He went on to refer to the provision by the builder of $3000 to be held until the works outlined were complete and asked that Council issue a strata plan. Pittwater Council did not make a written response, and Mr McKenzie's evidence seems to show that he regarded himself as having an arrangement for Council to accept a deposit of $3000, and for Council then to issue the strata plan. The terms of the letter of 14 September assist acceptance of Mr Munro's account of what he says Mr McKenzie told him on 14 September.
39 As the undertaking which it was said in the letter of 14 September the vendor was in a position to give was not accepted, it did not have any standing as an undertaking, but the offer of an undertaking does admit and demonstrate that it was then possible to complete the work within a week. If it was possible to complete the work in a week then, it had been possible to complete the work within a week at earlier times.
40 I accept that Mr McKenzie was already considering and speaking to Mr Munro of a proposal actually to construct the planter box between units 4 and 5 as early as 14 September; he may well also have been speaking to a similar effect on 27 or 28 September. Although this difference in the evidence of the protagonists was treated at the hearing as if it was of considerable importance, I do not see it as important.
41 Mr McKenzie gave an explanation in oral evidence of his not having proceeded to carry out the works within one week of the letter of 14 September to the effect that Mr Tow and Mr McKenzie formed the view that having paid the bond was as good as having built the works and the application should go to Council on 8 October in that state. In my finding this is not a reasonable explanation for not proceeding to construct the planter box and provide the additional screen planting soon after 14 September; and indeed there has been no reasonable explanation for their not having been constructed long before that date as an ordinary part of the building process.
42 The builder PhD Building Services paid the Council $3000 by bank cheque accompanied by a letter of 18 September 2001 saying that that amount represented "Bonds for additional landscaping required at the townhouse complex at the above address. We understand that the bond will be released once the additional planter box is in place. I trust that this will facilitate the early release of the strata title plan."
43 Mr Tow continued to seek to facilitate matters by communicating with Council officers. Mr McKenzie urged the purchasers including Mr and Mrs Munro to make representations for the Council in favour of approving the application. On 26 September Mr Dunbar made an internal report to Mr Lindsay Dyce; he said to the effect that there were two main areas of variation/departure from the court approved plan and development consent being the increase in the roof height and "2. deficiencies in level of planting of approved landscape plan and omission of terrace planter box from Unit 5 (unit fronting Ross Street)". He reported that the increase in the overall roof height was considered acceptable and that it would be difficult to discern any appreciable impact of the increase in roof height. He also reported "Item 2 is acceptable in terms of the number of plants provided being adequate and the prescribed/detailed number of plantings on the approved landscape plan being unachievable for the areas available. The omission of the planter to the 1st floor terrace of Unit 5 is not considered to be acceptable. The reasons provided for the omission of the planter are not considered justification for the omission. The provision of smaller planters in similar locations (decks over garages) has been undertaken for Units 2 & 3. It is considered appropriate that the planter detail upon the Court approved plans for the roof terrace of Unit 5 be provided." Mr Dunbar went on to report on the payment of the $3000 bond as an undertaking for the works to be completed.
44 Mr McKenzie had a conversation with Mr Dyce on 27 September. Mr Dyce was then unreceptive to arrangements involving a bond and said "If the planter box is completed prior to 8 October 2001 the applications can proceed to the meeting of the Councillors on that day." On the following day 28 September Mr Tow spoke to Mr Dyce who said to the effect "I am prepared to approve the application by way of delegation if the planter box is constructed and the additional planting around the air-condition units is done. The matter no longer needs to go before a Council meeting. Trevor Dunbar will not be able to approve the planter box and Bodrex's private certifier should do this."
45 Mr McKenzie then arranged for construction of the planter box to be completed by PhD Building Services. In Mr McKenzie's evidence, his decision to move towards actually constructing the planter box was a response to a suggestion made by Mr Dyce on 27 September 2001 that an appropriate amount for a bond was $15,000 to $20,000. Construction of the planter box commenced on 3 October 2001, and although there is a conflict of evidence my finding is that it was completed on the morning of 5 October 2001. Mr McKenzie also made arrangements for Mr Payne of BCA Logic to inspect the planter box which it seems he did on the afternoon of 8 October 2001; then on 9 October 2001 he completed a certificate showing approval.
46 BCA Logic's letter of 9 October certified that the planter box originally proposed for the upper terrace to Unit 5, omitted from the original construction, together with the provision of screen planting adjacent to a number of pad-mounted air-conditioning units, installed late in the original construction program and located in the garden edge adjacent to each unit, had been inspected; the planter box was considered to have been constructed in accordance with the original proposal and to be structurally adequate and the planting when fully developed should provide an adequate screen to the units.
47 Mr McKenzie collected the certificate on 10 October and arranged for a further enquiry by Mr Dunbar relating to waterproofing the planter box to be answered by the builder. There were further communications. Council's Development Consent for Development Application for Strata Plan subdivisions was dated 16 October 2001. The approval of the Strata Plan was collected on 17 October 2001. Thereafter Mr McKenzie arranged for its registration which (as earlier stated) took place on 5 November 2001.
48 On 17 October 2001 Mr McKenzie served on Mr and Mrs Munro two documents; a notice of rescission of the agreement for sale and a notice of rescission of the licence agreement. The claim to rescind the agreement for sale led to the issue of the summons on 25 October.
49 Restrictions on exercise of rights of rescission recurringly come under consideration in contracts for the sale "Off-the-Plan" of dwellings in proposed strata developments. The contractual terms are the primary source of any supposed restriction, and an apparent right of rescission may be restricted by implied terms to be discerned on the whole view of the parties' contract, or by the application to them of implications arising under general contract law of kinds illustrated by the following passage in Peters (WA) Ltd v. Petersville Ltd (2001) 75 ALJR 1385 at 1393 [36] "The law already implies an obligation by the respondents to do all such things as are necessary on their part to enable Peters WA to have the benefit of those licence arrangements Butt v. McDonald (1896) 7 QLJ 68 at 70-71; Secured Income Real Estate (Australia) Ltd v. St Martins Investments Pty Ltd (1979) 144 CLR 596 at 607-608. It is not now necessary to consider the basis of the implication. The law also implies a negative covenant not to hinder or prevent the fulfilment of the purpose of the express promises made in Art.5 Shepherd v. Felt & Textile of Australia Ltd (1931) 45 CLR 359 at 378."
50 Important statements about the principles involved were made in Plumor Pty Ltd v. Handley (1996 ) 41 NSWLR 30 (McLelland CJ in Eq). At 34C-E his Honour made observations showing the need for a sufficient causal relation between a breach by the party rescinding of a contractual obligation on that party and the happening of the event giving rise to a right of rescission, unless the parties' contract made performance of the obligation a condition of the exercise of the right of rescission. At 34E-G McLelland CJ in Eq said:
The plaintiff's third submission is based on the proposition that in addition to the express obligation to apply for the requisite 'consent' within twenty-four hours of the date of the contract, special condition 28 imposed on the defendant an implied obligation to take all reasonable steps available to him to obtain that 'consent' within the stipulated fourteen day period. That proposition is undoubtedly correct: see, eg, Butts v O'Dwyer (1952) 87 CLR 267 at 279-280. If the failure by the defendant to obtain 'consent' within the fourteen day period resulted from any default by him in the performance of either his express or implied obligations, then the defendant was not entitled to exercise the right of rescission of the contract otherwise available to him under special condition 28: see Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 440-443 applying New Zealand Shipping Co Ltd v Societe des Ateliers et Chantiers de France [1919] AC 1. This is an application of the principle that a party to a contract is not entitled, as against the other party, to rely on an event resulting from the first party's wrongful act. The history of that principle was, in New Zealand Shipping Co (at 7-8 and 12), traced back to a passage in Coke Upon Littleton (at par 206b): see also Alghussein Establishment v Eton College [ 1988] 1 WLR 587 at 591-594.
51 In my opinion this statement of the law is applicable to the rights of the vendor to rescind under Special Condition 37.2. The principle referred to in the passage cited prevents the vendor from exercising the right of rescission if breach of the undertaking to use reasonable endeavours to have the strata plan registered caused the strata plan not to be registered within the specified time. So too, if breach of the vendor's obligation in cl.40.1 to cause the building to be constructed and to do so in a reasonable time caused the strata plan not to be registered within the specified time. So too would any other breach of the vendor's contractual obligations which caused that result.
52 Another important subject dealt with in the same judgment is the onus of proof; see in Plumor v. Handley p.35A to 36B, particularly the concluding observation at 36 "… the onus of proof on the issue of whether the non-obtaining of the requisite consent or advice within the period stipulated in special condition 28 resulted from a breach by the defendant of his contractual obligations, rests on the plaintiff. In other words, the relevant principle can be briefly formulated as: "Non-fulfilment of a condition will justify rescission unless it is proved to be self-induced', rather than as: 'Non-fulfilment of the condition will not justify a rescission unless it is proved not to be self-induced'".
53 In Hunyor & Anor v. Tilelli (1997) 8BPR [97667] 15,629 at 15,631 McLelland in Eq referred to this passage and also said "It is necessary however to bear in mind that all evidence is to be weighed according to the proof which it was reasonably within the means of one party to produce or of the other to contradict. This has particular significance in respect of evidentiary facts which are peculiarly within the knowledge of one party rather than the other, see eg: Apollo Shower Screens Pty Ltd v. Building and Construction Industry Longer Service Payments Corporation (1985) 1 NSWLR 561 at 565-6".
54 McLelland CJ in Eq on p15,631 stated a further important matter frequently calling for consideration as follows: "For the purpose of considering the question of the defendant's default, the knowledge, acts and omissions of the defendant's solicitors or other agents, in that capacity, are to be attributed to the defendant (see CSS Investments Pty Ltd v. Lopiron Pty Ltd [1987] 76 ALR 463 at 474-5), although the knowledge, acts and omissions of independent contractors otherwise than in the capacity of agents for the defendant are not to be so attributed: see Woodcock v. Parlby Investments Pty Ltd (1988) 4 BPR 97301". In my opinion the vendor is not responsible for failures of the builder within the scope of his independence as a contractor but is responsible for the fulfilment of the vendor's own contractual duties in cl.40.1 and cl.37.2: these require the vendor to obtain performance by the builder of the work the builder has contracted to do.
55 In the present case then I am of the view that the plaintiffs are entitled to succeed if they discharge the onus of showing that the defendant was in breach of a contractual obligation, and that the breach caused the strata plan not to be registered within the contractual time.
56 The exercise of a right of rescission, even if authorised by the terms of the parties' contract, may be deprived of effect by equitable remedies referred to by Viscount Radcliffe speaking for the Judicial Committee in Selkirk v. Romar Investments Ltd [1963] 1 WLR 1415 at 1422-3 in these terms:
It does not appear to their Lordships, any more than it did to the judge who tried the action, that there is nay 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 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 to 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 Contract [1906] 1 Ch. 412, C.A.; Baines v. Tweddle [1959] Ch. 679."
57 Part of the passage cited was referred to, evidently with approval, by Gibbs J in Pierce Bell Sales Pty Ltd v. Frazer (1973) 130 CLR 575 at 590. See too Woodcock v. Parlby Investments Pty Ltd (1988) 4 BPR [97301] 9568 (Young J).
58 The vendor's counsel contended that there was no breach of the vendor's obligation in Special Condition 37.2, or of any other obligations in this respect because General Condition B of the Conditions of the Court's Development consent required that development to be carried out generally in accordance with the plan, that this was complied with and that the issue of the Occupation Certificate shows this. Submissions by counsel for the vendor on the subject of reasonable endeavours addressed the subject as if what was under consideration was limited to responses to difficulties raised by Pittwater Council. This limited the subject in quite a wrong way; the ambit of reasonable endeavours included compliance with conditions of the earlier development consent in the course of construction, and compliance with the obligations of Special Condition 40.1; and if there had been such compliance, there would not have been any matters for Pittwater Council to raise.
59 In my view the vendor's obligations are not limited to complying with the development consent and negotiating a way through the approval process for any matter of detail of the construction of the building. The vendor also had a contractual obligation to the purchasers in Special Condition 40.1, to cause the building to be constructed in accordance with the building plan and in a good and workmanlike manner. There was not a compliance with Special Condition 41 in the respect that the roof was built too high. The non-compliance was not of any real significance and it seems surprising that Pittwater Council gave attention to it, but if the vendor had complied with Special Condition 40.1 and caused the building to be constructed in accordance with the approved plans this difficulty would not have arisen. Delay caused or contributed to by the roof height was caused by breach by the vendor of Special Condition 40.1. If the vendor had complied with that Special Condition, the building would have been completed to the correct height as an ordinary part of the building process, before the application for development consent was made on 3 July 2001. This cause of delay continued until 14 September.
60 Not building the planter box between Unit 5 and Unit 4 was a failure to comply with the building plans, and a failure to comply with the contractual obligation to the purchasers to construct the building in accordance with the building plans. There was no less a breach by the vendor of its obligation in this respect because the builder wholly omitted to build the planter box, or because the builder offered the reason given in the builder's letter of 3 August 2001; the reasons offered by the builder were no reasons at all and could not be regarded by anyone responsible for certifying completion, or by the vendor, as excusing the entire omission of the planter box for which the building plans provided. (An incidental and unexplained mystery is that the Strata Plan certified by the surveyor on 14 June 2001 shows the planter box, although without any detail). If there were any sufficient reason for the planter box's not having been erected earlier, the need to erect it became plain during the process of obtaining the Occupation Certificate early in August, when the builder's reasons were given in writing and their inadequacy was available to be clearly discerned.
61 The vendor's counsel contended that Pittwater Council was not entitled to go behind the Occupation Certificate in respect of the height of the building and (as I understood his position) in respect of the absence of the planter boxes or other matters because of the provisions of subs.79C(4) of the Environmental Planning and Assessment Act 1979, which relates to Evaluation in relation to Development Assessment and to Procedures for Development that Needs Consent and provides:
(4) Consent where an accreditation is in force.
A consent authority must not refuse to grant consent to development on the ground that any component, process or design relating to the development is unsatisfactory if the component, process or design is accredited in accordance with the regulations.
62 In my view it is far from clear that Council was precluded by subs.(4) from refusing to grant consent to development consisting of the strata plan and strata subdivision by the existence of the Occupation Certificate from addressing and (it may be) refusing to grant consent on the ground that the planter boxes were simply not built at all, so that the conditions of the previous development and consent had not been complied with, or on the ground that the landscaping was not satisfactory, (a subject with which, so far as appears, the Occupation Certificate did not deal). The proposition is certainly not so clear that it was reasonable to proceed without attending to those matters on the basis that Council was precluded from having regard to them. In its dealings with Pittwater Council the vendor did not adhere to the position that attention by Council to these matters was precluded by the Occupation Certificate, and did not simply refuse to attend to the matters of the planter box and the landscaping. It would not have been the use of reasonable endeavours to take that line, and attending to the problems by doing the works, as was obviously required in the use of reasonable endeavours, was a measure which should reasonably have been taken long before it was taken.
63 Pittwater Council did not adopt the view that Council's inquiry or concern was precluded by the issue of the Occupation Certificate. It does not seem to me that inquiry or concern were so precluded. Even if inquiry and concern were so precluded, it was hardly to be expected that when Council came to consider a Development Application relating to the Strata Plan Council would not concern itself with whether the building had been finished or with the state of compliance with the conditions of development consent. When on 14 September it became clear that the absence of the planter box was regarded by Council as significant the vendor did not arrange to have the planter box erected. This was a simple enough task when it was finally addressed, and took only two or three days' work; no reasonable ground has been shown for not having done it in the course of earlier building work, and again no reasonable ground has been shown for not having done it shortly after Council's attitude that it was important was expressed on 14 September. More than two weeks passed before Mr McKenzie addressed actually having the work carried out, rather than pursuing the prospects of making some arrangement to lodge money as a bond to secure that it would be carried out at some future time.
64 No substantial reason had been shown either for not providing screening vegetation either before embarking on the application for consent to the Strata Plan or as soon as it appeared that Council officers regarded it as significant.
65 My conclusion on Mr McKenzie's evidence particularly the passage at t.11, l.41-43 is that Mr McKenzie made it his objective to achieve certification of the building work and did not give his attention to whether the building work required by the terms of the vendor's contract with the purchasers had all been carried out and the obligation in Special Condition 40.1 had been complied with. He did not know on 3 July that the planter boxes had not been constructed, and this came to his knowledge late in July. It should have been obvious that the builder could not dispense with some part of the building work indicated on the building plans, and that the omission was bound to lead to inquiry and could lead to delay. Learning of the omission did not prompt Mr McKenzie to take any action to have them constructed; his attention was directed to getting the Occupation Certificate and getting approvals from Council. It was not a large or difficult project actually to have the planter boxes constructed, either in the course of building work generally when other planter boxes were constructed, or soon after learning of their not having been constructed late in July, or soon after learning in mid-August that Council officers regarded their not having been constructed as a problem.
66 When he did encounter difficulties with Council officers Mr McKenzie's efforts were not well directed; he gave attention and energy to projects of getting Council to accept a bond or a deposit of money instead of constructing the planter boxes, and pursued a project of persuading these purchasers and the purchasers of other units to agree to accept company title, a very unattractive project involving considerable attention and expense, for stamp duty and otherwise, altogether out of scale with any difficulty of attending to the planter boxes and the landscaping.
67 In my finding the delays which led to the vendor having or appearing to have a right of rescission arose out of the vendor's own failures to comply with its contractual obligations to the purchasers. The matters which in fact were referred to by Council officers while they had the application under consideration were all matters which, in any reasonable course, should have been attended to while the building was being constructed and before the Development Application was lodged on 3 July. If they had been attended to then it is improbable that there would have been any great delay in Council's officers giving consent under delegated authority after the Occupation Certificate was available; this is improbable because the reasons for delay which they gave would not have existed. The time taken between lodging the application for Development Consent on 3 July and obtaining the Occupation Certificate and submitting it on 13 August is not really explained, bearing in mind that it was and must have been clearly seen that the Occupation Certificate was necessary for the approval. However that may be, the Occupation Certificate was available on 13 August, and if there had not been matters for Council officers to consider relating to the building work not being completed it is probable that Pittwater Council's consent would have been given under delegated authority within several weeks after 13 August and with ample time for the plan to be registered before 8 October. When the plan did become available on 17 October it was registered on 5 November, 19 days later.
68 It was Mr McKenzie's evidence (t.12) that on a few occasions throughout construction he was told by Council that if the vendor were to depart in any way from the plans it would need to go back to Court, as the Council's view was that Council took no part in further changes to the plans which the Court had referred to in its order. This was a strong indication to Mr McKenzie that he and the vendor should be very attentive to detail and not leave openings for contentions about departures from the plans. Mr McKenzie did not turn to actually building the planter boxes until the end of September, and he but used significant time pursuing Council approval on the basis of depositing money referred to as a bond to secure that the work would be done later. He gave no real explanation for failing to comply with the building plans and building a planter box either in the general course of construction, or as soon as their absence was drawn to his notice.
69 Mr McKenzie's evidence in cross-examination at t.18 and 19 shows that at the time the decision to rescind the contract was taken he, and the persons who controlled Bodrex, were aware that the value of Unit 3 was several hundred thousand dollars higher than the contract price of $720,000; counsel's advice was taken as to their rights, and as a result of the advice notice of rescission was given. I find that pursuit of the advantage of the increase in value was a dominating factor in the decision to rescind, as the decision was taken just at the time when the difficulties in the path of registering the strata plan had ended. The purchasers were already in occupation and had moved their goods into the unit, and they were unlikely to make delays about settlement. In the context of delay caused by failures of the vendor, this use of the right of rescission was unreasonable. It was unreasonable to make a precipitate rescission immediately after overcoming all substantial difficulties in the way of registration of the Strata Plan. However the rescission lacked effect for other reasons than those referred to in the passage cited from Selkirk v. Romar Investments.
70 I conclude that the Strata Plan's not being registered within the time referred to in Special Condition 37.1 was caused by breaches by the vendor of contractual obligations. I also conclude that it was unreasonable of the vendor to exercise the purported right of rescission, and reliance on that right of rescission should be prevented by granting to the purchasers equitable remedies in enforcement of their rights as purchasers.
71 The plaintiff's counsel put forward as further grounds for relief a claim that rescission had brought about a forfeiture of the plaintiffs' equitable interest in the home-unit and that there are equitable grounds on which the plaintiffs should be relieved against that forfeiture. That case requires consideration only if the plaintiffs are not entitled to succeed having regard to the contractual relationship between the parties, and I will not address the equitable claim.
72