Section 79 Pty Ltd as Trustee for the 79 Trebla Family v Suburban Land Agency

[2017] ACTSC 370

Judgment for the plaintiff in the sum of $335,043.03.

CIVIL LAW - CONTRACT - PLANNING AND DEVELOPMENT commercial contract for sale of land - dispute over pedestrian access easement - contract not completed - whether crown lease was on substantially the same terms as specimen lease - whether plaintiff rescinded the contract - whether plaintiff elected to forgo any right of rescission - whether defendant repudiated the contract - town planning in the ACT

Australian Capital Territory (Planning and Land Management) Act 1988 (Cth) pts 2, 3

City Area Leases Ordinance 1936 (ACT) s 11A (repealed)

Planning and Development Act 2007 (ACT) ss 7(1)(f), 10-12, 46, 49, 50, 112, 115, 119(1)(a), 120, 131B, 237, 238(3)(a)

Bridges v Norling t/as iTravel Forster [2016] FCCA 212; 305 FLR 78

City Area Leases Ordinance 1936 & Re Axiom Pty Ltd (1986) FLR 259

DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 CLR 423

Elder's Trustee & Executor Co Ltd v Commonwealth Homes & Investment Co Ltd [1941] HCA 31; (1941) 65 CLR 603

Flight v Booth [1834] EngR 1087; (1834) 1 Bing NC 370; 131 ER 1160

Foote v Barton Property Partnership No 2 [2015] ACTCA 53

Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) [1993] HCA 27; (1993) 182 CLR 26

Kannane & Ors v Demian Developments P/L [2005] NSWC 1193; 12 BPR 23 305

O'Connor v SP Bray Ltd [1936] NSWStRp 14; (1936) 36 SR (NSW) 248

Romero v Farstad Shipping (Indian Pacific) Pty Ltd (No 3) [2016] FCA 1453; 264 IR 288

Romero v Farstad Shipping (Indian Pacific) Pty Ltd (No 3) [2017] FCAFC 102

Sargent v ASL Developments Ltd (1974) 131 CLR 634

Australian Capital Territory Land Titles Practice Manual (14 June 2017)

ACT Government, Environment and Sustainable Development Directorate, Tuggeranong Town Centre Master Plan (September 2012)

Section 79 Pty Ltd as Trustee for the 79 Trebla Family (Plaintiff)

1. After an auction on 25 February 2015, Section 79 Pty Ltd as Trustee for the 79 Trebla Family Trust (the plaintiff) contracted with the Land Development Agency (LDA) (now known as the Suburban Land Agency) as delegate of the ACT Planning and Land Authority (ACTPLA) to acquire a 99 year lease over a 3582 m² block of land within the Southquay Greenway development, Tuggeranong. The land is known as Section 79.

2. Because of a dispute about a pedestrian access easement over Section 79, the contract was not completed.

3. In these proceedings, the plaintiff claimed $288,100.00, the amount that the plaintiff paid to the LDA as a 10 per cent a deposit on the purchase of Section 79. The LDA argued that the deposit was not refundable as the plaintiff had rescinded the contract or, alternatively, that the plaintiff was bound by an election made on 13 August 2015 to claim compensation for the impact of the easement on the value of Section 79 and forgo any right of rescission.

4. For the reasons that appear below, the plaintiff should succeed on both the rescission issue and the election issue.

5. The parties agreed on the amount of interest to be paid if the plaintiff was successful.

6. Mr Albert Bonansea and Mr Tomi Cavic, the directors of the plaintiff, were experienced Canberra property developers. They had not previously dealt with the LDA.

7. Prior to the plaintiff purchasing Section 79, the directors accessed the LDA website. They saw that a significant green area was depicted as transecting Section 79 once the land was developed. The green area appeared to be about 1/8 of the total area of Section 79. At [6] of his affidavit, Mr Cavic stated:

It was clear from the documents available on the LDA website ... that it was necessary to have a green break between the buildings that were to be built on the land however they did not provide sufficient details as to the nature, size or location of the green break that was required between the buildings to be erected on the land.

8. Mr Cavic made telephone calls to the marketing agent and ACTPLA in order to clarify the size of the green area, but his inquiries yielded no firm response.

9. Several days before the auction, the directors conferred with their architect, Jessica de Rome. They requested a rough sketch of the manner in which Section 79 might accommodate 21 units (the maximum number referred to in the Specimen Lease). On 25 February 2015, Ms de Rome provided a sketch which showed 20 units. Ms De Rome indicated that she believed that Section 79 could accommodate 21 units. As a result, the directors were confident that, having regard to the apparent size of the green area and the possibility of negotiating with ACTPLA, the plaintiff could develop Section 79 with 21 units. At [22] of his affidavit, Mr Cavic stated:

Following my conversation with the Marketing Agent and ACTPLA, I discussed the proposed purchase of the land further with Albert and Jessica. We considered that:

(a) Based on the information available to us, the required break between the buildings was a similar size to the break factored into the sketch provided by Jessica.

(b) The break/desired access way would not function so as to preclude construction of a parking garage underneath the affected area.

(c) The ultimate size of the desired break would most likely be subject to negotiation with ACTPLA when the development application was lodged.

10. I am satisfied that, prior to the auction on 25 February 2015, the directors did not see the document titled "Questions and Answers". The document was included on a USB stick that was provided to some interested purchasers. The records of the marketing agent do not indicate a date upon which any such material was provided to the plaintiff. This may be because it was not until 23 February, shortly before the auction, that the plaintiff first expressed interest to the marketing agent.

11. On 25 February 2015, Mr Cavic attended the auction. Mr Bonansea did not attend until after bidding had finished.

12. Before bidding at the auction, Mr Cavic did not see or seek the Contract for Sale (the contract) and did not know whether there was a registered Deposited Plan. In fact, the relevant Deposited Plan, number 11290 (the DP), was not registered until 16 March 2015.

13. After bidding had finished, Mr Bonansea discussed an electrical easement over Section 79 with a LDA representative. When Mr Bonansea asked the representative about other easements, she did not identify any other easement.

14. After the auction, the directors signed the contract and the associated Project Delivery Agreement (PDA), which the plaintiff was required to enter pursuant to clause 37.1 of the contract.

15. The contract provided that, upon completion, the LDA, as delegate of ACTPLA and on behalf of the Commonwealth of Australia, would grant, or procure the grant of a Crown Lease to the plaintiff. Clause 1.2 of the contract provided that: "[t]he Lease will be granted substantially upon the terms and conditions of the Specimen Lease." (emphasis added)

16. The definition of "contract" in cl 32 meant that special conditions, a Specimen Lease, the PDA and a Block Details Plan (BDP) (which is a proposed Deposited Plan) which were annexed to the contract formed part of the contract. A Background Document Schedule (that inter alia referred to an Estate Development Plan for Greenway Lakeside and the Greenway Master Plan and Land Release Report) was annexed to the contract. The schedule formed part of the contract, although the documents that it referred to did not.

17. Pursuant to clause 37.3 of the special conditions to the contract, the plaintiff was required to comply with all of its obligations under the PDA.

18. The BDP referred to a small service easement in one corner of Section 79 but no other easements.

19. Under the PDA, the plaintiff was required to design buildings on Section 79 that were consistent with all applicable laws, the Intended Design and Development Outcomes (IDDO) and the terms and conditions of the agreement. The plaintiff was required to consult with the LDA and make any changes to the initial development application that were reasonably required by the LDA. The LDA was required to endorse the initial development application if it complied with all applicable laws and included all changes that were reasonably required by the LDA.

20. On or about 6 July 2015, the LDA served the plaintiff with a Crown Lease (the Lease). The Lease referred to DP 11290. The DP was not given to the plaintiff at that time. In accordance with clause 4 of the contract, on 21 July 2015 the plaintiff signed and returned the Lease to the LDA.

21. On 5 August 2015, the directors received a survey report that attached the DP. They learned that the DP included a "proposed easement for pedestrian access variable width" in the location that had been identified as the green area.

22. The directors calculated that the proposed easement occupied about 10 per cent of Section 79. They concluded that, if Section 79 was burdened by such an easement, about 21 per cent of the developable land could not be developed. They considered that the fact that it was an easement rather than a "green finger" would prevent the installation of a single underground garage beneath the easement to service the blocks of townhouses on either side of it. They concluded that, in order to pursue the development, the plaintiff would need to construct two separate underground garages, with separate ramps and associated structures. Such garaging requirements would significantly reduce the development potential of Section 79. One of the directors, Mr Bonansea, said that the perceived inability to build a single basement carpark because the green area was an easement was a "deal breaker". He believed that ACTPLA would not negotiate to allow an underground carpark beneath the easement. Mr Cavic said that the size of the easement meant that it would not be possible to build an underground carpark.

23. On 13 August 2015, relying on conditions 18 and 19 of the contract, the plaintiff's solicitors wrote to the LDA itemising the loss that the plaintiff claimed as a result of the pedestrian easement. The letter stated:

As you are no doubt aware, Deposited Plan 11290/1 as registered, is significantly different from the Deposited Plan attached to the Commercial Contract for Sale dated 25 February 2015. The differences involve the notation of a substantial 'proposed easement for pedestrian access variable width'. Should that easement be created, then the area of land available to our client for development is significantly reduced.

If the easement is created, the loss of profit on saleable land when combined with additional civil works associated with our client's proposed development will result in a deficit of $704,318.24. Particulars of that amount are set out in the attached schedule.

In the circumstances, we have been instructed to make a claim under Section 18 of the Commercial Contract for Sale in the sum of $704,318.24. The claim arises from a misdescription of the land in the Commercial Contract the Sale

Will you confirm that the price can be reduced by the amount of the claim. We confirm that should your client confirm that the easement will not be created, then the claim will be withdrawn.

Please treat this letter as a notice pursuant to Section 28 of the Contract.

24. On 17 August 2015, the LDA's solicitor rejected the claim, relying on special condition 37.3 of the contract (the buyer must comply with all of its obligations under the PDA), clause 3.1 of the PDA (requiring the plaintiff to design buildings consistent with all applicable laws and the IDDO), the IDDO and the contents of the Estate Development Plan (EDP) (part of the background documents). The letter concluded:

On the basis of the above information, your client should not be surprised that it will not only be unable to build on the access way, but that it must also landscape it in a manner consistent with the IDDO.

Under the circumstances, the LDA rejects your clients [sic] claim for any alteration in the price of the Land.

Please advise whether your client will settle on schedule.

25. On 27 August 2015, the plaintiff's solicitors wrote to the LDA's solicitors. The solicitors asserted that the IDDO and PDA provided inadequate detail of the size and location of any access easement. The solicitors also asserted that the IDDO and PDA conflicted with the BDP, which did not refer to an easement, resulting in inconsistency about the size, location and existence of any easement. In part, the letter stated:

Having considered in some detail the contractual documents I have formed the view that the Contract signed by both parties on 25 February 2015 for the purchase of the Land is unenforceable as the subject matter of the Contract is uncertain and the parties' minds were not ad idem on the subject matter of the Contract.

...

In my view therefore I consider there was no valid contract between the parties.

...

It would seem that [the] deposit should be returned forthwith to my client and that any stamp duty paid refunded.

My client however instructs me that it nonetheless wants to work with the LDA to explore options and see the new agreement can be entered into, which provides the public access shown on Deposited Plan 11290/2 as depicted by the Public Easement.

26. On 2 October 2015, the LDA replied, stating that it would not agree to the contract being set aside and that the plaintiff was required to settle the sale.

27. On 8 October 2015, the plaintiff's solicitors wrote to the LDA's solicitor urging that the impasse be resolved otherwise than by litigation and requesting that the issue of a Notice to Complete be deferred.

28. On 14 October 2015, the LDA issued a Notice to Complete asserting, inter alia, that the LDA had complied with its obligations under the contract and was ready, willing and able to complete the contract.

29. On 20 October 2015, the plaintiff advised that it would commence proceedings to have the contract declared void and unenforceable and for repayment of the deposit. In addition to matters that had been raised previously, the plaintiff's solicitors pointed out that the easement contained in the Lease was inconsistent with the variable width pedestrian access easement described in the DP as affecting Section 79; the references to an easement in the Lease appeared to refer to a 14.2 m easement described in the DP as affecting Sections 74, 75, 76 and 78, rather than any easement burdening Section 79.

30. On 29 October 2015, the plaintiff served a "Default Notice" identifying two defaults:

(a) that the inclusion of a public access easement affecting Section 79 in the DP made the land "substantially and materially different" to that in the BDP; and

(b) that the Lease was not "substantially upon the terms and conditions of the Specimen Lease" because it included covenant 3(c), which created a 14.2 m access easement.

31. On 5 November 2015, the LDA issued a Notice of Termination.

32. On 23 December 2015, the plaintiff's solicitors responded, treating the Notice of Termination as a wrongful repudiation and reiterating that the plaintiff proposed to commence proceedings to recover the deposit (and other damages).

33. On 16 March 2016, the LDA sold Section 79 to another purchaser. The lease that was issued to the new purchaser replaced the contentious easement covenant with a new covenant 3(c). The new covenant correctly described the pedestrian access easement in the Section 79 DP, and repeated in covenant 3(c)(ii)-(iv) the terms of the covenants that were contained in covenant 3(c)(ii)-(iv) of the Lease that had been provided to the plaintiff.

(a) Whether the Lease was "substantially upon the terms and conditions of the Specimen Lease" or was, as the plaintiff submitted, "confused, ambiguous and different" from the Specimen Lease. The answer to this question determines whether the LDA repudiated the contract, entitling the plaintiff to terminate it.

(b) If the LDA did repudiate the contract, whether by its claim of 13 August 2015, the plaintiff elected to affirm the contract, pursue a claim for compensation under clauses 18 and 19 of the contract and forgo any right of rescission.

5 VARIATION TO LAND

5.1 The Buyer acknowledges that the Specimen Lease and other plans in relation to the Land may be affected by:

(a) the requirements of legislation;

(b) variations to the Territory Plan;

(c) the requirements of government authorities; and/or

(d) physical conditions affecting the Works;

and may result in one or more of the following:

(e) minor redefinition of the boundaries of the Land;

(f) minor road re-alignment or dedication; and

(g) minor variations of the easements relating to the provision of electricity, gas, water, sewerage and stormwater services.

5.2 Any redefinition, road realignment or dedication or variation of easements will be deemed to be minor if it does not materially and detrimentally affect the use of the Land.

5.3 The Buyer cannot make a claim or objection or rescind or terminate or make a claim for compensation under clause 19 of this Contract in respect of any matter set out in clause 5.1.

7 ENTIRE AGREEMENT

The Buyer agrees that this Contract sets out the entire agreement of the parties on the subject matter of this Contract and supersedes any prior agreement, advice, material supplied to the Buyer or understanding on anything connected with the subject matter of this Contract.

37. Clause 9 provided that the buyer had relied on its own enquiries in relation to Section 79 and had not relied upon any representation by the seller or any documentation that did not form part of the contract.

38. Clause 9.3 contained an acknowledgement by the plaintiff that it had been provided with the background documentation prior to entering the contract. However, cl 9.4 expressly provided that the background documentation did not form part of the contract and that the plaintiff's acknowledgement of non-reliance on non-contract material applied to the background documentation. As outlined above, the background documentation included a Design Response Report and the Greenway Master Plan and Land Release Report.

39. Clauses 18 and 19 dealt with errors and misdescriptions. Clause 18 provided that the plaintiff was entitled to compensation on completion (and the price would be reduced accordingly) for an error of any kind or misdescription if the plaintiff claimed compensation before completion. Clause 19 set out the process for making a cl 18 claim.

40. Clauses 20, 21 and 22 dealt with default, notices to complete and termination. Clause 20 provided that, at the time that a notice to complete was served, the party serving the notice must not be in default and must be ready, willing and able to complete but for the default or omission of the other party: see also DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 CLR 423, 433 which establishes that in order to be entitled to rescind for anticipatory breach, at the time of rescission, the party seeking to rescind the contract must be willing to perform the contract on its proper interpretation.

41. Clause 28 dealt with the need for a written claim and requirements for service of a claim.

42. As noted above, because of the definition of "contract" in cl 32, a Specimen Lease, the PDA and BDP (all of which were annexed to the contract) formed part of the contract.

43. The BDP, dated 2 December 2014, referred to the proposed services easement (in the northwest corner of the block) but to no other easement or "green finger".

44. The Specimen Lease contained the following relevant covenants:

(a) 3(b) - "PURPOSE" which referred to use of the land for between 15 and 21 dwellings; and

(b) 3(c) - "EASEMENT FOR SERVICES" which referred to the services easement in the northwest corner of the land but no other easement.

45. Clause 30 of the contract (which related to special conditions) provided that, to the extent of any inconsistency, the special conditions were to prevail over other terms and conditions of the contract.

46. Clause 36 of the special conditions included an acknowledgement by the plaintiff that "the area of the Land specified in the Block Details Plan [was] subject to final survey and [was] subject to change" and that a copy of a Deposited Plan would be provided prior to completion.

47. As stated above, the contract was contingent upon the parties entering into the PDA (clause 37.1 of the contract) and the contract required the plaintiff to comply with all of its obligations under the PDA (clause 37.3). The parties entered the PDA.

Relevant provisions of the Project Delivery Agreement (PDA)

48. Under the PDA, the parties acknowledged that they had entered into a contract for sale in relation to Section 79 and that they had agreed that, in developing Section 79, the plaintiff would comply with its obligations under the PDA.

3. Intended Design Development Outcomes

3.1 The Developer must design and construct all buildings on the Land consistent with:

(a) all applicable laws;

(b) the Intended Design Development Outcomes; and

(c) the terms and conditions contained in this Agreement.

3.2 To the extent of any inconsistency between sub-clauses 3.1(a)-(c), any obligations in any preceding sub-clause will take precedence over any obligations in subsequent sub-clauses and, to the extent of that inconsistency only, the Developer shall be relieved of obligations in subsequent sub-clauses.

4. LDA endorsement of Initial Development Application

4.1 Prior to lodging the Initial Development Application for the Land with the Planning and Land Authority (which must be after Completion) the Developer must:

(a) consult with the LDA in accordance with clause 6;

(b) submit the draft Initial Development Application to the LDA for endorsement; and

(c) make all changes to the draft Initial Development Application that are reasonably required by the LDA.

4.2 The LDA will endorse the Initial Development Application if it:

(a) complies with all applicable laws; and

(b) includes all changes that are reasonably required by the LDA.

4.3 The Developer must submit to the Planning and Land Authority the Initial Development Application in the form endorsed by the LDA in accordance with clause 4.2. The Developer must not lodge with the Planning and Land Authority an Initial Development Application which has not been endorsed by the LDA in accordance with clause 4.2

...

51. In 2014, the LDA had prepared and published a plan for the Southquay development, titled Southquay Intended Design and Development Outcomes (IDDO). The IDDO related to eight sections of land, including Section 79.

53. The substance of the document was preceded by a disclaimer that said:

Disclaimer: The Land Development Agency (LDA) makes no warranty to the accuracy or completeness of information in this publication and recommends obtaining independent legal, financial and accounting advice before considering purchasing land or making an offer to purchase land. The plans, examples and information contained herein are for illustrative purposes only and should not, without further inquiry, be relied upon as to their ultimate accuracy ...

(emphasis added)

54. The substance of the document was divided into two parts: a "project overview" and "urban design principles".

55. The "project overview" stated that the purpose of the document was "to provide guidance on the development intentions of precinct" and that the document was to be read in conjunction with the Territory Plan, including the Greenway Precinct Map and Code. The project overview identified the Tuggeranong Town Centre Master Plan as a "reference document of interest to a future purchaser" and characterised the Greenway Master Plan and Land Release Report as "background documentation".

56. Within the "urban design principles" section of the IDDO:

(a) Under the heading "siting" the contentious area was illustrated and described as a "green finger".

(b) Under the heading "built form" and the subheading "form and massing", the IDDO stated that the block control plans for each block "[reflected] the preferred built form outcomes." (emphasis added)

(c) Under the heading "landscape" and the subheading "public access easements", the document referred to the nature of the landscaping that was required, and said "public access easements shall be designed as a landscaped park". It further stated that "[w]hilst they are designated as public easements, it is expected that these zones will be privately developed and maintained" and the zones should "encourage safe passage by pedestrians and cyclists (limited at lower speeds)." (emphasis added)

(d) Under the heading "landscape" and the subheading "site access easements/shared zone", the document provided that "[t]hese easements shall be designed as a shared zone with a pedestrian priority." (emphasis added)

(e) Under the heading "block control plan", where reference was made to Section 79, the IDDO stated:

...This Plan is to be read in conjunction with the Intended Design and Development Outcomes document for Greenway Lakeside, and builds on the site principles established for the estate. The Master Plan shown below is indicative of the desired outcome for Block 1 Section 79. All design proposals for Block 1 Section 79 will be critically reviewed against the Intended Design and Development Guidelines. ...

Heights

Heights are defined as a maximum height of building (m), and allow for a range of built form typologies, with a predominant focus of townhouse.... Refer to Greenway Precinct Code Figure 2 Building Heights - Lakefront Development Area.

(emphasis added)

(f) On the following page, the document requires that any built form on Section 79 is designed so as to "ensure the accessway transecting the site maintains an inviting character."

58. In addition to the services easement referred to in the Specimen Lease, at cl 3(c) the Lease provided for an easement for access in the following terms:

(i) permit pedestrians and vehicles access across, over and along the part of the land described as "proposed easement for access 14.2 wide" on Deposited Plan No. 11290;

(ii) not place or construct, nor permit to be placed or constructed, a building or structure or any part of a building or structure on any part of the land comprising any easement;

(iii) not place, nor permit to be placed, any tree or (except as permitted by the Authority) any other vegetation on any part of the land comprising any easement; and

(iv) at all times maintain the easements (including all paths and services constructed on the easements) in good repair and condition and to the satisfaction of the Authority;

59. DP 11290 does not contain a 14.2 m wide easement on Section 79. There is such an easement relating to Sections 74-76 and 78 which appears to be designed to provide vehicular access. The reference to a 14.2 m easement seems to be a mistaken reference to this other easement. The subsequent purchaser was given a lease that referred to the correct easement.

60. Sections 103B-103H of the Land Titles Act 1925 (ACT) (Land Titles Act) deal with the creation and registration of easements affecting land under that Act. Unlike other Australian jurisdictions, in the ACT an easement is not created by the lodgement of a deposited plan. A deposited plan may refer to the location of an "easement", but it is the Crown lease that creates the binding easement.

61. The practice described in the Australian Capital Territory Land Titles Practice Manual is as follows:

Easements created in Crown Leases should be described by a map or plan attached to the Crown Lease or by diagram locating the easement in the Deposited Plan. A copy of the DP should be attached to the Crown Lease or the registered DP number should be stated within the easement clause within the Crown Lease.

Words creating easements in Crown Leases will normally be found in the body of the covenants of the Crown Lease.

The planning framework: the Planning and Development Act and ACTPLA

62. There are two local planning schemes in the ACT.

63. The first is the National Capital Plan, which is administered by the National Capital Authority on behalf of the Commonwealth: Australian Capital Territory (Planning and Land Management) Act 1988 (Cth) pts 2 and 3.

64. The second is the Territory Plan. The Territory Plan is a notifiable instrument that sets out the planning objectives for the ACT, and the planning principles and policies intended to give effect to them: Planning and Development Act 2007 (ACT) (PD Act) ss 46 and 49. The Territory Plan is prepared and administered by ACTPLA on behalf of the Territory: PD Act ss 10-12. The Territory Plan does not apply to areas identified in the National Capital Plan as "designated areas", which are administered by the National Capital Authority. The Lease is not in a designated area.

65. In carrying out its functions, ACTPLA must not approve or do anything that is inconsistent with the Territory Plan: PD Act s 50.

66. In the ACT, leases are used for town planning purposes: City Area Leases Ordinance 1936 & Re Axiom Pty Ltd (1986) FLR 259 (Re Axiom). Re Axiom involved an application under s 11A of the City Area Leases Ordinance 1936 (ACT) (the Ordinance) for variation of the purpose clause in a Crown lease relating to land situated in the ACT city area. Kelly J confirmed that, when dealing with an application under s 11A of the Ordinance, town planning factors may be taken into account: 267-8.

67. One of the functions of ACTPLA is to grant, administer, vary and end leases on behalf of the Executive: PD Act ss 12(1)(g) and 237. Section 238(3)(a) provides:

(3) A lease granted under this section may include provisions -

(a) requiring the lessee to develop the land comprised in the lease, or any unleased territory land, in a stated way; or

68. Another function of ACTPLA is to assess development proposals. "Development" is defined to include varying a lease relating to land: PD Act s 7(1)(f). If ACTPLA approves a development application relating to a lease variation, it must give written notice to the registrar-general for notification under the Land Titles Act.

69. Under the PD Act, different assessment tracks apply to the assessment of different types of proposed development: PD Act s 112. A "merit track" is used for development proposals that "can be assessed using the rules and criteria in the code that applies to the proposals": PD Act s 112(2)(b). A development proposal for lease variation that is not in a designated area must be assessed under the merit track: s 131B. Considerations that are relevant to the determination of a proposal under the merit track are set out in s 120 of the PD Act.

70. A development proposal must not be approved under the merit track unless the proposal "is consistent with ... the relevant code": PD Act s 119(1)(a). There are three types of code: precinct codes, development codes and general codes. To the extent of any inconsistency, the requirements of a precinct code take precedence over the requirements of a development code, which take precedence over the requirements of a general code: PD Act s 115.

71. The Greenway Precinct Map and Code (the Code) applies to Section 79. The Code is part of the Territory Plan. It contains rules and criteria for developing particular blocks or parcels on the precinct map. Where a rule is mandatory, it is expressed to be mandatory. If a rule is not mandatory, associated criterion or criteria apply: Code, p 4.

72. Section 79 is part of the area marked RC3 on the Greenway precinct map. The "desired character" of RC3 includes "a network of high quality open spaces ... with links to the lake foreshore, community gardens and other public spaces." There is reference to "physical and visual connections to the foreshore" and the provision of "a pedestrian friendly environment".

73. In r R9A and Figure 2, the Code specifies that the maximum height for buildings in Section 79 is 8.5 m. As no maximum building height is indicated for the "green finger" transecting Section 79, it may be inferred that the building height for that area is zero. However, r R9A is not a mandatory rule. It is supplemented by criteria for determining building heights. The criteria are set out in C9A: buildings are to be of an appropriate scale, have minimal detrimental impacts and be consistent with the "desired character".

74. In summary, considering the contract in the context of ACT planning law, ACTPLA was empowered to grant the Lease, to require the plaintiff to develop Section 79 in a stated way and to consider any application to vary the Lease, applying the "merit track" assessment process. In performing those functions, ACTPLA was required to act consistently with the Territory Plan, which meant applying the Greenway Precinct Code. Under the Code, the building height for the "green finger" was zero, but the height could be varied having regard to the criteria in C9A, including "consistency with the desired character".

Whether the Lease was "substantially upon the terms and conditions of the Specimen Lease"

75. The LDA submitted that the Lease was "substantially upon the terms and conditions of the Specimen Lease" in that the Lease did not change the substance or essence of the commercial bargain identified in the Specimen Lease; it did not substantially change the rights and obligations of the parties.

76. In support of this submission, the LDA sought to advance two principal arguments.

Submission that covenant 3(c) in the Lease involves no substantial change

77. The LDA submitted that the Lease was "substantially upon the terms and conditions of the Specimen Lease" because it was not substantially different in the sense discussed in Flight v Booth [1834] EngR 1087; (1834) 1 Bing NC 370; 131 ER 1160 (Flight v Booth). In Flight v Booth, Tindal J stated the rule that, a difference between a contract and a lease is "substantial" where, but for the difference, the purchaser might never have entered the contract. The LDA submitted that the question of "substantial difference" was to be determined by considering "the commercial bargain struck". This involved comparing the substantial "rights and obligations" under the Specimen Lease with those under the Lease.

78. First, the LDA submitted that the easement in the Lease did not change the commercial bargain struck because, regardless of the existence of any pedestrian access easement, under planning law and the Code, there was to be no building above ground level on the "green finger". By clause 5.1 of the contract, the plaintiff had acknowledged that the Specimen Lease might be affected by the requirements of the legislation, variations to the Territory Plan or other matters.

79. Second, the LDA submitted that the terms of the Lease did not adversely impact the plaintiff's rights because, if ACTPLA decided that the plaintiff should be able to build on the pedestrian easement, it could grant development approval to a lease variation.

81. Flight v Booth and the associated cases are not relevant to the issue in the present case. The issue in Flight v Booth was whether the subject matter of the lease that was produced was so different from the subject matter of the lease contemplated by the contract that the purchaser could rescind the contract on the basis that what the lease offered was not the thing that was really the subject of the sale, or whether the purchaser was required to complete the contract and claim compensation under a contractual condition that enabled such a claim to be made for "error or misstatement".

82. The rule in Flight v Booth is that, where a misdescription so fundamentally affects the subject matter of the contract that it may reasonably be supposed that, but for the misdescription, the purchaser might never have entered into the contract, the purchaser may rescind because the purchaser has not acquired the thing that was really the subject of the sale. It distinguishes between a fundamental misdescription and a misdescription that is not fundamental. As discussed in Kannane & Ors v Demian Developments P/L [2005] NSWC 1193; 12 BPR 23 305 at [39], the rule applies notwithstanding that a contract provides that no error or misdescription should annul the sale and confines the purchaser to claiming compensation.

83. The present case differs from Flight v Booth and the associated cases in that, in the present case, the contract contained a term requiring that the lease be substantially upon particular conditions. Further, in the present case, the contract did not contain a condition stating that no error or misdescription would annul the sale and confining the purchaser to a claim for compensation in the case of error or misdescription.

84. In this case, the question is quite different from that in Flight v Booth. It is whether, as required by cl 1.2 of the contract, the Lease was "substantially upon the terms and conditions of the Specimen Lease". The question is not whether, as compared to the Specimen Lease and in the planning context in the ACT, the Lease as a whole was "substantially different" in that it substantially changed the "rights and obligations" of the parties. The contractual obligation to grant or procure the grant of a Lease in substantially the same terms as the Specimen Lease was neither about "rights" nor about what terms might mean in a planning sense for a particular purchaser.

85. Generally, the contract in the present case confined what may be considered when interpreting the contract: see cl 7 (contract sets out the entire agreement) and cl 9 (buyer relies on own enquiries). It is consistent with that approach that the contract requires the LDA to procure a lease on substantially similar terms, not merely a lease to a similar practical effect.

86. The question of whether the Lease was "substantially upon the terms and conditions of the Specimen Lease" is to be determined by comparing the terms and conditions of the two documents.

87. A comparison of the terms and conditions of the Specimen Lease with those of the Lease shows that the Lease is not "substantially upon the terms and conditions of the Specimen Lease".

88. The Specimen Lease is divided into five sections: interpretation, rent covenants by the lessee, further/non-rent covenants by the lessee, covenants by the Commonwealth and mutual covenants. It purports to be a comprehensive statement of obligations, including burdens on title. In the section dealing with non-rent covenants, the only reference to an easement is the reference to the small services easement.

89. On the other hand, the Lease incorporates a completely new easement for access in the non-rent covenants section, thereby seeking to impose a new and substantial burden on the property that would give third parties rights in relation to it.

90. If, contrary to the view that I have expressed, it is permissible to look beyond the express terms of the two documents and consider whether the Lease substantially changed the "rights and obligations" of the parties in a commercial sense, then, contrary to the LDA's submission, the Lease did effect a substantial change to the "rights and obligations" associated with the Specimen Lease.

91. Absent the new easement referred to in the Lease, planning law does not preclude the approval of an underground car park with associated minimal aboveground features. Nothing in the Code prevents approval of an underground car park at the location of the "green finger". The zero height restriction is not mandatory; under C9A it can be varied to accommodate a development that is consistent with the desired character of providing landscaped pedestrian access.

92. An appropriate underground car park could have been accommodated, consistent with planning law and the Specimen Lease. On the other hand, at least on one interpretation, the pedestrian easement in the Lease precluded the placement of not only buildings, but any part of any "structure" on the area identified as the easement, including minor parts of structures that may be associated with an underground car park such as openings to ventilation shafts.

93. The second argument upon which the LDA sought to rely was raised for the first time at the hearing, at which stage it was characterised by the LDA as its "primary case".

94. The LDA submitted that, because it is obvious that the easement for access referred to in covenant 3(c) of the Lease is mistaken (it refers to an easement that affects adjacent land but not Section 79), it did not operate to create an easement and had no effect on the rights and obligations of the parties. The LDA submitted that all parts of the mistaken covenant are interrelated; where parts (ii)-(iii) refer to "any easement" they mean any easement created under covenant 3(c)(i). Consequently, the plaintiff should have disregarded the entire covenant, with the result that both the Specimen Lease and the Lease contained only one easement, the small services easement.

95. The plaintiff objected to the LDA advancing the argument as, at no time prior to the hearing (including in its written submissions), had the LDA raised it. The plaintiff said it was prejudiced by the LDA's very late change of approach.

96. I accept that the plaintiff would be significantly prejudiced if the LDA was permitted to advance the new argument. The argument represents a fundamental change in the LDA's position. It was not raised in the correspondence between the parties that preceded the issue of a Notice to Complete. At [12] of the defence, the LDA in effect accepted that the Lease contained the term that it belatedly sought to say was ineffective.

97. I accept that the plaintiff was unprepared to meet the argument. It is not a straightforward matter to address the argument because covenant 3(c) is somewhat ambiguous. Whereas covenant 3(c)(i) refers to a "proposed easement for access 14.2 wide" on "Deposited Plan No 11290" (clearly a mistaken reference to the easement affecting adjacent properties but not Section 79), covenant 3(c)(ii) prevents the placement of any building or structure on any part of the land "comprising any easement" (emphasis added). It may be arguable that only part of covenant 3(c) in the Lease was inserted by mistake.

98. The LDA should not be permitted to rely upon the new argument.

99. Clause 18 of the contract provided that the buyer was entitled to compensation on completion (and the price would be reduced accordingly) for an error or misdescription if the buyer made a claim for compensation before completion, unless the buyer knew the true position before the date of the contract.

100. In its letter of 13 August 2015, the plaintiff advised the LDA:

In the circumstances, we have been instructed to make a claim under Section 18 of the Commercial Contract for Sale in the sum of $704,318.24. The claim arises from a misdescription of the land in the Commercial Contract for Sale

Will you confirm that the price can be reduced by the amount of the claim. We confirm that should your client confirm that the easement will not be created, then the claim will be withdrawn.

Please treat this letter as a notice pursuant to Section 28 of the Contract.

101. The LDA rejected the plaintiff's claim. The plaintiff then asked that the deposit be returned and stamp duty refunded. The LDA responded by issuing a Notice to Complete. After indicating that it proposed to commence proceedings to have the contract declared void and unenforceable and for return of the deposit, the plaintiff served a "Default Notice" claiming that the LDA had not provided a lease substantially upon the terms and conditions of the Specimen Lease. The LDA responded by issuing a Notice of Termination.

102. The LDA submitted that on 13 August 2015 the plaintiff elected to claim compensation for loss of land value due to the access easement, and the plaintiff could not later exercise the right to rescind and claim return of the deposit.

103. For the reasons that follow, I do not accept the LDA's submission.

104. The words or conduct required to constitute an election must be unequivocal in the sense that it is consistent only with the exercise of one of two alternative and inconsistent sets of rights: Sargent v ASL Developments Ltd (1974) 131 CLR 634, Mason J at 656 (Sargent v ASL), and recently applied by this Court in Foote v Barton Property Partnership No 2 [2015] ACTCA 53 at [62], [64]. More recently, in Romero v Farstad Shipping (Indian Pacific) Pty Ltd (No 3) [2016] FCA 1453; 264 IR 288 (affirmed in Romero v Farstad Shipping (Indian Pacific) Pty Ltd (No 3) [2017] FCAFC 102) at [61], Tracey J reiterated that:

What is required for affirmation is that the party act in a manner consistent only with having chosen to rely on one of its two alternative rights (Khoury v Government Insurance Office of New South Wales [1984] HCA 55; (1984) 165 CLR 622 at 633). That may be done, for example, by the exercise of contractual rights during a period of delay, so as to induce the other party to believe that performance of the contract was insisted upon: Champtaloup at 268 (Glass JA, with whom Street CJ agreed). It may also be done by unequivocal conduct evincing an intention to affirm the wronged party's obligations to perform: Galafassi v Kelly [2014] NSWCA 190; (2014) 87 NSWLR 119 at [88] (Gleeson JA, with whom Bathurst CJ and Ward JA agreed)

105. The election must have been communicated to the other party in unequivocal terms: Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) [1993] HCA 27; (1993) 182 CLR 26, 30, 38-39 (Immer).

106. If an act is consistent both with the continuance of a contract and the reservation of a right to terminate, the right to terminate is not lost by the doing of the act: Immer per Brennan J at 30. In Immer at 31, Brennan J cited O'Connor v SP Bray Ltd [1936] NSWStRp 14; (1936) 36 SR (NSW) 248, 262 to the effect that:

an intimation of an election between alternatives of itself produces no irrevocable results, except in cases where the intimation, of itself, produces legal consequences independently of any question of election, or where it is necessary that the choice should be treated as irrevocable in order to do justice to the other party.

107. Brennan J held that, when Immer, as the purchaser, forwarded settlement documents to the vendor, it was merely intimating that it was not intending to exercise its right to rescind.

108. To a similar effect, in Immer at 41 the plurality said:

The true nature of election is brought out in this sentence from the seminal work of Spencer Bower and Turner, The Law Relating to Estoppel by Representation: "It is of the essence of election that the party electing shall be 'confronted' with two mutually exclusive courses of action between which he must, in fairness to the other party, make his choice."...

If a party to a contract, faced with the choice of terminating the contract or keeping it on foot, terminates the contract that party will ordinarily have acted in a way that leaves no doubt as to the choice made. And that choice will be clearly inconsistent with the exercise of the right to keep the contract on foot because the contract no longer exists. But where, as here, the situation is the converse the question is not answered so readily...

(emphasis added)

109. Undoubtedly, the right to claim compensation and continue with a contract is inconsistent with the right to terminate the contract.

110. However, for the doctrine to apply, there must be an unequivocal election to pursue one right to the exclusion of the other. As the plurality pointed out in Immer, where a party to a contract has indicated that it intends to continue with the contract (thereby maintaining the status quo), a court may need to be cautious about concluding that the party is electing to abandon a right to rescind. In Immer at 43, the plurality found that it could not truly be said that Immer was "confronted" with the need to make a choice at the time that it forwarded settlement documents (suggesting an intention to keep the contract on foot), even less that it was abandoning for all time its right to rescind the contract.

111. Recently, in Bridges v Norling t/as iTravel Forster [2016] FCCA 212; 305 FLR 78, Manousaridis J considered the distinction recognised in Elder's Trustee & Executor Co Ltd v Commonwealth Homes & Investment Co Ltd [1941] HCA 31; (1941) 65 CLR 603, 618 (Elder's Trustee) between cases where the party's conduct is unequivocal and cases where the party's conduct is merely some evidence of an election to affirm; in the latter case the party's knowledge of a right of election will be relevant to a determination of whether there has been an election.

112. In this case, the letter of 13 August 2015 stated that the plaintiff was pursuing a claim for compensation, indicating that the plaintiff intended to continue with the contract. The plaintiff was legally represented and must have been aware of its right to rescind. However, the letter did not state that the plaintiff was abandoning its right of rescission. The situation is analogous to that in Immer. Read in context, the plaintiff's letter of 13 August 2015 was not an irrevocable election. The dealings between the parties had not reached a critical point where the plaintiff was "confronted" with a stark choice and made an unequivocal election to abandon its right to rescission. The plaintiff's expressed intention had no adverse impact on the LDA.

113. A further difficulty with the LDA's election argument is that, ultimately, it was the LDA that rescinded the contract by wrongly purporting to terminate it because of default by the plaintiff, not the plaintiff who rescinded because of the LDA's default.

114. Judgment for the plaintiff in the sum of $335,043.03 ($288,100.00, plus interest of $46,943.03).

I certify that the preceding one-hundred and fourteen [114] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Chief Justice Murrell.