Plaintiff v Defendant

1 This case concerns the liabilities of parties to a contract for the sale of land at Torquay, which the vendors sold as vacant farming land to the purchaser who wished to develop it as a housing estate. Much of the development did not proceed. The purchaser did not pay the purchase price on time, and did not pay the final instalment of $13,500,000 at all and in 2017, after 11 years, the surviving vendor rescinded the contract.

2 On 27 March 2006, Mrs Sonje O'Grady and her late husband, John O'Grady, granted an option to Ironbridge Holdings Pty Ltd ('Ironbridge') to purchase their land of approximately 32.43 ha located at 35 Duffields Road, Torquay, Victoria ('O'Grady Land') for a fee of $20,000. Ironbridge exercised the option and entered into a contract of sale with the O'Gradys dated 18 May 2006, with a Settlement Date no later than seven years thereafter ('Contract'). The purchase price was $20,000,000.

3 More than 11 years later, after Ironbridge had been placed into administration by its bankers, Mrs O'Grady rescinded the Contract with much of the land still to be transferred to Ironbridge and much of the purchase price still to be paid by it. Ironbridge sues Mrs O'Grady in unjust enrichment for total failure of consideration, seeking restitution of much of the purchase price and interest that it did pay, while Mrs O'Grady disputes Ironbridge's claims and counterclaims against Ironbridge and its directors and a company associated with them for unpaid interest and other remedies.

4 Mr Ian Wallace, a director of Ironbridge, was a property developer and initiated the Contract. He and Ms Carolyn Wallace, his wife, guaranteed the obligations of Ironbridge under the Contract and are defendants to Mrs O'Grady's counterclaim. He founded Ironbridge in 1988 to develop residential subdivisions, particularly in Western Australia. He is also a director of I Wallace & Associates Pty Ltd, which is also a guarantor and the second defendant to Mrs O'Grady's counterclaim.

5 Mr O'Grady died on 5 April 2014, leaving Mrs O'Grady, who is an elderly lady, as the sole proprietor of the O'Grady Land.

6 The land Ironbridge sought to develop comprised approximately 57 ha of farm land, which was vacant save for a small flock of grazing sheep ('Development Land'). The O'Grady Land formed 80 acres or 32.43 ha of this land. The balance of the land, about 24.57 ha, was purchased by Ironbridge from a third-party vendor on 23 August 2007 ('Ironbridge Land').[1]

7 Ironbridge intended to develop the Development Land into a housing estate. The O'Grady Land was to be subdivided into 297 lots, with an additional 18 lots spanning the boundary between the O'Grady Land and the Ironbridge Land.[2]

8 The Development Land is located inland approximately 1.75 km west of Torquay Beach and has elevated sea views at its northern edge. The elevation slopes downwards towards a creek cutting across the land at its southern border. A waterway reserve dissects the land between the midpoint of its southern boundary and the midpoint of its western boundary. The Development Land is bordered by another property to the north which itself connects to Grossmans Road, Duffields Road to the west, Spring Creek to the south and its eastern border travels along Attunga Drive and nearby side streets.

9 The purchase price was $20,000,000. A $2,000,000 deposit, less the option fee of $20,000, was paid on 9 May 2006. The balance was to be paid in three instalments:

(a) $1,250,000 to be paid within 30 days from the date of sale, which was ultimately paid on about 20 June 2006 ('First Instalment');

(b) $3,250,000 to be paid within two and a half years of the option date ('Second Instalment'); and

(c) a final sum of either $13,500,000, $12,500,000 or $11,500,000 to be paid within seven, six, or five years after the option date; in other words, there was a discount for early payment ('Final Instalment').

10 Ironbridge's claim is that it paid the O'Gradys a total of $13,858,344.48 between March 2006 and May 2016, comprising $11,593,085.68 in instalments of the purchase price and $2,265,258.80 in interest.[3] It accepts that Mrs O'Grady should retain the $2,000,000 deposit and the $1,812,500 received for land that was transferred to Ironbridge. Ironbridge has lodged a caveat on the remaining O'Grady Land, claiming an equitable lien. Ironbridge's claim for restitution totals $10,156,005.90, calculated as follows:

11 The parties identified the following issues to be decided, which I list together with the answers I reach in this judgment:

(a) What was the consideration, and did it totally fail? (Issue 1);

The consideration for the Contract dated 18 May 2006 was the conveyance of title to the O'Grady Land. The Contract was severable and the Transferred Land of stage 6 and Lot P was severed. The consideration for the Contract in respect of the remaining O'Grady Land, being the Retained Land, totally failed.

(b) Does Mrs O'Grady have a defence or defences to any restitutionary claim for failure of consideration? (Issue 2);

No, Mrs O'Grady does not have a defence to Ironbridge's restitutionary claim for failure of consideration. However, she is entitled to counter restitution for the remediation and rehabilitation of the temporary stormwater basin land. That counter restitution is fixed in the sum of $315,467.00 plus GST.

(c) In what amount, if any, should Mrs O'Grady make restitution? Is Ironbridge entitled to interest on any amount recovered? (Issue 3);

Subject to hearing from counsel about the precise figure, I consider that Mrs O'Grady must make restitution to Ironbridge of the sum of $10,156,005.90. Ironbridge is entitled to interest on that sum under the Supreme Court Act 1986.

(d) Is Ironbridge entitled to an equitable lien? (Issue 4); and

No.

(e) In what amount, if any should the Ironbridge parties be required to pay Mrs O'Grady interest? (Issue 5).

The Ironbridge parties, including subject to any further submissions of counsel the guarantors, are required to pay Mrs O'Grady interest, being the amount of interest owing under the deeds of variation as at the date of the rescission, which was either 12 July 2017 or 2 October 2017. I will hear the parties as to the date that should be adopted and the amount of interest owing as that date. Mrs O'Grady is also entitled to interest under the Supreme Court Act 1986 on that sum to the date of rescission.

(f) Has Ironbridge committed a trespass and, if so, what relief should be ordered? (Issue 6).

12 The terms of the Contract included that time was to be of the essence, that Ironbridge had a right to call for early transfer of the O'Grady Land, and that the O'Gradys were to execute documents at Ironbridge's expense and to assist in the registration of a plan of subdivision of the Development Land and at Ironbridge's expense, execute any documentation to assist in its rezoning.[4]

13 The Particulars of Sale defined the 'Settlement Date' as:

... the date upon which vacant possession of the property must be provided, namely, upon acceptance of title and receipt by the Vendor under the terms of this contract of the sum of $3,250,000.

Vacant possession of the entire O'Grady Land was not provided when the sum of $3,250,000 was paid, or appears to have been paid. The Settlement Date appears to have been extended by the deeds of variation referred to below.

14 General condition 7 of the Contract provided that:

1. A party who breaches this contract must pay to the other party on demand:-

(a) compensation for any reasonably foreseeable loss to the other party resulting from the breach, and

(b) any interest due under this contract as a result of the breach.

15 The provisions of Table A of the Seventh Schedule of the Transfer of Land Act 1958 applied to the Contract,[5] subject to any inconsistencies in the express terms of the Contract, in which case those express terms would prevail. Table A operated so that:

(a) if Ironbridge defaulted in making payment under the Contract, then interest would be charged at the rate fixed under s 2 of the Penalty Interest Rates Act 1983 plus 2% in lieu of any rate named in the Contract;

(b) while time was of the essence, a notice of default needed to be issued and served by the O'Gradys on Ironbridge before any rights arising from a default could be exercised;

(c) if Ironbridge defaulted and failed to remedy such a default, all monies unpaid under the Contract became immediately payable and recoverable at the option of the O'Gradys; and

(d) if the Contract was rescinded after a notice of default was issued and served, the deposit paid by Ironbridge was forfeited to the O'Gradys and the O'Gradys were entitled to, within one year, either sue for damages for breach of contract or resell the land and recover any deficiency on resale as liquidated damages from Ironbridge.

16 The Contract contained a special condition 7 that applied if the O'Grady Land was rezoned residential and a plan of sub-division for it was approved by the Land Titles Office prior to the expiration of seven years from the option date. If those events occurred, upon Ironbridge paying the O'Gradys $250,000, or any multiple thereof, they would transfer to it land equivalent in value to the amount paid, valued at the agreed rate of $250,000 per acre.

17 Mr Wallace's plan was to develop the Development Land into a 14 stage residential development to be called the 'Surf View Estate'.

18 Stages 1-5, 7 (save for land comprising Lot P) and 8 (in small part) were to be constructed mainly on Ironbridge Land. Stages 6, the Lot P part of stage 7, 8 (in large part), and 9-14 were to be constructed mainly on the O'Grady Land.[6]

19 Lot P is an area of land within stage 7 of the development which Mrs O'Grady transferred to Ironbridge on 25 November 2015 and which was allocated a notional value of $50,000. The transfer of Lot P enabled Ironbridge to build a sewer line to service other stages of the development.[7]

20 A plan of the Development Land showing the stages that were to be developed is attached to this judgment as Annexure A.

21 The Court and the parties conducted a view of the Development Land at an early point in the trial.

22 Ironbridge commenced the development of stages 1 and 2 on the Ironbridge Land in 2009.[8]

23 On 15 November 2007, the O'Grady Land was rezoned to residential[9] and the Surf Coast Shire approved a Development Plan of the proposed 14 stage development on the Development Land.

24 Stages 1 to 6 have been developed and stage 6 has been subdivided and sold to purchasers for residential housing. But the remaining development has stalled and receivers and managers have been appointed to Ironbridge.

25 After Ironbridge paid the First Instalment of the purchase price in June 2006, it was unable to make further payments as required by the Contract. The parties entered into a series of deeds of variation of the Contract which extended time for payment of instalments, allowed Ironbridge to take early possession of parts of the O'Grady Land, and permitted it to apply the proceeds from early sales of land to paying debts owed to third parties before those owed to the O'Gradys. For Ironbridge, the price for such deeds was often added interest on the sum that it owed the O'Gradys, which was payable at fixed dates unconnected to the dates on which title was to be conveyed.

26 I will next describe the deeds of variation and events that provide the context in which they were made.

27 On 12 November 2008, the parties entered into a deed ('First Deed') which extended the time for payment of the Second Instalment by dividing it into four instalments, to be paid between 12 November 2008 and 12 March 2009, with Ironbridge to pay interest on the Second Instalment at the rate of 13% per annum.[10]

28 The Recitals to the First Deed stated that Ironbridge was unable to make payment of the instalment of $3,250,000 due on 12 November 2008 and noted that the O'Gradys had agreed to Ironbridge's request for an extension of time 'on condition that' Ironbridge and Mr and Mrs Wallace enter into the First Deed and 'in consideration of [the O'Gradys] agreeing not to enforce the payment of the [Second Instalment] on [12] November 2008'.

29 Mrs O'Grady gave evidence that she and her husband agreed to Ironbridge's various requests for more time to make payments due under the Contract on the condition that interest would be paid on the unpaid amounts. She also gave evidence that she would not have agreed to extend the due dates for payments if Ironbridge had not agreed to pay interest and that, in agreeing to extend payment dates, she acted on the basis of Ironbridge's promises to make all outstanding payments and in the belief that Ironbridge would perform all obligations under the Contract as varied. Ironbridge submitted that Mrs O'Grady had no memory of events that would support this evidence and I consider this submission later in the judgment.

30 Mr Wallace gave evidence that, in causing Ironbridge to enter into the First Deed, he understood that Ironbridge was receiving an extension of time for payment and that the price to pay for the extension was interest.[11]

31 By early 2009, Ironbridge was significantly in arrears of the payments to the O'Grady due under the Contract.

32 On 29 January 2009, Ms Birk of Logie-Smith Lanyon, Ironbridge's solicitors, emailed Ms Fox of Coulter Roache Lawyers, the O'Gradys' solicitors, regarding Ironbridge's request for further time within which to pay an instalment of $1,000,000 due under the First Deed. The email noted, among other things, that interest would continue to accrue and that the O'Gradys required the 'current interest' of $44,609.65 'to be paid now'.[12] On 3 March 2009, Mr Carmody of Ironbridge emailed Mr Lamb of Coulter Roache Lawyers stating that Ironbridge would be requesting a further six months extension to the terms that had been arranged in November 2008. He stated that Ironbridge would bring the interest payments up to date before the end of March and keep them up to date. He also said that the approval for the land adjoining the O'Grady Land had finally issued and that Ironbridge would be able to start construction shortly and 'extract the capital [it] expected 12 months ago'.[13] He also referred to other sources of capital that would enable it to provide funds to the O'Gradys.[14]

33 The O'Gradys agreed to the request for an extension of time and a second deed of variation was executed on 27 April 2009 ('Second Deed').[15] It extended the time for payment of $2,250,000 on account of principal instalments which was due on or before 12 September 2009 and provided for Ironbridge to pay interest. As security for its obligations, Ironbridge, the Wallaces and I Wallace & Associates Pty Ltd agreed to give the O'Gradys a mortgage over a property in Western Australia.[16]

34 Recital F to the Second Deed recorded that Ironbridge was in default of the Contract (as varied) in that it had failed to pay interest on the principal instalments due on 12 December 2008, 12 January 2009, 12 February 2009 and 12 March 2009 and had failed to pay the sum of $1,000,000 on account of the purchase price due on 12 March 2009. Recital G noted that Ironbridge and the guarantors had requested that the O'Gradys 'refrain from enforcing the Contract, and allow [Ironbridge] further time in which to make the payments now overdue'. Recital I noted that the O'Gradys had agreed to the request 'on condition that [Ironbridge] enter into the [Second Deed] to provide for a further variation of the Contract.'

35 Pursuant to the Second Deed, 'in consideration of the Vendor refraining from enforcing the Contract ...' (as varied), Ironbridge and its guarantors agreed with the O'Gradys as follows:

(a) that the sum of $73,125, being arrears of interest, payable (as referred to in recital F(i)) 'shall be paid to the Vendors via the Vendors solicitor on or before 30th April 2009';

(b) that Ironbridge was obliged to pay the sum of $146,250 (being interest on the overdue purchase price component of $1,000,000 for the period 12 March 2009 to 12 September 2009) on or before 12 May 2009;

(c) that, save as expressly provided, the terms of the Contract (as varied) were affirmed; and

(d) if Ironbridge (or the guarantors) defaulted in their obligations under the Second Deed, then the 'entire balance of the purchase monies payable under the Contract, the Variation Deed and this Deed shall immediately become due and payable, without prejudice to the Vendor's rights under the Contract'.

The O'Gradys seek payment of outstanding interest and costs

36 On 19 May 2009, the O'Gradys' solicitor, Ms Fox, emailed Ironbridge's solicitor, Ms Birk, asking for confirmation as to when the O'Gradys could expect payment of outstanding interest and costs. Ms Birk replied the following day that she was sorry Ms Fox had to run around for the payments, and that she would chase up her clients and let Ms Fox know when she had a response.[17]

37 On 20 May 2009, Coulter Roache Lawyers again wrote to Logie-Smith Lanyon regarding breaches by Ironbridge of the Contract as varied and stated that '[o]f grave concern to both ourselves and our client is the lack of response by [Ironbridge]'.[18] The letter noted that '[w]e are now in a position of crisis in the matter', noting that Ironbridge had not complied with the O'Gradys' further indulgences to allow more time to pay arrears and instalments, and that the sum of $146,250 due on 12 May 2009 was outstanding, together with legal costs of $1,500.

38 On 5 June 2009, Coulter Roache Lawyers wrote to Logie-Smith Lanyon regarding outstanding amounts under the Contract, noting 'with concern', that no further response had been provided other than that Ironbridge would pay the balance of funds payable within 14 days.[19]

39 On 5 August 2009, Coulter Roache Lawyers wrote to Logie-Smith Lanyon acknowledging receipt of a $20,000 payment 'without prejudice to [the O'Gradys'] rights'.[20] The letter noted that an interest and costs payment was to be made by 7 August 2009 and that an instalment of $2,235,000[21] was due on 12 September 2009.

40 On 4 September 2009, the O'Gradys issued a rescission notice to Ironbridge requiring payment of amounts then outstanding within 14 days. The rescission notice stated that Ironbridge had defaulted by failing to pay $66,250 of the $146,250 due on 12 May 2009 and $1,650 on account of legal costs due under the Second Deed on 9 April 2009.[22]

41 On 15 September 2009, Ms Birk of Logie-Smith Lanyon emailed Ms Fox of Coulter Roache Lawyers seeking confirmation that Ms Fox's office had received the funds necessary to remedy the default referred to in the rescission notice. The email noted that $2,235,000 was due on 12 September 2009 and sought to extend the date for the payment of that instalment, including that part be paid in six months' time. The next day, Ms Birk asked Ms Fox if the O'Gradys would like the next month's interest paid in advance.

42 On 25 September 2009, the O'Gradys issued another rescission notice to Ironbridge because of its failure to pay the amount of $2,250,000 due on 12 September 2009.

43 On 8 October 2009, Coulter Roache Lawyers wrote to Logie-Smith Lanyon setting out the terms upon which the O'Gradys were prepared to withdraw the rescission notice, including that interest and cost payments be made by specified dates.

44 Mrs O'Grady's evidence, in her witness statement, in effect was that whenever she and her husband agreed to grant Ironbridge more time for payments, it was on condition that interest be paid on unpaid amounts, and on the basis of Ironbridge's promises that it would make all outstanding payments, complete its purchase, and perform all obligations under the Contract. They would not have agreed to withdraw the rescission notice and keep the Contract on foot if Ironbridge had not agreed to pay all amounts owing, including interest on unpaid amounts. As previously mentioned, I consider below the significance of this evidence when assessed in conjunction with Mrs O'Grady's oral evidence.

45 By June 2010, stages 1 and 2 were developed and the plan of subdivision for them registered.

46 A third deed was entered into on 18 April 2013 ('Third Deed') which recited that:[23]

1. The balance of the purchase price is due to [the O'Gradys] on 18th May 2013 ("the settlement date").
2. [Ironbridge] is in possession of the land pursuant to the terms of the Contract.
3. [Ironbridge] has been since about August 2012 at its cost in all respects, carrying out works on part of the land for the purposes of subdivision and sale of same. ... The [O'Gradys] have not in any manner participated in such works.
4. The area of the land which [Ironbridge] proposes to subdivide prior to the settlement date is:

(a) for Plan 6ai - 0.557 hectares (1.24 acres) being the land in Plan of Subdivision 648126N.

(b) for Plan 6aii - 0.902 hectares (2.23 acres) being the land in Plan of Subdivision 710771M.

1. [Ironbridge] requested the [O'Gradys] to agree to the subdivision of the land prior to the settlement date for the benefit of [Ironbridge].

1. The [O'Gradys] have agreed to such request, subject to the terms and conditions herein contained.

47 The Third Deed contained Ironbridge's acknowledgement that:

(9) ... the [O'Gradys] have agreed to these terms to assist [Ironbridge] in its development and sale of the land and that the $40,000.00 being received by the [O'Gradys] on the settlement of each lot are being applied in reduction of the balance of the purchase price under the Contract.

48 The Third Deed required the O'Gradys to do all things necessary to assist with the registering of plans of subdivision for stage 6 on the O'Grady Land in return for the payment of $250,000 per acre of part of that land referred to as the stage 6A land, which Ironbridge proposed to subdivide prior to settlement. The Third Deed stated that Ironbridge had executed in the O'Gradys' favour mortgages over the lots in the subdivisions to secure the balance of the purchase price which were to be discharged upon the sales of the lots. The parties were to execute two transfers of the stage 6A land to Ironbridge with the consideration recorded in the transfers being $400,000 and $600,000, respectively. The Third Deed also required Ironbridge to pay the O'Gradys $40,000 for each subdivided lot that they sold to third parties.[24]

49 Mr Wallace gave evidence that this early possession of land for construction purposes was '[i]n accordance with the deed. We were just doing what the deed allowed us to do'.[25]

50 On 18 May 2013, the parties entered into a fourth deed to extend the due date of the Final Instalment and thus the completion of the Contract ('Fourth Deed'). The Fourth Deed recorded that the 'balance due under the Contract' was $13,500,000 as at 18 May 2013 and that Ironbridge had requested a variation of the Settlement Date to 18 May 2014. It also recorded that Ironbridge had agreed to pay interest on the balance of the purchase price at the rate of 20% and that the O'Gradys had agreed to extend the Settlement Date 'subject to the payment of the interest and subject to' the provisions of the Contract as varied. [26]

51 By this time, Ironbridge had begun construction of stage 6A on the O'Grady Land and stages 3 and 5 on the Ironbridge Land.

52 Mr Wallace accepted that 'the price or consideration that Ironbridge agreed to pay for [the] 12 month extension of time was interest at 20% per annum'.[27] That rate had been the subject of negotiation, with Ironbridge unsuccessfully seeking a lower rate of interest.[28]

The O'Gradys seek payments under the variation deeds

53 On 17 May 2013, Mrs O'Grady's solicitors wrote to Ironbridge's solicitors demanding payment of $40,000 for the lots of which sale had been settled and $112,500 for interest for the month commencing 18 May 2013. Mrs O'Grady's solicitors wrote that the sale of seven lots had settled.[29] On 22 May 2013, Ironbridge's solicitors confirmed that to be the case and enclosed a cheque for $392,000, being $40,000 for each of the seven lots plus interest of $112,500.[30] Costs incidental to the discharges of mortgages over the various lots were also paid.

54 On 7 August 2013, Mrs O'Grady's solicitors wrote again to Ironbridge's solicitors confirming that Mrs O'Grady was due to be paid $1,042,097.10 on 15 August 2013 for interest for the months of June, July and August 2013, and $600,000 as a result of the sale of 15 lots by Ironbridge.[31] On 20 August 2013, Ironbridge's solicitors advised that a cheque in the amount of $762,096.65 was deposited in Mrs O'Grady's account for the settlement of eight lots plus the interest for June to August 2013.[32] Incidental costs were again paid by deposit of a separate cheque.

55 On 23 September 2013, the solicitors exchanged emails about the payment of the September 2013 interest.[33] A letter was sent by Mrs O'Grady's solicitors on 20 November 2013 confirming receipt of $212,425.93 and confirming that payment of the November 2013 interest of $211,666.66 was due and payable.[34]

56 On 5 February 2014, Mrs O'Grady's solicitors again wrote to Ironbridge's solicitors confirming Ironbridge owed Mrs O'Grady $493,495.56.[35] Ironbridge deposited a cheque into Mrs O'Grady's account on 6 February 2014 in the amount of $211,931.74.

57 The payments which Ironbridge contends it made to the O'Gradys are listed in Annexure B to this judgment.

58 On 5 April 2014, Mr O'Grady died and, as the surviving joint tenant, Mrs O'Grady became the sole registered proprietor of the O'Grady Land.

59 By May 2014, Ironbridge had commenced construction on stage 6B of the Development Land. However, it did not complete the purchase on the due of 18 May 2014, and owed significant amounts to Mrs O'Grady.

60 A fifth deed was entered into on 27 October 2014 ('Fifth Deed'). The Fifth Deed recorded that the amount owing to Mrs O'Grady as at 30 June 2014 was $13,854,771.80, comprising the balance of the purchase price of $12,700,000 and interest of $1,154,771.80, and that Ironbridge had requested an extension of the Settlement Date from 18 May to 14 November 2014. The Fifth Deed also extended the date for payment, with interest on the outstanding sum(s) to be calculated daily at a rate of 20% per annum from 1 July 2014.[36]

61 Ironbridge agreed to pay to Mrs O'Grady the net proceeds of the sale of any lot arising from the subdivision of the land prior to the Settlement Date. Those proceeds were to be applied by paying to Mrs O'Grady the proceeds of any such sale, less any agent's commission, the legal costs of Ironbridge's solicitors on the sale of the lots, rate adjustments and any GST applicable on the sale. The proceeds were to be applied: firstly, towards any arrears owing to Mrs O'Grady, to her legal and accounting costs; and secondly, in reduction of the principal sum. Ironbridge promised to use its best endeavours and do all things reasonably required of it to pay to Mrs O'Grady on account of the principal sum the amount of $1,500,000 by 15 September 2014. The Fifth Deed recorded that Mrs O'Grady had agreed to extend the Settlement Date 'subject to the payment of the interest and subject to' the provisions of the Contract (as varied).

62 The extended Settlement Date of 14 November 2014 pursuant to the Fifth Deed passed without settlement. On 11 March 2015, Mr Lanyon, Ironbridge's solicitor, sent an email to Mr Lamb, Mrs O'Grady's solicitor, stating that Ironbridge's financier would provide funding as follows:[37] $6,000,000 would be provided at settlement to 'repay part of the O'Grady loan'; that the 'balance of the O'Grady loan [would] be secured by a second mortgage'; 'the financier [would] advance [$1,000,000] to complete [S]tage 6'; '[a]ll net proceeds from [S]tage 6 ... would be paid to Mrs O'Grady, reducing that loan by a further [$6,000,000], meaning that [$12,000,000] shall have been repaid within, say, 3 months'; the financier would provide an additional $3,500,000 to carry out works on stage 8 on the O'Grady Land 'which will enable the O'Grady loan to be repaid in full'. The email concluded by Mr Lanyon stating that he would keep Mr Lamb informed but that Ironbridge was expecting a letter of offer on finance 'in the next few days'. Ironbridge's own documentation earlier referred to the O'Grady 'loan'. Further reference was made to the O'Grady loan in correspondence.[38]

63 On 17 August 2015, the parties entered into the sixth and final deed ('Sixth Deed'), which was an extensive document in which Ironbridge acknowledged that it had failed to pay the Outstanding Principal Amount under and in accordance with the Contract. Ironbridge acknowledged and agreed that it had not paid the principal sum of $12,700,000 and that unpaid interest of $4,481,336.07 as at 31 July 2015 was owing and accruing daily at 20% per annum. The Sixth Deed did not provide for a completion date despite the previous date of 14 November 2014 having passed.

64 Ironbridge agreed to apply settlement funds from the sale of stage 6B lots: first towards amounts due to Draper's Civil Contracting Pty Ltd ('Draper's'), which had performed subdivisional works totalling $821,696.70;[39] second towards land tax; third for outstanding shire rates; fourth towards payment of commission that Ironbridge owed Hayden Real Estate for sales of stage 6B land; and finally towards any expenses that Mrs O'Grady might nominate in connection with the development. The Residual Settlement Funds, as defined, were absolutely and unconditionally assigned to Mrs O'Grady, and she was given an absolute discretion to apply them towards the outstanding principal, the interest owing in respect of that outstanding principal, or towards any other amounts owing to her under the Transaction Documents, as defined.

65 Under the Sixth Deed, Ironbridge was obliged to 'carry out ... all works and things required to achieve settlement under the Individual Lot Contracts', as defined, within four months and to 'diligently and expeditiously carry out ... all works and things required to achieve settlement under the Individual Lot Contract, to the satisfaction of' Mrs O'Grady (cl 4.1). It was expressly obliged to comply with the Project Documents, which term was defined to include the 'Construction Contracts' relating to stages 5 and 6B (cl 4.5). Mrs O'Grady was given 'step in' rights to ensure that settlement under the Individual Lot Contracts was achieved (cl 5). Mr Wallace agreed that there was a benefit to Ironbridge in deferring its obligations to pay the O'Gradys over the years because it enabled Ironbridge to fund development works on stage 6.[40]

66 On 13 April 2016, Ironbridge's solicitors wrote to Mrs O'Grady's solicitors regarding the Contract. By this stage, the 14 November 2014 Settlement Date under the Fifth Deed had passed without completion and the Sixth Deed, which was silent as to the date for completion, had been entered into eight months earlier. Mrs O'Grady had not taken any further action to terminate the Contract for breach. By their letter, Logie-Smith Lanyon put a proposal to Mrs O'Grady 'to enable the O'Grady loan to be repaid'.[41] Again, security for the loan was suggested, a second-ranking mortgage. The letter referred to the O'Grady 'loan' or the 'O'Grady debt' several times. Mr Wallace agreed that the proposal was for the O'Grady loan to be repaid and that he approved the proposal and was across its details.[42] He also gave evidence that negotiations occurred about the rate of interest to be paid.

67 On 6 June 2016, Coulter Roache Lawyers wrote to Logie-Smith Lanyon regarding the Contract.[43] They noted that Ironbridge was in default by failing to pay the purchase price and all monies owing to Mrs O'Grady by 14 November 2014, that time remained of the essence under the Contract, and placed Ironbridge on notice that all outstanding amounts were to be repaid by 24 June 2016. The letter sought payment of the principal sum, $8,406,915.35, plus interest in the sum of $7,443,874.83 'including' pursuant to cls 2.2 and 11 of the Sixth Deed.

68 On 6 July 2016, Mrs O'Grady's solicitors sent Ironbridge's solicitors a notice of intention to rescind based on general conditions 5 and 6 of Table A, giving Ironbridge 14 days to remedy the default.[44]

69 Mr Wallace agreed that, as at 6 July 2016, when Ironbridge was given a warning that Mrs O'Grady's patience would run out,[45] the Settlement Date remained 14 November 2014 and that Ironbridge owed the principal of $8,406,915.35 and interest of more than $7,700,000 which was continuing to accrue at 20%. He agreed Ironbridge did not comply with the demand for payment and he did not dispute the amount of interest said to be owing at that date. He agreed that the letter was a warning.[46]

70 On 18 July 2016, Mrs O'Grady and Ironbridge reached agreement for withdrawal of the rescission notice. The agreement was contained in a letter from Mrs O'Grady's lawyers, Coulter Roache Lawyers to Ironbridge's lawyers Logie Smith Lanyon.[47] The letter stated, inter alia:[48]

We refer to...our client's notice of intention to rescind the Contract dated 6 July 2016 (Recession Notice).

...

[O]ur client is prepared to withdraw the Rescission Notice on acceptance by each Purchaser Transaction Party (as defined in the Sixth Deed) (PTP) of the following terms:

1. Each PTP irrevocably acknowledges and accepts that the purchase price presently outstanding under the Contract is $8,406,915.35.
2. Each PTP irrevocably acknowledges and accepts that the interest due under the Contract (calculated to 6 July 2016) is $7,703,581.93, and continues to accrue at 20% per annum (calculated daily), and otherwise in accordance with clause 2.2 of the Sixth Deed.

1. The due date for payment of all monies owing under the Contract (including the amounts identified at paragraphs 1 and 2 above) is extended to 5 September 2016.

1. This offer may only be accepted by each Purchaser Transaction Party (as defined in the Sixth Deed) signing where indicated below, and returning the signed letter to our office by return email to [Coulter Roache Lawyers].

71 It was accepted by signature of Mr Ian Wallace and Ms Carolyn Wallace, each stating that they signed in their 'personal capacity and on behalf of Ironbridge Holdings Pty Ltd and I Wallace & Associates Pty Ltd'.

72 Ironbridge failed to settle and pay all amounts owing under the Contract by 5 September 2016. Mrs O'Grady's solicitors served a letter on Ironbridge's solicitors terminating the Contract because of that default.

73 This proceeding was commenced on 21 December 2016.

74 On 7 April 2017, Craig Shepard and John Bumbak of KordaMentha were appointed as receivers and managers of Ironbridge and I Wallace & Associates Pty Ltd. Ironbridge's loans had been obtained from the Bank of Queensland whose loan portfolio was purchased by Goldman Sachs, which is 'the ultimate interest standing behind the receivers who control this litigation on behalf of Ironbridge'.[49]

75 On 12 July 2017, Mrs O'Grady issued a further notice terminating the Contract on the basis that the appointment of the receivers and managers to Ironbridge and I Wallace & Associates Pty Ltd was an insolvency event under the Sixth Deed entitling her to terminate the Contract.

76 On or around 21 July 2017, Mr and Mrs Wallace appointed Greg Dudley and Neil Cribb of RSM Australia as joint and several administrators for Ironbridge. On 15 September 2017, a deed of company arrangement was entered into in respect of Ironbridge.

77 On 2 October 2017, Ironbridge's solicitors wrote to Mrs O'Grady's solicitors stating that Ironbridge accepted that the Contract had been terminated by the notice dated 12 July 2017.

78 On the same day, Ironbridge lodged a caveat over the land retained by Mrs O'Grady,[50] based on its contention that it has a purchaser's lien securing the repayment of monies paid to her under the Contract.[51] Mrs O'Grady seeks the removal of that caveat in this proceeding.

79 I will next describe the work undertaken in the development of the O'Grady Land and to the extent necessary on the adjoining Ironbridge Land. The parties each provided submissions as to the facts and, where appropriate, I have adopted their descriptions.

80 In late 2006, Ironbridge engaged Watsons Pty Ltd ('Watsons') to prepare a development plan to support an application to rezone the Development Land to residential. Watsons prepared a subdivision layout plan for the development, containing 14 stages ('Surf View Development').

81 After completing stages 1 to 4, Mr Wallace prioritised the development of stage 6 on the O'Grady Land so that Ironbridge could use the sale proceeds to pay the final purchase price instalment. Stage 5 could not be so used because Ironbridge had mortgaged it as security for its purchase of the Ironbridge Land. The development of stage 6 raised stormwater basin issues.

82 On or about 12 May 2010, Watsons prepared a Stormwater Management Plan for the Surf View Development. The plan noted that the O'Grady Land sloped steeply towards Spring Creek in the south and that two retarding basins, one in the east and one in the west, were required. The eastern basin would service stages 1 to 12 and the western basin stages 13 and 14.

83 In October 2010, Ironbridge obtained a planning permit for stages 4 and 5. The accompanying letter from the Council noted that the public open space required under two s 173[52] agreements with Council, which were registered on the title of the Ironbridge-owned 65 Grossmans Road, had not been provided and that the shortfall open space needed to satisfy the s 173 agreements had to be provided as part of the further subdivision of stages 6 to 14.

84 On 23 March 2011, Watsons prepared a revised subdivision layout plan for the Surf View Development. The plan showed a larger public reserve area in the north, with the lots previously abutting the reserve removed and replaced with public open space.

85 On 17 June 2011, Ironbridge obtained a planning permit for the land which included stages 6 to 14 of the Surf View Development. The permit required entry into an agreement pursuant to s 173 of the Planning and Environment Act 1987.

86 Ironbridge obtained three planning permits for the Surf View Development, the third of which related to stages 6 to 14. By June 2012, stages 3 and 4 were developed and the plan of subdivision for them registered.

87 On 8 August 2012, Ironbridge obtained an amended planning permit for stages 6 to 14 of the Surf View Development. On 13 August 2012, the subdivision layout plan for the Surf View Development was amended again, showing the shortfall public open space in the reserve to the north.

88 In order for stage 6 to be developed, a temporary stormwater basin needed to be built toward the southern end of stage 8. The existing temporary basin on stage 5 on the Ironbridge Land had insufficient capacity to service the existing stages 1 to 4 of the Surf View Development as well as stage 6. It treated and retarded stormwater from the developed stages 1 to 4 in the north and needed to be moved so that development of the stage 5 land could proceed.

89 On 20 February 2013, the Council sent Mr Wallace an amended planning permit 10/0417 for stages 6 to 14 of the land. The cover letter noted that new conditions 2 and 3 had been inserted, relating to the provision of a staged stormwater management plan to allow temporary stormwater facilities prior to delivery of the final stormwater infrastructure. It also noted that condition 1 of the permit had been amended to reflect the subdivision of stage 6 into four stages: 6A1, 6A2, 6B1 and 6B2. The letter noted that prior to the commencement of stage 7, in accordance with condition 4, an overall stormwater management plan would need to be submitted and approved by the Council. The effect of the letter and permit was to allow the decommissioning of the temporary stormwater basin on stage 5 of the Ironbridge Land and its replacement with the temporary basin on stage 8 of the O'Grady Land. Decommissioning of the basin on stage 5 allowed construction to occur on that stage with the new basin on stage 8 land to service the developed stages 1 to 4 on the Ironbridge Land.

90 The O'Gradys did not object to the grant of the amended planning permit 10/0417.

91 In August 2012, before the O'Gradys had transferred the stage 6 land to it, Ironbridge's contractors commenced construction works for the 'Stage 6A' of Surf View Development, which comprised stages 6A1 and 6A2. Mrs O'Grady gave evidence in her witness statement that she did not know when Ironbridge started work on the stage 6 land, that it had no lease or licence agreement and did not pay an occupation fee. Had she and her husband known that Ironbridge would fail to complete the Contract and pay amounts due they would not have permitted Ironbridge to construct a stormwater basin on the land.

92 It was only on 19 April 2013, about 7 months after construction work commenced, that the O'Gradys and Ironbridge signed a Transfer of Land for the stage 6A1 land, recording the consideration as $400,000.[53]

93 Stage 6A1 comprised 10 lots, numbered 601 to 610, which were on the O'Grady Land, save for lots 605 and 606 that were in part on the O'Grady Land and in part on the Ironbridge Land. Construction costs for stage 6A1 were $388,616, yielding Ironbridge a profit. Ironbridge entered into contracts for the sale of the stage 6A1 land between December 2011 and June 201354 a[54] the value of those contracts totalled $2,471,000.55 M[55] O'Grady contended that Ironbridge had made a profit of $1,900,000 from sale of stage 6A1 land and $2,860,000 from the sale of the 6A2 lots.

94 Under the terms of the Third Deed, the O'Gradys received $40,000 from the sale of each lot in stage 6A to be applied towards the purchase price.

95 The transfer of the stage 6A2 land was undated, but was signed on 25 July 2013 and recorded the consideration as $600,000.[56]

96 Mrs O'Grady gave evidence that she and her husband never agreed to the stage 6 land being given the value recorded in the transfers.[57]

97 From October 2012, Ironbridge had stockpiled soil on the O'Grady Land in the public reserve area in the north from work associated with stage 6B2.

98 On 7 March 2014, SMEC Urban, who were engineers acting on Ironbridge's behalf, awarded the stage 6B contract to Draper's ('6B Contract'). The contract price was $893,458.50, however the final payment claim dated 30 January 2016 noted stage 6B construction costs of $917,564. The 6B Contract included works associated with the construction of the temporary stormwater basin on stage 8 of the Surf View Development.

99 In April 2014, Ironbridge commenced construction works on stage 6B, which had two sub-stages, 6B1 and 6B2. Stage 6B1 comprised 18 lots numbered 611 to 628, which were on the O'Grady Land with the exception of lots 615, 616, 623, 624 and 625 which were partly on the O'Grady Land and partly on the Ironbridge Land. Stage 6B2 was to be subdivided into 10 lots, numbered 638 to 647, each of which was wholly on the O'Grady Land.

100 Ironbridge did not pay the final instalment of $13,500,000, or any part of it, to the O'Gradys by the due extended date of 18 May 2014. By that stage, Ironbridge had commenced construction on stage 6B of the Surf View Development, although it did not acquire title to that land until November 2015.

101 By email dated 15 October 2015, Jeremy Ashley of Logie-Smith Lanyon asked Tim Ma of Coulter Roache Lawyers whether 'Lot P' on the O'Grady Land could be transferred to Ironbridge, along with lots 638 to 647 which formed stage 6B2. That would increase the consideration to be paid because it would transfer a further 808m2 of land. Mr Ashley stated that Ironbridge had been in discussions with the mortgagee in respect of the Ironbridge Land and that stage 7 of the Surf View Development, which was predominantly on Ironbridge Land, incorporated Lot P. The mortgagee had apparently requested that Lot P be transferred in the same transaction, as this 'should make things a little smoother for the stage 7 subdivision'.[58]

102 Mr Wallace agreed that the transfer of Lot P was a benefit to Ironbridge, as it enabled Ironbridge to build a sewer line which benefitted stages 1 to 5 and stage 6 of the Surf View Development.[59]

103 It was only on 25 November 2015, more than eighteen months after construction works commenced, that Mrs O'Grady signed transfers of the land contained in stages 6B1 and 6B2 and Lot P to Ironbridge for a total consideration of $812,500. The transfer of the stage 6B1 land recorded the total consideration as $497,000 and the transfer of the stage 6B2 land recorded the total consideration as $315,000.[60] Mrs O'Grady submitted that Ironbridge made a profit of $5,800,000 on the sale of the stage 6B lots.[61]

104 In order for stage 5 to be constructed, a temporary stormwater basin was relocated from that stage on Ironbridge Land to stage 8 on O'Grady Land, as the existing basin on the Ironbridge Land was insufficient. It was constructed in November 2014 and is 3,200 square metres in area.

105 Both parties agreed that this temporary basin was a benefit to Ironbridge, given that it serviced the developed stages. Ms N Barich, an engineer who gave evidence for Ironbridge, said that the basin was intended for the retardation and treatment of flows generated from the development of stages 1 to 6. It captures the stormwater runoff from the developed land and controls the rate at which the runoff discharges into Spring Creek. This ensures that the developed stages do not permanently hold water and are free draining. Other witnesses gave similar evidence.

106 A permanent stormwater drain was to be constructed below stage 7, but has not been and the temporary stormwater basin is still on the O'Grady Land.

107 The soil excavated in the construction of the temporary stormwater basin was piled into several large stockpiles that still lie on the O'Grady Land. Mr Wallace conceded that this stockpiling of soil on the O'Grady Land was a benefit to Ironbridge.[62] In around April 2014, Ironbridge also stockpiled soil in stage 8 below Beach Road, partly on the O'Grady Land and partly on the Ironbridge Land. Approximately 25,000 tons of soil remains on stage 8.[63] This was the basis for Mrs O'Grady's trespass claim in her counterclaim, which is Issue 6 and is discussed below.

108 Between November 2015 and February 2017, Ironbridge entered into contracts to sell the lots in stage 7 on the Ironbridge Land for a total price of $12,970,000. None of those contracts have settled, but all remain on foot Mr Shepard intends to recommend to the secured creditor that stage 7 and the permanent basin be constructed and the lots in stage 7 be settled or sold.

Principles applicable to claims of unjust enrichment

109 I next consider the legal issues raised by Ironbridge's claims. I will commence with a general description of the basis of claims in unjust enrichment.

110 In order to succeed in a claim for remedies based on unjust enrichment, a plaintiff must establish that the defendant has been enriched at the plaintiff's expense and that the enrichment is unjust. Defences are available to an unjust enrichment claim including that the defendant has irreversibly acted to its detriment because of the enrichment. A claim based on unjust enrichment must fit within the accepted categories in which the law allows recovery by one person of a benefit obtained by another,[64] one category being the total failure of consideration for the bargain made by the parties.

Issue 1: What was the consideration, and did it totally fail?

111 The first issue for decision was whether there was a total failure of consideration justifying an order for restitution. As Mason CJ stated in Baltic Shipping Co v Dillon ('Baltic Shipping'):[65]

it is the performance of the defendant's promise, not the promise itself, which is the relevant consideration. In that context, the receipt and retention by the plaintiff of the bargained-for benefit will preclude recovery, unless the contract otherwise provides or the circumstances give rise to a fresh contract.

112 In identifying the consideration in a bargain, the law 'looks to the benefit bargained for by the plaintiff rather than any benefit which might have been received in fact',[66] and so is directed only to those benefits bargained for under the contract. Where none of those benefits have been received by one party and there has been a complete failure of the agreed return which was the basis of a contract, a total failure of consideration has occurred. But when a party has received some of the benefits for which they bargained, there will be no total failure of consideration, unless those benefits received are only 'incidental' to the benefit that was to have been provided.

113 However, if the contract can be divided into severable parts, a total failure of consideration in one severable part may justify restitution of benefits received under that part, although the consideration for the other severable parts may not have failed.[67]

114 Ironbridge emphasised the importance of the High Court decision in McDonald v Dennys Lascelles Ltd ('McDonald')[68] for the determination of restitution cases involving the sale of land. In that case, the assignee from the vendors of a contract of sale of land made a claim for an unpaid instalment of the purchase price against the guarantor of the purchasers' obligations as joint purchasers. The contract had been terminated at a point when that instalment was due. Dixon J held that the vendor, having elected to rescind the contract rather than sue for breach or specific performance, was not entitled to the unpaid instalment. He stated that:[69]

When a party to a simple contract, upon a breach by the other contracting party of a condition of the contract, elects to treat the contract as no longer binding upon him, the contract is not rescinded as from the beginning. Both parties are discharged from the further performance of the contract, but rights are not divested or discharged which have already been unconditionally acquired. ... It does not, however, necessarily follow from these principles that when, under an executory contract for the sale of property, the price or part of it is paid or payable in advance, the seller may both retain what he has received, or recover overdue instalments, and at the same time treat himself as relieved from the obligation of transferring the property to the buyer. When a contract stipulates for payment of part of the purchase money in advance, the purchaser relying only on the vendor's promise to give him a conveyance, the vendor is entitled to enforce payment before the time has arrived for conveying the land; yet his title to retain the money has been considered not to be absolute, but conditional upon the subsequent completion of the contract. 'The very idea of payment falls to the ground when both have treated the bargain as at an end; and from that moment the vendor holds the money advanced to the use of the purchaser' ... It is now beyond question that instalments already paid may be recovered by a defaulting purchaser when the vendor elects to discharge the contract (Mayson v Clouet).

115 Ironbridge argued that McDonald established that in the case of contracts for the sale of land, the consideration is the conveyance of title. As Ironbridge had not received conveyance of the title to any of the land other than stage 6 and Lot P, it was entitled to restitution of the amounts that it paid the O'Gradys other than the deposit and the amounts recorded in the transfers of land for stage 6 and Lot P ('Transferred Land').

116 Ironbridge argued that the consideration for the instalment payments of the purchase price was the conveyance of title to the land. It pointed to the expression 'Settlement Date' in the Contract, which stated that Ironbridge was to have 'vacant possession' of the land 'upon acceptance of title and receipt by the Vendor under the terms of this contract of the sum of $3,250,000'. The benefits it received from the O'Gradys during the decade when the Contract was on foot were incidental and were not the consideration for the instalment payments, as the conveyance of title was. But, without that conveyance, the incidental benefits given by the O'Gradys were of no value.

117 The stage 6 land transferred by the O'Gradys and developed by Ironbridge was a severable part of the consideration and had been severed in the manner contemplated by special condition 7 of the Contract.

118 Mrs O'Grady argued that Dixon J's statement in McDonald was limited in application to cases where the conveyance of title was the only consideration and did not apply when there was additional consideration or were additional benefits agreed to be provided, as there had been in this case.

119 Mrs O'Grady submitted that the consideration under the Contract was not limited to the conveyance of land. This was not a straight forward agreement for the sale of land. The agreed return for the payments of principal and interest that Ironbridge made and for which it seeks restitution was title to some land, assistance from the O'Gradys in rezoning, subdividing and developing stages of the Development Land, including stages on the Ironbridge Land and loan finance from the O'Gradys.

120 Ironbridge had bargained for and received other important benefits from the O'Gradys, including:

(a) financial accommodation in the form of extended payment terms, forbearance of the obligation to pay the purchase price immediately upon default, and the withdrawal of Mrs O'Grady's rescission notices;

(b) early possession of the stage 6 land, before settlement of its purchase, so that Ironbridge could facilitate its development and the construction for housing lots;

(c) the ability to sell lots in stage 6 and the proceeds of sale of lot 6. Ironbridge received the early transfer of the stage 6 land which was subdivided, developed, and sold to purchasers for a total amount of $12,942,500;

(d) the benefit of subdivisional works to stages 1 to 5 and 7 of the land, which Ironbridge owned;

(e) the benefit of being able to erect a temporary stormwater basin on stage 8, which was O'Grady land, which enabled Ironbridge to develop its adjoining stage 5 land and spared it the expense of constructing a permanent stormwater basin on its land;

(f) the early transfer of Lot P for a nominal amount;

(g) the benefit of being able to freely allocate the public open space required for the Surf View Development, including onto O'Grady Land rather than onto Ironbridge Land;

(h) the ability to pay other creditors in priority to the O'Gradys and to use settlement funds from the sale of 6B lots, which were assigned to Mrs O'Grady under the Sixth Deed, to pay other creditors before her; and

(i) the benefit of being allowed to stockpile soil from construction works on the O'Grady Land, rather than on Ironbridge Land.

Analysis of Issue 1: What was the consideration and did it totally fail?

121 The question is what was the agreed return or the benefit bargained for: the O'Gradys' conveyance of their land to Ironbridge, or that conveyance and the benefits that Mrs O'Grady contended that she and Mr O'Grady provided to Ironbridge under the Contract.

122 In Mann v Paterson Constructions Pty Ltd ('Mann'), Nettle, Gordon and Edelman JJ stated:[70]

The 'qualifying or vitiating' factor giving rise to a prima facie obligation on the part of the enriched party to make restitution is a total failure of consideration, or a total failure of a severable part of the consideration. In this context, consideration means the matter considered in forming the decision to do the act: 'the state of affairs contemplated as the basis or reason for the payment'. In many cases the relevant basis will be the benefit that is bargained for. In those cases, '[t]he test is whether or not the party claiming total failure of consideration has in fact received any part of the benefit bargained for under the contract or purported contract'.

123 In the case of a contract purely for the sale of land, the authorities are clear that the conveyance of the title is the agreed consideration. A vendor who has been paid the purchase price or part of it cannot keep that amount and the land; as Parke B said in Laird v Pim,[71] a vendor cannot have the land and its value too.[72]

124 To repeat Dixon J's statement in McDonald, a case in which the purchaser had been in possession of the land before the contract was rescinded:[73]

When a contract stipulates for payment of part of the purchase money in advance, the purchaser relying only on the vendor's promise to give him a conveyance, the vendor is entitled to enforce payment before the time has arrived for conveying the land; yet his title to retain the money has been considered not to be absolute but conditional upon the subsequent completion of the contract... It is now beyond question that instalments already paid may be recovered by a defaulting purchaser when the vendor elects to discharge the contract.

125 As Lowe J said in Real Estate Securities Ltd v Kew Golf Links Estate Pty Ltd ('Real Estate Securities'):[74]

It must not, however, be thought that I lend any countenance to the suggestion that possession of the purchaser will defeat his claim at law to the return of the instalments, where such a claim is open to him. As Dixon J has pointed out, the consideration for the purchase money is the conveyance. Possession pending the time for completion is treated in the contract for sale, not as part of the consideration, but as merely incidental thereto.

126 Lord Goff in the House of Lords decision in Stocznia Gdanska SA v Latvian Shipping Co, wrote that in cases for the sale of land or goods:[75]

it has been held that the buyer's remedy is contractual, the seller's title to retain the money being conditional upon his completing the contract: see, eg, Dies v British and International Mining and Finance Corporation Ltd (sale of goods), and the much-quoted judgment of Dixon J in McDonald v Dennys Lascelles Ltd ((sale of land).

127 Young CJ in Eq summarised these principles in Mulkearns v Chandos Developments Pty Ltd (No 3) in the following terms:[76]

The matter was considered in great detail by McPherson J in Lexane Pty Ltd v Highfern Pty Ltd. That case involved a failed contract for a home unit building, Shangri-La in Surfers Paradise. The purchase price was $11.5 million with a deposit of $500,000 and a $4 million progress payment to be made in four equal instalments of $1 million each. The purchaser paid the $4.5 million, but defaulted in completion and the vendor terminated. McPherson J said:

The fundamental principle applicable to a vendor who rescinds for breach after receiving payment, wholly or in part, on account of the price is that 'he cannot have the land and its value too': Laird v Pim per Parke B. Hence money so paid by the purchaser is recoverable from the vendor. At law it is recoverable as money had and received upon a total failure of consideration.

...

When considering total failure of consideration, two aspects of the matter have to be taken into account. The first is that there was a view in the early 20th century that there cannot be a total failure of consideration if the plaintiff obtains even a slight benefit from the contract. Thus in Real Estate Securities Ltd v Kew Golf Links Estate Pty Ltd there is a suggestion (which was indeed rejected in that case) that a person who has been in possession under the contract cannot say that consideration has fully failed. However, whilst the matter is not completely clear, the better view in 2005 is that being in possession does not mean that there has not been a total failure of consideration. The current view of the term is that total failure of consideration is directed to the key and principal part of the contract. In cases of the present type this is to provide a conveyance; see Automatic Fire Sprinklers Pty Ltd v Watson and Voumard, Sale of Land 5th ed [12 280].

128 Early possession of the land prior to settlement as occurred in McDonald,[77] and Real Estate Securities,[78] is generally not regarded as separate consideration, but as incidental to the primary bargain for the conveyance of title. The view has not been universally adopted; for instance Fullagar J, when a judge of this Court, said in Hodder v Watters[79] that there was much to be said for the view that, strictly speaking, that where a benefit, such as possession of the property sold, has been given by the vendor and received by the purchaser under the contract before settlement, it was not correct to say that there had been a total failure of consideration for that payment.

129 Another category in which the transfer of title is seen as critical is in the sale of chattel cases. It is no answer to a purchaser's claim for recovery of the purchase price when the vendor cannot give title that the purchaser has had the use of the chattel.[80]

130 The balance of authority supports the conclusion that mere possession of land without transfer of title is not part of the agreed return in a contract for the sale of land, and enjoyment of that possession is not sufficient to answer an unjust enrichment claim based on a total failure of consideration. Therefore, the early possession of the O'Grady Land was an incidental benefit and not separate consideration.

131 Mason CJ adopted the same approach in Baltic Shipping in the following passage:[81]

A qualification to this general rule, more apparent than real, has been introduced in the case of contracts where a seller is bound to vest title to chattels or goods in a buyer and the buyer seeks to recover the price paid when it turns out that title has not been passed. Even if the buyer has had the use and enjoyment of chattels or goods purportedly supplied under the contract for a limited time, the use and enjoyment of the chattels or goods has been held not to amount to the receipt of part of the contractual consideration. Where the buyer is entitled under the contract to good title and lawful possession but receives only unlawful possession, he or she does not receive any part of what he or she bargained for. And thus, it is held, there is a total failure of consideration. As this Court stated in David Securities Pty Ltd v Commonwealth Bank of Australia: 'the notion of total failure of consideration now looks to the benefit bargained for by the plaintiff rather than any benefit which might have been received in fact.'

132 The first task is to identify the agreed return or the benefit bargained for under the Contract.

133 The judgment of Deane and Dawson JJ in Baltic Shipping provides guidance as to how to identify the consideration and the bargain. This case concerned a holiday cruise which ended prematurely when the cruise ship was wrecked. Deane and Dawson JJ explained that:[82]

There can be circumstances in which there is, for relevant purposes, a complete failure of consideration under a contract of transportation notwithstanding that the carrier has provided sustenance, entertainment and carriage of the passenger during part of the stipulated journey. For example, the consideration for which the fare is paid under a contract for the transportation of a passenger by air from Sydney to London would, at least prima facie, wholly fail if, after dinner and the inflight film, the aircraft were forced to turn back due to negligent maintenance on the part of the carrier and if the passenger were disembarked at the starting-point in Sydney and informed that no alternative transportation would be provided ...

However, the promised consideration in the present case was not, as a matter of substance, the transportation of Mrs Dillon from Sydney to Sydney. As has been said, it was the provision of all that was involved in the promised pleasure cruise as a holiday experience. Even on the assumption that that promised consideration was entire and indivisible, it did not wholly fail. Baltic provided and Mrs Dillon accepted and enjoyed eight complete days of the cruise. It is true that Mrs Dillon would have been entitled to decline to board the ship or to accept only part of the promised consideration if it could have, and had, been known in advance that all that Baltic would in fact provide was eight days of cruising culminating in the sinking of the ship off New Zealand as a result of Baltic's breach of its contractual duty to take reasonable care. If, in that necessarily hypothetical situation, Mrs Dillon had wisely decided to stay at home, the consideration for the fare would have failed completely and, subject to any applicable provisions of the contract between herself and Baltic, she would have been entitled to succeed in an action in unjust enrichment for the recovery of the whole fare. In circumstances where Mrs Dillon accepted and enjoyed the major portion of the pleasure cruise, however, there was no complete failure of the consideration for which she paid the fare. The catastrophe of the shipwreck and its consequences undoubtedly outweighed the benefits of the first eight complete days. It did not, however, alter the fact that those benefits, which were of real value, had been provided, accepted and enjoyed.

134 The receipt of benefits associated with a contract for the sale of land additional to a conveyance of the land does not prevent a total failure of consideration, if those benefits are properly characterised as incidental or collateral benefits.[83]

135 Ironbridge did benefit from having early access to the stage 6 and Lot P land and being able to commence construction works and to subdivide and sell the lots.[84] But that was done under the mechanism contained in special condition 7 of the Contract.

136 Many of the benefits Ironbridge received were required under the Contract, including under the implied term of co-operation, which Griffith CJ described in Butt v M'Donald as:[85]

... a general rule applicable to every contract that each party agrees, by implication, to do all such things as are necessary on his part to enable the other party to have the benefit of the contract.

137 This description was based upon the duty to co-operate as expressed by Lord Blackburn in Mackay v Dick:[86]

I think I may safely say, as a general rule, that where in a written contract it appears that both parties have agreed that something shall be done, which cannot effectually be done unless both concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect. What is the part of each must depend on circumstances.

138 The obligations imposed by special conditions 7 and 8 of the Contract are relevant in assessing the legal effect of the benefits provided to Ironbridge on which Mrs O'Grady relies. The Contract provided for the possibility that before the due date for the payment of the final instalment of the purchase price of $13,500,000, the Development Land may have been rezoned as residential and a plan of subdivision of the O'Grady Land approved by the Land Titles Office. If those events occurred, the O'Gradys agreed to transfer land at the 'agreed rate' of $250,000 per acre. The O'Gradys also agreed to execute any documentation to assist in the registration of a Plan of Subdivision of the land and its rezoning as residential (special condition 8). The benefit of being able to use the sale price of stage 6 lots to pay other creditors before Mrs O'Grady was the result of the operation of the special conditions and of the Third Deed which provided for the transfer of land at $250,000 per acre before Ironbridge had made the final payment under the Contract. It also provided for payment to the O'Gradys of $40,000 per lot sold.

139 The land to be rezoned and subdivided was both the O'Grady Land and the Ironbridge Land, and some of the subdivision works benefited all of that land, which formed the Surf View Estate. The allocation of public space in the development, involved consideration of the development as a whole, encompassing both the O'Grady Land and the Ironbridge Land.

140 The forbearance to sue and extension of time for payment of instalments of the purchase price in exchange for the payment of interest were not required by the Contract but are relied on by Mrs O'Grady in support of her claim for interest which she submits was the subject of separate agreements. That issue is discussed below as part of issue 5.

141 Then there was the benefit conferred by the temporary retarding basin, the construction of which allowed Ironbridge to develop the stage 5 land. By not objecting to its construction the O'Gradys conferred an additional benefit on Ironbridge not required by the Contract. The temporary basin must remain on O'Grady Land until the construction of a permanent basin that satisfies the Council's requirements. As mentioned, in building the temporary basin on stage 8, Ironbridge was permitted to stockpile large amounts of soil on O'Grady Land.[87] I consider that in permitting the construction of the temporary basin, the O'Gradys went beyond their duty to co-operate under the Contract to achieve the subdivision of the land. However, I consider it to be an incidental or collateral benefit under the Contract. As I discuss later, I consider that it entitles Mrs O'Grady to a remedy in counter restitution to remediate the effects on her land of the temporary stormwater basin.

142 Mr Wallace said that the O'Gradys' grant of permission to Ironbridge to commence construction of works on stages 6A and 6B before it paid for, and obtained title to, the stage 6 land, benefited both Ironbridge and the O'Gradys and was '[i]n accordance with the deed. We were just following what the deed allowed us to do'.[88] The O'Gradys later transferred to Ironbridge the stage 6 land to which it received early access. The early access was preparatory to that early transfer, which in turn occurred under special condition 7. Mr Wallace agreed that the ability to sell lots in stage 6 was a benefit to Ironbridge from the money it obtained from sale of stage 6 lots: $1,900,000 from the sale of stage 6A1 lots, $2,860,000 from the sale of stage 6A2 lots and $5,800,000 from the sale of stage 6B lots. But as I have noted, the grant of early possession of the land to be conveyed does not prevent a total failure of consideration.

143 The manner in which the open space requirements for the Surf View Development were dealt with also conferred a benefit on Ironbridge. On 29 October 2010, pursuant to the terms of planning permit 10/0417, the Council required the provision on Ironbridge Land of a public open space shortfall in the development. The permit related to stages 6 to 14, which were primarily on the O'Gradys' land. Mr Wallace did not admit that this shortfall necessarily had to be provided on the O'Gradys' Land.[89] He said that the change in the subdivision layout plan from 15 January to 23 March 2011 was to show more public open space on the O'Gradys' retained land, and to avoid public open space on the O'Gradys' own land at 115 Grossmans Road, Torquay. This explanation does not appear to be supported by the documents, in the sense that they did not make it essential that the open space be provided on O'Grady Land. The letter dated 29 October 2010 provided that the public open space requirement was required pursuant to the s 173 agreement AG305099E which related to the O'Grady Land and Ironbridge Land (20 Eton Road, Torquay) and agreement AD770875M (relating to 116 Beach Road).[90]

144 However, I do not regard the O'Gradys' actions in providing open space on their land as the provision in respect of the sale of the O'Grady Land. It was the provision of an incidental benefit. The sale of the land was for a residential development in which the Council required open space to be provided. The O'Gradys were obliged to co-operate in the achievement of that development including the subdivision. The provision of open space was necessary to enabling subdivision.

Analaysis of the legal significance of the benefits provided by the O'Gradys

145 In my opinion the agreed bargain under the Contract of May 2006 was the conveyance of title to the O'Grady Land to Ironbridge for subdivision and sale as residential lots. The Contract permitted the transfer of parts of the land before the payment of the final instalment of the purchase price and the sale of the transferred lots could fund the payment of the remaining instalments of the purchase price. Understandably in the sale of land for subdivision, the Contract required the O'Gradys to sign documents to assist in the registration of a plan of subdivision of the land. The benefits on which Mrs O'Grady relies as providing an answer to Ironbridge's claim of total failure of consideration were incidental to the achievement of the main bargain and did not provide separate consideration. I do not include in that conclusion the O'Gradys' forbearance to sue and extension of dates for the payment of instalments of the purchase price which are considered below in connection with issue 5 which concerns Mrs O'Grady's counterclaim for interest.

Was the Contract an entire contract or a severable contract?

146 In deciding the first issue of whether there has been a total failure of consideration, it necessary to determine whether the Contract was an entire contract under which there was one indivisible purchase price or, whether it was severable in that the O'Gradys conveyance of the stage 6 and Lot P to Ironbridge formed separate and severable contracts. If the Contract was an entire contract, then consideration has not totally failed because the O'Gradys conveyed the stage 6 and Lot P land to Ironbridge.

147 This question of the characterisation of the Contract turns on whether there has been a failure of a distinct and severable part of the consideration. This occurs when part of the purchase price can be identified as being attributable to a distinct cost component and that component has failed.[91]

148 Ironbridge submitted that the Contract was intended to provide funding for the purchase of O'Grady Land by preparing parts of it for subdivision, registering the subdivision, obtaining transfers of the subdivided land, developing the Transferred Land and selling lots to purchasers. Special condition 7 permitted parts of the contract to be severed and the parties agreed to vary the Contract by transferring stage 6 and Lot P land ('Retained Land'), with Ironbridge giving consideration for the transfers. Because the Contract was terminated, there was a total failure of consideration concerning the Retained Land, which was not conveyed to Ironbridge.

149 Mrs O'Grady submitted that the Third and Sixth Deeds, which dealt with the transfer of the stage 6 land, were linked to the original Contract and provided that the amounts payable under them were to reduce the purchase price or to pay debts as determined by Mrs O'Grady.

150 Mrs O'Grady submitted that, even if consideration under the Contract was severable, there was no failure as to severable parts, particularly, no failure as to interest as to which $2,265,258.80 was paid; no failure in relation to the stage 6 and Lot P land for which it was said $5,093,085.68 was paid and no failure as to payment of the $2,250,000 consequential on the withdrawal of the 25 September 2009 rescission notice.

(a) First, the total of $2,265,258.80 paid as interest, which she argued had been paid under the bargain, or Contract as varied by the six deeds. The consideration for the interest payments was the O'Gradys' forbearance and forgiveness of Ironbridge's breaches of payment terms and extensions of time granted to it.

Ironbridge submitted that the interest payments were interest on the purchase price and the obligation to pay them fell away with the obligation to pay the purchase price, an issue which is discussed in detail below. The consideration, being payments of purchase price and interest in respect of the Retained Land, had totally failed.

(b) Secondly, $5,093,085.68, which she contended was paid for the stage 6 and Lot P land, under the Third and Sixth Deeds. The O'Gradys had performed their obligations under special conditions 7 and 8 and under those deeds, including by assisting in the registration of plans of subdivision and conveying the Transferred Land. Ironbridge received consideration in exchange for those payments.

Ironbridge responded that this sum was principal paid on the Transferred Land and paid as part of the purchase price, not for incidental benefits. The issue of the amount paid for the Transferred Land is also discussed below.

(c) Thirdly, $2,250,000 paid in October 2009 for the withdrawal of the rescission notice of 25 September 2009.

Ironbridge submitted in response that the rescission notice of 25 September 2009 was not withdrawn, but that it had complied with its requirements and paid $2,250,000 towards the principal of the purchase price for the O'Grady Land.

Analysis of whether the Contract was an entire or severable contract

151 In determining whether there has been a failure of a distinct and severable part of the consideration, an important issue is whether part of the agreed purchase price can be identified as being attributable to a distinct cost component.[92]

152 In David Securities Pty Ltd v Commonwealth Bank of Australia ('David Securities'),[93] the majority considered as significant the manner in which the consideration had been divided in the loan agreements stating:

In cases where consideration can be apportioned or where counter-restitution is relatively simple, insistence on total failure of consideration can be misleading or confusing. In the present case, for instance, it is relatively simple to relate the additional amounts paid by the appellants to the supposed obligation under cl. 8(b) of the loan agreements. The appellants were told that they were required to pay withholding tax and the payments that they made were predicated on the fact that, by so doing, they were discharging their obligation. Such an approach is no different in effect from the cases under the old statutes of usury whereby a borrower could recover from the lender the excess interest which the lender was prohibited from stipulating or receiving.

In this case, the Bank must prove that the appellants are not entitled to restitution because they have received consideration for the payments which they seek to recover. It does not avail the Bank to argue that the appellants were provided with the loan moneys agreed. Indeed, the severability of the loan agreement into its relevant parts would seem to be accepted by the Bank for it submitted that the appellants' consideration for agreeing to pay the additional amounts under cl. 8(b) was the Bank's agreement not to charge a higher interest rate. In circumstances where both parties have impliedly acknowledged that the consideration can be 'broken up' or apportioned in this way, any rationale for adhering to the traditional rule requiring total failure of consideration disappears.[94]

153 In Roxborough v Rothmans of Pall Mall Australia Ltd ('Roxborough'),[95] tobacconists had paid a tobacco licence fee payable under a government licensing scheme. The fee was held to be unconstitutional and its failure was held to be of a severable part of the consideration which was identified on the invoices. The plurality in Roxborough described this issue in the following terms:[96]

The notes to the 1868 edition of Bullen and Leake's Precedents of Pleadings, giving examples of cases where such a count would lie, said:

...

The failure of consideration must be complete in order to entitle the plaintiff to recover the money paid for it...; but where the consideration is severable, complete failure of part may form a ground for recovering a proportionate part of the money paid for it...; as where a quantity of goods were ordered at a certain rate of payment; and only a portion was delivered.

...

In a contract for the sale of goods, the total amount which the buyer is required to pay to the seller may be expressed as one indivisible sum, even though it is possible to identify components which were taken into account by the parties in arriving at a final agreed figure. The final figure itself may have been the result of negotiation, making it impossible to relate a cost component to any particular part of that figure. Or there may be other factors which prevent even a notional apportionment. But there are cases, of which the present is an example, where it is possible, both to identify that part of the final agreed sum which is attributable to a cost component, and to conclude that an alteration in circumstances, perhaps involving a failure to incur an expense, has resulted in a failure of a severable part of the consideration.

154 In order for a contract to be 'severable', it is not sufficient for it to be capable of being split into severable parts; those parts must already be identified, or capable of being identified. In Roxborough, in which consideration was held to be severable, it was clear which part of the sale price was attributable to the sales tax which was later held to be unconstitutional. In David Securities, in which consideration was also held to be severable, a specific part of the payments due under the contract was referrable to the withholding tax that the Bank had erroneously demanded.[97]

155 In Mann,[98] the High Court decided that the consideration under a domestic building contract was severable. That consideration was identified or referred to in the contract as follows:[99]

The Owner will make Progress Payments to the Builder in accordance with the agreed and completed Progress Payments Table as set out in Item 23 of the Appendix.

The Progress Payments Table required payment of percentages of the purchase price as a deposit, at the base stage, at the frame stage, the lock up stage, the fixing stage and of the final payment upon final completion.

The respondent's argument, in the terms in which it was put, fails because its obligation under the contract was not an entire obligation. The contract between the parties did not impose one entire obligation on the respondent to complete the whole of the contract works in order to become entitled to the payment of an indivisible contract price. The contract provided for the making of staged payments as the work was performed. Nothing in the contract was apt to suggest that these payments were only provisional, and subject to a final taking of accounts. The respondent's obligations are properly construed as severable rather than entire.

...The respondent's rights to the bulk of progress payments had accrued at the date of the repudiation, and there could be no failure of consideration in respect of the work the subject of those accrued rights.[100]

157 Nettle, Gordon and Edelman JJ distinguished between entire obligations, divisible obligations and obligations to perform work divisible into several entire stages, and stated:

Generally speaking, a construction contract which is divided into stages, and under which the total contract price is apportioned between the stages by means of specified progress payments payable at the completion of each stage, is viewed as containing divisible obligations of performance.[101]

158 The Contract made between the O'Gradys and Ironbridge contained a single sale price of $20,000,000 to be paid by four instalments in exchange for the conveyance of the O'Grady Land and the performance of other obligations. Therefore, while the Contract contemplated the possibility of severance by transfer of part of the O'Grady Land under special condition 7, no separate sale price was recorded for the severable part. However, the Contract contained a mechanism by which parts of the subject matter of the Contract could be severed and a price calculated.

159 As previously mentioned, the Third Deed, which dealt with the early transfer of the stage 6A land, recorded the price of $250,000 per acre, stated that:

1. The area of the land which the purchaser proposes to subdivide prior to the settlement date is:

(a) for Plan 6ai - 0.557 hectares (1.24 acres) being the land in Plan of Subdivision 648126N.

(b) for Plan 6aii - 0.902 hectares (2.23 acres) being the land in Plan of Subdivision 710771M.

(the subject land').

1. Pursuant to special condition 7 of the Contract the Purchaser is entitled upon the land being rezoned residential and upon Approval of Plan of Subdivision by the Land Titles Office upon payment to the vendors of the sum of $250,000.00 per acre, to obtain a transfer of part of the land equivalent to in value to the amount paid.

1. The Purchaser shall in all respects and at its cost provide to the Vendors a certified copy of each of the Plans of Subdivision for the subject land, and a Statement of Compliance on issue of same by Surf Coast Shire.
2. The Vendors shall do such things as may reasonably be required on satisfaction of condition 1 hereof, to assist the Purchaser to register the plan of subdivision for each respective plan PROVIDED THAT:

(1) The Purchaser has executed in favour of the Vendors at the Purchase's expense a separate registerable first mortgage over the lots in each subdivision, with such mortgage to secure the balance of the purchase price, with the Mortgage to be prepared by the Vendors solicitor.

(2) The Purchaser shall submit a Transfer of Land to the Vendors, executed by the Purchaser for the consideration of $400,000.00 in respect of Plan 648126N and for a consideration of $600,000.00 in respect of Plan 710771M. Upon execution of the respective Transfers by the Vendors the Purchaser shall pay to the State Revenue Office the duty on each Transfer, and hold such Transfer in escrow on the Vendors' behalf pending lodging of same with the relevant Plan into the Land Titles Office.

...

(7) Upon settlement of the sale of any lot by the Purchaser to third parties, the Purchaser shall pay to the Vendors the sum of $40,000.00 plus the legal costs of the Vendors on discharging the Mortgage of $164.00 plus GST whereupon the Vendors shall provide executed Discharge of Mortgage and the Title for such lot to the Purchaser or at the Purchaser's discretion.

...

(9) The Purchaser acknowledges that the Vendors have agreed to these terms to assist the Purchaser in its development and sale of the land and that the $40,000.00 being received by the Vendors on the settlement of each lot are being applied in reduction of the balance of the purchase price under the Contract.

160 The amount of $40,000.00 per lot appears also to have been adopted by reference to the rate of $250,000 per acre.[102]

161 Under the Third Deed, stage 6A1 and 6A2 land might be transferred for the consideration specified in cl 2(2). That specified consideration was an identifiable and severable part of the purchase price and its presence in the Deed supports Ironbridge's case that the Contract was severable in respect of land that was transferred. The Third Deed was made in 2013 after some instalments of the purchase price had been made. To recap, the transfer of the stage 6A1 land which recorded consideration of $400,000 was made on 19 April 2013,[103] and the transfer of the stage 6A2 land recorded consideration of $600,000 on 25 July 2013.[104] Mrs O'Grady and Ironbridge signed transfers of the stage 6B1 land recording the consideration as $497,500 on 25 November 2015,[105] and of stage 6B2 and Lot P land again on 25 November 2015 recording the consideration as $315,000.[106] Each of these amounts recorded as consideration appears to have been calculated on the basis of a rate of $250,000 per acre. I deal in issue 3 with the question of the amount that should be taken as actually paid by Ironbridge for the stage 6 and Lot P land.

162 The cause of action based on failure of consideration accrues when the consideration fails.[107] In this case, that failure occurred when Mrs O'Grady rescinded the Contract following the appointment of administrators. Before then, the stage 6 and Lot P land had been transferred and formed severable parts of the Contract, for which the consideration had not totally failed.

163 Thus, there was a severable part of the contract relating to the stage 6 and the Lot P land upon the making of the Third Deed in the case of stage 6A land and the Sixth Deed in the case of stage 6B and Lot P land or upon the transfers of those lands. The decision in David Securities accepted that where both parties have impliedly acknowledged that the consideration can be broken up or apportioned, it is unnecessary to prove total failure of consideration to obtain restitution. The consideration ceases to be entire and indivisible. The payments identified in the transfers had been 'broken up'[108] from the total purchase price.

164 In this case, as in Roxborough,[109] it is possible both to identify that part of the amount paid which is attributable to a cost component, i.e. $250,000 per acre. The stage 6 and Lot P land transferred at recorded consideration based on that rate became a severable or separate contract or contracts.

165 I conclude that the effect of the transfers of the stage 6 and Lot P land was to create severable contracts with separate consideration which did not fail. But consideration for the Retained Land did totally fail because there was no conveyance of its title to Ironbridge.

166 I do not consider that the three payments upon which Mrs O'Grady relied provided separate consideration for the Retained Land. The first concerned interest which I conclude in determining issue 5 was a separate contractual obligation. The second and third were amounts payable towards the purchase price. The $2,250,000 was paid following the service of a rescission notice, but was a payment towards the purchase price. As the title to the Retained Land was not conveyed to Ironbridge, the consideration for those payments totally failed.

Issue 2: Does Mrs O'Grady have a defence to any restitutionary claim for failure of consideration?

167 As the consideration totally failed in respect of the Retained Land, Ironbridge has a prima facie entitlement to restitution from Mrs O'Grady of amounts paid in respect of that land. However, the law recognises that in some situations that it would be unjust to order restitution. Mrs O'Grady relies upon four defences: (a) that she changed her position on the faith of the payments so as to cause her irreversible detriment; (b) that she provided good consideration; (c) that restitutio ad integrum is not possible and (d) that it would be otherwise unjust to order restitution. I next consider each of these defences.

168 Mrs O'Grady's change of position defence relies on irreversible detriment to her caused by the transfers of stage 6 and Lot P. This detriment includes the temporary stormwater drain constructed on the Retained Land, the effect of the s 173 agreements and the diminution in the value of her land.

Legal principles concerning change of position defence

169 The defence of change of position is available to a claim for restitution for a total failure of consideration against the recipient of payments when they rely in good faith upon their receipt and irreversibly change their position because of them so that they would suffer detriment if ordered to make restitution.[110] The detrimental change of position must be made 'on the faith of the receipt' so that a recipient of payments must be able to point to expenditure or financial commitment which can be attributed to the payments, although the precise identification of the expenditure need not be established.

170 In David Securities, the plurality stated that:[111]

... a defence of change of position is necessary to ensure that enrichment of the recipient of the payment is prevented only in circumstances where it would be unjust.

171 The elements of the defence were discussed by the High Court in Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd ('AFSL'). French CJ stated that:[112]

Recovery depends upon whether it would be inequitable for the recipient to retain the benefit. Retention may not be inequitable if the recipient has changed its position on the faith of the receipt and thereby suffered a detriment ...

A recipient of a payment made under mistake may suffer a detriment by acting on the faith of the payment. If the detriment cannot be reversed at the time that demand is made of the recipient, the recipient can be said to have changed its position and to have a defence to a claim for repayment of the money as money had and received. Whether or not the defence is available depends upon whether it would be inequitable for the recipient to refuse to repay the money. That is a judgment which the recipient, properly advised, must be able to make within a reasonable time and at a reasonable cost.

172 The joint judgment of Hayne, Crennan, Kiefel, Bell and Keane JJ, citing the extra-curial writings of Justice William Gummow describes the defence as follows:[113]

"[I]t is important to appreciate that 'change of position' is a species of the genus 'inequitable', not a synonym for it." One category of case in which it would be inequitable to require a recipient to repay is where the recipient has so far altered its position in relation to the receipt that it would be a detriment to it if it were now required to repay.

173 Their Honours went on to state:[114]

[I]n David Securities the "central element" of the defence was identified as being "that the defendant has acted to his or her detriment on the faith of the receipt".

...

In any event, consistently with an inquiry as whether it is unconscionable for the recipient to retain the moneys, it is necessary in cases such as the present to consider what was done by the recipient in reliance upon the receipt.

The defence of change of position is established where a defendant proves the existence of two conditions. The first condition is that the defendant has acted (that is, done something the defendant would not otherwise have done) or refrained from acting (that is, not done something the defendant would otherwise have done) in good faith on the assumption that the defendant was entitled to deal with the payment which the defendant received. The defendant need not for the purpose of meeting this condition have acted on knowledge derived from the payer. Whether the defendant needs also to have acted reasonably is a question which does not now arise for determination. The second condition is that, by reason of having so acted or refrained from acting, the defendant would be placed in a worse position if ordered to make restitution of the payment than if the defendant had not received the payment at all. The detriment constituted by that difference in position need not, in every case, be financial or pecuniary. If financial or pecuniary, it need not, in every case, be established with precision. It can be an opportunity forgone. It must, in every case, be shown by the defendant to be substantial.

175 In AFSL, a third party indebted to the respondents procured by fraud finance from the appellant, a finance company who paid the respondents the amount owed to it by the third party on the fraudulent basis that it was for goods to be acquired by the appellant from them and hired to the third party. The respondents treated the payments as reducing the third party's indebtedness to them. As a result, the respondents were induced to abandon other methods of recovery available to them. The appellant became aware of the fraud and sued the respondents for money had and received. The High Court held that if the respondents were required to repay the money to the appellant that they had received in good faith, they would suffer an irreversible detriment, as they had lost their ability to otherwise recover the money the third party owed them.

176 It is convenient to summarise the parties' general submissions about this defence before considering the specific detriments on which Mrs O'Grady relied.

Mrs O'Grady's submissions about the change of position defence

177 Mrs O'Grady submitted that the change of position defence can operate as a complete or a pro tanto defence to a claim for restitution based on total failure of consideration,[116] depending on the extent to which the detriment suffered is quantifiable and having regard to whether restitution would be inequitable in the circumstances.[117] The focus of the defence is on unconscionability: 'who should properly bear the loss and why?'[118] Its core requirement is detriment 'on the faith of the receipt',[119] with the causal link capable of being inferred.[120] The requirement was described in AFSL as, 'the recipient has so far altered its position in relation to the receipt that it would be a detriment to it if it were now required to repay'.[121] A broad view of causation is taken, having regard to the context in which the payee acted or refrained from acting. The 'critical moment' at which causation is assessed is the moment of the change of position.[122] Detriment is not a narrow concept and includes decisions not to act or to forgo a benefit.[123]

178 Mrs O'Grady submitted that, but for the receipt of payments from Ironbridge and anticipated receipt of further payments, she would not have allowed it early access to the O'Grady Land or agreed to transfer the stage 6 land. She did not pursue legal rights that she had and suffered real and significant detriment by transferring that land. By doing so, she lost the chance to sell it as a whole, with the desirable stage 6 land included.

179 Mrs O'Grady submitted that she and her husband changed their position in good faith in reliance upon Ironbridge's payments and its promise to make the remaining payments. An order for restitution would be inequitable and would leave her in a worse position than if she had not made the Contract in the first place and received the payments that Ironbridge made.

180 Mrs O'Grady listed many benefits that she and her husband conferred on Ironbridge which she contended involved actions to their detriment. Many of them have been mentioned in dealing with the first issue concerning whether there has been a total failure of consideration. The principal benefit was the transfer of the prime stage 6 and Lot P land so that Ironbridge could subdivide and sell it. She permitted Ironbridge's development which caused 'irreversible' burdens to the Retained Land. She lost the chance to sell the O'Grady Land as a whole. They did not exercise their legal rights to terminate the Contract, but transferred the stage 6 land and gave Ironbridge more time to pay the instalments and interest. Mrs O'Grady would now be better off if she had terminated the Contract. She and her husband would not have allowed Ironbridge early access to the O'Grady Land were it not for the payments Ironbridge had already made under the Contract and their belief in its promise to pay the outstanding instalments of the purchase price. She believed that she would receive the balance of the purchase price of $13,500,000 one month after she signed the Third Deed in April 2013. She acted 'on the faith of the payments Ironbridge made'.[124]

181 If Mrs O'Grady is ordered to pay restitution to Ironbridge, she will lose the payments made by Ironbridge in addition to the loss of the stage 6 and Lot P land, which was valued at $7,580,000 in June 2019. She will be in a worse position than if Ironbridge had not paid her any of the purchase price. Such an outcome would be inequitable and she cannot be returned to her original position.

Ironbridge's submissions about the change of position defence

182 Ironbridge submitted that Mrs O'Grady had not established her change of position defence Again much of its submissions repeated matters raised in respect of the first issue. The rights and benefits that Mrs O'Grady claimed to have conferred on it were merely incidental benefits, whereas the key and principal basis of the Contract was to be the conveyance of the O'Grady Land. Being in default is not an impediment to a purchaser under a contract for the sale of land establishing a total failure of consideration.

183 Mrs O'Grady's oral evidence was vague; for instance, she was not sure whether she recalled transferring the stage 6 land and she never said when she would have terminated the Contract. In cross-examination, she could not recall key events or her reliance upon the payment of part of the purchase price. Her witness statement evidence should not be accepted.

184 The core requirement of the defence was that the recipient of the payment had 'acted to his or her detriment on the faith of the receipt' and that the detriment was 'irreversible'.[125] Mrs O'Grady had not established these matters: there was no evidence that she changed her position on the faith of receiving payments of part of the purchase price and she had suffered no irreversible detriment. The Contract obliged her to take some of the actions that she took. For example, special condition 8 of the Contract required her to execute any documentation to assist in the registration of the plan of subdivision; she was required to sign the s 173 agreement pursuant to cl 7 of the planning permit; and special condition 7 obliged her to transfer the stage 6 land. Therefore, rather than changing her position, she was performing her contractual obligations.

185 The assignment contained in the Sixth Deed of variation was an unconditional assignment of the debt and no more, and its result was that Mrs O'Grady became entitled to sue directly any third party purchasers who failed to make payment.

186 Against that background of the parties' general submissions, I will next consider the significance of the detriments that Mrs O'Grady alleged.

First detriment: the transfer of stage 6 and Lot P

187 Mrs O'Grady relied on the fact that she has lost the chance to sell the O'Grady Land as a whole, including the desirable stage 6 land. But for her detrimental reliance, she would still have this very valuable parcel of land. She gave up opportunities to enforce the Contract or terminate it before stage 6 was 'carved off' from the Retained Land, on the faith of payments made and promises to make further payments.

188 As mentioned, Ironbridge submitted that the evidence, particularly Mrs O'Grady's evidence in cross-examination, did not establish that she had acted in reliance on the matters she advanced. Her transfer of the stage 6A land did not constitute a change of position because she was obliged to so act because of the terms of special condition 7 of the Contract.

Conclusion on whether transfer of stage 6 and Lot P was a relevant detriment

189 I have discussed the relevance of the benefits that the O'Gradys conferred on Ironbridge in considering whether there was a total failure of consideration.

190 I accept Mrs O'Grady's submission that stage 6 was more valuable land than the Retained Land. The valuers' evidence supports that conclusion. In many instances, the stage 6 land had sea views.

191 I find that the O'Gradys did act in agreeing to transfer stage 6 and Lot P land on the basis, and in the belief, that Ironbridge would make the payments due under the Contract, although they may have had some doubts about whether they would be paid on time. Mrs O'Grady is 80 years old, and her answers in cross-examination suggested that she no longer had a clear recall of events, so her written evidence must be assessed with caution. But, as a matter of common sense, it is unlikely that she and Mr O'Grady would have transferred the prime stage 6 land before the Contract required them to, if they had thought that Ironbridge would not pay the remaining instalments of the purchase price. The rescission notices and accompanying correspondence referred to previously indicate the concern the O'Gradys held about Ironbridge's defaults in paying the purchase price on time. Mr O'Grady was dyslexic, so when the transaction was unfolding, Mrs O'Grady read the documents to him and discussed them with him.[126]

192 Mrs O'Grady had agreed under special condition 7 of the Contract to transfer land at the rate of $250,000 per acre and she did that with stage 6 on two occasions: stage 6A in 2013 and stage 6B in 2015. These transfers occurred after rescission notices had been issued and then not pursued. They are likely to have had some doubts about whether Ironbridge would perform all of its future obligations under the Contract on the due dates. Mrs O'Grady's oral evidence was unclear as to the course that her and Mr O'Grady's decision making followed, but the consideration recorded for the transfer of stage 6 and Lot P land was the agreed rate of $250,000 per acre. However, in view of obligations that special condition 7 imposed on the O'Gradys, I do not consider that the transfers of that land provide the basis for a change of position defence to Ironbridge's restitution claim. They were carrying out their contractual obligations.

Second detriment: the temporary stormwater basin on the Retained Land

193 Mrs O'Grady relied on the construction of the temporary stormwater basin was an irreversible detriment to her land.

194 As previously mentioned in describing the development of stage 6, the temporary stormwater basin was built in 2014 on stage 8 of Mrs O'Grady's Retained Land. It services stages 1 to 6, which is Ironbridge Land, by receiving and treating stormwater flows from four open cut drains that run along portions of the Retained Land.[127] Its relocation to O'Grady Land from Ironbridge Land enabled Ironbridge to construct stage 5.[128] The temporary basin was intended to be used for three to six months, but is still in use.

195 Mrs O'Grady argued that the temporary stormwater basin and its drains were an irreversible burden on the Retained Land, preventing its development and significantly reducing its value. Accordingly, it would be inequitable to order restitution. Mr Gareth Kent's valuation evidence which was part of Mrs O'Grady's case, and which is discussed below, was that the temporary basin issue will need to be resolved to allow any development of the Retained Land and that stages 8 and 9 cannot be developed because of the open drains from the north east developed area. Having inspected the Retained Land and the basin and drains, he described them as an 'absolute mess'.[129] He gave the combined present value of stages 8 and 9 as $2,553,400, whereas his valuation of stage 8 alone in February 2013 was $11,100,820 and Knight Frank, an Ironbridge valuer, had valued stage 8 in October 2014 at $13,835,000.[130]

196 The planning permit enabling construction of the temporary basin made Ironbridge solely responsible for its maintenance and eventual removal and for the remediation of the basin and associated drains to the Authority's satisfaction.[131] Mrs O'Grady emphasised that the permit did not require stage 7 to be developed or a permanent stormwater solution submitted, but merely stipulated conditions to be met should the development of stage 7 be pursued. Therefore, the temporary basin could not be removed until Ironbridge developed stage 7 and installed a permanent basin.

197 Mr Wallace expected that a permanent stormwater basin would be constructed below stage 7 on Ironbridge Land.[132] But Ironbridge did not call any evidence to establish that it had prepared plans for a permanent basin or that Council approval had been sought. Mr Shephard, one of the receivers and managers, gave evidence that he intended to recommend to his appointor that a permanent basin be built and the contracts for the sale of stage 7 settled and sold 'after this proceeding has been determined or resolved ... unless there was a material change in economic circumstances'.[133] But Mrs O'Grady pointed out that there was no evidence of the source of funding for this work and submitted she should not be left to chase the receivers for remediation costs. The creditor who appointed the receivers and managers may not agree to fund the decommissioning or the Council may not approve it.

198 Ironbridge contended that Mrs O'Grady suffered no irreversible detriment because of the temporary stormwater basin, as if the Retained Land is developed, it will require a stormwater basin. Either the planned permanent stormwater basin will be constructed on Ironbridge Land, which will benefit the Retained Land, or the temporary stormwater basin will be transformed into a permanent stormwater basin at a lower cost than the construction of a new basin. There were a number of possible solutions to the stormwater issue. If a permanent basin was built, it would relieve Mrs O'Grady of the need to build a permanent basin on her Retained Land if she decided to develop it. Alternatively, if she did decide to build such a basin, the existing temporary basin could be converted into a permanent basin.

The cost of remediation works due to the temporary stormwater basin

199 The parties called evidence about the costs of remediation and rehabilitation works to return the Retained Land to its state before the temporary stormwater basin and drains were constructed.

200 Mr Peter Ficca, a civil engineer employed by Draper's for 21 years and is its Joint General Manager, gave evidence as part of Mrs O'Grady's case. He had built the water infrastructure on the Retained Land and worked with the construction of stormwater basins. While he was not involved in the design of the temporary basin on the O'Grady Land, he was in its pricing and project management. He considered that it was impossible, at present, to remediate the Retained Land by removing the basin and drains because stormwater would still be directed across it. In his opinion, there was currently no reasonable way by which the stormwater could be diverted away from the O'Grady Land. Only if, and when, a permanent solution is built, directing stormwater away from the Retained Land, would it be possible to remediate that land and decommission the temporary basin. Therefore, a permanent basin has to be constructed on Ironbridge's Land. He quoted the costs of $369,650 to $511,150, in both cases, plus GST, to decommission the basin and the drains and remediate and rehabilitate the Retained Land. The quoted cost $511,150 included a cost of $141,500, plus GST, if clay was required to be imported to complete the level 1 filling works.[134] He said that his quote was more conservative than Mr Healey's, which is referred to next, because he considered that making the allowance for clay was the prudent approach given his familiarity with the Retained Land and the risks and uncertainties associated with its state and the required remediation steps.

201 Ironbridge relied on an expert report of Mr Gregor Healey, an engineer employed by SMEC Australia as Team Leader of the Urban Construction Team at its Geelong office. SMEC was Ironbridge's consulting engineer. He gave evidence as part of Ironbridge's case. He estimated that the decommissioning and remediation work at between $236,347.00 and $315,467.00 plus GST. The difference between his two quotations was the inclusion in the higher quotation of items of the disposal of rock beaching off-site, dust control measures, removing stockpiles of uncontrolled spoil, traffic management during import of clean spill and cleaning of external public roads. He also said that it would be impossible to remove the drainage system on the Retained Land without first providing an alternative solution, as all drains lead across the Retained Land to the basin.

202 Ms Nina Barich of Incitus Pty Ltd, who is a civil engineer with 20 years' experience working in projects focusing on stormwater quantity and quality management, gave evidence as part of Ironbridge's case. She noted that the temporary basin was not intended to hold water permanently because it is a retarding basin, not a retention basin. She stated that the temporary stormwater basin was 'functioning in accordance with its intent' which was to mitigate the peak flows generated from the development and to control the discharge into the tributary of Spring Creek. She considered that a permanent stormwater basin will be required to service the development of the Retained Land. However until it occurs, the temporary basin can be augmented to service additional development within the Retained Land. When a decision is taken to construct a permanent stormwater basin on the Retained Land, one approach available is to convert the temporary basin into that permanent basin. That would be cheaper than constructing a new permanent basin, because part of the earthworks required have already been undertaken in constructing the temporary basin. The conversion of the temporary basin into a permanent basin could occur without decommissioning and while it is still used by the existing development. Ms Barich was not cross examined.

Conclusion on costs of remediation works due to the stormwater basin

203 I do not consider that the temporary stormwater basin is an irreversible detriment to the Retained Land. The land can be remediated and rehabilitated. But Mrs O'Grady should not have to wait for the receivers and managers to be instructed to build a permanent stormwater basin, but is entitled to the costs of remediation and rehabilitation now. She should not have to build a permanent basin at this point on the site of the temporary stormwater basin. She is entitled to payments by way of counter restitution to remediate her land.

204 The authorities recognise that a remedy by way of counter restitution can be granted where it is necessary to do justice in a given case in which restitution is ordered.[135] By way of analogy, when the court declares that a person has validly rescinded a contract or orders specific performance of a contract, the court may make the primary order conditional upon the plaintiff providing counter restitution.[136]

205 I consider that the amount that should be awarded to Mrs O'Grady by way of counter restitution for remediation and rehabilitation works is less than Mr Ficca's quotation, as he adopted a conservative approach assuming worst case conditions. He used the cost of level 1 soil compaction to rehabilitate the Retained Land, but I accept Mr Healey's evidence that level 1 soil is not required. Mr Ficca's quotation was also criticised on the ground that he had substantially overestimated the volume of soil required to remediate and rehabilitate the drains. He explained that the determination of the volume of soil required must take into account the need to rehabilitate the land around the drains, but even so, I consider that he allowed a greater volume of soil than is likely to be required.[137]

206 On balance, I will adopt the higher of Mr Healey's two quotations of $315,467.00 plus GST for the remediation and rehabilitation works. I consider that Mrs O'Grady is entitled to compensation in that amount. It is awarded by way of counter restitution and is to be deducted from the amount of restitution that Mrs O'Grady must otherwise pay Ironbridge.

Third detriment: The section 173 agreements

207 Mrs O'Grady also contended that she had suffered irreversible detriment by the six s 173 agreements that have been recorded on her title to the Retained Land. Section 173 of the Planning and Environment Act 1987 states:

173 Responsible authority may enter into agreements

(1) A responsible authority may enter into an agreement with an owner of land in the area covered by a planning scheme for which it is a responsible authority.

(1A) Without limiting subsection (1), a responsible authority may enter into an agreement with an owner of land for the development or provision of land in relation to affordable housing.

(2) A responsible authority may enter into the agreement on its own behalf or jointly with any other person or body.

(3) A responsible authority may enter into an agreement under subsection (1) or (1A) with a person in anticipation of that person becoming the owner of the land.

(4) Despite anything in this Division, if an agreement entered into with a purchaser in anticipation of the purchaser becoming owner is recorded by the Registrar of Titles, it does not bind the vendor unless the vendor assumes the purchaser's rights and obligations under the agreement.

208 The six s 173 agreements are dated 15 July 2005,[138] 29 May 2007,[139] 14 January 2009,[140] 4 June 2010,[141] 18 April 2012[142] and 19 February 2013.[143] Only the last was signed by Mr and Mrs O'Grady.[144] Her written evidence was that she only signed the sixth agreement because Ironbridge had paid instalments of the purchase price.

209 Each agreement binds the owner and the owners' successors, and requires that a successor in title be notified of the agreement and execute under seal a deed agreeing to be bound by the terms of the agreement. The agreements vary from prescribing public open space contributions in the development,[145] ensuring connection of sewerage facilities,[146] requiring the owner to pay development and community infrastructure contributions for each lot sold,[147] to restricting alteration of fences that adjoin municipal reserves.[148] The 19 February 2013 agreement, signed by the O'Gradys, prevents more than one dwelling being constructed on each lot.[149]

210 But only the first and sixth s 173 agreements purport to affect Mrs O'Grady's Retained Land. It is not clear on the evidence how the other agreements came to be registered on the title to the O'Grady Land. The first agreement dated 15 July 2005 was made by the Surf Coast Shire Council and 'the owners' being G Draper Holdings Pty Ltd and Costa Property Five Pty Ltd.[150] Its concerned the subdivision of land being 116 Beach Road, Torquay into 32 lots. The permit holder to pay an open space requirement of 5% of the value of the land in the subdivision. The owners owned land to the west which was to be subject to a future rezoning to a residential zone which would permit its subdivision into residential lots. The s 173 agreement permitted the public open space contribution required to be taken as an additional contribution at the time of the residential subdivision of the western land and was to be secured by a s 173 agreement registered on the title to the western land binding its then owner at the relevant time to make that contribution. It is unclear how that agreement came to bind the O'Gradys' title. The evidence did not establish what effect it would have on the Retained Land.

211 Ironbridge was a party to the third agreement made 14 January 2009 which purported to bind the O'Gradys' title.[151] The agreement contained Ironbridge's agreement about open space contributions in respect of Ironbridge Land. It recited that Ironbridge had agreed not to make an application for a planning permit to subdivide the 'Subject Land' without first entering into a further agreement to make development contributions in relation to that land to the satisfaction of the Council or until a Development Contributions Plan applying to that land was incorporated into the Planning Scheme. There is no evidence that this agreement would adversely affect the Retained Land.

212 The effect of Mr Wallace's and Mr Kent's evidence was that the s 173 agreements will have to be dealt with when the Retained Land is sold and cannot be removed without Council consent. There was no evidence about Council's attitude to their removal. Mrs O'Grady therefore argued that the agreements will remain a burden on the Retained Land for the foreseeable future.

213 Ironbridge submitted that the s 173 agreements had no material effect on the Retained Land and that the sixth agreement, the one dwelling agreement, that Mrs O'Grady did sign was a usual requirement for a residential subdivision. There was no evidence that she signed the s 173 agreement on the faith of the receipt of payments made.

Analysis of whether the section 173 agreements was a relevant detriment

214 I do not consider that the s 173 agreements have been shown to have a material effect on the value of the Retained Land and in my opinion do not constitute an irreversible detriment that establishes the change of position defence. The first agreement purports to bind the O'Gradys' title, but imposed no obligation on them. The sixth agreement, the one dwelling agreement, does impact Mrs O'Grady's land, but I accept that it was a usual restriction on a residential development. There was no evidence that such a restriction would affect the value of the Retained Land if it is developed for residential purposes. It may well be that negotiations will be required, including with Council, to obtain the removal of the other agreements which appear principally to concern Ironbridge Land. I do not consider that it has been established that the sixth agreement is an irreversible detriment to the O'Grady Land or to Mrs O'Grady.

Value of the Retained Land and the change of position defence

215 Mrs O'Grady's change of position defence depends, in part, on her contention that the value of her Retained Land has decreased as a result of the Ironbridge development and the transfer of stage 6 and Lot P land to it and that this is an irreversible detriment to her. She also pointed to the likely value of her land if she and her husband had never entered into the Contract or, had rescinded it when Ironbridge defaulted in paying instalments of the purchase price.

216 Two valuers, Mr Andrew Kinnaird, who gave evidence in Ironbridge's case,[152] and Mr Gareth Kent, who gave evidence in Mrs O'Grady's case,[153] valued stage 6, Lot P and the Retained Land as at 1 February 2013 and 21 June 2019 for the purpose of assessing their change in value.

217 In assessing value they were asked to take into account that, as at 1 February 2013, planning permit 10/0417 for the development of the Development Land had been approved but:

(a) the s 173 agreement entered into on 19 February 2013, the limit on one dwelling being constructed on each lot, had not been signed by Mr and Mrs O'Grady;

(b) the amendment to the permit made on 20 February 2013 which related to stormwater management had not been approved;

(c) none of the Transferred Land had been transferred to Ironbridge; and

(d) the temporary stormwater basin and associated infrastructure had not been constructed on the Retained Land.

218 Mr Kent's opinion of the market value of the Retained Land at 21 June 2019 was prepared on the basis of the land being subject to the existing plans and permits, and taking into account the changes to it as a result of the: (a) temporary water retention basin; and (b) the loss of land to the north east corner of the original site described as Lot N.[154] Mr Kinnaird was instructed to provide a response to Mr Kent's valuation.

219 Mrs O'Grady relied on the valuation of Mr Gareth Kent of Preston Rowe Paterson to establish the decrease in the value of her Retained Land. Mr Kent provided valuations both on a **'**project related site assessment basis' and on a direct comparison basis. He said that the former gave a value of the land by deducting the various development costs, including an allowance for profit and risk and the cost of money from the assessed Gross Realisation Potential, as if complete.[155] Mrs O'Grady contended that Mr Kent's valuation should be preferred as it was reliable and his methodology used the construction costs for the construction of stage 6A prevailing as at September and November 2012, and the development costs in May 2018 that were provided by Mr Berry, Ironbridge's witness.[156]

220 Mr Kent's valuations of the O'Grady Land as at February 2013 on a project feasibility basis was $33,410,000 and of the Retained Land as at June 2019 was $25,630,000.

221 Applying a direct comparison methodology, he referred for 2013 to properties sold at Bell Park, Melton and Mount Duneed, and adopted a value of $1,200,000 per hectare as 1 February 2013.

222 Mr Kent adopted a value of $1,300,000 per hectare as at 21 June 2019 as the midpoint of the identified range.[157] He referred to properties at the lower end of the range at St Leonards and Torquay and at the upper end at Leopold. He noted the 'current climate' for land development and market research indicated that sales volumes were down by 30%, but that in the Geelong/Surf Coast region, allotment prices had not declined significantly.[158]

223 Mr Kent's direct comparison value of the O'Grady Land as at 1 February 2013, was $32,172,000 on a net developable area of 26.81 ha.[159] His direct comparison valuation was, as at 21 June 2019, $23,150,600 on the Retained Land area of 21.22 ha for after deducting $350,000 for the cost of the retention basin and allowing $4,085,400 for profit and risk.[160]

224 Mr Kent's market valuation of the stage 6 land in February 2013 in its undeveloped state was $5,040,000 and in June 2019, in its unconstructed and vacant state, $7,580,000.[161]

225 Ironbridge's valuation witness, Mr Kinnaird used a direct comparison approach.[162] He was instructed to comment on Mr Kent's valuation and to assess the change in value of each of the O'Grady Land, the Transferred Land and the Retained Land between 1 February 2013 and 21 June 2019. Mr Kinnaird assumed in his 2013 and 2019 valuations that:

(a) the landowner or hypothetical purchasers would obtain the necessary permits and work with the adjoining landowner of stage 7 to construct the permanent retarding basin;

(b) as at 2019, the temporary retarding basin located in stage 8 could be filled;

(c) this process would take six to 12 months; and

(d) the hypothetical purchaser of the O'Grady Land would be taking on a higher risk than usual and that they would pay for the construction of the stormwater basin and adopt a higher profit and risk.

226 Mr Kinnaird stated that his valuation had been prepared 'absent of independent expert planning, detailed engineering advice and in relation to the retarding basin required to enable development of the Land but to be located on adjoining land'.[163] He proceeded on the basis that a hypothetical prudent purchaser of the Land would assume the full value of the entire land in accordance with the approved planning permit and then make allowances associated with the possible difficulties of constructing the retarding basin. He described the retarding basin issue as a typical scenario in modern Precinct Structure Plans where such basins were identified as part of the development plan. He said that these circumstances would result in a discount to the market value of the total subject land in the order of 5% to 10% which he had factored into his valuations.[164] A hypothetical purchaser would obtain expert advice in relation to this or whether there was an alternative solution of locating a retarding basin on the subject land.

227 Mr Kinnaird valued the O'Grady Land in 2013 at $825,000 per ha and in 2019 at $1,550,000 per ha being an increase of 88%. He valued the total O'Grady Land of 32.43 ha as at February 2013 at $24,020,000 and as at June 2019 at $45,110,000. His valuation of the Retained Land as at June 2019, giving a nominal value to encumbered/excess open space land, a matter which is discussed below, was $40,440,000.[165]

228 He valued stage 6 and Lot P, the Transferred Land, at $2,420,000 and $70,000 respectively in February 2013 and at $4,540,000 and $130,000 in June 2019. The Transferred Land is 3.01 ha: 2.93 ha for stage 6 and 0.08 ha for Lot P.[166] [Possibly relocate figures]

229 Mr Kinnaird commented on Mr Kent's valuation and said that, in his project related site assessment basis, he had adopted development costs based on their comparison to other developments but was not qualified to do that. Mr Kent had adopted an increase in building costs of 90% between 2013 and 2019 by using the Valuer-General's Index, which was applicable to government projects. The widely used guide was the Rawlinson Construction Cost handbook, which indicated that costs had increased by 17.87% in that period. It appeared that the costs in the Rawlinson handbook primarily related to building construction in capital cities.[167]

230 So far as Mr Kent's direct comparison valuation was concerned, Mr Kinnaird considered that Mr Kent had relied upon the mid-point of many sales located in inferior locations or in areas which did not have approved precinct structure plans. He did not consider that the Mount Duneed sale in 2013 was a comparable sale.[168] To recap, Mr Kent had valued, on a direct comparison basis, the Total O'Grady Land in 2013 at $32,172,000 and the Retained Land in 2019 at $23,150,600 (after allowing $350,000 for the cost of the retention basin and $4,085,400 for profit and risk. He had identified the market value, on a development cost basis, of the O'Grady Land in 2013 at $33,410,000 and the Retained Land in 2019 at $25,360,000.

231 The valuers appear to have based their valuations on different land areas or developable land areas. For example, the total area of the O'Grady Land was 32.43 ha; Mr Kinnaird treated 5.99 ha as being encumbered, including excess open space of 3.35 ha, leaving developable land of 26.44 ha, or, with the inclusion of open space, developable land of 29.08 ha. The Retained Land was 29.42 ha, including 26.07 ha of gross developable land. In determining the area of land to be valued in 2013, Mr Kent adopted a land 'in the before' area of 32.43 ha, of which 5.62 ha was encumbered by vegetation and inundation overlays, leaving a net developable area of 26.81 ha.[169] For 2019, the land 'in the after' was 29.42 ha from which he deducted 5.62 ha of land encumbered by vegetation and inundation overlays and a further 2.58 ha encumbered by runoff and a temporary stormwater basin leaving a net developable area of 21.22 ha.

232 In the result, for 2013, Mr Kent's valuation was of 26.81 ha, whereas Mr Kinnaird's was of 29.08 ha. For 2019, Mr Kent's valuation was of 21.22 ha, whereas Mr Kinnaird's was of 26.07 ha, and he gave a nominal value of $30,000 for the 3.35 ha of encumbered/excess open space.

233 Mr Kinnaird explained his approach to the encumbered/open space issue as follows. He gave a nominal value to the encumbered/excess open space area of 3.35 ha, because it would be handed over to the Government or a Government Agency as part of the development. The 3.35 ha comprised an encumbered creek area of 1.2 ha and 2.15 ha of excess open space. However, he said that the encumbered area in fact was 5.99 ha, including an open space area of 10% of the net developable area or 2.64 ha, which was to be contributed to the Surf Coast Council as open space.[170] In order to make a direct comparison with other sales he considered to be relevant, he applied a gross developable land area of 29.08 ha, including the 2.64 ha which would have to be contributed to Council to satisfy the 10% open space requirement.[171] He explained that developers of residential developments are required to provide to the Council either 10% of open space land. However, that requirement did not apply to properties within modern precinct structure plans, and some of his comparable sales were in such areas, for example, sales at Armstrong Creek and Plumpton, so he included the open space land of 2.64 ha in his developable area when making comparisons.

234 As mentioned, Mr Kinnaird's valuations were based on a direct comparison of other sales. Because Mr Kent had also provided a valuation adopting a development cost method, Mr Kinnaird considered whether that method could be applied. He assumed a sale rate of eight lots per month, whereas Mr Kent had assumed 12 for 2013 and 2019, respectively.[172] Mr P Berry gave evidence as part of Ironbridge's case about the development costs. Mr Kinnaird was provided with Mr Berry's development costs and indexed them with costs in the Rawlinson's Building Costs handbook, which he considered the key construction cost reference for valuers. On the basis of 255 lots, Mr Kinnaird adopted, for 2013, a total development cost of $16,835,354 or $66,021 per lot and for 2019 $20,732,898 or $81,305 per lot.[173] Mr Kent's development costs, before GST, were, for 2013, $33,955,856 for 298 lots and, for 2019, $29,961,098 for 180 lots. However, Mr Kinnaird did not consider that he had accurate costings as at the relevant date an decided to base his valuation provided in his expert report on the direct comparison of sales approach only.[174]

235 As mentioned, for his 2013 valuation, Mr Kinnaird adopted a value of $825,000 per developable hectare. In reaching that valuation on a direct comparison basis, he had particular regard to three properties. First, 110 South Beach Road, Torquay which sold in August 2013 for $820,000 per hectare and which was a comparatively small property of 9 ha. However, in oral evidence, Mr Kinnaird said that he no longer placed weight on this property because the vendor agreed to fund part of the construction costs. Second, 821-909 Melton Highway, Hillside, being 7.73 ha which sold at $1,100,000 per developable hectare and was purchased by Lend Lease for an 80-lot retirement village. Third, 1445 Horseshoe Bend Road, Torquay, being 20.24 ha which sold in June 2008 for $740,000 per developable hectare.[175]

236 For his 2019 valuation, Mr Kinnaird adopted a value of the O'Grady Land of $1,500,000 to $1,650,000 per hectare, applying a direct comparison basis. He paid particular regard first to a sale at Taylors Road, Deanside for $1,620,000 per hectare. This site was much smaller in size than the subject land, although the intention was to develop 196 lots. Secondly, he considered a property at Fraser Rise, which sold for $19,960,000 in September 2018, although it was a significantly smaller site. Third, he noted an Armstrong Creek property which sold for $1,050,000 per hectare in 2018. He considered that there was no key comparable sale in Torquay in 2019, but said that sales in Fraser Rise indicated that properties had doubled in price between 2013 and 2019.[176] He valued all the O'Grady Land at the same rate, but agreed that his valuation would have been affected if he had been instructed to assume that the stormwater infrastructure on the O'Grady Land could not readily be removed and that the land was subject to planning restrictions which might impede future development.[177]

237 Mrs O'Grady criticised Mr Kinnaird's direct comparison valuation, arguing that the sales on which he relied were not comparable and included sales that occurred up to 5 and a half years before the relevant date, were not for residential development, were for land sizes that were substantially smaller than the subject price and were properties to which Precinct Structure Plans did not apply. He did not give weight to available sales in Torquay in 2013.[178] In oral evidence, he no longer considered that one of the key sales that he used as a comparison was comparable.[179] Another of his comparable sales occurred in 2008 immediately after the Global Financial Crisis, which reduced its applicability and reliability. His assessment that the six s 173 agreements did not have a material impact on the value of the Retained Land and his assessment of the issues surrounding the stormwater retention basin were wrong. He applied a 'global' per hectare figure to the value of the O'Grady Land which did not take account of the fact that the stage 6 land had ocean views and a higher value. He did not take account the effect of detriment and burdens caused to the land as he treated it all as having the same value. He did not take into account the decline in property values in 2019 or the effect of the failed Ironbridge development.

238 Ironbridge on the other hand, submitted that Mr Kinnaird's valuation should be preferred. He adopted the direct comparison methodology only, since development costings were not available at the relevant dates. He considered a broad range of sales and provided a detailed analysis of which were most comparable. He gave consideration to each of the factors to which the valuers were asked to have regard.

239 I consider that neither valuer's evidence provides a reliable valuation of the O'Grady Land, the Transferred Land or the Retained Land. No directly comparable sale was referred to on which to base a valuation.

240 The valuation of land is not a precise exercise and is the result of judgment. As Dixon J stated in The Commonwealth v Reeve:[180]

The rule thus laid down is almost indispensable to the administration of justice in compensation cases. For the estimation of a money sum is usually so much a result of judgment and sound discretion and so little the product of analytical reasoning, that, were it otherwise, every appeal would mean an assessment of compensation de novo, without any assignment of error in the reasoning or conclusions of the court appealed from.

241 To like effect, Mason J in Commissioner of Taxation (Cth) v St Helens Farm (ACT) Pty Ltd stated:[181]

As with the assessment of damages, especially in personal injury cases, the valuation of property by a court has many of the characteristics of a discretionary judgment. Valuation is a matter of estimation, not of precise mathematical calculation. It certainly involves the making of a value judgment in a metaphorical as well as the literal sense.

242 Some of the sales on which Mr Kinnaird relied for his 2013 valuation were not comparable and his 2019 valuation did not take account of the effect of Ironbridge's failed development. It is significant that his first key sale for 2013 relied on in his written report turned out not to be a comparable sale and he ceased to rely on it. He valued the land at a constant rate regardless of any impediment to its development as he considered that the impediments were covered by his discount rate of 5% to 10%.[182] He did not deduct the full 5.99 ha of encumbered or open space areas in calculating the gross developable land area.[183]

243 On the other hand, some of the properties upon which Mr Kent's valuation was based were not immediately developable and seem of limited relevance. I do not accept his valuation based on a project related site assessment methodology as he did not have the expertise to make such a valuation. He stated:[184]

The valuer explicitly highlights that we are not experts in development costing. Development costing is usually undertaken by a quantity surveyor or civil engineer and deals with all intricate details of a proposed development.

Due to no costings being available, we have referred to the vast number of development costings that have been provided to this Valuer, within the immediate region of Torquay and Armstrong Creek, for comparison.

244 In any event, I do not consider that Mr Kent applied accurate development costs in his valuation. He was not qualified to assess development costs and his costs which were taken from the Valuer-General's indices appear too high. Although his ultimate development cost for 2019 was similar to Mr Berry's costs, his use of the Valuer-General's index and incorrect assumptions about the selling rate of development lots, make the reliability of this method of valuation uncertain. He was instructed not to take into account the effect of the temporary basin,[185] and did not apply the same value to stages 8 and 9 because they could not be developed.

245 I consider that the appropriate course is to adopt a figure somewhere between the two valuations.

246 Dealing with the value of the O'Grady Land as at February 2013, no exact comparable sale was identified. Some of the sales that the parties initially referred to were shown, under later examination, not to be comparable. I consider that the appropriate value to adopt is higher than Mr Kinnaird's value of $825,000 per hectare, but less than Mr Kent's value. I consider that a figure of $1,000,000 per hectare is appropriate.

247 On the other hand, I consider Mr Kinnaird's 2019 valuation is too high and does not take into account the reducing prices at that time or the effect of the failed development on the value of the Retained Land. Mr Kinnaird did not separately value the detriment caused to the Retained Land, but took it into account in his 5% to 10% allowance. In his report,[186] he made a site specific assessment for the Retained Land and adopted a higher figure per developable hectare 'noting the smaller size of the land'. I consider a value of $1,4000,000 per hectare to be appropriate for the Retained Land as at June 2019.

248 Applying the rate of $1,000,000 per hectare to Mr Kinnaird's area for 2013 of 29.08 ha produces a value of $29,080,000, plus a nominal value for the 3.35 ha of $30,000. For 2019, applying a rate of $1,400,000 per hectare produces a result of $40,712,000 or, after deducting 3.01 ha for stage 6 and Lot P land, and valuing 26.07 ha, a result of $36,498,000.

249 Adopting Mr Kent's area for 2013 of 26.8 ha and applying a rate of $1,000,000 per hectare produces a value of $26,810,000, and for 2019, applying a rate of $1,400,000 per hectare to 21.22 ha produces a value of $27,708,000.[187]

Conclusion about the value of the Retained Land

250 On those values, I am not persuaded that Mrs O'Grady suffered an irreversible detriment by a reduction in the value of the O'Grady Land or Retained Land because she and Mr O'Grady entered into the Contract with Ironbridge or by their decisions not to rescind the Contract following Ironbridge's failure to pay the instalments of the purchase price on time. The evidence does not establish that the value of the Retained Land has been adversely affected. Mr Kinnaird's valuations supports a conclusion that even without stage 6 and Lot P, the value of Mrs O'Grady's Retained Land as at 21 June 2019 significantly exceeded the value of the O'Grady Land on 1 February 2013.[188]

251 I do accept that the O'Grady Land including stage 6 and Lot P would be worth more than the Retained Land now is. I accept that the stage 6 land was particularly valuable and probably had a value of at least $5,000,000 in June 2019. I accept that if Mrs O'Grady had had sold the stage 6 and Lot P land of 3.01 ha at its true value on 1 February 2013,[189] she would have received at least $3,000,000 and probably more. She has suffered financial detriment in that regard, but it flows from her agreement to transfer stage 6 land based on the rate of $250,000 per acre.

252 Mrs O'Grady also relied on a 'good consideration' defence, arguing that Ironbridge had gained or accepted benefits that made an order that she provide restitution inappropriate. This defence applies if the payer received good consideration for the money that it paid, in that it gained or accepted a benefit for its payment.[190]

253 The parties relied on submissions similar to those made about the issue of total failure of consideration. Thus Mrs O'Grady submitted that Ironbridge had received the benefit of extensions of time to pay purchase price instalments and the early transfer of stage 6 and Lot P land. Ironbridge disputed that these matters were relevant as the consideration that had been bargained for was the conveyance of title.

254 In my opinion, Mrs O'Grady's defence that Ironbridge received good consideration for its payments is not established. As previously stated, I consider that there was a total failure of consideration in respect of the Retained Land, but that Mrs O'Grady is entitled to receive remediation costs. I do not consider that the benefits that the O'Gradys conferred on Ironbridge provided separate consideration for the instalments of purchase price that it paid. The authorities on which Mrs O'Grady relied in respect of this defence were cases in which the payer received the substantial benefit for which it had bargained under the contract, although a legal requirement for the conferral of the benefit had not been observed. They involved quite different fact situations from those in the present case. However, I do consider that the extensions of time and forbearance are relevant to Mrs O'Grady's claim for interest payments which I consider in issue 5 below.

Issue 2(c): Mrs O'Grady's reliance on the principle of restitutio in integrum

255 Mrs O'Grady argued that if she did not establish her change of position defence, restitutionary relief should be denied in any event as she cannot be restored to her pre-contract position. She submitted that the requirement of restitutio in integrum applies to cases of restitution based on total failure of consideration. She relied on the High Court's statement of principle in Alati v Kruger, a case stemming from a vendor's fraudulent misrepresentation about a business' takings:[191]

The fundamental factor in the situation is, of course, the rule that restitutio in integrum is a condition of rescission. It seems to me necessarily to follow from this that a purchaser remaining in possession after giving notice of rescission is under a duty to take reasonable care to preserve the property, so that what he has received from the other party may, so far as reasonably practicable, be restored to that other party. If the property includes the goodwill of a business, then I think that the purchaser in possession must carry on that business and take reasonable care to preserve the goodwill. If he commits a breach of this duty, and deterioration results, one of two consequences may follow according to the circumstances of the particular case. The court may find, having regard to the conduct of the purchaser, that it would not be equitable to decree rescission. Or, while not thinking it proper to refuse a decree, the court may make it a condition of the decree that the purchaser shall compensate the vendor in respect of the deterioration of the property.

256 Mrs O'Grady was unable to refer to any authority establishing that an inability to restore a recipient of payments to their original position provided a defence to an unjust enrichment claim[192]. The change of position defence covers much of the same area.

257 Ironbridge submitted that it had made restitution for the incidental benefits that it received under the Contract, including the transfers of the stage 6 and Lot P land. It took possession of, and paid for that land and in return paid for Council rates and land tax. It does not seek restitution of the amounts that it paid for that land. The other benefits relied upon by Mrs O'Grady benefited Ironbridge only to the extent of enabling it to develop stage 6 and Lot P. Under the Sixth Deed, it assigned to Mrs O'Grady its interest in the Residual Settlement Funds under the Individual Lot Contracts subject to payment of specified expenses. It agreed to pay interest on the unpaid purchase price, even though it contended that could not now be recovered as a debt due. It also agreed to remove the soil stockpiles on the O'Grady Land. Mrs O'Grady did not object to the construction of the temporary basin and the drains, and they were not benefits conferred under the Contract.

Conclusion on Mrs O'Grady's reliance on the restitutio in integrum principle

258 I assume for, present purposes, that the principle of restitutio in integrum can apply to a claim for restitution based on total failure of consideration. However, subject to the remediation and rehabilitation of the Retained Land at Ironbridge's expense to the extent necessary because of the temporary basin and the soil stockpile, I consider that Mrs O'Grady can be restored to her pre-contract position.

Issue 2(d): Would it be otherwise unjust to make an order for restitution?

259 Mrs O'Grady submitted that a prima facie liability to make restitution for unjust enrichment can be displaced by circumstances which the law recognises would make an order for restitution unjust.[193] She relied on AFSL, in which the plurality suggested that the basis for restitutionary liability was whether retention of funds was against 'conscience', which required an assessment of whether it would be 'inequitable in all the circumstances' to require the defendant to make restitution.[194]

260 Mrs O'Grady argued that it would be unjust for the Court to grant Ironbridge an order for restitution even if there had been a total failure of consideration. The principle governing restitution for unjust enrichment is the achievement of justice. Restitutionary obligations are imposed by operation of law in response to circumstances including the retention of a benefit received on a basis that has totally failed to materialise.[195] That was not the present case.

261 Ironbridge disputed that it would be unjust to grant it an order for restitution.

262 Mrs O'Grady's submissions on this point largely repeated her submissions about the issue of total failure of consideration detailed above, which I have not accepted. I do not accept that it would be unjust to make orders for restitution because of a change of position defence. However, I have decided that Mrs O'Grady is entitled to an order for counter restitution for remediation and rehabilitation works.

263 Because of my conclusions on issues 2(a) to 2(d), I consider that Mrs O'Grady's defences have not been established.

Issue 3: In what amount, if any, should Mrs O'Grady make restitution? Is Ironbridge entitled to interest on any amount recovered?

Issue 3(a): How much did Ironbridge pay the O'Gradys for stage 6 and Lot P?

264 In determining the amount of the restitution that Mrs O'Grady should make, the identification of the amounts that Ironbridge paid to the O'Gradys for stage 6 and Lot P land is central. Their identification will largely determine the amount that it paid the O'Gradys towards the Retained Land and therefore the amount of restitution Mrs O'Grady should make. In addition to the deposit of $2,000,000, Mrs O'Grady is entitled to retain the amounts that Ironbridge paid to her and Mr O'Grady for the transfers of the stage 6 and Lot P land. The consideration recorded in the transfers totalled $1,812,500. Mrs O'Grady's case is that it is just that a much larger amount should be treated as having been paid for that land. She contends that a large part of the purchase price payments made, $5,093,085.68 related to the stage 6 and Lot P land, which was transferred to Ironbridge for development and on-sale. That amount comprised $800,000.00 gained from the sale of stage 6A lots and $4,293,085.68 gained from the sale of stage 6B lots, which latter sum Ironbridge 'absolutely, unconditionally and irrevocably' assigned to Mrs O'Grady under cl 3.2 of the Sixth Deed. The amount of $187,414.27 is interest on the amount of $4,293,085.68. Some $2,375,420.22 or, using the amended annexure A figure, $2,265,258.80, related to interest acknowledged to be due and owing.

265 Mr Wallace agreed that the provision in the Third Deed that Ironbridge would submit transfers of land executed by Ironbridge showing a consideration of $400,000 for the stage 6AI land was a provision directed to the State Revenue and with stamp duty obligations in mind.[196] The same was the case with the transfer recording the consideration for stage 6A2 of $600,000. He then gave the following evidence:

The true value of the stage 6A land was far higher than a million dollars, wasn't it Mr Wallace? ---Nothing - the transfer was based on no construction on the land. So once construction took place, yes, the land was worth a lot more.

... And, in fact , was paying a higher rate per lot than the $250,000 equated to.

But construction had already taken place by this time in 2013 Mr Wallace? ---Sure, yes, yeah.

266 He agreed that when the alleged agreement was made in November 2015, that the amount of $812,500 understated the value of the stage 6B land.[197]

267 However, as Ironbridge pointed out, Mr Wallace also said in essence that he or they had applied the rate per acre allowed in the Deed,[198] which was $250,000 per acre. He also said that 'the transfer was based on no construction on the land' and that 'once construction occurred, 'the land was worth a lot more'.[199]

268 In support of her contention that the amounts that Ironbridge paid for the Transferred Land were more than the amounts recorded in the transfers, Mrs O'Grady relied on cl 2.2 of the Fifth Deed of 27 October 2014 which stated that '[n]otwithstanding anything previously agreed on', Ironbridge would, on the settlement of any lot arising from the subdivision of any part of the Land prior to the final Settlement Date of 14 November 2014, 'pay to [Mrs O'Grady] the proceeds of such sale' less costs and other incidentals. She submitted that it was agreed that funds from the settlement of stage 6 sales were to be made to her in advance of, and quite separate to, final completion at which point title would be conveyed.

269 Thus the 11 March 2015 email from Logie-Smith Lanyon to Coulter Roache Lawyers stated: 'All net proceeds from stage 6, which should be completed within two months from initial drawdown, will be paid to O'Grady, reducing the loan by a further $6m ...'.

270 Mr Wallace agreed that the Sixth Deed provided that upon the sale of the stage 6B lots, Mrs O'Grady was entitled to the full proceeds of the sales less certain specified costs. Ironbridge had absolutely, unconditionally and irrevocably assigned its rights, title and interest in the stage 6B sale contract proceeds. Mr Wallace agreed that the payments that Ironbridge made to the O'Gradys from stage 6 were made for the title to the stage 6 land.

271 For that reason, cl 3.2 of the Sixth Deed stated that: '[t]he Purchaser absolutely, unconditionally and irrevocably assigns its right, title and interest in and to the Residual Settlement Funds to [Mrs O'Grady].' 'Residual Settlement Funds' were defined as the Settlement Funds (as defined) less other than those parts which Mrs O'Grady consented to being paid to others in priority in accordance with cl 3.1. 'Settlement Funds' were defined as the purchase prices under the Individual Lot Contracts (as defined) and the proceeds of them. 'Individual Lot Contracts' were defined as the contracts of sale for the purchase of a lot forming part of stage 6B of the Surf View Development, including the contracts of sale listed in Schedule 1 to the Sixth Deed.

272 There was an absolute, unconditional and irrevocable assignment of all Residual Settlement Sums to Mrs O'Grady under cl 3.2 of the Sixth Deed. Mrs O'Grady submitted that those funds were not paid in contemplation of the ultimate conveyance of all the O'Grady Land. They were not conditional payments, but were absolute. There is no injustice in Mrs O'Grady retaining them.

273 Mrs O'Grady submitted that the High Court's decision in Mann established that in a quantum meruit claim, the use of the contract price as a cap was the prima facie position only and that there may be exceptions when adherence to the contract price would be unconscionable. Such circumstances existed in this case because of the significant disparity between the alleged contract price and the reasonable value of the benefits that Mrs O'Grady conferred on Ironbridge. Mr Wallace conceded that the consideration recorded in the transfers of land for stage 6A1 was directed to the State Revenue Office with stamp duty obligations in mind. This was much less than the true value of the land. Mrs O'Grady will not be unjustly enriched by allowing her the full value of the payments that Ironbridge made to her in respect of stage 6 and Lot P, whereas to limit the payments to be allowed in her favour would confer a windfall on Ironbridge. Ironbridge absolutely, unconditionally and irrevocably assigned its right, title and interest in and to the stage 6B payments to Mrs O'Grady and she detrimentally changed her position as a result of Ironbridge's conduct. Any windfall to her would simply be the result of the terms of the Contract and in any event, the Retained Land has been irreversibly changed and its value detrimentally affected by Ironbridge's development. Ironbridge has benefitted from its dealings with Mrs O'Grady and the indulgences she granted and has a substantial profit on the sale of the stage 6 lots.

274 Ironbridge submitted that the decision in Mann established that for the completed stages of a building contract, the builder's right to recovery was limited to the amount due under the contract for those stages or damages for breach of contract. For uncompleted stages, the builder's right to recovery was limited to damages for breach of contract or quantum meruit for work or labour done in respect of those stages and the builder's right of recovery should prima facie not exceed that portion of the contract price that was attributable to those services. The High Court applied Dixon J's decision in McDonald that upon termination of a contract for breach, both parties are discharged from the further performance of the contract, but the contract is not discharged from the beginning. Rights that have been unconditionally acquired or which arise from the partial execution of the contract are not divested or discharged and continue unaffected.

275 In this case, the stage 6 and Lot P land was transferred to Ironbridge for the agreed price while the Contract was on foot and partially executed. Mrs O'Grady's claim that the value of the land should be allowed at a higher amount than the variation deeds and transfers recorded would be to re-write or unwind the Contract. Her claim that the real value of the land should be allowed is inconsistent with her premise that the Transferred Land is a severable part of the Contract.

276 The authorities upon which Mrs O'Grady relied were not followed by the High Court in Mann.[200] The amounts recorded in the transfer documents were not intended to record the value of the Transferred Land, but the consideration to be paid. Mr Wallace did not say that the transfer price or value was directed to the State Revenue Office, but that the transfer documents recorded the agreed consideration, not the value of the land and that the price paid took into account that the O'Gradys were selling undeveloped land. It is not inequitable to hold parties to their bargain and there was no reason to depart from the application of the Contract price. Mrs O'Grady could have sued for damages for breach of contract if she had suffered any loss and should not now receive a windfall. The consideration and transfer prices recorded in the transfers were based upon and reflected the agreed rate of $250,000 per acre. Mann makes clear that if the Court accepts that the Contract was severable, the terms that govern the severance must apply and cannot be varied.

Analysis of issue 3(a) - the amount paid by Ironbridge for stage 6 and Lot P land

277 Special condition 7 provided for the early transfer of land at the rate of $250,000 per acre. The consideration recorded in the transfers appears to have been calculated using that rate. The relevant deeds of variation also rely on that rate.

278 The Deeds speak for themselves about the consideration for the transfers of the stage 6 and Lot P land - they are consistent with a price of $250,000 per acre. A somewhat analogous issue arose in Rawson v Hobbs,[201] where a purchaser was entitled to rescind a contract to purchase a lease of Crown land when the Minister refused to give consent after the purchaser had been in possession of the land. The High Court considered what equitable relief should be granted following the making of a declaration that the contract had been discharged; a task that required consideration of the division of the purchase price in the contract of sale. Windeyer J stated:[202]

This breaking up of the purchase price was said to have been made for stamp duty purposes only. But, for whatever reason it was done, it states what the parties agreed should be the prices at which the various items of property comprised in the sale were sold.

279 The same approach could be applied in this case. But there is more to support the conclusion that the consideration recorded in the transfers totalling $1,812,500, should be taken as the price Ironbridge paid for the Transferred Land. No payment made by Ironbridge to the O'Gradys appears to have been specifically designated as payment of the agreed consideration for stage 6 land, rather the payments, which are set out in Annexure B were made towards the purchase price of $20,000,000 or interest or expenses. Many of the payments appear to have been made from the sale of stage 6 land, in the form of $40,000 payments, but that did not make them payments for stage 6. They were payments towards the total purchase price.

280 The terms of the deeds of variation are significant. The Third Deed which provided for the transfer of stage 6A1 and 6A2 land and recorded consideration of $400,000 and $600,000 respectively provided that upon settlement of the sale of any lot by Ironbridge to third parties, it would pay to the O'Gradys $40,000 plus the legal costs of discharging the Mortgage of $164.00 plus GST. The Third Deed also provided that:

The Purchaser acknowledges that the Vendors have agreed to these terms to assist the Purchaser in its development and sale of the land and that the $40,000.00 being received by the Vendors on the settlement of each lot are being applied in reduction of the balance of the purchase price under the Contract.

281 The Fifth Deed which extended the final Settlement Date until 14 November 2014. provided in respect of the proceeds of sale of any lot:

Such proceeds shall be applied firstly towards any arrears owing to the Vendor and the vendor's legal and accounting costs and secondly in reduction of the principal sum.

282 The Sixth Deed which dealt with the sale of the stage 6B land provided in respect of 'Residual Settlement Funds':

3.7 Application of Residual Settlement Funds

To the extent that the Residual Settlement Funds are actually received by the Vendor, the Vendor must apply the Residual Settlement Funds towards either:

(a)the Outstanding Principal Amount; or

(b) the interest owing in respect of the Outstanding Principal Amount; or

(c)any other amounts owing to the Vendor under the Transaction Documents,

as determined by the Vendor in its sole and absolute discretion.

The 'Outstanding Principal Amount' was the outstanding amount of the purchase price under the Contract of Sale.

283 I consider that Mrs O'Grady is not entitled to retain an amount greater than $1,812,500 for the stage 6 and Lot P land. She is also entitled to retain the deposit of $2,000,000 paid by Ironbridge.

Issue 3(b): Payments made by I Wallace & Associates Pty Ltd

284 Mr Wallace gave evidence that I Wallace & Associates Pty Ltd paid three amounts, totalling $1,000,000, towards the purchase price of the O'Grady Land. The three payments were made by:

(a) a bank transfer on 11 November 2008 in the amount of $395,000 from the Bank West account in the name of 'I Wallace & Associates Pty Ltd' with the description of 'TFR TO COULTER ROACH';

(b) a cheque in the amount of $105,000 from the Citi Smith Barney account in the name of 'I Wallace & Associates Pty Ltd ATF The Wallace Superannuation Fund' ('Citi Smith Barney Account') honoured on 17 November 2008; and

(c) a cheque in the amount of $500,000 from the Citi Smith Barney Account honoured on 28 November 2008;

all of which were received by Coulter Roache Lawyers.

285 Ironbridge seeks to recover these payments by way of restitution, although it did not make the payments itself.

286 Mr Wallace's first statement confirms that he and Mrs Wallace are directors of both Ironbridge and I Wallace & Associates. His statement also states that 'I Wallace & Associates ... has at times held deposits for the purchase of lots in the subdivisions carried out by Ironbridge'.[203] He also says that since Ironbridge was incorporated, I Wallace & Associates has not operated as a valuation business and real estate agency; the reason for which it was originally created.[204] It seems that I Wallace & Associates became obsolete following the creation of Ironbridge and now serves solely to facilitate or otherwise assist Ironbridge's operations.

287 The interconnectedness of Ironbridge's and I Wallace & Associates transactions, business operations and directorships has the character of operating as a single economic entity.[205]

288 I next consider the issue of how restitution operates in circumstances involving three parties. There is little authority on this area of restitution law, perhaps because the issue in essence turns on questions of fact.[206]

289 Mrs O'Grady submitted that Ironbridge is only entitled to recover from Mrs O'Grady if her enrichment was 'at the expense of' Ironbridge. Given the payments were made by I Wallace & Associates, Ironbridge has not suffered the loss required to enliven restitutionary relief.

290 Ironbridge submitted that the payments made by I Wallace & Associates were made on its behalf. Mr Wallace gave evidence to that effect in his third witness statement and in cross-examination said that the payments were recorded 'as a loan in our books to Ironbridge'.[207] However, no such documents were in evidence and I cannot place any real significance on that evidence.

291 In Nu Line Construction Court Pty Ltd v Fowler,[208] Ward J found that a payment made personally by a director of the claimant on behalf of the claimant towards the purchase price of a property being purchased by the claimant was sufficient to give the claimant standing to sue for the return of that money paid by its director in restitution given there was a total failure of consideration.[209] Ultimately, Ward J dismissed the claim on the basis that it was out of time pursuant to the Limitation Act 1969 (NSW).

292 An appeal from Ward J's judgment was allowed by the New South Wales Court of Appeal solely on the limitation ground. However, the Court of Appeal appeared to agree with her Honour's analysis of the effect of the payment being made by a related third party on the claimants ability to recover favourably.[210]

293 In contrast is the decision of the High Court in Lumbers v W Cook Builders Pty Ltd (in Liq) ('Lumbers'),[211] which was referred to by Mrs O'Grady. In Lumbers, the appellant engaged a builder, Sons, to perform building works. Mid-construction, the builder transferred the benefit of the agreement between the appellant and itself to the respondent. Eventually, the respondent went into liquidation and the liquidators claimed a final payment for the work from the appellants. The High Court rejected the liquidators claim, noting that:[212]

[Lumbers] accepted no benefit at the expense of Builders which it would be unconscionable to retain. [Lumbers] made a contract with Sons [the original builder]. ... Sons made an arrangement or agreement with Builders. ... If either the agreement between Sons and the Lumbers or the agreement or arrangement between Sons and Builders has not been fully performed (because all that is owed by one party to the other has not been paid) that is a matter between the parties to the relevant agreement.

294 Lumbers is distinguishable on the basis that there was a transfer of benefit under the relevant agreements, and, the relevant agreements created relationships between parties in a manner different to the present case.

295 The Supreme Court of the United Kingdom has recently reviewed common law authorities on the issue of restitution involving three parties in Investment Trust Companies v Revenue & Customs Commissioners.[213] Lord Reed delivering the judgment of the Court stated that '"at the expense of" requirement [is not] satisfied by a connection between the parties' respective benefit and loss merely as a matter of economic or commercial reality'.[214] His Lordship also stated that:[215]

Where the defendant has not received a benefit directly from the claimant, no question of agency arises, and, where the property does not consist of property in which the claimant has or can trace an interest, it will generally be difficult for the defendant to maintain that he has been enriched at the claimant's expense.

296 It appears that it was not clear in that case that the third party had made a payment on behalf of the claimants for restitution and it could not be concluded that the payments had been made directly by the claimants.

297 In this case the payments records establish that I Wallace & Associates or, a superannuation fund associated with it, made payments totalling $1,000,000 to Mrs O'Grady on behalf of Ironbridge in respect of Ironbridge's debt. They were treated by the O'Gradys as part payment of Ironbridge's debt.

298 The amount paid by I Wallace & Associates Pty Ltd to Mrs O'Grady's solicitors should be treated as paid by Ironbridge.

299 The next issue is whether Ironbridge is entitled to interest on the restitution amount to be paid by Mrs O'Grady from the date of termination of the contract.

300 Ironbridge claimed interest on the sum payable to it as restitution. Interest is ordinarily payable on an amount awarded unless there is good cause shown to the contrary.[216]

301 Ironbridge contended that interest is awarded to compensate the person who has been kept out of their money. It claimed the sum of $13,858,344.84, which it said was the total purchase price and interest that it had paid. That sum consisted of $11,593,085.68, which is the total purchase price and interest of $2,265,258.80. It made allowances for the amount of $1,812,500.00 paid for stage 6 and Lot P land which had been transferred to it and the deposit of $2,000,000. Its net claim was therefore $10,045,844.84.

302 The result of my judgment is that Ironbridge is entitled to an order for the restitution of the purchase price paid less the deposit of the $2,000,000 and the $1,812,500. It is not entitled to restitution of the interest payments made. The exception is the counter restitution which must be made to Mrs O'Grady for remediation cost of the Retained Land. I have decided that the appropriate amount to award is $315,467.00 plus GST.

303 Mrs O'Grady argued against an award of interest because of the detrimental change to her land, the loss of prime land and the benefits Ironbridge had received. She said that her land had effectively been kept aside for Ironbridge for ten years.

304 I conclude that interest under the Supreme Court Act 1986 should be awarded to Ironbridge on the amount of restitution awarded to it as no good cause to the contrary has been shown. The matters on which Mrs O'Grady relied in opposing an award of interest were dealt with by Ironbridge's agreement to pay her interest due to the delay in paying the purchase price and the O'Gradys' forbearance in not rescinding the Contract.

305 I will hear the parties about the quantum of the interest payable to Ironbridge.

Issue 4: Is Ironbridge entitled to an equitable lien?

306 As an alternative to its claim in restitution, Ironbridge argued that it was entitled to an equitable lien over the Retained Land for an amount equal to the instalments of purchase price and interest it had paid. Ironbridge's caveat relies on its claim to an equitable lien.

307 Ironbridge submitted that an established category of equitable lien was the 'purchaser's lien', which secures the repayment of instalments made by a purchaser under a contract for the sale of land. The interest payable on any such amount is also secured by the lien.[217] Where title is not conveyed, the lien secures the repayment of monies paid by the purchaser to whom it gives a right to sell the property and take a share of the proceeds of sale in an amount equal to the debt.

308 Ironbridge argued that the lien exists whether or not the purchaser is in default. It relied on Frankcombe v Foster Investments Pty Ltd ('Frankcombe'),[218] in which Holland J stated in obiter that:

If the purchaser's default does not destroy the right to recover the money, why should it destroy the lien which he undoubtedly would have had prior to the rescission and would, on the cases, continue to have after the rescission if not in default.[219]

309 Mrs O'Grady argued that Ironbridge was not entitled to an equitable lien. She referred to Hewett v Court ('Hewett')[220] as authority that such a remedy is not available where the purchaser is in default. In that case, Gibbs CJ stated:[221]

A vendor's lien for unpaid purchase money has been said to be founded on the principle that 'a person, having got the estate of another, shall not, as between them, keep it, and not pay the consideration': Mackreth v Symmons . The lien of a purchaser for the purchase money that he has paid to the vendor on a sale that has gone off through no fault of the purchaser may perhaps rest on the converse principle that he who has agreed to convey property in return for a purchase price will not be allowed to keep the price if he fails to make the conveyance. At all events, the rule has been said to be founded on 'solid and substantial justice'.

310 Wilson and Dawson JJ, although in dissent on the ultimate issue in Hewett, also considered that the purchaser's lien did not apply if the purchaser was in default.[222]

311 Mrs O'Grady argued that there was no justification for the Court to recognize a proprietary remedy, such as an equitable lien. It was unnecessary; she had not engaged in unconscionable conduct and there was no suggestion that she would soon become insolvent. In contrast was Ironbridge's conduct towards her over the ten years of their dealings, which made any recognition of an equitable lien disproportionate..[223]

Analysis of Issue 4: whether Ironbridge is entitled to an equitable lien

312 The equitable lien asserted by Ironbridge can only succeed if it can show that Mrs O'Grady owes it a debt which the lien can secure. The equitable lien is not a separate avenue for establishing an entitlement to the instalments paid, but is a means for securing the repayment of money that has already been established as owing.

313 But, authority is clear that a purchaser is only entitled to an equitable lien where the contract 'goes off' through no fault of their own meaning for reasons other than the purchaser's default.[224] The contrary view expressed in Frankcombe is inconsistent with authority in particular Hewett.

314 I do not accept that Ironbridge has an equitable lien, being a purchaser's lien or otherwise. It has not established that it has an estate or interest in land to support its caveat. It would follow that I should make an order for the removal of Ironbridge's caveat.

Issue 5: In what amount, if any, should the Ironbridge parties be required to pay Mrs O'Grady interest?

(a) has Ironbridge established that the sum of $2,265,258.80[225] was paid entirely towards interest?

(b) is Ironbridge entitled to restitution of the interest allegedly paid under the various deeds in the furtherance of the acquisition of the Retained Land?

(c) is Mrs O'Grady entitled to counterclaim the interest that Ironbridge did not pay as required by the various deeds?

Issue 5(a): Was the $2,265,258.80 all paid for interest? - The issue of the $109,938.88

316 Late in the trial, an issue arose about the amount of $109,938.88 that Ironbridge said it had paid Mrs O'Grady for interest. It was recorded in Annexure A to its statement of claim amongst the payments it had made. The dispute concerned whether that sum had been double counted by Ironbridge and whether it had been paid toward interest owed to Mrs O'Grady or had rather been paid for costs and other like expenses.[226]

317 The issue first arose in cross-examination of Mr Wallace, when it was put to him that the amount of $109,938.88 had been double counted.[227] Specifically, it was put to him that, on 20 October 2015 that sum of money had been paid by Ironbridge to Mrs O'Grady's solicitors, Coulter Roache Lawyers, which was recorded in Annexure A, but that it was not until 22 March 2016 that Coulter Roache Lawyers transferred the benefit of that sum to Mrs O'Grady,[228] which transaction was also separately recorded in Annexure A.

318 At the conclusion of the trial, counsel for Ironbridge informed the Court that Ironbridge would submit an amended Annexure A acknowledging the double counting and addressing any consequential amendments to the figures.[229] It did file an amended Annexure A, reducing its claim by $110,161.42. The parties were given leave to file submissions addressing whether the amount of $109,938.88 had been double counted.

319 In a letter dated 3 September 2019, Mrs O'Grady's solicitors acknowledged that Ironbridge had remedied the double counting but disputed its categorisation of the payments of $2,265,258.80, part of which is the $109,938.88 payment, as interest payments. Mrs O'Grady contended that that amount was paid for expenses including interest, but also for legal fees. Under cl 12 of the Sixth Deed, Mrs O'Grady could demand payment from Ironbridge for all costs and expenses incurred in connection with the negotiation, preparation, printing, execution, enforcement of or the preservation of any rights in the Transaction Documents (as defined).

320 Ironbridge's solicitors responded that senior counsel for Mrs O'Grady had agreed to the entire contents of Annexure A, except in relation to the issue of the double counting of the $109,938.88,[230] and that Mrs O'Grady could not retract that admission. She had provided no evidence that she had demanded that Ironbridge pay costs and expenses as was required under cl 12.

321 Mrs O'Grady's solicitors replied in a letter dated 6 September 2019 denying that her counsel had made the admission claimed by Ironbridge and asserting that she had contested the characterisation of the $2,265,258.80 throughout the proceeding. Ironbridge responded disputing these contentions.

322 I heard submissions about this dispute on 16 September 2019 and the parties agreed that:

(a) $11,593,085.68 was paid by Ironbridge to Mrs O'Grady towards the purchase price;[231]

(b) a further $2,265,258.80 was paid by Ironbridge to Mrs O'Grady (the characterisation of which remains in dispute - see below);[232]

(c) Ironbridge does not claim restitution for any payments other than for the purchase price and interest, thus if the contested payments are found not to be interest payments, it could not recover them;[233]

(d) Ironbridge bore the onus of proving that the disputed payments were paid for interest;[234]

(e) Ironbridge relied upon the evidence of Mr Wallace to substantiate its claim as to the characterisation of the disputed payments;[235] and

(f) if Mrs O'Grady positively contended that some or all of the contested payments were made for costs and expenses other than interest, such as demands under cl 12, she bore the onus of establishing that contention.[236]

323 Therefore, the issue remaining in dispute was whether Mrs O'Grady, by counsel, admitted that the contested payments were interest payments and if not, what finding the Court should make about the payments.

324 Turning to the first issue, I accept Mrs O'Grady's contention that no admission was made. The passing comment of senior counsel cannot amount to an admission as to the quantum and characterisation of the Annexure A payments, particularly as Mrs O'Grady had consistently disputed the characterisation of the $2,265,258.80 sum in issue.[237]

325 With respect to the second issue, Ironbridge maintains that Mr Wallace's evidence proves that the disputed payments were for interest. It says that, if Mrs O'Grady was to disprove this, she must particularise which payments were not paid towards interest and for what purpose they were paid. Conversely, Mrs O'Grady maintained that Ironbridge has not proved that the contested payments were paid towards interest and put it to its proof. The onus of proof of these payments depends on Mr Wallace's evidence.

Analysis of issue 5(a) the payments of $2,265,258.80

326 Mrs O'Grady led no positive evidence, other than the example in the footnote of her solicitors' letter of 3 September 2019, that the payments were made towards legal and other costs. The crux of this issue is whether Mr Wallace's outline of evidence and oral evidence is sufficient to establish that the $2,265,258.80 payments were made solely towards interest. I accept his evidence that they were. I see no reason to doubt that part of his evidence.

Issue 5(b): Is Ironbridge entitled to restitution of the interest paid to Mrs O'Grady under the deeds of variation?

Issue 5(c): Is Mrs O'Grady entitled to payment of any further interest?

327 These two issues raise the same question - is Mrs O'Grady entitled to retain the interest paid to her under the deeds of variation and is she entitled to recover from Ironbridge amounts of interest not paid up to the rescission of the Contract and beyond to the present day.

328 Mrs O'Grady's counsel said that her claim for interest was brought in both debt and damages. A claim can be brought in both debt and damages, but her damages claim was not developed. It is pleaded in the Further Amended Counterclaim appearing after the plea of debt as '(alternatively, damages for loss suffered under clause 8(b) of the Sixth Deed in the amount of the Outstanding Interest)'. But the damages claim was not developed in submissions and no separate remedy in damages was sought in the Counterclaim. Therefore, I propose to consider the claim as one in debt.

329 Mrs O'Grady wishes to retain payments of interest relating to the land transferred as compensation for Ironbridge's failure or inability to perform its obligations under the Contract over the 10 or 11 year period and as payment for benefits conferred with the transfer of land.

330 Ironbridge says that it has paid Mrs O'Grady interest of $2,265,258.80[238] Mrs O'Grady counterclaims for additional interest of $11,974,501.74 to 2 October 2017, plus interest at 20% since 2 October 2017.

331 The contending positions in very general terms are as follow. Ironbridge argues that its obligation to pay interest went once the Contract ended. Mrs O'Grady argues that the interest was a debt which accrued under separate provisions in the deeds of variation, was not part of the purchase price and was agreed to in exchange for forbearance to rescind and extensions of time to pay.

332 The term of the Contract relating to interest was general condition 7 which stated:

1. A party who breaches this contract must pay to the other party on demand:-

(a) compensation for any reasonably foreseeable loss to the other party resulting from the breach, and

(b) any interest due under this contract as a result of the breach.[239]

333 Next were terms of the Contract incorporated from the general conditions in Table A of the Seventh Schedule of the Transfer of Land Act 1958, including:

1. If either party defaults in payment of any money under this contract then interest at a rate of two per cent higher than the rate for the time being fixed under section 2 of the Penalty Interest Rates Act 1983 in lieu of any rate named in the contract and computed upon the money overdue during the period of default shall be paid on demand made by the offended party without prejudice to any other rights of the offended party.

334 The operation of the Table A general conditions is dealt with by cls. 9 and 10 of the general conditions of the Contract which state:

General Conditions in Legislation

9.1 The general conditions in Table A of the Seventh Schedule of the Transfer of Land Act 1958 if the land is under the operation of that Act.

Conflict between Conditions

1. In case of a conflict between the conditions the order of priority is:-

(a) any special conditions in this contract;

(b) general conditions in this contract;

(c) general conditions in the legislation.

335 I have summarised the terms of the deeds of variation in the initial part of this judgment, however it is convenient to again refer to their provisions relevant to interest. To recap, the deeds of variation extended the payment dates for the payment of instalments of the purchase price and required Ironbridge to pay interest on those instalments from the original payment dates. The First Deed provided for interest to be paid on the 2008 instalment or the amount outstanding at the rate of 13% per annum payable monthly in advance with the first payment to be made on 12 November 2008.

336 The Second Deed recited that Ironbridge had failed to pay interest on the principal instalments due under the First Deed on 12 December 2008, 12 January 2009, 12 February 2009 and 12 March 2009 and provided that the sum of $73,125, being arrears of interest, was to be paid by 30 April 2009.

337 The Fourth Deed, made on 18 May 2013, extended the due date for payment of the balance of the purchase price until 18 May 2014. It also recorded that Ironbridge had agreed to pay interest at the rate of 20%, with part of that interest payable on that day, 18 May 2013, and on the 18th day of each subsequent month until April 2014.

338 The Fifth Deed, made on 27 October 2014, recited that Ironbridge was in default of its obligations under the Contract and that the balance due under it was $13,854,771.80 at 30 June 2014, including interest and legal costs owing to that date_._ It recorded that Ironbridge had agreed to pay interest on the balance of the purchase price at the rate of 20% from 1 July 2014 and that:

The Vendor has agreed to extend the settlement date subject to the payment of the interest and her legal and accounting costs and subject to the provisions of the Contract and the several variations thereof.

339 The Fifth Deed extended the date of settlement until 14 November 2014 and required Ironbridge to use its best endeavours and do all things reasonably required of it to pay to Mrs O'Grady the amount of $1,500,000 on account of the principal sum by 15 September 2014. In respect of interest, it provided that:

.1 The Purchaser shall pay interest on the sum of $12,700,000.00 ('the principal sum') or on such amount as is owing from time to time at the rate of twenty per cent (20%) calculated daily from 1 July 2014.

.2 The Purchaser shall pay interest on all arrears at the rate of twenty per cent (20%) per annum calculated daily and adjusted monthly from 1 July 2014. The arrears are agreed at $1,154, 771.80 at 30th June 2014.

340 The Sixth Deed contained acknowledgements that:

2. Acknowledgements

2.1 Acknowledgment of non-payment

Each of the Purchaser Transaction Parties acknowledges and agrees that the Purchaser has failed to pay Outstanding Principal Amount under and in accordance with the Contract of Sale.

Each of the Purchaser Transaction Parties acknowledges and agrees:

(a) that the Outstanding Principal Amount owing by the Purchaser to the Vendor under the Contract of Sale is A$12,700,000;

(b) that the outstanding interest owed by the Purchaser to the Vendor under the Contract of Sale:

(ii) as at 31 July 2015 was $4,481, 336.07 and

(i) is accruing daily at the rate of 20.00% per annum;

(ii) is calculated (and has been calculated):

(A) on the basis of actual days elapsed and a year of 365 days; and

(B) on the basis that interest is (and has been) compounded at the end of each calendar month; and

(iii) is payable by the purchaser on demand.[240]

341 The Sixth Deed provided for the application of Settlement Funds, being the proceeds of the sale of lots in stage 6, towards payments to Draper's, land tax and rates, amounts owing to the estate agent in connection with the sales, and towards the payment of any other expenses nominated by Mrs O'Grady. The deed provided in the case of 'Residual Settlement Funds':

3.7 Application of Residual Settlement Funds

To the extent that the Residual Settlement Funds are actually received by the Vendor, the Vendor must apply the Residual Settlement Funds towards either:

(a) the outstanding Principal Amount; or

(b) the interest owing in respect of the Outstanding Principal Amount; or

(c) any other amounts owing to the Vendor under the Transaction Documents,

as determined by the Vendor in its sole and absolute discretion.[241]

342 Clause 11 dealt with 'Default Interest' and stated:

Default Interest

If a Purchaser Transaction Party fails to pay any amount payable by it under or in connection with the Transaction Documents on its due date (including under an indemnity and including under Clause 4 (Commitments from the Vendor to the Contractor) of the Consent Deed interest will accrue on the overdue amount from the due date up to the date of actual payment (both before and after judgment). Interest

(a) accrues daily at the rate of 20.00% per annum;

(i) on the basis of actual days elapsed and a year of 365 days; and

(ii) on the basis that interest is compounded at the end of each calendar month; and

(c) is payable by the Purchaser on demand by the Vendor.

Clause 1.1 (Definitions and Interpretation) of the Sixth Deed provided that the 'Purchaser Transaction Parties' were Ironbridge and its guarantors - the Wallaces and I Wallace & Associates Pty Ltd - and the 'Consent Deed' was the deed between Mrs O'Grady, the Purchaser Transaction Parties, and Draper's (cl 1.1 Definitions and Interpretation).

343 The variation letter of 18 July 2016 contained Ironbridge and the guarantors irrevocable acknowledgement that the interest due under the Contract calculated to 6 July 2016 was $7,703,581.93 and continued to accrue at 20% per annum calculated daily and otherwise in accordance with cl.2.2 of the Sixth Deed.

344 I have previously referred to communications from Ironbridge's solicitors to Mrs O'Grady's solicitors referring to the amounts owing to Mrs O'Grady as 'the O'Grady loan'.

345 Mr Wallace gave evidence that he considered the term 'loan' to be a 'loose term associated with the deed[s]'.[242] He gave similar evidence about the parties' positions under the Sixth Deed. He said that the O'Gradys had been loaning Ironbridge money over the years leading up to the execution of the Sixth Deed 'in accordance with the terms of the deeds'.[243]

346 Mr Wallace did not agree that the transaction should be characterised as a loan, but agreed that he dealt with documents naming the transaction as a loan, including a reference to an $80,000 payment as a 'loan' in June 2013 by his book-keeper, Ms Thew.[244]

347 The reference to the 'O'Grady loan', while not inconsistent with Mrs O'Grady's claim for interest, is in my opinion not decisive of the present issue. The question ultimately turns on the contractual provision, although authorities may provide some guidance.

348 None of the authorities to which the parties referred bears any resemblance to the facts of this case. Here the term of the Contract providing for the date for payments of instalments of the purchase price was varied and the dates extended because the purchaser was unable to pay those instalments when due. The vendor did not rescind the Contract. In exchange for the extensions of time and forbearance, the purchaser agreed to pay interest on the outstanding purchase price which interest was to be payable well before the final largest instalment of purchase price and on dates unconnected to any requirement to convey title.

349 Consideration of this issue must commence with further reference to the judgment of Dixon J in McDonald, particularly the following passage:[245]

The sale of land is in this respect similar to the sale of goods. In the case of goods sold and delivered, and of goods bargained and sold, the property in each case having passed to the buyer, the seller's remedy is to sue for the price. But if under any executory contract the buyer wrongfully refuses to accept the goods the seller's only remedy is an action for damages. The general rule, however, that in an executory contract for the sale of land the vendor cannot sue for the price is excluded whenever a contrary intention is shown by the express terms of the contract. And it seems established by authority that a contrary intention is sufficiently shown in all cases which by the express terms of the contract the purchase money or any part thereof is made payable on a fixed day, not being the agreed day for the completion of the contract by conveyance. In all such cases the purchase money or such part thereof becomes, on the day so fixed for its payment, a debt immediately recoverable by the vendor irrespective of the question whether a conveyance has been executed and notwithstanding the fact that the purchaser may have repudiated his contract. Notwithstanding such repudiation the vendor is not bound to sue for damages or specific performance, but may recover the agreed purchase price....In Reynolds v Fury, the Full Court of Victoria, after a very full examination of the authorities, decided that instalments of purchase money, which, by the conditions of a contract of sale of land are payable at fixed times before conveyance, become immediately recoverable as debts or liquidated demands, notwithstanding that the sale has not yet been completed by conveyance.

...

When a contract stipulates for payment of part of the purchase money in advance, the purchaser relying only on the vendor's promise to give him a conveyance, the vendor is entitled to enforce payment before the time has arrived for conveying the land; yet his title to retain his money has been considered not to be absolute but conditional upon the subsequent completion of the contract...It is now beyond question that instalments already paid may be recovered by a defaulting purchaser when the vendor elects to discharge the contract.

...

But, where there is no express agreement excluding the implication made at law, by which the instalments become repayable upon the discharge of the obligation to convey and the purchaser has a legal title to the return of the purchase money already paid which makes it needless to resort to equity and submit to equity as a condition of obtaining relief, the vendor appears to be unable to deduct from the amount of the instalments the amount of his loss occasioned by the purchaser's abandonment of the contract. A vendor may, of course, counter-claim for damages in the action in which the purchaser seeks to recover the instalments.

350 Mason CJ stated that '[t]he question whether an advance payment, not being a deposit or earnest of performance, is absolute or conditional is one of construction'.[246]

351 Ironbridge argued that if the purchase price or part thereof was not payable because of a total failure of consideration, then interest was not payable on the unpaid purchase price. It relied on Carpenter v McGrath[247] in which a majority of the New South Wales Court of Appeal held that a purchaser was not required to pay interest to compensate a vendor for the purchaser's late completion of the contract when the contract was terminated by the vendor upon the purchaser's default in payment of the purchase price. The vendor sued for damages, but the majority of the Court held that interest was not recoverable because it was a component of the purchase price and was conditional upon the transfer of land. Under the contract, the purchaser was to pay the vendor interest on the balance of purchase money payable under the contract 'as and from the date fixed for completion'. Clause 24(b) of the relevant contract provided that:

The purchaser will ... on completion pay to the vendor interest on the balance of purchase moneys payable hereunder as and from the date fixed for completion at a rate calculated on daily rests and being $2.00 per centum per annum in excess of the rate charged from time to time by the National Australia Bank on overdraft loans of an amount equivalent to such balance of purchase moneys hereunder.[248]

Purchaser's Default

If the Purchaser defaults in the observance or performance of any obligation hereunder which is or the performance of which has become essential, the Vendor shall be entitled by notice in writing served on the Purchaser to forfeit the deposit hereunder (except so much of it as exceeds ten per centum of the price) and terminate this agreement and thereafter either:

(a) to sue the Purchaser for breach of contract; or

(b) to resell the property as owner and the deficiency (if any) arising on such resale and all expenses of and incidental to such resale or attempted resale and the Purchaser's default shall be recoverable by the Vendor from the Purchaser as liquidated damages provided that the proceedings for the recovery thereof be commenced within 12 months of the termination of this agreement.[249]

353 Ironbridge particularly relied on the following passages in Carpenter v McGrath. Clarke JA stated:

In principle the interest would not, in my opinion, be allowable. Once the contract had been rescinded the respondents could not have sued for the contract price. They were relegated to a claim in damages for loss of their bargain and consequential expenses. The interest payable under cl 24(b) operates to increase the amount payable on completion and, as the whole of the purchase money is not claimable, it is difficult to see upon what basis the interest payable on the purchase money could be claimable.[250]

Interest was a component of the purchase price payable on completion and as such to be taken into account in assessing the damages to be awarded for the loss of the bargain. In consequence it was no more appropriate for the respondents to recover separately for interest on the balance of the purchase price up to the date fixed for completion than it was for the respondents to recover or retain the whole or any part of the purchase price. In my opinion, the amount of interest calculated under cl 24(b) cannot be isolated and awarded as a head of damages. On this part of the appeal the appellants succeed.[251]

355 Cole JA, in dissent on this point, referred to the argument that the trial judge had erred in allowing $7,184.58 damages pursuant to cl 24(b) for interest and stated:

I would reject that contention. The purpose of cl 24(b) was to compensate the vendor for late completion. The contract contemplated that the giving of a notice to complete may be necessary, and the parties had agreed in cl 25 that fourteen days was a proper period of notice. Non-performance of the contract occurred and a notice determining the date for completion given ...

...

Part of the loss which the vendors suffered resulting from the purchasers not completing on 3 August 1989 was non-receipt of the moneys payable pursuant to cl 24. The sum is not part of the purchase price but rather a sum contractually payable if settlement is delayed. The sum so payable is in my opinion damages suffered for breach of contract arising from the purchaser failing to complete by the fixed contractual date of 11 July, as extended by the notice to complete to 3 August 1989.[252]

356 Taylor v Raglan Developments Pty Ltd,[253] was a decision in which the vendors did recover interest. The vendors sought declarations following their termination of a contract for the sale of land and sought damages for breach of contract and interest. They succeeded on the basis that the interest was payable 'pursuant to an independent agreement' which had provided for the reinstatement of the contract. Powell J wrote of the claim for interest:[254]

It still remains, however, to determine what were, and are, the plaintiffs' rights in the matter. The plaintiffs' rights to forfeit the deposit, and to unliquidated damages - the deposit being brought to account - upon termination for breach are clear enough, but what of the interest received, and, the additional interest claimed by them? Although I recognize that other minds may differ in their approach to the matter, I regard that interest as being paid or payable, not pursuant to the contract, but pursuant to an independent agreement whereby in consideration of the payment, or agreement to pay, the interest stipulated for in the letter of 26th August, 1975, from their solicitors, the plaintiffs agreed to 'reinstate' the contract. If this be so then, in my view, the plaintiffs are entitled to retain the interest already received, and, further, are entitled to recover interest from 15th September, 1975, until 2nd July, 1976.

357 In another New South Wales Court of Appeal decision of Galafassi v Kelly,[255] the vendor at trial succeeded in claiming from a defaulting purchaser damages for deficiency on resale, special condition interest on the purchase price, and land tax. The Court allowed an appeal on the issue of the purchaser's liability for interest, deciding that special condition interest was an amount contractually payable if settlement was delayed and was contingent on completion. As completion never occurred, special condition interest never became payable and could not be included as part of the price. Gleeson JA, Bathurst CJ and Ward JA agreeing, stated:

In my view the starting point in assessing the deficiency on resale is the price of the first contract if it had been completed according to its terms. In the present case this is the completion date of 30 December 2011. This amount less the Vendor's cost of sale on the first contract (the net contract price) is to be measured against the gross price on resale under the first limb of cl 9.3.1. Special condition interest is not part of the purchase price on the first contract but rather a sum contractually payable if settlement is delayed. It is an amount contingent on completion.

In these circumstances it is both arbitrary and artificial to determine the price of the first contract as constituted by the amount shown in the Contract as the purchase price coupled with the special condition interest when the latter never became payable. The Vendor's construction of cl 9.3.1 assumes a completion date under the first contract which was never agreed by the parties. Since completion never occurred, the better view, in my opinion, is that special condition interest is not included as part of the price under the first contract ...[256]

358 That passage raises the question for this case whether the interest that Mrs O'Grady claims was 'an amount contingent on completion'.

359 In Tropical Traders Ltd v Goonan,[257] the High Court decided that the acceptance of a payment of interest in respect of a completed period of possession did not mean that the vendor had not elected against rescinding the contract. The Court considered that the right to interest was correlative with the right to possession. Kitto J stated:[258]

For the respondents a submission was made that the appellant could not have recovered the interest save by suing on the contract, and that therefore by accepting the payment it treated the contract as still on foot. If the payment had been of an instalment of the price, the contention might well have been correct, even though the instalment were one which the contract had made payable specifically on 6th January, for only on the basis that the appellant was still bound by the sale could he assert a right to any part of the price: see per Dixon J in Automatic Fire Sprinklers Pty Ltd v Watson and cf. Campbell v Bent. But the right to interest on unpaid purchase money is correlative with the right to possession: cf Strahorn v Strahorn. The interest is analogous to a sum for rent or use and occupation: Reynolds v Fury. Accordingly the £962 10s. 0d. being interest in respect of a completed period of possession, would have been recoverable by the appellant even after an election to rescind: cf McDonald v Dennys Lascelles Ltd. By accepting payment of it, therefore, the appellant did not elect against terminating the contract.

360 Mrs O'Grady relied on two decisions of this Court in which vendors had successfully claimed interest as part of a damages claim after rescinding the contract following the purchaser's breach: the decision of Kaye J in Portbury Developments Pty Ltd v Mackali[259] and the decision of Davies J in Pettiona v Whitbourne.[260] The terms of the contract in the first case provided that a party who breached the contract must pay to the other on demand:

Any interest due under [the] contract as a result of the breach.[261]

361 Ironbridge submitted that these cases were damages claims and that Mrs O'Grady had decided not to make such a claim, but had sued in debt.

362 The parties also referred to two County Court judgments dealing with interest claims of relevance because of the arguments that were considered. In both, the contract contained a clause dealing with a party's breach of the contract in similar terms to that in the O'Grady-Ironbridge Contract, namely:

Breach

7. A party who breaches this contract must pay to the other party on demand:

(a) compensation for any reasonably foreseeable loss to the other party resulting from the breach, and

(b) any interest due under this contract as a result of the breach.

363 The contracts in the County Court cases also included a clause stating:

DEFAULT

26. Interest

Interest at the rate of 2% per annum [increased to 5% by Special Condition cl10] plus the rate for the time being fixed by section 2 of the Penalty Interest Rates Act 1983 is payable on any money owing under the contract during the period of default, without affecting any other rights of the offended party.

364 A clause in substantially similar terms was included in the Contract because of the incorporation of Table A of the Seventh Schedule to the Transfer of Land Act 1958.

365 In Bill v Clarke,[262] the vendor, after rescinding the contract for breach, sued the purchaser in damages. The vendor claimed interest for the period between the date on which settlement should have taken place and the termination date - a period of about seven weeks. Judge Macnamara dismissed that claim, applying the decision of the New South Wales Court of Appeal in Carpenter v McGrath.[263]

366 In Tymstock Pty Ltd v Patrick,[264] the vendor sued the defaulting purchaser to recover its losses on resale of the property, offset by the forfeited deposit. Judge Woodward decided not to follow the approach in Bill v Clarke and awarded interest on the unpaid purchase price from the extended Settlement Date until the contract of sale ended. His Honour considered that Carpenter v McGrath contained different approaches and dealt with a contract in different terms. He adopted the approach of Cole JA that the purpose of the provisions was to compensate the vendor for delay in settlement. His Honour stated:

Regardless, I consider that the approach taken by Cole JA in Carpenter (and by Kaye J in Portbury and Davies J in Pettiona) is to be preferred. In my view, the terms of the contract of sale discussed above create a liability for interest that is independent of any obligation to pay the purchase price. And as Cole JA found, the purpose of those provisions is to compensate the vendor for a delay in settlement.[265]

367 Ironbridge argued that, applying the reasoning in Carpenter v McGrath, the payment of interest was linked to the obligation to pay the purchase price for the Retained Land and as that was not recoverable because the consideration had totally failed, then the interest it paid was also recoverable as it was a 'component of the purchase price'.

368 Ironbridge submitted that the obligation to pay interest on the unpaid purchase price was conditional upon the conveyance of the land. Interest was payable on the unpaid purchase price and therefore fell away with the obligation to pay the purchase price. This meant that there was no liability to pay interest after rescission. The authorities on which Mrs O'Grady relied were distinguishable because they concerned claim for loss of bargain damages where the courts were seeking to put the innocent party in the position they would have been in had the contract been performed. Carpenter v McGrath was the relevant authority about the availability of a claim for interest in the absence of a loss of bargain claim. As Mrs O'Grady had not made such a claim, but was suing in debt, the Court should not award her interest by construing the obligation as an unconditionally accrued right recoverable by an action in debt as that would result in a windfall to her.

369 Mrs O'Grady disputed Ironbridge's claim for restitution of the interest that it had paid and claimed more interest, being the amounts that remained owing under the Contract as varied, but which Ironbridge had not paid. She argued that the interest payments under the deeds of variation were separate obligations from interest payments otherwise due under the Contract and were not in consideration for the conveyance of title. Rather, they were payable in exchange for her agreement to extend dates for the payment of purchase price instalments and for her forgiving past breaches of the Contract.

370 The interest payments were the agreed cost for Ironbridge's late payments of amounts due under the Contract. They were in the nature of a loan to Ironbridge and its documents included references to the interest obligations as 'loans'.

371 Mrs O'Grady relied on the two decisions of this Court previously referred to in which vendors had successfully claimed interest as part of a damages claim after rescinding the contract following the purchaser's breach: Portbury Developments Pty Ltd v Mackali[266] and Pettiona v Whitbourne.[267]

372 The issue is whether the O'Gradys' extension of the dates for the payment of purchase price instalments was good consideration for the interest that Ironbridge agreed to pay under the deeds of variation or whether it was a component of the purchase price and conditional upon the conveyance of the Retained Land. This depends on the interpretation of Contract, the variation deeds and the variation letter.

373 In Mann, Kiefel CJ, Bell and Keane JJ referred to 'the basal understanding in McDonald that accrued rights to payment under the contract are neither displaced or enhanced by termination in future'.[268] Gageler J said 'the modern understanding, settled in McDonald,[269] [is] that termination of a contract on acceptance of repudiation operates only for the future'.[270] Nettle, Gordon and Edelman JJ stated that

[a]t least since the decision of Dixon J in McDonald, it has been accepted that, where a party to a contract elects to accept the other party's repudiation of the contract, both parties are released from contractual obligations which are not yet due for performance, but existing rights and causes of action continue unaffected.[271]

374 I do not consider that Mrs O'Grady is prevented from suing in debt because she has no claim in damages. In my opinion, Mrs O'Grady is entitled to recover the interest as an accrued debt. She does not have to establish damages. Debt is a separate cause of action.

The result of the Builder's acceptance of the Owner's repudiation is that the Builder still has in respect of that work the same accrued contractual right to payment under the Contract as the Builder had up until the time of termination of the Contract. The Builder can enforce that accrued contractual right in a common law action in debt.[272]

His Honour cited for the last stated proposition the decision of the High Court in Young v Queensland Trustees Ltd ('Young'),[273] in which Dixon CJ, McTiernan and Taylor JJ stated:

The common law does not and never did conceive of indebtedness in a sum certain for an executed consideration as a mere breach of contract: it is rather the detention of a sum of money and that was so whether the creditor enforced his demand by an action of debt, or by indebitatus assumpsit.[274]

This principle was recently applied by the New South Wales Court of Appeal in Benson v Rational Entertainment Enterprises Ltd.[275]

376 I consider that Mrs O'Grady's claim to interest succeeds, as it was a debt independent of any obligation to convey title and was not contingent on completion of the Contract. The interest was compensation to her for Ironbridge's delay in making payments that were due and for her and Mr O'Grady's forbearance. Those circumstances can give to an agreement for interest which is independent from any obligation to convey title. That category of agreement for interest was recognised by Cole JA in his dissenting judgment on this issue in Carpenter v McGrath[276] and by Powell J in Taylor v Raglan Developments.[277] I do not read the judgments of Clarke JA and Sheller JA in Carpenter v McGrath[278] to deny that such an agreement could be made. In my opinion, that decision does not require me to dismiss Mrs O'Grady's claim. Each of the three judgments approaches the issues differently. Clarke JA dealt with the claim as for damages and considered that under the terms of the particular contract interest was only payable upon completion. Sheller JA treated interest as part of the purchase price that was only payable upon completion and Cole JA decided that the interest was recoverable even though the contract had not been completed.

377 The facts leading to Ironbridge's agreement to pay interest are very different from that case or indeed any other to which I was referred. The deeds of variation and the variation letter treat the interest as a debt owed to Mrs O'Grady independently of any obligation to convey title. It was an accrued liability at the time that the Contract was rescinded. It was recognized as a separate debt by the terms of the deeds of variation and existed independently of the purchase price and the obligation to convey title. It was compensation for the effect of the delay that Ironbridge's breaches caused the O'Gradys as a result of which their land was tied up by the Contract with Ironbridge. The O'Gradys were delayed in receiving instalments of the purchase price much longer than had been agreed. It is true that the deeds under which the interest was payable were variations of the original Contract and did vary its terms. But they also created an independent obligation to pay interest while Ironbridge's development continued on its delayed course. The interest was calculated as a percentage of the arrears of purchase price owing, but that does not mean that it formed part of the purchase price. It means only that the outstanding arrears of purchase price were a convenient measure with which to calculate interest.

378 As mentioned, the deeds of variation acknowledged that interest was owed as a debt at the time they made without any dependence on the requirement to convey title. Thus the Second Deed acknowledged that Ironbridge was in default in failing to pay interest agreed to in the First Deed on four dates and made provision for payment of interest of $73,125.00 on or before 30 April 2009 and interest of $146,250.00 on or before 12 May 2009 being interest for the period 12 March 2009 until 12 September 2009 on the overdue payments. The Fourth Deed provided that Ironbridge would pay interest on the balance of purchase price at the rate of 20% calculated as at 18 May 2013 and payable as to 1/12th monthly thereafter. The Fifth Deed provided for the variation of the Settlement Date to 14 November 2014 and provided that Ironbridge would pay interest on the principal sum of $12,700,000 or such amount as was owing from time to time at the rate of 20% calculated daily from 1 July 2014. The arrears of interest were agreed at $1,154,771.80 as at 30 June 2014.

379 Ironbridge argued that the conclusion that I have reached that Mrs O'Grady is entitled to recover interest under the deeds, would lead to her receiving a windfall, whereby she would keep the Retained Land, which had increased in value and receive a very large sum of interest. On Ironbridge's calculations, the value of the Retained Land was such that if Mrs O'Grady also received the interest she claimed, she would obtain an 'extraordinary windfall' from interest payments which were calculated at 6 July 2016 to be $7,703,581.93 and which now would be much more. Windfall arguments were put in David Securities[279] and Roxborough[280] but were not decisive in the outcome of those cases.

380 However, I do not consider that the interest provided for in the variation deeds continued to accrue as a debt after the rescission of the Contract, which occurred on 12 July 2017 or 2 October 2017. From that point Mrs O'Grady became entitled to deal with the Retained land free of any contractual entitlement to convey it to Ironbridge. The inconvenience caused to the O'Gradys and their forbearance were no longer reasons for awarding interest. The interest provided for in the deeds of variation was to compensate the O'Gradys for the delay and their forbearance in the payment of instalments of purchase price, while their land was bound by contractual obligations to Ironbridge. It was calculated primarily by reference to the outstanding balance of the purchase price. It had no such role to play by way of compensation once the Contract was rescinded. That conclusion does not mean that the interest was only payable as part of the purchase price. To the contrary, it was payable to the O'Gradys as a separate obligation and provided them compensation while their land was subject to the Contract.

381 Unless good cause to the contrary is shown, Mrs O'Grady is entitled to interest on the interest debt in accordance with the Supreme Court Act 1986. I will hear the parties about the amount of the interest debt at the date when the Contract was rescinded as well as the amount of the interest on that debt that should be awarded.

382 Mrs O'Grady made a claim in trespass to land against Ironbridge because of the soil stockpile which remained despite her demands that Ironbridge remove it.

383 The parties reached agreement that the Ironbridge would remove the stockpiles of soil from the O'Grady's Land at its expense. That agreement is contained in correspondence between the parties of 17 and 18 August 2019. That agreement removes the need for the Court to consider the making of orders to require the removal of the soil.

384 Subsequent to the making of that agreement, Mrs O'Grady's lawyers were informed on 20 August 2019 that Ironbridge had instructed Draper's to bury material under or at the area of the largest stockpile on the O'Grady Land. Mrs O'Grady contended that the agreement reached included the removal of any material buried by Ironbridge.

385 At the hearing, the parties did not suggest that the Court determine whether the Ironbridge parties had removed any buried matter.

386 Mrs O'Grady wished to ensure that the implementation of the agreement would not estop her from making later claims in respect of anything that may have been buried in the O'Grady Land. This was a concern arising from the possible application of an Anshun estoppel.[281] I informed the parties that I would make clear, as I now do, that the question of any cause of action that Mrs O'Grady may have in respect of anything buried under the soil has not been litigated or decided in this proceeding and, in my opinion, because of the late point at which Mrs O'Grady became aware of this issue, she had no opportunity to litigate any claim she may have in respect of the burial of such matter.

387 Mrs O'Grady counterclaimed against Mr and Mrs Wallace and I Wallace & Associates Pty Ltd as guarantors.

388 Mrs O'Grady was, with her late husband, the grantor named in the Option Deed and the vendor named in the Sale Contract.

389 The second and third defendants by counterclaim, Ian Wallace and his wife Carolyn Margaret Defreyne Wallace, are directors of Ironbridge and of I Wallace & Associates Pty Ltd which is the fourth defendant by counterclaim. Mr and Mrs Wallace were guarantors of Ironbridge's obligations under the Contract. They were parties to, the First to Fifth Deeds. Further, they were parties to the Sixth Deed and guaranteed Ironbridge's obligation under the deed. Finally, they were parties to the variation letter of 18 July 2016.

390 By the Fifth Deed, I Wallace & Associates Pty Ltd, the fourth defendant by counterclaim, also joined as guarantors to guarantee the due performance by Ironbridge under this deed and the Contract.

391 By the creation of the Sixth Deed, Mr and Mrs Wallace and I Wallace & Associates Pty Ltd ('Purchaser Guarantors') became 'jointly and severally' bound as guarantors under the Sixth Deed and the Contract.[282] Ironbridge and the Purchase Guarantors acknowledged that:

(a) the outstanding principal amount due was $12,700,00;

(b) the outstanding interest owing as at 31 July 2015 was $4,481,336.07; and

(c) interest was accruing daily at the rate of 20% per annum, that it was compounded at the end of each month and is payable on demand by Mrs O'Grady.[283]

392 Clause 8 of the Sixth Deed specifically related to the guarantee agreement, and required the Purchase Guarantors to 'unconditionally and irrevocably' guarantee Mrs O'Grady the 'due and punctual performance' of Ironbridge's obligations. Further, it indemnified Mrs O'Grady against any loss suffered if Ironbridge failed to perform its obligations and agreed that this was a continuing obligation. Upon demand, Ironbridge was required to indemnify Mrs O'Grady within three business days against any cost, expense, loss or liability incurred by Mrs O'Grady as a result or in connection with any breach of the Sixth Deed or Contract.[284] Ironbridge and the Purchase Guarantors were also obliged to pay Mrs O'Grady the fees, costs and expenses incurred in relation to the enforcement of breaches pertaining to the Sixth Deed or Contract.[285]

393 In support of her claim against the guarantors, Mrs O'Grady argued that cl 9 of the Sixth Deed required the Wallaces and I Wallace & Associates Pty Ltd indemnify her against any 'cost, expense, loss or liability (including legal fees) incurred by her as a result of or in connection with the occurrence of any breach or default under the Contract or the Sixth Deed'. Further, Mrs O'Grady says the Wallaces and I Wallace & Associates had a similar obligation to pay her within three days of demand, all costs and expenses incurred in connection with the enforcement of the Contract and the Sixth Deed.

394 As a result of a variation letter, Ironbridge and the Purchase Guarantors irrevocably acknowledged and accepted that $8,406,915.35 of the purchase price remained due and owing and that $7,703,581.93 in interest was due under the Contract, which continued to accrue at 20% per annum. The letter also noted that the due payment for all outstanding amounts was extended to 5 September 2016. However, Ironbridge failed to pay the outstanding amounts owing under the Contract by that date.

395 The guarantors, in their defence to counterclaim, admitted the guarantees on which Mrs O'Grady relied and did not raise any positive defence. Although their position on this issue was not developed in detail, their position appeared to be that there was no liability to which the guarantees or indemnities might attach.

396 Due to Ironbridge's failure to pay the outstanding interest, Mrs O'Grady contended that the Ironbridge, Mr and Mrs Wallace and I Wallace & Associates were liable to pay interest, with interest accruing in accordance with cl 11(b) of the Sixth Deed, in the following amounts.[286] .In addition, Mrs O'Grady claimed that the Defendants by Counterclaim were liable to pay the costs and expenses incurred by her in relation to the enforcement of these breaches under the Sixth Deed and Contract.

397 I consider that the wording of the Contract, of the several variation deeds and the variation letter establishes that the Wallaces and I Wallace & Associates Pty Ltd are guarantors for the purposes of the Contract and the Sixth Deed. In view of the conclusion, I will hear any further submissions from counsel as to the orders that should be made against them.

Issue 1: What was the consideration, and did it totally fail?

398 The consideration for the Contract dated 18 May 2006 was the conveyance of title to the O'Grady Land. The Contract was severable and the Transferred Land of stage 6 and Lot P was severed. The consideration for the Contract in respect of the remaining O'Grady Land, being the Retained Land, totally failed.

Issue 2: Does Mrs O'Grady have a defence or defences to any restitutionary claim for failure of consideration?

399 No, Mrs O'Grady does not have a defence to Ironbridge's restitutionary claim for failure of consideration. However, she is entitled to counter restitution for the remediation and rehabilitation of the temporary stormwater basin land. That counter restitution is fixed in the sum of $315,467.00 plus GST.

Issue 3: In what amount, if any, should Mrs O'Grady make restitution? Is Ironbridge entitled to interest on any amount recovered?

400 Subject to hearing from counsel about the precise figure, I consider that Mrs O'Grady must make restitution to Ironbridge of the sum of $10,156,005.90. Ironbridge is entitled to interest on that sum under the Supreme Court Act 1986.

Issue 4: Is Ironbridge entitled to an equitable lien?

Issue 5: In what amount, if any, should the Ironbridge parties be required to pay Mrs O'Grady interest?

402 The Ironbridge parties, including subject to any further submissions of counsel the guarantors, are required to pay Mrs O'Grady interest, being the amount of interest owing under the deeds of variation as at the date of the rescission, which was either 12 July 2017 or 2 October 2017. I will hear the parties as to the date that should be adopted and the amount of interest owing as that date. Mrs O'Grady is also entitled to interest under the Supreme Court Act 1986 on that sum to the date of rescission.

Issue 6: Has Ironbridge committed a trespass? And, if so, what relief should be ordered?

405 The table below includes payments collated from three sources: (1) Mr Ian Wallace's witness statement dated 21 June 2019; (2) Annexure A to third further amended statement of claim, filed on behalf Ironbridge, dated 29 August 2019; and (3) a document handed up by senior counsel on behalf of Ironbridge as an aid to the Court, titled 'Annexure A Review - Identity of Payer'.[287] In some cases the amounts paid on a given date vary between the three sources, in which case, the source of the figure will be included by reference to the numbers referred to earlier in this paragraph.

[1] Court Book, Ironbridge Holdings Pty Ltd v O'Grady (Supreme Court of Victoria) 508 ('CB').

[3] Taking the figures from the Amended Annexure A to Ironbridge's Third Further Amended Statement of Claim.

[4] Special conditions 7 and 8; CB 122.

[5] See general conditions cl 9.1 of the Contract; CB 119.

[6] Witness Statement of Ian Wallace, dated 21 June 2019 ('Wallace Statement') [40], Annexure A.

[9] Witness Statement of Ian Wallace, dated 19 July 2019 ('Second Wallace Statement') [9(a)].

[21] The amount may have been intended to be $2,250,000.

[50] Caveats had been previously lodged and withdrawn by Ironbridge.

[51] Wallace Statement (n 6) [124].

[52] Planning and Environment Act 1987 s 173.

[56] CB 963; Wallace Statement (n 6) [73].

[59] However, this may have been a mistake, as stage 6B had already been under development for at least a year and a half when the transfer request was made, and the email request from his solicitor did not mention that Lot P was needed for the development of stage 6B.

[60] Wallace Statement (n 6) [99]-[100]; T 297; CB 1033, .

[61] Defendant's Closing Submissions (23 August 2018), [179].

[64] Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 [30] (French CJ, Crennan and Kiefel JJ) ('Equuscorp').

[65] Baltic Shipping Co Ltd v Dillon [1993] HCA 4; (1993) 176 CLR 344, 350-1 (Brennan and Toohey JJ agreed) ('Baltic Shipping').

[66] David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353, 381-3 (Mason CJ, Deane, Toohey, Gaudron and McHugh JJ) applying Baltic Shipping (n 65).

[67] Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68; (2001) 208 CLR 516 ('Roxborough').

[68] [1933] HCA 25; (1933) 48 CLR 457 ('McDonald').

[69] Ibid 476-7 (Dixon J, Rich J agreeing at 467-8, McTiernan J agreeing at 486) (citations omitted).

[70] [2019] HCA 32; (2019) 373 ALR 1, [168] ('Mann') (citations omitted).

[71] [1841] EngR 237; [1835-42] All ER Rep 67; (1841) 10 LJ Ex 259; (1841) 7 M & W 474; (1841) 151 ER 852, 854.

[72] McDonald (n 68) 470 (Starke J).

[74] [1934] VicLawRp 49; [1935] VLR 114, 120 ('Real Estate Securities').

[75] [1998] UKHL 9; [1998] 1 WLR 574, 589 (citations omitted).

[76] [2005] NSWSC 504, [29]-[31] (citations omitted).

[77] McDonald (n 68).

[78] Real Estate Securities (n 74), see also Shaw v Bell (1962) 63 SR(NSW) 910, 917 (Sugerman J).

[79] [1945] VicLawRp 43; [1946] VLR 222, 231.

[80] See Rover International Ltd v Cannon Films Sales Ltd (No 2) [1989] 1 WLR 912.

[81] Baltic Shipping (n 65) 351 (citations omitted).

[83] K Mason, JW Carter and GJ Tolhurst, Mason & Carter's Restitution Law in Australia (LexisNexis Butterworths, 3rd ed, 2016) 436-7.

[86] (1881) 6 App Cas 251, 263.

[91] Roxborough (n 67) 426-8.

[93] David Securities (n 66).

[94] Ibid 383 (Mason CJ, Deane, Toohey, Gaudron and McHugh JJ) (emphasis in the original) (citations omitted).

[95] Roxborough (n 67).

[96] Ibid [14], [17] (Gleeson CJ, Gaudron and Hayne JJ).

[97] David Securities (n 66) 380-1.

[101] Ibid [176] (citations omitted).

[103] Wallace Statement (n 6) 15 [60].

[107] See Nu Line Construction Group Pty Ltd v Fowler (aka Grippaudo) [2012] NSWSC 587; (2012) 16 BPR 31,011 ('Nu Line Case'). Note that this decision was reversed, as it was held that the contract failed to materialise: see Nu Line Construction Group Pty Ltd v Fowler [2014] NSWCA 51 ('Nu Line Appeal').

[109] Roxborough (n 67) [17].

[110] Diao v Cohen [2016] NSWSC 96.

[111] David Securities (n 66) 385 (Mason CJ, Deane, Toohey, Gaudron and McHugh JJ) (emphasis in original).

[112] [2014] HCA 14; (2014) 253 CLR 560, 568; 583 ('AFSL').

[113] Ibid 596 [77] (Hayne, Crennan, Kiefel, Bell and Keane JJ)

[114] Ibid 597 [81] (emphasis in original) (citations omitted).

[116] Ibid 577 [17] (French CJ), 624 [154] (Gageler J).

[119] David Securities (n 66) 385.

[120] Southage Pty Ltd v Vescovi [2015] VSCA 117; (2015) 321 ALR 383 ('Southage').

[121] AFSL (n 112).

[122] Southage (n 120).

[123] See, eg, Gertsch v Atsas [1999] NSWSC 898; (1999) 10 BPR 18,431; TRA Global Pty Ltd v Kebakoska [2011] VSC 480; (2011) 209 IR 453.

[125] See David Securities (n 66); AFSL (n 112).

[132] Wallace Statement (n 6) 13 [51].

[135] David Securities (n 66) 383 [55]; J Edelman and E Bant, Unjust Enrichment (2nd ed 2016 Hart Publishing) 369-370.

[136] Edelman and Bant (n 135) 369; Equuscorp (n 64) 545 [114] (Gummow and Bell JJ).

[137] See CB 2222; See also Healey evidence starting T 346 and Ficca evidence starting T 425.

[152] Report of Andrew Kinnaird dated 9 August 2019, tendered as Exhibit H (see T 300) ('Kinnaird Report').

[153] Report of Gareth Kent dated 19 July 2019, tendered as Exhibit D7 (see T 463) ('Kent Report').

[154] Kent Report (n 153) 8.

[157] Kent Report (n 153) 51.

[160] Kinnaird Report (n 152) 51.

[161] Kent Report (n 153) 52; all the valuations quoted exclude GST.

[162] Kinnaird Report (n 152) 20-6.

[169] Kent Report (n 153) 4, 9-11.

[170] He explained that an alternative was to provide cash of 5% of the value of the land.

[172] Kinnaird Report (n 152) 34.

[180] [1949] HCA 22; (1949) 78 CLR 410, 423 (Dixon J).

[181] [1981] HCA 4; (1981) 146 CLR 336, 381 (Mason J).

[184] Kent Report (n 153) 35.

[187] Kent Report (n 153) 51.

[188] Kinnaird Report (n 152) 39.

[189] Kent Report (n 153) 25 - $1,200,000 per ha as at 1 February 2013.

[190] She relied on Ovidio Carrideo Nominees Pty Ltd v The Dog Depot Pty Ltd [2006] VSCA 6; [2006] V ConvR 54-713; Adrenaline Pty Ltd Bathurst Regional Council (2015) 97 NSWLR 207.

[191] [1955] HCA 64; (1955) 94 CLR 216, 228.

[192] She referred to Cook's Construction Pty Ltd v SFS 007.298.633 [2009] QCA 75.

[193] Defendant's closing submissions, [35].

[194] AFSL (n 112) 593-596.

[195] Mann (n 70) [188] (Nettle, Gordon and Edelman JJ); [213].

[200] See, eg, Lodder v Slowey [1904] UKLawRpAC 38; [1904] AC 442.

[201] [1961] HCA 72; (1961) 107 CLR 466.

[203] Wallace Statement (n 6) [5].

[205] See Walker v Wimborne [1976] HCA 7; (1976) 137 CLR 1; DHN Food Distributors Ltd v Tower Hamlets LBC [1976] 1 WLR 852.

[206] See K Mason, JW Carter and GJ Tolhurst, Restitution Law in Australia (LexisNexis Butterworths, 3rd ed, 2016) 314 [814].

[208] New Line Case (n 107).

[210] Nu Line Appeal (n 107) [47]-[49].

[211] Lumbers v W Cook Builders Pty Ltd (in liq) [2008] HCA 27; (2008) 232 CLR 635, 374 [215].

[213] [2018] AC 275; [2017] UKSC 29.

[216] See Supreme Court Act 1986 s 60.

[217] Ironbridge Closing Submissions [109]-[110] citing Rose v Watson [1864] EngR 300; [1864] 11 ER 1187, 1191-1192; Elderly Citizens Homes of SA Inc v Balnaves (1998) 72 SASR 210 [29]; Sunnyville Pty Ltd v ADIG (Australia Development and Investment Group) Pty Ltd (in liq) [2006] QSC 249.

[218] [1978] 2 NSWLR 41, applied in Cox v Parker [1987] NSWSC 4307.

[220] (1983) 149 CLR 639.

[224] G E Dal Pont, Equity and Trusts in Australia (Thomson Reuters, 5th ed, 2011) 47; J McGhee, Snell's Equity (Sweet & Maxwell, 33rd ed, 2015) 1007 citing Dinn v Grant [1852] EngR 482; (1852) 5 De G & Sm. 451 and Rideout v Fowler [1904] 2 Ch.93.

[225] Taken from Ironbridge's Amended Annexure A.

[231] Transcript of Proceedings, Ironbridge Pty Ltd (ACN 009 341 011) (Administrators Appointed) (Receivers and Managers Appointed) v Sonje Patricia O'Grady (Supreme Court of Victoria, S CI 2016 05210, Ginnane J, 16 September ('T(Sept)') 3.

[238] Amended Annexure A to the Third Further Amended Statement of Claim.

[245] McDonald (n 68) 475-9.

[246] Baltic Shipping (n 65) 352.

[247] (1996) 40 NSWLR 39 ('Carpenter v McGrath').

[253] [1981] 2 NSWLR 117 ('Taylor v Raglan Developments').

[255] [2014] NSWCA 190; (2014) 87 NSWLR 119.

[257] [1964] HCA 20; (1964) 111 CLR 41.

[258] Ibid 56 (Taylor J agreeing at 58, Menzies J agreeing at 60).

[259] [2011] VSC 69 ('Portbury Developments').

[260] [2013] VSC 205 (Pettiona').

[261] Portbury Developments (n 259) [27]. The contractual term in Pettiona v Whitbourne (n 260) was not set out in the judgment.

[262] [2015] VCC 1721.

[263] Carpenter v McGrath (n 247).

[264] [2019] VCC 1092.

[266] Portbury Developments (n 259) (Kaye J).

[267] Pettiona (n 260) (Davies J).

[268] Mann (n 70) [29].

[269] McDonald (n 68).

[270] Mann (n 70) [72].

[272] Ibid [62] (citations omitted).

[273] [1956] HCA 51; (1956) 99 CLR 560, 567, 569.

[275] [2018] NSWCA 111; (2018) 97 NSWLR 798, 811 [67] (Leeming JA, Beazley P agreeing at 801, Emmett AJA agreeing at 830).

[276] Carpenter v McGrath (n 247).

[277] Taylor v Raglan Developments (n 253).

[278] Carpenter v McGrath (n 247).

[279] David Securities (n 66) 384.

[280] Roxborough (n 67) 522.

[281] Port of Melbourne Authority v Anshun Pty Ltd (No 2) [1981] HCA 45; (1980) 147 CLR 589.

[282] Sixth Deed of variation cl 1.3; CB 267.

[283] Ibid cl 2.2, 11; CB 268, 276.

[284] Ibid cl 9; CB 275-6.

[285] Ibid cl 12; CB 276.