Wolseley Investments Pty Ltd v Gillespie

CATCHWORDS: EQUITY - availability of degree of specific performance where primary judge concludes that defendant had neither committed a contractual breach nor so conducted itself as to give rise to its reasonable apprehension - whether costs should be awarded against party unsuccessfully opposing specific performance in such circumstances - body corporate in a home unit building contracted with apartment owner to lodge development application with council with all due despatch and to use best endeavours to secure development consent from council for creation of extra apartment in attic - WORDS AND PHRASES - "all due despatch" - "best endeavours"

LEGISLATION CITED: Environmental Planning and Assessment Act 1979 Environmental Planning and Assessment Regulation 2000

Bass v Clivley (1829) 48 ER 33 Hasham v Zenab [1960] AC 316; [1960] 2 WLR 374 Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 CASES CITED: Marks v Lilley [1959] 2 All ER 647; [1959] 1 WLR 749 Turner v Bladin (1951) 82 CLR 463 Urban Traders Pty Ltd v Proceris Pty Ltd and Others (2005) 12 BPR 23,319; [2005] NSWSC 1192 Waters Lane & Anor v Sweeney & Ors [2007] NSWCA 200

PARTIES: Wolseley Investments Pty Ltd Patricia Maria Gillespie

COUNSEL: A: J-J Loofs R: J.B. Whittle SC / J P Redmond

SOLICITORS: A: Burridge & Legg, Forestville R: Clinch Neville Long, Sydney

LOWER COURT JURISDICTION: Supreme Court - Equity Division

2 February 2007 (hearing) LOWER COURT DATE OF DECISION: 9 March 2007 (substantive judgment) 14 March 2007 (costs judgment)

LOWER COURT MEDIUM NEUTRAL CITATION: Gillespie v Wolseley Investments Pty Ltd [2007] NSWSC 189

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40191/07 SC 6374/05

SANTOW JA IPP JA TOBIAS JA

WEDNESDAY 12 DECEMBER 2007 WOLSELEY INVESTMENTS PTY LIMITED v Patricia Maria GILLESPIE Judgment 1 SANTOW JA: INTRODUCTION This appeal poses a question in equity of some significance, as well as its costs implications for the parties. Does specific performance of a contract lie, and with attendant cost sanctions against the defendant unsuccessfully resisting it, when the judge making the decree first determines that the defendant had neither committed a contractual breach nor so conducted itself as to give rise to its reasonable apprehension? The correctness of that latter determination is also challenged in this appeal, being the subject of the successful plaintiff's Notice of Contention.

ELABORATION 2 The appellant and unsuccessful defendant below, Wolseley Investments Pty Limited ("the Company") is a share-title home unit company. The respondent, Ms Gillespie, is the owner of one of the apartments. Ms Gillespie successfully obtained an order from Brereton J at first instance, for a decree of specific performance against the Company as well as costs. 3 The Company as appellant contends that the primary judge was in error in so ordering. This was on the basis that the discretion to order specific performance (and in consequence costs) had not been enlivened, or if enlivened its exercise had miscarried in the circumstances. Those circumstances were that a decree of specific performance was awarded, with costs, despite that the primary judge had determined that the Company was not in breach of its contractual obligations nor was there reason to apprehend any such breach. The Company's contractual obligations were to proceed with all due dispatch to lodge a development application with Woollahra Council ("the Council") and use its best endeavours to secure the consent of the Council to that application. The development application related to an attic area above Ms Gillespie's apartment that Ms Gillespie was purchasing from the Company for $800,000. 4 It is fair to say that thereafter each side had an interest in the transaction going ahead. The Company needed Ms Gillespie's $800,000 purchase money for ongoing maintenance of the building whilst Ms Gillespie wanted the extra apartment. This made it less likely that the Company would be reluctant to fulfil its contractual obligations, though the question at issue is still whether it failed to do so, whatever its intentions. 5 The respondent, by Notice of Contention, challenges the primary judge's conclusion that there was neither breach nor reason to apprehend breach of those contractual obligations on the part of the Company. The respondent seeks to support the determination of the primary judge on that alternative basis. It is alternative to the broader basis adopted by the primary judge, namely that "the mere existence of a contract that gives the plaintiff an equitable interest in the subject matter is sufficient to justify intervention [by specific performance]"; Judgment [56]. 6 Whilst the respondent did not formally abandon this broader position, following exchange with the Bench, the respondent concentrated most of its argument on the Notice of Contention. I therefore need to deal with both issues, the first being of some importance. The salient facts bearing on both issues are summarised below.

SALIENT FACTS 7 The respondent and plaintiff below, Patricia Maria Gillespie ("Ms Gillespie") was and remains the owner of a residential apartment in an apartment building known as Cliveden at 22-24 Wolseley Road, Point Piper. The ownership of the apartment is represented by shares conferring exclusive rights of occupation, as distinct from strata title which confers an estate in fee simple. 8 There are and were at the relevant time, ten residential apartments in Cliveden. Unit 9 was the unit owned by Ms Gillespie and unit 10 was owned by Ms Carolyn Molnar. Each unit is located on the uppermost level. Above them within the roof space is an unused attic apartment known as unit 11. It had however in the past been occupied by a caretaker or tenant, though the precise details of that occupation have not been identified in any detail. 9 By deed dated 22 March 2005 ("the deed") the Company agreed to issue to Ms Gillespie 4,100 Group K shares to be created for a price of $800,000 which would entitle Ms Gillespie to exclusively occupy the caretaker's apartment. By clause 4A.1 of the deed, completion was subject to and conditional upon the Company obtaining from Woollahra Municipal Council ("the Council") consent to a development application for the use of the apartment as a residence, this to be by 22 September 2005. Clause 4A.2 then imposed this contractual obligation on the Company: "4A.2 The company must proceed with all due despatch to lodge the development application with Council and will use its best endeavours to secure the consent of the council. The company will, when requested, sign all authorities and do all things which may be necessary to obtain the approval sought in the development application." [Blue 1/7]. 10 Clause 4A concludes with subparagraphs 4A.5 and 4A.6 which have some tangential relevance to the issues in this appeal: "4A.5 Nothing contained in this clause 4A shall impose any obligation on Ms Gillespie to meet the cost of any work which Council may require be carried out to the building, other than as part of the premises, as a condition to Council consenting to the development application contemplated by clause 4A.1 herein and any such obligation shall be that of the company.

4A.6 Should Council consent to the development application contemplated by clause 4A.1 herein subject to any condition which materially and detrimentally affects the use of and/or the dimensions of the existing caretaker's flat, Ms Gillespie has the right to rescind this agreement by written notice to the company given no later than 14 days after the date on which she receives written notice from the company of the imposition of any such condition (or such later date as the parties may have agreed) and the provisions of clause 14 of this deed shall thereupon apply." [Blue 1/8] 11 When it became apparent that development consent would not be granted by 22 September 2005, the parties on 20 September 2005 agreed that in consideration of Ms Gillespie not exercising any right of rescission under clause 4A.5 if it became available on 22 September 2005, the clause would be amended by substituting for the period of fourteen days a period of six months after 22 September 2005. 12 Council on 17 November 2005 refused development approval. This was on the ground of failure to provide fire-rating or safety information for the whole building as earlier requested on 28 September 2005. However, a review application was subsequently made and, as the Court was informed when the appeal was argued, has been recently granted. It was acknowledged by the parties that the real and only outstanding issue between the parties was that of costs; a costs order having been made by the primary judge against the appellant. 13 The primary judge observed that both parties agreed that in the event development approval be granted, the agreement should be specifically performed and carried into execution (Red, 28/[3]). Ms Gillespie's principal allegation was that the Company did not lodge the development application with all due dispatch and had not used its best endeavours to secure Council's consent. The Company therefore had (it was said) either breached its contractual obligation or the circumstances were such that there was reason to apprehend breach. Proceedings for specific performance were commenced on 19 December 2005 by Statement of Claim, particularising the contentions concerning breach or its reasonable anticipation. Judgment and costs were ordered in favour of Ms Gillespie on 9 and 14 March 2005 respectively. 14 The Company in response submitted that there was nothing more required of it in connection with obtaining development approval, as now is clear from the granting of that approval following review. The Company further agreed that if approval were obtained the contract should be specifically performed and carried into execution. Throughout, the Company opposed any decree being granted, contending that circumstances warranting the intervention of equity had not arisen. 15 I set out below the other principal findings of the primary judgment, before turning in more detail to the events which followed entry into the deed on 22 March 2005.

The primary judgment - principal findings 16 What follows is a brief summation of the principal findings of the primary judge and of his Honour's observations in their support. (a) The essential issue was whether a decree for specific performance should be made. Neither party contended that the contract was one the nature of which precluded specific performance. Nor was it contended that any of the ordinary defences to specific performance were available. The sole issue was whether the circumstances were such as to justify the intervention of a court of equity; Judgment [49]. (b) As at the date when proceedings were commenced (19 December 2005) the Company was not in breach of any of its obligations under clause 4A.2. This conclusion was supported by his Honour's following observations (which I examine in more detail under "Analysis" below): "[61] Ms Gillespie alleges that in breach of cl 4 A.2 of the deed, the company failed to proceed with all due dispatch to lodge the development application with the Council, in that it did not lodge it until 10 June 2005, more than eleven weeks after execution of the deed.

[62] What is "due" dispatch depends upon the circumstances. The history recorded above shows that officers of the company approached Council on 27 March, seeking confirmation of the existence of a caretaker's flat; received an apparently encouraging initial response; but were not provided with a formal response until 23 May 2005. If Council had previously accepted the use of the flat for residential purposes, it must have facilitated the development application. Although there was some delay occasioned by waiting for the Council's response, not sent until 23 May 2005, I am unpersuaded that this was a failure to proceed with "all due dispatch" to lodge the development application; but if I am wrong in that respect and there were a breach, nonetheless the development application was lodged on 10 June 2005, six months before the proceedings were commenced, and by the time proceedings were commenced any such breach had been remedied.

[63] Ms Gillespie next alleges that, in breach of cl 4 A.2 of the deed, the company failed to use its best endeavours to secure the consent, and failed to do all things necessary to obtain the approval of the development application, in that it failed to provide the Council with: a a site plan and statement of environmental effects, within 14 days of Council's letter of 14 June 2005; or within 14 days of the further request of 22 June 2005;

b details of the work proposed to be performed on the apartment and details of the work proposed to be performed on the premises to provide access and egress, within 14 days of Council's letter of 20 September 2005, or at all;

c the further information required to satisfy clause 93, within 14 days of Council's letter of 28 September 2005, or within 14 days of Council's further letter of 17 October 2005, or at all.

[64] As to the site plan and statement of environmental effects, after an initial inadequate attempt on 20 June, a statement of environmental effects and site plan were lodged on 30 June. That was two days outside the 14 days allowed by the letter of 14 June, and well within the time allowed by the letter of 22 June. I am quite unpersuaded that that was a failure to use best endeavours to secure the consent. Nor was it a failure to do something necessary to obtain the approval; the Council's requirements were satisfied on 30 June 2005. I reject the contention that no site plan was ever lodged; the plans that were lodged with the statement of environmental effects included a site plan and were accepted by the Council as meeting its requirements.

[65] As to the details of proposed works, the company responded on 23 September and again on 4 October that no works were proposed to be performed on the apartment. So far as works to provide access and egress, on 23 September the company responded that a report had been commissioned from BCA which would cover that, and on 4 October that a refurbishment of the existing means of access and egress was proposed. Extensions of time were requested to enable the company to consider how best to respond. I do not think that taking time to consider what would be the best way of responding is a failure to use best endeavours to obtain the consent. I accept that there was some delay in formally instructing BCA to proceed, but by 23 November 2005 BCA had been instructed to proceed with the report on the whole building, and also to provide a report in relation to flat 11. That delay appears to have been occasioned by a need to consider how the company would respond to the notice of intention to issue a fire order and the subsequent refusal of the development application. I am quite unpersuaded that this was a failure to use best endeavours to obtain the consent. Nor was it a failure to do something necessary to obtain the approval; the company had given instructions for the necessary reports and all that remained to be done was to accept the quote for the Unit 11 report. Council had already refused the application, at a time when the company had sought an extension of time to respond to the relevant requirements, before the company had been able to respond. I accept that provision of the two BCA reports (or equivalent) was something necessary to obtain the approval, but I do not accept that, when proceedings were commenced, the company was in breach of its obligation to do something necessary to obtain the approval: it was in the course of seeking those reports."

(c) In support of the primary judge's conclusion that when the proceedings were commenced there were no grounds for a reasonable apprehension that the Company would not perform its obligations under the deed, he made these observations: "[67] Nor do I think that there was any reason to apprehend that the company would not perform the contract according to its terms. Although it raised the possibility of reliance on "existing use rights", it never suggested that it would not pursue development consent (unless, perhaps, Ms Gillespie were content to accept existing use rights). Indeed, ultimately it pursued that course despite having Mr Meagher QC's advice to the effect that it was superfluous. The evidence overwhelmingly favours the view that the company saw it as in its own interests that the development application, and with it the sale, proceed. True it is that progress has not always been expeditious, but the requirement for "all due dispatch" was in respect of the lodgement of the application only, and I do not think such lack of expedition as there was evidences or amounts to a want of "best endeavours". Nor was the company in breach of its obligation to do all things necessary to obtain the development approval; the "things" that remained outstanding were underway when the proceedings were commenced. I do not accept that failure to do something within the time limited by a letter from the Council is necessarily a breach of the obligation to use best endeavours, particularly where an extension of time has been sought."

(d) The primary judge observed that the statement of claim did not rely on any matters that post-dated commencement of proceedings on 19 December 2005. He also noted that there had been some delay in the prosecution of the subsequent review application with the Council as follows: (i) part of the delay was attributable to the desire to obtain earlier records in connection with the alleged "existing use"; (ii) a couple of months had been taken awaiting Council's issue of a section 149A certificate, a course Council apparently suggested ought to be taken; and (iii) some time was taken in further exploration of what would be required to satisfy the Council in respect of access to and egress from the flat and which related to fire safety issues. However, the primary judge concluded that "nothing suggests that the Company will not perform the contract according to its terms". (e) Thus, though prosecution of the review application post-dated the commencement of proceedings and any delay in its prosecution was not itself pleaded as a ground for alleging breach of clause 4A.2, the primary judge stated that he was " satisfied that the prosecution of the review application is a thing necessary to obtain the approval, and something which reasonable endeavours to secure the consent requires "; Judgment [75]. (f) The primary judge concluded that a breach of contract was not an essential element in a suit for specific performance; that equity would grant a decree even in the absence of a reasonable apprehension that the defendant will not perform the contract according to its terms, on the basis that the mere existence of a contract that gives the plaintiff an equitable interest in its subject matter is sufficient to justify equity's intervention; Judgment [50], [51] and [56]. Thus "the equitable right to specific performance arises once the contract is made"; Judgment [60]. In reaching that conclusion the primary judge cited Hasham v Zenab [1960] AC 316, Bass v Clivley (1829) 48 ER 33 and Marks v Lilley [1959] 1 WLR 749 and also the statements of principle in "Snell's Principles of Equity" 25th ed, 531-2 and Dr Spry's "Equitable Remedies", 5th ed at 77. I explain below under "Analysis" why I respectfully differ from that conclusion, bearing as it does both on when the discretion to award specific performance is enlivened and the considerations governing its proper exercise.

ANALYSIS 17 I first set out paragraphs 7 and 8 with accompanying particulars from the Statement of Claim as these represent the primary contentions of the respondent in support of her Notice of Contention: "7. In breach of Clause 4A.2 of the Deed pleaded in paragraph 4(a) above, the Defendant failed to proceed with all due dispatch to lodge the development application with the Council. Particulars (a) The Defendant did not lodge the development application with the Council until 10 June 2005, more than 11 weeks after execution of the Deed.

8. In breach of Clause 4A.2 of the Deed pleaded in paragraph 4(b) above, the Defendant failed to use its best endeavours to secure the consent of the Council. Particulars (a) By letter dated 14 June 2005 the Council requested the Defendant to provide the following information within 14 days: i) a site plan showing the location of all buildings on the site and the location of the Apartment within the building; and, ii) a Statement of Environmental Effects in accordance with Council's development application Guide. The Defendant failed to provide the Council with either of these documents within 14 days. (b) By letter dated 22 June 2005, the Council again requested the Defendant to provide the further information referred to in particular 8(a) above within 14 days. The Defendant failed to provide the Council with the documents requested in particular 8(a)(i) at all and provided the document requested in particular 8(a)(ii) on 30 June 2005. (c) By letter dated 20 September 2005, the Council requested the Defendant to provide the following information within 14 days: i) details of the work proposed to be performed on the Apartment; and,

ii) details of the work proposed to be performed on the premises to provide access and egress to and from the Apartment. The Defendant failed to provide the Council with either of these documents within 14 days or at all. (d) By letter dated 28 September 2005, the Council requested the Defendant to provide further information to satisfy Clause 93 of the Environmental Planning and Assessment Regular 2005 within 14 days; and, The Defendant failed to provide the Council with the document requested within 14 days or at all. (e) By letter dated 17 October 2005, the Council again requested the Defendant to provide the further information specified in Council's letters referred to in particular 8(c) and (d) above. The Defendant failed to provide the Council with the documents requested within 14 days or at all.

The Plaintiff reserves her right to supplement these particulars after discovery and production of documents under subpoena."

Discretion to order a decree of specific performance 18 I shall return to those particulars in dealing with the Notice of Contention. I commence with the principles which determine when the discretion to award the specific performance is enlivened and the proper scope for its exercise; in particular, whether that discretion can and should have been exercised on the assumption that, as the primary judge held, there was no actual or reasonably apprehended breach of contract. The correctness or otherwise of that assumption is the subject of the Notice of Contention. 19 I do not consider that the mere existence of a contract that gives the plaintiff an equitable interest in its subject matter, is sufficient of itself to justify equity's intervention by awarding a decree for specific performance, absent breach or its reasonable apprehension. The authorities, properly understood, demonstrate that such a proposition would be stated too widely. The discretion to award specific performance is more narrowly circumscribed. It is undoubtedly the case that unlike an action for damages at law, equity does not require actual breach. But that said, as the late R E Megarry QC (as he then was) explained in a typically pithy note in (1960) 76 LQR 200 at 203, "equity will not intervene to grant the remedy unless there is some good ground for doing so". That necessary qualification emerges from a closer consideration of the authorities cited by the primary judge, at [50] and following. So also can be derived some guidance of what suffices for "good ground for doing so". I refer in particular to this statement of principle taken from I C F Spry's "Equitable Remedies" (LBC 2001) (at 77, omitting footnotes): "If a party to a contract wishes to sue for legal damages in respect of a breach of one of its terms, he will not succeed unless that breach has taken place, and accordingly a right of action has arisen, by the time of commencement of the material proceedings. It is, of course, sufficient that there should have taken place an anticipatory breach, as opposed to an actual breach, yet there are many cases where it appears that the defendant has threatened not to perform part of a contract but where no anticipatory breach has taken place. So one party may have announced his intention of fulfilling his obligations apart from a particular inessential breach of those obligations, that is, a breach other than one on the absence of which the obligations of the plaintiff are intended to depend or on the occurrence of which a right to rescind would arise. In such cases there is no remedy at law until the breach in question has in fact occurred. But in equity the position is entirely different. An order of specific performance generally requires the defendant to carry out in specie every term, whether or not it is a condition or essential term, and accordingly wherever a breach has occurred or there is in the circumstances a sufficient likelihood of the occurrence of a breach to render it desirable that the interests of the plaintiff should be safeguarded by the court, an order of specific performance will be granted if otherwise appropriate.

So it has been said that 'proceedings for the specific performance of a contract which is of such a kind that it can be specifically enforced can be commenced as soon as one party threatens to refuse to perform the contract or any part thereof or actually refuses to perform any promise for which the time of performance has arrived'. This principle may be applied even although the term of which the breach is threatened is conditional and the condition has not yet been fulfilled. Further, it is not essential that there should have been an explicit threat not to perform the material obligation. There must be more than a theoretical or remote possibility of a breach, but otherwise a greater or lesser probability that there will be a failure to perform may be found to be sufficient in the general circumstances; and in particular the degree of probability of a future breach that must be shown before the court will intervene depends on the extent of hardship that the plaintiff may suffer if the breach occurs and on any other such matters that bear on the justice or injustice of granting relief immediately. " [emphasis added] 20 It is clear from the reasons of the primary judge that his Honour concluded that there was no more than a theoretical or remote possibility of a breach, a matter which I consider more closely when considering the Notice of Contention. However, on the primary judge's own finding, were it to stand, the decree of specific performance was not supported by the statement of principle from Dr Spry upon which he relied. 21 Moreover, even if the discretion to award specific performance were enlivened, whether the court should exercise its discretion invokes similar considerations as apply to the award of a perpetual injunction. Those are the considerations applicable to exercising the discretion to restrain by injunction the performance of acts that would involve a breach of legal rights or to specifically enforce compliance by the defendant of its contractual obligations to the plaintiff. In either case the court must be satisfied on the balance of probabilities not only as to

(a) there being sufficient likelihood of the occurrence of a future breach of the defendant's obligations (if not breach itself) but also

(b) as to the other discretionary matters that bear on the justice or injustice of granting the relief sought immediately. 22 I refer under (b) to the extent of hardship that would be caused by denying specific performance (or an injunction where appropriate) and the gravity of damage or consequence that would be caused from that denial or indeed its grant; also to other relevant matters encompassed within the balance of convenience. As Spry (supra at 394) puts it: "But the more fundamental enquiry relates to the extent of hardship that would be caused by leaving the plaintiff to resort to damages or to renew his application subsequently if the threat of injury to him should become greater, and this consideration in turn depends not merely on the precise probability that the acts to be enjoined will take place, but also on the gravity of those acts and on the degree of damage or inconvenience that they would cause if they took place. Further, as will be seen, account must be taken of such considerations as the degree of any hardship that might be caused the defendant if an injunction were granted, any inequitable conduct on the part of the plaintiff and other discretionary matters." 23 However that analysis is performed, where as here the likelihood of breach is remote, it is clear that any hardship to the respondent from a denial of a decree of specific performance would be minimal. Moreover, hardship from imposing a decree of specific performance would be exacerbated if costs, as here, were awarded against the party suffering the decree. There is also hardship from becoming potentially liable to contempt of court proceedings in the event of breach, even if the court may be reluctant in practice to exercise that power. I should interpolate here that Bass v Clivley, discussed later with other authorities, is cited as authority for the proposition in Snell's Equity (1990) (at 586) that "a plaintiff who needlessly sues for specific performance of an unbroken contract may obtain his decree but may have to pay the costs", with Marks v Lilley cited by way of contrast. 24 I would respectfully observe that the reasons of the primary judge do not appear, at least explicitly, to take these discretionary matters into account both in awarding the decree and then in ordering costs against the appellant. This appears so, though they were clearly matters properly taken into account by Brereton J in his Honour's earlier decision, Urban Traders Pty Ltd v Proceris Pty Ltd and Others (2005) 12 BPR 23,319, [2005] NSWSC 1192 at [64], discussed later. There Brereton J correctly stated the issue of principle in these terms: "[64] Accordingly, the issue is whether there were, when Urban instituted these proceedings, such circumstances as would justify the intervention of a court of equity having regard to risk of Proceris not performing, and the balance of convenience and hardship, and if so what relief should now be granted." 25 I turn now to consider cases relied upon by the primary judge for the broader proposition that the mere existence of a contract that gives the plaintiff an equitable interest in the subject matter is sufficient to satisfy equity's intervention, here by specific performance. As I make clear, I do not consider that these authorities go so far, though to the extent Bass v Clivley may be understood as doing so, I consider that it should not be followed. 26 Bass v Clivley was relied upon below and by the respondent on appeal, as authority for the proposition that (in the words of the primary judge at [53]), "a plaintiff may be granted a decree [of specific performance], even where no reasonable apprehension of a breach is established." 27 In Bass v Clivley, the plaintiff had sued the defendant, seeking specific performance of a loan contract. The plaintiff had agreed to lend to the defendant a sum of ₤3,000 over a period of five years, at lawful interest, with security for the loan being mortgages over five leasehold homes. At the time of the proceedings, the plaintiff had advanced ₤600 to the defendant and the defendant's agent had deposited the lease as security. Before the plaintiff would advance the balance of the ₤3,000, however, he insisted on inspecting the lessor's title to the mortgaged properties. The defendant refused to show title, claiming that such a requirement had not formed part of the loan contract. 28 The bill issued by the plaintiff sought a decree of specific performance of the contract by the defendant, namely the showing of the lessor's title, with the plaintiff being ready and willing to advance the balance of the principal upon that being done. Alternatively, the plaintiff sought either an account and repayment of the monies owing to him (both principal and interest) on the ₤600; or sale of the leasehold premises, with proceeds to be applied to discharge of the amount owing on the ₤600; or else the procuring of a transfer of the leasehold premises to the plaintiff by way of mortgage for the amount already advanced. 29 It was successfully contended by the defendant that there had been no term of the contract entitling the plaintiff to inspect the lessor's title to the plaintiff. That in my judgement should have been the end of the plaintiff's case for specific performance, given that there was neither breach nor any threat of non-performance by the defendant borrower of any of her legal obligations or such as to give rise to its reasonable apprehension. Instead, however, the Court placed before the plaintiff this choice; either to accept specific performance of the contract in the form contended for and proved by the defendant, or to suffer dismissal of the bill with costs. The plaintiff naturally enough elected for specific performance of the contract as proved, with the defendant then being awarded costs on the basis that she had at all times been ready and willing to perform the contract in that form. The holding of Sir John Leach MR as to costs was as follows (at 34-5): "Then the Defendant must have her costs. The Plaintiff does not obtain the decree he asks, that he should inspect the lessor's title. The Court is of opinion, that that was not part of the agreement; and if a Plaintiff insists upon what he is not entitled to, whilst the Defendant has been ready to perform the agreement really entered into, the Defendant is entitled to costs. It is a frequent practice to give costs against a Plaintiff who has a decree - the real question being, by whose fault were the costs incurred." 30 To the extent that Bass v Clivley tends to establish the proposition contended for by the primary judge and the respondent, it is necessary to evaluate its correctness in light its the confined application in later authorities largely to questions of cost. There are also to be taken into account the discretionary factors attending the granting of specific performance. In my view subsequent case law does not support the approach in Bass v Clivley, when the facts of those cases are examined. 31 Turner v Bladin (1951) 82 CLR 463 clearly demonstrates this. The High Court was considering a contract for sale of a quarry business by the respondents (quarry masters) to the appellant. The respondents had claimed that the purchase price had been ₤7,500, the balance to be paid in a series of instalments over five years from the date of payment of an initial deposit of ₤2,100. By the time of trial, the appellant had paid only the ₤2,100 sum, maintaining that that had been the only sum payable under the contract. The High Court determined to the contrary that the ₤7,500 figure had in fact been the amount payable, and found that all other things requiring to be performed under the contract had in fact been carried out. 32 The issue was thus whether a decree of specific performance was available in circumstances where the only thing left to be completed under the contract was the payment of a particular sum of money. The High Court (in a joint judgment of Williams, Fullagar and Kitto JJ), in finding that a decree of specific performance was available where "the claim is merely to recover a sum of money" (at 473), enunciated this general principle in relation to the granting of such decrees (at 472): "In our opinion proceedings for the specific performance of a contract which is of such a kind that it can be specifically enforced can be commenced as soon as one party threatens to refuse to perform the contract or any part thereof or actually refuses to perform any promise for which the time of performance has arrived. The court can then make a decree that the contract ought to be specifically performed and carried into execution, and can so mould its decree and order such inquiries, accounts and other proceedings under the decree as may be necessary to carry into effect all the promises of both parties whether they are presently performable or are only performable in the future." [emphasis added] 33 This extract makes clear that the trigger for the commencement of a specific performance suit will be some threat of refusal, express or at least implied, or some actual refusal, on the part of a contracting party to perform the contract in whole or part. This is indeed what had occurred in Turner v Bladin (but not here), with the appellant having declined in clear terms to pay the balance of the ₤7,500 claimed by the respondents. 34 Marks v Lilley [1959] 2 All ER 647, was another case relied upon by the primary judge and the respondent on appeal. It was said to support the principle that "the mere existence of a contract that gives the plaintiff an equitable interest in the subject matter is sufficient to justify intervention [by decree of specific performance]" (Judgment at [56]). The facts were these. 35 The plaintiff had agreed in writing to purchase the defendant's house, with what were termed National Conditions of Sale incorporated into the contract. Pursuant to those conditions, the date for completion of the contract was to be 7 January 1959. Completion did not take place on that stipulated date, but the plaintiff did not take steps to issue the defendant with a notice making time of the essence. 36 On 9 February 1959, the plaintiff issued a writ seeking a decree of specific performance of the contract. One week later, the plaintiff was given possession of the house, with completion eventually occurring on 18 February 1959. The issue at trial thus became one of costs only, with Vaisey J determining the issue in favour of the plaintiff. The entitlement of the plaintiff as at 9 February 1959 to issue the writ for specific performance, even absent any notice making time of the essence, formed the basis of costs being awarded to the plaintiff, notwithstanding that the defendant had, though after the agreed date, brought the contract to completion. 37 Vaisey J made these observations (at 648): "The date which was indicated for the completion of the purchase under the general conditions, ie, the first working day after the expiration of a certain period, was 7 January 1959. The purchase was not completed on that day, and a considerable amount of correspondence took place between the solicitors for the parties. The plaintiff pressed for an early completion, and the defendant said that he was quite willing to complete as soon as he could, but that he was not at present able to do so. One month after that date, ie, after 7 January 1959, the plaintiff issued the writ in this action, on 9 February 1959. I think in a sense he acted rather, precipitately, but the question is: Was he entitled to issue this writ? There had been no default in the strict sense. There had been no firm date for completion of the essence of the contract, and I do not think that there was any doubt that, subject to clearing away the difficulties which were besetting the defendant, the contract would have been completed within a reasonable time . In fact, what happened was that seven days after the issue of the writ, possession of the property was given to the plaintiff on 16 February 1959, and the contract was in fact completed on 18 February 1959." [emphasis added] 38 Marks v Lilley should be understood as recognising that there can still be an implied threat or risk of non-performance from the fact that the stipulated date has passed without actual performance. That threat or risk is not removed, merely because time was not made of the essence. Hence, subject to weighing up the degree of that risk in the particular circumstances, and taking into account balance of convenience factors, specific performance may still lie, though time has not been made of the essence. In effect, equity intervenes with a decree quia timet; see discussion in Meagher, Heydon and Leeming, "Equity Doctrines & Remedies" 2002 at 20-025. 39 Hasham v Zenab [1960] AC 316 again illustrates the awarding of a decree of specific performance quia timet. There the Privy Council considered a contract for sale by the defendant to the plaintiff of the defendant's two-acre property in Nairobi. The contract stipulated payment of a deposit immediately and of the balance upon presentation of title documents. These were to be executed by the parties within six months of the making of the contract. The contract was signed by the defendant on 19 February 1954, but was repudiated by her within minutes. This was on the basis that she had only agreed to the sale of half an acre of her property, rather than the entire two acres. Completion was due by 19 August 1954, but on 2 July 1954 the plaintiff commenced proceedings seeking specific performance. The defendant argued that the application was premature and would have been warranted only in the event of a failure to perform by the completion date, notwithstanding the clear indications that the defendant did not intend to perform the contract. 40 Lord Tucker delivered the advice of the Judicial Committee. On the question of specific performance, their Lordships considered that the defendant had fallaciously equated the right to sue for specific performance with a cause of action at law (at 330): "Their Lordships are of opinion that the fallacy of the [defendant's] submission consists in equating the right to sue for specific performance with a cause of action at law. In equity all that is required is to show circumstances which will justify the intervention by a court of equity. The purchaser has an equitable interest in the land and could get an injunction to prevent the vendor disposing of the property ." [emphasis added] 41 The emboldened sentences were employed by the primary judge as support for the contention that "the existence of an equitable interest in the subject matter of the contract is sufficient to attract intervention" (Judgment at [57]). But, again, the statements of the Judicial Committee must be taken in their context. The defendant had engaged in repudiatory conduct of the clearest order; the contract had been torn up within minutes of the defendant's signing it. Those circumstances must surely be taken to be part of what in that case "justified the intervention by a court of equity". 42 The sum effect of their Lordships' comments, in light of the factual context, should be taken as enabling that even prior to the stipulated date for completion under a contract for sale of land, an equitable right will have accrued in the purchaser's favour such that, where that right is threatened by the conduct of the vendor, equity will intervene to allow a declaratory order of the existence of a right to specific performance of the contract (see at 329-330). Should the contract not be performed by the vendor at the required time, the court will then make "consequential directions for performance" (at 330). Their Lordships' discussion of various authorities (at 330) merely demonstrates that equity will intervene in circumstances where the law would not, and that those circumstances ought not to be thought fully expressed by the concept of "anticipatory breach" alone. The circumstances obtaining in Hasham were similar to those contemplated by the sort of "[threat] to refuse to perform" considered sufficient in Turner v Bladin. 43 In his Honour's earlier judgment of Urban Traders v Proceris (supra), Brereton J considered whether specific performance was available before a breach of contract occurred. In that case, the plaintiff Urban Traders Pty Ltd co-owned land with the first defendant Proceris Pty Ltd, as joint venturers of a development. The plaintiff was under financial pressure and was required to sell the land to repay bank bills secured on the land. The first defendant was less enthusiastic about a sale. The plaintiff and first defendant came to an agreement to take various steps to cause the land to be sold by public auction as soon as practicable. The plaintiff claimed that the defendants had obstructed the performance of that agreement and the progress of the sale, and brought proceedings for specific performance. 44 In paragraphs [55] to [60], Brereton J discussed the tests espoused in Marks v Lilley [1959] 2 All ER 647; [1959] 1 WLR 749; Hasham v Zenab [1960] AC 316; [1960] 2 WLR 374 and Turner v Bladin (1951) 82 CLR 463; 25 ALJR 35. 45 Following this discussion of relevant legal authority, Brereton J asked, "Were there circumstances justifying equitable intervention?" His Honour then considered the circumstances in which equity should intervene to provide relief by way of specific performance. His Honour stated, at [64]: "Accordingly, the issue is whether there were, when Urban instituted these proceedings, such circumstances as would justify the intervention of a court of equity having regard to risk of Proceris not performing, and the balance of convenience and hardship, and if so what relief should now be granted". 46 Brereton J proceeded to consider more closely the behaviour of the defendant. At [66], His Honour observed: "However, there are some aspects of his conduct and evidence which are not so easily explained, and which tend to support a conclusion that Mr Roberts is not facilitating a sale, such as to found a threat, implicit if not explicit, of non-performance of his contractual obligations". 47 This test as correctly enunciated by Brereton J at [64] and applied in [66] in Urban Traders v Proceris, requires a court to consider the likelihood or degree of risk of non-performance before granting specific performance. Also to be considered is the discretionary factor of hardship and balance of convenience. Had Brereton J applied this test in the present case, I consider that his Honour's finding at [67] that the evidence "overwhelmingly favours" the appellant defendant, would have resulted in the correct conclusion that the circumstances of this case did not justify the intervention of equity.

The Notice of Contention 48 The grounds of the respondent's Notice of Contention, quoted below, in some respects go beyond those particularised in the Statement of Claim quoted earlier. I refer in particular to E below, as it goes beyond the date proceedings were commenced. The Notice otherwise substantially tracks the earlier particulars: "(A) At the time the proceedings were commenced, the appellant was in breach of its obligation to lodge a development application ("the development application") with the Woollahra Municipal Council ("the Council") with all due dispatch in that it delayed doing so for 11 ½ weeks while it investigated a possible "existing use" which was irrelevant both to the terms of the Deed and to the assessment of the development application by the Council.

(B) At the time the proceedings were commenced, the appellant was in breach of its obligation to use its best endeavours to secure the Council's consent to the development application in that it delayed seeking a fire report regarding the whole of the appellant's premises from 20 September 2005 until 23 November 2005 and thus failed to comply within time with Council's request for such a report before it could assess the development application.

(C) At the time the proceedings were commenced, the appellant was in breach of its obligation to use its best endeavours to secure the Council's consent to the development application in that it delayed seeking a report on the building work contemplated, and the access and egress, to unit 11 from 20 September 2005 until 17 January 2006.

(D) At the time the proceedings were commenced, the breaches referred to in (A), (B) and (C) above, were such as would have justified a Court of Equity in making an order for specific performance of the Deed.

(E) Thereafter the appellant continued to fail to use its best endeavours to secure consent of the Council to the development application in that it failed to lodge an application for review of Council's decision regarding the development application until 15 November 2006.

(F) At all material times the appellant was not ready, willing and able to perform the contract according to its terms." 49 As to (E) I observe that a cause of action, here for specific performance, must be complete when proceedings are commenced. But even if post-commencement matters such as in (E) could be taken into account, whether to strengthen or weaken a case for specific performance, that is a matter not necessary here to decide. For the reasons below, I do not consider that, in the events that happened, the respondent has made out her case in the Notice of Contention that there was either breach or reason to apprehend breach or that a decree of specific performance could justifiably be made quia timet. 50 It was common ground that the meaning of the obligation to use best endeavours in the deed should be taken from that adopted by this Court in Waters Lane & Anor v Sweeney & Ors [2007] NSWCA 200 in turn derived from the judgment of Gibbs CJ in Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 at 64: The implied obligation to use best efforts to promote the sale of the goods necessarily imported the obligation not to take any deliberate steps to damage the market for those goods in Australia. The meaning of terms of this kind has been considered in a number of cases, but it is trite to say that the meaning of particular words in a contract must be determined in the light of the context provided by the contract as a whole and the circumstances in which it was made, and that decisions on the effect of the same words in different context must be viewed with caution. On the one hand, an express promise by an agent to use his best endeavours to obtain orders for another and to influence business on his behalf 'necessarily includes an obligation not to hinder or prevent the fulfilment of its purpose': Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359 at 378. On the other hand, an obligation to use 'best endeavours' does not require the person who undertakes the obligation to go beyond the bounds of reason; he is required to do all he reasonably can in the circumstances to achieve the contractual object, but no more : Sheffield District Court Railway Co v Great Central Railway Co (1911) 27 TLR 451 at 452; Terrell v Mabie Todd & Co Ltd (1952) 69 RPC 234 at 237" [emphasis added] 51 As was suggested in Waters Lane (supra) there may be no relevant difference between the standard constituted by the expression "all reasonable endeavours" and that constituted by the expression "best endeavours". However as in that case so here it is not necessary to express any final conclusion on that proposition. 52 I turn now to the specific matters relied upon in the Notice of Contention. I start with what is described as the 11½ weeks complained of in lodging a development application with the Woollahra Municipal Council while it investigated the possibility of "existing use rights". The respondent submitted that establishing an existing use of apartment 11 was irrelevant both under the terms of the contractual obligation upon the Company under the deed and to the assessment of the development application by the Council. 53 The possibility and implication of "existing use" was apparently the subject of two opinions by the Honourable R P Meagher QC. I note however that the opinions in question were not before this Court, with neither side seeking to place them before the Court. Those opinions should therefore play no part in these reasons. The basis for the respondent's assertion that any existing use was irrelevant is to be found in paragraphs 6 to 11 of her written submissions on the appeal which stated: "6. The existence or non-existence of an "existing use" has, it is submitted, nothing to do with an application for development consent or with the case generally. Section 106 of the Environmental Planning and Assessment Act ("EPA Act") defines "existing use" to mean: "The use of a building, work or land for a lawful purpose immediately before the coming into force of an environmental planning instrument which would … have the effect of prohibiting that use, …" Sub-section 107(1) of the EPA Act provides that: "Except where expressly provided in this Act, nothing in this Act or an environmental planning instrument prevents the continuance of an existing use." The policy behind such provisions is to preserve an existing (and often valuable) right to use land which might otherwise be lost when the use becomes prohibited upon the proclamation of a new planning instrument: see North Sydney Municipal Council v Boyts Radio and Electrical Pty Limited (1989) 16 NSWLR 50 at 51-52 per Kirby P and Hudak v Waverley Municipal Council (1989) 18 NSWLR 709 at 714 per Hope A-JA. The essential point of the definition and the protection provided by section 107 of the EPA Act is that a use can only be characterised as an "existing use" for purpose of planning law if the use would otherwise be prohibited by the relevant planning instrument: see Hunt v Blacktown City Council (1999) 107 LGERA 156 at paragraphs 21-25 per Cowdroy J; affirmed (2001) 116 LGERA 357 at paragraphs 36-50 per Powell JA with whom Meagher and Beazley JJA agreed.

7. In this case, the relevant planning instrument is the Woollahra Local Environmental Plan, 1995 (see pages 77-112 of Mrs Gillespie's affidavit) (Blue Vol.1, 77-112). The certificate given under s.149 of the EPA Act, which is attached to the deed of sale (see pages 67-76 of Mrs Gillespie's affidavit) (Blue Vol. 1, 67-76) shows (on page 67) that the land in question is zoned 2(b). The Development Control Table as to land zoned 2(b) is at page 82 of Mrs Gillespie's affidavit. Items 4, 5 and 6 set out details regarding development of land within the zoning (which includes "use" - see the definition of "development" in s.4 of the EPA Act). Item 5 shows that use as "residential flat buildings" (defined on the rear of page 97 of the affidavit) is a permitted use with Council consent.

8. It follows that a residential flat building is permitted use and not a prohibited use within the meaning of s.106 or the other provisions of the Act and that therefore the whole concept of "existing use" has no relevance to the past or current use of the flat or to any development application relating to it. Further, in considering the development application the Council could not have taken into account any "existing use" (whether that term was used in a legal or some colloquial sense) but was obliged to consider the matter by reference to s.79C of the EPA Act: see Woolworths Ltd v Dubbo City Council (1997) 99 LGERA 334 at 341-343 per Cowdroy AJ. To the extent that Brereton J suggests to the contrary at paragraph 62 of his judgment (Red 54L N) it is submitted, with respect, that his Honour is not correct.

9. What the respondent sought and the appellant agreed to do was to try to ensure that the Council, as the consent authority, would permit the use of the space as a residence by Mrs Gillespie, and for that permission to be contained in a formal development consent. Mrs Gillespie was about to pay over $800,000 and it was only prudent for her to be certain that Council could not in any way attack her use of the premises and thus render her expenditure potentially useless.

10. The time which was spent in investigation of Council records in order to determine whether or not there was an "existing use" of the premises (as that term appears to have been understood by Mr Legg and the appellant) was so that proof of such use could somehow be relied upon in the assessment of the development application. When that investigation was complete, Mr Legg gave advice to the appellant by letter dated 3 June 2005 (see Annexure "AC" to the affidavit of Mr Munday) (Blue, Vol. 2, 325) which, in the light of the authorities and principles set out above, must be described as misconceived.

11. These misconceptions had the effect that the development application was lodged far later than would otherwise have needed to be the case, and that all subsequent steps in the consideration of the development application were correspondingly put back by the appellant's unnecessary delay." 54 The primary judge dealt with these contentions succinctly, and in my view correctly, as follows: "[11] Although much was made in submissions of the fact that the development application was designated as one for "change of use" and the proposed development to "use the caretaker's flat as a residence", I do not see that that as of significance. The company, as it was contractually obliged to do, lodged the development application. The relevant form required that one of seven boxes identifying different types of development be ticked, and that relating to "change of use" was the most closely applicable. I do not see that as inconsistent with the contention that it was in substance the continuation of an existing use. It may be, as Mr Whittle SC for Ms Gillespie now submits, that any reliance on "existing use" in this context was misconceived, even if Ms Gillespie were not insistent (as she was) on a development approval [cf Hunt v Blacktown City Council (1999) 107 LGERA 156 (Cowdroy J, NSWLEC); affirmed [2001] NSWCA 216; Woolworths Ltd v Dubbo City Council (1997) 99 LGERA 334 at 341-3 (Cowdroy AJ, NSWLEC)]. But I see nothing in the way in which this issue was raised and pursued to this point that objectively suggests that the company did not intend to perform its contractual obligation, if that was what Ms Gillespie wanted.

[12] On 6 July 2005, the Council wrote to the company advising that the information submitted with the application appeared to be satisfactory and it would therefore be processed. The letter indicated broad timeframes for determination, from two to four months. Following a telephone conversation between Mr Rugless and Mr Legg, on 11 July 2005 Mr Legg provided to Mr Rugless copies of the letters from Council dated 14 and 22 June, copies of the letters of 23 May and 6 July, and the statement of environmental effects and plans lodged with the Council. At this point, therefore, although there had been some delay in lodging the development application, the company had now done all things so far necessary on its part to obtain the development approval." 55 The primary judge added (Judgment [62]) that "if Council had previously accepted the use of the flat for residential purposes, it must have facilitated the development application". His Honour observed that "although there was some delay occasioned by waiting for the Council's response, not sent until 23 May 2005, I am unpersuaded that this was a failure to proceed with 'all due dispatch' to lodge the development application; but if I am wrong in that respect and there were a breach, nonetheless the development application was lodged on 10 June 2005, six months before the proceedings were commenced, and by the time proceedings were commenced any such breach had been remedied". 56 Again I agree with the appellant that this is a sufficient answer to this line of attack. One can on the one hand appreciate that in strict legal terms the existence or non-existence of an existing use does not bear on whether an application for development consent should be granted. Here however, the development consent sought did in Council's consideration give rise to questions of access with fire safety implications both for the new apartment and the whole building. That had the potential to make the original usage in the 1950's by a caretaker relevant to how Council would decide the application at least at a practical level. 57 Indeed Clause 93 of the Environmental Planning and Assessment Regulation 2000 was specifically the subject of Woollahra Council's development application Assessment Report (Blue 4/654 at 661. Regulation 93 provides that "a change of building use for an existing building requires the consent authority to take into account whether the fire protection and structural capacity of the building (meaning the building as a whole) will be appropriate to the building's proposed new use and precludes consent to the change of building unless the consent authority is satisfied that the building complies (or will when completed comply) with such of the category 1 fire safety provisions as are applicable to the building's proposed new use". 58 Furthermore, the development proposed had implications from the Council's perspective with respect to the maximum permissible floor space ratio for development of the building and as to its maximum permissible height (Blue, 656E-I). This led to Council somewhat belatedly requiring an SEPP1 objection to be submitted with the application. 59 These factors strongly support the primary judge's conclusion that investigating the existing use was reasonable in the circumstances. In my view the extra time that necessarily took was not such as to put the Company in breach of its obligation to lodge the development application with "all due dispatch", nor in breach of its obligation to "use its best endeavours to secure the consent of the Council". The latter requirement must inform what is meant by "all due dispatch", dependent as that is upon the circumstances (Judgment [62]). Delaying lodgement of the development application, while investigating the extent of any existing use in that broader context, could fairly be said to be in fulfilment of the obligation to use best endeavours to secure the consent of the Council, as reasonably understood by the Company. 60 I turn now to the other matters relied upon in the Notice of Contention. The further complaint concerns alleged undue delay in seeking and obtaining a fire report from BCA, a fire safety consultant. The significance of that fire report must be considered in the context of a foreshadowed order under the Environmental Planning and Assessment Act 1979, in a first letter from Council dated 20 September 2005. That foreshadowed order required such a report and a detailed plan of works. This was for works considered necessary for the fire safety of the whole building, not merely in relation to the proposed apartment 11 for safe egress. The production of a proposed timetable for the implementation of the necessary works was also required; see Blue 4/627-628. 61 On the same date as that first letter of 20 September 2005, and hardly coincidental, Council's Planning and Development Division (as distinct from its Compliance Division which was the source of the first letter) wrote to the appellant with respect to the development application in the following terms: " Application No: DA 350/2005/1 Proposal: Change of use of caretaker's flat to be used as a residence Property: 22-24 Wolseley Road POINT PIPER 2027

A preliminary assessment has been made of your development application. This indicates that we do not have enough information to properly consider your proposal.

In accordance with Clause 54 of the Environmental Planning and Assessment Regulation 2000 you are requested to provide the following additional information:- 1. Details of works proposed to be carried out to the subject flat.

2. Details of works proposed to be carried out to the building to provide access and egress to and from the subject flat which will comply with the provisions of the Building Code of Australia.

This information should be provided to us within fourteen (14) days of the date of this letter. If this information is not received, your application may be refused.

If you have any enquiries, please contact our Assessment Officer Mr J Saszczak on 9391-7000 between 8.30am and 11.00am Monday to Friday.

Catherine McMahon Team Leader - Development Control" 62 Though the letters were coming from different divisions within the Council, there was an obvious connection between them. Access and egress to the subject flat had a bearing on safe egress generally in the event of fire, even if not explicitly connected in the two letters. It is also worth noting that the letter from the Planning and Development Division still referred to a "change of use of caretaker's flat to be used as a residence". This suggested that at least that Division of Council thought any change of use, if such it was, would have had a bearing in Council's mind whether to grant or refuse a development consent. 63 This letter followed a letter earlier written on 30 August 2005 by the Company to Ms McMahon of the Planning and Development Division. In that letter the relevant issues were clearly foreshadowed, and properly so, in the following paragraph (Blue 4/614): "We reiterate, however, that subject to the outcome of the present development application, our client intends submitting an application for building work to be carried out within the existing 'caretaker's flat' and certain adjacent roof space. That building work will relate to the use of the area as a two or three bedroom residence. For that reason, it is essential that council have regard at the present development stage to all relevant safety and amenity factors, including carparking space, impacting on the proposed use of the premises as a residence. Of particular concern is the question of access. If it is conceivable, for example, that lack of internal access could adversely affect an application for building work within the existing 'caretaker's flat' our client's legitimate position is that the lack of internal access is an issue to be resolved now in application No. DA350/20005." 64 On 23 September 2005, Mr Robinson, the secretary to the Company, replied to Ms McMahon from the Planning and Development Division, in which reply the following critical paragraph appears: "Firstly, there are NO proposed works to be carried out to the subject flat. Secondly, we have already been working in conjunction with your Mr Robert Lawrence and have contracted the firm BCA Performance P/L (Mr John Koloadin) to prepare the necessary report that will apart from other matters answer your second question re access and ingress to comply with the Building Code of Australia." 65 I should note here that the word "contracted" was in error and should be read as "contacted"; see Black, 42A-H, cross-examination of Mr Robinson. 66 The letter concluded with Mr Robinson asking that Council contact the Chairman of the Company, Mr Munday, as Mr Robinson was to be on holidays for two weeks. Despite that, the Council replied to Mr Robinson on 28 September 2005 indicating that the fire report was required before a determination of the development application could be made; Blue 4/631-2. 67 In describing the steps that followed, it is clear, as the primary judge appreciated, that as matters developed so did their complexity with consequent implications for all apartment owners (Judgment [75]) and emphasising the need for careful investigation by the Company of matters bearing on the Council's likely approach to dealing with the development application. That required some care to be taken in dealing with BCA both as to the cost and scope of its report. 68 In terms of delay with respect to the BCA report received in December 2005, it may well be the case that the legal relationship between the Company and BCA was overstated in referring to it being "contracted". In fact the BCA quote of 28 September 2005 was not accepted until 23 November 2005 but that quote related to a report with respect to the current level of fire safety within the building generally and was not specific to apartment 11. However, given the circumstances, that sequence of events, coupled with the steps described below, does not to my mind indicate any failure on the Company's part in terms of its contractual obligations. 69 Thus on 4 October 2005 (Blue 4/633-634) Mr Munday wrote to the Council. I agree with the appellant that it can be inferred that at that time he had not received Council's letter of 28 September 2005. The primary judge set out the terms of that letter at [20]. Mr Munday first raised the existing use issue, pointing out that the development application was not for a change of use. Rather it was simply to obtain an acknowledgement of its prior use as a caretaker's residence since 1955. He pointed out that its continued use in its present form was sought and that the appellant did not propose any works but that if consent were granted, it was likely that the respondent would lodge a development application to refurbish the flat. Mr Munday responded to the access and egress issue indicating that dependant upon the development application lodged by the respondent, access/egress might be in one of three methods. Those methods were spelt out. The letter also concluded by asking Council whether the further information was sufficient for the development application to be determined. 70 The scope of the matters to be considered in the foreshadowed fire safety Notice and in regard to access and egress issues were clearly not matters which were capable of being considered and responded to adequately by the appellant within fourteen days, especially where not all of its members were present. The primary judge at [65] correctly found that it was reasonable for such matters to be given careful consideration. 71 The first step in such consideration taken by the appellant was applying for an extension of time. The respondent's solicitor assisted in this, having become aware that the Council had overlooked the fact that it had responded to Mr Robinson despite his foreshadowed absence. The judgment at [22] records the respondent's solicitor's letter (Blue 4/635). That letter requested inter alia a copy of Council's letter of 23 May 2005 (Blue 4/588) and a copy of Council's minutes of 1955 (those relating to existing use), if held. It pertinently contained no protest that the 'existing use' issue was irrelevant. 72 The application for an extension of time was made by the appellant's solicitor on 11 October 2005 (Blue 4/637). In that letter Mr Legg advised that he was in the process of obtaining further instructions to respond, no doubt as the matters concerning the fire report and access and egress needed to be considered. The application was granted by the Council letter dated 17 October 2005 (Blue 4/639), and the period in which a response was required was extended to 8 November 2005. By letter also dated 17 October 2005 (Blue 4/638) the respondent's solicitor acknowledged that, although reserving her rights, the Company had taken recent steps to comply with its obligations under the Deed. 73 As the appellant pointed out, for the first time by letter dated 21 October 2005 (Blue 4/640) the respondent's solicitor suggested that there was no bi-partisan support in respect of the 'existing use' issue. There were as at 21 October 2005 three issues requiring the appellant's attention, the last of which had only been communicated on that date: that the fire report now extended to the whole building, the connected access/egress issues, and that the respondent may be equivocal as to the role 'existing use' might play in respect of the development application. 74 By 4 November 2005 it was apparent that more time was needed, and the appellant's solicitor by letter dated 4 November 2005 (Blue 4/648) sought a further extension to enable further materials to be put before Council. No time extension had previously been refused, and the matter had clearly grown in complexity from that initially contemplated. An inspection of Council's records concerning the original building was sought, and in the Judgment at [29] the primary judge records that inspection of those plans was to occur early on the following week (Blue 4/648). 75 The primary judge also records that the solicitor for the respondent learnt on 14 November 2005 that the request for a further extension had not been received (Blue 4/152). No communication of this fact was made to the appellant or its solicitor. Three days later the Council rejected the development application. I agree with the appellant that it is reasonable to infer that had either the appellant or its solicitor been made promptly aware of this, an urgent renewed application for extension of time would have been lodged. 76 When assessing the reasonableness of its conduct, I also agree with the appellant that it is important to appreciate that the appellant could only make decisions as a collegiate body even if its management committee could and did meet informally at short notice from time to time. Fire safety affecting the whole building was not a normal matter for quick decision; see below regarding Mr Munday's memorandum. This decision-making context would have been appreciated by both parties at the time of entering into the Deed even if the later complexity with respect to fire safety considerations was not foreseen. It must have formed part of the circumstances in which the 'best endeavours' obligation was to be understood. Meetings would reasonably have been expected to be held on important matters with appropriate consultation of the owners (which included the respondent) given the safety and cost considerations. The position may well be distinct from an individual seeking to discharge such an obligation. 77 The primary judge found (at [65]) that the delay in accepting the BCA quotation was reasonable having regard to the complexity of the issues raised in the proposal to issue a fire order, and the access/egress issues. That is a proposition I would accept. Mr Munday on 16 November 2005 (Blue 4/649-651) circulated a detailed memorandum to the appellant's management committee. Mr Munday's memorandum makes it clear that very large sums of money were required for these purposes, and that absent funding from the proposed sale of the unit to the respondent, heavy levies would need to be imposed. That last underlines why the Company had every reason to pursue the development application. What had originally been thought to be a simple matter of obtaining development approval had by then become more complex. 78 As already noted, by letter dated 17 November 2005 (Blue 4/652-3) Council rejected the development application, contrary to the appellant's expectation. This then added a further matter for consideration, though the later Council review after proceedings were commenced was ultimately to prove successful. 79 Following circulation of the Munday memorandum, the BCA quote dated 28 September 2005 was accepted on 23 November 2005 (Blue 4/664-667), and a request made for a report specifically dealing with the fire safety issues with respect to apartment 11. A further quote for that report was sought which was provided on 7 December 2005. The primary judge correctly found that in the context of these events, and the nature of the decisions which needed to be made, the delay was not unreasonable in seeking that further report and did not amount to a breach of the best endeavours obligation.

80 The final aspect of delay relied upon by the respondent was that while BCA provided its quotation to provide a report on the fire safety issues with respect to access/egress to and from apartment 11 by letter dated 7 December 2005 (Blue 4/729), the quotation was not accepted until 17 January 2006 (Blue 4/728-9). By then the proceedings had been commenced on 19 December 2005 notwithstanding an earlier letter from the appellant's solicitors to the respondent's solicitors advising that the appellant was committed to the deed (see letter of 23 November 2005 (Blue 4/668V)). 81 Given the Christmas break, the increased complexity of the matters requiring decision and the nature of the decision-making process in the present case, I agree with the primary judge that though there was here some delay, it again was not unreasonable nor such as to breach the appellant's obligations under the deed. I agree also with the appellant's submission that it is not at all clear that even had the BCA quotation been accepted earlier just prior to Christmas this would have resulted in any significantly earlier provision by BCA of its reports on the access/egress issue with respect to apartment 11. 82 I thus would conclude that when the proceedings were commenced there was neither breach of the deed nor grounds for a reasonable apprehension that the Company would not perform its obligations under the deed. This was more especially so given the fact that it was overwhelmingly in the Company's own interests, and that of all apartment owners, that the development application, and with it the sale, proceed; see Judgment [67]. 83 Finally, I should simply record that the appellant properly conceded that the two-day delay the subject of particular (p) in paragraph 8 of the appellant's statement of claim was of itself in no way material.

COSTS 84 I would in any event have concluded that obtaining specific performance in the present circumstances should not have led to an order for costs, applying the principle in Bass v Clivley enunciated by Sir John Leech MR at 34-5, quoted above. But given that I respectfully conclude that the order for specific performance should not have been made in the circumstances, costs should follow the event. I record my view that these specific performance proceedings were from the outset misconceived and should not have been rewarded by a cost order in favour of the respondent.

OVERALL CONCLUSION AND ORDERS 85 I consider that the appellant should succeed in its appeal with costs to follow the event. I therefore propose orders as follows: (1) Appeal allowed.

(2) The respondent's Statement of Claim be dismissed.

(3) The respondent to pay the appellant's costs of the proceedings below and of the appeal but with respect to the latter to have a certificate under the Suitor's Fund Act 1951, if otherwise qualified.

86 IPP JA: I agree with Santow JA. 87 TOBIAS JA: I agree with Santow JA.

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