Plaintiff v Defendant

1. By originating process and summons both filed 27 September 2022, the plaintiff seeks relief by way of an order pursuant to s 49(1) of the Property Law Act 1958 (Vic), alternatively the inherent jurisdiction of the Court, declaring that:

(a) the Rescission Notice dated 21 September 2022 ('the Rescission Notice') sent by the defendant to the plaintiff in respect of a contract for sale of property at 205 Ballan Road, Moorabool Victoria dated 13 March 2022 and varied on 6 July 2022 ('the Contract'), is invalid, void and/or of no effect; and

(b) further and alternatively, the plaintiff is not in default of special condition 4.8 of the Contract.

1. By Contract, the defendant agreed to sell to the plaintiff the land situated at 205 Ballan Road, Moorabool being the land described as Lot 2 on Plan of Subdivision 820501E and contained in Certificate of Title Volume 12087 Folio 376 ('the property'), for a purchase price of $176 million. The purchase price was payable as follows:

(a) A deposit of $17,600,000 (being 10% of the purchase price) was paid by the plaintiff to the defendant in the following two instalments:

(i) $1,760,000 on 13 March 2022; and

(ii) $15,840,000 on 22 July 2022.

(b) The balance of the purchase price, of $158,400,000, is payable at settlement, being the earlier of:

(i) 9 months from the satisfaction or waiver of the "Rezoning Condition" (as defined in clause 1 of the Contract); and

1. The terms of the Contract included the following:

2.1 The vendor warrants that these general conditions 1 to 28 are identical to the general conditions I to 28 in the standard form of contract of sale of real estate prescribed by the Estate Agents (Contracts) Regulations 2008 for the purposes of section 53A of the Estate Agents Act 1980.

2.2 The warranties in general conditions 2.3 and 2.4 replace the purchaser's right to make requisitions and inquiries.

2.3 The vendor warrants that the vendor:

(a) has, or by the due date for settlement will have, the right to sell the land; and

(c) is in possession of the land, either personally or through a tenant; and

(d) has not previously sold or granted any option to purchase, agreed to a lease or granted a pre-emptive right which is current over the land and which gives another party rights which have priority over the interest of the purchaser; and

(e) will at settlement be the holder of an unencumbered estate in fee simple in the land; and

(f) will at settlement be the unencumbered owner of any improvements, fixtures, fittings and goods sold with the land.

2.4 The vendor further warrants that the vendor has no knowledge of any of the following:

(a) public rights of way over the land;

(b) easements over the land;

(c) lease or other possessory agreement affecting the land;

(d) notice or order affecting the land which will not be dealt with at settlement, other than the usual rate notices and any land tax notices;

(e) legal proceedings which would render the sale of the land void or voidable or capable of being set aside.

2.5 The warranties in general conditions 2.3 and 2.4 are subject to any contrary provisions in this contract and disclosures in the section 32 statement required to be given by the vendor under section 32 of the Sale of Land Act 1962 in accordance with Division 2 of Part II of that Act.

2.6 If sections 137B and 137C of the Building Act 1993 apply to this contract, the vendor warrants that:

(a) all domestic building work carried out in relation to the construction by or on behalf of the vendor of the home was carried out in a proper and workmanlike manner; and

(b) all materials used in that domestic building work were good and suitable for the purpose for which they were used and that, unless otherwise stated in the contract, those materials were new; and

(c) domestic building work was carried out in accordance with all laws and legal requirements, including, without limiting the generality of this warranty, the Building Act 1993 and regulations made under the Building Act 1993.

2.7 Words and phrases used in general condition 2.6 which are defined in the Building Act 1993 have the same meaning in general condition 2.6.

(b) Release of security interest (General Condition 7.4):

The vendor must ensure that at or before settlement, the purchaser receives:

(a) a release from the secured party releasing the property from the security interest; or

(b) a statement in writing in accordance with section 275(1)(b) of the Personal Property Securities Act 2009 (Cth) setting out that the amount or obligation that is secured is nil at settlement; or

(c) a written approval or correction in accordance with section 275(l)(c)) of the Personal Property Securities Act 2009 (Cth) indicating that, on settlement, the personal property included in the contract is not or will not be property in which the security interest is granted.

(c) Loss or damage before settlement (General Condition 24):

24.1 The vendor carries the risk of loss or damage to the property until settlement.

24.2 The vendor must deliver the property to the purchaser at settlement in the same condition it was in on the day of sale, except for fair wear and tear.

24 .3 The purchaser must not delay settlement because one or more of the goods is not in the condition required by general condition 24.2, but may claim compensation from the vendor after settlement.

24.4 The purchaser may nominate an amount not exceeding $5,000 to be held by a stakeholder to be appointed by the parties if the property is not in the condition required by general condition 24.2 at settlement.

24.5 The nominated amount may be deducted from the amount due to the vendor at settlement and paid to the stakeholder, but only if the purchaser also pays an amount equal to the nominated amount to the stakeholder.

24.6 The stakeholder must pay the amounts referred to in general condition 24.5 in accordance with the determination of the dispute, including any order for payment of the costs of the resolution of the dispute.

27.1 A party is not entitled to exercise any rights arising from the other party's default, other than the right to receive interest and the right to sue for money owing, until the other party is given and fails to comply with a written default notice.

28.1 All unpaid money under the contract becomes immediately payable to the vendor if the default has been made by the purchaser and is not remedied and the costs and interest are not paid.

28.2 The contract immediately ends if:

(a) the default notice also states that unless the default is remedied and the reasonable costs and interest are paid, the contract will be ended in accordance with this general condition; and

(b) the default is not remedied and the reasonable costs and interest are not paid by the end of the period of the default notice.

...

28.4 If the contract ends by a default notice given by the vendor:

(a) the deposit up to 10% of the price is forfeited to the vendor as the vendor's absolute property, whether the deposit has been paid or not; and

(b) the vendor is entitled to possession of the property; and

(c) in addition to any other remedy, the vendor may within one year of the contract ending either:

(i) retain the property and sue for damages for breach of contract; or

(ii) resell the property in any manner and recover any deficiency in the price on the resale and any resulting expenses by way of liquidated damages; and

(d) the vendor may retain any part of the price paid until the vendor's damages have been determined and may apply that money towards those damages; and

(e) any determination of the vendor's damages must take into account the amount forfeited to the vendor.

28.5 The ending of the contract does not affect the rights of the offended party as a consequence of the default.

The parties acknowledge and agree that:

23.1 subject to special conditions 23.2 to 23.5, the Purchaser will be entitled to make submissions to the appropriate Authorities in connection with the Precinct Structure Plan and satisfaction of the Rezoning Condition on and from the Day of Sale;

23.2 to the extent that it is not necessary for the Landowner to consent to any applications to the appropriate Authorities for any planning, building and other Approvals for the Purchaser's proposed use and development of the Land including for the purposes of satisfying the Rezoning Condition, on and from the Day of Sale the Purchaser will be entitled to make any such applications to the appropriate Authorities; and

23.3 to the extent that it is necessary for the Landowner to consent to any applications to the appropriate Authorities for any planning, building and other Approvals for the Purchaser's proposed use and development of the Land including for the purposes of satisfying the Rezoning Condition:

(a) during the period on and from the Day of Sale until the date of Completion of the Head Contract:

(i) the Vendor will take reasonable steps (at the cost of the Purchaser in all respects) upon request to procure any necessary consent from the Landowner to any such applications;

(ii) once any necessary consent from the Landowner has been obtained, the Purchaser is entitled to make any such applications to the appropriate Authorities,

(b) following the date of Completion of the Head Contract the Purchaser will be entitled to make any applications to the appropriate Authorities for any planning, building and other Approvals for the Purchaser's proposed use and development of the Land including for the purposes of satisfying the Rezoning Condition; and

23.4 the Vendor must (at the cost of the Purchaser in all respects) do all things reasonably requested by the Purchaser to facilitate the Purchaser's proposed use and development of the Land, including but not limited to signing and returning within 15 Business Days of a written request from the Purchaser all documents, objections, submissions and/or applications reasonably requested and provided by the Purchaser in connection with the Purchaser's proposed development of the Land.

23.5 Purchaser must promptly provide to the Vendor:

(a) upon request copies of all applications and submissions and other documents contemplated by this special condition 23 and associated reports, as well as details about the progress of any application or submission;

(b) copies of all Approvals issued to the request of the Purchaser or its Associates; and

(c) upon this Contract ending for any reason, copies of all documents, objections, submissions and applications prepared or lodged in connection with the Rezoning Condition or the Purchaser's proposed development of the Land.

23.6 The Purchaser may waive the Rezoning Condition after Completion of the Head Contract.

24.1 On and from the Day of Sale, the Purchaser and its Associates may enter onto the Property at reasonable times for the purpose of:

24.1.1 carrying out inspections, investigations, surveys, tests and site analysis; and

24.1.2 affixing any notices,

as are reasonably required for any planning applications for the Purchaser's proposed use and development of the Land, provided that the Purchaser:

24.1.3 promptly makes good any damage caused to the Land and any other property by the Purchaser or its contractors; and

24.1.4 complies with all reasonable written requirements and directions of the Vendor (including any requirement to ensure that the Vendor does not breach the terms of any lease or licence granted over any part of the Land disclosed in the Due Diligence Material).

1. With respect to the deposit payable under the Contract, the Contract relevantly provided (Special Condition 4):

4.1 The Purchaser must pay the Deposit by two instalment payments as follows:

(a) $1,760,000 (being 1% of the Price) payable on the Day of Sale; and

(b) $15,840,000 (being 9% of the Price) payable on the earlier of 7 days after the Vendor gives written notice that Completion of the Head Contract has occurred.

4.2 The Purchaser must pay the Deposit to the Vendor's Solicitors to be held in the Vendor's Solicitors' trust account upon the terms set out in this special condition as stakeholder for the parties until released in accordance with the Sale of Land Act.

...

4.8 The Purchaser must, within 5 Business Days of receipt, sign, date and return any statement given under section 27 of the Sale of Land Act which complies with General Condition 12(a).

1. The General Conditions section of the Contract also included a clause 12 which provided:

12. Stakeholding

12.1 The deposit must be released to the vendor if:

(a) the vendor provides particulars, to the satisfaction of the purchaser, that either-

(i) there are no debts secured against the property; or

(ii) if there are any debts, the total amount of those debts does not exceed 80% of the sale price; and

(b) at least 28 days have elapsed since the particulars were given to the purchaser under paragraph (a); and

(c) all conditions of section 27 of the Sale of Land Act 1962 have been satisfied.

12.2 The stakeholder must pay the deposit and any interest to the party entitled when the deposit is released, the contract is settled, or the contract is ended.

12.3 The stakeholder may pay the deposit and any interest into court if it is reasonable to do so.

However, Special Condition 2.1(d)(vi) provided that 'GC12 is deleted'.

1. The property is subject to Mortgage AV875030E registered 20 July 2022 ('the mortgage') given by the defendant in favour of its lender Loan Agency Services Pty Ltd. Under the terms of the mortgage 'Secured Money' is defined to include:

[A]ll amounts (including damages) that are payable, owing but not payable, or that otherwise remain unpaid by the Mortgagor or any other Obliger to the Mortgagee or any other Beneficiary on any account at any time under or in connection with the Secured Documents or any transaction contemplated by them...

Sale of Land Act 1962 (Vic)

1. The relevant provisions of the Sale of Land Act 1962 (Vic) ('the Act') are as follows:

(a) Deposit moneys held by legal practitioner, conveyancer or estate agent to be held as stakeholder (s 24):

(1) Any deposit moneys received by a legal practitioner, conveyancer or estate agent in the course of a transaction for the sale of land shall be held by that legal practitioner, conveyancer or estate agent as a stakeholder until -

(a) in the case of a cash transaction, the purchaser becomes entitled to a transfer or conveyance of the land; or

(b) in the case of a terms contract, the purchaser becomes entitled to possession or to the receipt of rents and profits -

at which time the deposit moneys may be paid to the vendor in his own right or as the vendor directs.

(b) Release of deposit moneys in certain circumstances (s 27):

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

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

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

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

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

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

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

(4) Where the purchaser is satisfied -

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

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

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

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

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

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

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

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

(8) Where a vendor knowingly or recklessly supplies false information to the purchaser regarding any particulars required to be given under subsection (3) -

(a) he shall be guilty of an offence against this Act and liable to a penalty of not more than 50 penalty units; and

(b) the purchaser shall be entitled to rescind the contract for the sale of the land and recover the deposit moneys.

(c) Powers of purchaser where contract in contravention of this Division (s 28):

(1) Where any contract for the sale of land contains provisions in contravention of this Division -

(a) those provisions shall be void and of no effect; and

(b) the contract shall be voidable by the purchaser at any time before completion and any person who has paid money under the contract shall be entitled to recover it.

(2) Notwithstanding paragraph (b) of subsection (1) the contract shall not be voidable by the purchaser if the Court is satisfied that the vendor has acted honestly and reasonably and ought fairly to be excused for the contravention and that the purchaser is substantially in as good a position as if all the relevant provisions of this Division had been complied with.

1. In accordance with the terms of the Contract, the plaintiff paid the defendant the deposit of $17,600,000 by the following instalments:

(a) $1,760,000 on 13 March 2022; and

(b) $15,840,000 on 22 July 2022.

The balance is due on the earlier of 13 September 2028, or 9 months from the satisfaction or waiver of the 'Rezoning Condition' (which has not currently been satisfied or waived).

1. On 25 July 2022, the defendant gave the plaintiff a notice titled 'DEPOSIT STATEMENT TO THE PURCHASER OF REAL ESTATE PURSUANT TO S 27- OF SALE OF LAND ACT 1962' ('the defendant's Deposit Notice'), which included the following particulars:

1. Particulars of the Mortgages to which the Property is now subject to -

1.1 $75,100,000.00 is the total amount secured by the mortgages. The amount now required to discharge the mortgages (as defined in the Act), which amounts include any outstanding rates, taxes or charges due to any statutory body, or any other charge or lien for money or monies worth is $60,000,000.00.

1.2 The mortgages DO NOT provide for further advances save for capitalised interest totalling $15,100,000.00.

1.3 Interest payable is 8.5% per annum plus BBSY.

1.4 The date by which the amount secured by the mortgages is to be repaid (unless the lender demands early repayment upon any breach of its conditions) is 15 July 2024.

1.5 The Vendor is NOT required to make instalment payments.

1.6 The Vendor is not in default under the Mortgage.

1.7 The Mortgage lender is Loan Agency Services Pty Ltd of Level 32, 120 Collins Street, Melbourne VIC 3000.

1.8 The Mortgage lenders have NOT consented to the Purchaser assuming the Vendor's obligations under the mortgages.

1. There is NO caveat lodged against the title to the property under the Transfer of Land Act 1958 other than any caveat lodged by or on behalf of the Purchaser.

1. These particulars adopted the form prescribed in schedule 1 of the Act; but it also included a 'Release of Deposit by the Purchaser' with provision for the plaintiff's signature, in the following terms:

1. The Purchaser is satisfied that

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

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

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

2. The Purchaser is deemed to have accepted title.

1. On 1 August 2022, the plaintiff served on the defendant a notice pursuant to s 27(6) of the Act ('the plaintiff's s 27(6) Notice') that it was not satisfied with the particulars for the reasons stated in the defendant's Deposit Notice. The plaintiff's s 27(6) Notice set out the plaintiff's response as follows:

Purchaser's response pursuant to Section 27(6)

Pursuant to section 27(6) of the Sale of Land Act 1962 (Vic), the Purchaser hereby gives the Vendor notice that it is not satisfied with the particulars given above for the following reasons:

(a) The notice given by the Vendor is not a valid notice pursuant to section 27 of the Sale of Land Act 1962 (Vic) because the Contract is subject to conditions enuring for the benefit of the Purchaser, including the Rezoning Condition and General Condition 24.2.

(b) The Purchaser is not satisfied that the amounts secured by the mortgage have been advanced solely for the purpose of settling the Head Contact.

(c) The Purchaser is not satisfied that the particulars given are accurate and complete as regards the debt secured by the mortgage over the Property.

(d) The Purchaser is not satisfied that the purchase price is sufficient to discharge all mortgages over the Property.

AND accordingly the Purchaser does NOT authorise the Stakeholder to release the deposit moneys to the Vendor in its own right or as it directs.

1. By rescission notice dated 19 August 2022, the defendant gave notice that unless the following default under special condition 4.8 of the Contract was remedied within 14 days, the Contract would be rescinded pursuant to General Condition 28 of the Contract:

Particulars of Default:

The Purchaser has failed to sign, date and return the statement given by the Vendor on 25 July 2022 under section 27 of the Sale of Land Act 1962, in default of special condition 4.8 of the Contract, which required the Purchaser to do so by 1 August 2022 being the date that is 5 Business Days (as defined in special condition 1.1 of the Contract) of receipt of that statement.

1. There being no application for the release of the deposit moneys pursuant to s 27 of the Act, the issue to be decided is whether the rescission notice based on an alleged default under Special Condition 4.8 is valid. This issue is to be determined by the answers to the following questions:

(a) Did the plaintiff breach Special Condition 4.8 by failing to sign and return the defendant's Deposit Notice within 5 days?

(b) Is Special Condition 4.8 void under s 28 of the Act?

1. On behalf of the plaintiff, it was submitted as follows:

(a) Special Condition 4.8 contravened Division 3 of Part 1 of the Act ('the Division') because it radically reworked the operation and efficiency of s 27 of the Act by creating a scenario where a purchaser:

(i) loses its deposit because it fails to respond within 5 business days and the vendor rescinds; but

(ii) is still entitled to make a response under s 27(6) of the Act to the effect that release of the deposit is not authorised and would be therefore protected.

Accordingly, Special Condition 4.8 is void and of no effect under s 28 of the Act as it is contrary to or inconsistent with s 27 of the Act and the policy of the Division as a whole.

(b) The Contract is subject to conditions enuring for the benefit of the purchaser including General Conditions 2, 7.4 and 24 and Special Conditions 23 and 24.

(c) The plaintiff was entitled at law not to authorise the release of the deposit because it was not satisfied that the particulars in the defendant's Deposit Notice:

(i) were accurate; or

(ii) indicated that the purchase price was sufficient to discharge all mortgages over the property.

1. On behalf of the defendant, it was submitted that Special Condition 4.8 is not in contravention of the Division, for the following reasons:

(a) There is no inconsistency between Special Condition 4.8 and s 27 of the Act because properly construed Special Condition 4.8 incorporates General Condition 12.1, which in turn incorporates s 27 of the Act.

(b) Special Condition 4.8 refers to 'General Condition 12(a)', which should be construed as a reference to General Condition 12.1. This construction is supported by:

(i) the parties' deletion of General Condition 12 by Special Condition 2.1(d)(vi), indicating they did not wish to be bound by the whole of General Condition 12, but only part of it;

(ii) the reference in Special Condition 4.8 to s 27 of the Act, which is referred to, and incorporated by reference, in General Condition 12.1; and

(iii) the reference in Special Condition 4.2 to the release of the deposit 'in accordance with' the Act.

(c) Special Condition 4.8 contemplates a statement being given by the vendor to the purchaser under s 27(3) of the Act.

(d) It is common conveyancing practice for the vendor's deposit statement under s 27(3) of the Act to include a section for the purchaser to authorise the release of the deposit.

(e) General Condition 12.1(c) (with which Special Condition 4.8 requires compliance) requires all conditions of s 27 of the Act be satisfied and a purchaser is only advised to sign and return under Special Condition 4.8 if the statement complies with General Condition 12.1 which includes 12.1(c), and therefore, s 27 of the Act.

1. It was further submitted that there was no condition in the Contract enuring for the benefit of the purchaser because there were no contingent conditions and except for an essential term, there is no authority in support of the proposition that promissory terms constitute a condition enuring for the benefit of the purchaser within the meaning of s 27(2)(a) of the Act.

Did the plaintiff breach Special Condition 4.8 by failing to return the defendant's Deposit Notice within 5 days?

1. For convenience, I restate Special Condition 4.8:

The Purchaser must, within 5 Business Days of receipt, sign, date and return any statement given under section 27 of the Sale of Land Act which complies with General Condition 12(a).

1. For the purposes of this question, I accept the defendant's submission that, as a matter of rectification by construction,[1] the reference in Special Condition 4.8 to 'General Condition 12(a)' should be read as a reference to General Condition 12.1.
2. In those circumstances, Special Condition 4.8 should be construed as requiring the plaintiff to sign and return the defendant's Deposit Notice providing it complies with General Condition 12.1.
3. General Condition 12.1(a) contemplated the release of the deposit on the provision of the stipulated particulars 'to the satisfaction of the purchaser'.
4. Accordingly, a reasonable business person would understand the special condition as only requiring the return of the signed statement in the defendant's Deposit Notice, if the plaintiff was satisfied with the particulars. That was the effect of General Condition 12.1(a); and to require the return of the signed statement the defendant's Deposit Notice authorising release of the deposit, if the plaintiff was not satisfied with the particulars, would be in blatant contravention of Division.[2]
5. Accordingly, in my opinion, the obligation under Special Condition 4.8 on the purchaser to 'sign, date and return the statement' only arose if the particulars in the statement were to the satisfaction of the purchaser.
6. As was notified by the plaintiff's s 27(6) Notice, the particulars were not to the satisfaction of the purchaser and therefore the obligation on the plaintiff to sign and return the statement did not arise.
7. On behalf of the defendant, it was submitted that the plaintiff's lack of satisfaction expressed in the plaintiff's s 27(6) Notice was required to be on reasonable grounds. I do not accept this submission, for the following reasons:

(a) In McEwen v Theologedis,[3] Hollingworth J rejected a similar submission stating:

Section 27(4) concerns itself with whether "the purchaser is satisfied", not with whether "a reasonable purchaser would be satisfied" or "the purchaser is satisfied on reasonable grounds". Subsection (6) is likewise concerned with the situation where "the purchaser is not satisfied". It does not matter that the purchaser may be proceeding on erroneous facts or assumptions; only that he or she be satisfied or not satisfied of the relevant matters.[4]

With respect, I accept her Honour's analysis and counsel for the defendant referred me to no authority supporting such an implied requirement of reasonableness.

(b) In my opinion the finding of such an implied requirement would not be consistent with the fact that the Division is remedial legislation for the protection of purchasers.[5]

(c) Accepting that the reasons for dissatisfaction as expressed in the plaintiff's s 27(6) Notice must be ex facie 'referable to [at least] one of the matters in [sub-section 4(b)],[6] the scheme of s 27 of the Act provides no indication as to whether and how a court should assess the reasonableness of such reasons.

1. Although it was only faintly the subject of submissions, I should add that, if the plaintiff had been required to have reasonable grounds for its lack of satisfaction with the particulars in the defendant's Deposit Notice, I am not satisfied on the evidence that the plaintiff's lack of satisfaction was without reasonable grounds. Although whether a party should be satisfied about particulars is a matter about which reasonable minds might differ, it may well be within the bounds of reason for the plaintiff not to be satisfied of the following:

(a) The accuracy of paragraph 1.2 of the defendant's Deposit Notice, being '[t]he mortgages DO NOT provide for further advances ...', given that:

(i) the defendant did not produce evidence of the provisions in the facility agreement with the mortgagee; and

(ii) the mortgage secured 'all moneys' without limitation.

(b) The particulars indicate that the purchase price is sufficient to discharge all mortgages over the property given the circumstances set out in in the previous sub-paragraph and the fact that the settlement of the property may not occur before 13 September 2028.

Is Special Condition 4.8 void under s 28 of the Act?

1. If I was to accept the defendant's construction of Special Condition 4.8, being that it required the purchaser within 5 Business Days of receipt to sign, date and return any statement given under s 27 of the Act thereby authorising the release of the deposit, I would find that the Special Condition was void as being a provision in contravention of the Division, because:

(a) the Division is remedial legislation intended to protect purchasers' deposits by requiring them to be held by a stakeholder until the purchaser settles or is entitled to possession of the land; and

(b) the Division establishes a scheme in s 27 of the Act by which deposit moneys may be released to a vendor at an earlier time. The scheme prescribes the only circumstances in which a purchaser's authorization in writing may be effective to empower the stakeholder to release those deposit moneys to the vendor.

1. A provision would be in contravention of the Division if it was 'to come or be in conflict with; go or act counter to; oppose'[7] the Division. It is 'not confined to literal conflicts ... between the contractual provisions and the statutory provisions'[8] but extends to 'whenever there is a conflict between a contractual provision or the operation of such a provision and the purpose or policy of the statute'.[9]
2. In my opinion, a provision in a contract that confers on the vendor additional rights for the release of deposit moneys, which dilute the protection provided to the purchaser by the Division and s 27 of the Act in particular, is in contravention of the Division and therefore void under s 28 of the Act.
3. Special Condition 4.8 purports to confer additional rights on the vendor for the release the deposit moneys and is therefore in contravention with the Division, for the following reasons:

(a) Under s 27 of the Act, the purchaser is not obliged to respond to a notice under s 27(3) and the only result of a failure to do so is a deemed authorisation for release of the deposit. Under Special Condition 4.8, a failure to provide a response is a breach of contract entitling the vendor to exercise rights under the default provisions. The imposition of a contractual obligation on the purchaser to take steps to release the deposit confers on the vendor contractual rights beyond those in s 27 of the Act.

(b) Under s 27(4) and (6) of the Act, the purchaser has 28 days from receipt of the s 27(3) notice to respond to the s 27(3) notice. Special Condition 4.8 purports to impose an obligation on the purchaser to respond within 5 days. The significance of this abridgement is demonstrated by the fact that a vendor would have time to rescind the contract under the default provisions if the purchaser did not respond to the s 27(3) notice until the end of the 28 day period, thereby circumventing the scheme in s 27 of the Act.

(c) The defendant's construction that Special Condition 4.8 required the plaintiff to authorise the release of the deposit within 5 days of receipt of the particulars referred to in clause 12.1 is entirely inconsistent with the purchaser's right to withhold authorisation by giving a notice under s 27(6) of the Act if not satisfied with the particulars in the defendant's Deposit Notice.

Is the contract subject to any condition enuring for the benefit of the purchaser?

1. As a result of the above findings, it is not necessary for me to determine this question. However, I propose to make the following comments.
2. In Aurumstone v Yarra Bank Developments ('Aurumstone'),[10] I determined that a condition within the meaning of s 27(2) of the Act included, not only contingent conditions, but essential terms. I expressly eschewed the expression of any opinion about whether an intermediate term could constitute a condition within the meaning of s 27(2) of the Act.[11]
3. In Aurumstone,[12] the parties agreed that the relevant provision was an essential term. It is well-established that 'courts are not too ready to construe a term as a condition [i.e. an essential term] and, at least where other conditions are finely balanced, will hold that a term is of such a kind that breach of it does not give rise to an automatic right to rescind'.[13]
4. Although the courts might be reticent to construe a contractual term as essential, the parties may stipulate a term as essential, thereby entitling a party to terminate on breach.[14] However if a term, which enures for the benefit of the purchaser, is essential by reason of such a stipulation, the deposit moneys may not be released under s 27 of the Act.
5. Counsel for the plaintiff did not contend that the clauses on which he relied, being General Conditions 2, 7.4 and 24 and Special Conditions 23 and 24, were essential terms. I have serious reservations that the clauses relied upon by the plaintiff are conditions within the meaning of s 27(2) of the Act.

(a) the plaintiff was not obligated by Special Condition 4.8 to authorise the release of the deposit; and

(b) if, on a proper construction of the Special Condition, they were so obligated, it was void under s 28 of the Act.

1. Accordingly, I make the following declarations:

(a) The plaintiff is not in default of special condition 4.8 of the contract for sale of property at 205 Ballan Road, Moorabool, Victoria dated 13 March 2022 (and varied on 6 July 2022).

(b) The Rescission Notice dated 21 September 2022 sent by the defendant to the plaintiff in respect of the Contract is invalid.

[1] For the principles to be applied in rectification by construction see Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liq) [2019] NSWCA 11; (2019) 99 NSWLR 317, [6]-[10] (Leeming JA).

[3] [2004] VSC 244 ('McEwen').

[5] Aurumstone v Yarra Bank Developments [2017] VSC 503, [52](b).

[6] McEwen (n 3) [27] (Hollingworth J).

[7] Macquarie Dictionary (online at 5 October 2022) 'contravene' (def 1). 'Contravention' is defined as 'the act of contravening; action counter to something; violation'.

[8] Caltex Oil (Australia) Pty Ltd v Best [1990] HCA 53; (1990) 170 CLR 516, 522 (Mason CJ, Gaudron and McHugh JJ).

[10] [2017] VSC 503.

[13] Ankar Pty Ltd v National Westminster Finance (Australia) Pty Ltd [1987] HCA 15; (1987) 162 CLR 549, 556 (Mason ACJ, Wilson, Brennan and Dawson JJ).

[14] Koompahtoo Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61; (2007) 233 CLR 115, 136-8 [47] (Gleeson CJ, Gummow, Heydon and Crennan JJ), citing Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632 at [641]-[642].