Vella v Nergl Developments Pty Ltd & Ors

Lot 2, Lot 3 and Lot 103 - 2006 to 2019

1. In 1978, Mr and Mrs Vella became the registered proprietors as joint tenants of the predecessor lots to Lots 2 and 3. They developed a market gardening enterprise and lived on the property until Mr Vella died in September 2011. Then by survivorship Mrs Vella became the registered proprietor of both lots. Her residence is on Lot 3.

Some Early Cadastral History of the Land in the 2006 Development Consent

1. The cadastral history of what became Lots 2 and 3 and the surrounding lots may be briefly mentioned so as to record it. But its detail is not essential background for determining the matters in issue. The net result of these various cadastral changes will be shown in a plan later in these reasons.
2. The Vella land was originally Lot 1 and Lot 2 in DP 551558. Lot 1 in DP 551558 is the closer of these two lots to the Northern Road, and generally overlaps the shape of the present Lot 3. Portions of the original Lot 1 and Lot 2 in DP 551558 have been further subdivided and transferred to third parties. In April 2004, Lot 2 in DP 551558 (the lot further to the west along Bradley Street from Lot 1) was itself subdivided and became Lots 1 and 2 in DP 1067082.
3. In 2008, Mr and Mrs Vella sold Lot 2 in DP 1067082 to a third party, Bengalla Developments Pty Limited ("Bengalla"). In 2009, Lots 1 and 2 in DP 1067082 were further subdivided and the residual portion retained by the plaintiff was given a new folio identifier, Lot 500 in DP 1133119.
4. The land north of Lots 2 and 3 also underwent substantial cadastral changes and changes in ownership. From about the same time that Mr and Mrs Vella purchased the land that became Lots 2 and 3, Kindelon began to accumulate properties proximate to and to the north of the Vella land. Kindelon and Nergl are related companies, in that they have the same directors and Kindelon is the majority shareholder in Nergl.
5. As a part of Kindelon's accumulation of land north of Lots 2 and 3, it became the registered proprietor of the land immediately to the north, Lot 103 in DP 1050042 and other lands further to the north, namely Lot 3 in DP 1067073 and Lots 3, 4 and 5 in DP 26658.
6. In the 1970s, Mrs Vella's sister, Lucy Vella, became the registered proprietor of one of the parcels of land north of Lot 103, namely Lot 6 in DP 26658. But Lucy Vella died in November 2014 and her property passed to her sons, the second and third defendants, Michael and Peter Vella. On 6 February 2018, Michael and Peter Vella's Lot 6 in DP 26658 became incorporated into DP 1239760. On 10 July 2018, part of the land (described as "Part FI 6/26658 and known as Lot 19 in DP 1239760") was transferred to the RMS. Michael and Peter Vella remain the registered proprietors as joint tenants of Lot 16 in DP 1239760.
7. Looking ahead briefly, on 10 November 2017, some of Kindelon's land, Lots 4 and 5 in DP 26658, was subsequently sold by a mortgagee in possession to Vinegar Hill Development Pty Ltd ("Vinegar Hill"). Vinegar Hill is unrelated to any of the parties, has no involvement in these proceedings and is not a party to the Heads.

The 2006 Development Consent

1. The 2006 development consent was issued after a contest in the Land and Environment Court of New South Wales. It was attached to a judgment of Commissioner Brown given on 10 October 2006: Ingham Planning Pty Limited v Penrith City Council [2006] NSWLEC 666. The issue in that case was whether the layout of the proposed subdivision satisfied the requirements for a site which was identified as a semi-rural gateway to Penrith City.
2. The 2006 development consent provided for the subdivision into 19 lots (17 of which would have access to Jilondalee Way) of a site comprised of the following parcels of land (described by the then owners and then current cadastral references to the said parcels): (1) the Vella land being Lot 1 in DP 551558 and Lots 1 and 2 in DP 1067082; (2) Lucy Vella's land being Lot 6 in DP 26658; and (3) the Kindelon land being Lot 3 in DP 1067073, Lot 101 in DP 597243 and Lot 103 in DP 1050042.
3. The 2006 development consent is a lengthy document covering a wide range of the Council's requirements for execution of the development project at the site. A number of its provisions are of present relevance and were referred to in the parties' submissions, namely clauses 1, 16, 19 and 27.
4. Clause 1 identifies a plan of subdivision dated 8 August 2006, the 2006 plan, drawn by Moore & Associates Pty Ltd ("Moore and Associates") of the subdivision development at the site: "1. The development must be implemented substantially in accordance with the plan [plan number omitted] drawn by Robert Moore & Associates Pty Ltd dated 8 August 2006 and stamped approved by Council, the application form and any supporting information received with the application, except as may be amended in red on the attached plans and by the following conditions."
5. Clause 16 identifies the requirements for the submission of an original Linen Plan to Council: "16. Submission of the original Linen Plan and ten (10) copies. The Linen Plan must indicate that: 'it is intended to dedicate all new roads to the public as road'(sic) All drainage easements, rights of way, restrictions and covenants are to be included on the linen plan. All dedications of roads/drainage are to be undertaken at no cost to Penrith City Council. The following information is to be shown on one (1) copy of the plan. The location of all buildings and/or other permanent improvements shall comply with any statutory boundary clearances or setbacks as defined by the Building Code of Australia and Council's resolutions. All existing services are wholly contained within the lot served and/or covered by an appropriate easement."
6. Clause 19 describes the timing and function of the subdivision certificate required by Council: "[The Subdivision] Certificate is to be obtained prior to the release of the linen plan of subdivision. The Subdivision Certificate will not be issued if any of the conditions in this consent are outstanding."
7. Clause 27 describes the function of the engineering construction certificate and specifies Council's design and construction requirements for the proposed road on Lot 3: "An Engineering Construction Certificate for the provision of engineering works (roads and drainage) is to be approved by the certifying authority. Engineering design drawings are to be prepared strictly in accordance with Penrith City Council's Engineering Works Development Control Plan and the Guidelines for Engineering Works for Subdivisions and Developments Part 1-Design. The Proposed Road is to be designed and constructed in accordance with the following table: Road No. Road Reserve Width (m) Carriageway Width (m) Shoulder (m) Verge (m) Footpath ESA Proposed Road 16 6.6 1.0 3.7 Nil 5x104 Cul-de-sac 14m radius 8.5m kerb radius 1.0 3.7 Nil 5x104

Proposed Road 1 is to be sealed with a maximum 50mm Asphaltic Seal in two layers of 26mm AC 10. Road shoulders shall be bitumen sealed a minimum of 0.5m. Subsoil drainage shall be provided on both sides of the proposed road. Street lighting in the proposed road shall be in accordance with AS1158. All dams in proposed lots on the eastern side of the proposed road shall be removed. The dams shall be filled in accordance with conditions of this consent. Note a separate approval may be required from the Department of natural Resources. All excavation material from the dams shall be disposed of in accordance with the approved waste management plan for the development or approved waste facility. Details of the proposed disposal location(s) of all excavated material from the development site shall be provided to the Principal Certifying Authority prior to Issue of the construction certificate."

1. The 2006 plan was attached to the 2006 development consent. It divides the proposed subdivision site into 17 new allotments of varying size. It clearly shows the proposed Jilondalee Way traversing Lot 3 and providing access to all the lots of the proposed subdivision north of Lot 3, ending in a cul-de-sac abutting the northernmost lots of the subdivision.
2. The 2006 plan became an important contractual document. It was later attached to the Heads with only one alteration: highlighting in red along the course of Jilondalee Way as it traversed Lot 3, the 2006 plan. The text of the 2006 plan made clear that all dimensions and areas that it displayed were "subject to final survey". The 2006 plan in this form was attached to the Heads with the additional red highlighting and is reproduced as Diagram 1 below:
3. The site that was subject to the 2006 development consent was later subdivided into 19 allotments, 17 of which had access to Jilondalee Way and two of which had access to a street to the west of the proposed subdivision. The differences in the numbers of lots are not material for present purposes.

From the 2006 Development Consent to the 2010 Tripartite Agreement

1. On 25 March 2008, Mr and Mrs Vella entered into an agreement with Lucy Vella and Nergl, with the three parties dubbing it "the 2008 Tripartite Agreement". But this agreement has not been located and is not in evidence. Under the authority of this 2008 Tripartite Agreement, on 2 April 2008 Nergl lodged a caveat on the title to the Vella land, then being Lot 1 in DP 551558 ("the 2008 Caveat"). That caveat ultimately lapsed following the service of a lapsing notice in September 2018 about the time these proceedings were commenced.

The Tripartite Agreement - 2010

1. The Glenmore Park Tripartite Agreement, as the 2010 Tripartite Agreement was titled, was made on 17 August 2010. The parties to it were Mr and Mrs Vella, Lucy Vella and Nergl. Kindelon was not a party, although the subject of the proposed subdivision included the land owned by Kindelon. The agreement wrongly described Nergl as the owner of the Kindelon properties.
2. The 2010 Tripartite Agreement recited that the parties had entered into the 2008 Tripartite Agreement but that the 2010 Tripartite Agreement superseded it.
3. The 2010 Tripartite Agreement sought to take advantage of and regulate a new development opportunity that had arisen for executing the 2006 development consent. The 2010 Tripartite Agreement identified what it called a "Seniors Living Subdivision Project", which involved a seniors housing development consisting of farmlets, villas, townhouses, houses and associated development (in the form of community facilities) on the site of the 2006 development consent. This proposed development was in addition to the proposed residential development contemplated by the 2006 development consent.
4. The 2010 Tripartite Agreement named the existing project authorised by the 2006 development consent as the "Rural Residential Subdivision Project". Together these two projects were called "the Development Projects". The 2010 Tripartite Agreement provided for some flexibility as to how the Development Projects would ultimately proceed, but one option was that the developments would take place pursuant only to the 2006 development consent.
5. The terms of the 2010 Tripartite Agreement were known to both parties at the time of execution of the Heads and are part of the background facts relevant to the interpretation of the Heads. The Heads released the parties from all claims existing at the date of a deed that the Heads proposed, including any claim arising in relation to the 2010 Tripartite Agreement. A general profile of the relevant parts of the Tripartite Agreement is as follows: 1. For consideration payable to it, Nergl was appointed a consultant to Mr and Mrs Vella and Lucy Vella ("the Vella landowners") on the Vella land and Lucy Vella's land and was required to advise them about the total scope, cost of and budgeting for the works needed to carry out the Development Projects, although Nergl itself may fund the works (clause 2). 2. Nergl was to apply and use its best endeavours to gain all necessary approvals to carry out the works on the Vella land and Lucy Vella's land for the defined "development projects", to obtain construction certificates and perform works in accordance with the construction certificates and to obtain registration of an agreed plan of subdivision for the Development Projects (clause 3). 3. The Vella landowners and Nergl agreed to cooperate and act in good faith in carrying out the works on the Vella land and Lucy Vella's land and dealing with any legal proceedings related to the works (clause 4). 4. The Vella landowners agreed not to sell any of their land on the site before registration of an agreed plan of subdivision (clause 5). 5. The Vella landowners consented to the lodgement of an agreed form of caveat (describing Nergl's claim as a "charge") over their interest in the land on the site to secure the performance of their obligations under the Tripartite Agreement. Nergl agreed to withdraw the caveat when the Development Projects were complete and individual lots were in the process of being transferred to third-party purchasers and all payments due to Nergl had been satisfied (clause 6). 6. The 2010 Tripartite Agreement also provided for a number of other matters: regular meetings between Nergl and the Vella landowners (clause 7), the taking out of appropriate insurance (clause 8), limitations on Nergl's liability to the Vella landowners (clause 9), an obligation to Nergl to keep records into charges over the Vella landowners land (clause 10), and a provision for dispute resolution and for rights of termination (clause 12).
6. Mrs Vella submitted in these proceedings that the 2010 Tripartite Agreement was "one-sided", because of some of these provisions: the restraint on the Vella landowners from selling without a parallel restraint on Kindelon selling; the charge over the Vella landowners' land but not over Kindelon's; the limitation on Nergl's liability in respect of the contemplated works without a similar limitation for the benefit of the Vella landowners; and Nergl alone having the right to terminate for convenience under clause 12.4. Whether or not that submission is correct does not matter for the purposes of these proceedings, which do not have to determine the merits of the 2010 Tripartite Agreement.
7. The 2010 Tripartite Agreement became the impetus for some work to be done to develop the site in accordance with the 2006 development consent.

From the 2010 Tripartite Agreement to the Heads of Agreement - 2010 to 2018

1. In 2011, Nergl engaged contractors to construct a road along the course of the easement over Lot 3. This involved accommodating the terrain of Lot 3 which travelling north from Bradley Street, rises up to a crest approximately 120 metres north of Bradley Street and then it falls away less steeply in a northerly direction towards the boundary of Lot 2 and 3 with Lot 103. Looking in an east-west direction, the land of Lots 2 and 3 is higher in the west and generally falls away with some undulation towards the Northern Road in the east.
2. It is common ground between the parties that the road Nergl constructed in 2011 was constructed within the road boundaries marked on the 2006 plan. After appropriate excavation, grading and support with batters, the contractors engaged by Nergl constructed the road foundations, the subgrade and subbase for the whole length of the road marked on the 2006 plan, from Bradley Street to the boundary with Lot 103. But the road foundations so constructed were only sealed with bitumen from the direction of Bradley Street along approximately 60% of the length of the road marked on the 2006 plan. The bitumen sealed section rose up to the crest and followed the course of the road part of the way down towards the boundary with Lot 103. This sealed section of road was bounded on each side with concrete dish drains. The other 40% of the road marked on the 2006 plan falling away further to the north was left unsealed. After that work was done, construction was abandoned. As a result, the photographs in evidence show that the unsealed section of the constructed road has deteriorated somewhat in quality since 2011 due to erosion. Neither party appears to have pressed forward the performance of the 2010 Tripartite Agreement for a long period.
3. The delay after the 2006 development consent and the work in 2011 resulted in changes to Kindelon's land holdings north of Lot 103. In November 2017, some of Kindelon's lands to the north of Lot 103, which were within the site of the subdivision contemplated by the 2006 development consent, namely, Lots 4 and 5 in DP 26658, were sold by a mortgagee sale to Vinegar Hill.
4. On 6 February 2018, Michael and Peter Vella's Lot 6 in DP 26658 was incorporated into DP 1239760. And on 10 July 2018, part of the land (described as "Part FI 6/26658 and known as Lot 19 in DP 1239760") was transferred to the RMS.
5. On 28 September 2018, in anticipation of the lapsing of the 2008 Caveat, Nergl lodged fresh caveats on Mrs Vella's lots, which at that time were still identified by their earlier cadastral references, as Lot 1 in DP 551558 and Lot 500 in DP 1133119. Both caveats claimed an interest in the nature of a charge over the properties which was founded on the 2010 Tripartite Agreement.
6. When Mrs Vella commenced the present proceedings, the RMS had negotiated with her to acquire from her a strip of land along the northern side of Bradley Street to facilitate the upgrading of that road to accommodate the upgrading of the Northern Road to a six-lane highway. The land the RMS was acquiring was a strip of land on the southern boundary of Lots 2 and 3, which at that stage still had a prior cadastral title reference. The RMS was acquiring from Mrs Vella part of Lot 1 in DP 551558 (approximately corresponding with what later became Lot 3) and part of Lot 500 in DP113319 (approximately corresponding with what later became Lot 2) adjoining Bradley Street. The RMS was prepared to compulsorily acquire those portions of Mrs Vella's land if agreement was not reached.
7. Mrs Vella did reach agreement with the RMS. For the transfers to occur by way of a negotiated sale, Nergl's caveats lodged on 28 September 2018 needed to be removed. After these proceedings were commenced, Nergl agreed to the transfer of the strip of land near Bradley Street to the RMS without withdrawing the caveats.
8. The associated boundary adjustments with those transfers to the RMS required the remainder of Mrs Vella's land to be defined by another deposited plan. This was the final cadastral event that created Lot 2 and Lot 3. The balance of Mrs Vella's land which had formerly been registered as Lot 1 in DP551558 became Lot 3 in DP1240377. And the balance of Lot 500 in DP 1133119 became Lot 2 in DP1240377. The strip of land transferred to the RMS became Lots 6 and 7 in DP 1240377. A copy of the whole of the proposed subdivision incorporating DP 1240377 appears in Diagram 2 below. The first letter/s of the name of the registered proprietor of each of the lots is written in red handwriting on the lots.
9. After Mrs Vella's transfers to the RMS were registered, Nergl's caveats operated against her new Lots 2 and 3. Those caveats remain on title and are the subject of her present claim for removal.
10. When these proceedings were commenced in October 2018, Mrs Vella was contending that the 2010 Tripartite Agreement had been frustrated, at least because of the mortgagee sale to Vinegar Hill, and was no longer on foot. Mrs Vella was arguing that contractual frustration arose because Vinegar Hill was not a party to the 2010 Tripartite Agreement and was neither legally bound by, nor apparently commercially interested in taking part in any aspect of, the 2006 development consent, which could therefore no longer be given effect. Also at issue in the proceedings was whether Nergl had a caveatable interest in the Vella land.
11. But the issues in the proceedings can be placed to one side because at the conclusion of the mediation the Heads were signed on 12 December 2018.

The Heads of Agreement - 12 December 2018

1. The Heads fall into three parts: a list of parties, a set of definitions, and some terms headed "Terms of Agreement".
2. Mrs Vella, Nergl and Kindelon were all parties to the Heads, as were Michael Vella and Peter Vella.
3. The Heads provided for a number of formal definitions. The "caveat" meant "any caveat lodged by Nergl over the Vella Land". Penrith City Council was referred to as "the Council". The "Kindelon Lands" and the "Vella Lands" were defined as described earlier in these reasons, as was Peter Vella and Michael Vella's land, "the PMV Land". The expression "Litigation" is a reference in the Heads to these proceedings. "Lot 103" in the Heads is a reference to Kindelon's Land abutting the Vella Land to the north. And finally, "TPA" is defined to mean the Tripartite Agreement of 17 August 2010.
4. The Heads provided for other definitions as follows: "Planning Consent means: the development consent issued by the Land and Environment Court in proceedings number 11526 of 2005 over, inter alia, the lands owned by Vella, PMV and Kindelon. Special Condition means: a condition in any contract for the sale of the Vella Land (or any part thereof) obliging the purchaser to consent to any application made by or on behalf of NergI to effect the Adjustments."
5. The central contest in these proceedings was fought over words in the definition of "the Easement" in the Heads. The definition provided for a right of carriageway in an instrument registered under Real Property Act 1900, s 88B as follows: "Easement means: a right of carriageway set out in a registered s88B instrument providing vehicular and pedestrian access to and from Lot 103 and including the right to construct and provide such services as NergI elects (including but not limited to electricity, gas, water, sewer and the like). The easement is to apply to the area depicted as Road Reserve in the Planning Consent (as shown in pink in the attached plan) with an allowance for kerb, gutter and footpath to the precise width required by the Council, as well as an additional area adjoining Bradley Street sufficient to permit the construction and dedication of a roundabout."
6. As will be seen, the Heads, clause 9, required Mrs Vella to consent in writing to such applications as Nergl might make to give effect to what the Heads described as "Adjustments". The definition section of the Heads provided for those "Adjustments", as follows: "Adjustments: means any or all of the following adjustments to the Planning Consent: 1. to relocate the northern boundary of proposed lot 3 (as shown in red in the attached plan) so as to be coincident with the current boundaries between lot 103 and the Vella Land (as shown in blue in the attached plan); 2. to excise from what was lot 2 in DP551558 the lands generally in the north east of that proposed lot which have been previously sold by Vella; 3. to permit Kindelon to make other boundary adjustments to proposed lots within the confines of its lands; 4. to fill dams located within the Kindelon Lands; and 5. to excise the land sold by Vella to the RMS."
7. The final section of the Heads is headed "Terms of Agreement". The eleven terms are introduced by an introductory paragraph, as follows: "Following a confidential mediation today before Mr John West, Q.C the parties have agreed to settle the Litigation on the following terms, each of which is dependent on the other:"
8. Of the 11 paragraphs that follow, the first two expressly refer to the parties entering into a Deed of Settlement and Release: "1. The parties will enter into a Deed of Settlement and Release pursuant to which the parties to the TPA agree to terminate that agreement in consideration of the other matters set out herein. 2. By the Deed, each party will release each other party from all claims existing as at the date of the Deed, including any claim arising in relation to the TPA."
9. The remaining clauses 3 to 11 of the Agreement deal with aspects of the registration of the Easement and what would follow registration: "3. NergI will withdraw the Caveat and will not lodge any further caveats over the Vella Land upon registration of the Easement. 4. Vella will discontinue the Litigation, and each other party will consent to the discontinuance, on the basis that all parties are to bear all of their own costs, as soon as practicable after registration of the Easement. 5. In consideration of the payment to Vella of $100,000 at the time of delivery by Vella to NergI of the Easement in registrable form, Vella will grant the Easement in favour of the owner of Lot 103. The terms of the Easement shall entitle the owner of Lot 103 to grant and register easements over the same lands extending the benefits of the Easement to such or all of the other properties to the north of Lot 103 which are benefitted by the Planning Consent, as the owner of the dominant tenement elects. NergI will pay Vella's reasonable legal costs relating to any subsequent grant as contemplated in the previous sentence. The owner of Lot 103 agrees to lodge for registration the Easement within 7 days of receiving the Easement in registrable form from Vella. 6. The holder of that dominant tenement shall have the right to dedicate the land within the Easement to the Council so as to become a public road. 7. Until such dedication or any subdivision of Lot 3 in DP1240377, the holder of the dominant tenement accepts all risks and liabilities associated with the Easement and indemnifies Vella in relation to that risk and liability, except to the extent that the liability arises or is caused by the actions of Vella, and will assume the obligation to repair and maintain it in good condition. Such a provision to this effect is to be included in the s88B Instrument referred to in clause 8, below. 8. The Easement will be documented in a s88B Instrument prepared and lodged at the cost of Nergl. NergI will pay Vella's reasonable legal costs and reasonable consultants' costs in relation to the s88B Instrument. 9. Vella will consent in writing to any or all applications as Nergl shall elect to give effect to the Adjustments either or both by means of a new development application or an application to modify the Planning Consent, provided such applications are lodged within 6 months of the date that the owner of Lot 103 lodges for registration the Easement in registrable form. PMV will also consent to any and all applications referred to in this paragraph. 10. In respect of any contracts entered into within six (6) months of the date that the owner of Lot 103 lodges for registration the Easement in registrable form, Vella will apply the Special Condition in any contract for the sale of the Vella Land (or any part thereof) and will procure that any subsequent purchasers also agree to apply the Special Condition to any future contracts for sale (again being contracts entered into within six (6) months of the date that the owner of Lot 103 lodges for registration the Easement in registrable form. 11. PMV will provide a first right of refusal to Kindelon, or its nominee, in respect of the sale of all or part of the PMV Land, which right must be exercised within 30 days of notification."
10. Before the signature blocks, the parties agreed upon two general paragraphs that were descriptive of any negotiations that were to follow the execution of the Heads: "The parties further agree that documents necessary to give effect to this settlement will be prepared by Nergl's lawyers and distributed to the legal representatives of Vella and PMV on or before 22 January 2019. The parties will diligently and in good faith negotiate the terms of the documents distributed by Nergl's lawyers with a view to achieving registration of the Easement before 29 March 2019 and the discontinuation of the Litigation as soon as practicable thereafter."
11. Exactly the same plan that was attached to the 2006 development consent, was also attached to the Heads, the 2006 plan, but the attachment to the Heads is highlighted in pink along Jilondalee Way, where it traverses Lot 3. This is the "area shown in pink in the attached plan" referred to in the definition of "Easement" in the text of the Heads.
12. Nergl's lawyers distributed documents that they claim were necessary to give effect to the settlement before 22 January 2019. Neither party contended that there was any breach of the final term of the Heads that "the parties will diligently and in good faith negotiate the terms of the documents distributed by Nergl's lawyer with a view to reaching registration of the Easement before 29 March 2019".
13. Despite the distribution of the documents by Nergl's lawyers, neither registration nor consensus about registration was achieved by the date indicated. Instead, Nergl has advanced a proposal for a 21.6 metre wide right of carriageway rather than a 16 metre right of carriageway across Lot 3. And Nergl has also proposed easements for construction extending on either side of the right of carriageway and being some 43 metres wide at their widest point. And the easements for construction have also been moulded to permit the filling in by earthworks of an old dam on Lot 3 immediately to the west of the right of carriageway ("the western dam"), Nergl's various claims to the right of carriageway and to the easements for construction are illustrated in a plan dated 27 September 2019 which it advanced. The version of this plan, which is set out below, Diagram 3, became Exhibit 3 and illustrates in an orange shaded area the difference between a 16 metre right of carriageway and a 21 metre right carriageway, with the difference in area occupied by the two rights of carriageway easements being 1318 square metres.
14. When first advanced, the easements for construction were not limited as to time. But it became accepted in the course of the trial that they would need to be confined in time and would be released once additional roadworks along the course of the proposed Jilondalee Way were completed.

The Valuation Evidence

1. Mrs Vella advanced valuation evidence to attempt to quantify what she claimed would be a diminution in the value of Lot 2 and Lot 3 as result of the imposition of a 21.6 metre easement rather than a 16 metre easement and by reason of the imposition of easements for construction. Nergl did not advance completing valuation evidence but cross-examined the valuer, Mr Brett Davis, about the logic of this valuation. The course of reasoning that the Court has taken in this judgment means it is not necessary to make a final determination of the loss in value of Lot 2 or Lot 3 by reason of these easements.
2. And indeed as Mr Miller SC and Mr Gaffney pointed out in objecting to this evidence on the grounds of relevance, the precise amount of any diminution in value cannot be taken into account in the proper construction of the Heads. The valuations did not exist at the time of the Heads and they cannot legitimately be used to infer, for example, that the payment to Mrs Vella of $100,000 under the Heads could not have been in exchange for a 21.6 metre easement or for an easement for construction. The Court admitted this material subject to relevance: the valuer's logic is briefly recorded here as it illustrates what Mrs Vella claims would be the loss of value from the additional easements Nergl claims.
3. Mr Davis undertook his valuation on 19 July 2019, approximately four months before the trial. He undertook two valuations, the first attempted to quantify the effect on value of a 21.6 metre right of carriageway contrasted with a 16 metre right of carriageway. The second attempted to quantify the effect on value of the imposition of the easements for construction.
4. As Exhibit 3 shows, a 21.6 metre wide right-of-way instead of a 16 metre right-of-way still lies entirely on Lot 3 and does not encroach upon Lot 2. It is only the addition of an easement for construction 43 metres wide from approximately the same centre-line as the right-of-way that encroaches on Lot 2. This is reflected in the Mr Davis' valuations, which only show diminution in value to Lot 2 from the easements for construction.
5. As to the right-of-way, at the valuation date the open market value of Lot 2 easement-free was assessed at $2.85 million, unaffected by an easement of either 16 metres or 21.6 metres. But at the valuation date the valuation of Lot 3 easement-free was $4.3 million and affected by a 16 metre easement was $3.9 million and affected by 21.6 metre easement was $3.7 million.
6. The calculation by Mr Davis was essentially undertaken by working out a rate per square metre of the total land area and deducting the rate per square metre of the area of the easement. For the right-of-carriageway, which was a permanent burden on the title, this was an appropriate calculation. Mr Davis' calculation of the loss of value from the easement for construction also assumed it was a permanent burden on the title. But the case is conducted on the basis that it would be temporary. Although on the one hand this meant that Mr Davis' calculation may have tended to exaggerate the loss of value, it was ultimately not inappropriate because there was no clear binding timeframe on when the easements for construction would be lifted.
7. As to the easements for construction, Mr Davis concluded that they would reduce Lot 2 in value to $2.75 million (a loss of $100,000) and would reduce Lot 3 in value to $3 million (a loss of $1.3 million).
8. But even without the benefit of expert valuation evidence, it is not difficult to infer that the imposition of these additional easements, particularly the construction easements which were to be unlimited as to time, would substantially adversely affect the value of Lot 2 and Lot 3.

Analysis of the Four Issues to Be Decided

1. The Heads is a commercial agreement which should be construed in accordance with the principles that apply to the construction of such agreements: Electricity Generation Corp v Woodside Energy Ltd; Woodside Energy Ltd v Electricity Generation Corp (2014) 251 CLR 640; (2014) 306 ALR 25; [2014] HCA 7 ("Woodside") and Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; (2015) 325 ALR 188; [2015] HCA 37 ("Wright Prospecting").

(1) Must the Easement Be Given Effect in a "Deed of Settlement and Release"

1. The Issue and the Parties' Submissions. The first question relates to what formalities are required by the Heads for Mrs Vella to grant Kindelon an easement and for the caveats to be released. Nergl argues that the Heads represents a Masters v Cameron (1954) 91 CLR 353; (1954) 28 ALJR 438 class two type contract and that the parties intended all the obligations in the Heads to be given effect in the "Deed of Settlement and Release" which is described in clauses 1 and 2 of the Heads. Nergl argues that the "Deed of Settlement and Release" contemplated by those clauses was one which would be settled and executed and be effective as a release only after the precise scope of the easement contemplated by clause 5 had been settled by the parties.
2. Nergl argues that on their proper construction the Heads operate so that the parties will execute a single "Deed of Settlement and Release" incorporating the final agreed terms of the Easement once the specific detail of the easement had been settled. Because the Heads contemplated wrapping the final form of easement up into a single deed, Nergl submits that the relief that Mrs Vella seeks in prayers 11A and 11B of her Further Amended Summons, which are not predicated upon the settling of such a deed, cannot be granted in the form in which it is sought. Consistent with its interpretation, Nergl has proffered such a comprehensive deed to Mrs Vella for execution. In its primary form it is Schedule 1 to Nergl's Cross-Claim. And in prayer for relief 1 of its Cross-Summons, Nergl seeks a declaration that the parties are obliged to execute that form of deed. The Schedule 1 draft deed seeks to flesh out all the obligations provided for in clauses 1 to 11 of the Heads, sometimes in identical language, sometimes with greater detail.
3. Nergl's argument is critical of Mrs Vella's case in that it said, (a) to ignore the obligation to settle a comprehensive deed, (b) to seek to enforce selective parts of the settlement reflected in the Heads, and (c) not to grapple with the need to delineate the detail of the easement in clause 5 of the Heads.
4. Mrs Vella's submissions in reply on this issue reveal that the issue is essentially an argument about the form of the "Deed of Settlement and Release", rather than a contest about the substance of the various obligations created under the Heads. Mrs Vella accepts that the Heads require a "Deed of Settlement and Release" to be executed between the parties. But she says that the "Deed of Settlement and Release" itself need only give effect to clauses 1 and 2 of the Heads, and that it does not have to restate the substance of all the other clauses.
5. Analysis. Upon the Court's analysis of the Heads, Nergl's argument is correct to the extent that it emphasises the complete interdependence of the various obligations under the Heads. Mrs Vella cannot have selective relief of only parts of the Heads. Her right to have removal of the caveats is interdependent with all her other obligations under the Heads. But the indications in the Heads are not strong that the parties are required to negotiate an all-encompassing "Deed of Settlement and Release" reproducing again all their obligations expressed in the Heads. And the Court does not accept that this has to be done.
6. Both parties contend that the Heads are legally binding between them. They acknowledge that they have agreed upon terms of a contractual nature and they also agree that the matter of their negotiations shall be dealt with by a further formal contract. In this situation the High Court in Masters v Cameron identifies three potential classes contract may arise. Subsequent authorities have suggested a fourth class but such refinements need not be discussed in this analysis: Taouk v Ho [2019] NSWCA 156. In the Court's view, Nergl's submissions should be accepted that the Heads better reflect the second class of contract referred to in Masters v Cameron. But the Court is not persuaded that this means that the whole of the Heads must be reproduced again in a "Deed of Settlement and Release".
7. The High Court described (at 360) the first Masters v Cameron class as one "in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect". The High Court described (at 360) the second Masters v Cameron class as one "in which the parties are completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document." This was not a third Masters v Cameron class case (at 360) "in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract."
8. In the Court's view, the Heads contain indications of a Masters v Cameron class two type of contract: the parties have completely agreed upon all the terms of their bargain and they intend no departure from or addition to that which their agreed terms express or imply but they have nevertheless made performance of one or more of the terms conditional upon execution of a formal document.
9. In the Heads the introduction to the 11 numbered clauses under the heading "Terms of Agreement" refers to the mediation that had just taken place and states that the parties "have agreed to settle the litigation" (emphasis added) on the following terms "each of which is dependent on the other" (emphasis added). This wording implies that the parties had reached complete agreement to settle the proceeding and that there should be no departure from or addition to the 11 terms that are then listed.
10. The Heads provide for the parties to agree in the future upon a number of documents to give effect to different aspects of the settlement that had just been made between them. There were at least four of these. They included a "Deed of Settlement" terminating the 2010 Tripartite Agreement and giving releases (clauses 1 and 2), a form of discontinuation of the litigation to be filed in court (clause 4), the recording of the agreed terms of the Easement in registrable form (clause 5) and the preparation of a Conveyancing Act 1919, s 88B instrument (clause 8). The parties recognised that placing all these documents in final form required greater precision than was being provided for by the Heads. So it was appropriate, as the parties stated, that all these "documents necessary to give effect to the settlement will be prepared by Nergl's lawyers and distributed" to the Vella's lawyers. To achieve the necessary final precision, it was logical for the parties to impose an obligation on one another, as they did, to "diligently and in good faith to negotiate the terms of the documents distributed".
11. But the Deed of Settlement and Release in clauses 1 and 2 does not operate immediately, as at the date of the Heads. Clause 2 makes clear that when this deed is executed it will operate as a release of each other party "from all claims existing as at the date of the Deed". The parties are not agreeing upon a release of claims against one another as at the date of the Heads. At some indeterminate time of the future, they will enter the deed, when all the other interdependent obligations under the Heads have been fulfilled, because the deed is made "in consideration of the other matters set out herein". The deed is the final contractual act required between the parties. Execution of this document offers the valuable incentive of releasing all potential claims up to the date of its execution. In that sense, performance of one or more of the terms is conditional upon execution of this formal document and Mr Miller SC's and Mr Gaffney's submission is correct that this is a Masters v Cameron class two contract.
12. But to call this a Masters v Cameron class two contract does not necessarily mean the parties must reproduce in the Deed of Settlement and Release in more elaborate words the whole of their agreement that is already in the Heads. All that the Deed of Settlement and Release that is contemplated by clauses 1 and 2 of the Heads requires is to embody terms that adequately provided for the termination of the 2010 Tripartite Agreement and to effect appropriately comprehensive releases that included any claims under the 2010 Tripartite Agreement.
13. But the several other documents identified above that required the parties' mutual assent also need to be prepared in mutually satisfactory form before the deed was executed. Any order for specific performance of the Heads in its true sense must require these things to be done. This is required because each of the terms of the Heads is "dependent on the other" and the deed is "in consideration of the other matters set out herein".
14. But their interdependence in the Heads raises some subtle issues of timing. In the Court's view, the Heads clearly closely link in time the withdrawal of the caveats with the registration of the easement: clause 3. That event is closely followed by discontinuance of the proceedings: clause 4. But the easement must be documented in a Conveyancing Act, s 88B instrument, which must therefore be prepared before registration of the easement: clause 8. The s 88B instrument must express the various obligations and rights set out in clauses 5, 6, and 7 of the Heads. But clauses 9 and 10 operate for a strict six-month period after registration of the s 88B instrument containing the easement. It is an open question as to whether clauses 9 and 10 could be included in the s88B instrument. As soon as the s 88B instrument is registered, the parties should enter the Deed of Settlement and Release. The Court's analysis later in these reasons makes clear that the actual dedication of the easement as a public road is not an integral part of this process, and is not an act that must be performed in order for Mrs Vella to have specific performance of the contract.
15. The Court will make an order for specific performance of the Heads but to the extent the parties wish to elaborate upon that order in additional short minutes they should bear this analysis in mind.
16. Before embarking on questions (2), (3) and (4), a general observation common to them all is necessary. The defendants' arguments on questions (2), (3) and (4) draw upon the principles governing whether or not terms should be implied into the Heads which the parties had not thought fit to express. In order to justify the implication of such a term on the grounds of business efficacy, the following conditions must ordinarily be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that it "goes without saying"; (4) it must be capable of clear expression; and (5) it must not contradict any express term of the contract: BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266 at 283; (1977) 45 LGRA 62; (1977) 16 ALR 363 ("BP Refinery"). In laying down those criteria in BP Refinery, the Privy Council recognised (at [283]) that there was a degree of overlap in the conditions.
17. But the defendants submitted here that because the Heads are an informal document that the parties did not intend it to be an exhaustive statement of the terms of the bargain. The defendants say the parties contemplated the settling of a more formal agreement to embody their consensus, the Deed of Settlement and Release. In those circumstances they submit the BP Refinery test does not apply. Rather the defendants submit this is a case where the Court will imply a term, if doing so is necessary for the reasonable or effective operation of the contract in the circumstances of the case. The defendants point to the High Court's statements of principle in Byrne & Frew v Australian Airlines Ltd (1995) 185 CLR 410 at 422; (1995) 131 ALR 422; (1995) 69 ALJR 797; [1995] HCA 24 ("Byrne"), to the effect that a rigid approach should be avoided in cases where there is no formal contract and the actual terms of the contract must first be inferred before any question of implication arises; that is to say it is necessary to arrive at some conclusion as to the actual intention of the parties before considering any presumed or imputed intention.
18. In approving the need for some degree of flexibility in the application of the BP Refinery conditions, the High Court cited with approval in Byrne the following statement of Deane J in Hawkins v Clayton & Ors (1988) 164 CLR 539 at 573; (1988) 78 ALR 69; [1988] HCA 15, a passage referred to again in Breen v Williams (1996) 186 CLR 71; (1996) 43 ALD 481; [1996] HCA 57: "The most that can be said consistently with the need for some degree of flexibility is that, in a case where it is apparent that the parties have not attempted to spell out the full terms of their contract, a court should imply a term by reference to the imputed intention of the parties if, but only if, it can be seen that the implication of the particular term is necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case. That general statement of principle is subject to the qualification that a term may be implied in a contract by established mercantile usage or professional practice or by a past course of dealing between the parties."
19. But on the Court's analysis of the Heads, Byrne cannot readily be applied in this case. That is because the only additional content that is required by the Heads for the Deed of Settlement and Release is the releases and matters prescribed by clauses 1 and 2 of the Heads. Various other documents did have to be produced between them by mutual consent. But the Deed of Settlement and Release is not a whole new replacement contract.
20. But the distinction between the BP Refinery and Byrne tests in this case is ultimately academic, because upon the Court's analysis of questions (2), (3) and (4) the defendants' putative implied terms would fail both tests. The terms they propose are not necessary for the reasonable or effective operation of the contract in the circumstances of the case.

(2) What width of the easement does the Heads require?

1. The defendants argue that the agreement that the parties reached in the Heads requires the road reserve easement across Lot 3 to be 21.6 metres wide. Mrs Vella submits that the agreement reached was that the width should only be 16 metres. The Court finds Mrs Vella's submission more persuasive. The issue is approached here by setting out Mrs Vella's case supporting the narrower easement, followed by a critical analysis of the defendants' submissions in support of a wider easement. The parties' contentions on this question draw upon the Council's evolving road construction controls between 1997 and 2018, which are set out first.
2. The Council's Road Construction Controls - 1997 to 2018. At the time of the 2006 development consent, the Council's engineering requirements and standards for road construction for the dedication of a public road were set out in the Council's 1997 Guidelines for Engineering Works for Subdivisions and Developments ("the 1997 Engineering Guidelines"). Standard road widths were provided for in Table 1, of the Council's 1997 Engineering Guidelines, which was as follows: Road Reserve Footway Traffic Lane Parking Lane a. Local

• Shareway (max 6 lots) 10 Variable 1x3.5 1x2.5*
• Access Place (max 12 lots) 12.5 2x3.5 1x5.5 Nil
• Access Street 14 2x3.5 2x3.5 Nil
• Access Street - likely bus route 16 2x3.5 2x4.5 Nil b. Collector 18 2x3.5 2x3.0 2x2.5 c. Distributor Width to be determined in Consultation with Council d. Industrial 20 2x3.5 2x3.5 2x3.0

• Parking bays are to be provided at the rate of 1 bay per allotments.

1. The Council's 1997 Engineering Guidelines also required road pavement to be based on a granular pavement with a thin bituminous surfacing. The design traffic loading were given in Table 2, of the 1997 Engineering Guidelines, which relevantly provides as follows: CLASSIFICATION A.A.D.T N(ESA) Residential Access Place (max 12 lots) 0-150 2x104 Access Street 150-500 5x104 Access Street - likely bus route 150-2000 2x105 Collector 2000-4000 5x105 Distributor 4000-10000 1x106

1. In the eight year period between the making of the 2010 Tripartite Agreement and the Heads, the 1997 Engineering Guidelines were superseded by the Council's 2013 Design Guidelines for Engineering Works for Subdivisions and Developments ("the 2013 Engineering Guidelines") and the Council's 2014 Development Control Plan ("the 2014 DCP").
2. The 2013 Engineering Guidelines reproduced (a) a standard road widths table and (b) a pavement design table that with respect to residential roadways were identical to the equivalent tables in the 1997 Engineering Guidelines.
3. But the 2014 DCP modified and simplified the required road widths a reference to local, collector and distributor roads. A local road was defined in the 2014 DCP as "a road or street used primarily for property access". A collector Road was defined as "a road which collects and distributes traffic in an area, as well as providing direct property access". And a "distributor road" was defined as "a road connecting arterial roads to areas of development". The 2014 DCP provided a table of road configurations for these three levels of roads (Table C10.1) as follows: Street/Road Type Parking Lane Provision (m) Width of Dedicated Travel Lanes - Both directions (m) Verge widths (m) Road Reserve (m) Concrete Pathway 1.5m wide Local 2 x 2.5 3 2 x 3.8 15.6 Both sides(9) Collector 2 x 2.5(4) 7(4) 2 x 4.8 21.6(4) Both side(4) Distributor 2 x 3.95(6) 7(6) 2 x 4.8 24.5 Both sides Industrial 2 x 3.0(4) 7(4) 2 x 3.8 20.6(4) Both sides(4) Rural n/a 7 2 x 6.0(7) 19 n/a

1. Then the 2014 DCP provided illustrative figures with respect to local roads and collector roads. The illustrative figure for a local road (Figure C10.2) was as follows:
2. The illustrative figure for a collector road (Figure C10.3) was as follows:
3. Mrs Vella's Case. Mrs Vella argues that the Heads expressly indicate that the parties reached a consensus for an easement 16 metres wide. The first basis for this contention is in the 2006 plan attached to the Heads itself. The road drawn in the pink highlighted the 2006 plan across the subdivision site, which has within its boundaries the words "JILONDALEE WAY 16m WIDE."
4. Mrs Vella's second basis for this contention is the text of the 2006 development consent, which was well known to all the parties to the Heads. The 2006 development consent, clause 27(a) requires that "the proposed road is to be designed and constructed in accordance with the following table". The table within clause 27(a) prescribes a road reserve width of 16 metres, with a carriageway width of 6.6 metres, a shoulder of 1 metre, and a verge of 3.7 metres, but it provides no specific allowance for footpaths. The table also provides for an ESA Reading ("Equivalent Standard Axle" - a measurement of load-bearing compression) of 5x104 for the proposed road. And the plan attached to the 2006 development consent contains the identical words "JILONDALEE WAY 16m WIDE".
5. These matters strongly indicate that the parties agreed upon a 16 metre wide easement. But the defendants' case pointed to other matters that potentially indicate a wider easement may have been agreed. But as will be seen, ultimately the Court has not found those indications persuasive.
6. The Defendants' Case. The defendants argue that there are several indications in the Heads, and in documents of which the parties were aware at the time they signed the Heads, that they agreed upon an easement of 21.5 metres for Jilondalee Way.
7. The defendants argue from the text of the definition of "easement" in the Heads. As a preliminary matter, they submit that there is a distinction within the second sentence of the definition between the reference to the "area depicted as a Road Reserve in the planning consent (as shown in pink in the attached plan)" and the words that follow "with an allowance for kerb, gutter and footpath to the precise width required by the Council." The defendants submit they must mean different things. They submit that the words "the precise width required by the Council" applies to the phrase "with an allowance for", such that the agreement confers on Kindelon the width of the pink area of the easement plus an additional width allowance that may be "required by the Council". They submit that the "allowance" must confer an additional width to the easement beyond 16 metres. Their contention is that if 16 metres were the maximum agreed width, it would not be necessary to introduce any "allowance" provision such as this.
8. Then by a number of further steps, the defendants seek to infer that this allowance extends the easement width to 21.6 metres. The steps involve contrasting what was in the Council's engineering guidelines controlling public road dedication at the time of the 2006 development consent with what was in the Heads. The several steps are as follows. 1. The 2006 development consent, clause 27 provides for a road reserve of 16 metres. 2. The 1997 Engineering Guidelines applied at the time of the 2006 development consent to the dedication of public roads such as Jilondalee Way. Therefore, the 1997 Engineering Guidelines informed the content of the 2006 development consent. Table 1 of the Standard Road Widths in the 1997 Engineering Guidelines (as set out earlier in these reasons) provides that a 16 metre road reserve is the width required for an "Access Street - likely bus route". The 1997 Engineering Guidelines break down that 16 metre width into sub-parts: two traffic lanes for vehicles of 4.5 metres (making a width for traffic of 9 metres) and two footways - one on each side - of 3.5 metres (making a width for pedestrians of 7 metres). 3. But the content of the road reserve described in the 1997 Engineering Guidelines contrasts with the 16 metre wide easement provided for in the 2006 development consent. The 1997 Engineering Guidelines provide for a footway within the 16 metre road reserve. But the 2006 development consent specifically excludes a footway within the road reserve. Its allowance for "Footpath" is stated as "Nil". Its 16 metre width is broken down into the following sub-parts, comprising a total carriageway of 6.6 metres (representing 2 x 3.3 metres for the traffic in each direction), two verges of 3.7 metres (making a total of 7.4 metres for verges) and two shoulders, each of a width of 1 metre (the 16m therefore being 6.6m+7.4m+1m). 4. Thus the 2006 development consent excludes footpath works. But a construction certificate was issued in 2009, pursuant to which roadworks were constructed north from Bradley Street. These roadworks included a dish drain, which was constructed within the area and allowed for the verge in the 16 metre road reserve. Prior to the execution of the Heads, it was not anticipated there would be any footpath works within the 16 metres, indeed the 2006 development consent was inconsistent with footpath works inside the 16 metre road reserve. But the Heads represent an agreement to add footpath works outside the 16 metre road reserve. This explains why the Heads needed to make the allowance for footway related items, such as kerbing, guttering and a footpath, by means of an allowance outside the 16 metre width provided for in the 2006 development consent. 5. So far this logic gets beyond an easement width of 16 metres but without pointing to another specific width. The defendants then take the next step to a width of 21.6 metres. The defendants contend that it should be inferred from the 2006 development consent and from the 1997 Engineering Guidelines that when dedicated, Jilondalee Way was plainly to be built as a road for a likely future bus route. Their inference is based on Table 1 of the 1997 Engineering Guidelines, which allocates a 14 metre road reserve for an "access Street" but a 16 metre road reserve for an "access Street - likely bus route". The defendants contend that the choice of a 16 metre road reserve in the 2006 development consent (rather than a 14 metre road reserve) indicates the specification of an access road which could accommodate a future likely bus route. 6. But by the time the Heads were signed, the Council had replaced the 1997 Engineering Guidelines with revised 2013 Engineering Guidelines and the 2014 DCP, which stipulated the then current controls for road engineering and construction. And it can be accepted that these revised 2013 Engineering Guidelines and the 2014 DCP were known to all parties to the Heads. In the 2014 DCP, any road which would accommodate a likely bus route is defined as a "collector road". And the 2014 DCP requires a collector road to be 21.6 metres in width. And that 21.6 metres is made up of parking lanes of 2x2.5m, travel lanes of 2x3.5m, verge widths of 2x4.8m, and with a concrete pathway of 1.5 metres on each side. 7. The defendants submit that the parties to the Heads must have had in mind the then current 2013 Engineering Guidelines and the 2014 DCP as the only basis upon which Jilondalee Way could be dedicated. And the road reserve that those two development controls require is 21.6 metres. So an "allowance" to expand the width of the easement (and later the dedicated road) in excess of 16 metres was both reasonable and necessary.
9. Analysis. The defendants' interpretation of the Heads is ingenious but over-engineered. It would be surprising if an objective account of the parties' intentions was this complicated. And the text of the Heads accommodates a simpler interpretation, which can be approached through Mrs Vella's several answers to the defendants' argument.
10. First, the inference at step (5) of the defendants' logic fails. The specification of a 16 metre road reserve in the plan attached to the 2006 development consent and attached to the Heads is unlikely to indicate that the parties had in mind an access road with a "likely bus route". The need to accommodate a bus route is not mentioned either in the 2006 development consent or in the Heads. Nor are the 2013 Engineering Guidelines, nor collector roads mentioned in the Heads. And no attempt was made in the Heads to adjust the requirements of the "access road - likely bus route" in the 1997 Engineering Guidelines to the somewhat different structural elements of a collector road described in the 2013 Engineering Guidelines.
11. And on a proper reading of the 2006 development consent, the specification of a 16 metre road width does not necessarily indicate an "access road - likely bus route" from the 1997 Engineering Guidelines. There are other contrary indications. The clause 27(a) table in the 2006 development consent should be read as a whole. The clause 27(a) table specifies an ESA reading of "5 x104". The 1997 Engineering Guidelines provide the ESA specifications for the design of road pavements for various classes of road in Table 2. And Table 2 indicates that an ordinary "access street" must have an ESA of 5 x104. And an "access street - likely bus route" must have an ESA of 2 x105 which is quite a different and higher reading. Thus the choice of the lower ESA reading in the clause 27 table in the 2006 development consent tends to indicate an access street, but not one with a likely bus route, was intended.
12. Moreover, by the time the Heads were signed, the 1997 Engineering Guidelines had been replaced by the 2013 Engineering Guidelines in the 2014 DCP, which presented a more nuanced picture. The 2013 Engineering Guidelines specified that "road widths shall be consistent with Council's Development Control Plan and the development consent." And the 2014 DCP was flexible about road widths: 10.4 Roads B Controls, 1) Controls for all Roads, (b). It said that if the road configurations in Table C10.1 can clearly be demonstrated to be "not appropriate", then a series of principles applied, including that "road and lane widths must allow two-way movement… including consideration for buses, heavy vehicles…" So the widths in the 2014 DCP are not absolute requirements. It is true that the category of "collector roads" in the 2014 DCP is the only one that specifically mentions a bus service but even local roads must be designed under the 2014 DCP with consideration for buses.
13. Second, the preliminary matters to the defendants' argument are not persuasive. It is not at all obvious that the "allowance" mentioned in the second sentence of the definition of "Easement", must be an allowance in respect of kerbing, guttering and footpath works that are all outside the existing road reserve of 16 metres. It is equally compatible with the proper construction of the Heads that these works would be done, as required by Council, partly inside the 16 metre road reserve and partly outside. In this context it should be noted that the local road (15.6 metres wide) and the collector road (21.6 metres wide) in the 2013 Engineering Guidelines (Table C10.1 Road Configurations) have a standard "verge" of 3.8 metres (for a local road) and 4.8 metres (for a collector road). And this verge in both roads already incorporates kerbing, guttering and a footpath of 1.5 metres. Thus the 3.8 metre verge in a local road in the 2013 Engineering Guidelines (and which incorporates kerbing, guttering and a footpath) is very little different from the verge of 3.7 metres already allowed for in the 2006 development consent. That being so, it is difficult to see why an allowance wholly outside the 16 metres already provided in the 2006 plan would be required.
14. In the 2006 development consent the entry of "nil" under "footpath" means that no requirement for the construction of a footpath within the verge is being imposed. But that does not mean that any footpath that is to be constructed must be constructed outside the verge, as the defendants' argument assumes. The 2013 Engineering Guidelines shows that verges generally accommodate footpath, kerbing and guttering. All the allowance means in the Heads is that when a footpath, kerbing and guttering are constructed within the verge, some marginal accretion to the verge may be necessary taking the total road reserve beyond the width of 16 metres.
15. Third, the actual state of development of the road at the time the Heads were signed does not suggest that the parties had in mind anything wider than 16 metres. Professor Carmichael's evidence indicates that the road was in fact sealed to a width of 8.5 metres, which leaves 7.5 metres in the existing road reserve outside the sealed road. That therefore leaves 3.75 metres on each side of the road which is available for kerbing, guttering and a footpath. The Council's 2014 DCP provides for local roads to have a footpath of 1.5 metres. Indeed a 1.5 metre footpath is prescribed not only for local road but also for a collector road and indeed for a distributor road. Kerbing, guttering and a 1.5 metre footpath could be comfortably accommodated within the 16 metre road reserve.
16. Fourth, Nergl submits that the parties knew the road over Lot 3 had to be built to accommodate buses. But apart from the inferences to that effect that Nergl submits should be drawn directly from the planning documents analysed above, there is no other mutual correspondence that indicates such joint knowledge. And had there been some mutually recognised early need for Jilondalee Way to accommodate buses for lots, or an aged care facility, at the northernmost end of the site, by the time the Heads were being negotiated, it must have been strongly doubted from the course of events that access for buses would be required. The parties knew at the time of the Heads that Kindalon's mortgagee had sold a substantial part of its land in November 2017 to Vinegar Hill, which had not since then indicated any interest in becoming involved in the development. That being so, all that could really be guaranteed was going to be developed at the time of the Heads was a further seven lots in the area of Lot 2, Lot 3 and Lot 103, not 17 lots; which would not obviously have called for a bus service.
17. How then does the "allowance" in the Heads work? In Mrs Vella's submission, it allows the dominant tenement holder, Kindelon, to construct kerbs, gutters and footpaths because they are not required under the right of carriageways. Mrs Vella submits that the only grant of the easement is in terms of the "right carriageway" as defined in Conveyancing Act, Schedule 8. The Schedule 8 definition is as follows: "Full and free right for every person who is at any time entitled to an estate or interest in possession in the land herein indicated as the dominant tenement or any part thereof with which the right shall be capable of enjoyment, and every person authorised by that person, to go, pass and repass at all times and for all purposes with or without animals or vehicles or both to and from the said dominant tenement or any such part thereof."
18. Mrs Vella submits that does not permit the construction of kerbs, gutters or footpaths, so an express provision would need to be made for them through the allowance.
19. But in the Court's analysis, the defendants' contentions about the second sentence of the definition of "easement" are correct as far as they go. It would be unnecessary to provide for an "allowance" that could not exceed the 16 metre road reserve shown in pink. The phrase "with an allowance" does imply it is something extra to the 16 metre road reserve. And an "allowance" that potentially extended the 16 metre road reserve is compatible with the concept of other part of the second sentence of the definition of "easement", concerning the roundabout: "as well as an additional area adjoining Bradley Street".
20. But the defendants' contentions overlook the effect of the words "to the precise width required by Council". The reach of the allowance does not provide a general licence to the defendants to expand the width of the easement to as wide an area as can be justified by any possible application of Council regulations. The words "to the precise width required by Council" mean just that: that if the parties want a kerb, gutter and footpath that the Council may itself actually determine the precise additional width that it requires for the easement to accommodate those ancillary road features. In other words, "an allowance…to the precise width required by Council" will ordinarily only be available as the product of a Council determination of additional width. The practical purpose of the allowance is to import a slight degree of flexibility into the easement in case the Council makes such a determination when approving the road with these ancillary features. And without that Council determination the width of the easement is 16 metres.
21. And the parties' joint knowledge pointed to very little flexibility in the width of the easement being required. The parties knew that the 1997 Engineering Guidelines, the 2013 Engineering Guidelines, and the 2014 DCP only specified the required size (of 1.5m) for footpaths, and did not specify the dimensions of kerbs and gutters. And there was already a dish drain at the edges of the road as constructed, well within the (3.7m) verge area inside the 16 metre width of the easement. And a dish drain and kerbing and guttering are not both required. So it could readily be anticipated that installing a kerb and gutter that replaces the dish drain should have comfortably fitted within an available 2.2 metres (3.7m less 1.5m) portion of the verge.
22. So far the defendants' case for a 21.6 metre easement has been analysed here in the principal way that it was argued: as an inference to be drawn directly from the text of the Heads as a matter of the proper construction. But analysed as a putative implied term, the defendants' case for a 21.6 metre easement is no stronger. An implied term of a 21.6 metre easement contradicts the express terms of the Heads. Given the complexity of the analysis of the applicable planning instruments required to reach the conclusion of a 21.6 metre easement, it can hardly be said that such a term is so obvious that it goes without saying. Nor is a 21.6 metre easement necessary to give business efficacy to the Heads in a BP Refinery sense or a Byrne sense. The Court's analysis above of how the "allowance" works shows that the Heads has a perfectly satisfactory operation without such an implied term. It is therefore not immediately obvious that the parties thought that the road needed to accommodate buses and therefore needed to be a collector road. Moreover, Mrs Vella submitted and it certainly does not go without saying, that the road width should be 21.6 metres. Interestingly, it is to be noted in this connection that the first proposal Nergl advanced to Mrs Vella for an expanded easement was for an easement which was 24 metres wide, not 21.6 metres wide.

(3) Do the Heads require temporary construction easements over Lots 2 and 3?

1. Introduction. The third question is whether the Heads require temporary construction easements over Lots 2 and 3, beyond the boundaries of the agreed right of carriageway over Lot 3 that is described in the Heads.
2. Nergl contends that it is entitled to an easement for construction, to enable it to bring in heavy earthmoving equipment to complete the building of the road. Nergl's claimed construction easement is approximately parallel to and outside the easement marked in pink in the 2006 plan annexed to the Heads. But the Heads are silent about any easement for construction. Therefore the creation of this proposed easement is based upon implication of a term into the Heads based on business efficacy.
3. Nergl contends that it is obvious that the claimed construction easement is needed and it should be implied. But Mrs Vella says in answer to that that it is not at all obvious that it is needed. She says that the nature of any construction easement depends upon what work actually needs to be done to complete the construction of the road. And she says that is contentious, pointing to difficulties in working out (a) the time for which the construction easement would need to be in place and (b) the physical extent of the easement that is actually required. And she submits that once an easement is implied outside the road reserve there would be an immediate diminution in the market value of Lot 3.
4. But before the evidence relevant to this issue is examined, it is necessary to construe the Heads as a whole with a view to applying tests for the implication of contractual terms.
5. Construction of the Heads and Implied Terms. At times the arguments advanced in this case seemed to the Court somewhat disconnected from the text of the Heads. This was no more evident than in this contest concerning the easement for construction. The purpose of the defendants' claimed easement for construction was to complete the pavement and ancillary works of a road along the easement that will ultimately be sufficient to satisfy Council's requirements for the later dedication of the easement as a public road.
6. But the Heads has a simpler mutual contractual objective, the "registration of the Easement", which is constantly repeated throughout the Heads. This objective is stated very clearly in the concluding words of the Heads: that the parties will "diligently and in good faith" negotiate the terms of the settlement documents distributed by Nergl's lawyers, "with a view to achieving registration of the Easement before 29 March 2019". And the only payment of money compensation to Mrs Vella of $100,000 under the Heads pivots entirely around Mrs Vella's delivery of the easement in registrable form to Nergl for registration.
7. This mutual contractual objective of "registration of the Easement" (or its lodgement for registration) is the touchstone of almost every contractual obligation under the Heads. The requirement for Nergl to withdraw the caveats over the Vella land is predicated on "registration of the Easement": clause 3. Mrs Vella's obligation to discontinue the litigation must happen as soon as practicable after "registration of the Easement": clause 4. Once Nergl delivers "the Easement in registrable form", Mrs Vella's active contractual duty is to "grant the Easement in favour of the owner of Lot 103" and to accept that the terms of such easement when granted will allow the dominant tenement owner to elect to extend the benefit of the easement to lands north of Lot 103: clause 5. Mrs Vella is required to consent to Nergl's amended development applications to give effect to the "Adjustments" as defined in the Heads, within six months of the date that the owner of Lot 103 "lodges for registration the Easement": clause 9. Again within the same six-month period, starting from when the owner of Lot 103 "lodges for registration the Easement", Vella must apply the Special Condition, as defined in the Heads, in any contract for the sale of the Vella land: clause 10.
8. The provisions of the Heads that project any time horizon beyond the registration of the easement are clauses 5, 6 and 7. These provisions confer rights upon "the holder of the dominant tenement". This expression is a reference to Kindelon, or the registered proprietor for the time being of Lot 103 after registration of the easement. Clause 5 allows the holder of the dominant tenement to register further easements over the same land in favour of further lands to the north that are benefited by the 2006 planning consent. This is open-ended as to time but it involves nothing more than the registration of further easements.
9. The only references anywhere in the Heads to taking steps towards dedication of the easement as a public road are clauses 6 and 7, which are of limited import.
10. Clause 6 states that the holder of the dominant tenement "shall have the right to dedicate land within the easement to the Council, so as to become a public road" (emphasis added). This confers important but limited protection on Kindelon. This clause declares Kindelon's intent to apply to dedicate the easement as a public road. Its effect would for example be to prohibit Mrs Vella from opposing Kindelon exercising that right in applying for such a dedication. The clause represents an implied negative stipulation in the Heads, which could be enforced against Mrs Vella by injunction. Whether it needs to be included in the s 88B instrument is a question that does not presently have to be answered.
11. But clause 6 does not require anything positive of Mrs Vella. It does not identify any obligations on the part of Mrs Vella, correlative to Kindelon's "right to dedicate", to take active steps to support or facilitate the dedication of the easement as a public road. All it requires is the limited obligation to recognise "the right to dedicate" the easement. This contrasts strongly with the express obligations on Mrs Vella in clauses 4, 5, 9 and 10 to take identified steps to facilitate the registration of the easement.
12. The scope of clause 7 is framed "until such dedication" (as a public road). But it goes no further than clause 6 in requiring anything of Mrs Vella "until such dedication". It only imposes on Kindelon the obligation "to repair and maintain [the Easement] in good condition" until dedication and confers an indemnity on Mrs Vella.
13. Importantly, in a context where at the end of the mediation Nergl's lawyers were going to prepare and distribute "documents necessary to give effect to the settlement", there was no obligation placed on the parties to negotiate both diligently and in good faith with a view to achieving dedication of the easement as a public road. Their negotiating obligations only extended to achieving "registration of the easement". This was a readily attainable objective which could be achieved without any further earthworks being planned or executed in the easement depicted in pink on the 2006 plan.
14. This analysis is supported by the limited range of the adjusting provisions that provide future flexibility in the definitions in the Heads. With the exception of filling in dams on the Kindelon lands, the matters that fall within the definition of "Adjustments" in the Heads all relate to boundary alterations. And the "allowance" and "additional area" in the second sentence of the definition of "Easement" provide some flexibility for specific future events which may result in slight boundary changes to the easement to be registered. But none of this flexibility relates to the period after registration of the easement or the period six months after lodgement of the easement in registrable form. Specifically, no flexibility is expressly conferred to make any variations required to accommodate future earthworks in the vicinity of the easement or the dedication of the easement area as a public road.
15. This reasoning must be borne in mind when considering any implication of terms such as the easements for construction into the Heads on the grounds of business efficacy (BP Refinery) or for the reasonable or effective operation of a contract (Byrne). The implication of a term on business efficacy grounds involves consideration of exactly what is necessary to give business efficacy to the particular contract and whether that contract will be effective without the term that is sought to be implied. Here, the Heads already do quite a workmanlike job (without additional implied terms) to achieve (a) "registration of the Easement" and (b) Mrs Vella's non-opposition to the any future application by Kindelon to dedicate the easement as a public road.
16. The defendants' case places reliance upon clause 6 of the Heads and says that Mrs Vella must therefore accommodate whatever Nergl believes it needs to dedicate the pink area on the 2006 plan as a public road. In the Court's view, this aspect of the defendant's case erroneously grafts onto this contract the idea that the parties had a mutual contractual objective of dedicating the pink area on the 2006 plan as a public road. That does not conform with the proper construction of the Heads. The parties did have a recognised mutual contractual objective to have the area marked pink on the 2006 plan registered as an easement and to actively cooperate in achieving that result. But their only mutual objective so far as the dedication of a public road is concerned, is that Mrs Vella would recognise and not oppose Kindelon exercising that right. Mrs Vella could reasonably cooperate in achieving that contractual objective by not opposing Kindelon's application, when it was made. But that does not mean they were obliged by the Heads to commit their financial resources (for example by impairing the value of Lots 2 and 3 for an extended period) to assist Kindelon for an undetermined time frame to successfully dedicate the easement as a public road.
17. And one does not need to look very far to see why any mutual obligations the parties may have in the Heads, relating to the possible dedication of the public road, are far more constrained than their mutual obligations in relation to achieving registration of the easement. The Heads express a strong theme of limiting the time during which Mrs Vella will have any continuing obligations to Nergl and Kindelon about the easement. Mrs Vella's obligation to cooperate with Nergl in giving effect to the Adjustments (clause 9) and to include the Special Conditions in the Vella sale contracts (clause 10) are strictly limited to a period of 6 months from lodgement of the easement for registration. And Nergl binds itself to avoid delay in easement registration, by lodging the easement for registration within seven days of receiving it in registrable form from Mrs Vella. The only obligation on Mrs Vella related to the easement without a time limit is the clause 5 burden to submit to further easements over the same pink strip on the 2006 plan but as the lots north of Lot 103 that might benefit from this are readily identifiable, this obligation is limited in scope. In any event, it will be a term of the s 88B instrument.
18. But the Heads contain no time constraint on Nergl dedicating the land in the easement to become a public road. Were there a positive obligation on Mrs Vella to actively cooperate with Nergl to achieve the objective of dedicating a public road, it would be an open ended one. It is not difficult to see why the parties expressed themselves in the very limited way that they did about dedicating the easement as a public road in the future. There are just too many imponderables over too long a period.
19. And not the least of these imponderables was who would own Lots 2 and 3 when the time came to dedicate the easement as a public road. On an objective reading of this contract there is no basis to conclude that the parties had in mind that Mrs Vella (a) would be required to hold Lots 2 and 3 until the easement was dedicated as public road, or (b) would have to ensure any purchasers of Lot 2 or Lot 3 from her would accommodate Nergl's requirements for dedicating the easement as a public road. Put another way, if more construction work on Lot 2 or Lot 3 outside the boundaries of the easement were required after the easement was registered, in order for the easement to be dedicated as a public road, then the Heads leaves Nergl to bear the negotiating and financial risk of getting that construction work done. And specifically, Nergl bears the risk of undertaking further negotiations either with Mrs Vella or with some future owner of Lots 2 and 3 to execute the necessary construction work outside the boundaries of the easement.
20. This analysis is a complete answer to the defendants' case for an easement for construction over Lots 2 and 3. Such an easement is not necessary to achieve business efficacy in the contract (BP Refinery) or for the reasonable or effective operation of the contract (Byrne). But in deference to the careful and thorough arguments that were advanced on both sides about this issue, some further analysis of the competing evidence and parties' submissions is undertaken below.
21. The easement for construction issue was complicated by two matters, one of which has been resolved by this judgment. The first complication is that the extent of the easement for construction will depend upon whether the right of carriageway marked in pink on the 2006 plan is 16 metres wide or 21.6 metres wide. That issue has been resolved. The second complication was that the 2006 development consent requires the old dam on Lot 3 immediately to the west of the right of carriageway ("the western dam") to be filled in by earthworks, which would most efficiently be undertaken at the same time as any earthworks to complete the road along the easement.
22. This easement for construction issue is approached first by examining Nergl's arguments for the implication of such an easement, followed by an examination and analysis of Mrs Vella's contrary arguments. It is to be remembered that by virtue of the grant of the easement, Nergl already has a right to enter within the area of the easement itself and to undertake necessary construction works in a reasonable manner to make the way passible to traffic: Newcomen v Coulson (1877) 5 Ch. D. 133 and Bidder v North Staffordshire Railway Co (1878) 4 QBD 412. The point at issue here is the extent to which Nergl may do construction work outside the boundaries of the easement.
23. The Case for an Easement for Construction. Nergl's case for an easement for construction can be conceptually divided into the need to accommodate construction in three separate areas. These areas are: (a) roundabout construction near Bradley Street; and (b) general road construction along the length of the easement depicted in the 2006 plan but not associated with construction of a roundabout near Bradley Street; and (c) an area west of the proposed easement where the remnants of a dam is located.
24. The defendants' claimed easement for construction (a) is associated with the roundabout at Bradley Street and derives in part from the definition of "Easement" in the Heads and is not just based on the same reasoning as would justify claimed easement (b) and (c).
25. As to easement for construction (a), the second sentence of the definition of 'Easement' in the Heads stated that the easement granted will encompass "an additional area adjoining Bradley Street sufficient to permit the construction and dedication of a roundabout". This may arguably be wide enough to encompass an easement for construction in this area. Whether or not it should be inferred is a different question dealt with in (4) below. The parties to the Heads knew that some of the Vella land adjoining Bradley Steet had already been resumed to accommodate the upgrade of Bradley Street as part of the upgrade of the Northern Road. The final resumed area is clearly outlined in the plan of Lot 2 and Lot 3 in DP 1240377 and runs all the way along Bradley Street from the Northern Road beyond the proposed Jilondalee Way. The parties treated the resumed land as being part of "Bradley Street" for the purposes of the phrase "adjoining Bradley Street" in the Heads.
26. Accordingly, the defendants' claim for an easement for roundabout construction near Bradley Street will be considered with question (4) below. This section only deals with the claims for an easement (b) for general road construction along the length of the easement depicted in the 2006 plan but not associated with construction of a roundabout near Bradley Street; and (c) an area west of the proposed where the remnants of a dam is located.
27. As to the proposed easement for construction (b), and leaving aside issues concerning proposed easement for construction (c), Mr Walsh, the expert witness called by Nergl says that to construct a road for dedication as a public road across a 21.6 metre road reserve at this site, an easement for construction 43 metres wide is required approximately along the axis of the proposed right of carriageway over Lot 3. The 43 metres is required Mr Walsh says because of the need to construct batters outside the proposed road reserve and that this will use multiple forms of heavy construction machinery and plant which will require sufficient working space for heavy machinery and plant to operate, to turn and to temporarily stockpile excavated material. He says that it is also necessary to make allowances for the safety of personnel operating plant and manual labour on the site. He calculates his 43 metres as comprised of 35.8 metres required to construct the road and a further 7.2 metres of working space to be provided for the safe performance of the works. This 43 metre distance can be locally narrowed in areas where the extent of the batters required is reduced. And he pointed to methodology and practices that might be used to reduce this distance.
28. Mr Walsh was primarily instructed to do his calculations based upon Nergl's case of a 21.6 meter road reserve. But he calculated that in the event that the alternative 16 meter road reserve were required that the difference of 5.6 metres (between 21.6 metres and 16 metres) could be directly deducted without further calculation from his 43 metre estimate. This would produce an amended figure of 37.4 metres for the easement for construction in those circumstances. The Court accepts that Mr Walsh had broad site experience over many years and was competent to give the opinions which he expressed.
29. Professor Carmichael, the expert called in Mrs Vella's case, said that it was possible to undertake the work required to construct a road within the 16 metre road reserve on this site using all the necessary heavy machinery. He pointed out that the area within the right of carriageway is 3,360 square metres. He gave the example of roadworks that sometimes have to be executed between buildings or in areas fenced on both sides. He pointed out that in such situations it is necessary to confine the earthworks within the area of a road reserve without traversing onto neighbouring property, because it is not possible to do so. Professor Carmichael had less day to day hands-on practical experience then Mr Walsh but has a very long and distinguished academic record in the sphere of civil engineering. He too was competent to give the opinions expressed.
30. At one level it is not necessary to resolve the differences between these two experts. The fact that this dispute even exists indicates that it cannot be said that an easement for construction is so obvious that it goes without saying, or to use the words of Byrne that it is necessary for the reasonable or effective operation of the contract. Whether an easement for construction is needed is a matter of debate and not obviously necessary.
31. But the Court will resolve the differences. Mr Walsh framed much of his reasoning as to what needed to be done around his instructions that the road reserve should be 21.6 metres wide and that substantial reworking of the existing road surface was required. He then adapted those workings mathematically to the 16 metre road reserve. But even so, it was clear that his workings were only estimates. He does not know what the precise scope of the works that would be required without closer study.
32. But in the Court's view, Professor Carmichael's approach is a better fit to what the Court has now found are the legal rights of the parties. His opinion was wholly based on a 16 metre road reserve. And the Court accepts his view that the task required is less extensive than Mr Walsh assumed. All that now seems to be required to complete this road is to curate the unsealed subbase covering 40% of the road reserve at its northern end and then to seal it with bitumen and complete dish drains along the length of the reserve. That is substantially less onerous work than what predicates Mr Walsh's reasoning. And it is difficult to fault Professor Carmichael's logic that if the area were fenced all work would have to be done within the 16 metre road reserve.
33. But even if Mr Walsh's evidence were to be accepted, there are a number of other reasons based in the text of the Heads and the jointly known surrounding circumstances for the Court to infer that the parties left the issue of the actual area required for construction, and the way it would be granted, to be worked out at a later time between Nergl and either Mrs Vella or a subsequent owner of Lots 2 or 3.
34. First, there is no express reference anywhere in the Heads to an easement for construction outside the right of carriageway area delineated in pink in the 2006 plan attached to the Heads. The Heads provided for many contingencies. It is to be expected that in such a careful document had the parties intended to provide for an easement for construction that they would have done so expressly.
35. Second, the easement for construction is not reasonable and equitable. As originally propounded it was unlimited as to time. As ultimately propounded in the defendants' draft documents, the time for which it will be required appears to be three years. Whatever development is going to take place further to the north of Lot 103 will take a significant period of time and is uncertain. And the easement for construction that the defendants now claim would burden Lot 2 for the first time, impairing Mrs Vella's capacity to sell Lot 2 until all construction on Lot 3 were complete. The parties agreed upon a substantial consideration of $100,000 (clause 5) for the grant of the right of carriageway in the Heads. The claimed easement for construction would impose a substantial further burden on Lot 2 and Lot 3 for no further consideration.
36. Third, an alternative is open, a licence. The Heads are effective without the implication of an easement for construction because it is open to Nergl to seek the grant of a short license for permissive entry to do particular things over Lots 2 and 3, which would not be as deleterious to the value of the land. And given the long history of inaction in developing this site and the interposition of Vinegar Hill, Nergl's commitment to developing the site in accordance with the 2006 development consent is uncertain. It is far more reasonable to leave the need for a construction area to be resolved, when the time comes, by a licence from the owner of Lots 2 and 3.
37. Nergl's answer to this submission is that such a licence will terminate if the land is sold. But the answer to that, in turn, is the leverage provided to Nergl or Kindelon from making a Conveyancing Act, s 88K application. This would of course mean that Nergl would have to pay any new owners of the land by way of compensation under s 88K. But if a person upon whom it is proposed to impose a section 88K easement proffers a license to achieve what the easement would otherwise achieve the Court generally will not impose a s 88K easement.
38. As a footnote to this analysis, it should be observed that when the 2010 Tripartite Agreement was in force, there was a contractual requirement for cooperation between the parties and Nergl had a contractual right to go onto Mrs Vella's land. But nothing in the Heads suggests that that the parties wished to rely upon any part of the 2010 Tripartite Agreement to perform the Heads. Rather their intent was to bring the 2010 Tripartite Agreement to an end.
39. Finally, as to easement for construction (c), based on Mr Walsh's evidence Nergl submits that it is necessary for the western dam to be filled as part of the works. The dam is very close to the unsealed part of the road towards the north of Lot 3 and on its western side. The photographs do not show that this dam is a very deep depression but Mr Walsh's evidence is that there is nevertheless a safety issue if the western dam is left unfilled. This can be accepted as is the completion of the roadworks with a sealed road will create a form of dam wall at the edge of the road which well may create a dangerous depth of water. Mr Walsh says that Council will make it a requirement of any future road dedication that the dam be filled, so is provided for an easement construction to encompass the filling of the Western dam. Nergl says that Professor Carmichael has overlooked this safety issue.
40. If the dam work were done separately it would take only two to three weeks for a contractor to complete it comfortably. But the proposed easement for construction to fill the dam is not directly related to the roadworks. Mr Walsh made this clear. He had inspected the land, and said that the two tasks were severable. Mr Walsh said in cross-examination: "Mr Sexton SC: But you could complete construction of the road by sealing that remaining section without going anywhere near the dam, couldn't you? Mr Walsh: In theory, you could. I believe council would require the dam be filled first. Mr Sexton SC: I understand that belief. I'm just asking you about construction. So far, what's been done and approved by council is the sub service layers for the whole of that length of the road on my client's land, correct? Mr Walsh: Correct. Mr Sexton SC: And subsequent to that, part of the road has been sealed, correct? Mr Walsh: Correct. Mr Sexton SC: And it would be possible to seal the rest of the road without going anywhere near the dam, wouldn't it? Mr Walsh: It would be an illogical construction sequence. Mr Sexton SC: It would be possible to do it though, wouldn't it? Mr Walsh: Yes. HIS HONOUR: Why would it be illogical, apart from what council would require? Mr Walsh: Typically, you would perform the bulk earthworks which typically involves heavier construction material or machinery and then you would commence construction of the road subsequent to that so that you're not tracking heavy vehicles over HIS HONOUR: Over formed roads? Mr Walsh: Over an asset that is going to be handed over to council."
41. But the requirement to fill the dam is one of the conditions of consent of the 2006 development consent, probably because of the safety issue. As a civil engineering task it is not strictly necessary in order to complete the sealing of the northern end of the road for the dam to be filled. It is not a mutually agreed objective of the Heads that the parties would agree to do whatever was required to assist Nergl successfully to gain registration of a linen plan of subdivision pursuant to the 2006 development consent. On the Court's earlier analysis, the parties conspicuously did not agree to that. There is no basis to imply any easement for construction for what is therefore a collateral purpose.
42. This is another matter that could be solved by Nergl negotiating as required for a temporary two to three week license from the registered proprietor for the time being of Lots 2 and 3, for the limited purpose of filling the dam.

(4) Accommodating a Roundabout at Bradley Street in the Easement

1. The final question relates to the proper configuration of the easement at the southern end of Jilondalee Way, where it joins Bradley Street, in order to accommodate a roundabout at that proposed intersection. Mrs Vella and the defendants have quite different approaches to what the Heads require at this southern end of the right-of-way. Mrs Vella's submissions are the more persuasive on this issue and they are set out first.
2. Mrs Vella advanced a plan (part of Exhibit D) which shows "an additional area adjoining Bradley Street sufficient to permit the construction and dedication of a roundabout". Exhibit D replicates the 2006 plan attached to the Heads (Exhibit 3) of a proposed 16 metre easement but it takes into account the area that has since been resumed by the RMS.
3. The plan in Exhibit D, giving an expanded view of the southern end of a 16 metre easement where it joins Bradley Street, is set out below.
4. Exhibit D shows on the western boundary of the easement, just before it meets Bradley Street, a splayed area marked with the notation of "6.48" metres. There is no similar splayed area on the right-hand side, the eastern boundary, of the easement. As Exhibit D shows, the area that the RMS has resumed has a width of 22.51 metres at the mouth of Jilondalee Way. Mrs Vella has instructed a surveyor to amend the boundary of the 16 metre right of carriageway slightly, so that it accommodates the surveying logic of the new boundary between Lots 2 and 3 and the land that the RMS has resumed from those lots. The RMS resumption along Bradley Street is articulated with a trapezoid section extending slightly further to the north at the point that Jilondalee Way will enter Bradley Street. Exhibit D amends the western side of the 16 metre easement to better fit with that trapezoid boundary structure.
5. Mrs Vella submits that the RMS can reasonably be presumed to have resumed all the land that the RMS anticipates it will need to construct a roundabout at the intersection of Bradley Street and Jilondalee Way. Mrs Vella argues that the plan appropriately amends the area to which the easement applies to add "an additional area adjoining Bradley Street", which is "sufficient to permit the construction and dedication of a roundabout."
6. Mrs Vella says if the RMS need more land to construct the roundabout than it has already resumed, then it has ample statutory powers to do so which it can use as it has powers of resumption. But as a "roads authority", the RMS also has extensive powers of entry into private land to execute the construction of public roads works in the Roads Act 1993, s175(1), which provides as follows: "(1) For the purpose of - (a) carrying out road work on a road or a proposed road, or (b) providing a temporary road to replace a public road that has become impassable, the appropriate roads authority may use and occupy, for as long as may reasonably be necessary in the circumstances, any land along or near the line of the road."
7. Mrs Vella submits that an easement for construction therefore does not need to be moulded to accommodate the construction of the roundabout.
8. Subject to one matter accepted by Mrs Vella's expert witness, Professor Carmichael, the Court finds Mrs Vella's submission persuasive. But through Mr Walsh, the defendants advance a broader proposal.
9. The defendants advance a drawing prepared by GTA Consultants, which is annexed to Mr Walsh's report, as a configuration for the roundabout where Jilondalee Way meets Bradley Street. The GTA Consultants drawing is set out below:
10. The GTA Consultants' drawing shows, in light blue outline, the profile of the road where the RMS has resumed land to build along Bradley Street. The black overlay is the work of GTA Consultants to show a roundabout at that intersection. The parties to the Heads certainly thought in December 2018 that a roundabout was likely to be built at this point and they structured their definition of "Easement" in the Heads around that belief.
11. Mr Walsh considered that a construction area on Lots 2 and 3 to accommodate the construction of a roundabout based on the GTA Consultants' drawing would be 43 metres wide at its northern end and 99.7 metres wide (being 92 metres plus 7.2 metres for a safe working space) at the southern end (being Area "A" in his report). The 43 metre width at the northern end of this construction area is the same as the 43 metre width that Mr Walsh says is necessary for the construction easement further north along the road reserve.
12. Mr Walsh regards GTA Consultants as a suitably qualified and competent consultancy to design a roundabout for this intersection. From his own desktop review, he considers their work adequate to assess what road reserve will be required for a roundabout at this intersection together with its associated construction area. Relying upon the GTA Consultants' drawing, Mr Walsh offers the opinion that the construction area he describes is required. The defendants build their case upon Mr Walsh's expert evidence to say that the additional area that Mr Walsh describes adjacent to Bradley Street, his Area "A", is "sufficient to permit the construction and dedication of a roundabout" and allowance should now be made for it by way of a construction easement.
13. It should be noted in passing that the GTA Consultants' drawing also accounts for the slight outward splay of the boundaries on each side of the proposed 21.6 metre easement shown in Exhibit 3 at its southern end at Bradley Street. This outward splay is detectable as a slight triangulation of the hatched orange area that shows the difference between the 16 metre easement and the 21.6 metre easement in that area.
14. But the defendants' case for an easement for construction as wide as 99.7 metres at its southern end, based upon the GTA Consultants drawing, is not persuasive. The final configuration of any future roundabout where Bradley Street meets Jilondalee Way is uncertain. Both Professor Carmichael and Mr Walsh agree that the Council or the RMS will finally determine the roundabout's design. It seems unlikely that Nergl will be constructing this roundabout, unless it is with the consent and supervision of the Council or the RMS, as well over 95% of the roundabout will be on the RMS land not on Lots 2 or 3. The GTA Consultants drawing does not originate from either the Council or from the RMS. Rather, it is as it declares itself, a "Preliminary Concept Layout" overlaid by GTA Consultants in black outline onto the RMS's blue master plans.
15. The GTA Consultants drawing therefore has no particular authority and is only one possible conceptual layout for a roundabout at this point. It is not a roundabout design which the Court should conclude is more likely to be built than any other concept design for the purposes of moulding the shape of the right of carriageway or the easement for construction. Indeed, features of this particular design suggest that it may well not ultimately be built. For example, the GTA Consultants drawing proposes a roundabout with four entrances rather than just a "T" intersection with Jilondalee Way. This structure for the proposed roundabout conflicts with the blue outline proposed "T" intersection of the current RMS plans.
16. Moreover, at this point there is no evidence that the RMS will definitely be building a roundabout, as distinct from some other form of traffic merging structure on Bradley Street. The Court does not have a sound basis in the GTA Consultants drawing to apply the easement to an "additional area" at this point "adjoining Bradley Street".
17. Nor does the Court have a sound basis for inferring an easement for construction from the GTA Consultants drawing. The RMS will probably be doing the work, largely from Bradley Street. The defendants have not established that it will be Nergl. What construction area is "sufficient to permit the construction and dedication of a roundabout" can simply be identified by adverting to the amply sufficient power to create a construction zone that is provided to the RMS by Roads Act 1993, s 175.
18. But for a concession by Professor Carmichael, the Court would therefore conclude that the plan in Exhibit D is the only alteration required at the intersection of the proposed easement across Lot 3 and Bradley Street. But Professor Carmichael conceded that a splay like that which is visible on Exhibit 3 (but about half the size) is a more appropriate way to join the proposed easement into a busy Bradley Street. It will not be difficult for Professor Carmichael, Mr Walsh and surveyors to come up with such an altered connection at the southern end of the proposed easement. The Court will direct that they consult with a view to settling the configuration of the southern end of the proposed easement over Lot 3.

Moulding the Relief

1. Mrs Vella is in substance seeking specific performance of the Heads. A party seeking equity must do equity. This doctrine is frequently applied: Tidd v Lister; Bassil v Lister (1852) 10 Hare 140, at 153; 68 ER 872, Chillingworth v Chambers [1896] 1 Ch 685, Forsyth v Blundell (1973) 129 CLR 477 at 504; (1973) 1 ALR 68; (1973) 47 ALJR 448 and Stefanetto v Forestry Commission of New South Wales [1975] 1 NSWLR 332. This means that a party seeking equity must be prepared to submit in that suit to any direction which a court of equity may find it proper to give: Langman v Handover (1929) 43 CLR 334 at 351; [1930] ALR 197.
2. But the doctrine has limits. The Court cannot impose arbitrary terms upon the grant of relief that are not justified by the defendant's existing legal or equitable rights: Hanson v Keating (1844) 4 Hare 1 at 6; (1844) 67 ER 537, at 539. The same idea has pithily been put this way: "the maxim requires the plaintiff to do equity, not justice": JD Heydon, MJ Leeming, PG Turner, Meagher, Gummow & Lehane's Equity: Doctrines and Remedies (5th ed, 2015, LexisNexis Butterworths), at 77.
3. Here, the Court's analysis shows that Mrs Vella will have to perform all of her side of the bargain represented by the Heads in order to obtain the removal of the caveats that she requests. To the extent that her prayers for relief 11A and 11B do not do this, they will need to be modified. If more detailed orders are required, they can readily be applied for and supplementary orders will be made if required.
4. But here Mrs Vella is also seeking statutory relief under Real Property Act 1900, s 74MA(2), for the removal of the caveats over Lot 2 and Lot 3. Under Real Property Act, s 74MA(2), the Court has broad power not only to order the removal of the caveats but to make other ancillary orders. Real Property Act, s 74MA(2), provides: "(2) After being satisfied that a copy of the application has been served on the person who would be required to withdraw the caveat if the order sought were made or after having made an order dispensing with service, the Supreme Court may: (a) order the caveator or another person, who by virtue of section 74M is authorised to withdraw the caveat to which the proceedings relate, to withdraw the caveat within a specified time, and (b) make such other or further orders as it thinks fit."
5. The Court will make an order for the removal of the caveats over Lot 2 and Lot 3 under s 74MA(2)(a). That removal will need to conform to the terms of the Heads, which schedule the removal of the caveats to occur, "upon registration of the Easement": clause 3. But the Court's earlier analysis shows that other interdependent obligations will also need to be performed at the same time, including execution of a Deed of Settlement and Release that conforms with the limited scope provided for in clauses 1 and 2 of the Heads. The Court will make an order for the removal of the caveats, but will qualify that order in conformity with this analysis.
6. But in light of the Court's reasons, the parties may also seek ancillary orders under s 74MA(2)(b) to control more closely the time at which various steps take place under the Heads and to more rapidly bring their mutual commercial relations to satisfactory finality. This may be able to be done at some kind of settlement appointed for the purpose. The Court's general grant of liberty to apply encompasses applications to facilitate this occurring. The liberty to apply is not limited in time because of the unpredictability of the problems the parties might encounter. But the parties are still expected to raise any ancillary issues expeditiously.
7. The defendants raise some arguments concerning Mrs Vella's ready willingness and ability to perform the Heads. But now that the Court has given clarity to the scope of the easements that are required by the Heads, most of these arguments appear to fall away. If despite these observations that issue is still contentious, it can be raised pursuant to the liberty to apply.
8. The Court will make an order for specific performance of the Heads and will make declarations to give effect to the Court's reasoning on the questions about the parties' obligations that arise under the Heads. These orders and declarations are all made below.

Conclusions and Orders

1. The plaintiff has been substantially but not wholly successful in the proceedings. The Court will reserve the question of costs and will hear submissions on that question. If any party wishes to apply for a special costs order then that is encompassed within the liberty to apply granted as part of the Court's orders.
2. For these reasons the Court makes the following declarations, orders and directions: 1. Order that the defendants specifically perform and carry into effect the agreement made between the plaintiff and the defendants on 12 December 2018 and entitled "Heads of Agreement following a Mediation" ("the Heads of Agreement"); 2. Declare that in carrying into effect the Heads of Agreement pursuant to order (1) that "the Easement" as defined under the Heads of Agreement that shall be placed in registrable form and registered on the title of Lot 3 in DP will be 16 metres in width; 3. Declare that in carrying into effect the Heads of Agreement pursuant to order (1) that the plaintiff is not required to grant easements for construction to the defendants over any part of Lot 2 and Lot 3 in DP 1240377; 4. Declare that in carrying into effect the Heads of Agreement pursuant to order (1) that "the Easement" as defined under the Heads of Agreement may be configured at its southern end where it meets Bradley Street with a splay of the type identified in Exhibit 3 at that location but approximately half of that shown in Exhibit 3; 5. Direct the parties to arrange for Professor Carmichael and Mr Walsh to consult with a view to constructing a plan to reflect the area of splay the subject of declaration (4) that will be in registrable form; 6. Order that pursuant to Real Property Act, s 74MA(2), the first and fourth defendants shall withdraw the caveats within 14 days after registration of "the Easement" defined under the Heads of Agreement (as modified by these orders and declarations) and upon the performance by the plaintiff of the other obligations imposed on her under the Heads; 7. The parties have liberty to provide the Associate to Slattery J with any further agreed short minutes of order to give further effect to these reasons; 8. Reserve the question of costs for further submissions; 9. Direct that any party seeking a special costs order shall do so by giving notice to the Associate to Slattery J by Tuesday 3 November 2020; 10. Note that the Court will make no order with respect to the costs of the second and third defendants, to the intent that they bear their own costs of these proceedings; and 11. Grant liberty to apply.

Amendments 05 March 2021 - [30]: citation corrected [75]: "The" added, "attempted" rather than "attempt" [93]: "v" instead of "in" DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 05 March 2021