(b) that, in order that a party be held disentitled to exercise a right of rescission, it must appear that it was his default which brought about, or at least materially contributed to, the occurrence of the relevant event.
57 Support for the latter of these two propositions may be found in the Judgment of this Court in Nina's Bar Bistro Pty. Ltd. (formerly Mytcoona Pty. Ltd.) v. MBE Corporation (Sydney) Pty. Ltd. [1984] 3 NSWLR 613 - a case involving a claim by a party, which was held to have failed to comply with a covenant to use its best endeavours to obtain the consent of a lessor to the assignment to it of a lease - in which it was held that, if non-compliance with a contractual obligation is to take away the defaulting party's right to terminate, there must be a direct causal relationship between the compliance and the failure to complete, the onus of proving which lies on the non-defaulting party, and there must be an absence of repudiation by the defaulting party prior to that time.
58 However, in the light of the admission by Pattern of the term pleaded in para. 5.4 of the Statement of Claim, it does not appear to be open to me to give effect to the views which I have set out above.
59 This notwithstanding, it remained incumbent upon Mr. Mitchell to establish that Pattern had in fact failed to comply with the obligation cast on it by additional condition 2.2 of the contract. The question thus is, whether it can properly be said that Pattern had failed to use all reasonable endeavours to procure the registration of a strata plan substantially in accordance with the draft strata plan, a question which is not concluded by the mere fact that no such plan was approved by the Council or registered by the Registrar General.
60 It is clear that, notwithstanding that, when it gave its original consent to the development application, Council required the deletion of the room in the roof void and the balcony, Pattern moved expeditiously to seek to have condition 5 deleted from that Development Consent. It is equally clear that, as the result of that action, Council, after the contract between Mr. Mitchell and Pattern had been entered into, acceded to modify the original condition 5. It is also clear that, albeit somewhat belatedly, Pattern then sought to have Council modify the substituted condition 5 with a view to increasing the size of the proposed balcony area, that further application not having been dealt with at the time when the Notice of Termination was forwarded to Mr. Mitchell's solicitors. It is equally clear, as Windeyer J found (para. 28 of his Judgment - see para. 45 (above)) that the consent would never have been further modified even if Pattern had acted more expeditiously with its application. This being so, it seems to me that Windeyer J did not fall into error when he held (para. 35 of his Judgment - see para. 46 (above)) that Pattern did make reasonable efforts to gain approval for its plan.
61 As Mr. Parker, on the hearing of the appeal, observed (T. 3), grounds of appeal 3 and 4 "really go together". That that is so is readily demonstrated by a reference to the speech of Viscount Radcliffe, when delivering the advice of the Judicial Committee in Selkirk v. Romar Investments Limited [1963] 1 WLR 1415, 1422-1424 a case which - in common with the decisions of the High Court in Godfrey Constructions Pty. Limited v. Kanangra Park Pty. Limited (1972) 128 CLR 529 and Pierce Bell Sales Pty. Limited v. Fraser (1972-1973) 130 CLR 575 to which Mr. Parker also made reference in the course of his submissions - involved a purported rescission by a vendor of land in reliance upon a condition in the contract allowing the vendor to give notice of intention to rescind if "unable or unwilling to satisfy or comply with" a requisition. In the passage to which I have referred, his Lordship said:
"Now, on what can the appellant rest his claim to set aside the respondent's notice of rescission? It is plain enough that, so far as the terms of the contract go, the respondent is within its rights. Clause 3(3) is as much part of the various undertakings and stipulations that make up the total nexus of the parties' agreement as any other of its clauses, and it is in fact a stipulation that was included in the draft put forward by a purchaser. If a vendor, having stipulated for or been conceded such a right, is to be precluded from asserting it in any particular context, it must be by virtue of some equitable principle which enures for the protection of the purchaser; and it is not in dispute that courts of equity have on numerous occasions intervened to restrain or control the exercise of such a right of rescission in contracts for the sale of land, despite what, on the face of the contract, its terms seem to secure for the vendor.
It does not appear to their Lordships, any more than it did to the judge who tried the action, that there is any room for uncertainty as to the nature of the equitable principle that is invoked in these cases. It has frequently been analysed, and frequently applied, by Chancery judges and, although the epithets that describe the vendor's offending action have shown some variety of expression, they are all related to the same underlying idea, and their variety is only due to the fact that, as each case is decided according to the whole context of its circumstances and the course of conduct of the vendor, one may illustrate more vividly than another some particular aspect of that idea. Thus, it has been said that a vendor, in seeking to rescind, must not act arbitrarily, or capriciously, or unreasonably. Much less can he act in bad faith. He may not use the power of rescission to get out of a sale 'brevi manu' since by doing so he makes a nullity of the whole elaborate and protracted transaction. Above all, perhaps, he must not be guilty of 'recklessness' in entering into his contract, a term frequently resorted to in discussions of the legal principle and which their Lordships understand connote an unacceptable indifference to the situation of a purchaser who is allowed to enter into a contract with the expectation of obtaining a title which the vendor has no reasonable anticipation of being able to deliver. A vendor who has so acted is not allowed to call off the whole transaction by resorting to the contractual right of rescission: see In re Jackson and Haden's Contracts ([1906] 1 Ch 412) Baines v. Tweddle ([1959] Ch 679).
………
Authorities or propositions of law which bear upon such situations have therefore no immediate relevance to what is now an issue, which is simply the question whether the respondent is to be held guilty of 'recklessness', in the legal sense, in not warning the appellant before the contract was signed that there were certain evidential gaps in the proof of its title that it was unlikely to be able to fill up.
Their Lordships are satisfied that recklessness is not to be attributed to the respondent for this omission. While there have indeed been instances in which a vendor has been deprived of the right of rescission for entering into his contract in circumstances in which he had no reasonable assurance that he could convey the whole title for which he was contracting, his disqualification arises out of his carelessness or lack of prudence in the particular circumstances and not out of a mere failure to disclose the defect in title, much less the defect in the evidence of title, which rendered the title that he had to offer less than complete. Had the law been otherwise, the decision in Duddell v. Simpson (1886) 2 Ch App 102) and In re Deighton and Harris' Contract ([1898] 1 Ch 458) could never have gone as they did, in favour of the vendor."
62 Even if - which, in the circumstances, I am prepared to do - one accepts that the principle described by Viscount Radcliffe is applicable to a case such as this, I am unable to accept Mr. Parker's submissions that, in entering into the contract with Mr. Mitchell, Pattern was guilty of "recklessness" and that, by reason of that fact, it was not entitled to rely upon the provisions contained in Additional Condition 2.4 of the contract. Although, at the time when the contract between Mr. Mitchell and Pattern was entered into, the Council, when granting consent to Pattern's Development Application, had imposed the original condition 5, the letter of 11 June 1999 requesting a review of (inter alia) that condition (see para. 12 (above)) would indicate that Council officers, when considering the merits of the original Development Application, had expressed a favourable view of it. Further, the application for review had by the time the contract was entered into been made and remained unresolved. Further still, as appears from what I have earlier recorded (paras. 16-17 (above)), the application for review did lead to a variation to condition 5.
63 In seeking to support the submission that, in giving the Notice of Termination, Pattern had acted unreasonably and in bad faith, Mr. Parker sought to rely upon the Judgment of Gibbs J (as he then was) in Pierce Bell Sales Pty. Limited v. Fraser supra at 590 in which his Honour had prayed in aid the speech of Viscount Radcliffe in Selkirk v. Romar Investments Ltd. supra and also upon the Judgment of this Court in Alcatel Australia Ltd. v. Scarcella (1998) 44 NSWLR 349 and, in particular, on the Judgment of Sheller JA in the latter case where his Honour said supra at 368:
"If a contract confers power on a contracting party in terms wider than necessary for the protection of the legitimate interests of that party, the courts may interpret the power as not extending to the action proposed by the party in whom the power is vested or, alternatively, that the powers are being exercised in a capricious or arbitrary manner or for an extraneous purpose, which is another was (sic) of saying the same thing. Thus a vendor may not be allowed to exercise a contractual power where it would be unconscionable in the circumstances to do so: Pierce Bell Sales Pty. Limited v. Fraser (1973) 130 CLR 575 at 587."
and later supra at 369 :
"The decisions in Renard Constructions and Hughes Brothers mean that in New South Wales a duty of good faith, both in performing obligations and exercising rights, may by implication be imposed upon parties as part of a contract. There is no reason why such a duty should not be implied as part of this lease. But it remains to decide whether the implication of that duty has any consequence in the resolution of the dispute the subject of this appeal."
64 Even assuming - as, in the circumstances, I am prepared to do - that there was to be implied in the contract a term to the effect of that suggested by Sheller JA, it seems to me that the implication of such a duty had no consequence in the present case. I say this since, as Windeyer J recorded in para. 33 of his Judgment (see para. 46 (above)), the basis upon which, at trial, it was sought to demonstrate that the giving of the Notice of Termination was not bona fide was that an agent had been asked to give an estimate of the value of Unit 2 prior to the date upon which termination was available, an assertion which his Honour did not accept.
65 It follows, in my view, for the reasons which I have set out above, that the grounds of appeal sought to be advanced by Mr. Mitchell have not been made out.
66 This being so, I propose that the appeal should be dismissed with costs.
67 STEIN JA: I agree with Powell JA.