Golden Mile Property Investments Pty Ltd (in liq) v Cudgegong Australia Pty Ltd

Primary judgment

1. By agreement between the parties, the hearing on the remittal was conducted solely on the evidence tendered at the first hearing before the primary judge and on the oral evidence and cross-examination at that hearing.
2. In the primary judge's reasons on the remittal, her Honour noted the following two issues as having been identified in the Cudgegong CA decision: first, (which the primary judge said had been identified in Cudgegong CA (at [81]) as a key question to be determined on the remitter) whether the deed of rescission of the First Contract was interdependent with entry into the Second Contract ([26]) and, second, whether Stacks breached its duties to Golden Mile in entering into the Second Contract ([33]).
3. On the first issue, in further written submissions provided by Cudgegong after the hearing (as directed by the Court), Cudgegong argued that Stacks was obliged to enter into the Second Contract immediately after executing the Rescission Deed by reason of an earlier oral agreement between Cudgegong and Stacks of a kind falling within the second class of contracts described in Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353 (at [9]-[10]) and that the binding oral agreement preceding the execution of the Rescission Deed and the Second Contract made the two interdependent. Her Honour accepted that submission.
4. The primary judge was satisfied, on the evidence adduced by Cudgegong, that prior to entry into the Rescission Deed and Second Contract, a binding oral agreement had been reached between Mr Stack (for the mortgagee) and Mr Singh (for Cudgegong) whereby rescission of the First Contract was conditional on entry into the Second Contract ([57]); and that the oral and written agreement[s] were part of the one transaction ([70]). On that basis, her Honour concluded (at [70]) that the rescission of the First Contract was legally interdependent with the Second Contract.
5. At [69], when concluding that the oral agreement leading to the execution of the two documents on 21 June 2012 fitted within the second category in Masters v Cameron, the primary judge said: A consequence of that finding is that an equity of redemption in favour of Golden Mile did not arise again on 21 June 2012 as there was no independent exercise of the power of sale by Stacks when the second contract was entered into.
6. As to the second issue, namely whether Stacks breached its duties to Golden Mile in entering into the Second Contract, her Honour said (at [71]) that s 420A(1)(a) of the Corporations Act (which imposes a statutory duty on the mortgagee to take all reasonable care to sell the property for the market value of the land, or otherwise the best price reasonably obtainable (and see also s 111A of the Conveyancing Act 1919 (NSW)) did not arise. Her Honour considered that the factual lens through which Mr Stack's actions must be considered was that he was not exercising anew the power of sale and that his duties as mortgagee should be assessed on the basis that the first exercise of the power of sale was continuing "so that the mortgagor's equity of redemption did not arise afresh" ([73]).
7. The primary judge considered that the reasonableness of Mr Stack's actions was required to be assessed in light of his evidence as to his belief that Cudgegong would have been likely to obtain finance elsewhere; noting that Mr Stack considered that $500,000 (the increased purchase price under the Second Contract) was reasonable compensation at the time for extending the First Contract (see [89]).
8. Thus the primary judge concluded that, as between Golden Mile and Cudgegong, the latter had the superior claim. Her Honour ordered the advance payment of $757,300 to be made to Cudgegong. Subsequently, her Honour stayed that order pending Golden Mile's foreshadowed appeal, subject to the payment of $50,000 to Cudgegong.

Appeal

1. In summary, Golden Mile challenges the primary judge's decision on the basis of the following three propositions:

• first, that irrespective of the interrelationship between the Rescission Deed and the Second Contract, entry into the Second Contract was still an exercise of the power of sale to which the mortgagee's duties applied;
• second, that if it were necessary to determine the interdependence between the Rescission Deed and the Second Contract, then the primary judge's reasoning is wrong on the basis that any such interrelationship does not relieve the mortgagee of the obligation to take the mortgagor's interest into account; and in any event there is legal error in the conclusion that there was an interrelationship, there being no evidence to support that conclusion; and
• third, that even if Golden Mile does not succeed in the first two arguments, there was nonetheless a breach of the mortgagee's duty at the time the parties negotiated the oral agreement to rescind the First Contract and enter into the Second Contract.

1. Those propositions basically amount to a challenge as to the finding of interdependence and the conclusion that there was no breach of the mortgagee's statutory and common law duties to its mortgagor. Golden Mile accepts as a general principle that if a mortgagee is contractually bound to sell at a particular price, then compliance with that contractual obligation would involve no new exercise of the power of sale (T 6.26-30) but submits that once a mortgagee begins to negotiate variations to, or the termination or replacement of, that binding contract (here, the First Contract), the mortgagee can only do so in its capacity as mortgagee and therefore it has the statutory and common law obligations when so doing to have regard to, and not sacrifice, the interests of the mortgagor and to take all reasonable steps to obtain the best price or the market price if there is one (T 6.39-45).

Appeal grounds 1 and 3

1. Golden Mile addressed grounds 1 and 3 of its proposed grounds of appeal together in its written submissions and I will deal with them in the same fashion. However, I accept, as Cudgegong submits, that the first raises error in the fact finding process, not an error of law. Grounds 1 and 3 are as follows: 1. Her Honour erred in finding that there was an enforceable agreement, on and prior to 21 June 2012, whereby Stacks Managed Investments Ltd became bound to enter into the Second Contract ("the oral agreement"), and/or that the oral agreement, the Deed of Rescission and the Second Contract were all parts of one single agreement. 3. Her Honour erred in holding that the existence of the oral agreement (if proved) meant that there was no independent exercise of the power of sale by Stacks when the Second Contract was entered into.
2. Golden Mile does not suggest that the question of interdependence (the first issue identified by the primary judge as requiring determination on the remittal) was not a key question to be determined on the remittal hearing. However, it submits that adoption of this premise led the primary judge into error in that her Honour mistakenly assumed that a finding of interdependence was decisive against Golden Mile's claim. It also argues that the issue should more accurately have been framed in terms of whether the Rescission Deed (not the First Contract) and Second Contract were interdependent; however, at [26] that is how the primary judge appears to have framed the issue.
3. Golden Mile argues that in Cudgegong CA this Court found, in effect, that both the entry into the Rescission Deed and the execution of the Second Contract involved an exercise by the mortgagee of the power of sale (referring to what was said by Emmett JA at [80]-[81] and [83]-[84]). It maintains that the primary judge wrongly focussed on the position after negotiations for the Rescission Deed had been concluded rather than at the earlier point when the negotiations as to a variation or extension of the first contract were being undertaken. Golden Mile submits that what the primary judge was required to consider (adopting the language of Emmett JA in Cudgegong CA at [81]) was, first "whether Cudgegong was not in a position to complete the First Contract, such that Stacks, as vendor, was in a position to bargain for much more favourable terms as a condition of granting an indulgence, or alternatively to decline to enter into the Rescission Agreement in the first place"; and then (referring to what Emmett JA said in Cudgegong CA at [81]) whether, had the mortgagee turned its mind to it, the mortgagee might have obtained a higher price in the light of the significant changes then affecting the market value of the land.
4. Golden Mile further submits that there was no proper evidentiary foundation for a finding that a separate oral contract was concluded between the parties, prior to the Rescission Deed, which required the mortgagee to enter into the Second Contract in those terms. (To amount to an error of law this must be understood as a no evidence ground.)
5. Her Honour concluded that the evidence of Mr Stack and Mr Singh established that an oral agreement was reached whereby the rescission of the First Contract was conditional on entry into the Second Contract on the agreed terms, saying (at [57]): In other words, Cudgegong only entered into the rescission of the first contract on the understanding that the second contract would be executed in the terms agreed with Stacks. As Mr Stack stated he was otherwise bound by the first contract until its completion date. The evidence of Mr Singh and Mr Stack that an oral agreement to extend the first contract was negotiated which led finally to the rescission of the first contract and the execution of the second contract on the same day was consistent and is confirmed by what occurred on 21 June 2012 and should be accepted.
6. Golden Mile complains that the primary judge's conclusion on this issue is "the (mistaken) imposition of a legal form on evidence of inchoate discussion and ex post facto rationalisation by two witnesses, of what they might have agreed had they turned their minds to the question" and maintains that that evidence was not capable, as a matter of law, of establishing the existence of such a contract.
7. Golden Mile emphasises that nowhere in the affidavit evidence of Mr Sukhdev Singh (extracted at [17] and [18] of the primary judge's reasons) does Mr Singh say that he agreed with the mortgagee that he would consent to rescission only on condition that the Second Contract be executed immediately. It says that the summary of Mr Stack's evidence (set out at [19]-[21] of the primary judge's reasons) amounted to two things: that Mr Stack believed there was a prospect that the purchaser would be able to complete the First Contract; and that "at least with hindsight, [Mr Stack] characterised the Second Contract as 'an agreement to extend the [First] contract'". It points out that the reference in the oral evidence to the agreement to extend the contract (T 106.28) is not to the form of the oral agreement ultimately found by her Honour.
8. Golden Mile also complains that there is some confusion in the reasons as to whether what was found was a separate oral agreement (the only term of which was that in consideration of entering into the Rescission Deed the mortgagee must enter into the Second Contract) (see [57]), or a single agreement constituted partly by the written Second Contract and partly by additional oral terms (referring to what was said by her Honour at [66]).
9. It argues that if the former was the conclusion reached by the primary judge (i.e., a separate oral agreement) then there was no reason identified for disregarding the entire agreement clause in the Second Contract (cl 34) and it says there was a real question as to the consideration for that oral agreement, noting the observation by Emmett JA (in Cudgegong CA at [80]) to the effect that the rescission was an indulgence granted by the mortgagee to Cudgegong. Golden Mile argues that it does not represent valuable consideration flowing from Cudgegong to the mortgagee.
10. I interpose to note that, insofar as Golden Mile points to the fact that Emmett JA said that the deed was an indulgence granted to the purchaser to permit the purchaser in effect an extension of time within which to complete so that the purchaser would not have to incur the risk of not getting finance and the expense of getting finance, it was accepted by Golden Mile in oral argument on the appeal (see T 21.40) that the Rescission Deed could only be seen as an indulgence in that sense if one took into account the Second Contract (which in other contexts it says one should not do because of the entire agreement clause in each of the respective agreements).
11. Alternatively, Golden Mile argues that if her Honour's conclusion (see [59] and [65]) was that the oral agreement, Rescission Deed and Second Contract were all aspects of a single agreement, then such an agreement had to be brought within the second category in Masters v Cameron, and that a collateral contract could not have been found in the present case because the oral contract was directly inconsistent with the statement in the Rescission Deed that the purchaser was surrendering all interest in the land.
12. It is further submitted that her Honour erred in admitting (in the face of the entire agreement clause) parol evidence of negotiations which led to the formation of the Rescission Deed where there was no allegation that the contract was in any way ambiguous.
13. Finally, Golden Mile submits that the question remitted to the primary judge (at [115] of Cudgegong CA) was whether the exercise of the power of sale was valid and effective and hence that the question addressed by the primary judge (as to whether there was an independent exercise of the power of sale when the Second Contract was entered into) was not open on the remittal and had already been determined adversely to Cudgegong (at [83] of Cudgegong CA). Complaint is made that Golden Mile's submission to that effect was not addressed in the primary judge's reasons.
14. Cudgegong in response submits that grounds 1 and 3 go to different issues: ground 1 to the question of fact as to whether an oral agreement, as found by the primary judge, was made (which it maintains is not appellable); ground 3 to the question of law as to the effect of such an agreement.
15. Cudgegong submits that, even if leave were to be given in relation to ground 1, it is unsustainable, pointing to the evidence given by Mr Stack as to the negotiations that followed the enquiry from Cudgegong about six months before the First Contract was due to expire as to whether Stacks would extend the First Contract; his evidence that following the extension request it was agreed that the parties enter into a new contract at a higher price (Transcript 101.20-24; Mr Stack's affidavit 16 August 2013 at [19], [20], [22]). He gave evidence as to his view that, if there was consideration in exchange for the extension of the contract, there was benefit to Stacks in providing the additional time and that the Second Contract was "not an independent contract" but an "extension of the First Contract" (Transcript 103.45-46; Black 101.44-47). Cudgegong also points to Mr Singh's evidence in cross-examination that, rather than permitting Stacks to re-market the property or require it to pay a full market price, Cudgegong would have settled the First Contract (Transcript 123.21-28) and to the fact that the Rescission Deed and the Second Contract were entered into on the same day.
16. Cudgegong submits that the inference which follows therefrom is that the benefit of the Rescission Deed could not have been obtained by Stacks without Stacks having agreed, prior to the Rescission Deed being executed, to enter into the Second Contract and hence, as there was no written agreement to that effect, the proper inference open to be drawn by her Honour was that there was an oral agreement to the effect that the parties would enter into both the Rescission Deed and the Second Contract. Hence it argues this is not a "no evidence" case.
17. Cudgegong also submits that there is no confusion in the primary judge's findings concerning the oral agreement; rather that her Honour should be understood as having found that the terms of the agreement were that the parties would enter into the deed rescinding the First Contract in the form of the Rescission Deed and then a contract for sale in the form of the Second Contract. Cudgegong argues that the oral agreement was separate from the written agreements, in the sense that it was a concluded agreement entered into before either of those written agreements was executed; but that (as well as the term that the parties were to enter into both those written agreements) it contained within it the terms of both those agreements, so as to define the contents of the two formal documents that were to be executed in order formally to record the rescission and the new sale contract.
18. As to ground 3, Cudgegong disputes that there was any determination by this Court in Cudgegong CA that precluded the primary judge from finding that the First Contract and/or the Rescission Deed and the Second Contract were interdependent. Rather, it is submitted (and I agree) that the order 5 remittal effectively mandated that the primary judge determine that question.
19. In that regard, Cudgegong points to [77]-[81] of Emmett JA's reasons in Cudgegong CA, where his Honour identified the first question arising on the appeal as being: (1) Was the Second Contract effectively an extension, by way of variation, of the First Contract, such that Stacks could not be found to have breached its duty as mortgagee exercising power of sale (since Golden Mile does not impugn the First Contract)?
20. Cudgegong submits that Emmett JA then addressed that issue in terms which recognised that if the Rescission Deed was interdependent with, or otherwise conditional upon entry into, the Second Contract, then Golden Mile's equity of redemption may not have revived; noted Cudgegong's submission as to interdependence and said it was not clear whether the primary judge had accepted the contention of interdependence or, if so, on what reasoning; and concluded that the primary judge should have examined (and her failure to do so was an error of law): … the question of whether or not the Rescission Agreement and the Second Contract were, as a matter of law, interdependent, such that, after the Rescission Agreement was entered into, it would have been open to Stacks to explore further the question of what was the market value of the Resumed Land or what was the best price that was reasonably obtainable, having regard to the circumstances existing at the time when the Second Contract was entered into. ([81])
21. Cudgegong submits that the effect of Emmett JA's reasons was to direct the attention of the primary judge on remittal to determine the question whether the Rescission Deed and Second Contract were interdependent as a key step in determining whether Stacks breached its duties as mortgagee.
22. Cudgegong does not cavil with the proposition that this Court in Cudgegong CA treated the negotiation of a variation of the First Contract as itself an exercise of the mortgagee's powers under the mortgages and as attracting a duty to take reasonable steps to obtain the best price. Rather, it says that what the primary judge did in the remittal hearing was to address the question whether Stacks breached its duty as mortgagee by, in effect, varying the terms of the sale from those contained in the First Contract to those contained in the Second Contract.
23. Cudgegong submits that the primary judge, correctly, first determined whether there was a dependence between the First Contract (or, perhaps more accurately, the rescission of the First Contract) and the Second Contract, so that Stacks was bound to enter into the latter as part of the agreement to rescind the former; and then determined whether the deal to rescind the First Contract at the price of having to enter the Second Contract was in itself, on the facts, a breach of the mortgagee's duties.

Determination

1. Insofar as ground 1 challenges the factual finding that the parties reached an oral agreement to the effect that the First Contract would be rescinded and a new sales contract entered into at a higher price, and there was evidence (as highlighted by Cudgegong) to support that factual finding, the submission by Golden Mile that the evidence was not capable as a matter of law of establishing such an agreement should be rejected.
2. Her Honour proceeded (from [53]) to consider whether the evidence of Cudgegong and Stacks established that an oral agreement was reached between them, "which agreement was confirmed by entry into the written contracts". Her Honour referred to Mr Stack's initial affidavit and that of Mr Singh, which she considered suggested that it was likely that Cudgegong would not have been able to complete the First Contract by the expiry date ([53]). However, Her Honour noted that subsequent affidavit evidence referred to negotiations between Mr Stack and Mr Singh in which Mr Stack said that Cudgegong had told him it could complete the First Contract by 1 July 2012 and that the oral evidence of those persons was to the effect that Mr Stack was told that Cudgegong might get outside finance; that he considered Cudgegong would be likely to get other finance if necessary to complete the First Contract; and that Mr Singh stated that he could have completed the First Contract on time if pressed to do so but had approached Mr Stack as he preferred not to do so (see [54]-[55]).
3. Her Honour accepted that the negotiations from March to June 2012 were entered into on the initiative of Cudgegong at a time when the parties were bound by the First Contract and that they took place in relation to the terms on which the First Contract could be extended ([56]).
4. In light of the above, it cannot be said that there was no evidence from which the inference of an oral agreement of the kind her Honour found could reasonably be drawn.
5. Indeed the logic of events supports the inference that there was an agreement of that kind. From Stacks' perspective, if it refused to entertain any change to the arrangements it would then have been faced with the prospect that Cudgegong did ultimately put itself in a position where it was able to complete the First Contract (thereby causing Stacks, and its mortgagor, to forego any increased contract sum) as against the possibility that Cudgegong might fail to complete the contract, in which case it would be open to Stacks to seek to secure a higher price for the land (or to accept TNSW's earlier offer if that were still open for acceptance). That was a judgment call made by Mr Stack based on his not unreasonable belief that Cudgegong, if it had to, would have been able to complete the first contract. From Cudgegong's perspective, if Stacks refused to negotiate any variation to the arrangements it would make commercial sense for it to take all available steps to secure finance to complete the purchase, in the knowledge of the compensation that would likely be payable on the compulsory acquisition, and no reason to doubt that a financier would be prepared to entertain such an application in the circumstances.
6. In any event, I am not persuaded that leave should be granted for appeal ground 1, as it raises no error of law.
7. As to ground 3, in essence Golden Mile's position is that any steps taken in relation to the sale of the land (be they in relation to a variation to the First Contract, entry into any oral agreement of the kind found, rescission of the First Contract, or entry into the Second Contract) must have been in exercise of the power of sale and must necessarily have attracted the duties applicable to a mortgagee when exercising that power of sale. As I understand its submissions, Cudgegong did not ultimately dispute that. (And the Second Contract itself expressly recorded that it was entered into in the exercise of the power of sale.)
8. Insofar as the primary judge held that there was no independent exercise of the power of sale when the mortgagee entered into the Second Contract, I would understand her Honour to be saying that the entry into the Second Contract was to be treated as part of the overall transaction agreed upon by the parties following Cudgegong's request for an extension of the First Contract. There is much to commend the view that, although separate agreements were entered into (each containing a separate agreement clause), they formed part of the one overall transaction. Once that conclusion is reached it may not matter whether there was a binding oral agreement as opposed to a common understanding that as part of the one transaction there were to be two agreements simultaneously (or as near to that as possible) entered into by the parties to replace the existing binding arrangement.
9. In Smith v Chadwick (1882) 20 Ch D 27 at 62 (in a passage cited in Re Piccolo: McVeigh v National Australia Bank Ltd [2000] FCA 187; (2000) 278 ALR 429 (per Finkelstein J at [29]-[34] and Kenny J at [68]-[69]); see also RIL Aviation HL 7740 and HL 7741 Pty Ltd v Alliance and Leicester plc [2011] NSWCA 423 at [134]), Jessel MR said: … when documents are actually contemporaneous, that is, two deeds executed at the same moment … or within so short an interval that having regard to the nature of the transaction the Court comes to the conclusion that the series of deeds represents a single transaction between the same parties, it is then that they are all treated as one deed; and, of course, one deed between the same parties may be read to show the meaning of the sentence, and be equally read, although not contained in one deed, but in several parchments, if all the parchments together in the view of the Court make up one document for this purpose.
10. Similarly, in Manks v Whiteley [1912] 1 Ch 735 at 754, it was recognised that several deeds may form part of the one transaction such that, if contemporaneously executed, they have the same effect as if they were one deed. There it was said that in such a case "[e]ach is executed on the faith of all the others being executed also and is intended to speak only as part of the one transaction, and if one is seeking to make equities apply to the parties they must be equities arising out of the transaction as a whole".
11. In the present case, however, the primary judge was satisfied that there was a binding oral agreement, so it is not necessary to consider what the position would have been had there simply been a common understanding to that effect.
12. The fact that there were entire agreement clauses in each contract does not mean that regard should not be had to the overall context in which the two transactions were entered into: i.e., the rescission of the First Contract and contemporaneous entry into the Second Contract. As Leeming JA observed in Mainteck Services Pty Ltd v Stein Heurtey SA [2014] NSWCA 184; (2014) 89 NSWLR 633, an entire agreement clause does not prevent regard being had to context ([130]). Regardless of what an entire agreement clause provides, whether the subject matter of an agreement is subject to more than one binding contract remains a question of fact (North Eastern Properties Ltd v Coleman [2010] 1 WLR 2715 at 2728).
13. Nor do I accept that the finding of an oral agreement (pursuant to which the two written documents were then signed) renders a "sham" the Rescission Deed (as Golden Mile argues in the context of ground 2 of its grounds of appeal). What Cudgegong was surrendering was its interest in the land under the existing First Contract. What the oral agreement, and for that matter the circumstances of entry into the Second Contract, make clear is that it was doing so as part of an overall arrangement pursuant to which a new contract would almost simultaneously be put in place.
14. Therefore, while I would give leave to raise ground 3 of the grounds of appeal, I consider that even to the extent that her Honour erred in finding that there was no "independent" exercise of the power of sale, it does not lead to the appeal being upheld.

Appeal ground 2

1. Appeal ground 2 also relates to the finding by her Honour that there was an oral agreement for the rescission of the First Contract and entry into the Second Contract. The primary judge said (at [67]) that she rejected the submission by Golden Mile based on s 23C(1) of the Conveyancing Act that the oral agreement was required to be in writing; her Honour concluding that the oral agreement was not accurately described as an agreement for the sale of land. Golden Mile submits that the primary judge misapprehended its submission in relation to s 23C of the Conveyancing Act. Ground 2 is framed as follows: 2. Her Honour erred in finding that the oral agreement (if proven) was not a "contract for the sale or other disposition of land or any interest in land" within the meaning of s 54A, or alternatively not a disposition of an equitable interest in land within the meaning of s 23C of the Conveyancing Act 1919.
2. Golden Mile argues that the logical conclusion from the finding that the oral agreement fell within the second class of contracts identified in Masters v Cameron must be that, as soon as the oral agreement was concluded, the mortgagee was obliged to sell the land to Cudgegong at the agreed price and that there was created in Cudgegong an equitable estate or interest in land. It is submitted that, if so, the Rescission Deed was a sham insofar as it declared that the purchaser surrendered all interest in the land; and that the agreement contravened s 23C of the Conveyancing Act.
3. Golden Mile submits that what her Honour was in fact rejecting at [67] was an argument under s 54A of the Conveyancing Act, which applies to a contract, rather than its argument based on s 23C, which applies to a conveyance. It submits that neither of the reasons given at [67] can deal with the s 23C objection and that those reasons are also inadequate to deal with the s 54A objection.
4. As to the latter, Golden Mile submits that the finding that the mortgagee was contractually bound (by the oral agreement) to enter the Second Contract, such that it did not have the freedom to seek to obtain a higher price or to sell the property on the open market and hence had not breached its duty to the mortgagor, should have led to the conclusion that the agreement was unenforceable pursuant to s 54A. It is submitted that the primary judge (at [67]) was looking at the question at the wrong point of time - at the moment of compulsory acquisition rather than at the moment of the disputed exercise of the power of sale. (I interpose to note that what this Court directed the primary judge to determine was the interest of the respective parties as at the acquisition date, which is what the statute requires. No doubt that explains in large part her Honour's focus.)
5. Cudgegong in response submits that her Honour correctly found that the oral agreement (to the effect that the Rescission Deed be entered into and that the Second Contract be entered into immediately thereafter) did not involve a conveyance or creation of an interest in land (and hence did not infringe s 23C) and submits that nor was the oral agreement a contract for the sale or disposition of land (and hence did not infringe s 54A). It further submits that even if s 54A had been applicable, that section would not have permitted Stacks to enter into the Rescission Deed and then to refuse to enter the Second Contract, since part performance is an express exception to s 54A, and part performance occurred as soon as the Rescission Deed was executed.

Determination

1. There is in my opinion a distinction between the creation of an interest in land (required by s 23C to be in writing) and an agreement for the sale of land, which is unenforceable pursuant to s 54A unless it is in or evidenced in writing (as recognised in Baloglow v Konstantinidis [2001] NSWCA 451; (2001) 11 BPR 20,721 at [162]). There is also in my opinion a distinction between the latter and an agreement to enter into one or more documents in the future which, if executed, will give rise to an interest in the land; i.e., an agreement on whatever conditions later to enter into a formal agreement for the sale of land such as occurred here.
2. I see no error on the part of the primary judge in concluding that the oral agreement between the parties pursuant to which they entered into the critical 21 June 2012 documents did not contravene s 23C of the Conveyancing Act. The oral agreement was not an agreement for the creation or disposition of an interest in land (see Khoury v Khouri [2006] NSWCA 184; (2006) 66 NSWLR 241 at [53] per Bryson JA). Moreover, I accept the submission of Cudgegong that the enforceability of the oral agreement as a contract would not have been precluded by s 54A once the Rescission Deed had been entered into as there would then have been sufficient part performance of the oral agreement (see O'Rourke v Hoeven [1974] 1 NSWLR 622; Powercell Pty Ltd v Cuzeno Pty Ltd [2004] NSWCA 51; (2004) 11 BPR 21,429).
3. Hence ground 2 of the grounds of appeal is not made out.

Appeal ground 4

1. The fourth proposed ground of appeal is that: 4. Her Honour erred in failing to find that, in entering into the Second Contract, Stack as mortgagee breached its duties to the Appellant under s 420A of the Conveyancing Act, and at law.
2. Although framed by reference to a breach of duty at the time of entering into the Second Contract, in its submissions Golden Mile further contends that if the finding of the oral agreement stands then there was nevertheless a breach of the relevant mortgagee duties on entry into the oral agreement.
3. Golden Mile points to the observations made in Cudgegong CA (at [43], [81] and [91]) as to the attitude or perceived attitude of the mortgagee: i.e., that Mr Stack's apparent only concern was to obtain a price that would ensure repayment, to the two mortgage companies of which he was a director, of the amounts secured and to ignore the interest of Golden Mile as the mortgagor, as well as its unpaid creditors ([43]); that the evidence indicated that Stacks simply did not turn its mind to the possibility of obtaining a higher price in light of the significant changes that would affect the market value of the resumed land ([81]); and that Stacks ignored the possible consequences of failing to ensure that the resumed land was sold, under the Second Contract, either for not less than the market value or for the best price that was reasonably obtainable, having regard to the circumstances existing at the time of the Second Contract ([91]). Those, however, did not purport to be and were not findings of fact by this Court. They were simply observations based on the submissions made at the appellate level. Hence the need for the matter to be remitted to the primary judge.
4. Golden Mile submits that the primary judge erred in considering the question of breach of duty not only on the basis that there was no new exercise of the power of sale in entering into the Second Contract but that, even approached on that basis, her Honour's decision was in error.
5. Insofar as the primary judge referred (at [69]) to causes of action that Cudgegong might have had against Stacks had it determined, immediately following the execution of the Rescission Deed, not to proceed with the Second Contact, Golden Mile submits that personal obligations of the mortgagee towards its counter-party are incapable of interfering with the mortgagee's objective duty to consider the interests of its mortgagor and to obtain either the market price or the best price reasonably available.
6. Golden Mile points to the evidence that by the time the mortgagee received TNSW's February 2012 offer to buy the land, the mortgagee was aware that rezoning of the land from rural to residential had occurred (Transcript 87.9). It also points to the evidence of the mortgagee that, because Golden Mile was in liquidation, it was irrelevant in any consideration as to whether to enter into the 21 June agreements (Transcript 107.8-13).
7. It is submitted that consideration of the interests of the mortgagor should have included Stacks identifying: first, that if Cudgegong could not settle and was not given further time to settle, it would have defaulted on the First Contract and Golden Mile's equity of redemption would have revived (and the property would also have been sold to Cudgegong or marketed for sale for the purpose of obtaining the highest possible price, or the offer of $4.2 million made by TNSW in February 2012 could have been accepted); alternatively, that if Stacks were to agree with Cudgegong that it could settle the sale at a later date by rescinding the First Contract and entering into the Second Contract, Stacks would be obliged to fulfil its statutory and common law duties by negotiating a price payable for the land up from that under the First Contract ($2.25 million) to much closer to the offer of $4.2 million made by TNSW in February 2012 or, if it was not satisfied that such a price could be obtained, withdrawing from any negotiation and forcing Cudgegong to settle the First Contract.
8. Golden Mile points out that there was no evidence of any such consideration; but rather, the evidence from Mr Stack was that: the purpose of the additional special conditions in the Second Contract was to ensure that any benefit obtained by the compulsory sale of the land belonged to Cudgegong (Transcript 99.47-50); at the time of entering into the Second Contract, Mr Stack's two considerations were to recover his own debt and to enable Cudgegong to achieve any upside in changing the value of the property (Transcript 106.37-40); Mr Stack would have liked to see the gentlemen behind Cudgegong achieve what he felt they were entitled to (Transcript 106.44-45); he negotiated on the basis that the interests of Cudgegong and his business would both be appropriately served by the Second Contract (Transcript 106.47-50); and by a "win/win" situation (Transcript 106.29) he meant a win for his group and a win for Cudgegong (Transcript 107.4). Golden Mile submits that this evidence not only contradicts the existence of a separate oral agreement but militates against any finding that there was any consideration by the mortgagee of the existence of its duty and how to fulfil it.
9. Golden Mile notes that Mr Stack made no contact with the liquidator, nor any enquiries as to the status of the company; and explained this by the fact that the company was "struck off" (Transcript 107.37; 101.48-49) and so was no longer relevant (and not in his field of vision) (Transcript 107.1-12; 108.41-50).
10. It is submitted that the primary judge's finding at [91], that the evidence of Mr Stack supported him having taken all reasonable care to sell the property for the best price reasonably obtainable, was informed by the erroneous finding that there was no independent exercise of the power of sale; and that this error was compounded by the implication (within [91]) that the proper exercise of the power of sale and entry into the alleged oral agreement were mutually exclusive.
11. Cudgegong in response argues that what is raised by ground 4 is an appeal on a question of fact, i.e., whether there was a breach of s 420A. It notes that the primary judge expressly addressed the question whether the process of terminating the First Contract so as to impose instead the terms of the Second Contract was in itself a breach of the mortgagee's duties, and found that no such breach had occurred.
12. Cudgegong submits that the circumstances in which the mortgagee entered into the June agreements establish that Stacks' interest was relevantly the same as that of Golden Mile, being to maximise the sale price of the property, and that Stacks sought to do that by securing a price increase of $500,000 when otherwise it could not have expected to obtain any increase at all.
13. In that regard, Cudgegong points to the evidence given by Mr Stack to the effect that he had to weigh up the possibility that Cudgegong might be unable to complete the First Contract (which would enable Stacks to end the First Contract and obtain the majority of the then mortgage debt of $4.8 million from TNSW), whereas if Cudgegong did come up with the finance then Stacks was bound by the First Contract and would thus obtain only the price provided in the First Contract. It also points to Mr Stack's belief that Cudgegong would obtain the necessary finance because the property was worth $4.2 million and the finance Cudgegong would have needed was approximately $2.3/2.4 million. Cudgegong notes that Stacks was facing a shortfall under its mortgage in excess of $2.5 million under the First Contract, and hence a situation in which Cudgegong defaulted under the First Contract would have been to Stacks' advantage (in light of the TNSW offer).
14. As to Mr Stack's reference to a "win/win" situation, Cudgegong submits that, as that expression is ordinarily understood, what Stacks was attempting to do was to gain the greatest increase in purchase price that could be extracted. It argues that although Mr Stack may not have been aware of a need to seek to maximise the purchase price for the sake of Golden Mile, he was seeking to maximise that price in any event. It is submitted that, rather than embarking on a (likely-losing) gamble that Cudgegong would not complete the First Contract, Stacks took advantage of the fact that Cudgegong preferred to wait until it could obtain less expensive terms of finance (referring to Transcript 125.19-22) in order to secure a $500,000 price increase in the contract sum.

Determination

1. Leave should not be granted to raise ground 4 of the grounds of appeal. There was evidence from which it was open to her Honour to conclude that the mortgagee had complied with its duties as mortgagee when agreeing to rescind the First Contract and enter into a Second Contract at an increased price.
2. Counsel for Golden Mile accepted that if, at the time of the oral agreement, the mortgagee was bound to complete a contract already in existence, then that would be a relevant, and perhaps critical, factor in determining what reasonable steps would have been available to the mortgagee (though he did not accept that it would be legally determinative).
3. What the parties agreed, on her Honour's findings, was that they would in effect replace the existing contract with a contract obliging Cudgegong to pay an increased price for the land but with a later completion date. The mechanism they chose for so doing was rescission followed by the immediate entry into a replacement contract with an increased contract price and an extended completion date. They could equally have achieved that outcome simply by a variation in the contract price. Ultimately, nothing turns on the fact that they chose the two-step process in circumstances where there was an overall arrangement pursuant to which it can readily be inferred that, but for the agreement to enter into the Second Contract, there would have been no rescission of the first, and therefore that the contemporaneous documents should be seen as part of the one transaction (notwithstanding the presence of the entire agreement clauses in each).
4. Critical in the assessment of whether the mortgagee complied with its duties in entering into that arrangement, in my opinion, is the fact that the mortgagee was bound under the existing contract to sell at a lower price. It was not unreasonable for the mortgagee to form the view that if it did not agree to the replacement contracts then Cudgegong would be able to, and would be likely to, complete the existing contract. In those circumstances her Honour's factual finding as to there being no breach is not open to challenge. To view the position at the point of entry into the Second Contract, i.e. immediately after rescission of the First Contract, without reference to the overall context in which the two written agreements were executed, is artificial and unwarranted. The parties were not agreeing to rescind the First Contract in a vacuum. They did so on the understanding that there would be a contemporaneous binding agreement to sell the land at the increased price.

Appeal ground 5

1. The final proposed appeal ground challenges the conclusion reached by the primary judge: 5. Her Honour erred in finding that the interest that the First Respondent as purchaser under the Second Contract was superior to that of the Appellant for the purposes of the Land Acquisition (Just Terms Compensation) Act 1991.
2. Golden Mile submits that the primary judge failed to fulfil the scope of the remittal and that the proper course was for her Honour to accept that there had been an independent exercise of the power of sale and then to determine whether that exercise was valid and effective.
3. In light of the conclusions reached on the preceding grounds, ground 5 is not made good. The primary judge, irrespective of whether her conclusion that there was no independent exercise of the power of sale at the time of entry into the Second Contract was correctly expressed, gave cogent reasons for the finding that reasonable steps had been taken by the mortgagee acting in good faith at the time of the negotiations that led to the 21 June 2012 agreements to secure the best price for the 'extension' or replacement of the existing contract. In my opinion this is sufficient to dispose of the challenge to the ultimate conclusion reached by the primary judge in this matter.

Conclusion

1. For the above reasons I would make the following orders: 1. Grant leave to appeal limited to grounds 2, 3 and 5 of the proposed grounds of appeal. 2. Direct that a further amended notice of appeal containing only those grounds be filed by the appellant within 7 days. 3. Dismiss the appeal with costs.

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