Plaintiff v First Defendant

Supreme Court of Victoria|2017-05-22|Before: RIORDAN J

PROPERTY - Contract for sale of land - Condition subsequent for registration of plan of subdivision to be achieved by specified date - Loss of right to terminate - Transformation of condition subsequent from one requiring performance by a specified time to one requiring performance within a reasonable time.

CONTRACT - Specific performance - Breach - Contract for the sale of land subject to registration of plan of subdivision - Obligation to use best endeavours to secure registration of plan of subdivision - Content of obligation to use best endeavours - Prevention principle discussed - Whether principle extends to acts that do not constitute contractual breaches - Whether acts of prevention by vendors - Whether purchasers entitled to specific performance - Whether relief should be conditional.

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

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

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

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:

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.
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.
(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.

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.
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.
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.
The Vendors hereby agree to pay the sum of $100,000.00 (One hundred thousand dollars) to Media Movers as a consultancy fee.
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:

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.
The Vendor will provide all or any documents in relation to the Urban Design Framework (UDF) by 2 December 2014.
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:

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.

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

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:

Your clients will enter such agreements when they are prepared by the relevant authorities;
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
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:

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;

(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:

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")).
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:

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;
GAIC is to be paid by the vendors after the issue of the statement of compliance;
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 ... ;
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;
Melbourne Water would still require payment of the bond specified in its offer pending entry into the two section 173 agreements;
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:

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.

At a glance

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Before

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Judgment (464 paragraphs)

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Legislation Cited (5)

Cases Cited (11)