified by title references.
Where the "completion date" was to be specified on the cover page, the Contract for Sale referred to "special condition 35". Relevantly, special condition 35.1 provided that the completion date was to be the later of:

21 days after the vendor notifies the purchaser of the registration of the plan of subdivision referred to in special condition 42; or
The 30th day after the date of the Contract for Sale. However, special condition 53 provided that, notwithstanding the provisions of special condition 35, the vendor would be entitled to extend the date for completion by each day that the vendor or its builder was delayed by reason of various matters. Neither party places any reliance on Special Condition 53. Clearly, therefore, completion was to take place 21 days after DGF notified Mr and Mrs Butros of registration of the plan of subdivision referred to in cl 42. I shall return to clause 42 below. Special condition 31 evidences some careless drafting, which is not presently material. Its effect is that the Contract for Sale contains the whole of the agreement of the parties in relation to the sale and purchase of the property and that, except where required by law, no further promises, representations, warranties, undertakings or conditions are to be implied in the contract or to arise between the parties by way of collateral or other agreement.

By special condition 52, Mr and Mrs Butros acknowledged that DGF was not the registered proprietor of the whole of the subject land. It provided that DGF must, on or prior to completion, become the registered proprietor and Mr and Mrs Butros were not to take any objection or make any requisition or claim for compensation in that regard.
The most presently relevant provisions of the Contract for Sale were concerned with the registration of the proposed plan of subdivision necessary to create the separate lot that was to be transferred to Mr and Mrs Butros. Both the printed form and the special conditions addressed that matter. There is some tension between the respective provisions, which may attract the operation of special condition 34. Special Condition 34 provided that, if there was any inconsistency between the special conditions and the clauses numbered 1 to 29 of the printed form, the special conditions were to override those clauses to the extent of that inconsistency.
Printed cll 28 and 29 relevantly provided as follows: "28 Unregistered plan 28.1 This clause applies only if some of the land is described as a lot in an unregistered plan. 28.2 The vendor must do everything reasonable to have the plan registered within 6 months after the contract date, with or without any minor alteration to the plan or any document to be lodged with the plan validly required or made under legislation. 28.3 If the plan is not registered within that time and in that manner - 28.3.1 the purchaser can rescind; and 28.3.2 the vendor can rescind, but only if the vendor has complied with clause 28.2. 28.4 Either party can serve notice of the registration of the plan and every relevant lot and plan number. 28.5 The completion date becomes the later of the completion date and 21 days after service of the notice. 28.6 Clauses 28.2 and 28.3 apply to a plan that is to be registered before the plan is registered. 29 Conditional contract 29.1 This clause applies only if a provision says this contract or completion is conditional on an event. 29.2 If the time for the event to happen is not stated, the time is 42 days after the contract date. 29.3 If this contract says the provision is for the benefit of a party, then it benefits only that party. 29.4 If anything is necessary to make the event happen, each party must do whatever is reasonably necessary to cause the event to happen. 29.5 A party can rescind under this clause only if the party has substantially complied with clause 29.4. ... 29.8 If the parties cannot lawfully complete without the event happening - 29.8.1 if the event does not happen within the time for it to happen, either party can rescind; 29.8.2 if the event involves an approval and an application for the approval is refused, either party can rescind; 29.8.3 the completion date becomes the later of the completion date and 21 days after either party serves notice of the event happening. 29.9 A party cannot rescind under clauses 29.7 or 29.8 after the event happens."
Special Condition 42 was relevantly in the following terms: 42 Sale subject to registration of plan of subdivision 42.1 The property is shown in the vendor's draft plan of proposed subdivision, a copy of which is annexed hereto (hereafter referred to as "Plan") and completion is subject to and conditional upon registration of the Plan or such further and/or other plan by Land and Property Information NSW ("LPI"); 42.2 The parties expressly agree and acknowledge that the purchaser shall not be entitled to make any requisition or claim to or in respect of: (a) any minor variation as regards the property, as shown in the Plan … (b) by any variation or alteration which may be required by the LPI in the size and location of any lot in the Plan (other than the property) for the purposes of or in connection with the approval and registration of the Plan. 42.3 If a Plan along the lines referred to above has not been registered by the LPI on or before a date which is twelve (12) months from the date of this agreement, either party shall be entitled to rescind this contract. 42.4 The Purchaser shall serve the form of transfer within seven (7) days either party serves notice on the other of the registration of the Plan. 42.5 The Vendor shall at its own cost and expense prepare the Plan and seek registration of the Plan at the office of the LPI and do all things reasonably necessary to achieve registration of the Plan as expeditiously as possible. 42.6 For the purposes of this clause "minor" shall mean less than 2.5% of an area or dimension."

[14]

The Rescission Proceedings

On 13 May 2016, DGF wrote to each of the Purchasers. Each of the letters was relevantly in the same terms (Rescission Letter). The Rescission Letter first referred to the relevant Contract for Sale and the fact that the sale involved an "off the plan contract" as defined in s 66ZL. After referring to Special Condition 42.3, the Rescission Letter stated that, as at the date of the Rescission Letter, the "sunset date" had expired but that, at that stage, neither party had elected to rescind even though the sunset date had expired a considerable time before. The Rescission Letter stated that DGF's purpose was to inform the Purchaser that DGF intended to rescind the Contract for Sale after the expiration of 28 days from the date of the Rescission Letter. It said that, in accordance with the requirements of s 66ZL(4), it was necessary to explain the delay in obtaining registration of the proposed plan of subdivision.
The Rescission Letter then said as follows: "As you may be aware the land the subject of the plan of subdivision was owned by the Vendor, Enzo and Franca Di Federico and Paul and Maria Rosa Scarfone. There has been disputation between the Vendor and the Di Federicos which has given rise to two separate sets of proceedings in 2013 and, more recently still, in 2015. In the proceedings commenced in 2013 the Vendor sought orders to compel the Di Federicos to do all necessary acts and things to enable the lodgement of the Final Linen Plan with Fairfield City Council. These proceedings were resolved by the execution of a Deed on 17 December 2013. The deed contained a confidentiality provision and whilst there may be some argument in favour of the confidentiality obligation being waived the Vendor, for abundant caution, considers the disclosure of that Deed to be questionable. It is sufficient to note that the Deed made the proceedings otiose and they were discontinued by consent. It was later necessary for the Vendor to pursue further proceedings against the Di Federicos in 2015 by the filing of a Summons in the Supreme Court seeking, amongst other things, an order for Specific Performance of the aforesaid Deed dated 17 December 2013. The Deed of 17 December 2013 required the Di Federicos to take certain steps that would enable the conditions of consent imposed by Fairfield City Council to be finalised thereby allowing the plan of subdivision to be registered. The proceedings commenced in 2015 gave rise to a further agreement being executed between the Vendor and the Di Federico's [sic] on 22 October 2015. Again, owing to a confidentiality provision contained therein the Vendor does not disclose the terms of that agreement herewith. In order to obtain the plan of subdivision Fairfield City Council requires certain work to be undertaken on the Di Federico's [sic] land. DGF has no entitlement to enter upon such land to undertake the outstanding work itself. The work involves the removal of unauthorised fill which will, if undertaken by the Vendor, cost at least $300,000.00-$400,000.00. It is work that is required to be undertaken by the Di Federico's [sic]. Thereafter the Vendor is required to create a Riparian Zone adjacent to the creek. It is not possible to create the Riparian Zone until the unauthorised fill has been removed. Prior to the agreement having been entered on 22 October 2015 Fairfield City Council issued a Work Order on 3 July 2015 requiring the Di Federico's to remove unauthorised fill on their land. The removal of this fill by the Di Federico's [sic] forms a large part of the work that must be undertaken in order to obtain registration of the plan of subdivision. After submissions made by the Di Federico's [sic] to the Council on 21 August 2015 the Council, on 2 February 2016, demanded that the Order made on 3 July 2015 be actioned. Despite the work order of 2 February 2016 no work has been done. The cause of the delay in undertaking the necessary work, in compliance with the Conditions of Consent imposed by Fairfield City Council, is work on that portion of the development site owned by the Di Federico's [sic]. In order to progress development work being performed, the Vendor has taken two separate sets of proceedings in the Supreme Court of New South Wales and Fairfield City Council has issued a Work Order, yet still, the work remains outstanding. DGF has no ability to undertake the work on land it does not own nor is it financially able to expend the considerable funds needed to undertake such work (which ought to be undertaken by, and at the expense of, the Di Federico's [sic]).
The Rescission Letter attached copies of:

The summons filed in the Specific Performance Proceedings;
The statement of claim in the Specific Performance Proceedings; and
The letter of 2 February 2016 from the Council to the Di Federicos.

The Rescission Letter asserted that it was not possible for DGF to predict when the necessary work on the Di Federico land will be undertaken so as to satisfy the last remaining condition imposed by the Council. It then sought the consent of the Purchaser to the rescission of the Contract for Sale, saying that, if consent was not forthcoming, DGF would commence proceedings seeking the Court's permission to rescind under the sunset clause. The Rescission Letter asserted that, if such proceedings were commenced, DGF would be contending that the Purchaser's lack of consent, if it was not forthcoming, would have been unreasonably withheld and, on that basis, DGF would seek that the Purchaser pay the costs of the application. The Rescission Letter sought written consent within 21 days.
None of the Purchasers consented to the rescission of their respective Contracts for Sale. Accordingly, DGF commenced the Rescission Proceedings by summons filed on 16 August 2016. By the summons, DGF seeks an order pursuant to s 66ZL(6) that it be permitted to rescind each of the Contracts for Sale. It also seeks an order that the Di Federicos pay the costs of the proceedings and, in the alternative, an order that each party pay its own costs of the proceedings. It does not seek an order that the Purchasers pay the costs of the proceedings, notwithstanding the threat made in the Rescission Letter.
All of the Purchasers, other than the ninth defendant, Mrs Panuccio, have been represented by the same solicitors and counsel. Mrs Panuccio has been represented by her own solicitors and counsel. The Di Federicos, who are also defendants in the Rescission Proceedings, have been represented by separate solicitors and counsel.
DGF seeks separate relief in relation to each of the Contracts for Sale, although common issues arise in relation to each of them. Ultimately, it will be necessary to deal separately with the circumstances of each of the Purchasers. Thus, it is not inconceivable that it might be just and equitable for one or more of the Contracts for Sale to be rescinded and not for all eight Contracts for Sale to be rescinded.
DGF has proffered, as a condition of the making of relevant orders under s 66ZL, an undertaking to the Court to share with each of the Purchasers any capital gain that it may derive from resale of the lots in the proposed subdivision. The undertaking may be summarised as follows:
DGF will do all necessary acts and things as soon as is reasonably possible to effect the registration of the proposed plan of subdivision;
Within seven days of registration, DGF will prepare contracts for the sale of the eight lots on usual terms for residential properties in New South Wales;
Within two days of the preparation of the contracts for sale, DGF will engage a real estate agent practising in the Horsley Park area, on usual business terms, to market and sell the eight lots at auction, with reserve prices agreed between DGF and the solicitors for the respective Purchasers or, failing agreement, with a reserve determined by the real estate agent;

[16]

Breach of special condition 42.5 and cl 28.2.3

As a matter of ordinary contract law, a party to a contract cannot rely upon the failure of a condition precedent if the failure is brought about by its own conduct [3] . The Purchasers contend that the effect of cl 28.2 and cl 28.3 is that the vendor can rescind only if the vendor has complied with cl 28.2. That is to say, DGF's right to rescind is conditional upon its complying with its obligation in relation to the registration of the plan of subdivision [4] . The Purchasers assert that it is for DGF to prove that the right to rescind exists and that the preconditions of the exercise of the right to rescind have been satisfied. They assert that it has not done so.
In that regard, a distinction must be drawn between breach of the provision prior to the Sunset Date and breach after the Sunset Date. I do not understand the Purchasers to contend that the right to rescind was lost by breach of the provision after the Sunset Date, putting aside the possible relevance of that matter in the exercise of discretion under s 66ZL.
Three questions of construction arise in relation to special condition 42.5 and cl 29.5. The first is whether the provision operates after the sunset date. The second is the effect of a failure by DGF to comply with the provisions. The third is the content of the obligation imposed by the provisions.
In relation to the first question, there is nothing in the language of special condition 42.5 to suggest that the obligation ceases upon the occurrence of the sunset date. Each of the Contracts for Sale remains on foot, notwithstanding the passing of the sunset date, until such time as either party elects to exercise the right to rescind. Having promised to do all things reasonably necessary to achieve registration of the plan as expeditiously as possible, that promise continues to bind DGF.
The second issue is the consequences of failure, after the occurrence of the Sunset Date, to do all things reasonably necessary to achieve registration of the proposed plan of subdivision as expeditiously as possible. The question is whether the breach of that obligation after the Sunset Date affects the right to rescind that arose upon the occurrence of the Sunset Date. Whether or not breach of that obligation gives rise to a claim for damages, the question is whether it affects the contractual right to rescind that has arisen, assuming that it has arisen and all pre-requisites or conditions for the exercise of the right to rescind have been satisfied.
The Purchasers contend that no fine question of construction as to the content of the obligation imposed by cl 28.2 arises because it is clear that DGF failed to perform its obligation under that provision. The obligation of DGF was to do all things reasonably necessary to achieve registration of the plan of subdivision as expeditiously as possible. Thus, it is not a promise to use best or reasonable endeavours to achieve registration. The Purchasers assert that the word reasonably qualifies what is necessary to achieve the stated object and does not qualify the conduct that is required. Irrespective of DGF's commercial interest, it promised to do all things reasonably necessary to achieve an end, namely, registration of the proposed plan of subdivision.
The Purchasers assert that there were multiple occasions on which DGF could have, but did not, take specifically identified action to achieve registration of the proposed plan of subdivision. They break the occasions into several periods.

[17]

December 2013 to May 2014

After DGF entered into the 2013 Deed, it had the opportunity to finalise the issues that previously may have delayed its completion of the subdivision. However, the Purchasers assert, DGF failed to comply with its obligations under the 2013 Deed for a period of almost five months. During that period, DGF entered into Contracts for Sale with Mr and Mrs Pijaca on 17 February 2014 and Mrs Panuccio on 20 February 2014. From those dates, it owed those Purchasers obligations under special condition 42.5, including obligations to comply with the 2013 Deed to the extent that that could affect the finalisation of the subdivision.
The Purchasers assert that, as at 1 April 2014, when Mr Frassetto wrote to RGM Civil, DGF was in breach of special condition 42.5 of the Contract for Sale to the Pijacas. Mr Frassetto accepted that DGF had not commenced any work in relation to the performance of its obligations under cl 4.3 of the 2013 Deed by 2 April 2014 and agreed that, for a period of almost five months, DGF had failed to comply with its obligations under the 2013 Deed. He agreed that, when DGF entered into the Contract of Sale with Mr and Mrs Pijaca, DGF had not commenced any work in performance of the obligation contained in cl 4.3 of the 2013 Deed.
On 1 May 2014, DGF entered into the Contract for Sale with Mr and Mrs Butros and its obligations to them commenced from that time. Mr Frassetto would not accept that as at 1 May 2014, when DGF entered into the Contract for Sale, work had not commenced. He asserted that, by May, the works were nearly finished. He asserted that by 19 May 2014, DGF had "done all the creek" and everything was finished. He asserted that the only fill that was used in performance of the obligation under the 2013 Deed was fill that came out of the creek.
When asked about the email of 19 May 2014 from Carlo saying that he "may be able to help in that field in the way of fill", Mr Frassetto denied that he understood that as a reference to DGF's obligations under cl 4.3 of the 2013 Deed and that Carlo wanted to do that work because DGF was not going to do it. While Mr Frassetto accepted that he did not write back to Carlo and say that DGF had fully complied with its obligations, he asserted that Carlo understood that that was the case "because the machinery was taken away". He said that as far as DGF was concerned, that job was finished and DGF was not going to put anymore fill in.

[18]

May 2014 to October 2014

The Purchasers assert that, despite the obligation owed to Mr and Mrs Pijaca, Mrs Panuccio and Mr and Mrs Butros after 1 May 2014, DGF, through Mr Frassetto, was involved in discussions with the Di Federicos about importation of fill. This was notwithstanding that Mr Frassetto believed that any importation of fill, even to a limited extent, would require a s 96 modification application to amend Consent 1171.1, something that was likely, at best, to delay registration of the plan of subdivision.
In the course of cross-examination, Mr Frassetto drew a distinction between up to 300mm of topsoil, which he said was allowed, on the one hand, and any other larger amount or any other fill. The Purchasers assert that there is no basis for such a distinction and point to Mr Frassetto's concession that he agreed to importation of fill to that extent because he could "get away with it".
The Purchasers assert that taking such a risk was a breach of special condition 42.5 and that, even if the distinction were accepted, it could only assist DGF if DGF took steps to ensure that any importation of fill was limited in the way and to the extent that Mr Frassetto suggested was permissible. When asked whether DGF took any steps to ensure that only 300mm of topsoil was applied on to the Di Federico land, Mr Frassetto said that when he saw the Di Federicos bringing in truckloads of soil, he asked his solicitors to send a letter. He accepted that DGF did not offer the services of its surveyor to supervise the work to ensure that only 300mm of fill was placed on the Di Federicos' land. Mr Frassetto accepted that no benchmarks were placed by the surveyors to indicate a level of 300mm. He accepted that he never told Mr Di Federico that he could not fill beyond the height of any such benchmark. DGF took no steps to monitor the fill that was being placed by the Di Federicos or to obtain certificates as to the quality and source of the fill. It did not engage a surveyor to measure the extent of the fill. The Purchasers say that that was reasonably necessary to ensure that there would be no delay in the registration of the proposed plan of subdivision.
When asked whether DGF was taking a big risk when it entered into Contracts for Sale knowing that there might be a problem with getting the proposed plan of subdivision registered, Mr Frassetto said that they had "a mutual friend" who was put in charge of "getting all that in place". He said that the mutual friend assured him that you would "get this all through the Council no problems". Mr Frassetto identified "the mutual friend" as Mr Morizzi. He agreed that on the strength of Mr Morizzi saying that he could "get this through the Council no problem", DGF thought it would take the risk of entering into the Contracts for Sale notwithstanding the unauthorised fill.
In the middle of 2014, Mr Frassetto had a meeting with Mr Morizzi in which they discussed the levels on the property owned by DGF and the property owned by the Di Federicos. Mr Morizzi said "you can just stand here and see that the levels are not right". Mr Frassetto accepted that he did not suggest to Mr Morizzi that he would make arrangements to bring clean fill "and fix this matter up".
Mr Frassetto accepted that he received Carlo's email of 15 June 2014 before any work was carried out on the Di Federico land by the Di Federicos. He understood that Carlo was offering a release by the Di Federicos of what they considered DGF's obligations under the 2013 Deed to be in return for a payment of $142,000. Subsequent to receipt of the communication, Mr Frassetto attended a meeting at the Di Federicos' house on 22 June 2014 at which Mr Morizzi was present. At the meeting, Mr Morizzi suggested that the filling and grading required by the 2013 Deed could be carried out by the Di Federicos but that DGF should pay for it. Mr Frassetto accepted that DGF rejected that proposal.
The Purchasers point out that, after becoming aware of and accepting the risk described above, DGF entered into four further Contracts for Sale to Mr and Mrs Scarvelis on 21 July 2014, to Mr and Mrs Mihajlovic on 22 July 2014, to Mr and Mrs Noble on 2 August 2014 and to Mr and Mrs Okan on 15 August 2014. They assert that, during that period, DGF allowed or permitted the very thing that caused the delay, namely, the unauthorised fill, when it was within its power both to prevent and mitigate the consequences of the placing of the unauthorised fill. Further, it took no steps to remove the fill.

[20]

March 2015 to October 2015

As a result of the meeting involving DGF, the Di Federicos and the Council on 11 March 2015, DGF was aware that there was a solution open to it whereby, in consideration of the payment of $142,000, the Di Federicos would take responsibility for the consequences of the importing of the unauthorised fill, such that the subdivision could progress without further day. The Purchasers complain that DGF chose not to take that course despite its obligations under special condition 42.5 in circumstances where three of the sunset dates had already passed.
The Purchasers assert that, even if payment of the sum $142,000 to the Di Federicos was commercially unattractive to DGF, DGF was under an obligation to make the payment if it was reasonably necessary in order to secure the registration of the proposed plan of subdivision expeditiously. They assert that that is so even if the Di Federicos were not legally entitled to such a payment and were applying commercial duress. However, I do not consider that a payment to the Di Federicos of a sum such as $142,000, to which they were not entitled, could be fairly characterised as reasonably necessary.
The Purchasers point out that, while DGF took some steps to prepare a s 96 modification application during March, by 9 April 2015 DGF had abandoned all efforts to do so and, instead of negotiating with the Di Federicos, commenced the Specific Performance Proceedings. The Purchasers assert that there were other avenues of resolving the difficulties with the Di Federicos that were available to DGF other than the commencement of legal proceedings. They assert that, even after the making of the 2015 Agreement and the orders of 22 October 2015, DGF did not take the required steps to enforce the solution that was agreed. The Purchasers assert that the expenditure of funds in pursuing the Specific Performance Proceedings was not enough to satisfy DGF's obligations. However, it is difficult to see what steps, other than paying money under duress, were reasonably available.

[21]

After 22 October 2015

The Purchasers assert that the 2015 Agreement prescribed a clear way forward, including a default mechanism for DGF to have any documents signed by the Registrar and a right of access to the Di Federicos' land. They assert that, while the 2015 Agreement authorised DGF to enter the Di Federicos' land if the riparian works were not completed within a month, that right was not enforced by DGF because of its desire to save money. The Purchasers assert that, while DGF enforced its rights to some extent, it did not do so sufficiently to enable the proposed plan of subdivision to be registered. Alternatively, they say there must be some other reason, unexplained, as to why the proposed plan of subdivision was not registered.
In any event, the Purchasers assert, DGF took no further steps to finalise the registration of the proposed plan of subdivision notwithstanding the encouraging communications from the Council, which identified a clear way for separating the issue as to the unauthorised fill from the final approval of the subdivision by the Council. At that time, NSW Water indicated to Mr Frassetto that it would approve the riparian works provided the Council approved them first. Nevertheless, DGF did not investigate further the possibility of putting forward a further bond pending completion of the riparian works, despite the fact that it discussed such a possibility with NSW Water, which appears to have accepted that as a solution.
The Purchasers complain that after 6 March 2017, DGF did not lodge the relevant documents with the Council and did not make a s 96 modification application. Rather, DGF's solicitors wrote to the Council effectively complaining about the decision on 30 August 2017. The Purchasers invite the Court to draw the inference that, at some time after October 2015, DGF decided that it preferred not to complete the subdivision, but would do so if the Contracts for Sale are all rescinded.
Mr Frassetto accepted that DGF could have asked its shareholders or investors to provide funding of an additional $72,000 (being the amount quoted by RGM Civil to complete the outstanding works) but that it had not done that. He accepted that DGF does not want the plan of subdivision registered "at the moment". However, he did not accept that the reason why DGF did not want the plan of subdivision registered "at the moment" was because not having it registered would assist in the present proceedings. He said that the reason why DGF had not taken further steps to try to have the plan of subdivision registered was "purely on financial matters". He referred to additional costs "to build the landscaping, the riparian zone and everything else that has to go with it". He accepted that by an expenditure of $120,000, the proposed plan of subdivision could be registered and the Contracts for Sale could be completed.
Mr Frassetto accepted that, if the Court permits DGF to rescind the Contracts for Sale, DGF will finish the subdivision as soon as possible and will sell the lots in the subdivision for the highest price that it can reasonably obtain. He accepted that the only way that DGF can get a return for its investors is to try to sell the lots at a higher price. Otherwise, DGF would go into liquidation.

[22]

Conclusion on Breach of Special Condition 42.5

Each of the Purchasers makes the assertion in relation to their respective Contracts for Sale that, during each of the periods referred to above, DGF failed to do those things reasonably necessary to achieve registration of the proposed plan of subdivision as expeditiously as possible. They assert that, at the time of each sunset date and at all times from entering into of each of the Contracts for Sale, DGF has been in breach of special condition 42.5 and cl 28.2. The Purchasers assert, DGF did not have a right to rescind either because a condition precedent had not occurred or by operation of the principle that DGF cannot take advantage of its own breach. Accordingly, they say, DGF has and had no contractual right to rescind under special condition 42. No question of the operation of s 66ZL therefore arises.
The Di Federicos also contend that DGF was in breach of cl 28.2 of the printed form constituting part of each of the Contracts for Sale and is therefore precluded from exercising any right to rescind the Contracts for Sale in accordance with special condition 42.3. They assert that:

DGF failed to comply with its obligations for "filling and re-grading" of the Di Federico land and construction of the driveway under the 2013 Deed such that the Di Federicos had to attend to those works;
DGF failed to cause the filling and re-grading to be properly supervised;
after being advised by the Council on 11 March 2015 that it may be necessary for a restriction on user caveat to be placed on the Di Federicos' land in order to permit the proposed plan of sub-division to be progressed, DGF failed to take steps to negotiate a settlement with the Di Federicos in that regard to enable that to occur;
at least in relation to lot 6, DGF failed after the execution of the 2015 Deed, to enforce its rights to complete the riparian works on the Di Federicos' land and to require the Di Federicos to sever their land and the unauthorised fill from the proposed plan of sub-division.

A complication with the contentions advanced on behalf of the Purchasers and the Di Federicos is that they do not adequately distinguish between the eight separate Contracts for Sale. That is to say, the content of the obligations imposed by printed cl 28 to "do everything reasonable to have the plan registered" within a particular period and by special condition 42.5 to "prepare the plan and seek registration of the plan and do all things reasonably necessary to achieve registration of the plan as expeditiously as possible" will differ according to the time when the relevant obligations came into operation. Thus, the first of the eight Contracts for Sale, with Mr and Mrs Pijaca, became binding on 17 February 2014. On the other hand, the last of the eight Contracts for Sale, with Mr and Mrs Azzopardi, did not became binding until 30 October 2014. The content of the obligation owed by DGF to Mr and Mrs Pijaca will therefore not necessarily be the same as the content of the obligation owed to Mr and Mrs Azzopardi.
In so far as the contractual right to rescind is dependent upon DGF's performance of its obligations under printed cl 28 and special condition 42, the obligation is relevant only up to the time at which the contractual right to rescind arose. The obligation did not cease, in that, unless it exercised the right to rescind, DGF continued to have the obligation to do the things described in cl 28 and special condition 45. However, failure to perform after the date when the contractual right to rescind arose, (namely, the sunset date), would not affect DGF's right to rescind unless it amounted to a waiver or abandonment of that right. It may well be, as will appear below, that failure to perform after the sunset date is relevant to the question of whether it would be just and equitable to permit DGF to rescind. That, however, is a different question.
Thus, the period for inquiry in relation to whether the contractual right to rescind arose in the first place is limited to the period from 17 February 2014 to 29 October 2015. However, only part of that period is relevant for any one of the eight Contracts for Sale.
I do not consider that the Purchasers have identified specific action or conduct on the part of DGF that it ought to have undertaken in order to discharge its obligations under printed cl 28 or special condition 42, the failure to perform which had any causal connection with the failure to have the a relevant lot created by the registration of the proposed plan of subdivision. I am not persuaded that any action has been identified by the Purchasers that DGF should have undertaken, during any part of the period in question from February 2014 to October 2015 with the result that the proposed plan of subdivision would have been registered before the occurrence of the sunset date of the Contracts for Sale with Mr and Mrs Azzopardi, much less any earlier sunset date. I conclude, therefore, that, but for the operation of s 66ZL, DGF became contractually entitled to rescind each of the Contracts for Sale on the respective sunset dates provided in them.
There is a further reason. The contracts provide inconsistent timeframes: six months in cl 28.2 versus 12 months in special condition 42 (with the exception of the Noble and Mihajlovic contracts, where special condition 42 also stipulated 6 months). I shall return to this below. However, a question arises as to whether the inconsistency exists only as to the extent of the time frame or generally. Clause 28.2 imposes an obligation to do everything reasonable whereas special condition 42.3 imposes no such obligation. DGF contends that, in so far as cl 28.2 of the standard terms would interfere with the operation of special condition 42.3, there is an inconsistency, in that special condition 42.3 should be understood as conferring the right to rescind if the plan of subdivision is not registered within the relevant time, irrespective of whether DGF has done everything reasonable to effect the registration of the plan of subdivision within the relevant period.
While printed cl 28.3 permits the vendor to rescind only if the vendor has complied with cl 28.2, special conditions 42.3 and 42.5, on the other hand, are not linked in that way. Thus, the right of rescission conferred by special condition 42.3 is not made subject to the performance of the of the obligation imposed by special condition 42.5, whereby the vendor promises to do all things reasonably necessary to achieve registration of the plan as expeditiously as possible.
It is clear enough that printed cl 28 and special condition 42 (or special condition 29, in the case of Mr and Mrs Scarvelis) both address the same subject matter, namely, the circumstances in which the parties may rescind because the proposed plan of subdivision has not been registered. I consider that, as a matter of construction, special condition 42 (or special condition 29) is intended to replace printed form cl 28 entirely, such that there is one regime regulating the circumstances in which a party is entitled to rescind by reason of non-registration of the proposed plan of subdivision.
One consequence is that DGF's right to rescind is not dependent upon performance by it of its obligation under special condition 42.5 or printed cl 28.2. On the other hand, DGF would not be entitled to rely upon its own breach if the consequence of that breach is that the condition of rescission, namely non-registration of the plan by the sunset date, is not satisfied [5] .

[23]

Election

Alternatively, the Purchasers say that, assuming that such a contractual right to rescind arose, contrary to the submissions referred to above, by reason of DGF's failure over considerable periods of time to take any steps to rescind, during which periods the respective Purchasers remained committed to the Contracts for Sale and continued to perform their obligations, DGF elected not to exercise its rights to rescind. Therefore, they say, by the time that DGF sent the Rescission Letter on 13 May 2016, giving notice of its wish to rescind, the right to rescind had been lost.
A person confronted with a choice between inconsistent rights, for example, to rescind a contract or continue with its performance, is not bound to choose at once. So long as that party does not affirm the contract or the delay does not cause prejudice to the other party, that first party may keep the question of rescission open [6] . Where a difficulty in performance arises and one party, while keeping the other party abreast of the difficulty and the steps being taken, takes reasonable time to investigate whether the difficulty can be overcome, that will not necessarily amount to an election. On the other hand, such an investigation cannot last forever. If the party having the right to rescind does not act with reasonably appropriate haste or fails to keep the other party adequately informed as to what is happening, the party having the right to rescind may be treated as doing nothing. Ultimately, after a long enough delay, not acting at all may be inconsistent with exercising the right and would amount to an election to affirm the contract by default [7] .
The first sunset date was 21 January 2015 under the Contract for Sale with Mr and Mrs Mihajlovic. The last sunset date was 29 October 2015 in relation to the Contract for Sale with Mr and Mrs Azzopardi. The Purchasers accept that, throughout 2015, DGF, at least ostensibly, continued to take steps to complete the proposed subdivision. However, the Purchasers complain that, from March 2015 until 15 November 2015, when the Registrar executed documents on behalf of the Di Federicos, they were not kept informed about progress. To the extent that DGF responded to queries from some of the Purchasers, the information provided was to the effect that DGF was encountering some difficulties and was working through them, including the commencement of the Specific Performance Proceedings. Mr and Mrs Scarvelis received no response to a request as to whether DGF would be prepared to extend the sunset date. Mr and Mrs Mihajlovic were told that DGF would not agree to an extension and that DGF were taking all steps possible to procure registration of the proposed plan of subdivision.
The Purchasers assert that it is unclear what DGF was doing between 16 November 2015, when the Registrar signed the documents, and 13 May 2016, when the Rescission Letters under s 66ZL were given to them. Whatever DGF was doing, the Purchasers were not informed of what was happening. They heard nothing about the possibility of rescission by DGF. Rather, they assert, they all continued to operate under the assumption that the Contracts for Sale would be completed. During that time, while their deposits were held by DGF's agent, the property market moved against the Purchasers in the sense that the value of the properties increased. The only correspondence from DGF during the period, in response to inquiries on behalf of Mr and Mrs Mihajlovic and Mr and Mrs Scarvelis indicated only that the 2015 Orders were sufficient to put DGF in a position to complete the proposed subdivision. Inquiries made in February and March 2016 remained unanswered.
During that time, not a great deal happened in relation to the proposed subdivision. For many months, DGF did nothing in the performance of its obligations under the Contracts for Sale. Further, Mr Frassetto accepted in cross-examination that, following the 2015 Agreement, the only reason that DGF had for not completing the outstanding matters to achieve registration of the proposed plan of subdivision was a disinclination to spend further funds.
The Purchasers assert that, in those circumstances, by its inaction, DGF elected to affirm each of the Contracts for Sale and is no longer now entitled to exercise its contractual right to rescind any of them. They assert that DGF's inaction was inconsistent with retaining a right to rescind, assuming it had such a right, to rescind but was consistent only with the affirmation of the Contracts for Sale. Precisely when the election occurred, they say, is unnecessary to determine: if the right to rescind was to be exercised in relation to any of the Contracts for Sale, the time for exercise passed before 13 May 2016.
Mr Frassetto accepted in cross-examination that DGF did not form the intention of rescinding any of the Contracts for Sale until May 2016. The question, however, is whether, by its inaction, DGF must be taken to have affirmed each of the Contracts for Sale, in the sense that it abandoned its right to rescind.
I consider that a distinction should be drawn between the right of an innocent party to a contract to rescind by reason of repudiation of the contract by the other party, and a contractual right to rescind. The right to rescind in the former case is not a contractual right but a remedy afforded by the law to an innocent party by reason of the repudiation of the contract by the other party. A contractual right to rescind, on the other hand, is of a different character.
Thus, where the parties to a contract expressly agree that, in specified circumstances, either of the parties or, indeed, each of the parties, has a right to bring their contractual relations to an end, that contractual right will not be lost merely because a party having the right continues to treat the contract as being on foot. Of course, it would be possible that the conduct of a party having a contractual right to rescind, being conduct engaged in after the right arose, could give rise to an estoppel such that it would be unconscionable for the party to exercise its contractual right to rescind. Further, it may be possible to argue, in particular circumstances, that a contractual right to rescind must be exercised within a reasonable time. However, no such contention has been advanced on behalf of the Purchasers.
In the circumstances, I do not consider that inaction on the part of DGF, in the sense that it did not purport to exercise its contractual right to rescind, constituted an abandonment by it of that contractual right or an affirmation of the Contracts for Sale. I do not consider that, apart from the operation of s 66ZL, the doctrine of election would have precluded DGF from exercising its rights of rescission. Accordingly, it is necessary to consider whether the Court should exercise its discretion to permit DGF to exercise its contractual right in relation to each of the Contracts for Sale.

[24]

Construction of s 66ZL

It is significant in the present case that s 66ZL was enacted after each of the eight Contracts for Sale was made. The enactment of s 66ZL therefore had a retrospective effect in that, upon coming into force, it altered the contractual rights of the parties to each of the Contracts for Sale.
When made, each of the Contracts for Sale contained a bilateral right of rescission. So long as DGF, as vendor, acted lawfully, it was entitled to rescind, as a matter of contract, at or after the expiry of the Sunset Date. When the Contracts for Sale were made, none of the Purchasers had an entitlement to benefit from any capital gain. When made, there was no certainty that completion would occur. A contract containing such a term provides a risk for both parties. The vendor would suffer detriment in a falling market and the purchaser would suffer detriment in a rising market, if the condition (registration) was not satisfied.
So long as a vendor under such a contract performs its obligations, the nature of the bargain entitles it to rescind if it elects to do so, whether the market is rising, falling or static. After the effluxion of the relevant time, 12 months in six Contracts for Sale and six months in the case of two of the Contracts for Sale, the vagaries of the market and the progress of development could make completion unfavourable for either party. Each party voluntarily granted the other the right to rescind if the other so elected.
DGF contends that, in relation to such a contract, the risk is greater for a vendor because it risks its capital in the event of rescission: the deposit would be refundable. The risk for a purchaser is that, if the market is rising and the contract is rescinded, the purchaser would be at a disadvantage in re-entering the market at a higher level. That risk could be controlled to the extent that, upon the occurrence of a sunset date, a purchaser could rescind, if it wished if concerned that the market would continue to rise after that date. That entitlement on the part of the Purchasers was not hindered by the enactment of s 66ZL. In the present case, the first Purchasers, Mr and Mrs Pijaca, would have been entitled to rescind as early as February 2015.
Assuming that it acted lawfully and performed its obligations under the contract, a purchaser under such a conditional contract could rescind once a sunset date is reached. The motivation of the purchaser for doing so would be irrelevant and the fact that it did so in order to maximise or to improve its commercial position would not be relevant. Equally, DGF says the fact that a vendor might rescind in order to maximise its revenue would not affect the justice or equity of the rescission.
DGF contends that the aim of s 66ZL was to prevent a developer from manufacturing delays in order to obtain an unjust result or manipulating events in order to rescind, so as to gain commercial advantage. Thus the reform intended by the insertion of s 66ZL was to ensure that developers would be unable to benefit unjustly at the expense of home buyers.
DGF asserts that the aim of s 66ZL was not to make things harder nor to intrude heavily into already existing or future off the plan contracts, but to ensure that prospective homebuyers would be protected from unscrupulous behaviour to which they may be subject [8] . Thus, the Minister used several times the phrase "manufactured or false delays" where rescission would be "dubious". DGF asserts that the circumstances in which it seeks an order permitting rescission do not suggest unscrupulous behaviour on its part or manufactured or false delays on its part.
DGF accepts that the failure by a Purchaser to realise prospective capital gain, if permission to rescind is granted, should not be marginalised. However, according to DGF, none of the Purchasers will lose a capital gain: rather, the Purchasers will not realise capital gains that might otherwise have been available. DGF asserts that any capital gain in the hands of any of the Purchasers would be a windfall, as compared to a capital gain in the hands of a vendor, which DGF characterises as a return on capital and the purpose justifying the initial investment by the vendor.
DGF relies on the fact that none of the Purchasers elected to exercise the right to rescind and, by not doing so, must be taken to have accepted the risk of having to enter the market at an increased level after the Sunset Date had passed. DGF asserts that, while rescinding will deprive each of the Purchasers of the prospective capital gain that might otherwise have been available and would require them to re-enter the market at a higher level, that was a risk that each of the Purchasers accepted when entering into a conditional contract and by not exercising the right to rescind at the earliest time, in circumstances where the market was rising. One response to that contention might be that, before giving notice of its wish to rescind the contracts, DGF waited for some time, with the time varying from contract to contract.
DGF purported to set out in detail in the Rescission Letter the circumstances that it contended prevented completion of the Contracts for Sale by their respective Sunset Dates. There has been no suggestion that the reasons advanced in the Rescission Letter were erroneous or overblown. It would be reasonable to assume that the sale prices in the Contracts for Sale reflected the market values for the respective lots, save for Mrs Panuccio to whom I shall refer later. DGF asserts that each of the Purchasers could have rescinded on the occurrence of the Sunset Date and re-entered the market at that time, at a point where increase in value would have been substantially less than subsequently.
The Purchasers contend that the Court should not limit its consideration to events after the dates of the Contracts for Sale because events prior to making the Contracts for Sale might inform the knowledge of the vendor and the risks taken by the vendor. They say that the relevance of those facts is reinforced by the corresponding lack of knowledge of a Purchaser, who may not be told of facts that might delay registration of a plan of subdivision. Further, they say, events after the occurrence of the sunset date may also inform a number of matters. Thus, the present circumstances of the parties and the reasons for their circumstances may be relevant. For example, they say, a vendor may be able to avoid holding costs by registering a plan of subdivision earlier. Another factor is the increase in value of properties that can only be measured at the date of hearing.
The Purchasers assert that the Court should take into account all events up to the time of the hearing, consistently with the language of s 66ZL, particularly s 66ZL(7). None of the mandatory considerations listed in s 66ZL(7) is limited to any particular point in time, such as the commencement of proceedings by the vendor. The time of commencement of proceedings would be quite arbitrary and wholly under the control of the vendor. The factors referred to in s 66ZL(7)(b), (d), (e) and (f) are likely to change, sometimes favourably to rescission and sometimes in a way that would be unfavourable to rescission. The language of the provisions does not permit such changes to be ignored. Indeed, s 66ZL(7)(g) would be inconsistent with any limitation. Any other matter that the Court considers to be relevant is not limited to any particular factor existing at the time when the proceedings are commenced or at the occurrence of the sunset date.
There is nothing in the language of s 66ZL that suggests any time limitation on the matters that the Court may take into account. It may be that the hearing of an application for an order permitting rescission may take some time. That of itself might be a matter that the Court could take into account, although questions of expedition and diligence on the part of the parties may be a relevant factor. The criterion is whether rescission is just and equitable "in all the circumstances". The conduct of the vendor must be shown to be reasonable and in good faith up to the time of the hearing since, until such time as an order is made, the contractual obligations of the parties remain on foot. The Purchasers assert that the approach suggested by DGF effectively puts DGF's efforts to finalise the registration of the proposed plan of subdivision on hold at some point after November 2015 notwithstanding DGF's intention to renew those efforts as soon as the Court permits rescission, if it does so.
Section 66ZL(6) is explicit in providing that it is for the vendor to satisfy the court that the making of an order permitting rescission is "just and equitable in all the circumstances". Certain matters to be taken into account under s 66ZL(7) would be within the knowledge of both parties, such as the terms of the relevant contract and whether the subject lot has increased in value. Some matters would be suspected to be wholly within the knowledge of the vendor, such as the reason for the delay and the likely date in which the subject lot will be created.
Whether the vendor has acted unreasonably or in bad faith would raise some difficulties if the criteria of unreasonableness and bad faith involved subjective elements. It would be incumbent upon the vendor to establish the course of events and the steps taken by it in order to create the subject lot. It would then be a matter for a purchaser to demonstrate that those events and steps constituted acting unreasonably or acting in bad faith. Clearly, the effect of rescission on a purchaser would be something wholly within the knowledge of the purchaser. It would be a matter for the parties to adduce evidence as to any other matter that a party wished to contend that the Court should consider relevant.
Section 66ZL operates to change the allocation of the risk resulting from delay. Its effect is that the developer carries that risk which is avoided only if the vendor persuades the Court that it is just and equitable for rescission to be permitted. The Purchasers contend that such a provision entails an allocation of risk that the Parliament considers reflects the interest of the community and the trade-off between risk and reward undertaken by a property developer. While a diligent developer may have a greater risk, that, the Purchasers say, is no more than the consequence of Parliament's allocation of the risk of delay to the developer at least in the first instance.
Deriving a profit is not intended to be penalised by s 66ZL. However, profit is not the object or governing factor that underlies the intended operation of s 66ZL. The Purchasers assert that, while the Minister may have referred to developers who "manipulate the progress of the development" or "an unscrupulous manufactured or false" delay, the language of s 66ZL does not limit its operation by reference to such criteria, except in so far as it uses the broad criterion of acting "unreasonably or in bad faith". That is to say, while that criterion is a factor that the Court must take into account, it is not decisive. A developer who manipulated events or caused unscrupulous manufactured or false delay would almost certainly be found to have acted unreasonably or in bad faith. The language of the section, not the observations of the Minister, is decisive.
True it is that, when each of the Contracts for Sale was entered into, the relevant Purchaser had no entitlement to a capital gain. That is to say, each of the Contracts for Sale was conditional upon creation of the relevant lot by registration of the proposed plan of subdivision by the sunset date. However, DGF promised to do all things reasonably necessary to achieve registration of "the Plan" as expeditiously as possible. It is equally true that, after the sunset date was reached in respect of a particular Contract for Sale, the Purchaser could have limited the risk by exercising the right to rescind. However, none of the Purchasers was in a position to know how the development was progressing, how long it was likely to be before the plan of subdivision might be registered or whether there were any impediments in the way of such registration. That was something wholly within the knowledge of DGF. The Purchasers complain that no attempt was made by DGF to keep any of them informed about the difficulties that it was experiencing with the Di Federicos.
The Purchasers also emphasise the comparative significance to each of them of the capital commitment made by paying the deposit, as compared with the capital commitment of DGF. While in money terms the commitment of DGF was considerably greater than the commitment of any one of the Purchasers, each of the Purchasers' commitments was, for that Purchaser, of relatively greater significance. The Purchasers have a commitment to the payment of the deposit and the greater investment that may be required if, after a significant delay in a rising market, the Purchaser is required to re-enter the market. That question may be reflected in the requirement for the Court to consider the effect of the rescission on each of the Purchasers.
Section 66ZL applies only in relation to a contract for the sale of a lot that is a residential property. The term residential property is defined as: "Land on which are situated, or in the course of construction, not more than two places of residence and no other improvements, or Vacant land on which the construction of a single place of residence alone is not prohibited by law, or A lot or lots, including a proposed lot or lots, under the Strata Schemes Development Act 2015, comprising not more than one place of residence alone, whether constructed or in the course of construction, and including any place used or designed for use for a purpose ancillary to the place of residence." That is to say, the assumption is that the purchaser is buying a place in which to live.
Where a residential lot is involved, it is easy to draw an inference that the purchaser is buying with the intention of constructing a family home. Indeed, that is the evidence as to the intention of each of the Purchasers. Delay and uncertainty is therefore likely to cause significant distress for the Purchasers and their family whose lives may be significantly disrupted. Rescission after a lengthy period of delay in a rising market may have a very significant effect on the financial capacity of the Purchasers to acquire a property of similar characteristics.
Section 66ZL assumes the existence of a contractual right to rescind and alters that contractual right. Thus, s 66ZL expressly refers to a sunset clause as a provision of an "off the plan contract" and, by s 66ZL(9), expressly preserves any right that a purchaser may have to rescind an off the plan contract under such a sunset clause. Section 66ZL(3) then restricts the right of a vendor to rescind an off the plan contract by providing that the vendor may do so only if one of three pre-requisites is satisfied. Relevantly, one of the pre-requisites is that the purchaser consents in writing to the rescission. The other relevant prerequisite is that the vendor has obtained an order under s 66ZL.
Further, a sunset clause that operates to rescind an off the plan contract automatically if the lot has not been created by the sunset date is to be given a modified effect, namely, it is to be read as if the clause permits rescission on or after the sunset date only in accordance with s 66ZL. Section 66ZL(4) further varies the contractual rights and obligations of the parties to an off the plan contract in so far as it, in effect, inserts a term requiring a vendor who is proposing to rescind to serve a notice on the purchaser.
If follows, the Purchasers contend, that s 66ZL should not be construed as removing any provision of an off the plan contract that is beneficial to a purchaser. Thus, s 66ZL should not be construed as watering down express contractual obligations of a vendor, such as special condition 42.5 (or special condition 29 in the case of Mr and Mrs Scarvelis). I consider that, notwithstanding that in the present case s 66ZL had not been enacted when each of the Contracts for Sale was entered into, s 66ZL should not be construed as qualifying in any way the contractual obligations of DGF that may be pre-requisites, as a matter of contract law, to the exercise by it of its right of rescission.

[26]

Section 66ZL(7)(a): the Terms of the Contracts

The Purchasers contend that, even if DGF's contractual right of rescission arose and has not been lost by election, the obligations under special condition 42.5 and the circumstances alleged to constitute breaches of those obligations described above should be taken into account in considering whether or not an order permitting rescission should be made. Whether or not DGF has claims against the Di Federicos under the 2013 Deed or the 2015 Agreement, it has obligations to the Purchasers under their respective Contracts for Sale. The two are interrelated in that, if it were to be held that DGF had done everything that was reasonably open to it to achieve registration of the proposed plan of subdivision, despite breach by the Di Federicos, it may have discharged its obligations under special condition 42.5. However, if it were to be held that the Di Federicos acted in breach of their obligations to DGF but DGF failed to take all steps reasonably open to it to enforce those obligations, that failure may constitute a failure to perform the obligations imposed by special condition 42.5. The question of whether DGF discharged its obligation under each of the eight Contracts for Sale is preferably addressed in dealing with s 66ZL(7)(c).
As I have indicated, there are variations in the terms of the eight Contracts for Sale. However, it has not been suggested that any of the variations are material, except for the period between the date of the Contracts for Sale and the relevant sunset dates. For the most part, the numbering of clauses and conditions is the same. However, in the case of the contract with Mr and Mrs Mr and Mrs Scarvelis, the two counterparts of the Contract for Sale in evidence are not the same. In one counterpart, the numbering of the Special Conditions is consistent with the numbering in the other Contracts for Sale. In the other counterpart, the numbering of the Special Conditions is different. Nothing appears to turn on the inconsistency.
In the case of six of the eight Contracts for Sale, there is a tension between the printed cl 28.2 and special condition 42.3 (or special condition 29.3 in the case of one version of the Scarvelis Contract for Sale). Thus, the printed cl 28.2 provides that the vendor must do everything reasonable to have the plan registered within six months after the contract date. Printed cl 28.3 then provides that, if the plan is not registered within that time, the Purchaser and the Vendor can rescind, although the vendor an rescind only if the Vendor has complied with cl 28.2. On the other hand, special condition 42.3 (or special condition 29.3) provides that, if a plan has not been registered on or before the date which is 12 months from the date of the contract, either party is to be entitled to rescind. The inconsistency in that regard would appear to be resolved by special condition 34.1 (or special condition 21.1 in the case of Scarvelis), which provides that the special conditions override the printed conditions to the extent of any inconsistency.

[27]

Section 66ZL(7)(b): Whether DGF Acted Unreasonably or in Bad Faith

A question arises as to the time during which the conduct of a vendor is to be scrutinised for the purposes of s 66ZL. DGF contends that the relevant time is limited to the time of the expiration of the sunset date for the relevant Contract for Sale. The question would be of no significance where a vendor exercised a contractual right to rescind as soon as the right arose. In the present case, however, not insignificant times have elapsed from the sunset dates under the various Contracts for Sale until the date when DGF sent the Rescission Letter on 13 May 2016.
The considerations arising under s 66ZL(7)(b) must be taken into account in relation to the considerations to be considered for the purposes of s 66ZL(7)(c), namely, the reason for the delay in creating the subject lot by registration of the proposed plan of subdivision. On the other hand, they are separate considerations and that suggests that conduct may be relevant even if the conduct occurs after the occurrence of the sunset date.
It is conceivable that the conduct of a vendor after the occurrence of the sunset date might contribute to the decision of a purchaser not to exercise the purchaser's right to rescind. That may be relevant in a rising market such as is the case in these proceedings. That is to say, if a vendor, by its conduct, suggests to a purchaser that it does not intend to exercise a right to rescind but after some considerable time exercises that right, a purchaser may have acted to his or her detriment in failing to exercise the purchaser's right to rescind and re-entering the rising market. Interrelated with this question is the possible application of principles of election and laches. Of course, if, by the application of those doctrines, DGF has lost its right to rescind such that a court of equity may restrain it from exercising the right or may not permit it to exercise the right, where the strict contractual right to rescind subsists, conduct that may not amount to election or laches may nevertheless be relevant to the exercise of a discretion conferred by s 66ZL(6). Accordingly, I consider that the preferable view is that the conduct of a vendor up to the time when the Court hears the application for an order under s 66ZL is relevant under s 66ZL(7)(b).
A further question arises in relation to the conduct of a vendor prior to entering into a contract for sale. At least seven of the Purchasers suggest that the provision encapsulates pre-contractual conduct and that it is relevant that, at the time when Contracts for Sale were entered into by DGF, it was aware of ongoing disputes with the Di Federicos that had the potential to delay registration of the plan of subdivision, matters that were not disclosed to Purchasers at the time when the Contracts for Sale were entered into.
DGF's response is that such matters may be the subject of relief if a purchaser seeks to make a positive claim. For example, it is conceivable that a failure to disclose certain matters may constitute misleading or deceptive conduct on the part of a vendor in contravention of the Australian Consumer Law. However, whether or not a purchaser would be entitled to relief in relation to conduct prior to entering into a contract for sale, that conduct may be relevant to the question of whether it is just and equitable for the vendor to rely on the contractual right to rescind. I consider that the better view is that the court may have regard to the conduct of DGF prior to entering into the Contracts for Sale with each of the Purchasers.
In any event, DGF contends that it was entitled to be optimistic as to its prospects of having the plan of subdivision registered despite its disputes with the Di Federicos. The importation of authorised fill was hardly predictable, particularly after Mr Frassetto's text messages to Carlo on 19 May 2014. DGF contends that it could not have predicted that the Di Federicos would fail to perform any of their obligations under the 2013 Deed, the 2015 Agreement or the orders made on 22 October 2015.
The Purchasers assert that DGF behaved unreasonably by entering into some of the Contracts for Sale while in breach of its obligations under the 2013 Deed and entering into the majority of the Contracts for Sale in circumstances where that breach was probably ongoing and its dispute with the Di Federicos was ongoing and becoming worse. Thus, Mr Frassetto accepted that it was clear to him that, in mid-2014, DGF and the Di Federicos were in heated disagreement as to the effect of the 2013 Deed. Prior to June 2014, Mr Frassetto accepted that he knew there was a dispute between DGF and the Di Federicos as to how much fill could be placed on the Di Federicos' property.
Mr Frassetto also agreed in cross examination that, apart from the Contracts for Sale with Mr and Mrs Pijaca of 17 February 2014 and Mrs Panuccio of 20 February 2014, all of the Contracts for Sale were entered into after the dispute had arisen with the Di Federicos in relation to the levels of fill. He agreed that, at the time when DGF entered into the Contract for Sale with Mr and Mrs Scarvelis on 21 July 2014, DGF was in serious dispute with the Di Federicos. DGF took the chance that Mr Morizzi would be able to sort it all out and enable the proposed plan of subdivision to be completed by the sunset dates. Mr Frassetto also agreed that, when DGF entered into the Contract for Sale with Mr and Mrs Mihajlovic on 22 July 2014, he knew that there was a risk that DGF would not be able to have the plan of subdivision registered by the sunset date.
The Purchasers reiterate that, during 2014, DGF should have been completing the works that it promised to perform under the 2013 Deed. They say that, despite the fact that no such works had been commenced, DGF entered into Contracts for Sale in February 2014 with Mr and Mrs Pijaca and Mrs Panuccio. By April 2014, DGF was chasing its contractor and the Di Federicos were complaining about the delay. Nevertheless, DGF entered into the Contract for Sale with Mr and Mrs Butros.
In June 2014, DGF's solicitors wrote to the Di Federicos referring to the unauthorised fill, demanding its removal and threatening Supreme Court proceedings to enforce the 2013 Deed. After that, DGF entered into contracts with Mr and Mrs Scarvelis, Mr and Mrs Mihajlovic, Mr and Mrs Noble and Mr and Mrs Okan. On 16 September 2014, DGF's solicitor wrote again to the Di Federicos raising the issue of the unauthorised fill and referring expressly to the Contracts for Sale that had been exchanged and their sunset clauses. That correspondence continued on 13 October 2014. Nevertheless, later that month, DGF entered into the Contract for Sale with Mr and Mrs Azzopardi. The Purchasers complain that none of those difficulties were explained to any of the Purchasers at the time when those Contracts for Sale were entered into.
Next, the Purchasers say, DGF behaved unreasonably in making representations to them at various times as to when the plan of subdivision would be registered. They say it acted unreasonably in not keeping them informed as to the delay and the reasons for the delay. The Purchasers assert that, by entering into the Contracts for Sale in the circumstances in which they were entered into, without full disclosure and without full and frank updates, DGF took the risk of the further obstacles resulting from its relationship with the Di Federicos, including the issue of the unauthorised fill. The Purchasers also assert that, generally, DGF did not do all things reasonably necessary to achieve registration of the plan of subdivision as expeditiously as possible and that that conduct was unreasonable having regard to the express contractual promise.
The high point of the contentions advanced by the Purchasers and the Di Federicos is that, by 21 October 2015, DGF ought to have taken some steps to deal with the registration of the plan of subdivision separately from the issue of unauthorised fill on the Di Federicos' land. They assert that DGF should have taken advantage of the statements by the Council in 2016 and early 2017 that the subdivision could be completed without removing or doing anything with the unauthorised fill. They say that DGF should have been able to achieve registration of the plan of subdivision and should have performed the remaining obligations to transfer the lots to each of the Purchasers.
The question is whether the Court should permit DGF to exercise its contractual right to rescind each of the Contracts for Sale. That right arose on the respective sunset dates. DGF commenced the Specific Performance Proceedings seeking specific performance by the Di Federicos of their obligations. It obtained an order for expedition and prosecuted the proceedings diligently. DGF was not obliged to undertake those proceedings. As at 22 October 2015, when the Specific Performance Proceedings were listed for hearing, DGF had become entitled to rescind seven of the eight Contracts for Sale. The sunset date for the latest Contract for Sale, with Mr and Mrs Azzopardi, occurred seven days later.
The Purchasers point out that, under the 2015 Orders, the Di Federicos were required to execute not only the specified documents relating to the subdivision but also any document reasonably required by DGF to obtain consent of the Council or LPI or any other government department whose consent was required to enable registration of the proposed plan of subdivision. All documents that DGF asked the Di Federicos to execute were subsequently executed by a Registrar of the Court upon the failure of the Di Federicos to do so. The Purchasers assert that there is no explanation as to why the plan of subdivision could not then have been registered.
One possibility is that DGF did not ask for and obtain execution of all of the necessary documents. If that is so, that is a failing for which DGF is wholly responsible. Another possibility is that, having obtained execution by the Registrar of the documents required, DGF did not take the necessary steps to register the plan of subdivision. Either way, the Purchasers assert, the delay after November 2015 is all DGF's responsibility, whether or not DGF was responsible for any earlier delay.
Of course, by the time when the Registrar signed documents on behalf of the Di Federicos, the sunset date for each of the Contracts for Sale had passed. By the time that DGF received the documents signed by the Registrar, it was entitled to rescind all eight of the Contracts for Sale. However, at that stage it did not intend to do so.
The Purchasers point out that the 2015 Agreement addressed the question of the unauthorised fill and the works that DGF was still required to undertake on the Di Federicos' land, including planting vegetation near the creek, which was required as a condition of the development consent. The 2015 Agreement authorised DGF to enter the Di Federicos' land if they did not complete the riparian works within a month. DGF did not enforce its entitlement to do so and the only reason advanced on its behalf was a desire to save money. While DGF adduced evidence of a contractor who was ordered off the Di Federicos' land by Enzo Di Federico, the Purchasers assert that that is not evidence of a reasonable attempt in good faith to carry out the work and is not evidence of a reason why the work could not have been carried out.
The Purchasers assert that, at the time of the execution of the 2015 Agreement, NSW Water was not, if it ever had been, an impediment to registration of the proposed plan of subdivision. NSW Water had told Mr Frassetto that it would approve the works undertaken if the Council gave its approval. Thus, the Purchasers assert, from that time the Council was the only impediment to the registration of the proposed plan of subdivision and completion of the development.
The Purchasers assert that one way to deal with the Council's concern about the unauthorised fill was to remove it from the riparian zone. There has been no evidence as to the cost of that work other than it would be substantially less than $300,000 to $400,000, the estimate of the cost asserted by DGF for removing the unauthorised fill from the whole of the Di Federicos' land. The Purchasers assert that the only explanation offered by DGF for not removing the unauthorised fill after 22 November 2015 was that it was trying to save money. They assert that DGF either did not perform its obligations to them or the delay was a matter for which DGF was responsible.
However, by 22 November 2015, the sunset date for each of the eight Contracts for Sale had passed and DGF was entitled to rescind all of them. That raises the question as to the extent to which special condition 42 (or special condition 29) operated after the occurrence of the sunset clause.
By email of 9 March 2017 to Carlo, Ms Diacopoulos said that she had "signed off" on the two issues concerning the unauthorised fill brought onto the site and that she had advised Council's investigation section, by an email that was attached, that, in the light of the findings of the amended report, EMS raised no further objections and that both issues had now been resolved. In a further email to Carlo later on 9 March 2017, Ms Diacopoulos said that "the matter is now resolved and closed". The letter from the Council to the Di Federicos of 16 May 2017 confirmed that the Council was satisfied that the s 121B Order had been complied with and that the Council would take no further action in relation to the matter.
The Purchasers contend that that demonstrates that the Council had determined that the unauthorised fill did not need to be removed. Thus, they assert, from March 2017 there was no impediment to registration of the proposed plan of subdivision and completion of the development. That, they assert, is also implicit in the undertaking proffered by DGF as a condition of the Court permitting rescission. On 6 March 2017, the Council informed DGF that the issue of the unauthorised fill had been satisfactorily resolved and listed the minor items that would need to be completed for the subdivision to be finalised. The Purchasers assert that there is no adequate explanation as to why the subdivision remains incomplete and why DGF should not register the proposed plan of subdivision and complete the development.
Under the Contracts for Sale DGF presently has an obligation to seek registration of the proposed plan of subdivision, since, because of the operation of s 66ZL, the Contracts for Sale have not yet been rescinded and are still on foot. The Purchasers assert that DGF should not be permitted to take advantage of a delay for which it is responsible, at least as between DGF and the Purchasers, being a delay, they assert, can be explained in large part by DGF's desire to save money.
The Purchasers point to the fact that the lots that are the subject of the Contracts for Sale have increased substantially in value since their respective dates. The rising market, they say, does not result in a windfall gain. Rather, they say, buying a property or buying a more valuable property will be more expensive and could be out of reach of some of the Purchasers.
The Purchasers contend that, if DGF were permitted to rescind the Contracts for Sale, they will suffer significant loss in so far as they will be unable to buy an equivalent property because of the rise in the market in the meantime. If rescission is not permitted, the Purchasers will simply receive what they were promised in the first place.
The Purchasers assert that there are several difficulties with the proposed undertaking at a conceptual level in so far as it proceeds from an erroneous premise, namely, that there is a windfall gain that might fairly be shared. They assert that there is no gain for those Purchasers who are out of the market, only degrees of detriment.

[28]

Section 66ZL(7)(c): Reasons for Delay

The Purchasers accept that s 66ZL may justify rescission in circumstances where relevant delay was caused by some unexpected events beyond the control of the vendor. However, they contend that analysis of the conduct of DGF makes clear that, since October 2015 at the latest, the delay in registering the proposed plan of subdivision was the responsibility of DGF, regardless of the proper construction of the Contracts for Sale. Thus, they say, the 2015 Agreement gave DGF all the rights it needed to finalise the subdivision but it simply failed to do so.
The Purchasers accept that the situation during the period from February 2014, when the first Contract for Sale was entered into, and October 2015 may be more complicated, but assert that that complexity does not affect the conclusion that it is not just and equitable to permit rescission since, they say, DGF was responsible for or able to remedy the matters causing delay. The Purchasers accept that the initial delay in registration in 2014 may have been, at least to some extent, the result of actions of the Di Federicos who evinced a lack of preparedness to co-operate if DGF did not comply with its obligations under the 2013 Deed. They accept that DGF and the Di Federicos are in dispute as to the extent of those obligations, especially in relation to levelling works, and the question of whether the importation of the unauthorised fill prevented DGF from fulfilling its obligations under the 2013 Deed. Further, they accept that if the importation of the unauthorised fill had that effect, the Di Federicos breached the 2013 Deed and may have a liability to DGF, apart from questions of proving any loss on the part of DGF.
In any event, the Purchasers say, the dispute between DGF and the Di Federicos should not affect their position. If DGF is correct, it is entitled to compensation from the Di Federicos for any loss, if any, that it can demonstrate was the result of breach on their part and DGF has redress in relation to any prejudice caused to it by the delay. On the other hand, if the Di Federicos are correct, the delay is attributable to DGF's own conduct and, accordingly, could not assist it in establishing that it would be just and equitable for rescission to be permitted.

[29]

Section 66ZL(7)(d): Likely Date for Creation of Subject Lots

The Purchasers assert that the proposed subdivision can be finished promptly. Thus, Mr Frassetto accepted that, if rescission is permitted, DGF will complete the subdivision quickly and resell the lots. Further, the undertaking proffered by DGF assumed a quick completion of the subdivision. The Purchasers contrast those matters with what they characterise as unsatisfactory correspondence from DGF and its solicitors complaining, somewhat extraordinarily, about the letter from the Council saying that the Council does not require the unauthorised fill to be removed. That is apparent from the letter from Simone Legal to the Council of 30 August 2017.
The tasks that still need to be addressed were clearly identified by the Council as follows:

Riparian works required by condition 56 of the development approval: Mr Frassetto accepted in cross-examination that, since 2016 at the latest, DGF did not perform those works only because it was trying to save the money required to remove unauthorised fill. Now that the Council no longer requires the fill to be removed, that work is unnecessary.
Rectification works required by the Council, including landscaping and clean up: Mr Frassetto accepted in cross-examination that most of those tasks could have been completed some time ago.
Payment of outstanding bonds and fees required by the Council.

Only two matters appear to be put forward by DGF as constituting obstacles. The first is that it has not had sufficient funds to pay for the works. The second is that the Council would not be in a position to approve the plan of subdivision because the importation of unauthorised fill changed the levels noted on the plan forming part of the development approval.
Lack of funds appears to be inconsistent with Mr Frassetto's admission that DGF will complete the subdivision quickly if rescission is permitted and is inconsistent with the undertaking proffered on behalf of DGF. In any event, DGF's lack of funds should not excuse delay in circumstances where the works in question were not the result of an unforeseen event but were always going to be required as part of the development. DGF should therefore have been conscious of the need to incur the expense when entering into the Contracts for Sale.
Further, Mr Frassetto accepted that for expenditure of $120,000, the proposed plan of subdivision could be registered and the Contracts for Sale could be completed. The Purchasers point to the unsatisfactory state of the evidence as to DGF's financial position. In any event, there is some evidence that DGF would be in a position to obtain funding from other sources. For example, as at 30 June 2016 a company associated with Mr Frassetto, Nelson Bay Developments Pty Ltd, owed DGF approximately $3.5 million dollars. Mr Frassetto accepted that DGF could have called on that debt.
The Purchasers suggest that there is no real basis for the proposition that the Council would be precluded from approving the plan of subdivision so long as the unauthorised fill remains. In any event, DGF accepts that the question could be resolved by means of a s 96 amendment application to vary the levels on the plan forming part of the development consent to bring the plans in line with the physical state of the land. There has been no suggestion that any such an application would encounter problems with the Council and the Purchasers suggest that an inference should be drawn, in light of the position of the Council communicated to date, that any opposition by the Council is unlikely.
The Purchasers assert that the reason why the outstanding works have not been completed is the unwillingness of DGF. They assert that since sometime between mid-November 2015 and May 2016, DGF has not taken steps to endeavour to ensure that the subdivision be completed but, rather, has sought to rescind the Contracts for Sale in order to achieve sales at higher prices. Thus, Mr Frassetto accepted in cross-examination that DGF does not want the plan of subdivision registered at the moment, which, the Purchasers assert, is confirmed by the letter to the Council of 30 August 2017.
On the other hand, as indicated above, Mr Frassetto accepted that, if rescission is permitted, DGF will complete the subdivision as quickly as possible and sell the lots for the highest price possible. That is the undertaking proffered on behalf of DGF. The proposed lots can only be sold if the proposed plan of subdivision is registered and it is apparent that DGF considers that it will be able to achieve registration.

[31]

Section 66ZL(7)(f): Effect of Rescission on the Purchasers

While, as a matter of convenience, DGF joined all of the Purchasers as defendants in the Rescission Proceedings, none of the Contracts for Sale is inter-related with any other. It has been convenient for the common issues in relation to each of the Contracts for Sale and the question of whether any one or more of the Contracts for Sale should be permitted to be rescinded, to be determined in one set of proceedings. Thus, several of the considerations that the Court is required to take into account are common in relation to each of the Contracts for Sale. On the other hand, because the Contracts for Sale were entered into at different times and the term of the sunset clauses varies, there is not complete coincidence for the purposes of all them. Further, the Court must take into account the effect of the rescission of a relevant Contract for Sale on the Purchasers under it. Accordingly, each of the Purchasers must be considered separately.
Evidence has been given on behalf of each of the Purchasers indicating the nature of the disruptive effect that delay in completing the respective Contracts for Sale has had as well as the consequences for the Purchasers of rescission. Each of the lots has been purchased with the intention of building a home for the family of the Purchaser. Delay and uncertainty has caused significant stress for Purchasers and their families.
Specifically, the effect of the rising property market is that, for most of the Purchasers, rescission may have the consequence that that those Purchasers can no longer afford a similar property in the Horsley Park area. Looking at it from a different aspect, if the Contracts for Sale are rescinded, the Purchasers will lose the benefit of the capital appreciation referred to above.
DGF says that the only "loss" of any of the Purchasers is not realising a capital gain that, under the Contracts for Sale, they would not have been guaranteed because of their conditional nature. DGF asserts that that "loss" would be substantially offset by the undertaking proffered DGF.
There is no evidence as to the financial circumstances of any of the Purchasers that would enable an assessment of their ability to purchase another property in the Horsley Park area if their respective Contracts for Sale were to be rescinded. Some have acquired other properties. There is no evidence of the benefit that may be derived from those acquisitions, which may not have occurred but for the delay in the registration of the proposed plan of subdivision.
DGF also points to "the tax free benefit" that would be enjoyed by the Purchasers in receiving half of any capital gain in pursuance of the undertaking proffered on behalf of DGF. It asserts that, if any of the Purchasers, particularly those that own houses, sold the lots acquired from DGF, assuming the Contracts for Sale are completed, there would be an exposure to capital gains tax, because the lots in the proposed subdivision are not places of residence at this stage.
On the other hand, DGF asserts, the payment that would be made under the undertaking proffered by it would not be a capital gain because no property has been sold. The offer proffered by DGF would spare the Purchasers the risk of capital gains tax and the need to outlay the balance of the purchase price. In addition, the Purchasers would receive back their deposits and stamp duty. The propositions concerning capital gains tax were not disputed on behalf of the Purchasers or the Di Federicos.

[33]

Panuccio

For several months in late 2013, Mrs Panuccio and her husband, Frank Panuccio (Mr Panuccio) looked at properties in the Horsley Park area. They wanted to build a house for themselves and the family that they proposed to have. On 15 January 2014, Mr De Bortoli sent a price list for the Horsley Park development. The list price for lot 5 was $875,000. On 20 February 2014, Mrs Panuccio and DGF entered into a Contract for Sale in relation to lot 5 for the price of $650,000.
However, DGF asserts that the true consideration payable was $850,000. It appears that Mr Panuccio or Mrs Panuccio paid the sum of $200,000 to Mr De Bortoli as a loan, which was to be applied towards the purchase price but was to be re-paid if completion did not take place by March 2015. The sum has not been repaid. An independent valuation of lot 5 as at 22 April 2016 was $1.3 million, similar to the value of other lots in the proposed subdivision. DGF says that there is no reason why it would have sold lot 5 for a price of some 25% below its value. DGF asserts that the Contract for Sale provided for a lesser price because of a "side deal" for the payment of consideration additional of $200,000. There is in fact no evidence that Mr Panuccio sought to avoid the payment of stamp duty by having the price reduced.
Mr Panuccio contends that, having lent $200,000 to Mr De Bortoli, that loan was repaid by Saltnpepper Pty Ltd, which is connected to Mr Gelonesi. The terms of the alleged loan specifically tie the sum of $200,000 to the sale price of lot 5. If the sale price is $850,000, the loan does not have to be repaid. DGF contends that the only sensible and consistent explanation is that Mr Panuccio requested the sale price to be reduced in order to save stamp duty and pay the additional $200,000 by way of "side deal" to make up the difference. Mr Panuccio appears to suggest that the sum of $200,000 repaid by Saltnpepper Pty Ltd has given rise to a liability on his part.
If the Contract for Sale is rescinded, nothing further will be payable by way of purchase price and the deposit will be repayable. However, if the Contract for Sale is to be performed, the price payable will be that provided for in it. Whether Mr Panuccio is indebted to Saltnpepper Pty Ltd is not to the point.
Mrs Panuccio said that she wanted to buy lot 5 because it was near her family and that is where she planned to build her dream home. Mr Panuccio and his two brothers spent a week with excavation equipment preparing the site of lot 5, levelling, compacting and placing survey points. Mrs Panuccio said that, in order to achieve her dream she agreed to live with her in-laws for a period of time, an arrangement which was not ideal for a young married couple. She and her husband lost their privacy and they put off having more children.
By early 2016, Mrs Panuccio decided that she had invested so much emotionally in lot 5 that she was not going to give up. She asserts that she had a reasonable expectation that DGF would complete the Contract for Sale. That expectation was induced by the post-contract conduct and inaction on the part of DGF.
On 31 July 2014, Mrs Panuccio wrote to DGF inquiring when registration of the proposed plan of subdivision would occur. DGF responded on 8 August 2014 saying that DGF expected the plan to be registered in November 2014. On 27 February 2015, Simone Legal wrote to Mrs Panuccio saying that registration was unlikely to occur before May of that year.
At that time, DGF knew that there was a problem with having the plan of subdivision registered, but chose not to rescind the Contract for Sale at a time when s 66ZL imposed no impediment, and told Mrs Panuccio that the plan of subdivision was going to be registered, thereby indicating that DGF intended to complete the Contract for Sale.
On 2 June 2015, Simone Legal wrote to Mrs Panuccio saying that DGF was not in position to complete at that stage because of factors beyond its control. The letter said that a party to the proposed subdivision had taken steps that effectively prevented DGF from attending to registration of the proposed plan of subdivision and referred to the Specific Performance Proceedings. Mrs Panuccio contends that DGF's conduct was inconsistent with any intention to rescind. Indeed, Mr Frassetto accepted that, as at 2 June 2015, DGF's intention was to complete the Contracts for Sale.
Following the letter of 2 June 2015, Mr De Bortoli told Mr Panuccio that there would be no delay in settlement and that the linen plan for the proposed subdivision would be lodged with LPI in November, and that settlement could occur in December. Mr Frassetto accepted that Mr De Bortoli was accustomed to relay to Mr Panuccio the progress of the subdivision. Mrs Panuccio contends that the conversation was, at the very least, conduct of DGF consistent with an intention not to rescind.
Mr Frassetto accepted in cross-examination that, in January 2016, he said to Mr Panuccio "relax, you're going to get your land, we are sorting it out". Mrs Panuccio asserts that that is a clear affirmation of the Contract for Sale, being close in time to the Rescission Notice. There was no explanation as to why DGF would have been prepared to complete in January 2016 but in May 2016 wanted to rescind.
Mrs Panuccio asserts that the delay prejudiced her because she lived with the expectation that DGF would complete the Contract for Sale. She arranged her life accordingly. In that time, lot 5 appreciated in value but Mrs Panuccio has not purchased alternative property.

[34]

Butros

In April 2014, Mr Butros was told by DGF's real estate agent that the proposed plan of subdivision would be registered within three months. On 1 May 2014, Mr and Mrs Butros entered into a Contract for Sale in relation to lot 1 for the price of $850,000, with a sunset period of 12 months. In May or June 2014, Mr Frassetto told Mr Butros that the proposed plan of subdivision would be registered in no more than three months.
In mid-2014, Mr and Mrs Butros paid a deposit of $10,000 for the construction of a house on lot 1 and paid a fee to the Council of $10,000. After Mr Butros was informed by Suncorp that he could not borrow funds to complete and build while he owed money in respect of their family home, the family home was therefore sold. The proceeds after repayment of the loan secured on the property was $200,000. The purpose for realising those funds was to enable Mr and Mrs Butros to complete the purchase of lot 1. They would not otherwise have sold their home. From August 2014 to November 2016, Mr and Mrs Butros lived in an investment property which they had previously let out.
In December 2014, emails were exchanged between Mr Frassetto and Mr Butros concerning consent of DGF to the lodging of a development application. On 27 April 2015, Mr and Mrs Butros bought a parcel of land at Luddenham for $800,000, using the proceeds from the sale of their home. On 21 March 2016, they commenced building a house on the new parcel of land. That house is now completed and Mr and Mrs Butros have resided there since November 2016. Mr Butros does not suggest that he may not be able to obtain funds to complete the purchase of lot 1, but indicates that if he is unable to attain funds, he would sell lot 1 prior to the completion in the hope of making a capital gain.
On 30 April 2015, the Sunset Clause occurred. On 13 May 2016, some 12 months later, DGF gave the rescission Notice. Between June 2016 and August 2016, the solicitors for Mr and Mrs Butros and DGF exchanged correspondence concerning failure by DGF to perform its obligations under the Contract for Sale.

[35]

Scarvelis

In early 2014, Mr and Mrs Scarvelis began looking for a property to buy. They rejected one property in favour of the DGF development because they considered that it had a greater potential return on their investment. In July 2014, Mrs Scarvelis was told by DGF's real estate agent that settlement would occur in November 2014. On 8 July 2014, Mr and Mrs Scarvelis sold their home for the purpose of being able to complete a purchase from DGF. They received approximately $210,000 after repayment of a loan secured on their home and moved in with Mr Scarvelis' father, where they have remained until the present time.
On 21 July 2017, DGF entered into a Contract for Sale with Mr and Mrs Scarvelis in relation to lot 8 for the price of $880,000 with a 12 month sunset period. From July 2014 to May 2016, Mrs Scarvelis spoke to DGF's real estate agent every month, and more frequently in later times, and was told "it will be another month's time".
In August and September 2014, Mr and Mrs Scarvelis sold and bought assets in preparation for completion of the Contract for Sale. In December 2014, their conveyancer was told that the proposed subdivision would not be completed until January. On 23 February 2015, their conveyancer received a facsimile from DGF's solicitor saying that registration was unlikely to occur prior to May. In June 2015, their conveyancer inquired of DGF whether DGF would be prepared to extend the sunset date. No reply was received. The sunset date occurred on 20 July 2015.
On 9 December 2015, solicitors for Mr and Mrs Scarvelis requested an update. DGF's solicitors replied saying that court orders made on 22 October 2015 put DGF in a position to complete the subdivision but that the Di Federicos had failed to comply with the orders. A request for an update in February and March 2016 was not responded to. In April 2016, Mr and Mrs Scarvelis' daughter was enrolled in a school near Horsley Park.
On 13 May 2016, Mr and Mrs Scarvelis received the Rescission Notice. That was some 10 months after the sunset date occurred.
While Mrs Scarvelis contends that she would not have sold the Castle Hill property had she known that DGF might not be able to complete the Contract for Sale within a year, DGF contends that that assertion should not be accepted, since there was never any guarantee that the Contract for Sale would be completed either within the sunset period or at all. It asserts that selling assets in advance of a potential settlement of a conditional contract was inherently risky and that, in any event, in selling the Castle Hill property for $1,195,000 they were relieved of a liability for loan of over $1 million. DGF points out that not only have Mr and Mrs Scarvelis substantially decreased their debt, they have not been required to raise funds to pay the price for lot 8. DGF asserts that Mr and Mrs Scarvelis would make a very large gain for a very small outlay if rescission is not permitted.

[36]

Mihajlovic

On 1 March 2014, Mr and Mrs Mihajlovic sold for $115,000 a motor vehicle purchased as an investment. The sole purpose of that sale was to realise funds to complete the purchase of a parcel of land. On 28 April 2014, they sold their family home at Cecil Hills and received some $660,000 after repayment of a loan secured on that property.
In mid-2014, Mr and Mrs Mihajlovic began looking for land on which to build a house. DGF's real estate agent told Mr Mihajlovic that lots in the proposed subdivision by DGF would be ready by the end of 2014. On 22 July 2014, Mr and Mrs Mihajlovic entered into a Contract for Sale with DGF in relation to lot 7 the price of $860,000 with a 6 month sunset period.
On 5 August 2014, Mr and Mrs Mihajlovic engaged a design company to draw up plans for a residence to be constructed on lot 7 and paid the design company the sum of $11,000. On 11 August 2015, they paid $1,210 for a survey of proposed lot 7. It is unclear whether the work done by the design company could be used elsewhere.
In September and October 2014, Mr and Mrs Mihajlovic's conveyancers requested an update and requested consent for the lodgement of a development application. The conveyancers were informed that DGF expected registration of the plan of subdivision prior to Christmas. The sunset date occurred on 21 January 2015.
From June to August 2015, Mr and Mrs Mihajlovic's conveyancers exchanged correspondence with DGF's agent and DGF's solicitors concerning progress with the proposed plan of subdivision. On 26 June 2015, Mr and Mrs Mihajlovic requested an extension of the sunset date. DGF's solicitors responded on 15 July 2015 saying that DGF would not agree to an extension.
On 2 September 2015, Mr and Mrs Mihajlovic bought a property in Mount Vernon using funds realised from the sale of assets. Thereafter, various requests were made of DGF's solicitors seeking an update but no response was received. On 13 May 2016, Mr and Mrs Mihajlovic received the Rescission Notice, 15 months after the occurrence of the Sunset Date.
While Mr Mihajlovic may not have sold the Cecil Hills property and his motor vehicles had he known that the Contract for Sale would not be completed before the Sunset Date, those assets were sold even before entering into the Contract for Sale. Further, Mr Mihajlovic conceded that he was aware how long it could take for development applications to be approved by the Council. He knew that the Council "dragged its feet". That, is relevant to the risk that Mr and Mrs Mihajlovic took in entering into a conditional contract with a 6 month sunset clause.
Mr Mihajlovic is presently renovating the Mount Vernon property and has obtained development consent for an additional storey and a swimming pool. DGF asserts that, by owning that property since 2 September 2015, Mr and Mrs Mihajlovic have secured the capital gain that they would have obtained from completion of the Contract for Sale.

[37]

Noble

Mr and Mrs Noble own a residence at Abbotsbury. In mid-2014, they considered the purchase of two properties in Horsley Park but preferred the DGF development because of the size of the relevant lot, and the fact that the land was located in a new development where the houses would be new. On 2 August 2014, they entered into a Contract for Sale in relation to lot 2 for the price of $850,000 with a 6 month sunset period.
On 10 August 2014, Mr and Mrs Noble engaged Masterton Homes to carry out a survey and draw up plans for a new residence on lot 2 and paid approximately $4500. On 10 September 2014, they withdrew a sum in excess of $386,000 from superannuation to have funds ready for completion of the Contract for Sale. DGF contends that the Court should approach that assertion with some circumspection.
Between August 2014 and late 2015, DGF's agent told Mr Noble that the agent did not know what was causing the delay in registration of the plan of subdivision. In October 2014, Mr Frassetto told Mr Noble that the proposed plan of subdivision would be ready for registration before December. Mr Frassetto said in cross-examination that at the time he thought that that estimate was accurate.
On 26 November 2014, Mr and Mrs Noble paid Masterton Homes the sum of $11,834.56, representing 5% of the price for the house they were proposing to build on lot 2. It is not clear whether that payment can be applied in connection with the construction of a house on another site. On 29 March 2017, the Nobles were informed that the tender price for construction of the proposed house on lot 2 to had increased by some $43,350 since the time of the original arrangement with Masterton Homes.
In December 2014, Mrs Noble suffered a stroke. Since that time, Mrs Noble has difficulty with stairs. The Abbotsbury house is a two storey house and, accordingly, because of Mrs Noble's disability, they will need to move to a single story dwelling.
On 1 August 2015, the sunset date of the Contract for Sale occurred. On 13 May 2016, DGF gave the Rescission Notice, some fifteen months after the sunset date. Thereafter, communications were exchanged between Mr and Mrs Noble's solicitors and DGF's solicitors concerning rescission.
DGF points to the fact that Mr Noble knew that completion of the purchase of lot 2 would not take place any earlier than December 2014 and was aware, thereafter, that there were delays. Therefore, there was no reason to withdraw superannuation funds before December 2014. Knowing that there were delays, Mr Noble could have, and should have, kept his superannuation funds until such time as completion appeared imminent.

[38]

Okan

In mid-2014, Mr and Mrs Okan were looking for a property to buy and considered three other properties in the Horsley Park area. They preferred the DGF development because of its location. In August 2014, DGF's real estate agent told Mr Okan that registration of the proposed plan of subdivision would happen by the end of 2014. On 15 August 2014, Mr and Mrs Okan entered into a Contract for Sale in relation to proposed lot 3 for a total price of $840,000 with a 12 month sunset period.
On 16 October 2014, Mr and Mrs Okan sold an investment property to make funds available to complete the proposed purchase. They received $53,000 after payment of a loan secured on the property. In February 2015, Mr and Mrs Okan sold shares in IAG realising in excess of $6000 to have funds made available for completion. In late 2014 or early 2015, Mr and Mrs Okan paid $500 to Masterton Homes to prepare a site plan. On 28 February 2015, they paid $1,000 to Metricon as an initial deposit for the construction of a house. On 25 May 2015, they paid a further $4,000 to Metricon for construction of the home. On 2 October 2015, Mr and Mrs Okan signed the contract with Metricon for the construction of a house on the proposed lot 3.
In June 2015, Mr and Mrs Okan's solicitors were informed by DGF's solicitors that DGF was not in a position to complete because of factors beyond its control, explaining that DGF had commenced proceedings against a party to the proposed subdivision. On 14 August 2015, the Sunset Date occurred. On 30 September 2015, in response to a request for an update, Simone Legal referred to the Specific Performance Proceedings that were scheduled to commence on 22 October 2015.
In February 2016, Metricon informed Mr Okan that the price was to be reviewed and that he had to pay $1,000 per month if he wanted to keep the initial price. Given the uncertainty of registration of the plan of subdivision, Mr and Mrs Okan cancelled the contract with Metricon and were reimbursed the sum of $1,607.
On 19 March 2017, Mr and Mrs Okan and bought a property in Horningsea Park for $940,000. They moved there in May 2016 and continue to reside there. Mr Okan says that they intended to sell that property if their contract with DGF is not rescinded, although he expressed doubt about being able to afford to build on lot 3. DGF asserts that, in buying the Horningsea Park property in May 2016, Mr and Mrs Okan will enjoy a capital uplift in relation to that property. DGF contends that if rescission is not permitted, Mr and Mrs Okan would need to sell the Horningsea Park property in order to complete the Contract for Sale with DGF and possibly lease alternative premises while building works are taking place.

[40]

Section 66ZL(7)(g): Any other Relevant Matter

The Purchasers contend that this case is unusual in an important respect, in that DGF seeks to rescind while pursuing its case against the Di Federicos whom it asserts have been responsible for the delay. That suggests a significant tension in the proceedings. That is to say, it is clear that there has been delay. If the delay can be laid at the feet of DGF, DGF must accept the consequences that that may have in terms of whether the Court would be satisfied that it is just and equitable that any of the Contracts for Sale be rescinded. On the other hand, if, as DGF asserts, the delay was the result of breaches of contract by the Di Federicos, that may sound in a claim for damages. Either way, they say, the Contracts for Sale should not be rescinded: DGF should either bear the consequences of its own conduct or is entitled to be compensated by the Di Federicos for the delay.
Clearly enough, the damages to which DGF might be entitled would depend upon the way in which the Court exercised the discretion to permit rescission. If the Court concluded that DGF was not at fault, that may lead to the conclusion that it is just and equitable that DGF be permitted to rescind because of the detriment it might suffer as a consequence of being required to perform the Contracts for Sale. On the other hand, if DGF is entitled to be compensated by the Di Federicos for the loss that it might suffer by reason of being required to perform notwithstanding the passing of the sunset dates, it may not necessarily be just and equitable, as against the Purchasers, to permit it to rescind.
DGF points to possible financial loss that might follow if it is required to complete the Contracts for Sale. DGF has put forward five sets of accounts, each of which is inconsistent with the others. They were prepared by Mr De Bortoli and Mr Gelonesi. They are generally incomplete and none of them has been adopted in any formal sense by DGF. The Purchasers invite the Court to draw the inference that none of the sets of accounts is reliable. There is nothing about them to give any credence to them in light of the variations. In those circumstances, DGF's true financial position is unknown and DGF has failed to prove an important, and perhaps necessary, component of its case. More particularly, it is by no means clear, if there is any evidence of the fact at all, that DGF has any liability to pay interest to investors who have provided funds to date.

[41]

Conclusion as to "Just and Equitable"

DGF must satisfy the Court that making orders permitting rescission of any one of the Contracts for Sale under s 66ZL would be just and equitable in all of the circumstances. However, the effect either of refusing or of permitting rescission could be arbitrary and unfair. Clearly enough, rescission could be highly prejudicial to a purchaser just as refusal of rescission could be highly prejudicial to the vendor. Accordingly, in many circumstances, the making or refusing of an order permitting rescission would be just and equitable only if the making or refusing of the order were to be on terms or conditions. For example, one possibility might be that, if a purchaser does not wish to consent to rescission, it would be just and equitable for a mechanism to be provided for the price payable for the subject lot to be increased, such that, if the purchaser failed to pay that price, it would be just and equitable to permit the vendor to rescind the contract.
In determining whether it is just and equitable in all of the circumstances pertaining to each of eight Contracts for Sale, the Court must have regard to the position of the respective Purchasers, on the one hand, and the position of DGF, on the other. That is to say the Court must be satisfied that it is just and equitable as between both parties to the relevant Contract of Sale that it is just and equitable for rescission to be permitted. That requires a consideration of the consequences of refusing permission so far as DGF is concerned, as well as considering the consequences of rescission from the point of view of each of the Purchasers.
The Di Federicos contend that DGF has not established that it is "just an equitable in the circumstances" for it to rescind the Contracts for Sale by reason of the following: (a) DGF has acted unreasonably in seeking to rescind when it was itself in breach of its obligations under printed cl 28.2; (b) DGF entered into all of the Contracts for Sale at a time when was in breach of its obligations to the Di Federicos under the 2013 Deed in relation to filling and re-grading and construction of the driveway; (c) DGF entered into the Contracts for Sale in relation to lots 7 and 8 knowing that it was dispute with the Di Federicos regarding its obligations under the 2013 Deed; (d) DGF entered into the Contract for Sale with respect to lot 3 knowing that, as a result of the dispute with the Di Federicos, the Di Federicos were introducing fill onto their property that had not been authorised by the Council; (e) DGF entered into the Contract for Sale in relation to lot 6 knowing that it was aware that the s 121B Order had been made in relation to the filling activities being carried out by the Di Federicos; (f) DGF acquiesced in the unauthorised filling carried out by the Di Federicos and failed to take any reasonable steps to ensure that such filling was carried out in a manner that would have allowed for the timely authorisation of that filling; (g) DGF failed to take any steps to negotiate with the Di Federicos for a restrictive use covenant on the Di Federicos' land so as to allow the registration of the proposed plan of subdivision; (h) DGF failed exercise its contractual rights under the 2015 Agreement to complete the riparian works on the Di Federicos' land or to cause the separation of the subdivision from the unauthorised fill restrictions; (i) DGF failed to perform any works after October 2014 to progress the registration of the plan of subdivision other than the obtaining of a certificate for connection of electrical services on 8 September 2016; (j) DGF has not demonstrated that it has suffered any loss, other than the obligation to pay land tax, by reason of the delay in completion of the Contracts for Sale; (k) DGF will experience a considerable financial windfall, at the expense of the Purchasers, in the amount of $3,830,000 if each of the Contracts for Sale is rescinded.
It is of considerable relevance to know the source of the funds employed by DGF in acquiring its land and carrying out the development. Subscribed share capital, loans from financial institutions or loans from private investors would be possible sources.
Thus, in the event of loans being the source of funding, the precise terms of the loan would be relevant in order to determine what consequences would flow for DGF according to whether the Contracts for Sale were to be rescinded or completed according to their terms. For example, holding charges in the form of interest payable to a financial institution or a private investor will have been incurred by DGF. DGF would be expected to recoup such holding charges if it were able to rescind the Contracts for Sale and resell the lots at higher prices. Alternatively, private investors may have agreed to be rewarded by a share of profit following completion of the development. In that circumstance, there may be a question as to what the consequences for DGF would be if the Contracts for Sale were not rescinded.
Although there was some suggestion that the arrangement made by DGF with its investors was to share in the profit, I accept the evidence of Mr De Bortoli that investors were to be rewarded by the payment of interest at the rate of 8% per annum. Thus, the evidence indicates that loans from individual investors bearing that interest rate constituted the only source of funding. As I have said, the records as to DGF's financial position from the commencement of the development up to the date of the hearing are anything but clear. It is well-nigh impossible to be satisfied as to the financial consequences for DGF according to whether the Contracts for Sale are rescinded or are to stand.
Individual Purchasers will be affected differentially. Some Purchasers may have been in a financial position to re-enter the market once the sunset date was reached. On the other hand, the financial position of other Purchasers may have been such as to preclude such Purchasers from re-entering the market without the deposit that had been paid to DGF under their Contracts for Sale. Both DGF and the Purchasers accept that each of the Purchasers must be considered separately. It is possible that the Court could make an order permitting DGF to rescind one or more of the Contracts for Sale but not all of them.
As I have indicated, DGF proffered an undertaking formulated to afford the Purchasers a share of any increase in value of their respective lots over the sale prices in the Contracts for Sale. That procedure, however, would not guarantee that a particular Purchaser would be able to acquire the subject lot that that Purchaser had contracted to buy. The proposal formulated by DGF assumes that the Court will make an order permitting rescission of all of the eight Contracts for Sale and makes no provision for differential treatment for individual Purchasers.
The Purchasers assert that it is not only developers who manipulate the progress of the development who are disentitled from rescinding. Thus, a vendor who seeks an order under s 66ZL must demonstrate that rescission is just and equitable in the circumstances and must show a reason for permitting rescission. Further, the reason for the delay is only one of the mandatory considerations and it is not expressed in terms of manipulation by a developer. Further, it does not follow, from the fact that developers who manipulate the sunset date are not permitted to rescind, that it is only developers who manipulate the sunset date who are not permitted to rescind.
It is very difficult, for the reasons indicated above, to determine precisely what the consequences for DGF will be if permission to rescind is refused. Clearly, DGF has incurred holding charges in relation to each of the eight lots in the proposed subdivision from the dates of occurrence of the respective sunset dates up to the time of the hearing. It would not have incurred those costs if the proposed plan of subdivision had been registered before the occurrence of the sunset dates. DGF's conduct of the development generally has been less than entirely efficient and competent. However, I do not consider that DGF's conduct can be characterised as falling within the practices described by the Minister in the Second Reading Speech. I do not consider it to have acted in bad faith or unreasonably.
It is common ground that the value of each lot in the proposed subdivision has increased significantly since the dates of the respective Contracts for Sale and is significantly higher than the price provided for in the relevant Contract for Sale. While the delays in registration of the proposed plan of subdivision may have worked to the detriment of most of the Purchasers in not insignificant respects, the Purchasers have also derived an advantage or benefit in so far as the time for the payment of the price under the Contracts for Sale has been deferred.
It is significant that each of the Contracts for Sale was entered into a considerable period of time before any announcement was made that s 66ZL would be enacted. Indeed, the sunset date under each of the Contracts for Sale had occurred prior to 2 November 2015, when the legislation was announced. The Minister expressly acknowledged the retrospective operation of the proposed amendment.
At the time when each of the Purchasers entered into their respective Contracts for Sale, the Purchasers accepted the risk that, if the value of the lots in the proposed subdivision increased, they might lose the benefit of that increase if the proposed plan of subdivision was not registered before the occurrence of the sunset date. On the other hand, it is fair to conclude that none of the Purchasers was informed of the possible risks that disputes between DGF and the Di Federicos might bear upon whether or not the proposed plan of subdivision was registered before the relevant sunset date.
Notwithstanding the differences between the circumstances of the various Purchasers, I have concluded that, if DGF gives to the Court an undertaking along the lines described below, it would be just and equitable to permit DGF to rescind each of the Contracts for Sale by notice in writing given within 14 days. If such an undertaking is not proffered on behalf of DGF within 14 days, the application for an order permitting rescission of the Contracts for Sale will be dismissed. In determining whether it is "just and equitable" in all the circumstances to make an order permitting the vendor to rescind the contract, I consider that the existence and terms of an undertaking proffered by the vendor is a matter which the Court may take into account under s 66ZL(7)(g).
The undertaking to be given by DGF would be along the following lines:
DGF will, as soon as is reasonably possible, and in any event no later than 60 calendar days from date of the final orders, do all such acts and things, execute all such documents and pay all such fees as may be necessary to procure the registration of the proposed plan of subdivision by LPI including, but not limited to: (a) lodge any necessary application to the Council for variation of Development Consent Nos 1171.1 of 2009 and 1171.3 of 2009 in order to accommodate the fill currently on proposed lots 11 and 12; (b) lodge any necessary application to the Council for consent to the proposed subdivision; (c) lodge the s 88B instrument necessary for registration of the proposed plan of subdivision by LPI; (d) meet any requisitions raised by the Council or by LPI in relation to any of the above.
DGF will at the same time as giving any notice of rescission to a Purchaser or Purchasers in respect of any of the Contracts for Sale, make an offer in writing to such Purchaser or Purchasers to enter into a new contract for the sale and purchase of the proposed lot that is the subject of the rescinded Contract for Sale on the same terms as the rescinded Contract for Sale except that: (a) The price to be paid under any such new contract will be the price payable under the rescinded Contract for Sale together with a sum calculated on the balance of the purchase price payable under the rescinded Contract for Sale from 16 May 2017 until the date of acceptance of the offer (and the making of a new contract for sale) at an appropriate rate; (b) Any provision relating to rescission of the Contract for Sale by reason of the proposed plan of subdivision not being registered will be deleted; (c) The amount of the deposit payable under any new contract will be the amount of the deposit paid under the rescinded Contract for Sale.
DGF will not withdraw any such offer prior to the expiration of 28 days after the making of the offer.
DGF will apply the deposit paid under any rescinded Contract of Sale as the deposit payable under any Contract for Sale entered into as a consequence of acceptance of such an offer.
DGF is incurring interest at the rate of 8% per annum. On the other hand, the saving to Purchasers would be the usual rate for home loans. I consider the date of 16 May 2017 to be appropriate on the basis that the Di Federicos will be ordered to compensate DGF for damage occasioned by the delay up to that date. I will hear the parties further, if they wish, on the appropriate rate and the period for which the rate should be applied.
By such an arrangement, DGF would be compensated in respect of the Contracts for Sale that are completed for being out of pocket to the extent of the balance of the purchase price. On the other hand, each of the Purchasers would have the opportunity of completing the purchase of the proposed lot at the higher price notwithstanding that the Purchaser was prepared to accept the risk at the time of entering into the Contract for Sale that DGF might be entitled to rescind it if the plan of subdivision was not registered before the sunset date. Further, by reason of the delay in completion of the sale and purchase of proposed lots, the Purchasers have either had the use of the balance of the purchase price or have not been required to borrow to pay the balance of the purchase price.

[42]

Costs

I do not consider that any of the Purchasers have unreasonably withheld consent to rescission. The undertaking proffered on behalf of DGF came very late in the proceedings, being proffered during the hearing. I am therefore not persuaded that the presumption contained in s 66ZL, that the vendor should pay the costs of a purchaser in respect of an application for permission under s 66ZL has been rebutted. The proposal for the Purchasers to agree to pay an additional sum was not ventilated during the hearing. DGF should therefore pay the costs of the Purchasers of the Rescission Proceedings.
DGF seeks an order that the Di Federicos pay both DGF's costs of the Rescission Proceedings and pay any amount that DGF is ordered to pay to the Purchasers in respect of their costs of the Rescission Proceedings. DGF contends that it was not unreasonable, by May 2016, to seek to rescind in light of its financial situation, the ongoing delay and the continued failure by the Di Federicos to perform their obligations. It contends that if the Di Federicos' land had not been involved, the delays from 2014 to 2017 would not have occurred.
DGF could have rescinded without any order of the Court at the times when the respective sunset dates occurred. Section 66ZL took effect from 2 November 2015. By that stage, DGF was entitled to rescind all of the Contracts for Sale. The last sunset date, for Mr and Mrs Azzopardi, had occurred on 29 October 2015, albeit only days before the commencement of s 66ZL. Nevertheless, DGF did not take steps to rescind the Contracts of Sale until 13 May 2016. In those circumstances, I am not persuaded that, if the Di Federicos had not committed breaches of their obligations, DGF would have been able to rescind the Contracts for Sale. I do not consider that any breach by the Di Federicos has occasioned the order for costs that should be made in favour of the Purchasers.
DGF has been partially successful as against the Di Federicos. It is entitled to damages as indicated. I consider that the appropriate order is that the Di Federicos pay DGF's costs of the Specific Performance Proceedings but that there be no order as between DGF and the Di Federicos in relation to the Rescission Proceedings. However, I will hear the parties further, if any party wishes to make submissions, on the question of costs generally or on the question of the apportionment of costs as between the Specific Performance Proceedings and the Rescission proceedings.

[44]

Appendix 1 Lot Number in proposed subdivision Date of Contract for Sale Purchaser Sunset date Price in Contract for Sale Value of lot at 18 October 2017 Value of Lot at 22 April 2016 1 1.5.2014 Marianna Butros and Bolos Butros 30.4.2015 (12 months from date of agreement) $850,000 $1.425 million $1.275 million 2 2.8.2014 Peter Alec Noble and Diane Cecelia Noble 2.2.2015 (6 months from date of agreement) $850,000 $1.4 million $1.25 million 3 15.8.2014 Zafer Okan and Nuran Okan 14.8.2015 (12 months from date of agreement) $840,000 $1.4 million $1.25 million 4 17.2.2014 Joe Pijaca and Gloria Pijaca 16.2.2015 (12 months from date of agreement) $725,000 $1.5 million $1.25 million 5 20.2.2014 Samantha Panuccio 19.2.2015 (12 months from date of agreement) $650,000 $1.45 million $1.3 million 6 30.10.2014 Mark Anthony Azzopardi and Raquel Azzopardi 29.10.2015 (12 months from date of agreement) $890,000 $1.45 million $1.3 million 7 22.7.2014 Stiven Mihajlovic and Linda Maria Mihajlovic 21.1.2015 (6 months from the date of agreement) $860,000 $1.475 million $1.325 million 8 21.7.2014 Michael Scarvelis and Tanya-Marie Scarvelis 20.7.2014 (12 months from date of agreement) $880,000 $1.475 million $1.325 million

On 23 December 2015, Ms Diacopoulos sent a memorandum to Mr Ken Collins, an officer of the Council. The memorandum said relevantly as follows: "The submitted flood study was prepared by SEEC. It was originally prepared for the adjoining subdivision to ascertain the new flood levels as a result of the creek alignment works (March 2015). A subsequent revised flood study was submitted shortly after which also took into account the changed levels within the subject property (June 2015). A comparison of the levels and extents was undertaken which revealed the unauthorised fill has raised flood levels on the upstream property when compared to the results without the fill in both 20 year and 100 year ARI events and should therefore be removed to the extent such that there are no adverse effects on upstream and downstream properties. … Furthermore, the information submitted was deficient in a number of aspects, the following additional effects [sic] were not considered in the submitted flood study but should have been addressed which include any increase in velocities and hydraulic hazard of the flood water. The following information would need to be submitted if further consideration was to be accepted in this matter: . A detailed survey plan showing the level and extent of fill and current surface levels across the entire property (including creek invert levels), . A revised flood study which only compares the filled site to the unfilled site and considers increases in velocities and hydraulic hazard, . Details of proposed works to rectify the situation and eliminate any flood effects on adjoining properties as a result of the unauthorised fill. However, when considering the flood impacts and the environmental report discussed below, the orders should stand and the removal of the fill be reiterated. … In addition to the above issues, the survey plans were reviewed, they appears to be an average of 900mm of fill over the affected area, with depths in some areas of over 1.3 m. The compaction tests provided to Council are inadequate … For the affected site, six tests were submitted 3 at finish surface levels and the three others at various levels, these tests are inadequate. In view of the area affected, the average depth of fill you would expect approximately 40 tests to be submitted. Conclusion This matter has gone on for far too long. It is holding up the subdivision and unauthorised fill has been placed within the vicinity of a natural water course traversing the subject site. A review of the flood study revealed the unauthorised fill has raised flood levels on the upstream property when compared to the results within the fill in both 20 year and 100 year ARI events. There are real contamination issues that have not been resolved. The fill is considered to be uncontrolled fill. Therefore engineering assessment cannot support any of the documentation submitted on 21 August 2015. It is understood the information was submitted as a response to the issue of an Order to remove the unauthorised fill dated 3 July 2015. Consequently [Engineering Assessment] requests the Order stand and action be taken to remove the unauthorised fill." The Di Federicos assert that the memorandum proves no more than the opinion of the Council officer and cannot prove as a fact that the unauthorised fill was holding up the development. However, the internal memorandum tends to confirm that, as at 23 December 2015, the fill issue was holding up the development and asserts that that situation did not change in 2016.

By letter dated 30 August 2017, Simone Legal responded to the email from Ms Diacopoulos of 6 March 2017, saying that DGF was concerned that the development approval granted was conditional upon the land being at the levels as approved by Consent 1171.1. The letter noted that the levels appeared to be substantially different levels on proposed lots 11 and 12, being the Di Federico land, compared with those approved in the notice of determination. Simone Legal said that DGF was concerned as to the question of liability in circumstances when the email of 6 March 2017 seemed to suggest that the work could be completed. The letter went on to say as follows: "In this regard, kindly advise as to the following matters: 1. How has the issue with the "unauthorised fill been satisfactorily resolved"? Specifically, does this resolution make the removal of the fill such that condition 1 of the development approval dated 8 July 2010 will be satisfied and if not, can Council advise how any such resolution can sit comfortably with the satisfaction of any such condition. 2. Please advise how the matter of the unauthorised fill can be dealt with "separately to the subdivision" when the land containing that fill forms part of the subdivision and no Section 96 Variation has been progressed as far as our client is aware. 3. Please advise as how it is the case that this matter has now been satisfactorily resolved: what has occurred in 2017 to bring about this situation rather than this occurring at an earlier time. 4. Please provide a copy of any approval issued pursuant to an application to vary the Development Approval of 8 July 2010. 5. Please advise who was the responsible officer within Council that made the decision to approve the fill on the land owned by Enzo and Franca Di Federico being proposed lots 11 and 12 in the subdivision. The matters that we raise are concerned with our client's development consent and our client is entitled to transparency in relation to what has occurred." The tone of the letter of 30 August 2017 might be regarded as somewhat curious. It is unclear whether it was written with knowledge of the letter of 16 May 2017 from the Council, one might have expected DGF to seek confirmation that the issue of the unauthorised fill would not impede the issue of a subdivision certificate. On the other hand, it is explicable in so far as it raised concerns about whether the altered levels as a result of the fill meant that the 2013 Drawings would not be complied with.

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