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[2003] NSWSC 1058
defendant. Judgment for the defendant; the Court refused to order repayment of the purchasers' deposit under s.55(2A) of the Conveyancing Act 1919 and awarded costs to the defendant ([90]–[91]).
Purchasers bought a commercial property subject to an annexed development consent, paid a 10% deposit, then commissioned reports which suggested the approved redevelopment (including 21 basement car spaces requiring extensive underpinning) could not be achieved. They refused to complete unless the vendor paid for redesign and extra excavation. The vendor lawfully terminated after the purchasers failed to complete, resold the property and the purchasers sought return of the deposit under s.55(2A). The Court, after detailed consideration of expert evidence, found the DA could be implemented (though with difficulty and expense), the vendor was not in breach and the contract allocated the development risk to the purchasers. Exercising the wide discretion under s.55(2A), the Court refused to order repayment of the deposit and entered judgment for the defendant with costs.
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The parties contracted at auction on 3 November 2001 for the sale of 43 Majors Bay Road, Concord, for $2,200,000 with a $220,000 deposit. The contract annexed a Development Application approval (DA) and contained negotiated special conditions, notably Special Condition 31 and Special Condition 40, which stated the purchaser relied on inspection and enquiries and disclaimed reliance on extraneous warranties or representations (see [2]–[6], [23], [26]). Advertising for the sale prominently described the property as a "DEVELOPMENT OPPORTUNITY" and stated "DA Approved for ... 21 basement car spaces" (see [22]).
After exchange the purchasers commissioned consultants. Reports by their architect and traffic consultant suggested the DA drawings were schematic and that the specified 21 on-site car spaces might not be achievable without substantial redesign, additional excavation and cost (see [29]–[31], [34]–[41]). A geotechnical report (boreholes) revealed sandstone at depth that would necessitate substantial rock excavation and complicated underpinning (see [19], [30]).
The purchasers failed to complete on 16 January 2002 and would not attend settlement on the later notice to complete (6 February 2002). The vendor served notices, terminated the contract and resold the property (settlement 26 July 2002). The purchasers sought relief in equity and under s.55(2A) Conveyancing Act 1919 to recover the deposit, alleging infeasibility or undue difficulty with the DA implementation; they also sought other remedies which were not sustained (see [31]–[33], [78]–[80]).
At trial (17–19 September 2003), the Court heard extensive competing expert evidence addressing underpinning methodology, piling tolerances, carpark dimensions, compliance with the Building Code and AS2890. The judge accepted the vendor's experts that underpinning within the adopted shoring zone (350 mm in top methodology) could be achieved with specialist workmanship and that the design tolerances permitted construction; he concluded the difficulties were not such as to render the DA incapable of implementation and that any necessary modifications to the DA were minor and likely to be acceptable to Council (see [46]–[66], [72]–[74]). On those findings the Court held the vendor was not in breach, the notice of termination was effective, and, in the exercise of its discretion under s.55(2A), refused to order repayment of the deposit. Judgment was entered for the defendant with costs ([76], [90]–[91]).
Three linked reasons determined the outcome.
Contractual allocation of risk and disclaimers: The contract (Special Conditions 31 and 40) recorded that the purchaser relied on inspection and their own enquiries and disclaimed reliance on other representations (see [3], [6], [23], [24]). The judge treated these clauses as placing the burden of development risk on the purchasers. That meant any impracticality in implementing the DA was a risk purchasers had assumed absent an express warranty by vendor (see [75]–[76], [80]).
Factual finding of feasibility: The pivotal factual question was whether the DA could, in reality, be implemented. The purchasers' experts argued underpinning would require larger shoring zones, leave insufficient internal width for parking bays and aisle widths, and necessitate additional excavation or another basement. The vendor's experts (notably Mr Bonser and Mr Powell) demonstrated a technically feasible underpinning method, accepted that specialist contractors and close supervision would be needed, and produced redesigned plans showing how parking and the disabled bay could be achieved (see [46]–[66], [72]–[74]). The judge accepted the vendor's evidence that construction could be achieved within the 350 mm shoring zone in Powell's design and that the departures from the DA were chiefly minor and remediable (see [63]–[64], [69], [74]).
Discretion under s.55(2A), equities and loss: Section 55(2A) gives the Court a statutory discretion to order refund if it thinks fit. The judge considered authorities (Lucas & Tait, AA Jones, Universal, Romanos, Butcher, and others) and emphasised that the power is broad but must be exercised by reference to the contract and the equities (see [81]–[86]). Here, purchasers had not completed, had restricted the vendor by caveat and litigation (imposing delay and expense), and the deposit was a commercially reasonable 10%. The vendor had suffered interest and carrying costs; the purchasers had not shown they were entitled to relief given their contractual undertakings and the Court's finding of feasibility. On balance the equities favoured the vendor and the judge declined relief ([78]–[90]).
The decision is therefore a combination of contract construction, practical assessment of expert evidence and a conventional equitable balancing exercise under s.55(2A).
Before this decision, s.55(2A) was recognised to confer a broad judicial discretion to order repayment of a deposit in appropriate cases; appellate authorities had cautioned against a court exercising an overall monetary supervision of the parties' bargain and indicated that relief should be granted only where it would be unjust or inequitable to permit retention (see the judge's discussion at [81]–[86], quoting Lucas & Tait and other authorities).
Bryson J did not restate a novel test. Rather he reinforced the established approach: the Court must evaluate contractual allocation of risk, the conduct of parties and opposing claims to loss and hardship; it will not use s.55(2A) as a device to upend ordinary commercial deposit arrangements except where a substantial equitable reason exists. He emphasised the absence of any single bright-line rule and accepted that references in authorities to 'unjust and inequitable' are helpful but not a substitute for the statutory discretion (see [82], [84]–[86]).
After the decision the law as articulated remains that s.55(2A) is discretionary, fact-sensitive and heavily influenced by the contract terms and the allocation of risks. Bryson J's application provides a detailed example of how technical factual findings (on feasibility) interact with the equitable discretion.
Passage: "Subsection (2A) ... confers on the Court ... a wide but not unlimited discretion to order repayment of a deposit." ([81]) Plain English: The Court has broad power to give back a deposit, but it is not unbounded; the judge must find a good reason, connected to the contract and circumstances, to do so.
Passage: "The vendor was not in breach of any term of the contract. The Notice of Termination was fully effective." ([76]) Plain English: The vendor acted within the contract and legally ended the contract when the purchasers failed to settle.
Passage: "I find ... construction of the walls ... can be achieved within the 350 mm shoring zone ..." ([63]) Plain English: After hearing the experts, the judge was satisfied that the underpinning method proposed by the vendor could be built in the small space available; therefore the technical obstacle alleged by the purchasers was not fatal.
Passage: "In my opinion the appropriate outcome is that the parties' contractual arrangement for the deposit should continue in effect. I do not think fit to order refund of the deposit." ([90]) Plain English: Balancing the rights and losses, the judge decided not to return the deposit and left the contract's normal forfeiture rule to stand.
This judgment is directly engaged where:
In short, cases where alleged development infeasibility is the buyer's reason for non-completion and the contract allocates risk to the buyer and the alleged obstacle is one of difficulty and expense rather than absolute impossibility.
This judgment itself cites appellate authority (Lucas & Tait, Butcher, Romanos) and draws on them to describe s.55(2A)'s breadth and limits (see [82]–[86]). The judgment provides a detailed application of those authorities on facts where technical feasibility is contentious. It is best read as an example of applying the established approach rather than as announcing new doctrine: Bryson J emphasised that there is no single test and that s.55(2A) requires a fact-sensitive equitable exercise ([84]–[86]).
Because this is a first-instance decision applying established principles, its precedential value is primarily persuasive and factual: later courts dealing with s.55(2A) will look to it for guidance on evaluating expert evidence and balancing commercial equities where a purchaser contests implementation of a DA. The judgment also underscores the importance of special contractual disclaimers in these contexts (see [3], [6], [80]).
The contours of 'substantial ground' under s.55(2A). Bryson J applied the statutory discretion with reference to established authorities but acknowledged the absence of a single test and the need for broad judicial evaluation ([84]). What combination of factors (magnitude of vendor's loss, demonstrable impossibility vs. difficulty, deposit size relative to damages) will be determinative in closer cases remains unresolved.
The role of local planning authorities' likely attitude. Bryson J assumed reasonable conduct by Council and treated likely modification as probable and non-problematic ([69], [74]). Where a Council's record indicates uncooperative practice or where DA conditions are unusually onerous, the factual matrix may shift, but how courts assess such predictive planning judgments lacks a fixed methodology.
Precise thresholds for 'feasibility' vs 'practical impossibility'. The judgment distinguishes impossibility from heavy expense or trouble, finding feasibility here despite specialist piling and precise workmanship requirements ([58]–[64]). Future cases will test where the line falls between 'feasible with high cost and difficulty' and 'not feasible' for s.55(2A) purposes.
How to quantify and impose terms upon relief. Bryson J noted that relief may be subject to terms for vendor damages or part repayment ([88]). The criteria and methods for immediate assessment of vendor loss and reduction of deposit in such terms remain a practical problem that may require fuller appellate elaboration.
Influence of advertising and pre-contractual promotion. This case found advertising truthful and of limited weight because of the contractual disclaimers and the purchaser's own enquiries (see [22], [80]); but situations where advertising is materially misleading and where contractual disclaimers are weaker may raise different issues about causation and estoppel.
In practice, this decision will be cited for the proposition that s.55(2A) relief is discretionary, fact-specific and will not lightly override clear contractual allocations of development risk; it is a detailed exemplar of assessing technical evidence and balancing commercial equities when a purchaser declines to complete because a DA appears difficult to implement.
CITATION : LUCANTONIO v. CIOFULI [2003] NSWSC 1058 revised - 24/02/2004 HEARING DATE(S) : 17, 18 & 19/09/2003 JUDGMENT DATE : 21 November 2003 JURISDICTION: EQUITY JUDGMENT OF : Bryson J at 1 DECISION : Judgment for the defendant with costs [91]
CATCHWORDS : VENDOR and PURCHASER - recovery of deposit - discretion of Court to order repayment of deposit - purchaser bought after advertisement &c. notified "DA Approval" - purchaser sought compensation on ground that development as approved was not feasible - no contractual warranty - on review of extensive expert evidence it was found that development was feasible and difficulties were not abnormal for development project - on review of circumstances, the Court declined relief against forfeiture of the deposit under s.55(2A) CA 1919. Conveyancing Act 1919 Conveyancing (Amendment) Act 1930 LEGISLATION CITED : Disability Discrimination Act 1992 Fair Trading Act 1987 Law of Property Act 1925 (U.K.) Supreme Court Act 1970 AA Jones & Son Pty Ltd v. Weeden [1964-5] NSWR 1780 Bernard & Anor v. Weingarth & Anor (1997) 8 BPR [15,651] Butcher v. Lachlan Elder Realty [2002] NSWCA 237 Carpenter v. McGrath (1996) 40 NSWLR 39 Clarke v. Dilberovic (1982) NSW Conv R 55-083 CASES CITED : Delgado v. Walker Developments Pty Ltd (Bryson J 18 July 1989 unreported) Lucas & Tait (Investments) Pty Ltd v. Victoria Securities Ltd [1973] 2 NSWLR 268 Pratt v. Hawkins (1991) 32 NSWLR 319 at 323 - 325 Romanos v. Pentagold Investments Pty Ltd [2003] HCA 58 Terry v. Permanent Trustee Australia Ltd (1995) 6 BPR [14,091] at 14,106-14,107 Universal Corporation v. Five Ways Properties [1979] 1 All ER 552 Wilson v. Kingsgate Mining Industry Pty Ltd [1973] 2 NSWLR 713 PARTIES : Dean Paul Lucantonio and Paulette Lucantonio (P) Lucia Ciofuli (D) FILE NUMBER(S) : SC 6073/2001 COUNSEL : D.L. Warren (P) M.L. Brabazon & M. Hirshorn (D) SOLICITORS : Otto Stichter & Associates (P) Christopher Balomatis (D)
IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION
6073/2001 LUCANTONIO v. CIOFULI JUDGMENT 1 HIS HONOUR: The plaintiffs as purchasers and the defendant as vendor entered into an agreement in writing on 3 November 2001 for the sale of property known as 43 Majors Bay Road, Concord. The sale was not completed and the vendor later sold and transferred the property to another purchaser. The purchasers commenced these proceedings on 21 December 2001 and claimed a number of remedies. Specific performance can no longer be pursued as in a practical sense it was defeated by the outcome of interlocutory proceedings in June 2002 in which the purchasers were unable to maintain their caveat or restrain the vendors from completing the second sale. The vendor's claims now appear in the Amended Summons of 25 October 2002. The principal claims are Claims 1 and 3 to establish that the vendors have terminated the Contract of Sale and are contractually entitled to return of the deposit, and Claim 4 for an order that the deposit be repaid with interest under s.55(2A) of the Conveyancing Act 1919. There are also claims for damages for breach of contract, damages under the Fair Trading Act 1987 (Claims 5, 6 and 7) and ancillary claims. The principal matter debated at the hearing was the claim for the return of the deposit under subs.55(2A). 2 The property is a commercial building in a prominent position in Concord Shopping Centre with frontages to Majors Bay Road to the west and Jellicoe Street to the south; there is also access from a lane at the rear or eastern side. The building abuts another building to the north. The building was originally a cinema but has now for many years been used for commercial purposes. The property is the land in Lot 171 DP136638, Folio 171/136638. The purchase price was $2,200,000 and the deposit of $220,000 was paid to and is still held by an estate agent; the deposit was invested at interest which at the time of the hearing amounted to $16,403. The price was exclusive of GST which the purchaser was to pay on completion in addition to the price. The contractual completion date was 16 January 2002 and was not of the essence. The contract included clauses in the standard 2000 edition including Printed cl.9 regulating the vendor's right to terminate the contract. Subclause 9.1 is to the effect that after the termination the vendor can keep or recover the deposit to a maximum of 10 percent of the purchase price. 3 The contract contained a number of special conditions in addition to the standard printed clauses. Special Condition 31 is in these terms: The Purchaser acknowledges that he does not rely in this Contract upon any warranty or representation made except as are expressly provided herein but has relied entirely upon his inspection of the property and his own enquiries relating thereto. 4 Special Condition 33 provided: In the event of a party failing to complete this Contract within the time stipulated herein then the other party shall be entitled to issue a Notice making time the essence of the Contract and requiring completion to be effected within a period of not less than fourteen (14) days of the date of service of such Notice. 5 Special Condition 35(a) provided: 35 (a) If completion does not take place on or before the completion date (otherwise than as a result of default by the Vendor) the Purchaser may pay the Vendor interest at [8%] per annum on the balance of the price. 6 Special Condition 40 is in these terms: The Purchaser acknowledges that he does not rely in this Contract upon any warranty or representation made except as are expressly provided herein but has relied entirely upon his inspection of the property and his own enquiries relating thereto. The purchaser acknowledges that annexed to the contract is a Notice of Determination of a Development Application dated 4 September, 2001 in respect of the property issued by the City of Canada Bay Council and accompanying documents. The Purchaser agrees that they shall not raise any objection, requisition, claim for compensation or be entitled to delay completion because of the said Notice or accompanying documents. The Vendor, by virtue of completion assigns to the Purchaser all copyright in the said development consent and will upon completion deliver to the purchaser all original plans, drawings and contents in relation thereto. This clause will not merge upon completion. 7 The last four lines of Special Condition 40 in handwriting were added to an earlier draft in the course of negotiations before the purchasers bought the property at auction. 8 Annexed to the contract was a letter from City of Canada Bay Council to Mr Richard Ciofuli dated 28 September 2001. This set out the Council's notice of determination of a development application. Mr Richard Ciofuli, the vendor's son, is a man of business experience with an understanding of property development. By occupation he is an information technology consultant. He managed business on behalf of the vendor in making the development application, including engaging an architect, lodging the development application and plans, and dealing with requirements from Canada Bay City Council arising during Council's consideration of the development application; this involved engagement of further consultants. Mr Richard Ciofuli also attended to much of the business relating to the sale on behalf of the vendor. He is also a principal in Ritz Constructions Pty Ltd which purchased the property from the vendor, duly completed the purchase and is now proceeding towards realisation of plans for redevelopment. The price in the second sale was also $2,200,000. As a principal of Ritz he has pursued a further application or development consent to Canada Bay City Council relating to a different form of redevelopment involving a greater residential component. It was his position in evidence that he did this not because he recognised any impracticality in the development approval already obtained, but because he regarded residential redevelopment as likely to be more lucrative. I accept that this is the true motivation. 9 In Council's notice of determination the proposed development was described as "Renovations and alterations to provide seventeen (17) commercial/retail units with basement parking." About 50 pages of documents were incorporated in the conditions of consent, including a number of drawings. Condition 1 is in these words: Development shall take place and operate generally in accordance with this consent accompanied by Sheet Nos. 1 to 8 of 8, Sheets 1, 7 and 8 dated April 2001 and Sheets 2 to 6 dated May 2001, and Sheets 1, 7 and 8 as received by City of Canada Bay Council on 14 May 2001, Sheets 2 and 3 as received by City of Canada Bay Council on 24 August 2001, and Sheets 4 to 6 as received by City of Canada Bay Council on 10 May 2001, except where otherwise altered or amended by the conditions listed hereunder. Please read the conditions of this development consent carefully and make sure that you understand all the conditions that have been imposed. NB: Any minor modification to the approved plans shall require the lodgement, and assessment of an "Application to Modify Consent" pursuant to Section 96 of the Environmental Planning and Assessment Act, 1979, (as amended) . Major modifications to the approved plans shall require the lodgement, and consideration of a new Development Application. (CA1) 10 Conditions 3, 4, 5 and 7 pointed to the need to comply with the Building Code of Australia 1996 and to obtain a Construction Certificate. 11 Conditions 37, 38, 40 and 41 related to off-street parking and provided: 37. Off-Street Parking : Car parking spaces shall be provided in accordance with the approved plans for the parking of resident and visitor vehicles on the site. In this regard, no less than twenty-one (21) spaces are required and designated as follows:- a) One (1) space for units 3 to 11, and 15 to 17. b) Two (2) spaces for units 1, 2, 12 and 14. All car spaces shall be allocated and marked accordingly. If the development is to be strata subdivided, the car park layout must respect the above allocation and thereafter regarded as part of the entitlement of that unit. Each space shall be a minimum of 5.5 m x 2.5 m. Under no circumstances shall parking spaces be sold, let or otherwise disposed of for use other than in accordance with this condition. Visitor spaces shall only to be used by persons visiting residents of the property or persons with legitimate legal reason to be upon the land. Access to visitor parking shall not be restricted without development approval.(CP1) 38. Aisles, Ramps & Internal Circulation : The aisle widths, internal circulation, ramp widths and grades of the car park shall comply with the Roads and Traffic Authority Guidelines and AS 2890.1-1993. A Compliance Certificate for these works shall be submitted to Council or an Accredited Certifier prior to issue of a construction certificate. Prior to the issue of a construction certificate long sections of all ramps shall be submitted to Council or an Accredited Certifier, and the applicant is to specify in writing the types of vehicles the loading bay is designated to accommodate. (CP10)
….. 16 Plans annexed to the Development Consent show car parking on two floors; lower ground floor plan 1 shows car parking spaces on two levels with 14 spaces and a loading dock, together occupying the whole lower ground floor of the building and accessible from the rear lane, and lower ground floor plan 2 shows a further level with seven parking spaces accessible by a ramp down from the lower ground floor and occupying about two-thirds of the area under the building. 17 The development consent incorporated drawings of the proposed development, entitled "Proposed Development of Existing Premises 43 Major's Bay Road, Concord for R&L Ciofuli. Scale 1 to 100 April 2001." These are said to be to scale, but they are not highly detailed; they are dated April 2001 and the copies which formed part of the Development Consent do not state by whom they were drawn. The drawings do not show the dimensions of the car spaces, passageways and ramps which they show on Lower Ground Floor 1 and Lower Ground Floor 2. The ground floor plan shows two units on the Major's Bay Road frontage each designated as "café restaurant" and three designated as "retail space". The plans for the first and second floors show 11 professional suites. To obtain a Construction Certificate it would be necessary to produce architectural plans and specifications complying with the Building Code of Australia 1996 and with relevant Australian standards as well as with the Development Consent and Conditions. 18 Before development consent was given Mr Ciofuli on behalf of the vendor put architectural services for completion of the prospective project to tender and gave Mr Ken Powell, Architect, a commission as a result of the tender process; the commission was originally to commence once development approval was obtained but before that happened Mr Ciofuli received a letter from Council of 14 August 2001 relating to car parking and requested Mr Powell to review Council's letter and redesign the car park to comply with Council's comments. Mr Powell did not prepare the plans originally submitted to Council in the application for Development Consent. Mr Powell redesigned the internal layout of the car park and introduced single lane ramps between the two levels of car park; and the development approval when given was based on this redesign. 19 Construction of the car parking levels would require extensive excavation of rock and soil under the building, and works to underpin the existing building. A geotechnical investigation conducted for the purchasers in January 2002 by PPK Environment and Infrastructure established that, after passing through a sandy clay soil profile, much of the excavation would be of sandstone, which would be difficult and would require the use of hydraulic rock-breaking equipment, with vibration effects. Mr Kevin Brennan the principal of PPK reported to the purchasers in February 2002, with advice and recommendations to address the difficulties of excavation. Mr Brennan recommended construction of a continuous anchored pile wall before commencement of site excavation works. The wall was to be designed by an engineer. Mr Brennan's report showed that the engineering work would be elaborate and could only be carried out by specialised and experienced contractors. 20 Evidence of engineers described the construction of a pile wall in detail; greatly abbreviating what was required, it was necessary to drill from the surface to excavate the tubular space in which each pile was to be formed; then a pile would be formed in each tubular space with steel reinforcement and concrete so as eventually to form a continuous wall of piles, retaining the soil laterally and supporting the building. Drilling operations have to be conducted very close to the inner face of the existing wall of the building; this is necessary for support to be effectual and also to maximise the space including floor space to be available. The piles have to be formed within the title boundary, and the outer face of the existing wall is on the title boundary. To achieve a relatively regular surface and fill any gaps the spaces between the piles would be filled by trowelling grout into the spaces or by spraying the wall with Shotcrete. Complete precision in the location of the piles is not attainable because of the nature and difficulties of drilling operations; small variations in location, direction and angle of piles must be allowed for. 21 Submissions received by Council included several which showed concerns about the provision of parking and access to the car park. At p.149 the Minutes dealt with car parking in relation to cl.6 of Development Control Plan No. 3 - Major's Bay Road Shopping Centre. A Town Planning officer reported to the effect that according to cl.6 the existing use of the building required provision of 41 car spaces, the existing consent provided for four car spaces on site and there was a shortfall of 37 spaces. Application of cl.6 to the proposed development produced a requirement for 64 spaces, there was a credit for the previous shortfall of 37 spaces, the total number of car spaces required by cl.6 was 27, the proposal included 21 spaces resulting in a shortfall of 6 on-site parking spaces, and a s.94 contribution of $26,167 was to be levied to address the shortfall. The applicant proposed to dedicate the rear laneway to Council. After a review of local parking it was reported that provision of 21 car spaces on site was considered satisfactory. The report recommended a condition that "all ramps, aisle widths, etc comply with … " (AS2890.1) Considerations raised when addressing the Disability Discrimination Act 1992 included a requirement for "… The provision of disabled parking space[s] … ". The report went on to recommend the conditions which were adopted. 22 The first plaintiff Dean Lucantonio is a builder. The second plaintiff his wife did not give evidence, and played little part, if any, in the events. Mr Lucantonio also has experience as a property developer. He became aware that the property was for sale about the beginning of October 2001 when he saw an advertisement in a local newspaper called the Glebe and Inner Western Weekly. A series of advertisements was published in the weeks leading up to the auction. He produced in evidence a copy of the advertisement published on 17 October 2001. The advertisement includes photographs of the building and the surrounding Concord shopping centre. In a prominent way it says "DEVELOPMENT OPPORTUNITY" in block letters and also says "DA Approved for the conversion of the existing building to five shops, 12 professional suites and 21 basement car spaces." Mr Lucantonio also saw a sign displayed above the awning of the building which said, also prominently,
"DA Approved 5 x shops 12 x professional suites Basement parking for 21 cars" 23 Mr Lucantonio obtained a copy of the contract for sale from Richards First National Real Estate, one of two co-agents referred to in the advertisement. He also inspected the property. He was given an advertising flyer when he inspected the property; this contained similar statements about development opportunity to the newspaper advertisements. Before the auction he inspected the Canada Bay City Council's file about the Development Application, particularly about parking. He was aware of Condition 3 and of the contemplation that further plans would have to be prepared. He said in evidence to the effect that he did not see this as applying to the parking because he believed that the parking had been considered in detail and had been approved by Council; this belief appears to have been based, at least in part, on his looking at the Council's file. His impression or belief that provisions relating to parking had been fully considered in detail was not, in my finding, based in any particular representation made in the advertising material, or otherwise by anyone representing the vendor. 24 Mr Lucantonio saw Special Condition 31 relating to acknowledging that he relied entirely on his inspection of the property and his own inquiries. He said, when this Special Condition was pointed out to him in cross-examination, to the effect that it was true that he acknowledged to the vendor that he had not relied on any representation or promise of hers except in the terms of the contract, and that he was relying entirely on his own inspection and inquiries. However he said "That's true, but the problem wasn't about the property itself" and went on to speak in a way that implied that he regarded Special Condition 31 as applying only to the state of the property in its current form. In my view the terms of Special Condition 31 do not provide a basis for this qualification. 25 Before he purchased the property Mr Lucantonio intended that if successful at the auction he would develop the property in accordance with the Development Consent. It was his view that without the Development Consent the property was not worth the price he agreed to pay, and he said that without the Development Consent he would not have purchased the property. He was aware of the need for formal application to Council if there was to be any modification of approved plans and he said "My experience with Council is that obtaining such a modification to approved plans into an existing development consent is difficult and time consuming." 26 Mr Lucantonio consulted his solicitor Mr Stichter of Ashfield, and on Mr Lucantonio's instructions Mr Stichter negotiated with Mr Balomatis, solicitor of Abbotsford, who had prepared the contract and was acting in the interests of the vendor. In an exchange of fax messages on 2 November 2001, the day before the advertised auction, Mr Stichter made inquiries about or sought modifications of contract conditions on 12 subjects, and received back replies from Mr Balomatis, some of which were favourable. Mr Balomatis indicated that the vendor agreed to modify several contractual provisions including Special Conditions 35 and 40, and declined to modify others. The agreed modification to Special Condition 40 was the addition of the handwritten passage dealing with assignment of copyright. Mr Lucantonio bid for himself and his wife and was the successful bidder at the auction, and exchanged contracts on the auction day with the modifications which his solicitor had earlier obtained. At about the same time he paid the deposit of $220,000. 27 It was put on behalf of Mr Lucantonio that the time available for him to investigate whether he should buy the property and to make inquiries was rather short as he only heard about the property being advertised at the beginning of October, about a month before the auction. In view of his opportunities for inspection of the property and the Council files, and of the consideration which he and his solicitor were able to give to the terms of the contract, I find that he was not under any unusual time pressure. 28 Mr Lucantonio regarded the time available for settlement as too short to make it safe for him to rely on finance from National Australia Bank, as his experience had been that it took considerable time to obtain the Bank's approval for finance for a development application. Accordingly before the auction date he applied for a loan through mortgage brokers, and obtained an approval; this involved him in significant expenditure for fees. Later he obtained an approval for finance from National Australia Bank, which if he had proceeded with the purchase would have been at lower interest and generally on more favourable terms. So he incurred preliminary costs of obtaining finance from two different financiers. 29 At about the time of exchange of contracts the purchasers engaged Mr Jaime Kleinert, architect to carry out necessary work to obtain a construction certificate. Mr Kleinert gave advice, on 21 November, that there had been errors and that items had been omitted from the DA approved drawings which would make it impossible to attain the required number of car spaces. Mr Kleinert set out a number of concerns and expressed the view that layout changes required would result in another basement level of parking being required, with increased building costs, and a new development approval or s.96 Amendment. Mr Kleinert obtained the views of Mr Ross Nettle, a consultant in transportation and traffic planning, dated 13 December 2001; Mr Nettle said to the effect that the plans with the development approval did not truly depict the existing structural elements, with the consequence that there were significant non-compliances relating to the parking spaces and that it would not in reality be possible to achieve 21 parking spaces and satisfy Council's code and consent conditions. The effect of this advice was that it appeared to Mr Lucantonio that there would have to be a redesign, and that the Council would have to be asked to modify its consent so as to allow for an extra level of basement car parking, with further excavation, to obtain 21 spaces. This would involve additional construction costs. 30 The evidence of Mr Kevin Brennan, a Geo-technical Engineer, whose evidence was not contentious, showed the results of the geo-technical investigation commissioned by Mr Lucantonio, in which bore holes were bored on the site under the building on 18 January 2002 and a report was given in February 2002. The report shows that beneath concrete structure and fill the building is underlain by low to medium plasticity sandy clay of varying depth and high strength, then by sandstone of low to medium strength at a depth of 4.2 m in one borehole and 2.1 m in the other. At these depths car park excavation would eventually encounter sandstone. 31 Mr Lucantonio commenced these proceedings on 21 December 2001 by issuing the Summons, claiming specific performance but on the basis of the vendor accepting responsibility for the cost of redesign and extra excavation. 32 Mr Stichter on behalf of the purchasers sent a letter of demand (on a without prejudice basis, but this was later waived) demanding an extension of the settlement date and other modifications of contract arrangements, but also demanding that the vendor bear the cost of obtaining amended plans and the cost of additional building works, and meet many other claims. In an exchange of correspondence which continued for several weeks, the vendor's solicitor disputed these claims and continually called for settlement on 16 January 2002 which was the contracted date, declined to accept service of the Summons and said that notice to complete would be issued if the contracted settlement date was not met. The purchasers' solicitor did not join in arrangements to settle on that day, and served the summons on or shortly after 14 January. On 17 January the vendor's solicitor gave notice to complete for 6 February 2002. With the two financing arrangements the purchasers could, so far as payment of the price is concerned, have completed the purchase. Mr Lucantonio was willing to do so, but only on the basis that the vendor complied with his demand for compensation. Correspondence continued in which the vendor's solicitor called for completion on 6 February while the purchasers' solicitor disputed entitlement to give notice to complete, and other matters. Service of the Summons was accepted on 29 January. The vendor's solicitor made full arrangements and attended, with other parties involved, at the appointment for settlement for 6 February but the purchasers' solicitor did not attend, and when contacted by telephone confirmed that he would not attend. Then on 7 February 2002 the vendor's solicitor gave notice of termination, and soon afterwards he stated that his client intended to resell the property. Then the purchasers lodged a caveat. The vendor entered into the second contract on 10 April 2002 to sell the property also for $2,200,000 to the Ritz Constructions Pty Ltd, of which Mr Richard Ciofuli, the son of the vendor, is one of the principals. 33 The vendor issued a lapsing notice and the purchasers applied for extension of the caveat. The application in these proceedings for an order extending the caveat was heard by Justice Austin on 31 May and 4 June 2002, and for reasons published on 7 June 2002 his Honour refused to extend the caveat. It was Mr Lucantonio's evidence that during the hearing of the caveat application he realised that the property was out of the purchasers' reach; until then he had still been willing to purchase the property. From that time on the claim for specific performance, although it remains in the Summons, has not truly been the plaintiff's claim. The second sale was settled on 26 July 2002. 34 In November 2001 Mr Kleinert embarked on a redesign of the development. His redesign for car parking appears in his plans WD02 and WD03 in Exhibit D, and departed substantially from the plans with the development approval because they provided for car parking on an extra and lower half level under the western end of the building, which would involve considerably more excavation than earlier contemplated, at a large cost in the order of $500,000. His redesign is more fully shown in his plans DA01 to DA07 which form Exhibit E and include in DA07 sections of the elevations of the car park, and of the building generally. 35 Mr Kleinert set out the difficulties which he saw for achieving construction in accordance with development consent in his report of 21 February 2002, which was communicated to the vendor and her representatives in the course of maintaining what was then Mr Lucantonio's position that the contract should be completed but with compensation to him. The vendor obtained a report dated 23 May 2002 from Mr Ken Powell, architect, in which Mr Powell responded to Mr Kleinert's position and criticisms. 36 Mr Powell stated in his first report: The drawings submitted to Council and subsequently approved were not detailed or fully resolved drawings and could at best be described as Schematic Design drawings. This would be immediately evident to any professional involved in the building profession. As a consequence, a significant amount of time would be required during the next stage of the Approval, the Construction Certificate approval to resolve all the issues that would be expected in this type of project with this level of DA documentation. If Mr Ciofuli had not decided to sell the project, KPA would have completed this detail resolution with the assistance of a Structural Engineer and other Consultants. KPA had already been commissioned to undertake this work. But as a result of the sale, the detail resolution of the project would be undertaken by the purchaser, Mr Lucantonio and his team of consultants. 37 In my finding these observations about the nature of the drawings and what they would indicate to professional persons involved in the building industry are realistic and correct. Mr Lucantonio, taking a reasonable view, ought to have understood and in my finding did understand, when he entered into the contract, that much further design work was required before the construction certificate could be obtained and before building could commence, that further design problems could emerge and might have to be faced, and that it might be necessary to ask Council to modify the Development Consent or to make a further application for Development Consent. The terms of the Development Consent itself point out the possibility of modifications and further applications, and this was a statement of the obvious. In the eye of reality these possibilities must have been known to Mr Lucantonio or to any purchaser in his position, and any expectations which did not conform to them could not be grounded in reality. 38 A summary of the issues and difficulties raised by Mr Kleinert's first report is as follows: (a) An extra car space is required to comply with Condition 37. (b) The overall internal width of the building was less than that shown on the car park plans forming part of the development approval because · Existing external walls are 500 mm thick while the DA drawings show less; · Plans do not show any zone for piling inside the external wall that would be required to underpin the existing structure. (c) No disabled car parking space was provided. (d) The DA drawings did not show or allow for: · Kerbs on the car park ramps; · Transitions at the top and bottom of the ramps within the car park. · Columns between the car spaces. 39 The report which Mr Lucantonio obtained from Mr Nettle, who is a highly experienced consultant in transport and traffic planning, identified the following as difficulties with the plans for the car park in the development approval: (a) Columns intrude into the car parking bays (b) Parallel parking bays are only 2.1m wide, not 2.4m wide. (c) No kerbs are shown on the ramps. (d) Vehicles using the loading dock cannot turn around within the building. (e) the clear internal width of the building is less than that shown on the drawings. 40 It will be seen that some matters raised by Mr Nettle coincide with some raised by Mr Kleinert. 41 In Mr Powell's view the issues raised could not be dealt with on the drawings annexed to the Development Approval because of their being Schematic Design drawings, but required to be addressed by undertaking detailed resolution of planning of the car park. Mr Powell said: The clear internal width of the building is the most critical determinant in the planning of the car park and so therefore the total thickness of the existing external walls plus the zone required for underpinning the existing wall is critical. Underpinning is required because the building is not built on rock and the proposed design involves excavating below the footings of the existing building for the new car park levels. 42 Mr Powell produced in his first report his resolution of the detail design of the car park in his drawing No. 0213/A.01 REV. There were departures in the layout from the plans with the development approval, but except as specifically mentioned in this judgment, not in ways which could be expected to encounter any difficulty or any detailed consideration in obtaining the Council's further approval. As Mr Powell said, the changes were only minor. (Mr Powell changed the terminology: what the plans with the development consent call Lower Ground Floor Plan 1 Mr Powell calls Lower Ground Floor Level and what the development consent plans call Lower Ground Floor Plan 2 Mr Powell calls Basement Level). 43 Mr Powell reported that the thickness of the existing external walls was not shown correctly on the DA drawings, and the north and south walls, which are critical to the clear internal width of the car park, are 350 mm thick, and include brick piers at approximately 3.8 m centres which are 500 mm thick. That is to say Mr Powell disputed Mr Kleinert's statement that the walls were 500 mm thick, except as to the brick piers, and in my understanding Mr Kleinert in giving evidence accepted that Mr Powell was correct. In the conduct of the hearing Mr Powell's position was not challenged. 44 Mr Neil Bonser a Structural Engineer was commissioned on behalf of the vendor to provide a structural design for the underpinning; after inspection and investigation he made a report on 15 May 2002 describing an underpinning method. He said "The above shoring system should take up to 350 mm from the face of the existing brick wall. Allowance should be made for tolerance." The thickness of the external walls and of the shoring zone are the elements referred to as critical by Mr Powell. 45 The underpinning contemplated by Mr Bonser and relied on in Mr Powell's first report would consist of almost contiguous underpinning piles formed of steel reinforcement and concrete poured into tubular excavations 300 mm in diameter drilled down from points close to the inner face of the existing brickwork, after cutting back part of the concrete footing supporting the existing brickwork to a line continuing the face of the brickwork. In the working method contemplated by Mr Bonser, excavations would be drilled progressively, first next to the brick piers in each bay, and after forming underpinning piles there by drilling three more excavations and forming three more piles in each bay. For this method there needs to be a shoring zone inside and below the existing brick wall, occupied by the new wall created by the contiguous underpinning piles. Necessarily there is less distance between the north and south walls of the newly excavated car park than there was between the north and south walls of the building above, as the underpinning piles are 300 mm in diameter, and they cannot be constructed completely flush with the line of the existing wall as it is necessary to allow some space between the existing wall and the excavation for the pile to accommodate the drilling machinery. Then too, it is necessary to make a further allowance because of unavoidable variations in the exact position achieved in construction of underpinning piles; complete regularity is not attainable. There are to be no piers or piles under the brick piers 500 mm wide which form part of the existing wall, so the newly formed wall is to have gaps in it which are to be filled in by applying Shotcrete to mesh. There are piles on either side of each existing brick pier. It may be necessary to put a little corbell underneath each brick pier. The brick piers would not impinge on the floor space at any level. Gaps between the underpinning piers are also filled by grout or Shotcrete, so that the piles form an apparently complete concrete wall, with some irregularities. These practicalities led Mr Bonser to saying in his first report "The above shoring system should take up to 350 mm from the face of the existing brick wall. Allowance should be made for tolerance." 46 The width of the floor available between the north and south walls, after allowing for the shoring zone, is central to much of the debate to which evidence related. In drawing 0213/A.01 REV B the zone 350 mm wide occupied by underpinning piers and shotcrete is indicated for each level on which there is to be parking. If the zone actually required for the new construction is in fact greater than 350mm the space which in Mr Powell's drawing seems to be available on the lower ground floor, or entrance level of the car park at RL 12.00 is not actually available and the lengths of the 90 degree car parking spaces, the width of the passageway between the car parking spaces, the width of the parallel car parking spaces and the width of the interval between the car parking spaces and the wall required for a kerb cannot all be achieved, the car park cannot be constructed to design, and certification of conformity to development approval, on which lawfulness of occupation depends, is not obtainable. For this reason there was a considerable body of evidence about whether it is feasible to construct the underpinning within the 350mm zone allowed by Mr Powell's plan. 47 Another area of debate was whether, if it is feasible to construct the building in accordance with Mr Powell's plan 0213/A.01 REV B, the building so constructed would comply with the development approval, or with any modification which could be expected. 48 Without the assistance of evidence I would not have understood that construction of a wall of piers 300m in diameter within a zone 350 mm wide was a matter of difficulty, but the evidence requires review. 49 Mr Bonser illustrated his first report with a design sheet entitled "Underpinning detail" dated 15/5/02 which provides for an interval of 50 mm between the internal face of the existing brickwork and the underpinning pier, hence his statement that the shoring system should take up to 350 mm from the face of the existing brick walls and "allowance should be made for tolerance". Mr Simpson, an Engineer retained by the plaintiff, suggested that the additional tolerance required is 25 mm, and Mr Bonser in oral evidence accepted that this was a fair figure. The source of the need for this tolerance is the difficulty of driving the excavation for a pile at the precise centre required by the design; the contemplation is that the centre actually driven might be up to 25 mm more distant from the face of the existing brick wall than the design position. 50 There is also a requirement for tolerance arising from potential departure from verticality of the excavation for the pile; Mr Simpson estimated and Mr Bonser accepted that this tolerance was about 2 percent, or a little less than 2 degrees. Mr Bonser estimated, without completing an exhaustive design estimate, that the tolerance required by departure from verticality is 157 mm at the base of the excavation. I take it that the departure is of declining significance at higher points in the excavation. 51 Mr Bonser produced a second report dated 26 August 2003 in practically the same terms as the report he had earlier given to Mr Powell. 52 When Mr Bonser came to give evidence however he described in chief, by reference to another design sheet dated 17 September 2003 Exhibit 4, modification of the working method in which the underpinning pile is designed to be angled slightly, at say 2 degrees, rather than to be vertical as provided for in his earlier design sheet. An effect of allowing for an angle off the vertical is that the lower the point in the pile, the closer the pile approaches the property boundary which is the outer face of the existing brick wall, the more the pile occupies space directly under the existing brick wall; and the narrower the shoring zone required. The advantage gained increases with the depth of the pile; it is maximal at the basement level, which is at RL9.3, but slight at the lower ground floor level at RL12.00, which is very little lower than the highest point of the pile, and very little lower than the lowest point of the existing brick wall as shown on Mr Kleinert's Plan DA07 in Exhibit E. The advantages in terms of increased floor space would accrue significantly only at the basement level at RL9.3 where, as it happens, there is, in my reading of Mr Powell's Plan 0213/A.01 REV, relatively little need for extra space; there is some need as the passage way adjacent to parking space 21 is 5970 mm whereas according to the purchasers' critique 6000 mm is required. In my understanding the width of the shoring zone is not critical for the western section of the lower ground floor at RL10.735, and is more important for the lower ground floor at RL12.00. 53 In Mr Bonser's estimation the expression of the advantage at the basement floor was that the zone of 350 mm to be occupied by the piling was reduced by 157 mm, being the advantage produced by inclining the pile at 2 degrees, but the reduction should be adjusted plus or minus 90 mm for tolerance required by the process of drilling the pile at an inclined angle. That is to say, the 350 mm zone should be reduced by a maximum of 247 mm and a minimum of 67 mm. He allowed 375 mm for the zone to be occupied by the pile, that is to say, he added 25 mm as a tolerance above the 350 mm which he had earlier allowed; he reduced the 375 mm by a maximum of 247 mm and a minimum of 67 mm, with the result that the zone required at the floor level of the basement for the piling is in a range of 128 mm minimum to 308 mm maximum. He pointed out that there are also advantages from the 2 degree inclination at the intermediate level or RL10.735 and at the lower ground floor level or RL12.00, but did not quantify the advantages and I estimate that they are quite small. As the top of the underpinning pile, and the footing of the existing brick wall, is higher than the lower ground floor at RL12.00, the zone of 375 mm required for the underpinning at the top of the would be slightly reduced at RL12.00. In Mr Bonser's words "This is giving more car park space if you require it". I conclude that the advantage produced by a 2 degree incline for the underpinning piles if realised would end the apparent difficulty at the basement level at RL 9.3 created by there being only 5970 mm available between car park space 21 and the southern wall, but could have little effect on the difficulties whatever they are at the lower ground floor at RL12.00. 54 Mr Simpson made an allowance for Shotcrete finish 50 mm thick over the concrete piles, further widening the zone required for the piling and reducing the available floor space. Mr Bonser did not accept the necessity for Shotcrete finish over the piles, or elsewhere than in the spaces below the brick piers where there are no piles. If necessary grout would be placed with a trowel between the underpinning piles to prevent soil leaching through. According to Mr Bonser's evidence in some instances a Shotcrete finish is applied to piles, but that is only cosmetic, and it is not a structural necessity. As the present exercise relates to what is feasible rather than what is aesthetically pleasing, I accept that it is not necessary to allow 50 mm for concrete finish over the underpinning piles. Mr Bonser pointed out the possibility of shaving one pile that happened to be out of alignment, and said that about 40 to 50 mm could be shaved back, but it was necessary to maintain about 25 mm of concrete cover over the reinforcement. 55 In his calculations Mr Bonser appears to have included a tolerance of 25 mm, or a total of 375 mm when calculating the zone to be occupied by the underpinning piles at the top. He appears to have reached 375 mm by including a further 25 mm because the exercise involving designing the piles to be erected at an 2 degree inclination was introduced in answer to observations of Mr Simpson, who had made the allowance of 25 mm; Mr Bonser made the same allowance in pursuing what he said were the implications of inclining the piles. 25 mm is an allowance for error in centring the drilling hole. In his own calculations he had earlier allowed 350 mm in total. 56 In June 2002 Mr Lucantonio retained Mr Andrew Simpson to prepare a report in answer to Mr Bonser's report of 15 May 2002. Mr Andrew Simpson is a Consulting Engineer with impressive qualifications and long experience in engineering work of high responsibility. Significant matters observed on by Mr Simpson were to the effect that conventional piling rigs require a tolerance of about 550 mm from the centre line of the drill to the face of the obstructing wall. (This may be contrasted with Mr Bonser's allowances totalling 200 mm). Mr Simpson said "There are a few specialist piling contractors who have rigs that are able to install piers at a closer tolerance, Emanon Pty Ltd being one. A cost penalty may be incurred by using specialist contractors." 57 The 350 mm shoring zone allowed for by Mr Bonser did not allow for the tolerances allowed for by Australian Standard AS2159-1995-Piling-Design and Construction, clause 7.2.1, which are plus or minus 75 mm in plan position at the head and 4 percent deviation from the vertical. Mr Simpson said in his report "Contractors will not be willing to work under a specification calling for nil tolerance, as implied by the 350 mm shoring zone indicated by [Mr Bonser]. A reasonable tolerance to specify in the contract documentation, we believe, will be plus or minus 25 mm in plan, and 2 percent verticality." Mr Simpson also criticised the allowance of 350 mm on the ground that Mr Bonser had not dealt with finishing the exposed face of the pile wall, saying "The finish of a contiguous wall can be very rough following excavation, and may be visually unacceptable." Mr Simpson referred to the usual practice of applying a shotcrete finish, for which allowance should be made. Where Mr Bonser allowed 350 mm as the shoring zone Mr Simpson would allow 540 mm made up of Offset from existing wall to allow for footing 75 mm Size of piers 300 mm Allowance for grout tolerance 25 mm Allowance for verticality tolerance over 4.5 m, 90 mm Allowance for shotcrete finish 50 mm. 58 It is part of Mr Bonser's approach that it is necessary to retain a highly skilled contractor and to maintain close control to achieve the figures including the tolerance for which he has allowed. A significant difference between Mr Simpson's view about the space required and Mr Bonser's view is that Mr Bonser allowed a 50 mm offset between the face of the existing brick wall and the closest point of the underpinning pile, whereas Mr Simpson treated 75 mm as the corresponding allowance. The difference is explained by different views about the quality of the work and the availability of skilled contractors and equipment able to work to more exacting standards than the general run of contractors. As an illustration of the high standards required, Mr Bonser's design contemplates largely achieving a design objective in which the underpinning piles are at 2 degrees off the vertical, whereas the relevant Australian Standard allows piles which according to their design are to be vertical to be put in place at up to 4 percent off verticality meaning 3.6 degrees. Plainly a much higher standard of workmanship than is contemplated by the Australian Standard is contemplated by Mr Bonser. 59 The difference between the evidence of Mr Simpson and that of Mr Bonser is largely explained by Mr Bonser accepting in his design assumptions an extremely high standard of skill on the part of the contractor which implies maintenance of close control over the contractor in the course of the work. Involved in the selection of the contractor is that the contractor should have drilling equipment as well as personal skill at a higher standard than is usual for such contractors. Mr Bonser's appraisal also implies acceptance of a lower standard of finish. 60 In his oral evidence Mr Simpson pointed to the inexactitude of the process of drilling for piles - "It is not a particularly exact science" and the tendencies to inaccuracy and movement when working with augering machines. He pointed to the practical difficulties of achieving a design position "… but physically on site actually getting the guys on site to do that is quite hard to do." It was within the jurisdiction of engineers to specify tight tolerances for tight sites. When expressing his concern (t84, l.21) he said to the effect that theoretically something like what Mr Bonser contemplated could be done by the contractors. He had spoken to several contractors, including the principal of Emanon, who said to the effect that they could work within Mr Bonser's specification, but were not particularly happy about the plus or minus 25 mm tolerance and preferred to work to the Australian Standard. He concluded "Physically, I don't think what has been shown here from my understanding and speaking with the piling contractors, I don't believe that this system that is being used here can be done with sufficient accuracy that is required. It looks good on paper. Practically, whether it can be done is a different matter "(t.85). He also pointed to irregularities which must be experienced in the result as built. 61 Mr Simpson acknowledged that Emanon are highly skilled and have specialised equipment which allow them to work close to a wall and said (t88) "Mr Henser from Emanon didn't sound particularly confident about putting an inclined pile to within the specifications that I nominated to him." 62 Overall, my understanding of Mr Simpson's evidence is that construction as contemplated by Mr Bonser is achievable, but is only achievable by retaining a highly skilled contractor with specialised machinery, and maintaining an unusually high standard of work; further, the surface produced without shotcrete finish is not aesthetically pleasing. Notwithstanding his repeated expressions of doubt about the practicalities of achieving the contemplated outcome, Mr Simpson's evidence confirms, in a way, that its achievement is possible. Obviously working to these standards will involve unusual pains and trouble, and high expense, but I do not think that the purchasers are in a position to claim that it is not feasible to carry out the work because it would involve unusual pains and trouble and high expense. Their complaint is only good if the development simply cannot be carried out, not if it can be carried out but at unusual expense and difficulty. 63 My conclusion is that I should find, and I find that, as described by Mr Bonser, construction of the walls of the excavated area can be achieved within the 350 mm shoring zone shown on Mr Powell's drawing O213/A.01 REV of April 2002. 64 It follows that in my finding the internal dimensions shown on that drawing are achievable. 65 There was extended debate about two car parking spaces parallel to the northern wall on the lower ground floor at RL12.00. Condition 37 of the Development Approval included the requirement that each car space is to be 5.5 m x 2.5 m minimum. All other car parking spaces in Mr Powell's drawing are set at 90 degrees to a wall and conform with this requirement. In Mr Powell's first design Car Space 8 was 5,900 mm long (conforming) and 2,400 mm wide (not conforming with the requirement of 2,500 mm) while Car Space 9 (misdescribed as Car Space 8) was 6,200 mm long (conforming) and 2,400 mm wide (not conforming with the requirement for width of 2,500 mm.) In his redesign Car Space 8 was 5,400 mm long (not conforming with requirement for 5,500 mm), Car Space 9 was 6,200 mm long as before and both car spaces were 2,400 mm wide, not conforming as before. The total length of the two car spaces was 11,600 mm, ample length within which to provide for each to be 5.5 mm in length and conform literally with Condition 37. Mr Powell's position appears to have been influenced by the view that Council had in Condition 37 adopted 5.5 m by 2.5 m from a provision in Australian Standard AS2890.1 which is applicable to 90 degrees parking; whereas Mr Powell adopted sizes for parallel bays which accorded with provisions of Australian Standard AS2890.1 for parallel parking bays. Mr Powell could have allowed 5.5 m length for each of car spaces 8 and 9 and used less total length, but as he took the same view as Mr Hazell that the Council's requirement related to 90 degree parking spaces it would have been cynical of him to make a show of compliance when the reasonable alternative to compliance with Council's development consent condition was to move to compliance with the Australian Standard. The net effect is that both Mr Powell's designs do not comply literally with requirements of Condition 37, but are completely defensible in terms of the requirement of the Australian Standard for parallel parking. 66 Mr Hazell, a Traffic Engineer who gave evidence for the vendor, said in his report dated 22 May 2002 to the effect that spaces 8 and 9 were acceptable because they meet the minimum standard in Australian Standards, Parking Facilities Part 1: Off Street Car Parking AS2890.1 - 1993, which in Figure 2.11 at p21 requires, where there is a parallel parking space adjacent to a wall greater than 150 mm high, that the width of the car parking space be 2.1 m plus 300 mm clearance to the wall. In his oral evidence Mr Hazell repeated his interpretation that Condition 37 refers to 90 degree angle parking spaces; he made this interpretation because the length dimension of 5.5 m is insufficient for parallel parking spaces. When cross-examined Mr Hazell agreed that Council's requirement should be clarified by a modification of the consent (t116), not necessarily as a formal application for alteration of the condition. Mr Hazell did not come to grips with the fact that the condition of development approval requires a width of 2.5 m, not 2.4 m; this is true whatever the Australian Standard provides. However the requirement of the Australian Standard should have a large influence on any application to Council for a modification of the condition relating to the size of car parking spaces, particularly as all the 90 degree angle car parking spaces meet Condition 37 and the modification would relate only to the width of two parallel spaces. 67 The same Figure 2.11 may have led Mr Powell to design (in his Revision B) for car space 8 to be 5,400 mm long and car space 9 to be 6,200 mm long. The table in Figure 2.11 shows the minimum space length for a space with unobstructed ends, such as car space 8, as 5.4 m for all the adjacent aisle widths specified, from 3 m to 3.6 m. The table shows a length of 6.2 m for a space with an obstructed end, such as car space 9 adjacent to a one-way aisle 3.6 m wide. 68 Another criticism of the car parking spaces of some importance related to the width of the access way on the lower ground floor at RL12.00 which as designed by Mr Powell is 5865 mm wide. Although there was much debate about this, it is clear to me that Australian Standard requires this access way to be 6000 mm wide, and there is a deficiency of 135 mm. I do not regard this deficiency as likely to lead to any actual difficulty in an application to Council for modification of the development approval. An aisle with parallel car parking on one side only may be 3000 mm wide, and no real difficulty for manoeuvring would be created by an aisle 5865 mm in width. 69 There is a difficulty in understanding references to aisle width in the Australian Standard. Reading the diagram and the table of figures in Figure 2.11 together it seems that the reference to the aisle width (one-way) is, where the aisle is two-way, a reference to the width to the centre line of the two-way aisle. The words used are unclear, but they are assisted by the diagram. In Mr Powell's design the width of the aisle is 5.865 m and the width to the centre line is 2.9325 m; so that for car space 9 the space length of 6.2 m is only appropriate if it is assumed that the whole of the aisle width of 5,865 metres is available for turning movements associated with use of space 9. Of course as a practical matter the whole 5.865 m is available, as there is no reason why there would be any obstruction along the centre line of the aisle. In relation to a car park containing only 21 spaces there is in reality no need to fear practical problems arising from conflicting movements of vehicles arising from use of the parallel parking spaces; there would be ample space for passage to and fro along the aisle and for parking manoeuvres, as drivers would accommodate each other's movements in ordinary reasonable ways. Manoeuvres in which an aisle of whatever width is momentarily blocked as vehicles enter or leave car parking spaces are commonplace, and the likelihood of such manoeuvres is not a large factor in deciding what width of aisle is acceptable. The supposition that there might be difficulty in obtaining a modification of the development approval relating to the length and width of car spaces 8 and 9 and the adjacent aisle would depend on the assumption that the Council would not take a reasonable approach to any application for modification. There is no evidence of the approach which Council has in the past taken or is likely to take to such an application for modification, and in the absence of evidence, I assume that Council would exercise its powers in a reasonable way, and that a modification so as to approve Mr Powell's design for car spaces 8 and 9 would not face any real difficulty. 70 If it were necessary that car space 9 be 6.6 m in length, the reading for which the plaintiff's counsel contended, Mr Powell explained, in what I regard as an adequate way, further redesign proposals which would enable an additional 400 mm to be achieved. 71 Mr Kleinert's criticisms of the plans with the development approval included "(c) No disabled car parking space is provided." Mr Powell responded first by pointing out that conditions of the Development Consent do not expressly require a disabled car space, but later and more relevantly Mr Powell produced a further design to deal with the requirement in Part D3.5 of the Building Code of Australia for one disabled persons' car space in Drawing 0213/A.01 REV B dated 18 September 2003. In this redesign the arrangement of car parking spaces at the basement level was altered, in a manner involving altering the design position of a supporting column, so as to place a car park for disabled persons adjacent to an exit passage way leading to the exit stairs. 72 Although Mr Powell was challenged on this redesign and cross-examined at some length, I am satisfied with his explanations which show that as redesigned, the car park space conforms with the requirements of the Building Code of Australia both as to available width, inclusion of the exit passage way in the calculations, and available head room; as well as in other respects including access to the lift. The operation of the requirement for clearance of 2.5 m at the disabled car parking space referred to by Australian Standard at cl.5.3.2 p4 was fully and correctly explained by Mr Powell (t96 and 97) and I am satisfied that his redesign Revision B does not fail to conform with cl.5.3.2. The disabled car space uses a 500 mm overlap into the adjacent walk way; AS2890.1 expressly contemplates this. The position of the columns has implications for design of the concrete slab which have not yet been fully addressed. Notwithstanding that Mr Powell was cross-examined in an attempt to show that there may be some difficulties, I am satisfied that there is no substantial reason why a satisfactory design should not be expected to emerge with the application of engineering and architectural expertise. The redesign was simply and rapidly carried out by Mr Powell when the full problem including the requirements of the Building Code of Australia was presented to him, and I am satisfied that the need to provide a disabled persons car space was not at any stage a large difficulty. 73 Mr Powell also answered, to my mind in an altogether satisfactory way, criticisms offered to the effect that the development application drawings did not show or allow for kerbs on the car park ramps, transitions at the top and bottom of the ramps within the car park and columns between the car spaces. I accept Mr Powell's explanation at (t98) about the achievability of 2.2 m of headroom above the ramp. Mr Powell's designs in Drawing 0213/A.01 REV and in REV B show that these were not large difficulties and could readily be solved by carrying designs to detail as Mr Powell did. 74 In the circumstances there are very strong reasons to expect that Council would accept any necessary modification of the dimensions of the two parallel parking spaces and of aisle width. As the car parking spaces conform with the Australian Standard it hard to suppose that there would be any real difficulty about obtaining a modification, or that it would not be possible to do so. As Mr Powell put it, design, development and Council approval are an evolving process - see (t103). Literally applying Condition 37 to the parallel spaces would produce an unsatisfactory result. In my view a reasonable approach by Council to what, viewed overall, are minor modifications is altogether likely and should be expected. There is no evidence dealing in a direct way with the likelihood of Council approving any necessary modifications. Mr Lucantonio's evidence was that it was his experience that obtaining such a modification was difficult and time consuming. He did not contend that it was not possible. If in truth it was not possible to get Council to agree to necessary modifications relating to the layout and size of parking spaces that would have been a significant fact for my consideration. I see any necessary modifications as minor matters, which no doubt Council would be called upon to consider, but over which no great difficulty, and no unreasonable response, should be expected. It is not remarkable, and it is only to be expected as a matter of course, that some need for minor modifications would arise when planning proceeds from the stage of applying for and obtaining development consent to the detailed planning required to produce plans on which a building could be constructed, and to obtaining a construction certificate. The likelihood that there would be some modifications, and that that would involve, to a greater or less degree, difficulty and use of time, ought to have been obvious to any purchaser. 75 In my opinion the purchasers' contention that it would not be possible to carry out development in accordance with the conditions of the Development Approval does not raise any question about the title to the property. The land was not sold on terms which made the development approval or its effectiveness part of the thing sold. No warranty about it was given and the references to it in the contract are made in provisions which shield the vendor from responsibility. The lack of relation between the purchasers' contentions and any question of title is even greater than in Carpenter v. McGrath (1996) 40 NSWLR 39, in which the Court of Appeal held to the effect that potentiality of a demolition order under Local Government legislation, where a building had been built without Building Approval, did not constitute a defect in title. 76 I conclude that the position taken by the vendor, including the issue of Notice to Complete and the Notice of Termination, was justified by the terms of the contractual relationship between the parties, including the terms of Special Condition 31 and Special Condition 40. The vendor was not in breach of any term of the contract. The Notice of Termination was fully effective. 77 The purchasers' breach of contract and failure to complete on the contractually agreed date 16 January 2002 and to comply with Notice to Complete for 6 February 2002 imposed loss on the vendor, even though she resold the property for the same price. The property was important to the vendor as her only significant source of income. The property was built as a cinema, and is said to have been built in 1921, and was used as a cinema until about 1960. It was then used for storage until about 1978. By 1978 it owned by the vendor and was leased to Jewel Food Stores and used as a retail food store until about the end of 1996. From about March 1997 to June 2001 the vendor leased the property to her son Richard Ciofuli who conducted a supermarket there; however the emergence of competition from a Coles Supermarket directly opposite led Richard Ciofuli to cease trading, and from about July 2001 onwards the vendor did not receive any income from the property. However she continued to incur outgoings such as land tax, Council rates and water charges; and obligations to Citibank Limited were charged on the property, as it was used as collateral security for loans made to Richard Ciofuli and persons associated with him, while he was in occupation, for refurbishments of the property. 78 The principal element in the vendor's loss can be expressed as the interest cost on the balance of purchase money, which she should have received on 16 January 2002 but did not in fact receive until 26 July 2002; she would also, had the contract been settled on the contracted date, have received the benefit of the deposit about 16 January. The forfeited deposit is an element in the calculation of the vendor's damages; see Carpenter v. McGrath (1996) 40 NSWLR 39 at 45 (Clarke JA), 73-76 (Cole JA). Adopting the contract interest rate of 8 percent, her counsel contended that the interest lost was $92,099, and that there were further losses in respect of continued outgoings for land tax, Municipal rates and water charges, and continued exposure to interest on the Citibank debt. She also incurred the burden of the litigation, including the costs of the application relating to the extension of the caveat. These losses in total do not amount to $220,000 the amount of the forfeited deposit, but were said to illustrate purposes served by the familiar contract machinery of a 10% deposit and provision for its forfeiture. If the deposit is forfeited, her net position will be that she has not suffered any loss or damages; on the other hand, if the purchasers are relieved against forfeiture of the deposit, it will be necessary for the court to address whether some terms should be imposed on relief which will recognise the entitlement of the vendor to damages for the purchasers' breach of contract. 79 Mr Lucantonio produced a schedule of expenses - now Exhibit F, which he has incurred in relation to the project. Leaving to one side the amount of deposit itself and a brokerage fee of $18,264.00 which he has not paid, and which there is no reason to think he is liable to pay, these expenses actual and prospective amount to $144,858.84. They are of many different kinds, and include costs in relation of this litigation, expenses incurred in relation to obtaining the two different finance approvals, and many expenses relating to fees and reports of consultants and practical tests related to the project and its perceived difficulties. 80 Upon the facts I have found and my observations earlier in this judgment it will be seen that the purchasers have not established that the vendors are in any way in breach of any contractual obligation, nor has it been shown that the purchasers are entitled to any equitable relief, or relief under the Fair Trading Act. The advertisements are literally true, but the fact that they refer to the development approval in the context of offering the property for sale carries some implication that the development is feasible. I have found that it is feasible. There was no engagement in misleading or deceptive conduct, and in any event the purchasers acted on Mr Lucantonio's own inquiries and judgment, and not on the slight indications relating to the feasibility of development conveyed by references to the development approval in advertising material. Causation of the purchasers' not completing the contract is diffuse and the advertisements were a very small influence on the outcome, the dominating influence being Mr Lucantonio's interpretation of the situation, on the basis of information of which the advertisements were only a small part. The acknowledgement in Special Condition 31 about reliance upon the purchasers' own inquiries, and the further acknowledgement in Special Condition 40 disentitling the purchasers from relying on anything relating to the development approval represent the actual position in fact; the purchasers relied on Mr Lucantonio's inquiries and judgement, and not on any representation by or belief created by the vendor. 81 The purchasers claimed an order under s.55(2A) of the Conveyancing Act 1919 relieving them against forfeiture of the deposit. Applications under s.55(2A) come before the Equity Division frequently and counsel referred me to a number of decisions at first instance, not all of which need be cited in these reasons. As first enacted s.55 of the Conveyancing Act 1919 gave a purchaser an entitlement to recover his deposit and other relief where specific performance would not be enforced by reason of a defect in title which the contract did not disclose. Subsection (2A), added by amendment by Conveyancing (Amendment) Act No. 44 of 1930, greatly expands the grounds on which a purchaser may recover his deposit. It is no longer necessary that there be a defect in the vendor's title, and it is not necessary that the purchaser have any legal or equitable entitlement to recover the deposit. Subsection (2A) confers on the Court, using the words "the Court may, if it thinks fit," a wide but not unlimited discretion to order repayment of a deposit. There must be some substantial ground or good reason, relevant to the parties' contractual relationship, for the Court to think fit to order repayment. 82 "The language of the subsection, though brief in the extreme, is appropriate to confer a wide discretion in the court to order a refund of the deposit. It is clearly available in cases in which the vendor's contractual right to forfeit the deposit is otherwise completely unassailable" - AA Jones & Son Pty Ltd v. Weeden [1964-5] NSWR 1780 Hardie J at 1789. In Lucas & Tait (Investments) Pty Ltd v. Victoria Securities Ltd [1973] 2 NSWLR 268 L.W. Street CJ in Eq reviewed decisions in New South Wales dealing with subs.(2A), and at 272-273 made observations about the basis on which the Court is to act which have had great influence on later decisions. His Honour said: The jurisdiction under s.55(2A) does not give to a Court an overall discretionary supervision of monetary adjustments between parties to a contract under which a deposit was paid but which has been terminated. A vendor who forfeits a deposit in strict enforcement of his legal rights is not to be deprived of it under s.55(2A) unless it is unjust and inequitable to permit him to retain it. If the Court would not, in its discretion, specifically enforce the contract against the purchasers, then it may follow that it would be unjust and inequitable to allow the vendor to retain the deposit. In appropriate cases he should be left to prove the damages payable to him by the defaulting purchasers in accordance with the established rules governing the measure of damages, rather than simply pocketing the deposit, which might in some cases exceed the damages which would properly be recoverable by him at law. 83 In Universal Corporation v. Five Ways Properties [1979] 1 All ER 552 at 555 Buckley LJ said, of Law of Property Act 1925 s.49(2): … it confers on the judge a discretion, which is unqualified by any language of the subsection, to order or refuse payment of the deposit, a discretion which must, of course, be exercised judicially and with regard to all relevant considerations, including the very important consideration of the terms of the contract into which the partis have chosen to enter. 84 The relevant considerations and the principles on which the power in subs.(2A) is to be exercised have not been defined or delimited by any appellate decision. This is shown by the review made by Handley JA in Butcher v. Lachlan Elder Realty [2002] NSWCA 237 at [70] to [84]. In my opinion it is only possible to use general expressions such as Buckley LJ used in Universal Corporation. 85 The words "unjust and inequitable" have come to be used in judicial references to the power under subs.(2A). In Romanos v. Pentagold Investments Pty Ltd [2003] HCA 58 the principal judgment at para [27] dealt very shortly with the aspect of the appeal involving s.55(2A) by saying: Involved in allowing the cross-appeal is the conclusion that Windeyer J erred in the exercise of his discretion under s.55(2A) of the Conveyancing Act in ordering the return of the deposit where evidence was insufficient to show that it would be unjust or inequitable to allow the vendors to retain the total sum of $50,000 paid as deposits under the contracts for sale. 86 In my view their Honours did not, by the words "unjust or inequitable" attempt an exposition of the test or embark on a restatement different to what is found in subs.(2A) - "if it thinks fit" - but the passage illustrates clearly that there must be some substantial ground upon which a decision for relief is based. References to the unjust and inequitable, and like formulations, can not rightly be understood as prescribing or defining a test for relief, or as substituting a formulation for the words in subs.(2A); the formulations are convenient allusions to what subs.(2A) says. 87 Unconscionable conduct or unfair behaviour by the vendor could be a ground on which the Court might grant relief, but it is not necessary to impeach the conduct of the vendor in any way. In Delgado v. Walker Developments Pty Ltd (Bryson J 18 July 1989 unreported) I was prepared to give relief where the vendor had resold at a large profit. There is no element of misconduct of the vendor in that ground. The Court may act on the basis of hardship; see Pratt v. Hawkins (1991) 32 NSWLR 319 at 323 - 325 (Young J). Deposits of a reasonable amount, not conventionally over 10 percent of the purchase price, have an important function in the relationship of vendor and purchaser which extends beyond protection of the vendor against potential damages, and provisions for forfeiture of deposits are not avoided in Equity as penalties. See Wilson v. Kingsgate Mining Industry Pty Ltd [1973] 2 NSWLR 713 at 735 (Wootten J) and consideration of this passage in Terry v. Permanent Trustee Australia Ltd (1995) 6 BPR [14,091] at 14,106-14,107 (Santow J). 88 If relief against forfeiture of the deposit is granted, the possibility that the vendor may claim damages may be opened up, and this possibility may fall for consideration in exercising the discretionary power in s.55(2A). It may be appropriate for the court to assess the vendor's damages and to impose terms on relief against forfeiture requiring the purchaser to allow for the damages, or a payment on account of them out of the deposit; section 21 of the Supreme Court Act 1970 appears to allow for such terms. The power may extend to ordering return of part of the deposit as in Clarke v. Dilberovic (1982) NSW Conv R 55-083 (Rath J) although the better view is that repayment should be ordered on terms requiring an off-setting allowance for damages or money on account of damages: see Bernard & Anor v. Weingarth & Anor (1997) 8 BPR [15,651] McLelland CJ in Eq. at 15656. 89 In my view the facts and circumstances which have the most bearing on whether I should order refund of the deposit are these. The way in which the development approval was spoken of in advertising and otherwise before contract conveys some implication that the development approval was in some way useful, but only in the most general way, and the purchasers made inquiries, Mr Lucantonio inspected the Council file, the purchasers relied on Mr Lucantonio's own judgment, and confirmed that they did so by contractual terms. The purchasers did not complete at the contractual time or at the time made of the essence because, although they wished to complete, they wished to do so on terms which made an allowance to them in consideration of difficulties or the impossibility of carrying out development in accordance with the development approval. They were not entitled to any allowance. Mr Lucantonio had the advice of professional experts which supported the view that the development could not be carried out. On a full examination, including a large body of expert evidence from both sides, the Court has found that the development could be carried out, with difficulties and with needs to obtain further approvals from Council which are not insurmountable, and are not out of the order of difficulties commonly encountered in development projects, although they will involve time, care and expense. The contractual conditions put the relevant risk on the purchasers. For some months the purchasers restricted the vendor's freedom to deal with the property, by a caveat and litigation, although the vendor actually had a contractual entitlement to resell the property. This imposed trouble and expense on the vendor. The vendor was not in breach of anything, did not give any warranty and did not make any misleading or deceptive representation. This course of events exposed the vendor to delay, postponement of receipt of the price and costs arising from delay, at a time when she did not have income. Both sides have incurred significant losses as a result of the contract. The purchasers incurred expense about the purchase which has brought no result. They have no equity to relief. The terms of the contract were subject to negotiation before the auction and were modified, and the purchasers bought the property on the negotiated terms. There was a public auction and the property was exposed to others who may have wished to buy it on these terms but did not, presumably because they were outbid. The deposit was of an ordinary and reasonable amount. The parties were dealing with each other in the commercial context where the affairs of both were in the hands of men of relevant business experience. 90 In my opinion the appropriate outcome is that the parties' contractual arrangement for the deposit should continue in effect. I do not think fit to order refund of the deposit. 91 For these reasons I give judgment for the defendants with costs.
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Judgment for the defendant; the Court refused to order repayment of the purchasers' deposit under s.55(2A) of the Conveyancing Act 1919 and awarded costs to the defendant ([90]–[91]).