THE APPROPRIATE SPECIFIC PERFORMANCE ORDER
50After the appeal hearing, the parties lodged, at the Court's direction, written submissions concerning the form of order that would be appropriate if the Court reached conclusions to the effect of those that appear in [33] - [49] above. Having considered those submissions, my view is that to give effect to the requirement of Clause 1(g) of the Heads of Agreement that the parties execute a formal agreement, the Court should order by way of specific performance of the Heads of Agreement that the parties execute a document in the form set out in Attachment A to this judgment (the "Formal Contract"). This order would substantially reflect the order sought by the Ellis Interests in their post-hearing submissions. The following observations should be made about the Formal Contract and the parties' submissions.
51I reject the James Interests' submission that the orders sought by the Ellis Interests in their post-hearing submissions, and which I consider should in large measure be made, are materially different from those that they sought at first instance and that the James Interests have been prejudiced by the loss of an opportunity to put arguments against, and raise discretionary defences to, the claim for such orders. In my view the orders now sought, and which I propose that the Court should make, are narrower than those made by the trial judge. They fall within the ambit of, but do not go as far as, the orders sought by the Ellis Interests at first instance and made by the primary judge. In these circumstances I do not consider that the James Interests have been unfairly prejudiced.
52I reject also the James Interests' submission that this Court should not vary the orders for specific performance made at first instance in the manner for which the Ellis Interests contended in their post-hearing submissions as the James Interests should be given the opportunity to contend that such varied orders would impose undue hardship upon them. As I have indicated, I consider that the orders now proposed fall within the ambit of those sought at first instance. As no hardship defence was raised at first instance and such a defence would require consideration of factual issues that have not been addressed, it should not in my view be permitted to be raised on appeal. This is not to say however that hardship to the James' Interests may not be relevant if questions of enforcement of this Court's orders arise (see Meagher, Gummow and Lehane's Equity Doctrines and Remedies, 4th ed (2002) LexisNexis Butterworths [20 - 270]; I Spry, The Principles of Equitable Remedies, 8th ed (2009) Lawbook Co., pp 372 - 3; P Young, C Croft & M Smith, On Equity (2009) Lawbook Co., [16.1460]).
53I also reject the James Interests' submission that the Ellis Interests' claim for specific performance is not based upon any breach of the Heads of Agreement by the James Interests. The primary judge clearly found that the James Interests breached the Heads of Agreement by ceasing to instruct their solicitors to negotiate the form of formal agreement to be executed by the parties (Judgment [163]).
54Specific comments on the provisions of the Formal Contract set out in Annexure A to this judgment are as follows (using the clause numbers of that document):
(1) Contrary to the James Interests' submissions, there is no doubt that the reference in the Heads of Agreement to units to be transferred was to units in the Sydney Superyacht Marina Unit Trust.
(5) It is clearly implicit in the Heads of Agreement that the James Interests' obligation to pay 21.6 per cent plus GST of the Gross Marina berth income would only continue so long as that income was derived by SSM or SSM T'ee. The first part of Clause 5 in Attachment A reflects this. The Ellis Interests accepted that this limitation was appropriate.
Clause (5) does not state whether the James Interests' obligation would cease when the James Interests no longer owned a controlling interest in SSM and SSM T'ee. As this point was not the subject of argument on appeal, it should be left for determination if and when that circumstance occurs. This point should remain unresolved by the Formal Contract simply repeating the words of the Heads of Agreement.
The Ellis Interests' submissions did not suggest that the Formal Contract should contain a provision reflecting the last sentence of Clause 1(g) of the Heads of Agreement. Such a provision would be for the sole benefit of the Ellis Interests as it would entitle them to receive amounts representing 21.6 per cent of estimates of the Gross Marina berth income prior to the income being derived. Their right to require the inclusion of such a provision can therefore be waived (Maynard v Goode [1926] HCA 4; 37 CLR 529) and I regard their non-inclusion of such a provision in their draft Formal Contract as effecting this waiver.
It is appropriate, as provided for in Clause (11)(iii) of the Formal Contract that the expression Gross Marina berth income be defined in a manner that conforms with the meaning attributed to it by the primary judge in a finding not successfully challenged on appeal.
In their submissions, the Ellis Interests expressly waived their right to have 21.6 per cent of the surface area of the Marina berths transferred to them, as provided for in Clause 1(c) of the Heads of Agreement in the event, as in my view should occur, that the Court finds that no formal agreement was reached between the parties' solicitors for the purposes of clause 1(g). As Clause 1(c) operated for the sole benefit of the Ellis Interests, they are entitled to waive its performance. It is therefore appropriately excluded from the draft Formal Contract.
(7) - (10) It is appropriate that the terms of these clauses reflect the corresponding clauses in the Heads of Agreement. Any doubts concerning their operation may require resolution in further proceedings, if disputes arise.