Plaintiff v First Defendant

TRADE AND COMMERCE - Australian Consumer Law - Conduct 'in trade or commerce' - Whether representations concerning a subdivision of a residential property 'in trade or commerce' - Concrete Constructions (NSW) Pty Ltd v Nelson [1990] HCA 17; (1990) 169 CLR 594 applied - O'Brien v Smolonogov (1983) 53 ALR 107 discussed - Application of the re-enactment presumption.

Alstom Ltd v Yokogawa Australia Pty Ltd & Anor [No 7] [2012] SASC 49

Apollo Shower Screens Pty Ltd v Building & Construction Industry Long Service Payments Corporation (1995) 1 NSWLR 561

Balfour Beatty Building Ltd v Chestermount Properties Ltd (1993) 62 BLR 12

Bisognin v Hera Project Pty Ltd [2015] VSC 647

Bisognin v Hera Project Pty Ltd [2016] VSC 75

Built Environs Pty Ltd v Tali Engineering Pty Ltd [2013] SASC 84

Concrete Constructions (NSW) Pty Ltd v Nelson [1990] HCA 17; (1990) 169 CLR 594

CSS Investments Pty Ltd v Lopiron Pty Ltd (1987) 16 FCR 15

Foran v Wight [1989] HCA 51; (1989) 168 CLR 385

Fortress Credit Corporation (Australia) II Pty Limited v Fletcher [2015] HCA 10; (2015) 254 CLR 489

Hawes v Cuzeno Pty Ltd [1999] NSWSC 1167; (1999) 10 BPR 18,011

Hawkins v Pender Bros Pty Ltd [1990] 1 Qd R 135

Hera Project Pty Ltd v Bisognin [No 4] [2017] VSC 270

IBM United Kingdom Ltd v Rockware Glass Ltd [1980] FSR 335

Joseph Street Pty Ltd v Tan (2012) 38 VR 241

Masters v Belpate Pty Ltd [2001] NSWSC 169; (2001) 10 BPR 18,527

New Zealand Shipping Co v Societe des Ateliers et Chantiers de France (1919) AC 1

O'Brien v Smolonogov (1983) 53 ALR 107

Ottawa Northern and Western Railway Co v Dominion Bridge Co (1905) 36 SCR 347

Pacifico (Timber) Pty Ltd v Berlian Timbers Pty Ltd (1997) 8 BPR 15,785

Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd (1970) 1 BLR 111

Re Alcan Australia Ltd; Ex parte Federation of Industrial, Manufacturing and Engineering Employees [1994] HCA 34; (1994) 181 CLR 96

Roberts v Wyatt [1810] EngR 117; (1810) 2 Taunt 268

SMK Cabinets v Hili Modern Electrics Pty Ltd [1984] VicRp 31; [1984] VR 391

Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418

Williams v Pisano [2015] NSWCA 177; (2015) 90 NSWLR 342

1 By this proceeding, the plaintiff ('the purchaser') seeks an injunction restraining the defendants ('the vendors') from exercising a power of termination under a contract exchanged on 25 March 2015 ('the 2015 Contract') for the sale of Lot 1 ('Lot 1') on an unregistered Plan of Subdivision being part of the land described in Certificate of Title Volume 8776 Folio 892, being part of 1 Adrian Street, Cranbourne East ('the Land'); and orders in the nature of specific performance of the 2015 Contract.

2 The sale of Lot 1 has a protracted history of litigation. The principal issue, which I am required to determine in this proceeding, is whether the vendors have a right to terminate the 2015 Contract when registration of the plan of subdivision had not occurred by 31 August 2016.[1] The purchaser contends that the vendors have lost that right by reason of their conduct, including their breach of a best endeavours obligation under the 2015 Contract, in the period from 4 March 2016 and 31 August 2016 ('the relevant period').

3 The following is a summary of the relevant facts and litigation history prior to the relevant period.

4 By contract of sale of land dated 29 February 2012 ('the 2012 Contract'), the vendors agreed to sell Lot 1 to Joslin Street SA Developments Pty Ltd and/or nominee for a price of $3,600,000 including a deposit of $1,000,000 payable as follows:

(c) $2,600,000 payable on the settlement date being 31 December 2012 'or 14 days after the vendor gives notice to the purchaser of registration of the plan, whichever is the later'.

5 The special conditions of the 2012 Contract were as follows:

1. The balance of the deposit namely $990,000.00 is payable within 7 days of Plan of Subdivision being approved as referred to in clause 4 herein.
2. This sale is subject to the City of Casey amending the Strategic Plan to accommodate a full line supermarket with associated shops on the site herein.
3. (a) The Purchaser shall at its own cost and expense prepare a Plan of Subdivision in respect of the land comprised in the Parcel in or to the like effect of the Plan of Subdivision annexed hereto and submit the same to the City of Casey for sealing in accordance with the provisions of Part 1 of the Act and shall use its best endeavours and do all things reasonably required to expedite and procure the registration of the said Plan pursuant to the provisions of Part II of the Act;

(b) The proposed Plan of Subdivision is attached hereto and shall not be amended without the consent of the Vendors;

(c) The Purchaser shall have the right and the Vendors will do all things necessary to assist the Purchaser or their agents having access to the property for the purpose of surveys and studies with a view to prepare a Plan of Subdivision.

1. The deposit and all other monies paid or payable by the Purchaser hereunder until such time as the said Plan of Subdivision shall have been so registered shall be held by Waters Lawyers Pty Ltd on trust for the Purchaser in accordance with the provisions of Section 9AA of the Sale of Land Act.
2. If the Purchaser shall be or include a company, the company will forthwith upon execution of this Contract procure the execution by each of its directors of the Guarantee annexed to that part of this Contract to be held by the Vendor.
3. The right of the Purchaser to nominate or substitute a Purchaser pursuant to General Condition 18 hereof shall be exercised so that notice thereof is received by the Vendors or his solicitors within fourteen (14) days of the date of settlement, after the expiration of which the said General Condition 18 shall no longer be of any force or effect.
4. The Vendors hereby agree to pay the sum of $100,000.00 (One hundred thousand dollars) to Media Movers as a consultancy fee.
5. The Vendors and Purchasers agree that if this sale does not proceed then all monies paid herein shall be refunded less the sum of $10,000.00 to the Purchasers.

6 By Sale of Real Estate Nomination Form dated 26 July 2013, Joslin Street SA Developments Pty Ltd nominated Hera Project Pty Ltd as the purchaser under the 2012 Contract.

7 By Rescission Notice dated 21 October 2013 to the purchaser, the vendors gave notice that they intended to 'exercise their rights' unless the purchaser's default was remedied within 14 days. The particulars of default were:

The purchaser is unable to obtain approval of a Plan of Subdivision in accordance with the special condition 3 of the Contract of Sale dated 29/02/2012.

8 On 12 November 2013, the purchaser lodged a caveat on title with the Registrar of Titles. The caveat was given dealing number AK710443W.

9 On 18 November 2013 to the purchaser, the Registrar of Titles gave notice to the purchaser pursuant to s 89A(3) of the Transfer of Land Act 1958 that, as a result of an application made by the vendors pursuant to that section, the caveat would lapse on 20 December 2013 unless the purchaser gave notice to the Registrar stating, in substance, that proceedings had been filed to substantiate the claim made under the caveat.

10 By letter dated 26 November 2013 to the vendors' solicitors, the purchaser's solicitors advised that, prior to the Plan of Subdivision being lodged for approval, it was necessary for the vendors to complete and submit an Urban Design Framework ('UDF'). The vendors' solicitors responded by letter the next day stating that the 2012 Contract had been rescinded and '[i]t was not incumbent on our client to complete and submit to the Council an Urban Design Framework'.

11 On or about 13 December 2013, the purchaser filed proceeding S CI 2013 06591 ('the first proceeding') in the Supreme Court against the vendors seeking a declaration that the purported Rescission Notice was of no effect and an order that the vendors undertake all works required to procure an UDF for the Adrian Street precinct and pay any necessary Growth Areas Infrastructure Contribution.[2]

12 On 25 November 2014, at a mediation conference, the parties settled the first proceeding and agreed to enter into a new contract with additional terms, which was effected by the 2015 Contract.[3]

13 On 19 February 2015, Hargrave J made orders in proceeding S CI 2014 6875 ('the second proceeding') which was a dispute about the management of the purchaser, including whether Mr Christopher Pinzone was entitled to be a director of the purchaser. The orders:

(a) removed Mr Pinzone[4] as a director and shareholder of the purchaser;

(b) reinstated Mr John Kazakouras as the purchaser's sole director; and

(c) required the plaintiffs in that proceeding, which included Mr Nikolaos Konstandellos (the attorney under power of the purchaser and Mr John Kazakouras) to:

(a) Forthwith cause the Company to execute the 'New Contract' described in the terms of settlement exhibit NK-5 to the affidavit of Nikolaos Konstandellos sworn 23 December 2014; and

(b) Until the hearing and determination of the proceeding or further order, take all reasonable steps to ensure that the Company is able to complete the New Contract.

14 By the 2015 Contract, the vendors and the purchaser entered into a fresh contract of sale of Lot 1 in substantially identical terms to the 2012 Contract except that it included three further special conditions as follows:

1. If the said Plan of Subdivision is not registered by 25th August 2015, then the parties may by notice in writing to each other end this Contract of Sale.
2. The Vendor will provide all or any documents in relation to the Urban Design Framework (UDF) by 2 December 2014.
3. The Vendor will use their best endeavours to co-operate with the Purchaser, sign all documents, do all acts and things necessary to give effect to the approval of the Plan of Subdivision and to give effect to the UDF, making the duplicate title available at the Land Titles Office for the purpose of registration of the Plan of Subdivision, and will make any Growth Areas Infrastructure Contribution (GAIC) payment promptly if required by the relevant authorities.[5]

15 The exchange of the 2015 Contract was completed on 25 March 2015.

16 By letter dated 11 June 2015, the City of Casey ('the Council') notified the purchaser that its application for the planning permit for the two-lot subdivision had been approved subject to a number of conditions. The conditions included the following:

1. The owner of the land must enter into agreements with the relevant authorities for the provision of water supply, drainage, sewerage facilities, electricity and gas services to each lot shown on the endorsed plan in accordance with the authority's requirements and relevant legislation at the time.

...

Telecommunications Conditions

5. The owner of the land must enter into an agreement with:

(a) a telecommunications network or service provider for the provision of telecommunications services to each lot shown on the endorsed plan in accordance with the provider's requirements and relevant legislation at the time; and

(b) a suitably qualified person for the provision of fibre ready telecommunications facilities to each lot shown on the endorsed plan in accordance with any industry specifications or any standards set by the Australian Communications and Media Authority, unless the applicant can demonstrate that the land is in an area where the National Broadband Network will not be provided by optical fibre.

1. Before the issue of a Statement of Compliance for any stage of the subdivision under the Subdivision Act 1988, the owner of the land must provide written confirmation from:

(a) a telecommunications network or service provider that all lots are connected to or are ready for connection to telecommunications services in accordance with the provider's requirements and relevant legislation at the time; and

(b) a suitably qualified person that fibre ready telecommunications facilities have been provided in accordance with any industry specifications or any standards set by the Australian Communications and Media Authority, unless the applicant can demonstrate that the land is in an area where the National Broadband Network will not be provided by optical fibre.

Servicing Requirements

1. Prior to the issue of a Statement of Compliance for the subdivision the owner must ensure that:

(a) The land shown on the endorsed plans is drained to the satisfaction of the Responsible Authority with outfall drainage constructed to provide a legal point of discharge to each allotment.

17 On 3 August 2015, the Plan of Subdivision was certified by the Council.

18 By default notice dated 11 August 2015, the vendors gave notice to the purchaser of their intention to exercise their rights unless the purchaser paid the balance of the deposit of $990,000 in accordance with special condition 1.

19 By letter of the same date to the vendors' solicitors, the purchaser's solicitors stated that the balance of the deposit was not payable until the Plan of Subdivision was registered at the Land Titles Office.

20 On 17 August 2015, the vendors filed an originating motion in proceeding S CI 2015 04285 ('the third proceeding') seeking answers to questions about the 2015 Contract pursuant to s 49(1) of the Property Law Act 1958. The three questions were as follows:

(a) Question one: On its true construction, does special condition 1 of the Contract provide for the balance of the deposit in the sum of $990,000 to be paid within seven days of the relevant plan of subdivision being certified by the City of Casey pursuant to s 6 of the Subdivision Act 1988 or within seven days of the plan of subdivision being registered by the Registrar of Titles pursuant to s 22 of that Act?

(b) Question two: On its true construction, does special condition 8 of the Contract provide that if the relevant plan of subdivision is not registered by 25 August 2015 then either party may end the Contract by notice in writing to the other party?

(c) Question three: On its true construction, apart from any Growth Areas Infrastructure Contribution Payment, does special condition 10 of the Contract require the plaintiffs to make any payment to a third party that is necessary to be made to secure registration of the plan of subdivision?

21 On 21 August 2015, Cameron J, sitting in the Practice Court, determined that the answer to question one was that the balance of the deposit was only payable within seven days of registration of the Plan of Subdivision with the Registrar of Titles.[6]

22 The trial of questions two and three was conducted before Sloss J on 7, 8, 9, 10 and 14 December 2015.

23 On 4 March 2016, Sloss J delivered her reasons for judgment.[7] After answering question two in the affirmative, she answered question three as follows:

Question three: On its true construction, apart from any Growth Areas Infrastructure Contribution Payment, does special condition 10 of the Contract require the plaintiffs to make any payment to a third party that is necessary to be made to secure registration of the plan of subdivision?

Answer: Yes. The plaintiffs, as vendors of a lot on an unregistered plan of subdivision, undertook by special condition 10 of the Contract with Hera to use their "best endeavours to co-operate with the Purchaser, sign all documents, and do all acts and things necessary to give effect to the approval of the Plan of Subdivision and to give effect to the UDF ...". The planning permit issued by the City of Casey dated 11 June 2015 to allow the two lot subdivision of the 1 Adrian Street land, required the vendor[s] as "owner of the land" to enter into agreements with the relevant authorities in respect of each of the southern lot 2 and northern lot 1 (to be retained by them) for the provision of water supply, drainage, sewerage facilities, electricity and gas services, and telecommunication services (and fibre ready telecommunication facilities) in each case in accordance with the relevant authority's requirements and relevant legislation at the time, and also to ensure that the land is drained to the satisfaction of the Responsible Authority with outfall drainage constructed to provide a legal point of discharge to each allotment.

To the extent that entry into any such agreements required the payment of moneys, by way of fees and other charges, and the provision of bond moneys, those were obligations that were to be satisfied by the vendors.

24 By emailed letter of 18 March 2016 to the vendors' solicitor, Mr Noel Waters, the purchaser's solicitor, Mr Leonard Warren, summarised his understanding of her Honour's determination of the parties' respective responsibilities under the 2015 Contract and noted that it was necessary for there to be new applications to the relevant authorities for agreements as required by the planning permit. The letter concluded by requesting that Mr Waters confirm the following:

1. Your clients will enter such agreements when they are prepared by the relevant authorities;
2. Your clients are taking steps to obtain production of the duplicate certificate of title from the mortgagee bank (specifying such steps that they have taken); and
3. Your clients are organising themselves to be in a position to pay GAIC upon lodgement of the plan of subdivision (specifying such steps that they have taken).

25 By email of the same date to Mr Warren, Mr Waters replied as follows:

We have been waiting for Luke Pozzebon [the purchaser's project manager] to contact us to make application to the bank for the amount required to provide a guarantee.

Our clients will abide by the judgement of the Court.

Council have a standard form which they require so please forward to us for signing.

26 By email of the same date to Mr Waters, Mr Warren confirmed that the old applications had expired and requested that the vendors authorise fresh applications as requested in the emailed letter sent earlier that day.

27 On 21 March 2016, the purchaser made fresh applications to the relevant authorities.

28 By letter dated 13 April 2016, Melbourne Water Corporation ('Melbourne Water') set out 14 conditions to be included in the agreement with the vendors before it would consent to the Council issuing a Statement of Compliance. The conditions required, among other things, that the following be submitted to Melbourne Water prior to the issue of the Statement of Compliance:

(a) practical completion forms signed by Melbourne Water's Asset Services team (condition 2);

(b) council approved engineering plans for the subdivision (condition 5); and

(c) as constructed models and detailed designs for stormwater quality works and written confirmation of acceptance of these works by Council (condition 13).

29 By email of 3 May 2016 to Mr Waters, Mr Warren requested the vendors' permission for contractors to have access to 'the site' to carry out a Cultural Heritage Management Plan ('CHMP'), which he asserted was a condition of the planning permit.

30 By email of 4 May 2016 to Mr Waters, Mr Warren attached a plan showing that both lots in the subdivision required a CHMP. Mr Waters replied on the same day suggesting that 'we need to settle the Orders to be made first'.

31 In May 2016, Mr Konstandellos, the purchaser and others, of one part and Mr Pinzone, Mr Miaogen Wu and others, of another part entered into a Deed of Settlement and Release in which they mutually released each other from:

(a) the second proceeding - being the claims and counterclaims in proceeding S CI 2014 6875 (referred to at [13] above);

(b) another proceeding filed in the Supreme Court in 2015 - being the claims and counterclaims in S CI 2015 3088; and

(c) 'Further Claims' - being further claims threatened by Mr Pinzone, Mr Wu and another by way of defence or counterclaim to the 2015 Proceeding.

(a) Mr Pinzone and Mr Wu would not directly or indirectly interfere with the 2015 Contract; and

(b) Mr Konstandellos and others would not directly or indirectly interfere with another contract, referred to as the Ipswich Contract.

33 By emailed letter of 31 May 2016 to Mr Waters, Mr Warren referred to the failure of settlement negotiations concerning the third proceeding and enclosed for completion by the vendors the agreements for South East Water Corporation ('South East Water') and Melbourne Water. He noted that the authorities' fees were as follows:

(c) AusNet fees: $550.00 (which had been paid, and reimbursement was sought).

The letter requested that, within 48 hours, the signed agreements with the authorities be returned, together with confirmation that:

(a) arrangements have been made with the bank for production of the title;

(b) the vendors had the ability to pay and would pay the GAIC at settlement;

(c) the vendors had the ability to pay and would pay the authorities' fees and bonds;

(d) the vendors had the ability to pay and would pay at settlement the sum of $100,000 to Media Movers as required by special condition 6.

It further requested that the vendors confirm that access to 'the property' would be permitted for the purpose of the CHMP and suggested proposed orders to be made in the third proceeding.

34 By emailed letter of 2 June 2016 to Mr Warren, Mr Waters referred to the letter of 31 May 2016, suggested that the matter be listed so that orders could be made and said that 'We will respond to the other matters raised in your letter shortly'.

35 By email of 3 June 2016 to Mr Waters, Mr Warren enclosed a further authority's agreement for signing and said that, as a result of the failure to respond to the letter of 31 May 2016, the purchaser would be seeking orders 'to compel compliance with the contract of sale of land dated 31 March 2016 [sic]'.

36 By email of 3 June 2016 to Mr Waters, Mr Warren stated:

We note that on 2 June 2016 you stated that you would be responding "shortly" to the other matters raised by us. You have still not done so. What is required is simple - compliance with [special condition] 10, as made clear in Her Honour's Reasons for Judgment.

Our client is now proceeding on the basis that notwithstanding Her Honour's Reasons for Judgment, your clients refuse to comply with their obligations under [special condition] 10.

37 By emailed letter of 3 June 2016 to Mr Warren, Mr Waters replied as follows:

We refer to your recent correspondence in relation to the above matter and we note that our clients have always been ready, willing and able to perform their obligations under the Contract and are ready to do so once the Orders are made.

You have failed to obtain the Orders. If your client is happy to submit Orders on the basis that each party [bear] their own costs would you please submit Orders for signing relating to our clients. Otherwise you should apply to the Court to make a determination in regards to any proposed Orders.

38 By email of 4 June 2016 to Mr Waters, Mr Warren stated:

Your clients have an obligation to fulfil their obligations under the Contract whether or not Orders have been made. Please have your clients immediately sign the agreements and confirm they have done so.

You have not answered whether or not your clients have organised the ability to pay GAIC, the utility fees and the SC 6 amount, and whether or not they have organised production of the duplicate title. Please respond in that regard immediately.

39 On 22 June 2016, Sloss J made declarations following the reasons, including the answers to questions two and three as referred to at [23] above, and the following orders:

1. The period of time specified in special condition 8 of the Contract for registration of the plan of subdivision be and is hereby extended to 31 August 2016 (being a period of approximately 70 days commencing from the date of these orders ("the period of extension of time")).
2. During the period of extension of time, the plaintiffs [vendors] are to use their "best endeavours" to co-operate with the defendant and do all acts and things necessary to give effect to the approval of the plan of subdivision and give effect to the Urban Design Framework (as approved by the City of Casey) as required by special condition 10, including:

(a) satisfying the conditions of the planning permit issued on 11 June 2015 by entering into the agreements with the relevant referral authorities, the Responsible Authority and the relevant telecommunications service provider in a timely way in respect of both lots on the plan of subdivision;

(b) making arrangements with their mortgagee to produce the duplicate Certificate of Title at the Land Titles Office (at the cost of the defendant); and

(c) promptly paying any Growth Areas Infrastructure Contribution Payment,

with a view to assisting the defendant [purchaser] to obtain the statement of compliance and thereby procure the registration of the plan.

40 On the same day, by letter to Mr Waters, Mr Warren reproduced the relevant parts of his letter of 31 May 2016 and set out the purchaser's requirements of the vendors as follows:

Your clients promised in your emails to me of 18 March 2016 (11.21 am) and 3 June 2016 to immediately abide by the judgment of the Court and perform their obligations under the Contract once the Orders are made.

For the avoidance of any doubt, the orders require your clients:

(a) to forthwith sign the following agreements:

(1) Development Agreement with South East Water in accordance with the requirements of South East Water set out in the letter from South East Water to Hera Projects Pty Ltd dated 31 May 2016;

(2) Agreement with Melbourne Water in accordance with the requirements of Melbourne Water set out in the letter from Melbourne Water to Hera Projects Pty Ltd dated 13 April 2016;

(3) Agreement with Melbourne Water in accordance with the requirements of Melbourne Water set out in the further letter from Melbourne Water to Hera Projects Pty Ltd dated 13 April 2016; and

(4) Agreement with AusNet in accordance with the requirements of AusNet set out in the letter from AusNet to 18 Pty Ltd dated 5 May 2016.

(b) to forthwith make the following payments and/or provide the following bank or cash guarantees (as the case may be):

(1) to forthwith pay $3,711.28 to South East Water in accordance with clauses 7.1.1 and 7.1.2 of Schedule 7 of the offer letter from South East Water to Hera Projects Pty Ltd dated 31 May 2016;

(2) to forthwith provide to South East Water a bank or cash guarantee in the sum of $485,000 in accordance with clause 7.1.3 of Schedule 7 of the offer letter from South East Water to Hera Projects Pty Ltd dated 31 May 2016;

(3) to forthwith provide to South East Water a bank or cash guarantee in the sum of $21,100 in accordance with clause 7.1.4 of Schedule 7 of the offer letter from South East Water to Hera Projects Pty Ltd dated 31 May 2016; and

(4) to forthwith pay to Melbourne Water the sum of $231,787 in accordance with the letter from Melbourne Water to Hera Projects Pty Ltd dated 13 April 2016.

(c) to forthwith making arrangements [sic] with their mortgagee to produce the duplicate Certificate of Title at the Land Titles Office (at the cost of the defendant); and

(d) to promptly pay any Growth Areas Infrastructure Contribution Payment.

Our client requires that, by 12 noon tomorrow, your clients:

(a) sign the utility agreements delivered by our firm to your firm on 31 March 2016 and 3 June 2016, and deliver them to the relevant utility authorities, and provide evidence to us that they have done so;

(b) confirm to us that they have organised themselves to pay such moneys and bond moneys required by the utility authorities under the aforesaid agreements, providing evidence to us of the same;

(c) confirm to us that they have organised themselves to pay GAIC upon lodgement of the plan of subdivision providing evidence to us of the same;

(d) provide details of the steps they have taken to obtain production of the duplicate certificate of title from the mortgagee bank (providing evidence of the steps that they have taken), and advise us of any cost payable by our client in relation to the same; and

(e) confirm to us that they will permit our client's contractors to conduct a CHMP at 1 Adrian Street, Cranbourne upon reasonable notice.

If your clients fail to do so, our client will seek the relief set out in my email to you dated 3 June 2016 (11.03am), including seeking orders in the nature of specific performance and/or mandatory injunctions to compel compliance with the contract of sale of land dated 31 March 2016, further or alternatively, our client will take steps to enforce the orders made [by] Her Honour this day.

41 By emailed letter of 23 June 2016 to Mr Warren, Mr Waters stated that the ANZ Bank was prepared to make the title available for registration on the plan of subdivision and 'in relation to the bonding of the works our client is making an application to his bank forthwith'.

42 On 24 June 2016, Lot 1 was valued by In Property Mortgage Valuations Pty Ltd at $7,000,000.

43 By email of 24 June 2016 to Mr Waters, Mr Warren replied to the letter of the previous day and stated that the agreements with the authorities 'need to be signed promptly as they commence expiring shortly' and requested access to the land for the CHMP.

44 By letter dated 27 June 2016 (received 28 June) to the purchaser's solicitors, Mr Waters enclosed two agreements with Melbourne Water; one with South East Water; and one with AusNet Services ('AusNet'); and stated: 'Our client has made an application to the Bank in relation to those Authorities'.

45 By email of 28 June 2016 to Mr Waters, Mr Warren acknowledged receipt of the signed agreements and asked whether the vendors had lodged the originals and made the payments and, if they had not, asked when they would. Mr Warren also confirmed that he had sent the cheque required by the ANZ Bank and asked when the title would be available; whether the vendors had organised payment of the GAIC; and whether the CHMP could proceed.

46 By email of the same date, Mr Waters replied to the effect that the agreements had been sent so that they could be lodged with the authorities by the purchaser. Mr Waters proposed that the GAIC could be paid from settlement funds and that he needed to see a copy of the application for permit with respect to the CHMP. He confirmed: 'As stated our client has made application for a loan/guarantee with his Bank'.

47 On 29 and 30 June 2016, Mr Luciano [also known as Luke] Pozzebon, the purchaser's project manager, lodged the signed agreement with South East Water.

48 By email of 29 June 2016 to Mr Waters, Mr Warren set out further required steps and, with respect to payment, said:

Please confirm timing of payments to the authorities. The authorities will not proceed and permit the issue of a statement of compliance until payment is received. Your clients have been on notice as to the amounts to be paid to the authorities well prior to the court orders being made, but appear to have done nothing until the orders were made. If the plan of subdivision is not registered by 31 August 2016, our client will rely on your clients' delays to assert that your clients cannot terminate on that date.

49 By letter dated 30 June 2016 to the purchaser's solicitors, Mr Waters responded to the email of 29 June 2016 relevantly stating that the vendors were under no obligation to provide access to the land for the purpose of obtaining a planning permit. With respect to payment of the authorities, he stated:

As previously stated our client has made application to his bank to provide the funding/bond/guarantee for the authorities. As soon as we have had a response from his bank we shall advise you.

50 By email of 1 July 2016 to Mr Waters, Mr Warren required specific responses with respect to the AusNet agreement; whether the GAIC payment had been organised; when the title would be made available; and contended that the vendors were required to provide access for the CHMP assessment. However, with respect to the payment of the authorities he said as follows:

We asked you in item 2 of our email to you of 29 June 2016 to confirm timing as to payments of the authorities. You responded vaguely in your letters of 30 June 2016 that your client had made application to the bank, and would let us know when he had a response from the bank. You would appreciate that the situation is unsatisfactory. Your clients were on notice of the precise amounts required to be paid to the authorities since 31 May 2016. As recorded in our letter to you on 22 June 2016, your clients have twice stated that they would comply with the orders once made. The orders were made on 22 June 2016. Your clients have not complied with the orders. The utility agreements require payment, not applications for loans. If your clients were dependent upon a loan, then the relevant applications for finance ought to have been made long ago so that your clients could immediately comply with their payment obligations. Your clients did not previously inform us or the Judge that they were dependent on finance, that they were making applications for loans and that they needed further time. Your clients have not provided any evidence of the steps taken by them to obtain loans, nor the matters being considered by the bank, nor has your clients sought our client's consent to any increase of the mortgage limit in respect of the subject land. Your clients' conduct appears to be a further attempt to delay our client achieving registration of the plan of subdivision by 31 August 2016. Already 10 days have passed. Our client will not simply sit back and allow time to run out. Original agreements appropriately signed in duplicate must be immediately delivered to our office by courier today and all required payments to the authorities must be made by Monday, otherwise our client will bring this matter back to Court.

Further, my client is paying interest on outstanding loans and on funds that have been organised for settlement. Again, our client is not willing to let time drift, and our client will seek damages from your clients for the delays.

51 By letter dated 1 July 2016 (received on 4 July 2016) to the purchaser's solicitors, Mr Waters enclosed signed AusNet and South East Water agreements.

52 On 4 July 2016, in a telephone conversation, Mr Waters told Mr Warren that, from his 'experience', home loan applications can take 4 to 6 weeks to get approved and it may be the same with this application; and if the plan of subdivision was not registered by 31 August 2016, his client would terminate the 2015 Contract. Mr Warren said that his client had loan funds available on which he was paying interest.

53 By email of 4 July 2016 to Mr Waters, Mr Warren expressed his client's concern that the vendors were only paying 'lip service' to their best endeavour obligations and in fact were seeking to delay the registration process so that they could terminate the 2015 Contract. In particular, he referred to the vendors' suggestions that:

(a) the vendors' application for finance may take more than 4 to 6 weeks to process; and

(b) the vendors will terminate the 2015 Contract after expiration of the deadline 'on the basis that any delay will have been caused by events beyond their control (namely their own bank's formal process for approving finance)'.

He further noted that although the agreements with the authorities were provided on or about 31 May 2016, the vendors did not respond until after judgment was entered on 22 June 2016. He suggested that the vendors should be doing more to process their application for finance including making applications to other lenders.

54 By email of 4 July 2016 to Mr Jamie Colletti, a finance intermediary, Mr Waters asked 'Where are we at with the guarantees re the works'.

55 By letter dated 4 July 2016 (emailed on 5 July) to Mr Warren, Mr Waters stated that the vendors were using their best endeavours and were doing their best to 'review and sign the necessary agreements and find sufficient funds to progress the compliance requirements'. He further stated:

As previously advised our client is seriously considering an appeal. As part of our appeal our clients will be seeking a stay of the required timeframe until the termination [sic] of the matter.

56 By email of 5 July 2016 to Mr Waters, Mr Warren stated that the payments 'must be made by your clients to the authorities by noon on Friday, failing which we will go back before her Honour pursuant to the liberty to apply'.[8]

57 By email of 6 July 2016 to Mr Colletti, Mr Waters asks 'Can you please expedite the matter as Purchaser getting anxious'. Mr Colletti forwarded that email to Ms Dorine Hajj, an ANZ Bank officer, saying 'With reference my previous email, may I please ask if you could expedite the matter for Gino, as per Noel Waters email below'.

58 By emailed letter of 6 July 2016 to Mr Warren, Mr Waters provided the following 'Schedule as to what we believe has happened so far':

Please advise if VicRoads have any requirements for the issue of Statement of Compliance.

59 By email of 6 July 2016 to Mr Waters, Mr Warren noted that the vendors had not made payment nor indicated when payment would be made. He further noted that a time period was 'tighter than previously indicated' because the Council had said that it may take 2 weeks after they received confirmation from the authorities before the issue of a Statement of Compliance. By email of 7 July 2016, Mr Waters replied stating: 'I expect to hear from the Bank on Monday re Bond'.

60 By emailed letter of 8 July 2016 at 1:14 pm to the purchaser's solicitors, Mr Waters suggested that the purchaser could pay the bonds from the loan funds it had available, and deduct that sum from the purchase price.

61 By email of 8 July 2016 at 3:45 pm to Mr Waters, Mr Warren asked what the vendors were doing to comply with the drainage requirements and other requirements under the agreements with the authorities.

62 By email of 9 July 2016 to Ms Hajj and Mr Bisognin, Mr Colletti asked:

May I please ask if you could contact Gino's solicitor Noel Waters from Waters Lawyers as soon as possible please to expedite this matter as it is very time critical.

63 Twenty-one minutes later, Mr Bisognin replied, 'Thanks Jamie'.

64 On 11 July 2016, in a telephone conversation, Mr Waters told Mr Warren that he did not know if the loan approval had been granted. Mr Warren gave evidence that Mr Waters also said that the vendors had decided not to appeal. This allegation was disputed by Mr Waters. I accept Mr Warren's evidence because it is supported by a detailed contemporaneous file note made by Mr Warren on the day of the conversation. Mr Waters had no file note of the conversation. Mr Waters gave evidence that Mr Warren also said that his client was amenable to paying the bonds if the vendors were prepared to extend the settlement date. Mr Waters said that he replied by simply stating that his client 'intended to comply with the Orders made on the 22 June 2016'.

65 On 11 July 2016, the purchaser filed a summons pursuant to liberty to apply seeking detailed orders in substance to the effect that the vendors comply with their best endeavours obligations; including the payment of the fees, other charges and bond moneys required under the agreements with the authorities.

66 In an affidavit sworn 13 July 2016, Mr Waters deposed that 'Gino Bisognin has informed me this day that the ANZ Bank will provide a guarantee'.

67 Mr Bisognin deposed in a later affidavit that, in telephone conversations on or prior to 13 July 2016, Ms Hajj 'said to me, or at least I understood as a result of my conversation with her, that a guarantee by the bank would be able to address those matters and that such a guarantee should be available to [sic]'.

68 By an affidavit sworn 13 July 2016, Mr Bisognin stated: 'The bank has informed me today that they will provide a guarantee'.

69 On 14 July 2016, the purchaser's application was heard before Sloss J. The hearing proceeded on the basis that the vendors had secured the finance and that the parties would negotiate about how the best endeavours obligations would be satisfied. Mr Hay QC, who appeared for the vendors, opposed the orders sought in the summons on the basis that the purchaser was seeking a reiteration of the orders made by Sloss J on 22 June 2016. He submitted in substance that such orders were unnecessary because 'there was nothing unclear about what my client has to do'. The summons was adjourned sine die, and her Honour granted the parties liberty to apply.

70 By email of 14 July 2016 to Mr Waters and others, Mr Warren forwarded an email from Melbourne Water which stated that, because of the urgency, Melbourne Water would accept deferring obligations under the agreement until the ultimate development 'through the use of a s 173 agreement lodged on the title'.[9]

71 By emailed letter of 20 July 2016 at 3:48 pm to Mr Warren, T F Grundy Lawyer stated that he had been instructed by Mr Bisognin for the purpose of considering an appeal; and that he would keep Mr Warren informed. He further said:

Our purpose in writing to you, however, is to put you on notice of the prospect of a possible appeal, coupled with an application for the extension of time within which such an appeal should be filed. In those circumstances, your client should not proceed as if no appeal was in fact lodged.

72 By email of 20 July 2016 at 7:32 pm to Mr Waters, Mr Warren confirmed that at the hearing before Sloss J, with the authority of counsel for the vendors, he had informed the Court of matters including the following:

1. The payments to be made and bonds to be provided by your clients to the referral authorities were those set out in the application book page 4, items (a) - (d), totalling $742,148.98;
2. GAIC is to be paid by the vendors after the issue of the statement of compliance;
3. Before Melbourne Water gives its consent to the City of Casey for it to issue a statement of compliance, the vendors need to comply with the 14 special conditions ... ;
4. Melbourne Water was willing to consider an alternative to the vendors' compliance with the 14 special conditions, which will enable it to immediately consent to the Council's issue of a statement of compliance, namely the entry by the parties into two section 173 agreements;
5. Melbourne Water would still require payment of the bond specified in its offer pending entry into the two section 173 agreements;
6. The entry into a section 173 agreement over the southern lot to be purchased by our client would require our client's consent, as under the Contract, it was to purchase unencumbered land.

Mr Warren noted that Sloss J had encouraged discussions between the parties about the alternative suggested by Melbourne Water. He stated that the purchaser was prepared to accept that alternative and detailed the practical steps required.

73 At 7:34 pm on the same day (two minutes after the previous email) Mr Warren forwarded to Mr Waters the email from Melbourne Water with respect to the s 173 agreement.

74 By email of 21 July 2016 to Mr Dean Edwards of T F Grundy Lawyer, Mr Warren acknowledged the email of the previous day and asked to where future correspondence concerning the 2015 Contract should be addressed.

75 By email of 21 July 2016 at 5:54 pm to Mr Warren, Mr Edwards replied to Mr Warren's email to Mr Waters at 7:32 pm on the previous day stating:

Our clients do not accept that proposal. As advised in our letter yesterday, our clients intend to apply for an extension of time for leave and appeal of Justice Sloss' decision [sic].

76 By email of 22 July 2016 to Mr Edwards, Mr Warren replied to the email of the previous day stating that an application for leave to appeal does not act as a stay and that the vendors were required to comply with those orders. He continued:

Your client has said on oath that the bank has agreed to provide the bonds required by the referral authorities.

Please let me know by return when your clients will pay or provide the authorities' fees, charges and bonds and otherwise comply with the referral authorities' agreements and permits.

77 Mr Bisognin deposed that the ANZ Bank refused his application for finance on about 25-26 July 2016. In his affidavit of 7 September 2016 he stated as follows:

Subsequently, on about 25-26 July 2016 I again telephoned [Ms Hajj] at the ANZ Bank. I outlined what I understood to be the full extent of what was required, and also told her that my business had by this stage ceased operations due to its unprofitability. [Ms Hajj] said to me that she doubted whether any such loan facility or guarantee for the amount that was required would be granted. That was largely because I had no income and no capacity to meet the Bank's guidelines for servicing any such facility.

Under cross-examination, Mr Bisognin said that the bank officer stated: 'Don't bother filling out an application form because of the caveat' (being a reference to the caveat lodged by the purchaser referred to at [8] above). He also explained: 'I had personal defaults on the thing because I had no income so until I fixed those arrears, I was in a Catch-22'.

78 On 29 July 2016, pursuant to liberty to apply granted on 14 July 2016, the purchaser brought on the summons of 11 July 2016 for mention. At the hearing, counsel for the vendors acknowledged that her Honour's orders of 22 June 2016 were clear and that nothing had changed in that regard since the previous hearing. He informed the Court that the vendors were intending to apply for an extension of time within which to file an application for leave to appeal, but he accepted her Honour's observations that 'that doesn't do anything about the obligations that are on foot at the moment'. He opposed the making of any further orders on the basis that:

Your Honour's orders are clear in what they say and they articulate the obligations that the parties have to each other. And if those parties fail in the discharge of those obligations to each other, rights will accrue.

79 Her Honour was not prepared to make any further orders on the basis of developments since the delivery of her judgment and said to the parties:

Perhaps I should just say again to the parties that the Court doesn't make orders lightly. We have had a trial, we have all spent a lot of time and effort on the matter and the parties have undertaken the obligations imposed on them under the Civil Procedure Act, and they also understand as I - [counsel for the vendors] has indicated the vendors understand, as do the defendants [purchaser], their obligations under the formal orders that I have made.

Now, the Court is entitled to expect [not only] that parties in this Court understand their obligations, but adhere to them. Now, there might be disputes between you as to what the content of those obligations is, but my understanding is that on each occasion the legal representatives of both parties have indicated to the Court that they understand their obligations.

80 By email of 5 August 2016 to Mr Warren, T F Grundy Lawyer communicated that 'the application [for an extension of time and for leave to appeal] might be ready for filing today but realistically, [we] suggest that Monday is more likely'.

81 By letter dated 12 August 2016 to Mr Darren Smith of Balmain NB Commercial Mortgages Ltd ('Balmain'), the finance broker for the purchaser, Mr Jack Gringlas of Jadig Group increased its offer of finance from $3,000,000 to $3,850,000.

82 On 26 August 2016 (five days prior to the extended termination date provided by order 3 of Sloss J on 22 June 2016), the purchaser filed the writ in this proceeding together with a summons seeking an interlocutory injunction restraining the vendors from terminating the 2015 Contract.

83 On 29 August 2016, the vendor filed an application before Irving JR seeking an extension of time within which to file an application for leave to appeal the decision of Sloss J made 22 June 2016 (being some 40 days out of time). Unsealed copies of the application were served by email on the same day.

84 On 30 August 2016, Macaulay J, sitting in the Practice Court, granted an interim injunction in this proceeding (without opposition from the vendors) restraining the vendors from terminating the 2015 Contract until further order of the Court.

85 By email of 30 August 2016 to Mr Edwards of T F Grundy Lawyer, Mr Warren noted that they were surprised by the concern expressed at the injunction application before Macaulay J about the fact that the vendors may need to encumber the land for the purpose of raising finance to meet the relevant financial conditions because 'the position your clients put before her Honour Justice Sloss in July was that your clients had already arranged finance to meet the relevant financial conditions'.[10] The email continued:

Having said that, if it transpires that the position your clients put before her Honour in July was wrong, and your clients now need to encumber the land for the purpose of raising finance to meet the relevant financial conditions, please let us know as soon as possible so that we can seek instructions to consent to a variation of Order 1(a). In short, we wish to avoid any further delays that may be caused by your clients [claiming] that Order 1(a) prevents them complying with their obligations.

Finally, his Honour asked whether your clients had positively said that they were not going to pay the money required to meet the relevant financial conditions. Unless your clients confirm otherwise, we will assume from your clients' conduct (namely, informing her Honour that they had already arranged finance, yet neither paying the money nor responding to our letter of 22 July 2016) that your clients are able to, but have decided they are not going to, pay the money. Please let us know by close of business on Friday 2 September 2016 if our assumption is incorrect.

At the time of writing this email, Mr Warren had not been told that Mr Bisognin had contended that Ms Hajj had rejected the 'application' as referred to at [77] above.

86 By email of the same day, Mr Edwards replied stating that it had always been their clients' position that they would need to borrow money and said:

We will also contend in the current application that the necessity for our clients to encumber their land is a very good reason why the relief sought by your client in relation to specific performance is inappropriate, in all circumstances of the case. That simply arises from the alternative scenario that would see your client pay the moneys and then seek reimbursement after settlement which would take place approximately two weeks after payment.

87 By affidavit sworn 7 September 2016, Mr Bisognin deposed to the conversation with Ms Hajj at the ANZ Bank in which she doubted that a loan facility would be granted (as referred to at [[77 > Until further order, the defendants and each of them, whether by themselves or their servants or agents or otherwise, be restrained from:

(a) Selling, encumbering or otherwise dealing with the land the subject of the contract for the sale of real estate dated 13 March 2015 in respect of Lot 1, Adrian Street, Cranbourne East ('the Contract'), other than with the prior written consent of the plaintiff; and

(b) Terminating or purporting to terminate the Contract pursuant to Special Condition 8 on 31 August 2016 or any other date.

90 On 9 November 2016, the Court of Appeal heard the application for leave to appeal and the appeal. On 16 December 2016, the Court of Appeal published its reasons for judgment on the application for leave to appeal and the appeal of the purchaser from the orders of Sloss J made 22 June 2016 in the third proceeding.[12] Following the publication of reasons, on 31 January 2017 the Court of Appeal made orders including that the answer given by Sloss J to question three, referred to in order 2 of the orders of Sloss J made 22 June 2016 be set aside and in its place, the question be answered 'No'. Orders 3 and 4 of the orders of Sloss J made 22 June 2016 were not set aside.[13]

91 Late on the fourth day of the trial before me, counsel for the vendors produced and tendered a contract of sale of the Land executed on 6 and 9 July 2015 between the vendors and CMJ Property Group Pty Ltd (ACN 606 754 956) (the directors of which are Mr Pinzone and Mr Wu) ('the CMJ Contract'). The terms of the sale included:

(a) The contract price for the Land for a price of $7,100,000.

(b) The settlement date was 18 months from the Day of Sale but the purchaser had rights to bring the date forward on notice to the vendors.

92 The special conditions of the CMJ Contract included the following:

3. Contract Conditional and Settlement requirement

3.1 The formation of a binding agreement by this Contract, other than this special condition 3 and special condition 2, is subject to the Hera Project Contract [defined as 'the contract of sale for the Property entered into by the Vendor and Hera Project Pty Ltd'] being terminated (Condition).

3.2 The Vendor [defined as 'Gino Andrew Bisognin and Leah Joan Bisognin'] must:

(a) terminate the Hera Project Contract at the earliest lawful opportunity, and in any event no later than 26 August 2015 (or such later date as advised by the Purchaser acting reasonably) (Condition Expiry Date); and

(b) act at all times in a manner consistent with facilitating the earliest termination of the Hera Project Contract and not take any action that would, or would be likely to, prevent or hinder the fulfilment of the Condition.

3.3 Each party must use its best endeavours (within its own capacity) to ensure that the Condition is fulfilled on or before the Condition Expiry Date.

3.4 Provided that the Vendor and the Purchaser have complied with their obligations under special conditions 3.2 and 3.3, the Purchaser may end this Contract by giving written notice to the Vendor that the Condition has not been fulfilled by the Condition Expiry Date.

3.5 The Vendor must procure withdrawal of the caveat AK710443W on or before the Settlement Date.

3.6 If this Contract is ended under special condition 3.4:

(a) no party has any obligation or liability to any other party, except in connection with claims that arose before this Contract ended; and

(b) the Deposit or any part of the Deposit that has been paid and any interest earned on the Deposit must be refunded to the Purchaser.

93 Also produced and tendered by counsel for the vendors was a letter dated 18 February 2016, in which Gadens Lawyers ('Gadens') recorded variations to the CMJ Contract including:

(a) an amendment to the settlement date from '18 months from the Day of Sale' to '90 days from the date the Contract becomes unconditional under special condition 17.2'; and

(b) the insertion of special condition 17, which provides for the purchaser to be entitled to elect to extend the settlement date by up to 18 months '[i]n the event that the Vendor is restrained or prevented from completing this Contract on the due date for Settlement by injunction, court proceedings, caveat, legal action or otherwise'.[14]

94 The circumstances leading to the disclosure of the CMJ Contract were as follows:

(a) In October 2015, the purchaser made an application for specific discovery returnable before Elliott J. The application was resolved without formal orders on the vendors agreeing to provide discovery of documents referred to in an Annexure of Specific Discovery Required From The Plaintiffs dated 9 October 2015. The Annexure included the following category of document:

1. All documents recording any communication by the Plaintiffs [vendors] with any other person concerning the sale or possible sale or development or possible development of 1 Adrian Street, Cranbourne or any part thereof between October 2014 and 25 August 2015.

(b) By facsimile of 13 October 2015 to Mr Warren, Mr Waters responded with respect to the Annexure with respect to the abovementioned category as follows:

(c) By emailed letter of 15 October 2015 to Mr Waters, Mr Warren responded disputing the claim for privilege and stating:

We dispute the documents are privileged. They were sent to, or involved communications with a third party. If you persist with your claim of privilege, please provide us with a list of the documents over which you assert privilege, and the ground of privilege claimed.

(d) By letter dated 16 October 2015 to Mr Warren, Mr Waters relevantly responded with respect to item 7 as follows:

In relation to item 3 & 7 on page 3 there are no such documentation that fits that description other than the Affidavits provided by Melbourne Legal which you have been provided with and which were subject to a Notice to Produce to the Court. In any case the matters referred to in 3 & 7 do not relate to the issue in dispute, namely the allegations of our client's delays in UDF process. The writer had discussions with the solicitor acting for Pinzone discussing the merits of both cases which is confidential.

(e) By email of 23 November 2015 to Mr Warren, Mr Simon Varszeghy of Waters Lawyers relevantly stated as follows:

There are no recordings of any communications by the Plaintiffs with any other person concerning the sale of Adrian Street between October 2014 and 25 August 2015. There was a communication between Noel Waters and Eu Min Ling on 24 September 2015.

(f) In the course of cross-examination on 28 March 2017, Mr Bisognin gave evidence that he had been 'working with' and 'had engaged' Ms Meg Lee of Gadens and had instructed the town planning consulting firm Contour Consultants Australia Pty Ltd ('Contour'). Counsel for the purchaser called for production of documents from Gadens and Contour.

(g) At the commencement of the hearing on Wednesday 29 March 2017, counsel for the vendors said that Contour was not prepared to voluntarily produce the documents it held and, with respect to Gadens, he said to the Court:

We have spoken to Gadens and they have confirmed that they undertook a small matter for Mr Bisognin, on which they anticipated there might be a couple of letters to council and the like which they have written. They haven't been paid but they are prepared to produce the letters and I hope they will be available this morning.

(h) On resuming at 2:30 pm, counsel for the vendors produced two letters in response to the call of documents from Gadens and counsel for the purchaser requested leave to issue a subpoena to Gadens 'in relation to their files and in relation to the subject property', which I granted.

(i) On 29 March 2017, Mr Bisognin was cross-examined with respect to his dealings with Mr Pinzone and in particular he gave the following evidence:

You were negotiating or having discussions with Mr Pinzone, I suggest, with respect to selling him the northern lot because he was interested in developing it, correct?---No, I made a proposal. It was only a discussion.

Did you make a proposal to him, did you say?---No, it was only a discussion.

(j) At 10:30 am on Thursday 30 March 2017, Mr McGowan QC, Chief Counsel of Gadens, appeared on behalf of Gadens and advised that 12 lever-arch files of documents responding to the subpoena had been compiled; but that Gadens had not finished 'the most important task [of] reviewing that material to make sure that privileged and confidential material is identified'.

(k) At 11:18 am the Court adjourned for the purpose of the parties attending a mediation before an Associate Justice of the Supreme Court. Prior to adjourning for the purpose of mediation, counsel for the purchaser said that he was proposing to cross-examine Mr Bisognin with respect to a number of documents including a handwritten note (produced on subpoena by Contour) which stated: 'Separate contract for full lot conditional on first contract being terminated'.

(l) At 3:00 pm, after completion of the mediation, the trial resumed and counsel for the vendors informed the Court that the vendors waived their claim for privilege with respect to the file from Contour and tendered the CMJ Contract together with the letter varying the CMJ Contract dated 18 February 2016. It is common ground that the CMJ Contract was provided to the purchaser prior to the resumption of the hearing earlier in the afternoon.

(m) After the production of the CMJ Contract, by email at 4:56 pm on 30 March 2017, Mr Warren informed Mr McGowan QC that 'As matters have progressed today we will not need to call on the subpoena'.[15]

95 On 30 March 2017, after production of the CMJ Contract, Mr Bisognin gave the following evidence in response to questions from me:

HIS HONOUR: Mr Bisognin, I need to understand. When you gave the answer to the question, 'Did you make a proposal to him' and you said, 'No, it was only a discussion', by that discussion were you intending to communicate to the Court that you entered into a contract to sell the property to an associated company subject to the Hera contract not proceeding?---Correct.

That's what you are telling the Court you meant by a discussion?---Correct.

Think about the answer, Mr Bisognin: you thought by saying, 'No, it was only a discussion', you were including the fact that you had entered into a contract?---Correct.

96 In final submissions, counsel for the vendors conceded that the above answers of Mr Bisognin were not truthful.

97 Subsequently, at the submissions with respect to the expenses relating to the subpoena to Gadens on 26 April 2016, counsel for the vendors submitted that the cross-examination referred to at [94(i)] above related to emails sent in July 2016 and whether Mr Pinzone had any interest in the northern lot. Re-reading the transcript provides some support for this submission.

(a) That was not the explanation offered by Mr Bisognin when asked to explain (as recorded in [95] above); or by his counsel in final submissions.

(b) No explanation has been offered for the failure to discover the CMJ Contract in response to the specific discovery request in the third proceeding.

(c) Counsel and instructing solicitors for the vendors confirmed that they had not been instructed about the existence of the CMJ Contract prior to its production on the fourth day of the trial in this proceeding.

(d) Counsel for the vendors did not contest the proposition that there had been a deliberate policy of not disclosing the CMJ Contract. He properly conceded 'That is probably a conclusion that is reasonably open'.

99 Accordingly, I find that Mr Bisognin deliberately concealed the existence of the CMJ Contract from the purchaser and from the Court. Further, I do not accept his evidence that:

(a) his solicitor Mr Waters, who acted on his behalf on the CMJ Contract, did not have a file about the CMJ Contract;

(b) if, as Mr Bisognin gave evidence, Mr Waters disposed of or destroyed the CMJ Contract, then it was because 'it was an automatic thing because it was all a plan B, so he knew this from the outset, because my main priority was Hera'; and

(c) he asked Mr Waters to destroy the CMJ Contract in May 2016 'because that's when Chris [Pinzone] worked out a deal with Nick [Konstandellos] and we cancelled everything'. In particular, I note that:

(i) The Deed of Settlement and Release of May 2016 makes no reference to the CMJ Contract.

(ii) It was not put to Mr Konstandellos that the CMJ Contract had been referred to in the negotiations leading to the Deed of Settlement and Release.

(iii) The CMJ Property Group Pty Ltd is not a party to the Deed of Settlement and Release.

(iv) Neither of the vendors is a party to the Deed of Settlement and Release.

(v) The vendors did not seek to call Mr Pinzone or Mr Wu or any other person to give evidence in support of the proposition that the CMJ Contract was brought to an end by the Deed of Settlement and Release or that CMJ Property Group Pty Ltd had purported to exercise termination rights under the CMJ Contract.

100 I consider Mr Bisognin to be an unreliable witness who was prepared to give false answers for the purpose of attempting to advance his case.

101 Critically, I am not prepared to accept Mr Bisognin's evidence that he made a genuine attempt to raise the finance necessary for the payment under the authorities' agreements. Further I consider it inherently improbable that, after he was told finance was approved, he was told by an officer of the ANZ Bank that there was no point in him making an application.

102 I base these findings, not only on the lack of Mr Bisognin's credibility; but also the following:

(a) No written application for finance was made and no written rejection was received from the bank. Mr Bisognin did not explain why he did not make any written application before 25 July 2017, when he asserts he was told that Ms Hajj doubted his application for finance would be successful.

(b) Mr Bisognin gave no explanation as to why he did not reveal the 'rejection' of finance prior to expiration of the relevant period.

(c) No evidence was called from Ms Hajj or any other officer of the ANZ Bank to support Mr Bisognin's assertions. No explanation was proffered for why this evidence was not called. In the circumstances, I was invited to draw a Jones v Dunkel[16] inference; and accordingly, I infer that evidence from the ANZ Bank or any of its officers or employees would not have assisted the vendors' case on this point.

103 The CMJ Contract has further relevance in assessing whether the vendors complied with their best endeavours obligations during the relevant period from April 2016 to August 2016 as follows:

(a) The vendors had a strong incentive in the 2015 Contract being terminated because of the purchase price of $7,100,000 under the CMJ Contract (compared with $3,600,000 under the 2015 Contract).

(b) The vendors had entered into the CMJ Contract which required them, and during the relevant period they were under an obligation, to:

(i) act in a manner consistent with facilitating the earliest termination of the 2015 Contract;

(ii) not take any action that would hinder the termination of the 2015 Contract; and

(iii) use their best endeavours to ensure that the 2015 Contract was terminated.[17]

104 In my opinion, the above obligations under the CMJ Contract were in direct conflict with the vendors' best endeavours obligations under the 2015 Contract.

105 The principle, which is of long standing, is that a person cannot take advantage of the existence of a state of things that he has produced himself.[18] Accordingly, a party to a contract who, by his own act, brings about an event to terminate a contract, 'cannot be permitted ... to insist upon the stipulation ... because to permit the blameable party to do [so] ... would be to permit him to take advantage of his own wrong'.[19]

106 The consequence of the act of prevention is that the relevant term 'transform[s] from one requiring performance at a specified time to one requiring performance within a reasonable time'.[20]

107 With respect to the application of the principle on a right to rescind a contract of sale of land, the Court of Appeal in Joseph Street Pty Ltd v Tan stated the position as follows:

It is well established that a party wishing to rescind cannot take advantage of its own ineffective or inefficient measures to comply with its contractual obligations, and that where a vendor's default has deprived the purchaser of a 'substantial chance' that the condition would have been fulfilled, the vendor cannot exercise the right of rescission.[21]

108 Although there is authority for the proposition that the principle arises from a term implied into the contract by law, the better view is that the principle is a 'positive rule of law' based on fairness and reasonableness.[22] The acts or omissions of prevention may be in breach of the contract including the implied duty to co-operate.[23] However, preventative acts, which enliven the principle, may extend to conduct which is strictly legitimate under the terms of the contract such as ordering extras or variations under a building contract.[24] In SMK Cabinets v Hili Modern Electrics Pty Ltd,[25] Brooking J cites a number of formulations that support the extension of the principle to acts that do not constitute contractual breaches;[26] and notes the following formulation of the principle by Davies J of the Supreme Court of Canada in Ottawa Northern and Western Railway Co v Dominion Bridge Co:

[I]f the owner by the ordering of extra work or by the doing or omitting to do any act which he ought to have done or omitted has delayed the contractor in beginning the work or necessarily increased the time for finishing the work he thereby disentitles himself to claim the penalties for non-completion provided by the contract.[27]

109 The legal burden of proving the fact and effect of the alleged acts of prevention rests with the party so asserting. However, if facts are peculiarly within the knowledge of the party allegedly responsible for the preventing acts, the evidentiary burden may shift to that party 'because if the vendor does not do this, inferences may be drawn against the vendor, for example by unexplained delays'.[28]

What is the content of a best endeavours obligation?

110 In Joseph Street Pty Ltd v Tan,[29] the Court of Appeal considered an appeal from the refusal of specific performance sought by purchasers in circumstances where the purchasers had entered into a contract to purchase an off-the-plan residential unit from the vendors/developers. The contract obliged the vendors to use their best endeavours to procure the registration of the plan of subdivision; but, if the plan was not registered within 15 months of the day of sale, then either party had the right to terminate. Nine months after the expiration of the 15 months, the vendors purported to terminate on the basis that the plan had not been registered.

111 The purchasers contended that the delay in the registration of the plan was the refusal of the vendor to enter into a s 173 agreement. The vendor submitted that, as was found by the trial judge, a s 173 agreement was not appropriate for a building development as distinct from a green fields subdivision.

112 The Court of Appeal, after a detailed review of the legislative scheme concluded that:

(a) a s 173 agreement was a potential method of expediting the registration of a plan of subdivision for a building development;[30]

(b) 'the vendors could have entered into a s 173 agreement with the council and that, had they done so, a statement of compliance would have been issued and registration of the plan of subdivision would have been achieved' prior to the termination of the contract;[31] and

(c) objectively assessed, 'by failing to pursue a s 173 agreement ... the vendors did not use their best endeavours to obtain registration of the plan of subdivision during the relevant period'.[32]

113 In reaching its conclusion, the Court of Appeal identified the content of a best endeavours obligation as follows:

An obligation to use best endeavours to achieve a contractual object requires the obligor to do all he or she reasonably can do in the circumstances to achieve that contractual object. The words 'best endeavours' mean what they say - best endeavours, not second-best endeavours; and so, within reasonable limits, they require the obligor, broadly speaking, to leave no stone unturned to achieve the object in view.[33]

114 With respect to the express obligation to use best endeavours to obtain planning permission, the Court accepted that it required the obligor to do what an owner who is anxious to obtain permission would do to achieve it. Their Honours adopted the formulations from other courts[34] that the best endeavours clause required the obligor:

(a) 'to take all those steps in their power ... which a prudent, determined and reasonable owner, acting in his own interests and desiring to achieve that result, would take';[35] and

(b) 'conscientiously to apply itself to the task of securing approval with the vigour to be expected of it if it were prudently attempting to secure its own interests'.[36]

115 Counsel for the vendors contended that the vendors had used their best endeavours because, during the relevant period, they had:

(b) approached their banker to obtain finance to pay the bonds;

(c) offered to allow the purchaser to pay the bonds and deduct such payments from the balance due under the 2015 Contract at settlement; and negotiated with the purchaser at Court on 14 July 2016 about the option of complying with authorities' requirements through a s 173 agreement.

116 Counsel for the purchaser contended that the vendors did not use their best endeavours during the period, because they did not pay:

(a) the bonds under the agreements with authorities (despite giving the purchaser and Sloss J the impression that they would); or

117 The purchaser also referred to Mr Bisognin's obligations under the CMJ Contract and his evidence of his dissatisfaction with the 2012 Contract after Joslin Pty Ltd exercised the nominee clause and the Council approved a UDF in which the supermarket car parking intruded onto their lot.

Did the vendors use their best endeavours during the relevant period?

118 A review of the vendors' steps to obtain the registration of the plan of subdivision during the relevant period and, in particular, to obtain the consent of the authorities to the issue of a Statement of Compliance by the Council, can be summarised as follows:

(a) On 4 March 2016, the day that Sloss J published her reasons, Mr Warren requested confirmation that the vendors would take specified steps. Mr Waters replied, somewhat delphically, 'Our clients will abide by the judgement of the Court.'[37]

(b) The vendors appeared to take no steps prior to 31 May 2016, which may be explicable by settlement negotiations (which were not successful) and awaiting the updated agreements with the authorities, which were attached to Mr Warren's email of 31 May 2016 that requested that they be returned in 48 hours.[38]

(c) Although Mr Waters said he would respond to that request 'shortly', no further steps were taken by the purchaser before Sloss J made her orders on 22 June 2016. Mr Waters sought to explain this inaction on the basis that the vendors 'are ready to [perform their obligations under the 2015 Contract] once the Orders are made'.[39]

(d) On 22 June 2016, the day that Sloss J made orders, Mr Warren detailed the steps required by 12 noon 'tomorrow' in a letter to Mr Waters;[40] in particular, he requested the return of the signed agreements with the authorities and confirmation of financial and other matters. Mr Waters replied the following day stating that the vendors were 'making an application to his bank forthwith'; but did not return the signed utility agreements or provide the confirmations requested.[41]

(e) On 28 June 2016, the signed agreements with the authorities were returned by Mr Waters who stated that 'his client has made an application to his Bank'. No explanation was offered by the vendors about why they failed to return the agreements with the authorities (which had been provided on 31 May 2016 and 3 June 2016) until 28 June 2016.[42]

(f) On 29 June 2016, Mr Warren again set out the necessary steps and requested confirmation of the timing of payments. Mr Waters responded the following day simply repeating that the vendors had applied to the bank for funding.[43]

(g) After Mr Warren complained, on 1 July 2016, about the vendors' unsatisfactory and vague response as to the timing of payment, Mr Waters replied on 4 July 2016, that from his 'experience home loan applications can take 4 to 6 weeks to get approved'.[44]

(h) After Mr Warren continued to press about the payments to the authorities by emails on 6 and 7 July 2016 and a telephone conversation on 11 July 2016, Mr Waters responded to the effect that the vendors were waiting for the bank.[45]

(i) After the purchaser filed a summons on 11 July 2016 to enforce the orders of Sloss J made 22 June 2016, Mr Bisognin swore an affidavit on 13 July 2016 stating that the ANZ Bank had approved the financing arrangements.[46]

(j) At the hearings before Sloss J on 14 July 2016 and on 29 July 2016 the vendors submitted, in substance, that no orders were required because the vendors' finance had been approved and the vendors would comply with the orders of 22 June 2016.[47]

(k) On 20 July 2016, Mr Warren suggested that Melbourne Water would consent to the issue of the Statement of Compliance prior to compliance with its conditions if the vendors entered into a s 173 agreement. Mr Edwards, the vendors' new solicitor, simply responded 'Our clients do not accept that proposal'. No alternative solution was suggested.[48]

(l) There was no evidence of the vendors taking any other steps to further the registration of the plan prior to the expiration of the relevant period on 31 August 2016.

119 Although the vendors made no genuine or reasonable attempts to obtain finance, in my opinion, the vendors' assurances that:

(a) they would comply with the orders of 22 June 2016;

(b) an application for finance was being pursued; and

induced the purchaser to proceed on the basis that the vendors would pay the fees, charges and bonds and comply with the orders of 22 June 2016.

(a) During June 2016, the vendors delayed for approximately 4 weeks, before returning the signed agreements with the authorities.

(b) During July and August 2016, the vendors falsely represented that they were taking reasonable steps to obtain finance and that finance had been approved.

(c) On the vendors' version, they failed to inform the purchaser or the Court (at the hearing on 29 July 2016) that finance had been 'refused'. No explanation for this failure has been proffered.

(d) From mid-July 2016, when the vendors decided to apply for leave to appeal out of time, the evidence does not disclose any further steps by the vendors. On the contrary, the suggestion of a s 173 agreement was rejected without any proposal for how the consent of the authorities to the issue of the Statement of Compliance might be obtained.

121 On the basis of the above, in my opinion, the steps taken by the vendors during the relevant period fell well short of what would be expected of an owner who was anxious and determined to obtain registration of the plan of subdivision by the specified date. In fact, the vendors' conduct was consistent with an owner who, while purporting to comply with his obligations, was determined to 'facilitat[e] the earliest termination of the Contract' - as they were required to do under the CMJ Contract.

122 On behalf of the vendors, it was submitted that 'the decision of the Court of Appeal confirmed that the vendors were under no obligation [to pay the authorities' fees] such as was described in Order 4 [of the orders made 22 June 2016]'. Counsel for the vendors did not submit that, absent a stay, they were not obliged to comply with Order 4, or that the prevention principle would be inapplicable to a failure by the vendors to comply with the orders of Sloss J. In fact, during the relevant period the vendors stated both to Sloss J and the purchaser that they would so comply.

123 In my opinion, a party, acting under a best endeavours obligation, would comply with a court order, which touched upon a matter of controversy between the parties concerning the interpretation of the contract to which they were both parties. Of course, nothing would prevent such a party applying for leave to appeal the relevant order; and either applying to stay the orders pending the appeal or seeking a financial or proprietary readjustment if the appeal were to succeed. Certainly, the vendors did not satisfy their best endeavours obligation by encouraging the purchaser to believe that they would comply with the Orders of Sloss J; and then refusing to do so.

124 I also reject the vendors' contention that they should not be required to agree to a s 173 agreement because it would be an encumbrance on their title. Property owners agreeing to use their best endeavours to subdivide their property would normally contemplate that municipalities and authorities would prescribe preconditions for their consent. The entry into a s 173 agreement is a 'logical option'[49] to satisfy such preconditions, particularly when the best endeavours obligation is to effect a subdivision of the property by a stipulated date. It was not suggested that the conditions imposed by the authorities were unreasonably burdensome; but rather the s 173 agreement would be an encumbrance of the vendors' lot. In my opinion, the mere fact that a s 173 agreement would be an encumbrance on the vendors' title until compliance with the preconditions, does not mean the vendors, under a best endeavours obligation, can refuse to enter into such an agreement.[50]

125 For the reasons set out above, I find that, during the relevant period, the vendors breached their best endeavours obligations by:

(a) failing to promptly undertake the necessary steps to facilitate the registration of the plan of subdivision, as requested by the purchasers (as summarised in [120]);

(b) representing that they would pay the authorities' fees and charges and refusing to do so; and

(c) failing to enter into a s 173 agreement (or at least refusing to give an undertaking to do so).

126 I also find that, during the relevant period, the vendors failed to comply with the orders of Sloss J which, in the circumstances of this case, was an act that enlivened the prevention principle.

127 In my opinion, a reasonable vendor of land, anxious and determined to secure the registration of a plan of subdivision, would have paid the fees, charges and bond moneys that were identified in the reasons of Sloss J published on 4 March 2016 having represented that they would do so. Her Honour's reasons identified what fees, charges and bond moneys would need to be paid by the vendors. The fact that her Honour's interpretation of the 2015 Contract with respect to the payment obligation was ultimately held to be erroneous does not affect the manner in which an owner of land, anxious to secure registration of the subdivision would behave, having represented that they would pay the fees, charges or bond moneys to the necessary authorities, even if that party held doubts about the correctness of her Honour's conclusions in that regard.

Did the vendors' default deprive the purchaser of a substantial chance of the subdivision being registered by 31 August 2016 and settling the 2015 Contract?

128 On behalf of the vendors, it was contended that the purchaser was not deprived of a substantial chance of obtaining registration of the plan of subdivision by 31 August 2016 and settling the 2015 Contract because:

(a) the purchaser would have been unable to raise the finance and pay the authorities' fees;

(b) if the plan of subdivision had been registered by 31 August 2016, the vendors would have been unable to raise the finance to settle the 2015 Contract within 14 days; and

(c) the purchaser would have been unable to meet the National Broadband Network ('the NBN') conditions in the Planning Permit.

Would the purchaser have been able to raise the finance?

129 With respect to borrowing capacity, the purchaser called Mr Darren Smith, a commercial mortgage originator from Balmain NB Commercial Mortgages Limited ("Balmain'), and Mr Jake Gringlas, the group managing director of the Jadig Group.

130 Mr Smith gave evidence that Balmain had arranged the following four finance offers from the Jadig Group with respect to the acquisition of Lot 1:

(c) 11 January 2017 for $3,850,000 plus $250,000 for Melbourne Water and $520,000 for South East Water.

(d) 18 January 2017 for $805,000 initially plus $4,750,000 on settlement.

131 Mr Smith also gave evidence that he was confident that he could have arranged finance for the purchaser for the purpose of paying the authorities' fees in the period 22 June 2016 to 31 August 2016 without first mortgage security over Lot 1.

132 Mr Gringlas gave evidence as to the dealings between the Jadig Group and the purchaser since 2013 and deposed that he could 'see no reason why the Jadig Group would not have been willing to provide finance for the referral authority bonds if asked, consistent with its current decision to do so'.

133 Mr Gringlas also gave evidence that, based on the valuation of $7,000,000 for Lot 1 made in mid-2016, in about August 2016 'Jadig Group was prepared to support [the purchaser] and make a binding offer, subject only to the execution of the loan documentation, which I expect to be a mere formality'.

134 Neither Mr Smith nor Mr Gringlas were cross-examined with respect to the above evidence and counsel for the vendors did not submit that I should not accept this evidence. On behalf of the vendors it was submitted that, although the purchaser had the borrowing capacity, he would not have requested that the necessary funds be obtained. This was not a proposition that was put to Mr Konstandellos; and counsel for the vendors was unable to offer any reason why, if the finance was required, the purchaser would not have requested it.

(a) the purchaser would have been able to raise the finance and pay the authorities' fees; and

(b) if the plan of subdivision had been registered by 31 August 2016, the purchaser would have been able to raise the finance to settle the 2015 Contract within 14 days.

Could the NBN requirements have been satisfied?

136 By amended defence filed pursuant to leave granted on 27 March 2017, the vendors allege that:

(a) prior to the registration of the plan of subdivision, it was necessary to comply with the requirements of conditions 5(b) and 6(b) of the Planning Permit[51] with respect to the provision of fibre for telecommunications and confirmation by a suitably qualified person that fibre ready telecommunication facilities had been provided; and

(b) these conditions had not been complied with by 31 August 2016.

137 The purchaser submitted that these conditions had been complied with and referred to the following evidence:

(a) on or about 29 June 2015, Mr Pozzebon (for the purchaser) procured a 'Form 1' and 'Form 2' from a provider called 'Wireless Connections';

(b) at that time, the provision of those Forms was all that was required to satisfy the City of Casey of compliance with Permit Conditions 5; and

(c) on 11 August 2015 the purchaser's former solicitor wrote to Mr Waters (the vendors' former solicitor) and said in relation to the 'Telecommunications Condition': 'Required advice provided to Council ... No further action required'.[52]

138 The vendors did not contest the proposition that conditions 5(b) and 6(b) had been satisfied, prior to August 2016; but contended that the requirements had changed on 5 August 2016 as a result of the introduction of the NBN in the area. The extent of the evidence relied upon by the vendors was that, on the third day of the trial, Mr Waters said in cross-examination that he had been told 'the other day' by an unnamed person from the Council that the NBN requirements had come in on 5 August 2016.

139 The purchaser similarly led hearsay evidence from Mr Warren that he had spoken to Ms Michele Scarlet at the Council who had told him that the NBN requirement had only been introduced in late 2016.

140 I reject this contention put on behalf of the vendors for the following reasons:

(a) The evidence of Mr Waters and Mr Warren of conversations with Council employees are both inadmissible as hearsay. I do not accept the truth of the contents of the hearsay evidence.

(b) The evidence given by Mr Pozzebon that, during the relevant period, the purchaser had made arrangements in compliance with conditions 5 and 6 was not challenged.

(c) Even if fresh requirements had been introduced by 5 August 2016, in my opinion, by the failure of the vendors to perform their best endeavours and comply with the orders of Sloss J, the purchaser lost a substantial chance of obtaining all of the relevant consents before 5 August 2016.

141 Ultimately, it was unclear if this submission was pressed because, in final submissions, counsel for the vendors conceded that he did not think that the NBN issue was of 'critical importance'.

142 In the circumstances, I consider that the conduct of the vendors in breach of their obligation to use their best endeavours and their failure to comply with the orders of Sloss J during the relevant period deprived the purchaser of a substantial chance of the plan of subdivision being registered by 31 August 2016.

143 Accordingly, the vendors are not entitled to exercise the right to terminate the 2015 Contract pursuant to special condition 8 and special condition 10 transforms into a term requiring performance within a reasonable time.[53]

144 It was not contended on behalf of the vendors that they were entitled to terminate by reason of any conduct after the relevant period.

145 Accordingly, it would be appropriate to order that the vendors take the necessary steps to enable the registration of the plan of subdivision. I will hear the parties as to what steps are now required.

146 The vendors, however, further contend that any orders in the nature of specific performance should be subject to conditions that:

(a) the sum of $600,000 be paid into Court for the purpose of satisfying the amount estimated as owing to the vendors under outstanding orders for costs; and

(b) the purchaser pay an additional $1,200,000 at settlement being a 50% allowance for the increase in the value of Lot 1 since entering into the 2015 Contract.

147 The vendors submitted that the purchaser was not ready, willing or able to fulfil its obligation in the relevant period regardless of the vendors' conduct; and, therefore, the above conditions provided a balance between the competing interests of the vendors and the purchaser. The vendors relied upon the following paragraph in Equity: Doctrines and Remedies by Meagher, Gummow and Lehane:

Decree on condition

Like injunctions, decrees of specific performance may be granted subject to conditions. Thus where the purchaser had retained the purchase price by reason of the vendors delay in performance, specific performance was decreed on condition that it pay not only the price but interest on it. Conditions may be imposed to ensure that an enforceable contract capable of being performed illegally is in fact performed lawfully. In Langen & Wind Ltd v Bell, where the plaintiffs purchased shares in a company for a price to be calculated in the light of future events, specific performance in their favour was decreed, but on condition that the unpaid vendors' lien for the purchase money be safeguarded by requiring the plaintiffs' solicitors to hold the shares as stakeholders. Where problems of mutuality have been overcome in part by the defendant performing the plaintiffs' obligations, specific performance was decreed on condition that the plaintiffs pay the defendant compensation for the work she had done.[54]

148 The purchaser submits that any order for specific performance should not be subject to conditions for the following reasons:

(a) The vendors seek conditions in exercise of the Court's discretion to 'do equity', but the vendors do not come with 'clean hands'. The purchaser relies on the vendors' conduct being the non-disclosure of the CMJ Contract.

(b) The vendors do not in truth seek conditions - what they seek is for the Court to amend the contract price. But if the Court grants specific performance, there is nothing inequitable about the vendors, at settlement in due course, getting what they bargained for under the 2015 Contract.

149 In my opinion, I do not consider that any order for specific performance should be subject to the conditions proposed by the vendors or any other conditions for the following reasons:

(a) The vendors' submissions were based on the proposition that the purchaser was not ready, willing and able to fulfil its obligations in the relevant period. In my opinion, for the reasons set out above, I find that the purchaser would have been ready, willing and able to fulfil its obligations under the 2015 Contract, but for the conduct of the vendors.

(b) Although there have been substantial delays in the settlement of the 2015 Contract, during the relevant period I have found that those delays have been the responsibility of the vendors. It is a normal incident of a contract with a future settlement date that the subject matter of the contract may increase or decrease in value between the date of the contract and the date of settlement; and the risk of such rise or fall rests with the vendor and purchaser respectively.

(c) There is no evidence that the value of Lot 1 has increased during the relevant period. The evidence was that the value of Lot 1 was $7,000,000 as at 24 June 2016 and the same as at 10 January 2017.

(d) Further, there is no evidence as to the amount owing by one party to the other under the outstanding costs orders, which are yet to be taxed.

150 In summary, I do not consider that the interests of justice require that the Court impose the conditions proposed by the vendors and I do not consider that it would be equitable to do so. I note that counsel for the vendors was unable to identify any authority in which a court had imposed conditions of the type suggested.

During the period from 4 March 2016 (or 22 June 2016) to 31 August 2016, did the vendor engage in misleading or deceptive conduct in trade or commerce?

151 The purchaser submitted that it was entitled to relief under s 243 of the Australian Consumer Law[55] and damages under s 234 because of the misleading and deceptive conduct of the vendors in contravention of s 18.

A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

153 For the reasons set out above, I consider that the vendors did engage in conduct that was misleading and deceptive by falsely representing that they had applied for a loan to meet the authority fees, charges and bonds, that such a loan had been approved; and that they would pay such fees, charges and bonds.

154 However, for the purchaser to establish a contravention of s 18, it is required to prove that the impugned conduct occurred in trade or commerce.

155 The purchaser submitted that the vendors conduct was in trade or commerce for the following reasons:

(a) The conduct concerned the obtaining of a business loan from a bank for the purpose of discharging contractual obligations to the referral authorities, in the context of pursuing a multi-million dollar land sale incidental to the development of the Land.

(b) The Land had been rezoned commercial.[56]

(c) The vendors were selling a lot on an unregistered plan of subdivision for the purpose of the purchaser building a shopping centre.

(d) To allow the subdivision to proceed, a UDF needed to be approved, a subdivision permit obtained, and services brought to the Land.

156 The vendors submitted that the private sale of land 'unaccompanied by advertising to the world at large, and absent other commercial activity being carried out on the land, was not in trade or commerce.'

157 The meaning of the expression 'in trade or commerce' was considered by the High Court in Concrete Constructions (NSW) Pty Ltd v Nelson.[57] There, in the context of s 52 of the Trade Practices Act 1974,[58] which referred only to corporations, the majority (Mason CJ, Deane, Dawson and Gaudron JJ) said:

[T]he reference to conduct 'in trade or commerce' in s 52 can be construed as referring only to conduct which is itself an aspect or element of activities or transactions which, of their nature, bear a trading or commercial character ... it is plain that s 52 was not intended to extend to all conduct, regardless of its nature, in which a corporation might engage in the course of, or for the purposes of, its overall trading or commercial business.[59]

158 Their Honours went on to illustrate when an activity has the necessary trading or commercial character as follows:

(a) The activity of driving of a truck for the purposes of delivering goods to a consumer is in trade or commerce vis a vis the supplier and the customer.

(b) However, the activity of the same truck driver giving a misleading hand signal is not in trade or commerce vis a vis the driver and the other road user.[60]

159 Instructively, their Honours found, in that case, that a misleading instruction by a foreman to a construction worker on a commercial building site was not in trade or commerce because the section was concerned with conduct towards persons ... with whom [the trading corporation] ... has or may have dealings in the course of those [trading or commercial] activities'. The majority found that the foreman's misleading instruction was not inherently of a trading or commercial character and was 'divorced from any relevant actual or potential trading or commercial relationship or dealing' of his employer.[61]

160 Consistently with this approach, J D Heydon has explained that in interpreting the expression 'in trade or commerce', the better view is that 'in' means 'within, as part of' and does not mean 'in connection with' or 'in relation to'.[62] The expression therefore refers to the central conception of trade or commerce, rather than the myriad of activities which individuals and corporations engage in for the purpose of carrying on some overall trading or commercial function.[63]

161 Usually, a private sale of a parcel of land does not amount constitute a transaction 'in trade or commerce'. In O'Brien v Smolonogov,[64] the vendors had advertised various parcels of rural land for sale in a newspaper. It was alleged that, during a telephone conversation regarding the sale of two parcels of land, the vendor made certain statements about the land which were false or misleading. The parties entered into a contract for sale; and the purchasers purported to rescind on the ground that they were induced to enter into it by a number of false representations.

162 The trial judge accepted that the sale of land by private contract, without more, may not be in trade or commerce; but found that the vendors' invitation to the public at large by way of advertisements was sufficient to amount to conduct 'in trade or commerce'.

163 On appeal, the Full Court of the Federal Court held that 'the conduct complained of was not something done by the vendors in the course of carrying on a business and it lacked trading or commercial character as a transaction'.[65] Moreover, the Court held that 'the mere use, by a person not acting in the course of carrying on a business, of facilities employed in commercial transactions, cannot transform a dealing which lacks any business character into something done in trade or commerce'.[66]

164 In this case, the relevant facts are as follows:

(a) The vendors have used the Land for residential purposes for a number of years.

(c) The vendors are engaged in subdividing the Land, which has been their home for the purpose of selling a part of it to the purchaser.

(i) the purchaser intends to use the subdivided lot for commercial purposes; and

(ii) it is unclear whether the vendors will retain, develop or sell the remaining portion of the Land.

165 In my opinion, the following features, alone or in combination:

(b) the owner contracting to sell part of a residential property to a person, who intends to use it for commercial purposes;

(c) the owner's representations relating to a loan being raised to pay expenses relating to the subdivision of his or her residential property for the sale; or

(d) the owner intending, after the subdivision, to use the remaining portion of the property for commercial purposes;

do not imbue the sale of this residential property or the representations made with respect to its subdivision or sale with the necessary trading or commercial character for the transaction to be 'in trade or commerce'.

166 Accordingly, I find that the relevant conduct of the vendors was not in trade or commerce and the vendors did not by their conduct contravene s 18 of the ACL.

167 The purchaser made claims under numerous heads for damages based on the assertion that, as a result of the vendors' failure to use its best endeavours under special condition 10, the plan of subdivision was not registered by 31 August 2016 and the settlement of the sale of Lot 1 was not effected in September 2016.

168 In support of the claim for damages the purchaser relied upon the affidavit of Mr Pozzebon sworn 22 March 2017 and the affidavit of Mr Konstandellos sworn 23 March 2017. In summary, the claims are as follows:

(a) There is a risk that Woolworths may seek to terminate the agreement for lease with the purchaser.

In fact, the evidence of Mr Pozzebon is that the purchaser has been in default under the agreement for lease since it failed to meet the 'development approval date' on 30 June 2015 - well before the relevant period.

(b) Had the purchase proceeded 'some time ago' the construction could have started earlier and therefore Mr Pozzebon believed that, since December 2015, there would be additional construction costs between 5% and 10%.

He gives no evidence about how this estimate is calculated; and whether the increase occurred after September 2016.

(c) Mr Konstandellos opines that the construction delay will also result in the estimated handover date in mid-2018 being unachievable. As a result, he asserts the income stream from rental from Woolworths and other tenants will be delayed.

He gives no evidence about the basis of this opinion, a proper quantification of this loss; or the extent that any loss is referrable to the post September 2016 delay.

(d) The value of the project achievable on the sale to a third party has, in the opinion of Mr Konstandellos, 'been depressed by the ongoing delays and uncertainty associated with litigation'.

There is no evidence as to the basis for this belief or the extent of the 'depressed' value.

(e) Mr Konstandellos asserts that a pharmacy group was 'interested in executing heads of agreement at an annual rental of $160,000' but 'the delays have meant that the tenant is no longer presently available. It is possible that you may find an equal or better or worst tenant, but that is not clear at present'.

(f) The purchaser has loans which it will need to repay, together with interest. 'The precise quantum is not known at this time, but on borrowings totalling approximately $1,100,000, and 2% per month, interest is running at approximately $723 per day'.

No documents were tendered establishing the amount of the loans or the agreed interest rate; nor was there evidence about the purposes for which the borrowed sums had been applied.

(g) The purchaser claimed the original application of South East Water of $949.32 and a project management fee on 18 March 2016 and $5,555 which Mr Konstandellos asserts 'can be attributed to reapplying for the referral authority agreements'.

These expenses were incurred prior to the relevant period.

(h) The second Melbourne Water offer required the payment of greater sums than the first Melbourne Water offer.

The evidence establishes that the first Melbourne Water offer expired prior to the relevant period.

(i) The delay since December 2015 'is likely to have caused and will continue to cause increased expenditure on consultants' which Mr Pozzebon estimates would be 'in the vicinity of $40,000'.

He provides no basis for this calculation; or the extent to which it relates to the delay since September 2016.

(j) The purchaser has accepted what it refers to as the third Melbourne Water offer. There were drainage works to be done on the Bisognins' land. Mr Pozzebon deposes that the new route is approximately 100 metres longer. Mr Pozzebon opines, without disclosing the basis, that the additional cost is approximately $100,000 plus GST.

(k) The consultants engaged for the purposes of the CHMP charged $2,500 for the wasted day which Mr Konstandellos alleged was due to the vendors refusing access to their land.

The purchaser did not press any claim that the vendors were obliged to allow access to their land on the day in question.

(l) The purchaser claimed that it had paid the authorities' bonds of approximately $754,000 and that:

(i) if the vendors do not do the work required of them under the agreements with the authorities, the authorities will do the work and deduct the cost from the bonds; and

(ii) the vendors have not directed the authorities to return any bonds to the purchaser.

There was no submission as to how this could give rise to a present loss.

(m) Since December 2016, the purchaser has received three offers to purchase its interest in Lot 1 for $7,900,000, $8,200,000, and $8,600,000, subject to various unspecified conditions. The purchaser alleges that the delay in settling deferred the time that it could have received moneys under the offers.

There was no evidence as to whether any of the offers would have been accepted and neither was there evidence as to a loss being suffered by reason of the value of its interest in Lot 1 being reduced at some other date.

169 In my opinion, the evidence of the losses under the claimed heads of damage is inadequate not only for the reasons briefly stated above but more generally because the purchaser has failed to establish that it suffered losses under any of the claimed heads of damage as a result of the failure by the vendors to use its best endeavours during the relevant period for the following reasons:

(a) The evidence of Mr Konstandellos and Mr Pozzebon is nearly entirely hearsay, based on hearsay or inadmissible opinion evidence.

(b) The claims appeared to relate to alleged delays extending back to 2015. There was no evidence that identified risks and losses had been affected by the delay in the settlement of the purchase for Lot 1 from September 2016.

(c) Any loss suffered by the purchaser would need to be offset by the fact that it has not been required to pay interest on the balance of the settlement moneys since September 2016.

170 Senior counsel for the purchaser, after being challenged about the adequacy of the evidence as to damages, stated 'My instructions ... are not to concede the claim for damages'. After accepting criticisms about the quality of the evidence, senior counsel stated 'My only submission is that the purchaser does request an opportunity to put better evidence on in a more targeted fashion once your Honour has made some findings'.

171 As I indicated in the course of argument, I was not, and am not, prepared to effectively split the issue of quantum in this trial by adjourning it to allow the purchaser a further opportunity to establish damage relevantly caused by the breach of the vendors' best endeavours obligation during the relevant period for the following reasons:

(a) The litigation between these parties has an extremely extensive history as set out above.

(b) After the orders were made by the Court of Appeal in January 2017, the matter was brought on before the Court on 24 February 2017 for the purpose of expediting the trial and final determination of this matter. Recognising the urgency, I suggested the trial of the matter could commence in early March 2017; but senior counsel for the purchaser submitted that he doubted whether the purchaser would be able to get its evidence in order as to damages by an early trial date. He suggested that the expedited trial could be limited to the issue of liability. I ruled that the issues of liability and quantum should not be split, and arrangements were made for the trial to proceed from 27 March 2017 on all issues.

172 In my opinion, the oral application by counsel for the purchaser must be refused in all the circumstances of the case, in particular because the trial was conducted on the basis it was as to all issues, the obligations on the Court under ss 8 and 9 of the Civil Procedure Act 2010 and as a matter of fairness to the vendors.

173 I propose to give judgment for the plaintiff and order that the defendants specifically perform the 2015 Contract. I will give liberty to apply with respect to specific orders in aid of specific performance. I will hear the parties on the question of costs.

[1] Being the day to which the termination date under the 2015 Contract had been extended by orders of Sloss J made 22 June 2016, following the publication of reasons in Bisognin v Hera Project Pty Ltd [2016] VSC 75.

[2] See Planning and Environment Act 1987 pt 9B.

[3] See [14]. Any difference between the terms agreed on 25 November and those inserted in the 2015 Contract is of no consequence to this proceeding.

[4] Referred to in the orders as 'Pizone'.

[5] There were some minor changes in language between these special conditions and those that appeared in the Terms of Settlement signed on 25 November 2014 but no party placed significance on any such difference.

[6] Bisognin v Hera Project Pty Ltd [2015] VSC 647 [29].

[7] Bisognin v Hera Project Pty Ltd [2016] VSC 75.

[9] See Planning and Environment Act 1987 s 173.

[11] That affidavit also contained the evidence referred to at [67] above.

[12] Bisognin v Hera Project Pty Ltd [2016] VSCA 322.

[13] Bisognin v Hera Project Pty Ltd [No 2] [2017] VSCA 7.

[15] There was application by Gadens for the costs of compliance with this subpoena: see Hera Project Pty Ltd v Bisognin [No 4] [2017] VSC 270.

[17] Special conditions 3.2(b) and 3.3 of the CMJ Contract: see [92] above.

[18] New Zealand Shipping Co v Societe des Ateliers et Chantiers de France (1919) AC 1, 6-7 (Lord Finlay); Roberts v Wyatt [1810] EngR 117; (1810) 2 Taunt 268, 276; CSS Investments Pty Ltd v Lopiron Pty Ltd (1987) 16 FCR 15, 31-2.

[19] New Zealand Shipping Co v Societe des Ateliers et Chantiers de France (1919) AC 1, 9 (Lord Atkinson); cited with approval in Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418, 440-1 (Latham CJ, Williams and Fullagar JJ).

[20] Foran v Wight [1989] HCA 51; (1989) 168 CLR 385, 458 (Gaudron J); also see Balfour Beatty Building Ltd v Chestermount Properties Ltd (1993) 62 BLR 12, 27; Alstom Ltd v Yokogawa Australia Pty Ltd & Anor [No 7] [2012] SASC 49 [576] (Bleby J).

[21] (2012) 38 VR 241, 257 [47] (Warren CJ, Nettle JA and Cavanough AJA) (citation omitted).

[22] SMK Cabinets v Hili Modern Electrics Pty Ltd [1984] VicRp 31; [1984] VR 391, 394-5, 397 (Brooking J; Starke and Kaye JJ agreeing).

[23] Built Environs Pty Ltd v Tali Engineering Pty Ltd [2013] SASC 84 [152] (Blue J).

[24] SMK Cabinets v Hili Modern Electrics Pty Ltd [1984] VicRp 31; [1984] VR 391, 395-6 (Brooking J; Starke and Kaye JJ agreeing).

[26] In particular, in Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd (1970) 1 BLR 111, 121, Salmon LJ refers to 'the employers' own fault or breach of contract' (emphasis added).

[27] (1905) 36 SCR 347, 359 (emphasis added).

[28] Masters v Belpate Pty Ltd [2001] NSWSC 169; (2001) 10 BPR 18,527, 18,538 [59] (Hodgson CJ in Eq citing Apollo Shower Screens Pty Ltd v Building & Construction Industry Long Service Payments Corporation (1995) 1 NSWLR 561, 565-6 and Hawes v Cuzeno Pty Ltd [1999] NSWSC 1167; (1999) 10 BPR 18,011, 18,018 [41].

[29] (2012) 38 VR 241 (Warren CJ, Nettle JA and Cavanough AJA).

[31] Ibid 251 [28] as the trial judge had found.

[33] Ibid 256 [41] (citations omitted).

[35] IBM United Kingdom Ltd v Rockware Glass Ltd [1980] FSR 335, 343 (Buckley LJ).

[36] Hawkins v Pender Bros Pty Ltd [1990] 1 Qd R 135, 150-1 (Thomas, Shepherdson & Williams JJ).

[37] See [25] above.

[38] See [33] above.

[39] See [34] and [37] above.

[40] See [40] above.

[41] See [41] above.

[42] See [44] above.

[43] See [48]-[49] above.

[44] See [50]-[55] above.

[45] See [58], [59] and [64] above.

[46] See [68] above.

[47] See [69] and [78[-[79] above.

[48] See [75] above.

[49] Joseph Street Pty Ltd v Tan (2012) 38 VR 241, 255 [38] (Warren CJ, Nettle JA and Cavanough AJA).

[50] Ibid. See discussion at 251-5 [28]-[40] and 257-8 [50]-[51]. Also see Pacifico (Timber) Pty Ltd v Berlian Timbers Pty Ltd (1997) 8 BPR 15,785, 15,790 where Windeyer J found that a vendor, under a best endeavours obligation to effect the registration a subdivision, was not entitled to terminate a contract of sale because it had not been prepared to enter into a bond which was 'well known method of obtaining release of subdivision plans prior to the final work being done'.

[53] See [106] above.

[54] (LexisNexis, 5th ed, 2015) [20-280] (citations omitted).

[55] Competition and Consumer Law Act 2010 (Cth) sch 2.

[56] The Land is in fact zoned 'Urban Growth Zone', but by reason of Schedule 2 to Urban Growth Zone in the Casey Planning Scheme, the applied zone provisions to the Land is Commercial 1 Zone.

[57] [1990] HCA 17; (1990) 169 CLR 594.

[58] Section 18 of the Australian Consumer Law ('the ACL') replaced s 52 of the Trade Practices Act 1974 (Cth) ('the TPA'). The substance of the drafting was not changed, other than amending the reference to 'a corporation' to 'a person'. The jurisprudence on s 52 of the TPA is applicable to s 18 of the ACL: see Williams v Pisano [2015] NSWCA 177; (2015) 90 NSWLR 342, 362-3 [99] (Emmett JA with whom Bathurst CJ and McColl JA agreed). The principle that where the Parliament repeats words which have been judicially construed, it is taken to have intended the words to bear the meaning already judicially attributed to them has been called the 're-enactment presumption': Fortress Credit Corporation (Australia) II Pty Limited v Fletcher [2015] HCA 10; (2015) 254 CLR 489, 502 [15] (French CJ, Hayne, Kiefel, Gageler and Keane JJ) citing Re Alcan Australia Ltd; Ex parte Federation of Industrial, Manufacturing and Engineering Employees [1994] HCA 34; (1994) 181 CLR 96, 106-7 (Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ).

[59] [1990] HCA 17; (1990) 169 CLR 594, 603-4 (Mason CJ, Deane, Dawson and Gaudron JJ).

[62] J D Heydon, Thomson Lawbook Co, Trade Practices Law, vol 2 (at 10 April 2017) [11.210].

[63] [1990] HCA 17; (1990) 169 CLR 594, 603.

[64] (1983) 53 ALR 107. Also see Williams v Pisano [2015] NSWCA 177; (2015) 90 NSWLR 342, 349 [37]-[38], 350 [41] considering s 18 of the ACL.

[65] O'Brien v Smolonogov (1983) 53 ALR 107, 114.