Lendlease Communities (Figtree Hill) Pty Ltd v Mount Gilead Pty Ltd

Supreme Court of NSW|2024-12-17|Before: Stevenson J, Honourable J

Solicitors: King & Wood Mallesons (Australia) (Plaintiffs/Applicants) Woolf Associates (Defendants/Respondents) File Number(s): 2024/423110

JUDGMENT

The plaintiffs are members of the Lendlease group ("Lendlease").
The defendants (the "Owners") own land at Campbelltown (the "Balance Land").
These proceedings were commenced on 14 November 2024, and are now fixed for hearing on 5 and 6 March 2025. The proceedings concern an "Irrevocable Offers Deed Balance Land, Mt Gilead" made between Lendlease and the Owners on 17 April 2015 (the "Deed").
I am dealing with Lendlease's application, made by Notice of Motion also filed on 14 November 2024, for an interlocutory mandatory injunction requiring the Owners to take certain steps pending the final hearing.

The Deed

The Deed concerns development of the Balance Land and envisaged that the Balance Land will be subdivided into lots 6, 7, 8, 9 and 10.
The Deed is a complicated document. It is replete with defined terms. In order to simplify matters as far as is practicable at this stage of the proceedings, I will use those defined terms without descending into the definitions, except where necessary.
At its heart, the Deed provides for call and put options between Lendlease and the Owners. In substance, Lendlease is entitled to compel the Owners to sell to it the Balance Land, failing which the Owners are entitled to compel Lendlease to purchase the Balance Land.
This is achieved by cl 8 which contains a "Sale Offer" by the Owners to sell to Lendlease the "Property" on the terms of the Deed and a "Purchase Offer" by Lendlease to purchase same; the latter exercisable only after the Sale Offer Period in respect of the Sale Offer has expired.
"Property" is defined as each part of the "Balance Land" as notified by Lendlease under cl 7.1(b) of the Deed.
Such notification is required to be accompanied by provision by Lendlease to the Owners of a form of Plan of Subdivision "based on" a plan annexed to the Deed (the "Annexure 2 Plan").
There were conditions precedent to Lendlease giving such a notification. It is common ground that Lendlease was entitled to, and has now waived, those conditions precedent.
On 10 July 2024, Lendlease notified the Owners that it intended proceeding with registration of a Plan of Subdivision in relations to lots 7, 8, 9, and 10: but not lot 6.
Lendlease accepts that, in the events that have happened, it can no longer purchase lot 6. I return to the significance of this below.
On 12 July 2024, Lendlease served the Owners with two Plans of Subdivision together with a Subdivision Application. One of those plans is now relevant ("the 12 July Plan"). Lendlease contends the 12 July Plan is "based" on the Annexure 2 Plan. There is an issue about this.
Clauses 5.1 and 5.2 of the Deed provide that once Lendlease has taken the required steps under cl 7, the Owners must use their best endeavours to obtain and pursue Subdivision Development Consent and must lodge an application for Subdivision Consent with the Council; failing which Lendlease may do so.
Lendlease contends that the Owners are obliged under cl 5.2 of the Deed to lodge with the Campbelltown City Council ("Council") the Subdivision Application, based on the 12 July Plan, so as to enable registration in due course of the Plan of Subdivision depicted in the 12 July Plan.
On 31 July 2024, the Owners, by their solicitor, wrote to the Council stating that the Owners had not agreed to make, and did not consent to any development application in respect of the Balance Land.
On 17 September 2024, Lendlease lodged a Subdivision Application with the Council, also based on the 12 July Plan.
On 30 September 2024, the Council informed Lendlease that it could not accept that Subdivision Application.
By its Summons, Lendlease seeks: 1. various declarations as to the proper construction of the Deed; and 2. orders that the Owners: 1. perform their alleged obligation under cl 5.2(a) of the Deed and lodge with Council the Subdivision Application; or, alternatively, 2. withdraw their 31 July 2024 letter to the Council, provide their consent to the Council's determination of the Subdivision Application and not take any steps to interfere with Lendlease's lodgement of the Subdivision Application.
Lendlease contends the matter is urgent because: 1. on its construction of the Deed, the Sale Offer Period for lot 7 expires 30 June 2025; 2. for a Sale Offer to be made for lot 7, the Balance Land must be subdivided; 3. it is likely that it will take four months or more for the Council to process the application and for registration of the Plan of Subdivision then to occur; and 4. if the Balance Land is not subdivided by 30 June 2025, it will lose the opportunity to purchase lot 7 for $10 million; evidently a price well below its current value.
By its Notice of Motion filed on 14 November 2024, Lendlease seeks an interlocutory mandatory injunction in the same terms as the final orders sought in the Summons.

Principles - serious question to be tried

In this Court, it is established that there is now a single test for interlocutory injunctions, whether mandatory or prohibitive. [1]
Lendlease must show a prima facie case. Thus, Mr Giles SC, Ms Bathurst, and Ms Carr for Lendlease submitted in their written opening that Lendlease must show a "serious question to be tried and there is a sufficient likelihood [that the applicant will be successful at trial] to justify in the circumstances the preservation of the status quo pending trial", referring to Papas v Grave, [2] where Emmett JA said: [3] "The purpose of an interlocutory injunction is to keep matters in statu quo until the rights of the parties can be determined at a final hearing. Further, a plaintiff seeking an interlocutory injunction must be able to show sufficient colour of right to the final relief, in aid of which interlocutory relief is sought. A plaintiff seeking an interlocutory injunction must show at least a probability that he or she will succeed in establishing his or her entitlement to the final relief claimed. [4] … Thus, the claim for final relief will usually inform the question of whether interlocutory relief is warranted." (Emphasis in original.)
But insofar as Lendlease seeks the order in [21(b)(i)], that the Owners lodge the Subdivision Application with the Council, this being what Mr Giles said orally was Lendlease's preferred position, Lendlease does not merely seek to preserve the status quo.
Where an applicant seeks mandatory interlocutory relief to compel a respondent to adopt a fresh course of action, as opposed to compelling a respondent to revert to an earlier course of action and thereby re-establishing the status quo, careful and close attention is required to the applicant's likely ultimate success at trial. [5]
Further, as Gummow J said in Businessworld Computers Pty Ltd v Australian Telecommunications Commission: [6] "[I]t has long been the case that interlocutory mandatory injunctions would be more likely to issue where the defendant was compelled, not to embark upon a fresh course of conduct, but, as here, to revert to a course of conduct pursued before the occurrence of the acts or omissions that provoked the litigation."
Those remarks are particularly apposite here, where the preferred order sought by Lendlease would compel the Owners immediately to lodge with Council the Subdivision Application based on the 12 July Plan and "use their best endeavours to obtain and diligently pursue" [7] development consent. Such conduct which would prove otiose if Lendlease fails at trial, and may not be able to be undone; rendering damages an uncertain vehicle for redress.
Mr Giles, Ms Bathurst, and Ms Carr submitted that Lendlease has a "strong" prima facie case.
That overstates matters.
The Owners certainly have refused to lodge the Subdivision Application and the 12 July Plan with Council.
But there are a number of issues.

Is the 12 July Plan "based on" the Annexure 2 Plan?

The first is whether the 12 July Plan can be said to be "based on" the Annexure 2 Plan.
Copies of the Annexure 2 Plan and the 12 July Plan are attached to these reasons.
There are significant differences between the two plans: 1. Lot 6 is the orange shaded lot in the 12 July Plan; in the Appendix 2 Plan it is 36.6 ha, whereas in the 12 July Plan it is only 1.41 ha; no doubt reflecting the fact that Lendlease now accepts it cannot purchase lot 6; 2. Lot 7 is the blue shaded lot in the 12 July Plan and has been significantly re-shaped and re-located; 3. Lot 8 is the purple shaded lot in the 12 July Plan and has also been significantly re-shaped; 4. Lot 9 is the three separate yellow shaded lots in the 12 July Plan; and 5. Lot 10 is the seven separate green shaded lots in the 12 July Plan.
Thus, the 12 July Plan appears to bear no resemblance to the Annexure 2 Plan.
Thus, the Owners' surveyor, Mr Stuart de Nett, has deposed: "… other than the property boundary lines defining the parcel known as Lot 2 in DP 121887 … the proposed lot subdivision pattern of the [12 July Plan] bears no resemblance to the proposed lot subdivision pattern delineated in [the Annexure 2 Plan]."
Clause 7.1 of the Deed provides that Lendlease can vary the form of the Plan of Subdivision "in order to facilitate Lendlease's development and staging of the Balance Land". Further, cl 7.3 of the Deed provides that such variations can include a "variation of the boundaries and dimensions of any proposed lot" provided that the area of Lots 6 to 9 do not exceed specified maxima. Lendlease's power to affect such variations are subject to a proviso that the variations "do not materially adversely affect the ability of the parties to obtain the approval … in relation to the Plan of Subdivision".
There is no dispute that the area of Lots 6 to 9 on the 12 July Plans do not exceed those maxima.
Lendlease's surveyor, Mr Matthew Hermes-Smith, has explained how he prepared the 12 July Plan. He has deposed that he took into account the maximum lot sizes given to him by an identified officer at Lendlease, [8] and said that, a year earlier, he had been given the Annexure 2 Plan. He then deposed that he had taken into account something called the "Enspire Drawing" and, to create the 12 July Plan, had been instructed to "allocate land that had previously been allocated for Contract 6 to a later stage contract".
It is not at all obvious to me how this evidence could lead to a conclusion that the 12 July Plan is "based on" the Annexure 2 Plan.
First, for all practical purposes, the 12 July Plan contains no lot 6, at least no evidently marketable area of land comprising lot 6. Rather, a small rump of land of seemingly landlocked land [9] has been included in the 12 July Plan, evidently in response to the instructions to which Mr Hermes-Smith referred.
Second, accepting that Lendlease has the powers in cll 7.1 and 7.3 to which I have referred, it is hard to see how such a different looking plan could be said to be "based on" the Appendix 2 Plan, especially bearing in mind Mr Hermes-Smith's evidence of the process he undertook.
Mr Giles submitted that all that was necessary for the 12 July Plan to be "based on" the Appendix Plan is that either: 1. the requirements of cll 7.1 and 7.3 were satisfied; or 2. the author of the 12 July Plan "started with" or "used" the latter to create the former.
In either case, it is hard to see what work the words "based on" would do.
Mr Giles also submitted that there was nothing in the text of the Deed, and in cll 7.1 and 7.3 in particular, which requires that lots 6, 7, 8, 9 and 10 be contiguous.
However, Mr Coles KC, who appeared with Ms Castle and Mr Haines for the Owners, drew my attention to cl 7.6 of the Deed in which the Owners agree that Lendlease may require registration of plans of consolidated and subdivision of the Balance Land provided that, relevantly, "the relevant registration or variation does not create more than 5 lots, corresponding to the 5 Properties". This points to the conclusion that the parties intended that, notwithstanding Lendlease's power under cl 7.3 to vary the boundaries of the lots, the lots were to remain contiguous.
It is neither necessary nor appropriate that I express any final view about these matters.
But I am able to conclude that I do not see Lendlease's case on this point as being strong.

The lot 6 point

The next issue arises from the fact that Lendlease now accepts that, for reasons not necessary to explain here, it cannot now purchase lot 6. Indeed, as I have said, lot 6 has, for all intents and purposes, now been removed from the 12 July Plan. And as Lendlease cannot purchase lot 6, it must remain owned by the Owners.
The Owners contend that lot 6 should be seen as the central feature of the plan in the Deed to dispose of the parcels of land within the Balance Land and that, now that Lendlease cannot purchase lot 6, it "no longer has the right to continue to continue to pursue any rights under the … Deed". [10]
The importance of lot 6 appears to be reflected in the Key Items Schedule to the Deed which provides that the Purchase Offer Periods for lots 7, 8, 9 and 10 end 11, 35, 59 and 83 months, respectively, "after the completion of Contract 6" and that the "Completion Dates" for those lots is the earlier of 30 days after the date of the relevant contract and 12, 36, 60 and 84 months after "completion of Contract 6".
The Owners' solicitor, Mr Woolf, outlined the potential problem as follows in a letter he wrote to Lendlease's solicitors on 17 July 2024: "However, the difficulty confronting your client is that the Deed does not allow it to accept a Sales Offer for any of the Properties unless it first accepts a Sales Offer for Property 6. This follows because if the Sale Offer Periods for Properties 7 to 10 remained open when a sale of Property 6 cannot be completed, then the Sale Offer Periods for Properties 7 to 10 become perpetual. Those periods will never end given that the Sale Offer Period end dates for Properties 7 to 10 are measured from the completion of Contract 6 - which cannot occur now. The reason why the Deed does not permit the acceptance of a Sales Offer for Contracts 7 to 10 if the acceptance of a Sales Offer for Contract 6 does not occur, is due to the effect this would have on our clients and because it undermines the purposes of the Deed, when another construction of the Deed, which avoids this outcome, is available. If your client obtained perpetual call options over the Balance Land (besides for Property 6), our clients would never obtain Purchase Offers for Properties 7 to 10. The Purchase Offer Periods for properties 7 to 10 only commence once the relevant Sale Offer Period ends, which will never occur unless Contract 6 completed. This undermines the Deed's purpose being to give your client the right to compel our clients to sell your client the Balance Land, failing which our clients obtain the right to compel your client to purchase all or part of the Balance Land."
Mr Woolf was referring to the fact that the Sale Offer Period for lots 7, 8, 9 and 10 is expressed in the Key Items Schedule of the Deed to end 11, 35, 59 or 83 months "after the completion of Contract 6". As there can now not be a "completion of Contract 6", the Sale Offer Periods appear to be open-ended.
The Key Items Schedule also refers to a Completion Date for each of lots 7, 8, 9 and 10 being the earlier of 30 days after completion of the relevant contract, and 12, 36, 60 or 84 months "after the date of completion of Contract 6". As there will not be a "date of completion of Contract 6", it is not obvious how the "earlier" of the Completion Dates is to be determined. Presumably, the argument will be that 30 days after completion of the relevant contract is earlier than a date that can never eventuate. But that is an awkward argument, and one that it is hard to see the parties having contemplated.
Further, cl 11 of the Deed provides that on completion of lot 6, the Owners must transfer the "Utility Land" to the Council. Now that there can be no completion of lot 6, this clause cannot now be enlivened. That is, the Owners are no longer obliged to transfer the Utility Land to the Council so that, as Mr Giles accepted, Lendlease will now have to "give up part of its land" for that purpose. It seems unlikely that this was the parties' intention, pointing to the pivotal role the parties appear to have attributed to lot 6.
Further, as Mr Coles submitted, a consequence of Lendlease's construction of the Deed is that the Owners are obliged to submit to the Council a Plan of Subdivision which includes land, lot 6 in the 12 July Plan, that will remain their own were any such plan to be approved and registered.
On the other hand, Mr Giles, Ms Bathurst, and Ms Carr pointed to what they described as "textual indicators" pointing to a different conclusion, particularly the reference in cl 8.1 of the Deed to the Sale Offer being in respect of "each relevant Property".
Again, it is neither necessary nor appropriate for me to express any final view about these matters today.
But there does appear to be a not insubstantial prospect of the Owners establishing that Lendlease's acquisition of lot of 6 was an essential element necessary to be established in order that the call and put options in the Deed proceeded further and that, as Lendlease cannot now purchase lot 6, it no longer has any entitlement to acquire the remaining lots.

Balance of convenience

Lendlease points to the matters to which I have referred at [22] above and to the prospect of Lendlease losing the opportunity to purchase lot 7 for $10 million. If Lendlease is successful at trial in March, there will only be around 5 months for matters to progress with Council prior to 30 June 2025.
In that regard, it is true that, as Mr Giles emphasised in oral submissions, Lendlease sought, and would have been prepared, to take final hearing dates on 18 and 19 December 2024; that is, tomorrow and the next day. However, those days have been allocated to the mediation before Mr Sackar, and the Owners were not prepared to waive provisions in the Deed requiring mediation.
There has been some delay by Lendlease in bringing this application. It has known since July 2024 of the Owners' position and yet commenced proceedings only last month. I am told there have been without prejudice discussions in the meantime, but Lendlease must at all times have been conscious of what it now sees as the 30 June 2025 deadline in respect of lot 7.
The Owners point to prejudice arising from their position that they do "not intend to progress development in the manner proposed in [the 12 July Plan]".
More obvious prejudice to the Owners would likely result if orders were now made as sought by Lendlease, but not sustained at the March hearing.
Further, on 6 June 2024, Lendlease purported to serve an "Acceptance of Sale Offers" under which it purported to accept an offer to itself to purchase lots 6, 7, 8, 9 and 10.
Lendlease now accepts that this was not effective, and does not seek relief in these proceedings in relation to the contract of sale it purported to issue following its "Acceptance of Sale Offers".
Mr Giles, Ms Bathurst, and Ms Carr dismissed the relevant communication as now being "no more than part of the factual narrative". It was, however, a step inconsistent with the course it now seeks to compel the Owners to adopt; a factor that weights, albeit perhaps not heavily, in the balance.

Conclusion

In these circumstances, I am not persuaded to make the orders sought by Lendlease.
In effect, Lendlease seeks at this interlocutory stage what in substance amounts to final relief.
For the reasons I have set out, I have not reached a sufficient degree of satisfaction as to Lendlease's likely success at trial to warrant such orders being made now.
The plaintiffs' Notice of Motion of 14 November 2024 is dismissed with costs.

Endnotes

See MP Water Pty Ltd v Veolia Water Australia Pty Ltd [2021] NSWSC 582 at [61] (Rees J).
[2013] NSWCA 308.
At [83] (Basten JA and Sackville AJA relevantly agreeing).
Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; [2011] HCA 63 at [9]-[11] (Gleeson CJ).
See, for example, Shepherd Homes Ltd v Sandham [1971] Ch D 340 at 351 (Megarry J).
(1988) 82 ALR 499; [1988] FCA 206 at 503; referring to Hoffman J in Films Rover International Pty Ltd v Cannon Film Sales Ltd [1987] 1 WLR 670; [1986] 3 All ER 772 at 679-681.
The language of 5.1(a) of the Deed.
Which I will assume are those in cl 7.3.
It appears to be intended to have the benefit of an easement for access
Commercial List Response at [51(i)]. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 17 December 2024

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