Plaintiff v Defendant

CONTRACT - Principles of interpretation of commercial contracts - Categories of contractual terms - Implication of terms.

1 By originating motion filed 25 July 2017, the plaintiff ('the Purchaser') seeks an order that pursuant to s 49(1) of the Property Law Act 1958, and all other enabling powers, an order and/or declaration that the document styled 'Rescission Notice' delivered by the defendant ('the Vendor') on 19 July 2017 is ineffective and/or invalid.

2 The rescission notice relates to the sale of a property located at 295-305 and 307-309 King Street, Melbourne and is situated on the north west-corner of King Street and Little Lonsdale Street in Melbourne ('the property'). The improvements on the property currently consist of a three-level free-standing building and a two-level office and retail building.

3 On 15 March 2016, the Minister for Planning determined to grant a planning permit for the 'demolition of the existing buildings and construction of a multi-storey mixed-use building, comprising dwellings and ground floor retail premises ... and associated car parking in accordance with the endorsed plans'. The permit would expire if the development was not started within three years and completed within five years of the issue date.

4 Promotional material stated that the approved permit allowed for the following:

The indicative concept shows a 66-level tower with a basement car park, ground floor retail component and three (3) penthouse levels.

The striking tower is comprised of a total of 431 apartments offering 45,148 square metres of Gross Floor Area and 28,939 square metres of Net Saleable Area.

5 The Purchaser has lodged an application to vary the permit to allow for an additional 41 apartments; and has already sold approximately 70 apartments 'off the plan'.

6 By a lease executed on 30 June 2005 ('the Lease'), Elizabeth Andrews Pty Ltd ('the Tenant') leased part of the property, being the premises at 309 King Street, Melbourne ('the Premises'), for a period of 10 years with an option for two further terms of five years each - extending the total potential effective term of the lease to 2025. By letter dated 22 July 2015, the tenant exercised its first option extending the Lease to 2020.

7 The registered proprietor of the property is presently Farinia Pty Ltd, but, by a contract of sale of real estate dated 15 February 2016, the Vendor purchased the property from that company and settlement has been effected, but the transfer has not yet been registered.

8 By contract of sale of real estate dated 8 September 2016 ('the Contract of Sale'), the Vendor agreed to sell the property to the Purchaser and/or nominee on terms which included the following:

(a) Purchase price of $42,600,000 payable by a deposit of $4,260,000 (which has been paid), the balance [to be paid] eight months from the date of sale (the proposed settlement date being 8 May 2017).

(b) The property was sold subject to the Lease (clause 26.1).

9 Critically, the contract included the following special condition with deletions and addition as follows:

3. GST and Tenants

The Vendor agrees to use all reasonable endeavours to ensure that the sale of the Property under this Contract is sold as a going concern.

The Vendor further agrees that the Purchaser may but not earlier than two (2) months before the Settlement Date secure a tenant or tenants for any vacant part of the Property (provided the terms of such tenancy are on terms acceptable to the Vendor (acting reasonably)). As part of the terms of any lease, the lease must terminate should the Purchaser not settle the Property on the Settlement Date.

The Vendor further agrees that it will ensure that the current tenant of the Property as at the Day of Sale will have vacated the Property on or before the Settlement Date or will provide the Purchaser with a deed of surrender that requires the tenant to vacate the Property not later than two (2) months after the Settlement Date.

The Vendor further agrees that it will provide the Purchaser with a deed of surrender or termination of lease that requires the current tenant at the Property as at the Day of Sale to vacate the Property not later than two (2) months after the Settlement Date. For the avoidance of doubt, the Vendor may terminate the lease at any time prior to the Settlement Date by deed or otherwise at the Vendor's discretion.[1]

10 At about 3:00 am on Sunday 7 May 2017, the Vendor re-entered the part of the property leased to the Tenant, changed the locks, and placed two security guards at the entrance. A notice of re-entry and termination were attached to the front door.

11 At about 5:00 am on 8 May 2017, an employee of the Tenant informed the Managing Director of the Tenant of the purported re-entry.

12 By email on 8 May 2017 at 7:41 am to the solicitor for the Purchaser, the solicitor for the Vendor confirmed that 'the existing lease to Elizabeth Andrews Pty Ltd has was [sic] terminated on Sunday 7 May 2017 ... and new lease to Yongzhong Australia Pty Ltd started on Sunday 7 May 2017'.

13 The Vendor contends that it was entitled to re-enter and terminate the Lease in the following circumstances:

(a) The Lease provided for a Consumer Price Index ('CPI') rental increase from 24 December 2016.

(b) The Tenant did not pay the CPI rental increase from December 2016 to March 2017, but continued to pay rent at the rate applicable prior to December 2016.

(c) On 27 March 2016, the Vendor, as landlord, served the Tenant with an invoice for the unpaid rent.

(d) By 7 May 2017, the additional rent had not been paid.

14 On 8 May 2017, the Tenant applied for and obtained an interim injunction. After a number of hearings, on 29 May 2017, the Victorian Civil and Administrative Tribunal:

(a) issued an interlocutory injunction restraining Farinia Pty Ltd and the Vendor from:

(ii) granting or giving effect to any property rights inconsistent with or adverse to the Tenant's Lease of the Premises; and

(b) ordered them to respect and abide the Tenant's right to peaceful enjoyment of the Premises.

15 The Victorian Civil and Administrative Tribunal proceedings have been set down for final hearing in December 2017.

16 By a letter dated 25 May 2017 and executed by the Vendor, the Purchaser and Aurumland Pty Ltd (the Purchaser's nominee under the Contract of Sale) ('the Variation'), the parties agreed as follows:

The parties ... hereby vary the contract as follows:

1. The Settlement Date is amended to 15 July 2017;

1. The Purchaser shall be entitled to effect settlement at any time after 20 June 2017 by giving the Vendor 2 business days prior written notice; and
2. The Purchaser agrees that the Vendor shall be entitled to charge the Purchaser interest in accordance with special condition 17.1 of the contract from 30 June 2017, which shall be payable to the Vendor at settlement.

In consideration of the above variations to the contract made at the request of Aurumstone Pty Ltd (ACN 167 090 388), Aurumstone Pty Ltd (ACN 167 090 388) releases the deposit paid by Aurumstone Pty Ltd (ACN 167 090 388) under the contract in the sum of four million two hundred and sixty thousand dollars ($4,260,000) to the Vendor immediately upon the execution of this letter by all parties and in this regard Aurumstone Pty Ltd (ACN 167 090 388) shall sign a section 27 deposit release statement. Aurumstone Pty Ltd (ACN 167 090 388) agrees that the release of the deposit to the Vendor is effective notwithstanding section 27(2) of the Sale of Land Act 1962 and in this regard Aurumstone Pty Ltd (ACN 167 090 388) and Aurumland Pty Ltd (ACN 168 796 049) agree to waive any rights they may have to seek repayment of the deposit if the contract of sale is lawfully terminated other than by a breach or default of the Vendor.

17 On 25 May 2017, the Purchaser acknowledged receipt of a Deposit Statement to the Purchaser of Real Estate pursuant to s 27(3) of the Sale of Land Act 1962 ('the Act') and the Purchaser provided the following notice for the release of the deposit pursuant to s 27(4) of the Act stating:

The Purchaser is satisfied that -

(a) the above particulars provided by the Vendor is accurate [sic].

(b) the particulars indicate that the purchase price is sufficient to discharge all mortgages over the Property.

(c) the contract is not subject to any condition enuring for the benefit of the Purchaser.

The Purchaser is deemed to have accepted title.

18 The Variation was negotiated by email exchange and, for reasons that will become apparent, it is necessary to have reference to these emails in some detail:

(a) By email of 11 May 2017 to the Vendor's solicitor, the Purchaser's solicitor stated that 'for a variety of reasons' the Purchaser 'would like the ability to extend settlement up to 22 June 2017 and in consideration pay interest on the balance of the rates stated under the Contract of Sale'.

(b) By email of 19 May 2017 to the Purchaser's solicitor, the Vendor's solicitor asked, if the Purchaser was not in a position to settle on 22 May 2017:

1. Whether your client is prepared to pay my client upfront (at the beginning of the period of the extension sought) the amount of the interest for the period of extension sought; and
2. Whether your client is prepared to release the deposit to my client.

(c) By email of 19 May 2017 at 4:04 pm to the Vendor's solicitor, the Purchaser's solicitor referred to the email on 8 May 2017 at 7:41 am alleging termination of the Lease on 7 May 2017 and stated as follows:

Our updated title search today reveals a caveat lodged on 12 May 2017 wherein the tenant claims a leasehold estate pursuant to the lease dated 30 June 2005, which as you know has the potential to continue until 2025.

Obviously this has made our client and its financier and stakeholders justifiably nervous, not only in relation to the potential ongoing issues with the tenant but in light of your email below and lack of disclosure by your client.

We cannot counsel our client to settle this matter without comfort that the lease to Elizabeth Andrew Pty Ltd has or will shortly terminate. As you are aware, our client intends to commence its 'off the plan' sales of properties in a matter of days, which would then be at risk if the lease has not or could not be validly terminated.

As such we require a deed of termination or alike from the tenant confirming that the lease has been terminated and that it will remove its caveat. Once we have this from you we will then be able to book settlement in with my client's financier. Please let me know if this is going to be a concern.

In addition, you have called for commencement of the lease to Yongzhong Australia Pty Ltd in circumstances where our client instructs the current tenant continues to operate its business as recently as yesterday. You must admit that to have the lease commencing on 8 May 2017 then our client could safely assume that the sitting tenant would have vacated prior to that date.

As you could appreciate, we now find ourselves encountering further queries and delays from our client's financier.

(d) By email of 19 May 2017 at 4:19 pm to the Vendor's solicitor, the Purchaser's solicitor stated as follows:

I refer to our 'without prejudice' discussion this afternoon and confirm that you will obtain a deed of termination or alike with respect to the lease and a withdrawal of caveat from Elizabeth Andrews Pty Ltd. Once you have this we can book in settlement.

As discussed, this is come as an absolute shock to our client and has certainly created an air of distrust from our client's financier.

(e) By email of 19 May 2017 at 4:27 pm to the Purchaser's solicitor, the Vendor's solicitor stated as follows:

That is not what I said to you. Please don't misquote me.

My client will be in compliance with all of its obligations under the contract of sale at settlement in accordance with the terms of the contract of sale.

Please provide evidence that your client's financier is now in a position to effect settlement and let me know when it would like to book in settlement.

(f) By email of 19 May 2017 at 4:37 pm to the Vendor's solicitor, the Purchaser's solicitor noted that the hearing of the Lease dispute was listed for 25 May 2017 and said: 'So it appears your client is clearly in no position to settle on 22 May 2017'.

(h) By further email of 19 May 2017 at 4:42 pm to the Vendor's solicitor, the Purchaser's solicitor stated 'You are in Court with the tenant on the 25th. How can we book in settlement with this looming?'

(i) After an email from the Purchaser's solicitor on 22 May 2017 asking 'How are you going with [the Tenant]', the Vendor's solicitor replied by email of 23 May 2017 at 12:41 pm stating that the Vendor would extend the contract to 22 June 2017 on relevantly the following terms:

1. Your client agrees to release the deposit to my client immediately upon the service on your client of a section 27 deposit statement;
2. Your client pays upfront (today) the amount of the penalty interest on the residue amount due under the contract for the period of the extension sought being from 8 May 2017 to 22 June 2017 (45 days) in the sum of $709,027.39.
3. Each of our respective clients will work together using their best endeavours to try to persuade Yongzhong Australia Pty Ltd to vary its lease to ensure the lease is active past 23 June 2017; and
4. Yongzhong Australia Pty Ltd pays the outstanding rent under the lease outstanding as at 7 May 2017.

(j) By email of 23 May 2017 at 12:58 pm to the Vendor's solicitor, the Purchaser's solicitor rejected the proposal stating:

This I cannot even take to my client. Your client must be kidding.

There is no penalty interest up to even today. You have a sitting tenant, a caveat and a Court hearing tomorrow. Your client is not in a position to settle.

Please put something in line with what we discussed today. If this is not achievable then perhaps a meeting with all parties is advisable asap.

(k) By email of 23 May 2017 at 3:36 pm to the Vendor's solicitor, the Purchaser's solicitor counter-offered, relevantly, as follows:

1. Release the deposit immediately;

2. Settlement date is amended to 15 July 2017;

3. Penalty interest from 30 June 2017. Adjusted at settlement;

1. We have the ability to settle anytime from 21 June 2017 provided we give you not less than 48 hours prior notice;
2. Lease with Yongzhong Australia Pty Ltd is varied to accord with your suggestion;

6. Rent is paid by Yongzhong Australia Pty Ltd;

7. Side letter is amended to accord with the above.

He sent a further email amending the offer so that the rental by Yongzhong Australia Pty Ltd would be paid after the Vendor had reached a formal agreement with the sitting tenant.

(l) By email of 23 May 2017 at 8:24 pm to the Vendor's solicitor, the Purchaser's solicitor referred to an earlier discussion and stated as follows:

My client is very concerned that your client will not be able to have the lease terminated and believes the immediate release of the deposit is a significant risk to them. However, my client is willing to provide immediate release of the deposit and assistance with the lease in order to obtain agreement for the extension.

It would be greatly appreciated if your client could agree to the below so that you have everything you need to ensure the tenant vacates asap.

(m) After an email from the Vendor's solicitor querying whether the Purchaser would not be offering anything more upfront than the release of the deposit, the Purchaser's solicitor replied by email of 23 May 2017 at 8:38 pm confirming that was correct and said:

This caveat and pending Court action is a real concern. My client is frightened that if the Court upholds the current tenants lease and the tenant will not agree to terminate the lease for any amount of money then the contract of sale needs to be cancelled and my client will have to someone [sic] claw back the deposit. This is very different to the way things are done in China.

(n) After an email earlier in the day confirming 'all is agreed', by email of 25 May 2017 at 5:29 pm to the Vendor's solicitor, the Purchaser attached the Variation and the s 27 Deposit Statement 'duly signed'.

19 After an email of 14 July 2017 in which the Vendor's solicitor proposed a settlement for 17 July 2017, the Purchaser's solicitor replied:

I refer to our email of Tuesday this week to your office where we urgently requested details on what arrangements have been made with the sitting tenant. The contract of sale specifically provides that the vendor must either have terminated the lease prior to settlement or have a deed of surrender or termination of lease that requires the tenant to vacate the property not later than 2 months after settlement. What has been agreed with the tenant?

It is very concerning to our client that your client is embroiled in litigation with the tenant with a Court date set for later this year.

You are no doubt aware of the case law in a situation like this. Your client needs to satisfy my client that it has complied with the contract of sale as noted above. Please advise as a matter of urgency and certainly not later [than] 12 noon today.

20 By email of 17 July 2017 to the Purchaser's solicitor, the Vendor's solicitor stated his client's position with respect to ASC 3 was as follows:

1. My client believes that as a result of your client releasing the deposit to my client and signing the Deposit Statement provided pursuant to section 27 of the Sale of Land Act 1962, your client has effectively waived the purported obligation of my client to provide your client with a deed of surrender or termination of lease that requires the current tenant at the Property as at the Day of Sale to vacate the Property no later than two (2) months after the Settlement Date. The Release of Deposit Statement signed by your client dated 25 May 2017 confirms that your client as purchaser is satisfied that the contract is not subject to any condition enuring for the benefit of the purchaser and that the purchaser is deemed to have accepted title.
2. In the alternative, if the position in item 1 above is incorrect (which is not admitted but denied), my client says that it has complied with additional special condition 3 by undertaking a re-entry of that part of the Property subject to the lease on 7 May 2017 and by doing so has effectively terminated that lease.
3. In the alternative, if the position in item 1 and item 2 above is incorrect (which is not admitted but denied), my client says that the obligation of my client in relation to additional special condition 3 is to provide your client with a deed of surrender or termination of lease that requires the current tenant at the Property as at the Day of Sale to vacate the Property no later than two (2) months after the Settlement Date but this can be provided after settlement and does not need to be provided at or prior to settlement.

21 By emailed letter of 19 July 2017 to the Purchaser's solicitor, the Vendor's solicitor served a rescission notice alleging that the Purchaser had defaulted by failing to pay the balance of the purchase price, being $38,338,680 on 17 July 2017 being the next business day after Saturday, 15 July 2017.

22 By the conclusion of the trial, it was common ground that there were three questions to be answered under s 49 of the Property Law Act 1958:

(1) Has the Vendor complied with ASC 3 by a termination of the Lease?

(2) Is ASC 3 a condition enuring for the benefit of the Purchaser within the meaning of s 27(2) of the Act?

(3) Did the Variation implicitly amend the Contract of Sale by deleting ASC 3 or otherwise discharging the Vendor's obligation to comply with ASC 3?

Question 1 - Has the Vendor complied with ASC 3 by a termination of the Lease?

23 The Vendor submitted that the second sentence of ASC 3[2] contemplated that:

(a) the Vendor could comply with ASC 3 by terminating the Lease prior to the settlement date otherwise than by a deed; and

(b) re-entry under a commercial lease is a recognised manner of termination.

24 Senior counsel for the Vendor said that, as the Court is presently unable to determine whether the purported re-entry and termination on 7 May 2017 was effective, it would be necessary for there to be a further hearing to determine that question.

25 The Purchaser submits that a re-entry and termination, which is defeasible, could not satisfy ASC 3. Senior counsel for the Purchaser submitted that such a construction of ASC 3, inserted for the protection of the Purchaser, would be 'surprising'.

26 To determine the meaning of the terms of the commercial contract, the Court will ask the question, 'What would a reasonable business person have understood those terms to mean?'[3] For the purpose of answering that question, 'the reasonable businessperson [is] placed in the position of the parties';[4] and the Court applies the following principles:

(a) The terms are construed objectively and the subjective intentions of the parties are irrelevant.[5] For example a court 'cannot receive oral evidence from one party as to its intentions and construe the contract by reference to those intentions'.[6]

(b) A court will consider not only the text and the ordinary meaning but also:

(i) the context, being the entire text of the contract including matters referred to in the text of the contract;[7] and

(ii) the commercial purpose and object of the contract. The identification of the commercial purpose and object of a contract 'presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating'.[8] For this purpose, a court may have regard to the surrounding circumstances known to the parties;[9] and is entitled to assume 'that the parties intended to produce a commercial result'.[10]

27 Accordingly, a court may 'have regard to more than internal linguistic considerations',[11] but ordinarily, where there is no ambiguity, the intention can be discerned by reference to the contract alone. As French CJ, Nettle and Gordon JJ observed in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd:

Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning.[12]

(a) the matters constituting the context and purpose, which may be referred to without ambiguity; and

(b) events, circumstances and things external to the contract, which may not;

was explained by the plurality in the High Court in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd. Their Honours said:

(i) A court may refer to 'events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating'.[13]

(ii) However, 'evidence of the parties' statements and actions reflecting their actual intentions and expectations' is inadmissible.[14]

29 In my opinion, by failing to provide a deed of surrender, the Vendor has not satisfied its obligations under ASC 3 for the following reasons:

(a) The first sentence of ASC 3 unambiguously requires the Vendor to provide the Purchaser with a deed of surrender or termination of the Lease.[15] Further, it was common ground that ASC 3 obliged the Vendor to provide the deed prior to the Settlement Date.

(b) Because there is no ambiguity, the intention is to be discerned by reference to the terms of the contract alone. However, even if ASC3 was ambiguous reference to events, circumstances and things external to the contract only support the unequivocal requirement for the Vendor to provide the deed. In particular, the Purchaser was proposing to develop the property, in the manner set out above, pursuant to a permit which required the development to be commenced by March 2019 and completed by March 2022. The imperative of the Purchaser being required to settle, only after it was satisfied that the Lease was the subject of a deed of surrender or a deed of termination, is readily apparent.

(d) There is nothing in the second sentence of ASC 3 which is inconsistent with the obligation in the first sentence. The second sentence merely permits the Vendor to terminate the lease prior to the Settlement Date 'by deed or otherwise at the Vendor's discretion'. It says nothing about the obligation to provide a deed.

(e) The words 'For the avoidance of doubt' presumably were added because the draftsperson considered that there was a potential ambiguity in the first sentence about whether the Vendor was only permitted to terminate the Lease between the Settlement Date and two months thereafter. I do not consider that the words 'For the avoidance of doubt' add meaning to the second sentence and, in my opinion, a reasonable business person would not understand the words to mean that, if the Vendor terminated prior to the Settlement Date, it would not be required to satisfy the obligation to provide the deed as required by the first sentence. For such an argument to be viable, at least, the second sentence would commence with words to the effect of 'Notwithstanding the first sentence, the Vendor may terminate ...'.[16]

(f) The parties deleted the sentence immediately above ASC 3, which had read:

The Vendor further agrees that it will ensure that the current tenant at the Property as at the Day of Sale will have vacated the Property on or before the Settlement Date or will provide the Purchaser with a deed of surrender that requires the tenant to vacate the Property not later than two (2) months after the Settlement Date.

The effect of this clause was that, rather than imposing an absolute obligation to provide a deed of surrender, a deed of surrender was only required if the Tenant had not vacated the Property by the Settlement Date. This is the construction of ASC3, for which the Vendor contends, but by the deletion it is a construction that 'the parties have united in rejecting'.[17]

Question 2 - Is ASC 3 a condition enuring for the benefit of the Purchaser within the meaning of s 27(2) of the Act?

30 Division 3 of pt 1 of the Act ('Division 3') provides that deposits paid with respect to the sale of land must be held by a stakeholder[18] in a special account;[19] and on rescission paid to the Vendor or the Purchaser depending on which party was relevantly in default.[20]

31 Section 27 of the Act provides for the circumstance where a purchaser may authorise the stakeholder to release the deposit moneys prior to settlement and prescribes the procedure to be adopted. It relevantly provides as follows:

(1) Where a legal practitioner, conveyancer or estate agent is holding deposit moneys as a stakeholder under section 24, the purchaser may by authorization in writing empower the legal practitioner, conveyancer or estate agent (as the case may be) to release those deposit moneys to the vendor in his own right or as the vendor directs.

(2) Subsection (1) shall only operate -

(a) where the contract is not subject to any condition enuring for the benefit of the purchaser; and

(b) where the purchaser has accepted title or may be deemed to have accepted title.

(3) An authorization in writing shall not be effective unless and until the vendor has given the purchaser a notice in writing setting out -

(a) if there is a mortgage over the land which is the subject of the transaction, the particulars specified in Schedule 1; and

...

(c) particulars of any caveat lodged under the Transfer of Land Act 1958 in respect of the land which is the subject of the transaction -

and the purchaser has given notice under subsection (4) that he is satisfied with those particulars.

(4) Where the purchaser is satisfied -

(a) that the particulars provided under paragraphs (a) and (c) of subsection (3) are accurate; and

(b) that the particulars provided under paragraph (a) of subsection (3) indicate that the purchase price is sufficient to discharge all mortgages over the property -

he shall give the vendor notice in writing to that effect within 28 days of receiving the particulars.

(5) A notice in writing under subsection (4) stating that the purchaser is satisfied with the particulars shall be deemed to be the authorization required by subsections (1) (2) and (3).

(6) Where the purchaser is not satisfied with the particulars he shall within 28 days of receiving them give notice in writing stating that he is not satisfied with the particulars and giving the reasons why he is not satisfied.

(7) Where the purchaser fails to give a notice under either subsection (4) or (6) within the time limited by the subsection he shall -

(a) be deemed to be satisfied with the particulars provided; and

(b) be deemed to have given the authorization required by subsection (1).

32 A provision in a contract of sale of land in contravention of Division 3 is 'void and of no effect'.[21]

33 The Purchaser contended that the deposit had been lawfully released because ASC 3 was not a 'condition enuring for the benefit of the purchaser' within the meaning of s 27(2)(a) of the Act because 'condition' in the subsection was a reference to a contingent condition; and not a promissory condition, such as ASC 3.

34 It was submitted that this construction was supported by the following:

(a) The text of the subsection refers to the contract being 'subject' to any condition, which 'bespeaks contingency: a condition which renders the contract's performance (and accordingly its future existence) "subject" to the satisfaction of the relevant condition'.

(b) The construction was consistent with the purpose of Division 3 because, if the subsection was referring to promissory conditions, a deposit could never be released under s 27 of the Act because there are always promissory conditions enuring for the benefit of the purchaser in every incomplete contract of sale. The Purchaser cited the following examples:

(i) The conveyance of title on payment of the purchase price.

(ii) A promise by the Vendor to remove a specified encumbrance on a title.

(iii) A promise to procure the construction of a dwelling on the property.

(iv) A promise to submit to adjustment of the purchase price in order to apportion outgoings between the parties.

Accordingly, it was contended that the Purchaser's construction avoided rendering the subsection otiose, futile or absurd.

35 The Purchaser relied upon the following passage in 'Sale of Land Act Victoria':

For the purposes of s 27(2)(a), a 'condition enuring' means a contingent condition, also known as a 'condition subsequent' or a 'condition precedent to performance', which remains to be fulfilled. Any alternative construction requiring the contract to contain no promissory condition for the purchaser's benefit for the purposes of the section would render the statutory requirement commercially unworkable. The most commonly encountered contingent condition making completion subject to the purchaser obtaining finance approval. It matters not if the contingent condition is for the benefit of the vendor as well as the purchaser.[22]

36 The Vendor contended that ASC 3 was a condition within the meaning of s 27(2)(a) of the Act for the following reasons:

(a) The words 'subject to' do not confine the conditions referred to in the text to contingent conditions; and it is common ground that non-compliance by the Vendor with ASC 3, as an essential term, would entitle the Purchaser to terminate.

(b) The text does not require a distinction to be drawn between types of conditions, it only requires that the condition enure for the Purchaser's benefit.

(c) The Purchaser's construction is not consistent with the legislative purpose which was to ameliorate the position of purchasers where the deposit had been released to the Vendor, the contract was not unconditional, it went off in circumstances entitling the purchaser to recover the deposit, and the vendor had spent the money.

37 The Vendor submitted that its contention was supported by the legislative history which was as follows:

(a) Section 27(1) of the Act, in its original form as introduced by the Sale of Land (Deposits) Act 1980, provided as follows:

Where a solicitor or estate agent is holding deposit moneys as a stakeholder under section 24 and the contract pursuant to which the deposit moneys are held has become unconditional the purchaser may by authorization in writing empower the solicitor or estate agent (as the case may be) to release the deposit moneys to the vendor.[23]

(b) Division 3 was modified by the Sale of Land (Deposits Amendment) Act 1980 which was assented to on 16 December 1980. In the Second Reading Speech the Minister provided an insight into the reason for the amendment stating:

There are also provisions that require a purchaser to agree to the release of deposit moneys to enable the vendor to apply those to some other purpose. These provisions, of course, operate only in circumstances where, so far as is possible, it has been ascertained that the release of the deposit moneys will not be to the detriment of the purchaser. The remainder of the amendments are dealt with in the notes circulated with the Bill, and I shall not go into those in any more detail.[24]

38 However, the Vendor relied upon an article in the 'Law Institute Journal' by Mr Rowland Ball in which he stated as follows:

The new s 27(2) will make it clear that deposit monies cannot be released to the vendor until any condition in the contract for the benefit of the purchaser, e.g. as to obtaining finance or a permit or the sale of another property, has been satisfied and requisitions on title delivered and satisfactorily answered so that the purchaser has accepted or is deemed to have accepted title.

The purchaser will therefore be protected in that he cannot be requested to release the deposit to the vendor until he has finance or a permit has been obtained or any other condition satisfied and he or his solicitor has had the opportunity to investigate the title to the property concerned.[25]

39 The Vendor submitted that s 27 of the Act was not directed to reciprocal obligations at settlement (as contended by the Purchaser) but was rather directed to conditions that preceded settlement, such as obtaining finance or a permit or the sale of another property (being examples cited by Mr Ball). It was submitted that 'the vice to which the provision is directed is placing the purchaser in the position of losing both the contract and deposit by reason of something done or omitted prior to the settlement being called on.'

40 In determining whether ASC 3 is a condition enuring for the benefit of the Purchaser within the meaning of s 27(2)(a) of the Act, it is necessary to determine the meaning of 'condition' as it is used in the subsection. The word 'condition' has various different meanings in Australian contract law.[26] In fact, the late Professor Samuel Stoljar identified 12 different senses in which the word has been used in Australian contract law; [27] and various judges use different terms to describe the same concept.[28]

41 The following is a summary of the usual classification of terms and conditions:

(a) A contingent condition merely provides that the formation of a contract, or its performance, is subject to a contingency; [29] but does not include a promise by a party (and does not create an obligation on a party). A typical example is a condition providing that a contract is subject to purchasers completing the sale of their property, such as was considered in Perri v Coolangatta Investments Pty Ltd.[30] Brennan J described the clause as a stipulation which 'specifies the event upon the occurrence of which the obligations to complete cease to be contingent, [but] the stipulation contains no promise that the event will occur'.[31]

(b) Contingent conditions are therefore to be distinguished from promissory terms.[32] Traditionally, promissory terms were categorised as either conditions (breaches of which give rise to a right to terminate) or warranties (breaches of which only give rise to a claim for damages).[33] However, at least since the High Court decision in Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd,[34] it has been recognised in Australia that there are three categories of promissory terms:

(i) An essential term where the parties demonstrate an intention that the condition is essential and any breach by a party will entitle the other party to terminate the contract and claim for damages. As was said by the majority in Koompahtoo:

It is the common intention of the parties, expressed in the language of their contract, understood in the context of the relationship established by that contract and ... the commercial purpose it serves, that determines whether a term is 'essential', so that any breach will justify termination.[35]

An essential term was 'sometimes described as a condition'.[36]

(ii) An intermediate (or innominate) term gives rise to a non-essential obligation; but the breach of such a term may be sufficiently serious to justify termination.[37] A breach of such a term will be sufficiently serious if it goes to the root of the contract[38] and is 'such as to deprive the injured party of a substantial part of the benefit to which he is entitled under the contract'.[39]

(iii) A warranty, which is a non-essential term, giving rise to a claim for damages, but no right to terminate for breach.

42 The Court of Appeal recently considered the principles of statutory construction in Colonial Range Pty Ltd v CES-Queen (Vic) Pty Ltd.[40] I summarise the approach adopted by the Court of Appeal as below.

43 The primary object of statutory construction is to construe the relevant provision so that its legal meaning is consistent with:

(a) language of the relevant provision, being the text; and

(b) the legislative purpose of the statute.[41]

The legal meaning is 'the meaning that the legislature is taken to have intended the provision to have'. It may or may not be the same as the literal meaning.[42]

44 Accordingly, in statutory construction, the focus is on the text and the legislative purpose as follows:

(a) The primacy of the text has been emphasised by the High Court.[43] It has been said that the process of statutory interpretation starts and ends with the text.[44]

(b) To ascertain the legislative purpose, the Court first considers the text of the relevant provision in its context. The context means:

It is only after exhausting this approach, that one can have reference to parliamentary debates or other extrinsic material;[45] and such material cannot displace the clear meaning of the text.[46]

45 If the literal meaning of the text is consistent with the identified legislative purpose, the literal meaning will be accepted as the legal meaning.

46 However, if the literal meaning conflicts with the identified legislative purpose, a departure from the literal meaning may be justified. The resultant tension was described by Francis Bennion in 'Statutory Interpretation' as follows:

Consideration of the enactment in its context may raise factors that pull in different ways. For example the desirability of applying the clear literal meaning may conflict with the fact that this does not remedy the mischief that Parliament intended to deal with.[47]

47 Examples of conflicts between the literal meaning and the identified legislative purpose, which have justified departure from the literal meaning, have included the following:

(a) The literal meaning would conflict with other provisions of the statute.

(b) The literal meaning is inconsistent with the purpose of the statute.

(c) The literal meaning is incapable of practical application.

(d) Adoption of the literal meaning would lead to a result, which is absurd, unreasonable, or anomalous.[48]

48 If it is determined that such a conflict exists, the approach to reconciliation of the conflict is as follows:

(a) First, if an alternative construction is to be adopted as the legal meaning, it is necessary that the alternative construction is 'reasonably open'[49] and 'consistent with the language in fact used by the legislature'.[50] This is necessary because 'the task remains the construction of the words the legislature has enacted'.[51] The purpose of legislation must be derived from what the legislation says, and not from any assumption about the desired or desirable reach or operation of the relevant provisions'.[52]

(b) Section 35(a) of the Interpretation of Legislation Act 1984 provides that a construction that promotes the purpose of the Act is to be preferred to a construction that does not.

(c) If the inconsistency between the literal meaning and the legislative purpose is the result of 'simple, grammatical, drafting errors which if uncorrected would defeat the object of the provision', an alternative construction, which is consistent with the legislative purpose, may be more 'readily' adopted.[53]

(a) After the identification of an alternative construction, the legal meaning will be determined by balancing:

(i) the strength of the literal meaning as against the alternative construction; and

(ii) the extent to which these meanings are consistent with the promotion of the legislative purpose.

49 This balancing exercise has been explained by the High Court as follows:

(a) 'If the choice is between two strongly competing interpretations, as we have said, the advantage may lie with that which produces the fairer and more convenient operation so long as it conforms to the legislative intention. If, however, one interpretation has a powerful advantage in ordinary meaning and grammatical sense, it will only be displaced if its operation is perceived to be unintended.'[54]

(b) '[I]nconvenience or improbability of result may assist the court in preferring to the literal meaning an alternative construction which ... is reasonably open and more closely conforms to the legislative intent'.[55]

50 With respect to interpreting a provision as if it contained additional words, guidance has been provided by the plurality of the High Court in Taylor v Owners - Strata Plan No 11564.[56] Their Honours stated that 'the task remains the construction of the words the legislature has enacted ... any modified meaning must be consistent with the language in fact used by the legislature.'[57] The plurality said that whether an interpretation of a provision, as if it contained additional words, is justified involves a judgment of matters of degree; and explained:

That judgment is readily answered in favour of addition or omission in the case of simple, grammatical, drafting errors which if uncorrected would defeat the object of the provision. It is answered against a construction that fills 'gaps disclosed in legislation' or makes an insertion which is 'too big, or too much at variance with the language in fact used by the legislature'.[58]

51 It was the position of both parties that ASC 3 was an essential term; and I therefore propose to determine this question on the basis of whether a 'condition', within the meaning of s 27(2)(a), includes an essential term, as contended by the Vendor, or is limited to a contingent condition, as contended by the Purchaser.

52 For the following reasons, I consider that the expression 'condition' within the meaning of the subsection includes an essential term:

(a) For the reasons referred to in [41](a)-[41](b)(i) above, the word 'condition' is capable of referring to a contingent condition and an essential term which is sometimes described as a condition.[59]

(b) Consideration of s 27 of the Act in the context of Division 3, in my opinion, demonstrates a legislative intention to provide protection to enable purchasers to recover their deposits after termination of a contract of sale of land. As the text of Division 3 demonstrates, Division 3 was intended to be remedial legislation for the protection of purchasers. I consider that it should be interpreted liberally.[60] In my opinion, the positions of:

(i) a purchaser who has the benefit of a contract subject to a contingent condition; and

(ii) a purchaser, who has the benefit of an essential term of the contract;

are, in this context, indistinguishable, in the sense that the non-fulfilment of the first and the breach of second would both ordinarily give the purchaser a right to the return of the deposit.

(c) Reference to the Second Reading Speech of the Minister confirms the legislative intention to be discerned from the text in the context of Division 3. The Honourable Haddon Storey concluded the Second Reading Speech stating:

The provisions of the Bill will ensure that for the future innocent purchasers who have in good faith paid a deposit for the purchase of a home, will not lose that deposit in the event that the sale of the property is not completed through no fault of the purchasers.[61]

(d) To the extent that there is a plain meaning of the word 'condition' it is a reference to an essential term of a contract.[62]

53 It appears likely that the purpose of the Sale of Land (Deposits Amendment) Act 1980 was to extend s 27(2)(a) to apply to promissory conditions. The Act originally required the contract to be 'unconditional', which usually means that it was not, or was no longer, subject to a contingent condition (as to finance or otherwise).[63] The expression 'a condition enuring for the benefit of the Purchaser', in my opinion, indicates a legislative intention to extend the application of the subsection.

54 It is not necessary for me to consider whether an intermediate term could constitute a condition within the meaning of the subsection, and as the parties agreed that ASC 3 was an essential term, the matter was not argued before me. However:

(a) on one hand, as the breach of an intermediate term can give rise to a right to terminate, an extended meaning may promote the purpose of the Act; but

(b) on the other hand, an intermediate term may not normally be referred to as a condition because it is 'operative within the class of non-essential obligations'.[64]

55 In his Second Reading Speech for the Sale of Land (Deposits Amendment) Bill, the Minister said:

I must point out that the Government does not necessarily consider this Bill as the last word on purchasers' deposits. Its effect must be considered in practice, and the Government will monitor its operation very closely.[65]

Consideration may need to be given to whether a purchaser can resist release of the deposit if the contract of sale has an intermediate term enuring for the benefit of the purchaser.

Question 3 - Did the Variation implicitly amend the Contract of Sale by deleting ASC 3 or otherwise discharging the Vendor's obligation to comply with ASC 3?

56 The Vendor contends that, by the Variation, the Purchaser agreed to the release of the deposit and to the signing of the s 27 Deposit Release Statement. The Deposit Release Statement required that the Purchaser acknowledge that the contract was not subject to any condition enuring for the benefit of the Purchaser.

57 Accordingly, if ASC 3 was a condition enuring for the benefit of the Purchaser, the deposit could not be legally transferred unless the effect of the Variation was to delete ASC 3 from the contract or otherwise discharge the Vendor's obligation to comply with ASC 3 ('effectively delete'). It was submitted that such an implied term was supported by the presumption that persons intend to act legally.

58 It was initially submitted on behalf of the Vendor that the Purchaser had 'waived' his rights under ASC 3. The difficulty of relying upon a waiver is that it merely states a conclusion. As stated in Halsbury's Laws of Australia:

The word 'waiver' is a flexible term used with different or shifting meanings. In essence, to say that something has been waived is merely to state a conclusion or result.

The two principal senses of waiver are estoppel and election. Neither sense requires consideration to be established. Although less frequent, the word is also used to describe an agreement, which must be supported by consideration, to vary or discharge a contract, contract obligation or remedy.[66]

59 In oral argument, senior counsel for the Vendor submitted that the waiver was supported by the consideration supplied by the Variation and, to avoid invalidation under s 28 of the Act, it must be that the Variation had the effect of effectively deleting ASC 3 from the Contract of Sale; or at least constituted agreement to reduce ASC 3 so that it was no longer a condition - in the sense that it would not form the basis for termination or refusal to settle.

60 It was submitted on behalf of the Purchaser that a term could not be implied effectively deleting ASC 3 because the emails leading up to the Variation are inconsistent with an intention that ASC 3 would be effectively deleted.

61 It is well established that five criteria must be satisfied before a term will be implied to give business efficacy to a contract. These are:

(a) it must be reasonable and equitable between the parties;

(b) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it;

(c) it must be so obvious that it 'goes without saying';

(e) it must not contradict any express term of the contract.[67]

Each criteria must be satisfied and it is not sufficient that it would be reasonable or equitable to imply the term.[68]

62 For the following reasons, I do not consider that the Variation effectively deleted the obligation on the Vendor to comply with ASC 3:

(a) Application of the principles of construction of a commercial contract do not support the proposition that the Variation was intended to effectively delete ASC 3. Specifically, the text of the Variation provides that the Purchaser 'agrees that the release of the deposit to the Vendor is effective notwithstanding s 27(2)'.[69] The word 'notwithstanding' as a preposition is defined by the Macquarie Dictionary as 'without being withstood or prevented by; in spite of'.[70] Accordingly, the Variation recognises that the release of the deposit was 'in spite of' the subsection, whereas, if ASC 3 was effectively deleted, any reference to s 27(2) would have been unnecessary because the release of the deposit would have been in accordance with the subsection.

(b) The implication of such a term would be inconsistent with the surrounding factual circumstances including the email communications leading to the Variation. These communications were 'objective background facts which were known to both parties'[71] and would therefore be admissible to support the implication. In my opinion, they patently demonstrate that the deed of surrender remained fundamental to the transaction.

(c) The commercial context known to both parties, as set out above, was that the Purchaser was proposing to demolish and develop the property. Accordingly, the commercial purpose of ASC 3 was essential because it enabled the Purchaser to have control of the property for the purposes of demolition and development. Accepting the property subject to the Lease, which gave the Tenant rights to exclusive possession until 2025, was antithetical to the proposed development.

63 Pursuant to s 49(1) of the Property Law Act 1958, for the reasons set out above, I propose to answer the questions raised as follows:

Question 1: Has the Vendor complied with ASC 3 by a termination of the Lease?

Question 2: Is ASC 3 a condition enuring for the benefit of the Purchaser within the meaning of s 27(2) of the Act?

Question 3: Did the Variation implicitly amend the Contract of Sale by deleting ASC 3 or otherwise discharging the Vendor's obligation to comply with ASC 3?

64 Accordingly, in my opinion, it is appropriate to make a declaration that the rescission notice delivered by the Vendor on 19 July 2017 is ineffective. I will hear from the parties about consequential and other orders.

[1] The italicised portion was handwritten and in these reasons that part alone is referred to as ASC 3'.

[2] 'For the avoidance of doubt, the Vendor may terminate the lease at any time prior to the Settlement Date by deed or otherwise at the Vendor's discretion'.

[3] Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104, 116 [47] (French CJ, Nettle and Gordon JJ).

[4] Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12; (2017) 91 ALJR 486, 491 [16] (Kiefel, Bell and Gordon JJ).

[6] DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 CLR 423, 429 (Stephen, Mason and Jacobs JJ).

[7] Eureka Operations Pty Ltd v Viva Energy Australia Ltd [2016] VSCA 95 [45]-[47] (Santamaria, Ferguson and McLeish JJA).

[8] Reardon Smith Line Ltd v Hansen-Tangen [1976] 1 WLR 989, 995-7 (Lord Wilberforce) cited with approval by Mason J in Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337, 350-1 which in turn was cited by Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ in Royal Botanical Gardens and Domain Trust v South Sydney City Council [2002] HCA 5; (2002) 240 CLR 45, 52-3. Also see Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451, 461-2 (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ).

[9] Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, 179 [40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ).

[10] Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12; (2017) 91 ALJR 486, 491 [17] (Kiefel, Bell and Gordon JJ).

[11] Royal Botanical Gardens and Domain Trust v South Sydney City Council [2002] HCA 5; (2002) 240 CLR 45, 52-3 [10] (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ).

[12] (2015) 256 CLR 104, 116 [48] (French CJ, Nettle and Gordon JJ).

[15] It was not contended that the conjunctive 'or' permitted a construction that the Vendor could 'provide the Purchaser with a ... termination of lease ...'.

[16] For a discussion of the effect of the expression 'for the avoidance of doubt', see Allen v Feather Products Pty Ltd [2008] NSWSC 259 [25]-[29] (Barrett J).

[17] Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337, 352-3 (Mason J) cited with approval in Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12; (2017) 91 ALJR 486, 489-90 [9] (Kiefel, Bell and Gordon JJ).

[22] David Lloyd and William Rimmer, Sale of Land Act Victoria (Lawbook, 2015) 103 [27.60].

[24] Victoria, Parliamentary Debates, Legislative Council, 18 November 1980, 2901 (Robert Maclellan).

1. [25] Rowland J Ball, 'Sale of Land (Deposits Amendment) Bill' (1980) Law Institute Journal 806.

[26] Donald Grieg and James Davis, The Law of Contract (Lawbook, 1987) 586-7.

[27] The Contractual Concept of Condition (1953) 69 Law Quarterly Review 485, 486-8.

[28] As was observed by Brooking J in McTier v Haupt [1992] VicRp 46; [1992] 1 VR 653, 657: 'Terminology in this field is ... by no means uniform, a state of affairs that is at times the cause and at times the result of misunderstanding and confusion'.

[29] The utility of drawing a distinction between contingent conditions that are conditions precedent and conditions subsequent has been doubted: Meehan v Jones [1982] HCA 52; (1982) 149 CLR 571, 582 (Gibbs CJ).

[30] (1982) 149 CLR 537 (Gibbs CJ, Stephen, Mason, Wilson and Brennan JJ).

[31] Ibid 565. Although the contingent condition imposed no obligation there was a collateral implied promise that the purchaser would do all that was reasonable to find a buyer. See ibid 541 (Gibbs CJ).

[32] Although there was a third category where the stipulation combines the characteristics of a promissory condition and a contingent condition - not to be confused with a term that the promissor will make reasonable efforts to procure the fulfilment of a condition such as that referred to in Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537; McTier v Haupt [1992] VicRp 46; [1992] 1 VR 653, 657 (Brooking J).

[33] Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632, 641-2 (Jordan CJ).

[34] [2007] HCA 61; (2007) 233 CLR 115 (Gleeson CJ, Gummow, Heydon, Crennan and Kirby JJ) ('Koompahtoo').

[35] Ibid 138 [48] (Gleeson CJ, Gummow, Heydon and Crennan JJ).

[39] Decro-Wall International SA v Practitioners in Marketing Ltd [1971] 1 WLR 361, 380 (Buckley LJ) cited with approval in Koompahtoo [2007] HCA 61; (2007) 233 CLR 115, 140 [55].

[40] [2016] VSCA 328 [47]-[55] (Warren CJ, Whelan JA and Riordan AJA).

[41] Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, 381-2 [69] (McHugh, Gummow, Kirby and Hayne JJ).

1. [43] See examples cited in Commissioner of State Revenue v EHL Burgess Properties Pty Ltd [2015] VSCA 269 [56]-[62] and the discussion in Di Paolo v Salta Constructions Pty Ltd [2015] VSCA 230 [32]-[48] (Osborn and Kyrou JJA) and Lowe v The Queen (2015) 48 VR 351, 357-9 [12]-[18] (Warren CJ).

[44] Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; (2012) 250 CLR 503, 519 [39] (French CJ, Hayne, Crennan, Bell and Gageler JJ). The expression was adopted by the High Court in Thiess v Collector of Customs [2014] HCA 12; (2014) 250 CLR 664, 671 [22] (French CJ, Hayne, Kiefel, Gageler and Keane JJ) and also by the Court of Appeal in DPP v Walters [2015] VSCA 303 [2] (Maxwell P, Redlich, Tate and Priest JJA).

1. [45] Saeed v Minister for Immigration & Citizenship [2010] HCA 23; (2010) 241 CLR 252, 265 [33] (French CJ, Gummow, Hayne, Crennan and Kiefel JJ); quoted in Di Paolo v Salta Constructions Pty Ltd [2015] VSCA 230 [36] (Osborn and Kyrou JJA).

[46] Northern Territory v Collins [2008] HCA 49; (2008) 235 CLR 619, 642 [99] (Crennan J).

[47] Francis Bennion, Statutory Interpretation: A Code (Butterworths, 3rd ed, 1997) 343-4; referred to with approval in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, 384 [78] (McHugh, Gummow, Kirby and Hayne JJ).

[48] Colonial Range Pty Ltd v CES-Queen (Vic) Pty Ltd [2016] VSCA 328 [47]-[55] (Warren CJ, Whelan JA and Riordan AJA) (citations omitted).

[49] CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 348, 408 (Brennan CJ, Dawson, Toohey and Gummow JJ).

[50] Taylor v Owners - Strata Plan No 11564 [2014] HCA 9; (2014) 253 CLR 531, 549 [39] (French CJ, Crennan and Bell JJ). Although the Court was here referring to a modified meaning as one which added or omitted words, a fortiori, it must also be a requirement whenever a court is to infer the legal meaning is other than a literal or grammatical meaning.

[52] Certain Lloyd's Underwriters v Cross [2012] HCA 56; (2012) 248 CLR 378, 390 [26] (French CJ and Hayne J).

[53] Taylor v Owners - Strata Plan No 11564 [2014] HCA 9; (2014) 253 CLR 531, 548 [38] (French CJ, Crennan and Bell JJ). The unique nature of the power to correct drafting errors was recognised in Inco Europe Ltd v First Choice Distribution (a firm) [2000] UKHL 15; [2000] 1 WLR 586. At 592, Lord Nicholls said 'It has long been established that the role of the courts in construing legislation is not confined to resolving ambiguities in statutory language. The court must be able to correct obvious drafting errors. In suitable cases, in discharging its interpretative function the court will add words, or omit words or substitute words. ... This power is confined to plain cases of drafting mistakes.'

[54] Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation [1981] HCA 26; (1981) 147 CLR 297, 321 (Mason and Wilson JJ).

[55] CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 348, 408 (Brennan CJ, Dawson, Toohey and Gummow JJ).

[56] [2014] HCA 9; (2014) 253 CLR 531 (French CJ, Crennan and Bell JJ).

[59] Query whether it may also include an intermediate term. See [54]-[55] below.

[60] Webb Distributors (Aust) Pty Ltd v Victoria [1993] HCA 61; (1993) 179 CLR 15, 41 (McHugh J); Registrar-General v Harris (1998) NSWLR 404, 416 (Mason P, Stein JA agreeing).

[61] Victoria, Parliamentary Debates, Legislative Council, 15 April 1980, 7886 (Haddon Storey).

[62] Koompahtoo [2007] HCA 61; (2007) 233 CLR 115, 136 [47] (Gleeson CJ, Gummow, Heydon and Crennan JJ); Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632, 641 (Jordan CJ).

[63] See, eg, Landbank Tinana Pty Ltd v McKay [2006] QSC 55 [9] (de Jersey CJ).

[64] Koompahtoo [2007] HCA 61; (2007) 233 CLR 115, 138 [49] (Gleeson CJ, Gummow, Heydon and Crennan JJ).

[65] Victoria, Parliamentary Debates, Legislative Assembly, 18 November 1980, 2902 (Mr Robert Maclellan).

[66] Halsbury's Laws of Australia, LexisNexis [110-900] (citations omitted).

[67] BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266, 283 (Lord Simon, Viscount Dilhorne and Lord Keith) adopted in Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596, 605-6 (Mason J).

[68] Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337, 346 (Mason J).

[70] Macquarie Dictionary (6th ed, 2013) 804.

[71] Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337, 352 (Mason J).