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[2026] NSWCA 89
respondent. Appeal dismissed with costs. [60]–[62]
The developer wanted the deed changed so it could pay a lower price because a planning rule affected development in a transport corridor on part of the property. The appeal relied on a different description of the parties’ alleged shared intention from the one used at trial. The Court said the primary judge could not have made the alleged error on that changed basis, and the respondents had lost the opportunity to meet that version with evidence. The Court also found that the evidence did not clearly establish a shared intention or shared mistake. The appeal was dismissed with costs.
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2,589 words · generated 05/10/2026
IDP 971 Richmond Pty Ltd, a property developer, entered into an option deed on 10 October 2018 with Jerry Xerri and Emanuela Xerri, later represented in the proceedings by executors. The option concerned property in Marsden Park. An earlier option deed had been terminated on 2 October 2018. The October Deed required IDP to pursue a development application, and contained clauses governing certain changes to the property information and the consequences of those changes. [2], [10], [25], [32]–[33]
2 cited instruments linked from this judgment.
Part of the property overlapped with an area identified as a potential public transport corridor. Under cl 6.10 of Appendix 12 to the State Environmental Planning Policy (Sydney Region Growth Centres) 2006, development consent could not be granted for development in the mapped area without the concurrence of Transport for NSW. In deciding whether to concur, TfNSW was to consider matters including the practicality and cost of future public transport projects and their structural integrity or safety. [4]
The dispute centred on cl 15.4 of the October Deed. As executed, it provided for a price reduction if an updated attachment affected the property by reducing, or proposing to reduce, its area, or by creating a corridor or buffer area. The reduction was to be calculated proportionately using a price per square metre of $773.82. Clause 15.3 provided a related termination right, subject to the exception in cl 15.4. [10], [31]–[32]
IDP sought rectification: it wanted the deed to refer not only to updated attachments but also to the development approval obtained in respect of the development application required by cl 3. Its case was that the price should be reduced to reflect the effect of the corridor on residential subdivision. The primary judge rejected the claim. The option was exercised on 24 March 2025, and the purchase was later completed for $22 million, with $6,272,662.30 held in a controlled monies account pending the appeal. [3], [8]–[9], [13]–[14]
A central difficulty on appeal was that IDP’s formulation of the alleged common intention had changed. At trial it relied on the corridor “adversely affect[ing]” residential subdivision. In its Notice of Appeal, it said the intention was that the price would fall to the extent that the development consent did not permit development of the corridor. Bell CJ considered those formulations materially different. [35], [41]–[44]
The Court of Appeal, comprising Bell CJ, Mitchelmore JA and McHugh JA, dismissed the appeal with costs. Mitchelmore JA agreed with Bell CJ and McHugh JA. [60]–[62], [72]
The Court gave several related reasons. First, the appellate case did not match the case decided at trial. The trial formulation focused on the extent to which the corridor adversely affected residential subdivision. The appellate formulation focused on what the development consent did or did not permit. Bell CJ said the latter looked to an unknown future event and placed the price determination in the hands of the relevant consent authority. He rejected the submission that there was no practical difference between the two. [42]–[44]
That difference mattered to the allegation of error. The primary judge had considered and rejected the trial formulation. As Bell CJ put it, the Court below “could not have erred in the way contended” because the common intention relied on in the appeal had been expressed differently. [44]
Second, the respondents objected to the changed case because it would have affected what evidence they presented at trial. They submitted that, if IDP had pleaded the revised formulation, they would have called evidence that nothing had been said in the solicitors’ conversations to that effect. Bell CJ accepted that there was force in that submission. He also rejected the argument that the respondents could simply have called their solicitor but chose not to. The decision not to call him had been made in response to the case IDP actually ran at trial. [45]
Third, the Court considered the evidence inadequate to establish the common intention and mistake required for rectification. Bell CJ recounted the established approach: there had to be clear and convincing proof of an actual, sufficiently precise common intention, held by both parties at execution, and a common mistake that caused the written instrument not to reflect it. The primary judge’s identification of that approach was not challenged. [37]–[39]
The emails demonstrated that IDP was concerned about the corridor and sought changes to the deed. But Bell CJ regarded the existence of that concern as only a “first step” towards proving that the parties shared the particular intention alleged. The proposed amendments to the earlier August Deed had been part of a package of terms that was rejected. Agreement in principle to amendments to cl 15 did not disclose that the respondents shared either of IDP’s later formulations. [20]–[22], [49]
The drafting history also counted against rectification. Both solicitors were closely involved, several versions of the clauses were exchanged, and the final text was checked shortly before execution. The Court reasoned that if the parties had intended the price to turn on TfNSW’s concurrence, it would have been relatively straightforward to draft a clause saying so. Instead, the executed clause linked the price reduction to an updated attachment affecting the area or creating a corridor or buffer area. [30]–[32], [51]–[53]
The absence of evidence from the solicitors was significant because the correspondence took its context from conversations that were not in evidence. Bell CJ considered the appellant’s failure to call its own solicitor surprising, given that IDP bore the burden of proving common intention and common mistake. He stated that the inference was that calling her would not have assisted IDP’s case, referring to Jones v Dunkel. [54] The Court also noted a later exchange, before exercise of the option, in which the solicitors acknowledged that they had “different interpretations” of cl 15.4. That later conduct was treated as relevant to the question whether an unexpressed shared intention had existed. [55]
McHugh JA added a commercial and textual analysis. The unrectified clause made $22 million the default price for the whole property, with a reduction only if an event reduced the area to be transferred. IDP’s formulation would instead make the lower price the default unless TfNSW consented to development in the corridor. If TfNSW later consented, IDP could have paid the lower price while receiving the whole property. McHugh JA considered that inversion of the clause’s mechanism significant. [66]–[67]
The proposed reliance on cl 3 also had problems. That clause required IDP to lodge an application for subdivision of the property, but did not require it to seek development approval for the corridor land. The application actually lodged did not seek consent to develop proposed Lot 3. And even an application directed to that land would not necessarily resolve whether TfNSW would consent in the future. [68]–[70] The Court therefore regarded the alleged shared intention as highly improbable. [71]
The judgment did not purport to create a new test for rectification. Bell CJ said that no issue was taken with the primary judge’s identification of the governing authorities and principles. The judgment applied the established requirement that rectification for common mistake be supported by clear and convincing evidence of a sufficiently precise common intention, held by each party when the instrument was executed, and a common mistake in recording it. [37]–[39]
The judgment quoted the High Court’s explanation in Simic v NSW Land and Housing Corporation. The relevant inquiry is the parties’ actual or true common intention, viewed objectively from their words or actions. Express communication is not essential, but the intention must correspondingly have been held by each party. Unless the required agreement and common mistake are established, the written instrument retains the evidentiary force of the parties’ true agreement. [37]
The Court also relied on the caution required where a negotiated document was drafted by solicitors on both sides. Franklins Pty Ltd v Metcash Trading Ltd was cited for the observation that it is inherently less likely, though not impossible, that both solicitors made the same mistake about clear words. This is a reason for caution in fact-finding, rather than an absolute bar to rectification. [38], [48], [51]
The appellate aspect of the decision was similarly grounded in the cited authorities, rather than stated as a new general rule. Bell CJ referred to Suttor v Gundowda Pty Ltd and Bird v DP in addressing the respondents’ objection to IDP’s change in the formulation of its case. He focused on the practical prejudice: evidence that could have been called in response to the revised case had not been presented at trial. [45]
After this decision, the source establishes that the Court of Appeal dismissed this particular appeal and applied the existing rectification principles to the evidence and procedural history before it. It does not establish how later courts have interpreted or applied this judgment. Nor does it establish a categorical rule that solicitor involvement, an absent solicitor witness, or a commercially unattractive result independently defeats rectification. The Court treated those matters as features of the evidence in combination. [50]–[55], [58]
Different case on appeal. Bell CJ said the two formulations were “quite different”: the appellate formulation depended on an unknown future event and put the price question in the hands of the consent authority. [43] In plain English, a case about general adverse effects on development was not the same as a case about what a particular development consent eventually allowed.
Changing the case after trial. Bell CJ accepted that the respondents could have called evidence to refute the revised version if IDP had advanced it at trial. [45] In plain English, the appeal could not fairly be treated as though the new version had been tested by the evidence that might have been called in response.
The evidentiary burden. Bell CJ said the material did not amount to “clear and convincing proof” of the alleged common intention and mistake. [50] The correspondence showed a concern about the corridor, but the Court considered that this alone did not prove that both sides intended the same price mechanism.
The drafting history. Bell CJ observed that the solicitors were closely involved and that the clauses went through multiple drafts. [51] The point was not that lawyers cannot make drafting mistakes. Rather, the Court considered it less probable that both sides, through their solicitors, shared the particular intention alleged but failed to express it in the negotiated wording.
The default price. McHugh JA said, “Nothing in the evidence suggests that the parties intended the default price to be $15,727,337.70.” [66] In plain English, the evidence did not show that the parties had agreed that the lower amount would be payable unless TfNSW later allowed development in the corridor.
The role of the development application. McHugh JA explained that cl 3 did not require IDP to seek approval for development on the corridor land, and the application actually submitted did not do so. [69] Even a corridor-specific application would not necessarily have settled TfNSW’s future position. [70] That weakened the claim that the parties had made the approval outcome the price-setting trigger.
The judgment is most directly relevant to rectification disputes where a party alleges that a signed commercial instrument failed to record a shared intention. It illustrates the importance of identifying precisely what that intention was, showing that it was held by both parties at the time of execution, and connecting the alleged mistake to the actual wording of the instrument. [37]–[38]
It is also relevant where a party’s formulation of the alleged common intention changes between trial and appeal. The Court treated the difference between an “adverse effect” on development and a development consent that did not permit development as substantive, not merely stylistic. A changed formulation may matter particularly where the other party says it would have called different evidence if the revised case had been advanced at trial. [42]–[45]
The case also provides an evidentiary illustration for deeds negotiated through solicitors. Draft exchanges, solicitor conversations, file notes, evidence from the people who gave and received instructions, and the final drafting history may be important to establishing what each party intended. Here, the absence of solicitor evidence was particularly consequential because the correspondence referred to telephone conversations whose content was unknown. [31], [45], [52]–[54]
The judgment may also be relevant where the proposed rectification changes the commercial default created by the instrument. McHugh JA contrasted the deed’s $22 million default price with the lower default price that followed from IDP’s interpretation. That comparison helped the Court assess whether the alleged intention was consistent with the written bargain and the surrounding evidence. [66]–[70]
These are indicators arising from the judgment, not a checklist that decides any other dispute. The Court’s conclusion depended on the particular wording, evidence, drafting history and procedural course of this case.
The judgment identifies authorities that it relied on or cited, but the supplied material contains no decisions issued after IDP 971 Richmond Pty Ltd v Xerri [2026] NSWCA 89. It is therefore not possible, from this source alone, to state how later courts have treated this decision.
The authorities discussed within the judgment include Simic, cited for the requirements of common intention and common mistake; Franklins, for caution where negotiated words were drafted by solicitors on both sides; and Suttor and Bird, cited in connection with the objection to changing the case on appeal. The judgment also refers to Public Trustee, Newey, Re Jimmy’s Recipe, Carlenka and Jones v Dunkel in addressing the applicable evidentiary principles. [37]–[38], [45], [50], [54]
Those are authorities the Court used in reaching its decision, not later treatments of this judgment. The text does not report that any of them affirmed, reversed or otherwise considered IDP 971 Richmond Pty Ltd v Xerri.
The judgment does not decide the respondents’ Notice of Contention as a necessary ground for dismissing the appeal. Bell CJ said it was “not strictly necessary” to deal with it, although he stated that he would have upheld the dismissal on those grounds if necessary. The contention included whether the development consent engaged cl 15.4 and whether the relevant limitation had already arisen through the 2013 planning amendment. [59] The judgment therefore does not provide a definitive determination of those issues as independent grounds.
The decision also does not determine how a differently drafted clause, expressly making price depend on TfNSW’s concurrence or the operation of a development approval, would be construed. The Court assessed the wording actually executed and the evidence of the alleged common intention. [10], [31]–[32], [67]–[71]
Nor does it establish that a party’s later disagreement about a clause necessarily disproves an earlier common intention. The later statement that the parties had different interpretations was one item in the assessment, alongside the drafting history and the absence of evidence about the solicitors’ conversations. [52]–[55]
Finally, the judgment does not state what evidence would have been sufficient in another case. It explains why the material before it fell short, including the gap between the parties’ documented concern about the corridor and proof of a precise shared price mechanism. [49]–[55] Whether different contemporaneous communications, witness evidence, or drafting instructions could satisfy the rectification test is not answered by this judgment.
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Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: IDP 971 Richmond Pty Ltd v Xerri [2026] NSWCA 89
Hearing dates: 12 May 2026
Date of orders: 19 May 2026
Decision date: 19 May 2026
Before: Bell CJ at [1]
Mitchelmore JA at [61]
McHugh JA at [62]
Decision: Appeal dismissed with costs.
Catchwords: APPEALS — rectification suit — whether common intention contended for on appeal differed from common intention contended for at trial — whether evidence could have been led at trial to rebut common intention contended for on appeal
CONTRACTS — rectification — intention — common intention — proof of common intention — where party to deed knew of concern of other party in relation to a risk — where evidence of communications between solicitors of parties to deed in relation to risk — whether clear and convincing proof of common intention — significance of solicitors being closely involved in drafting of the clause sought to be rectified — significance of failure to call plaintiff’s solicitor
Legislation Cited: Environmental Planning and Assessment Act 1979 (NSW) s 10.7
State Environmental Planning Policy (Sydney Region Growth Centres) 2006 (NSW) App 12 cl 6.10
Cases Cited: Bird v DP [2024] HCA 41; (2024) 98 ALJR 1349
Commissioner of Stamp Duties (NSW) v Carlenka Pty Ltd (1995) 41 NSWLR 329
Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603; [2009] NSWCA 407
Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8
Newey v Westpac Banking Corporation [2014] NSWCA 319
Public Trustee v Smith [2008] NSWSC 397
Re Jimmy’s Recipe Pty Ltd (No 2) [2020] NSWSC 632
Simic v NSW Land and Housing Corporation (2016) 260 CLR 85; [2016] HCA 47
Suttor v Gundowda Pty Ltd (1950) 81 CLR 418; [1950] HCA 35
Texts Cited: JD Heydon, Heydon on Contract: The General Part (2019, Thomson Reuters)
J Sumption, “A Question of Taste: The Supreme Court and the Interpretation of Contracts” (2017) 17 OUCLJ 301
Category: Principal judgment
Parties: IDP 971 Richmond Pty Ltd (Appellant)
Jerry Xerri (First Respondent)
Christopher Xerri as Executor of the Estate of the late Emanuela Xerri (Second Respondent)
Samantha Jane Oldman as Executor of the Estate of the late Emanuela Xerri (Third Respondent)
Representation: Counsel:
T Lynch SC with P Wiggins (Appellant)
JC Kelly SC with AE Maroya (First, Second and Third Respondents)
Solicitors:
Sparke Helmore Lawyers (Appellant)
Michael Siderowitz & Co (First, Second and Third Respondents)
File Number(s): 2025/00414992
Publication restriction: N/A
[This headnote is not to be read as part of the judgment]
A property developer, IDP 971 Richmond Pty Ltd (the Appellant), was party to a deed granting it an option to purchase a property from Mr Jerry Xerri and the late Ms Emanuela Xerri (the Respondents).
Clause 6.10 of Appendix 12 to the State Environmental Planning Policy (Sydney Region Growth Centres) 2006 (NSW) provided that development approval could only be granted over a particular area of land reserved as a potential transport corridor with the concurrence of Transport for NSW (TfNSW). Part of that potential corridor overlapped with the property.
Clause 15.4 of the deed provided that the purchase price would be reduced to the extent an “updated attachment” to the deed created a “corridor or buffer area”.
The Appellant brought proceedings against the Respondents seeking rectification of cl 15.4 of the deed to provide that the purchase price would be reduced to the extent the operation of any “development approval obtained in respect of the development application” created a “corridor or buffer area”. It sought this on the basis that the parties held a common intention that the purchase price would be reduced to the extent the corridor “adversely affected the use of the Property for residential subdivision”.
The primary judge dismissed the claim. His Honour held that the parties did not hold the common intention contended for. On appeal to this Court, the Appellant argued that his Honour erred in failing to hold that the parties held a common intention that the price would be reduced to the extent the development approval “did not permit development” of the corridor. This was a different common intention to that contended for at first instance.
The Court (Bell CJ, Mitchelmore JA and McHugh JA agreeing) held, dismissing the appeal:
Suttor v Gundowda Pty Ltd (1950) 81 CLR 418; [1950] HCA 35; Bird v DP [2024] HCA 41; (2024) 98 ALJR 1349, cited.
Simic v NSW Land and Housing Corporation (2016) 260 CLR 85; [2016] HCA 47; Public Trustee v Smith [2008] NSWSC 397; Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603; [2009] NSWCA 407; Newey v Westpac Banking Corporation [2014] NSWCA 319; Re Jimmy’s Recipe Pty Ltd (No 2) [2020] NSWSC 632; Commissioner of Stamp Duties (NSW) v Carlenka Pty Ltd (1995) 41 NSWLR 329; Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8, cited.
BELL CJ: This is an appeal from a decision of Pike J (the primary judge) sitting in the Equity Division of this Court: IDP 971 Richmond Pty Ltd v Xerri [2025] NSWSC 1151 (PJ or primary judgment).
A property developer, IDP 971 Richmond Pty Ltd (the Appellant), entered into a deed on 10 October 2018 (the October Deed) that granted it an option to enter into a contract in a form annexed to the Deed (the Contract) to purchase a property in Marsden Park (the Property) from Mr Jerry Xerri and the late Ms Emanuela Xerri (the Respondents). An earlier option deed (the August Deed) had been terminated on 2 October 2018.
The option was exercised by the Appellant on 24 March 2025.
The Property included a strip of land along its southern boundary that had been marked as a potential public transport corridor under the State Environmental Planning Policy (Sydney Region Growth Centres) 2006 (NSW) (2006 SEPP). Clause 6.10 of Appendix 12 to the 2006 SEPP provided:
“6.10 Development of land within or adjacent to public transport corridor
(1) Consent must not be granted to development in the area marked ‘I’ on the Land Zoning Map without the concurrence of Transport for NSW.
(2) In determining whether to provide concurrence, Transport for NSW is to take into account the likely effect of the development on—
(a) the practicability and cost of carrying out public transport projects on the land in the future, and
(b) without limiting paragraph (a), the structural integrity or safety of, or ability to operate, public transport projects on the land in the future, and
(c) without limiting paragraph (a), the land acquisition costs and the costs of construction, operation or maintenance of public transport projects on the land in the future.”
A portion of the Property fell within the area marked “I” on the Land Zoning Map, namely the public transport corridor.
“(b) Stage 1: Subdivision of 1 lot to create proposed Lot 1 zoned B4 for mixed use development with an area of 9698.9m2; proposed Lot 2 being a residue lot zoned R3 with an area of 3553.3m2; 1 lot for public roads (New Road 1, New Road 2, New Road 3, New Road 4); proposed Lot 3 being a residue lot zoned B4 and R3 with an area of 8106.1m**2.
(c) Stage 2: Construction of a large mixed-use development within proposed Lot 1 comprising a series of 6 x 8 storey buildings proposed to contain:
(i) Total retail floor space with area of 2641m2 for 14 commercial tenancies; a future Child Care Centre with GFA of 582.7m2 and outdoor play area of 700m2; and a future Gymnasium with GFA of 404m2 on the ground level
(ii) 236 residential units over 6 buildings (Blocks A – F) in the 7 storeys above the ground level retail and mixed-use development, with the following breakdown:
• 43 x 1 bedroom units;
• 145 x 2 bedroom units;
• 38 x 3 bedroom units;
• 10 x 4 bedroom units; and
(iii) 502 car parking spaces across Basements 1 – 3 comprising
• 347 residential parking spaces (being 273 occupier spaces, 48 residential visitor spaces and 26 residential accessible spaces); and
• 104 commercial spaces (being 101 commercial spaces and 3 commercial accessible spaces)
• 17 gym spaces (being 16 gym spaces and 1 accessible space);
• 34 child care spaces (being 16 parent spaces, 17 staff spaces and 1 accessible space);
(iv) 2 car wash bays, 2 courier parking spaces, 12 electric vehicle charging stations, 110 bicycle spaces and 14 motorbike spaces.
(v) Associated landscaping, and street tree planting.” (emphasis added)
The proposed Lot 3 upon which no development was proposed at any stage included such of the area marked “I” on the Land Zoning Map as overlapped with the Property.
In November 2020, Transport for New South Wales (TfNSW) had concurred with the development application subject to certain conditions including that its prior approval be granted before any work occurred within the corridor in relation to the Stage 2 development. TfNSW’s concurrence was unsurprising given that no development was proposed within the corridor identified in cl 6.10 of Appendix 12 to the 2006 SEPP.
As already noted, the option was exercised by the Appellant on 24 March 2025. Subsequent to the commencement of the proceedings before the primary judge, the purchase was completed with the purchase price of $22,000,000 being paid but with some $6,272,662.30 being held in a controlled monies account pending the determination of this appeal.
Before the primary judge, the Appellant unsuccessfully sought rectification of cll 15.3 and 15.4 of the October Deed. Had rectification of those clauses been made, the Appellant contended that the purchase price under the Contract should also be rectified and have been reduced by the amount currently held in the controlled monies account to $15,727,337.70. The Respondents contended, however, not only that rectification of cll 15.3 and 15.4 ought not be granted but that, even if it were, the rectified cl 15.4 would not be engaged so as to warrant the $6,272,662.30 being deducted from the purchase price and repaid to the Appellant. This last contention is the subject of a Notice of Contention in this Court.
“RECITALS:
A. The Owner is the registered proprietor of the property;
B. On 30 August, 2018 the Owner and Grantee entered into a Call Option Deed;
C. On 2 October, 2018, pursuant to its rights to and following a due diligence period of thirty (30) days, the Grantee terminated the said Call Option Deed;
D. The Owner now agrees to grant to the Grantee a further Call Option to purchase the property, on the terms set out in this Deed;
E. The Grantee intends, as soon as practicably possible, to lodge with the Blacktown City Council, a Development Application to develop the property;
…
3. Grantee’s Development Application:
3.1 The Grantee shall, as soon as practicably possible, lodge with the Blacktown City Council (‘the Council’) a Development Application to approve a proposed subdivision of the property (‘the DA’).
3.2 The Grantee shall, as soon as practicably possible, provide to the Owner full details, draft plans and all supporting documentation in respect of the DA.
3.3 The Grantee shall use its best endeavours to obtain the approval of the Council and all other appropriate authorities in respect of the proposed subdivision and act with the utmost diligence in seeking such approval.
3.4 If requested by the Owner the Grantee shall, within fourteen (14) days of such request, provide the Owner with updates so far as the progress of the DA is concerned.
…
15. Updates of Contract:
15.1 Updated attachment:
In the event that the Call Option has not been exercised, the Owner’s solicitor may give the Grantee’s solicitor an updated version of any attachment to the Contract.
15.2 Contract amended with updated attachment:
If the Owner’s solicitor takes the action described in clause 15.1, then, subject to clause 15.3, the Contract is taken to be the document in Schedule 3 but with any updated attachment replacing the earlier version of that attachment.
15.3 Grantee’s right of termination**:**
Subject to clause 15.4, if any updated attachment significantly and detrimentally affects the property, or if any portion of the property is acquired or proposed to be acquired by any statutory or non-statutory authority thereby causing that portion of the property to be unsuitable for residential land subdivision, then the Grantee shall have the right to terminate this Deed by written notice to the Owner delivered within fourteen (14) days of the date of receipt by the Grantee’s Solicitor of any such updated attachment, time being of the essence.
15.4 Exception to Grantee’s right of termination**:**
In the event that any updated attachment affects the property so as to either reduce or propose to reduce its area or create a corridor or buffer area, then the Grantee shall not have the right to terminate this Deed in accordance with clause 15.3 but shall be obliged to proceed with its obligations under this Deed provided that the Price for the Property is reduced to a figure calculated on an area proportionate basis and based upon a price per square metre of $773.82.
…”
Schedule 3, referred to in cl 15.2, was the Contract, for the sale and purchase of the Property. It had seven attachments, being: the property certificate for the land; the plan of the land; the s 10.7(2) planning certificate under the Environmental Planning and Assessment Act 1979 (NSW); additional information included in that certificate under s 10.7(5); the sewerage infrastructure location diagram; the sewer lines location diagram; and the land tax certificate.
Clause 15 of the October Deed contemplated that any of these attachments to the Contract could be updated prior to exercise of the Call Option. None were.
The Appellant sought rectification of cll 15.3 and 15.4 by insertion of the emboldened words so that they would respectively read:
“15.3 Grantee’s right of termination**:**
Subject to clause 15.4, if any updated attachment or if the development approval obtained in respect of the development application required under clause 3 hereof significantly and detrimentally affects the property, or if any portion of the property is acquired or proposed to be acquired by any statutory or non-statutory authority thereby causing that portion of the property to be unsuitable for residential land subdivision, then the Grantee shall have the right to terminate this Deed by written notice to the Owner delivered within fourteen (14) days of the date of receipt by the Grantee’s Solicitor of any such updated attachment, time being of the essence.
15.4 Exception to Grantee’s right of termination**:**
In the event that any updated attachment or if the development approval obtained in respect of the development application required under clause 3 hereof affects the property so as to either reduce or propose to reduce its area or create a corridor or buffer area, then the Grantee shall not have the right to terminate this Deed in accordance with clause 15.3 but shall be obliged to proceed with its obligations under this Deed provided that the Price for the Property is reduced to a figure calculated on an area proportionate basis and based upon a price per square metre of $773.82.”
Both cll 15.3 and 15.4 of the October Deed were the subject of negotiation, albeit limited, by the solicitors for both the Appellant, Ms Kallianiotis, and Respondents, Mr Siderowitz, prior to the execution of the October Deed.
To understand the evolution of those two clauses it is necessary to start with the August Deed which, it should be noted, did not include a clause equivalent to cl 3 in the October Deed.
Clause 15 of the August Deed was in the following terms:
“15. Updates of Contract:
15.1 Updated attachment:
In the event that the Call Option has not been exercised, the Owner’s solicitor may give the Grantee’s solicitor an updated version of any attachment to the Contract.
15.2 Contract amended with updated attachment:
If the Owner’s solicitor takes the action described in clause 15.1, then, subject to clause 15.3, the Contract is taken to be the document in Schedule 3 but with any updated attachment replacing the earlier version of that attachment.
15.3 Grantee’s right of termination:
In the event that any updated attachment significantly and detrimentally affects the property, other than by virtue of a reduction in its area, then the Grantee shall have the right to terminate this Deed by written notice to the Owner delivered within fourteen (14) days of the date of receipt by the Grantee’s Solicitor of any such updated attachment, time being of the essence.
15.4 Exception to Grantee’s right of termination:
In the event that the updated attachment affects the property so as to reduce its area, then the Grantee shall not have the right to terminate this Deed in accordance with clause 15.3 but shall be obliged to proceed with its obligations under this Deed provided that the Price for the Property is reduced to a figure calculated on an area proportionate basis and based upon a price per square metre of $773.82.
…”
Clause 15.3 was concerned with a circumstance of “significant and detrimental affectation” of the Property by reason of an updated attachment “other than by virtue of a reduction in the area of the property” whereas cl 15.4 was concerned with any affectation of the Property by reason of an updated attachment which reduced the area of the Property. It contained no reference in terms to the creation of “a corridor or buffer area”.
On 12 September 2018, in the course of undertaking its due diligence as contemplated by the August Deed, the Appellant sought and was provided expeditiously with information regarding the public transport corridor referred to in cl 6.10 of Appendix 12 to the 2006 SEPP. That information contained extracts from the reports of two town planners, prepared in 2015. One of those reports, prepared by Mr Haskew, included the following about the public transport corridor:
“If I were advising hypothetical parties to a transaction of the site, I would advise that there are no firm details of the PT Corridor. In this regard it is unknown what form of transport will be accommodated and whether it will be above ground or below ground. In these circumstances I would advise that both Blacktown Council and Transport for NSW would require it to be free from development except landscaping and surplus at grade parking.”
“Hi Michael
My clients are in the process of conducting their due diligence and I note that the following issues have arisen:
- The council meeting has been scheduled for 29 September 2018 with RMS feedback likely to take a further 30 days or longer;
- Our client is unable to fully ascertain the effects of the railway corridor which appears to be more likely than previously thought;
- In order to assess the full impact of the railway corridor my client is required to submit a Development Application[;]
- The Development Application will cost approximately $1,000,000.00;
- Our client intends to lodge the Development Application within 3 to 6 months;
Given the uncertainty of the railway corridor my client requests the following:
- The instalments noted [in] clause 4.1.1 in subsection (a) and (b) be halved to $550,000.00 each;
- The outstanding deposits ($1,100,000.00) to be paid on Development Consent being granted;
- Clause 15.4 be amended so that after ‘so as to reduce its area’ including ‘any proposal to reduce its area’. I also suggest a definition for area to be ‘included in this clause, area is to include any area that is proposed or actually acquired by any statutory or non-statutory authority and any corridor or buffer area that causes part of the land to be unsuitable for residential land subdivision’.
In the event that your client agrees to the above, my client will arrange for a waiver of the remaining due diligence period and payment of the $550,000.00.” (emphasis added)
“15. Updates of Contract:
In this condition area means any part of the property that is proposed or actually acquired by any statutory or non-statutory authority and any corridor or buffer area that causes part of the land to be unsuitable for residential land subdivision.” (emphasis added)
The second annotation provided:
“15.4 Exception to Grantee’s right of termination:
In the event that the updated attachment affects the property so as to reduce its area including any proposal to reduce its area, then the Grantee shall not have the right to terminate this Deed in accordance with clause 15.3 but shall be obliged to proceed with its obligations under this Deed provided that the Price for the Property is reduced to a figure calculated on an area proportionate basis and based upon a price per square metre of $773.82.” (emphasis added)
“Hi Tania
My instructions are now as follows:
- Execution of a Deed of Variation of Call Option
- Option period reduced to 36 months
- Proposed amendments to cl. 15 agreed
- Deletion of Due Diligence provisions
- Payments in cl.4.1.1 in the sum of $550,000 to commence on exchange of Deed of Variation and then on a six monthly basis (6 in total) with a payment of $1.1 million within 7 days of development consent
- 3 year Sunset Clause re development consent
- Grantee to provide full details of DA, lodgement within 6 months, regular updates and due diligence in pursuing DA
- Payment of Grantors costs of $5,500 as per cl.3.8
Please seek urgent instructions.”
It might be observed that the agreement to the proposed amendments to cl 15 was offered as part of a package of instructions. These did not all prove acceptable to the Appellant which, through Ms Kallianiotis, reported on 26 September 2018 that it could not agree to items 2, 5 and 6. Ms Kallianiotis continued:
“Our client has had to consider current market conditions and bank valuation issues. In addition our client is unable to control third parties such as council in the time it takes to approve the Development Application. Our client will of course do the best they can to achieve the DA as soon as possible but cannot warrant the time council will take.
Would you please ask that your client reconsider their position.”
“The proposed site is identified as containing a ‘Transport Corridor Investigation Area’. The site is subject to clause 6.10 of Appendix 12 Blacktown Growth Centres Precinct Plan 2013, under State Environmental Planning Policy (Sydney Region Growth Centres) 2006 … Consent must not be granted to development in the area marked ‘I’ on the Land Zoning Map without the concurrence of [TfNSW] … Written evidence of consultation with [TfNSW] and their requirements must be submitted with any development application (DA) for the site and provisions made accordingly in the design and layout of your proposal.”
“Dear Michael
As previous[ly] advised the results of my clients [sic] due diligence is unsatisfactory. They cannot proceed with the option agreement in its current form.
They will reconsider their position if your client agrees to proceed on the basis proposed in our email to you on 26 September 2018.
In the event that your client does not agree to the variations, please take this correspondence as notice of our clients [sic] termination of the agreement due to unsatisfactory results of their due diligence.”
It was common ground that the August Deed was terminated on 2 October 2018 although it appeared to provide a template at least for what would become the October Deed.
On 3 October 2018, Mr Siderowitz sent the following email to Ms Kallianiotis at 12:28 pm:
“Dear Tania,
Thank you for your email of yesterday afternoon. I have left a message for you to call me earlier today but as usual, you are no doubt busy.
Would you kindly seek instructions as to whether, as a compromise, the matter could proceed on the basis that the option period remain at five (5) years but the payments in 4.1. (a) & (b) each be $825,000.00, with the remaining payments as proposed by your client.
Kindly advise at your very earliest convenience.”
“Hi Michael
I refer to your email below.
I am instructed that my client does not agree.
Our client is willing to again reiterate its offer made on 26 September 2018.
We await your instructions.”
“Dear Tania,
I refer to my email of earlier this afternoon and our subsequent telephone conversation.
I confirm that your client has instructed you to reject my clients’ compromise proposal and has reiterated its proposal as previously made.
I am currently seeking further instructions from my clients but in the interim, I attach my Tax Invoice for your client’s early attention.”
“Hi Tania,
Thank you for your email.
As per the message I left for you with your receptionist earlier this afternoon, I am instructed to proceed on your client’s offer. To that end, I will commence drafting a fresh Deed, which probably will not occur until Monday, due to other commitments. In the interim, however, I would appreciate it if you would kindly provide me with relevant clauses dealing with the Development Application as previously canvassed.
Thanking you again for your co-operation in this matter.”
“Hi Tania,
Further to my email dated October 3 and our telephone conversation this morning, please find attached for your consideration draft Call Option Deed.
Kindly specifically note the following amendments:
- Definition of Call Option, substituting clause 3.1 with 5.1
- Deletion of reference to Due Diligence
- Insertion of new clause 3 covering the DA
- Amendment to 4.1 with payments as now agreed
- Amendments to 15.3 and 15.4
I await hearing from you at your very earliest convenience as I would like to get my clients in as soon as possible to sign the Deed.”
The “amended” clauses in the attached draft deed provided:
“15.3 Grantee’s right of termination:
If, other than by virtue of a reduction or proposed reduction in its area, any updated attachment significantly and detrimentally affects the property, or if any portion of the property is acquired or proposed to be acquired by any statutory or non-statutory authority or if there is created any corridor or buffer area that causes any portion of the property to be unsuitable for residential land subdivision, then the Grantee shall have the right to terminate this Deed by written notice to the Owner delivered within fourteen (14) days of the date of receipt by the Grantee’s Solicitor of any such updated attachment, time being of the essence.
15.4 Exception to Grantee’s right of termination:
In the event that any updated attachment affects the property so as to simply reduce or propose to reduce its area, then the Grantee shall not have the right to terminate this Deed in accordance with clause 15.3 but shall be obliged to proceed with its obligations under this Deed provided that the Price for the Property is reduced to a figure calculated on an area proportionate basis and based upon a price per square metre of $773.82.” (emphasis added)
“15.3 Grantee’s right of termination:
Subject to clause 15.4, if any updated attachment significantly and detrimentally affects the property, or if any portion of the property is acquired or proposed to be acquired by any statutory or non-statutory authority thereby causing that portion of the property to be unsuitable for residential land subdivision, then the Grantee shall have the right to terminate this Deed by written notice to the Owner delivered within fourteen (14) days of the date of receipt by the Grantee’s Solicitor of any such updated attachment, time being of the essence.
15.4 Exception to Grantee’s right of termination:
In the event that any updated attachment affects the property so as to either reduce or propose to reduce its area or create a corridor or buffer area, then the Grantee shall not have the right to terminate this Deed in accordance with clause 15.3 but shall be obliged to proceed with its obligations under this Deed provided that the Price for the Property is reduced to a figure calculated on an area proportionate basis and based upon a price per square metre of $773.82.”
One significant change in this drafting was the movement of the reference to the creation of a “corridor or buffer area” from the termination right in cl 15.3 to the mechanism of the price reduction in cl 15.4.
On 10 October 2018, the Appellant and the Respondents entered into the October Deed, which included the versions of cll 15.3 and 15.4 set out in the preceding paragraph.
The Deed also included in cl 3 obligations on the Grantee (Appellant) in relation to its contemplated development application: see at [10] above. The Deed also contained the attachments to the Contract in Schedule 3 as have been noted at [11] above.
It was contended at first instance that the parties held a common intention which was not reflected in the terms of the October Deed and that both parties were mistaken in executing the October Deed in terms which did not reflect that asserted common intention.
The primary judge identified the common intention contended for by the Appellant as being that “to the extent that the railway corridor adversely affected the use of the Property for residential subdivision, the price would be reduced at the rate of $773.82 per square metre”: PJ [98].
His Honour’s methodical analysis proceeded as follows:
“[99] It is immediately to be observed that the alleged common intention as set out immediately above is nowhere to be found in any of the communications between the parties during the relevant period. Nowhere is it said that the trigger for, and measure of, the reduction in purchase price is the ‘extent that the railway corridor adversely affected the use of the Property for residential subdivision’. The concept of ‘adverse affectation’ is in any event quite imprecise and no doubt susceptible to different meanings.
[100] Whilst it seems obvious that IDP 971 in the 21 September 2018 email from Ms Kallianiotis to Mr Siderowitz identified what may be termed a ‘Corridor Risk’ – being the impact of the transport corridor on the development of the Property, that is only the first step, and a small step at that, along the path to rectification.
[101] The manner in which that risk was proposed to be dealt with by IDP 971 – as reflected in the words proposed by Ms Kallianiotis – is far from clear. The proposed amendment to clause 15.4 is simply to pick up any proposal to reduce the area of the Property. It is not entirely clear how the proposed definition of ‘area’ which includes ‘any corridor or buffer area that causes part of the land to be unsuitable for residential land subdivision’ is intended to fit in with the substantive clauses, including the proposed to be amended clause 15.4.
[102] Even assuming, most favourably to IDP 971 that what was intended by the proposed amendments was the creation of a corridor or buffer area that causes part of the land to be unsuitable for residential land subdivision, a number of further questions arise. Picking up on one of the matters raised during argument, what is meant by a ‘corridor or buffer area’ – is it an area which TfNSW has determined will be used for a transport corridor, or is it simply an area in respect of which TfNSW has expressed concurrence with a development consent that does not presently permit development?
[103] Further, what is meant by part of the land being ‘unsuitable’ for residential land subdivision? Does it mean being unable to be built on at all or not able to be developed to the same extent as the rest of the Property?
[104] Against the background of a development application having to be submitted which would require consultation with TfNSW, there are a number of potential outcomes of the consultation with TfNSW and, more particularly, the basis on which TfNSW may express concurrence. The options would include a formal corridor being created or TfNSW not yet determining to create a corridor but not permitting any development at the present time to enable a decision to be made at a later time as to whether to go ahead with the proposed corridor. Which of these options was intended to be picked up is far from clear.
[105] Under the first option, development would not be possible. Under the second, it would not be possible until a decision is made as to whether to proceed with the corridor or not. If a decision is made to proceed, the land would be compulsorily acquired and compensation paid to the land owner at that point in time under the Just Terms Act (defined below).
[106] The fact that Mr Siderowitz subsequently said he was instructed to agree to the proposed amendments to clause 15 does not advance the rectification claim too far in the absence of some clear statement as to what his clients – the defendants – understood was intended by the amendments.
[107] There is no evidence in the present case about what either side subjectively intended.
[108] The position does not become any clearer when regard is had to what subsequently occurred – principally the drafting efforts of Mr Siderowitz. The drafting of clauses 15.3 and 15.4 on 8 October 2018 is far from clear. There was then a telephone discussion between Ms Kallianiotis and Mr Siderowitz on the morning of 9 October 2018, resulting in the redraft sent later that day.
[109] There was no evidence from either side as to what was discussed in this conversation – whether it was simply a confirmation of some earlier common intention or otherwise. It is for IDP 971 to prove the common intention and its continuation up to execution.
[110] For these reasons above, the claims advanced by IDP 971 fail.”
“… demonstrated that, at the time of the execution of the written instrument sought to be rectified, there was an ‘agreement’ between the parties in the sense that the parties had a ‘common intention’, and that the written instrument was to conform to that agreement. Critically, it must also be demonstrated that the written instrument does not reflect the ‘agreement’ because of a common mistake. Unless those elements are established, the ‘hypothesis arising from execution of the written instrument, namely, that it is the true agreement of the parties’ cannot be displaced.
The issue may be approached by asking – what was the actual or true common intention of the parties? There is no requirement for communication of that common intention by express statement, but it must at least be the parties’ actual intentions, viewed objectively from their words or actions, and must be correspondingly held by each party.” (emphasis added and footnotes omitted)
“To conclude that the parties have misrecorded their common intention in that sort of situation involves the solicitors on both sides of the transaction having each failed to grasp and express the intention of his or her own client. In other words, each of the solicitors has been mistaken, and, furthermore, mistaken in the same way. There is a measure of inherent unlikelihood in such an event happening. If the words of which rectification are sought are clear in meaning on their face, that unlikelihood is compounded — one would not ordinarily expect two lawyers, each professional dealers in language, to make the same mistake about the meaning of words that are clear on their face. However, we know that sometimes even experienced solicitors take or are given inadequate instructions, or misunderstand their instructions, and in consequence misrecord their client’s intention, so these matters are no more than reasons for caution in making the factual findings upon which a rectification order is based.” (emphasis added)
The Appellant’s grounds of appeal comprise little more than an assertion that the primary judge erred in refusing to grant rectification.
What is of significance and interest in the Notice of Appeal, however, is the fact that the common intention upon which the Appellant appears to rely for the purposes of the appeal differs in its formulation from that identified by the primary judge in his judgment: see at [35] above. Thus, the Notice of Appeal is in the following language:
“1 The Court below erred:
(1) in concluding that the correspondence
(a) between the solicitors for the parties to the October Deed,
(b) between 12 September 2018 and 9 October 2018,
did not manifest a common intention that to the extent the Development Consent did not permit development of what was in the correspondence referred to as the Railway Corridor, the price payable for the Property was to be reduced at the rate of $773.82 per square metre; and
(2) in not concluding that that that [sic] correspondence did manifest such a common intention.
2 The Court erred in failing to make orders to rectify clause 15.4 of the October Deed to accord with that common intention.
3 The Court erred in failing to make an order that the front page of the Contract be amended to $15,727,337.70.”
The revised common intention as expressed in the Notice of Appeal differs from the common intention contended for at first instance in that, whereas the latter hinged on the term “adversely affected”, which the primary judge held was “no doubt susceptible to different meanings” and lacked the requisite precision, the revised common intention hinged upon the development consent “not permit[ting] development of … the Railway Corridor”: see PJ [99].
I reject the submission made by Mr Lynch SC on behalf of the Appellant that there was no practical difference between the two formulations. In my view, they are quite different. The latter looks to an unknown future event and puts the determination of any price reduction in the hands of the relevant consent authority whereas the former may refer to the effect per se of cl 6.10 of the 2006 SEPP (although this was not clear).
An immediate and simple answer to the Appellant’s appeal is that the Court below could not have erred in the way contended because the common intention as articulated at first instance was expressed in different terms.
In addition, this change of case was the subject of complaint by the Respondents to the effect that the Appellant should not be permitted to prosecute its appeal on the basis of this revised common intention: see Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 438; [1950] HCA 35; Bird v DP [2024] HCA 41; (2024) 98 ALJR 1349 at [39], and that to do so would permit the Appellant to alter its case from the case pleaded below in circumstances where, had the Appellant pleaded the revised common intention at first instance, the Respondents “would have called evidence, the gist of which would have been that nothing was said in any of the conversations between the solicitors to that effect”. There was force in this submission. I do not accept Mr Lynch’s submission to the effect that the Respondents could have called Mr Siderowitz but chose not to do so. The decision not to call Mr Siderowitz before the primary judge was no doubt a carefully considered forensic decision made in the context of the case as propounded by the Appellant at first instance. That case differed from that now propounded. For this additional reason, the Appeal must fail.
Further, the fact that the Appellant sought to articulate the “common intention” in the different way that it did in the Notice of Appeal tends to highlight the Appellant’s difficulty in articulating what is always a critical part of a rectification suit. This difficulty was only compounded by the request, at the end of the Appellant’s closing oral reply submissions in this Court, to reformulate the form of rectification sought in terms of the words it sought to have introduced into cll 15.3 and 15.4. This application was rejected but, as with the attempted reformulation of the “common intention”, it highlighted the difficulties with the Appellant’s case.
“When an agreement is one tailored to the particular case it deals with rather than being a standard form, has been reduced to writing through a process of negotiation between solicitors over a period of months, and is clearly a matter of great commercial significance to the parties, that situation in itself is a factor that tends to make it less likely that the parties have recorded their common intention incorrectly.”
This was such a case.
The “agreement” as to proposed changes to cl 15 in Mr Siderowitz’s email of 26 September 2018 relied upon in argument is of little if any moment: it was in the context of a proposed amendment to the August Deed as part of a package of terms which were rejected. In any event, the “agreement” referred to in this email in relation to cl 15 did not disclose a common intention of the kind asserted by the Appellant albeit that it was actuated by the Appellant’s concern that TfNSW may not permit development on the corridor. The perception of that risk was, as the primary judge pointed out at PJ [100] “only the first step, and a small step at that, along the path to rectification”.
Next, the evidentiary basis relied upon for establishing the common intention and the common mistake was sparse, comprising only the solicitor correspondence set out at [15]-[32] above. This could not be described as “[s]trong evidence” or “especially cogent evidence” (per Leeming JA in Re Jimmy’s Recipe Pty Ltd (No 2) [2020] NSWSC 632 at [153]) or “clear and convincing proof” (per McLelland AJA in Commissioner of Stamp Duties (NSW) v Carlenka Pty Ltd (1995) 41 NSWLR 329 at 345). As Lord Sumption has said, “the legal criteria for rectifying a contract are extremely exacting”: J Sumption, “A Question of Taste: The Supreme Court and the Interpretation of Contracts” (2017) 17 OUCLJ 301 at 312, quoted in JD Heydon, Heydon on Contract*: The General Part* (2019, Thomson Reuters) at [30.190].
The fact that two solicitors were closely involved in drafting the relevant clauses and that these went through a number of drafts militates strongly against the existence of a common mistake based upon a common intention not reflected in the language of the October Deed. Moreover, if the common intention was as contended (whether at first instance or on appeal), with both parties cognisant of the possibility of TfNSW withholding its concurrence under the 2006 SEPP, it would have been relatively straightforward to draft a clause adjusting the price on that contingency, but this was not done. As Campbell JA observed in the passage from Franklins extracted at [38] above, this also militates against there having been a common intention and consequent common mistake.
It is not possible to “divine” a common intention of the kind alleged from the sparse solicitor correspondence other than to the extent of agreement as to the drafting of particular clauses in the October Deed, that is to say, the extent of the parties’ agreement is reflected in the words used. Whatever may have been intended or assumed by Ms Kallianiotis (and she did not give evidence), the record does not disclose Mr Siderowitz’s position beyond the text of the clauses that he proffered on 9 October 2018 (see at [31] above). Nor does the record disclose that he was mistaken in what he drafted and mistaken in the same way as Ms Kallianiotis, if indeed either of them was in fact mistaken.
“ … if the intention of the parties were as the Appellant now contends, the Appellant would get both a reduction of price and the Property without any reduction of area, so long as Clause 6.10 of Appendix 1 of 2006 SEPP continued to apply, and be doubly compensated in the event that the State Government decided to proceed with the extension of the Sydney Metro after the expiration of sixty months because the Appellant would then be the owner of the land and entitled to compensation for its resumption.”
I also agree, in this context, with the observations of McHugh JA in his concurring reasons.
“1. If the October Deed should be rectified in accordance with the common intention which is now alleged, upon the proper construction of clause 15.4 of the October Deed, the Contract Price should not be reduced by $6,272,662.30 or any other sum by reason of the fact that the Development Approval granted by the Land and Environment Court on 18 November 2021 does not operate so as to:
(a) ‘reduce or propose to reduce’ the area of the Property which is available for residential development within the meaning of that clause; or
(b) create a ‘corridor or buffer area’ of 8,106 square metres or any other area.
- To any extent that it may be said that the area of the Property was subject to a limitation of use or proposed use for residential development purposes or a corridor or buffer area, that limitation of use and corridor or buffer area was created by legislative fiat upon the gazettal of the amendments introduced into (the then) State Environmental Planning Policy (Sydney Region Growth Centres) 2006 by the State Environmental Planning Policy (Sydney Region Growth Centres) Amendment (Blacktown Growth Centres Precinct Plan) 2013 on 4 October 2013, and the October Deed was made subject to and with full knowledge of that limitation and affectation.”
For all of the above reasons, the appeal should be dismissed with costs.
MITCHELMORE JA: I agree with the orders proposed by the Chief Justice for the reasons his Honour gives, and with the additional reasons of McHugh JA.
McHUGH JA: I entirely agree with the Chief Justice. I would add only the following.
As the Chief Justice explains, the Appellant formulated the common intention said to have been operative here in two different ways at trial and on appeal. The first was, as the primary judge said at PJ [90], that set out at par 1.5 of the Appellant’s revised submissions at trial dated 16 October 2025:
“… [a common intention] that, to the extent that the railway corridor adversely affected the use of the Property for residential subdivision, the price would be reduced at the rate of $773.82 psm.”
“… a common intention that to the extent the Development Consent did not permit development of what was in the correspondence referred to as the Railway Corridor, the price payable for the Property was to be reduced at the rate of $773.82 per square metre”.
Whether either formulation was in truth the parties’ common intention falls to be decided in light of the fact that the operation of cl 6.10 of Appendix 12 to the 2006 SEPP was known to both parties.
As to the formulation of the common intention at trial, cl 6.10 itself “adversely affected the use of the Property for residential subdivision”, as Senior Counsel for the appellant accepted.
As to the formulation on appeal, in the absence of concurrence by TfNSW, the effect of cl 6.10 was that any development consent must “not permit development of … the Railway Corridor”.
It follows that, in light of the parties’ knowledge of the operation of cl 6.10, the practical effect of both formulations amounts to the proposition that the parties intended the contract price for the Property to be the “reduced” price of $15,727,337.70, unless and until TfNSW gave its concurrence to development within the transport corridor.
Nothing in the evidence suggests that the parties intended the default price to be $15,727,337.70.
Moreover, if, as is submitted, this is a case in which the parties were not mistaken as to the words used in the instrument but rather were mistaken as to the legal effect of those words, it would be highly surprising that any lawyer could mistakenly understand that the language which was used had the legal effect of either formulation of the alleged common intention. The operation of both formulations would reverse the mechanism of the language that the parties actually used for setting the purchase price. On the un-rectified language of cl 15.4, the default price for the whole Property was $22,000,000. It would only be if an event occurred which would reduce the area of land which was to be transferred to the purchaser (i.e., actual or proposed compulsory acquisition) that there would be any reduction in price. By contrast, on the Appellant’s case, the default price for sale of the whole Property would be the “reduced” price of $15,727,337.70. It would only be if an event occurred (concurrence by TfNSW to development in the transport corridor) that the price would be increased to $22,000,000; but in that event there would be no change in the area of land transferred to the purchaser. The Court should not readily find that lawyers who had paid attention, as these had, to the language of cl 15.4 could so misunderstand its legal effect.
It is also significant that the proposed language of rectification for which the Appellant contends in its prayers for relief in this Court refers to “the operation of the development approval obtained in respect of the development application required under clause 3 [of the October Deed]”. The Appellant puts this language forward on the basis that the parties intended that the making of such a development application would, in effect, resolve the issue of the extent to which TfNSW concurred in the development of the transport corridor. There are two difficulties with that proposition.
First, cl 3 of the October Deed relevantly required no more than that the Appellant “lodge … a Development Application to approve a proposed subdivision of the property”. The parties’ bargain in cl 3 did not require the purchaser to seek approval for development of the land subject to the transport corridor. Clause 3 effectively left it in the power of the Appellant to determine whether TfNSW’s concurrence to development within the transport corridor was relevantly sought at all. Indeed, the development application that was ultimately submitted did not seek consent for any development in respect of proposed Lot 3 (i.e., the transport corridor). That cannot be reconciled with the proposition that the parties intended by cl 3 that submitting the development application would resolve the issue of the extent to which the transport corridor “adversely affected” the use of the Property.
Secondly, there was in any event no reason to think that even a development application directed specifically to development on the land subject to the transport corridor would fully resolve the question of TfNSW’s concurrence. It would be open to TfNSW to decline for the time being to give its concurrence to any proposed development within the transport corridor, without committing TfNSW to any future course of action (such as compulsory acquisition). But on the Appellant’s case, as the Chief Justice points out, that would result in the Appellant’s paying $15,727,337.70 in return for the whole Property, leaving open the possibility of a windfall to the Appellant if TfNSW later gave its concurrence to development within the transport corridor.
**********
IDP 971 Richmond Pty Ltd
Xerri
(2024) 98 ALJR 1349
(1995) 41 NSWLR 329
(2009) 76 NSWLR 603
(1959) 101 CLR 298
(2016) 260 CLR 85
(1950) 81 CLR 418
Appeal dismissed with costs. [60]–[62]
To the extent that the reasoning of the primary judge was attacked (and there was little attempt to engage with it by the Appellant in any detailed manner), his Honour’s reasoning was compelling. To it or consistently with it I would add the following observations.
It is appropriate to start by noting the observation of Campbell JA in Franklins at [460], namely that:
In this context, on 9 October 2018, just prior to the execution of the October Deed the following day, Mr Siderowitz called on Ms Kallianiotis to confirm his final drafting of cll 15.3 and 15.4 which he said he “hope[d] g[o]t us where we want to go”: see at [31] above. Ms Kallianiotis’ apparent acquiescence in the terms of the draft advanced, which became cll 15.3 and 15.4 in the October Deed, is the best evidence of what the parties’ agreement in fact was given the matter had been expressly adverted to by Mr Siderowitz. That agreement fell far short of the asserted common intention of the parties. The agreement reached was in terms of the actual or proposed reduction in the area proposed to be developed prior to the exercise of the option which could, as was the case, be many years off.
The failure of both sides to call their solicitors (or to adduce any file notes) rendered it difficult to ascertain the parties’ common intention especially in light of the fact that such sparse correspondence as existed took its context from conversations between the solicitors on 3 October, 8 October and 9 October 2018, the detail of which was unknown. While for forensic reasons a defendant to a rectification suit will often refrain from going into evidence, the failure by the plaintiff to call Ms Kallianiotis was surprising given where the onus to establish a common intention and common mistake lay. The inference is that calling her would not have assisted the Appellant’s case: Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8.
Furthermore, the existence of any unexpressed and unreflected common intention is undermined by the fact that, on 7 August 2024 (admittedly many years after execution of the October Deed but prior to exercise of the option), Mr Siderowitz conveyed to Ms Kallianiotis after conversations between them on 29 July and 7 August 2024 that “[i]t would seem that we clearly have different interpretations of clause 15.4 of the Call Option Deed”. Evidence of subsequent and subjective conduct is admissible and relevant to the inquiry into the existence of a common intention: Heydon on Contract*: The General Part* at [30.450].
In terms of the revised common intention contended for in the Notice of Appeal, neither cll 15.3 nor 15.4 refer to a development consent or the outcome of a development application. To the extent that Mr Lynch sought to emphasise the introduction of cl 3 into the October Deed (see at [10] above), that clause was not obviously or self-evidently tied to cll 15.3 or 15.4. The purpose of the introduction of cl 3 was to expedite the making of a development application and to keep the vendor informed of its progress for obvious commercial reasons.
Contrary to the Appellant’s submissions, this is not a case where the subject clauses were left without work to do (a circumstance that may be indicative of a common intention not being effectuated or a common mistake having been made). Exercise of the option contained in the October Deed was likely to be many years away and the Deed contemplated, in cl 4, dealing with payment instalments of the call option fee, it not being exercised for more than 48 months after execution of the October Deed. The Appellant had resisted the Respondents’ attempt to insert a time frame by which the option had to be exercised and, as events transpired, almost seven years elapsed between the grant of the option in October 2018 and its exercise. In this context, it was entirely feasible that the Property could have been rezoned and/or that the State could have compulsorily acquired part of the Property for transport corridor purposes. Had that happened, resulting in a consequent update to the attachments to the Contract appended to the October Deed, cl 15.4 of the Deed would have been engaged.
The unlikelihood of the common intention being as contended for by the Appellant is further undermined by the fact that it would have been commercially disadvantageous to the Respondents in a number of respects. For example, if there was a price reduction because of TfNSW’s lack of concurrence with a development application, a subsequent change of attitude by TfNSW would result in a windfall to the Appellant which would have paid a lower purchase price on the basis of an inability to use the subject land but which would, on this hypothesis, then be able to develop it fully. As put by the Respondents in their written submissions:
That being so, it is highly improbable that the parties shared a common intention that “the operation of the development approval obtained in respect of the development application required under clause 3” would be the criterion determining the purchase price.
The appeal should be dismissed with costs.