Al Achrafi v Topic

[2016] NSWSC 1807

Supreme Court

New South Wales

Medium Neutral Citation:

Al Achrafi v Topic [2016] NSWSC 1807

Hearing dates:

29 – 31 August 2016

Decision date:

15 December 2016

Jurisdiction:

Equity

Before:

Robb J

Decision:

See pars 357 – 362

Catchwords:

CONTRACTS – construction of contracts – contract for sale of land – cl 28..2 required defendants as vendors to do “everything reasonable” to cause plan of subdivision to be registered within 12 months after the contract date – cl 28.3.2 permitted the vendor to rescind, but only if the vendor had complied with cl 28.2 – special condition 48 gave parties an unfettered right of rescission if plan of subdivision not registered within 12 months – whether the clauses are inconsistent – consideration of how parties objectively intended the terms to operate – held special condition 30.11 in expressly amending cl 28.2 recognized its effectiveness including cl 28.3.2 – held despite superficial inconsistencies, on proper construction, parties had intended cl 28.3.2 to take effect

 

REAL PROPERTY – contract for the sale of land – defendants as vendors had a conditional right of rescission if plan of subdivision not registered within 12 months – vendors rescinded when plan of subdivision not registered within period – whether condition satisfied and rescission valid

 

CONTRACTS – burden of proof – whether the plaintiffs or the defendants had the burden of proving that the condition to the defendants’ right to rescind the contract for sale had not been satisfied, or satisfied, as the case may be – consideration of authorities – held defendants had the burden of proving they had satisfied the condition to their right to rescind the contract

  CONTRACTS – rescission – whether defendants had done everything reasonable to cause the plan of subdivision to be registered within 12 months of the date of the contract– in this instance, defendants were required to have a development plan designed to allow for possible delays and contingencies – plan needed to take into account evolving circumstances – defendants asserted that failure of registration in time was due to delay by third parties – court considered instances of delay in works and payment – held ultimately defendants did not manage the development project in a proactive manner so as to satisfy the condition to do everything reasonable – held defendants failed to validly rescind the contract

Legislation Cited:

Sydney Water Act 1994 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Actall Pty Ltd v Pacific Bay Development Pty Ltd [2005] NSWSC 1067
Actall Pty Ltd v Pacific Bay Development Pty Ltd [2006] NSWCA 190
Adina Constructions Pty Ltd (in liq) v Whitehead (1976) 1 BPR 97,013
Blatch v Archer (1774) 1 Cowp 63; 98 ER 969
Brauer & Co (Great Britain) v James Clark (Brush Materials) Ltd [1952] 2 All ER 497
Brauer & Co in Barber v Crickett [1958] NZLR 1057
Chopard v Vamiso Pty Ltd (1998) 9 BPR 16,813
Earle Cameron (Industrial) Pty Ltd v Comprador Properties Pty Ltd (1987) 3 BPR 97,235
Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7
Graeme Webb Investments Pty Ltd v Soerpyk (1993) NSW ConvR 55-661
Hardy v Wardy [2001] NSWSC 1141; (2001) 10 BPR 19,055
Hawes v Cuzeno Pty Ltd [1999] NSWSC 1167; (1999) 10 BPR 18,011
Homburg Houtimport BV v Agrosin Ltd [2004] 1 AC 715; [2003] UKHL 12
Hunyor v Tilelli (1997) 8 BPR 15,629
Italo-Australian Club Ltd v National Australia Bank Ltd (1989) NSW ConvR 55-461
Joseph Constantine Steamship Line v Imperial Smelting Corporation [1942] AC 154
Joyce v Realm Marine Insurance Co (1872) LR 7 QB 580
Kayserian Nominees (No 1) Pty Ltd v JR Garner Pty Ltd [2008] NSWSC 803
Maganic v Ravagnani [2003] NSWSC 1063
Masterton Homes Pty Ltd v Executive Builders & Developers Pty Ltd [2003] NSWSC 908
Masters v Belpate Pty Ltd [2001] NSWSC 169
Mitchell v Pattern Holdings Pty Ltd [2002] NSWCA 212; (2002) 11 BPR 20,241
Munro v Bodrex Pty Ltd [2002] NSWSC 122; (2002) 10 BPR 19,403
New Zealand Shipping Co Ltd v Societe des Ateliers et Chantiers de France [1919] AC 1
Nina’s Bar Bistro Pty Ltd v MBE Corporation (Sydney) Pty Ltd [1984] 3 NSWLR 613
Pelly v Tebran Pty Ltd [2006] NSWSC 1072
Plumor Pty Ltd v Handley (1996) 41 NSWLR 30
Rivat Pty Ltd v B & N Elomar Engineering Pty Ltd [2007] NSWSC 638; (2007) 13 BPR 24,473
Schenk v ACN 081 123 140 Pty Ltd [2002] NSWSC 123; (2002) 11 BPR 20,375
Sharjade Pty Ltd v Commonwealth [2009] NSWCA 373; (2009) 15 BPR 28,443
Suttor v Gundowda Pty Ltd (1950) 81 CLR 418; [1950] HCA 35
The City of Gosford v Marim Pty Ltd (1990) 6 BPR 13,871
Walker v Chanrich Properties Pty Ltd [2003] NSWSC 1064; (2003) 11 BPR 21,289
Wang v Kaymet Corporation Pty Ltd [2015] NSWSC 1459
Woodcock v Parlby Investments Pty Ltd (2014) 251 CLR 640; (1998) 4 BPR 9568
Yeung v Densor Pty Ltd (1989) 5 BPR 11,343
Zieme v Gregory [1963] VR 214

Texts Cited:

JD Heydon; Cross on Evidence (10 ed)
Professor P Butt; The Standard Contract for Sale of Land in New South Wales (2 ed)
Ritchie’s Uniform Civil Procedure NSW

Category:

Principal judgment

Parties:

Ayman Al Achrafi (first plaintiff)
Rana Al Achrafi (second plaintiff)
Vlajko Topic (first defendant)
NedeljkaTopic (second defendant)

Representation:

Counsel: H W Somerville (first and second plaintiff)
D M Loewenstein (first and second defendant)

  Solicitors: Johnsons Solicitors (first and second plaintiff)
Just in Case Legal (first and second defendant)

File Number(s):

2015/165751

Publication restriction:

None

Judgment

Introduction

1. On 16 January 2014, the plaintiffs, Ayman and Rana Al Achrafi, entered into a contract for the sale of land with the defendants, Vlajko and Nedeljka Topic, for the purchase of proposed Lot 215 in a subdivision of Lot 1013 Plan 1126014 at Thistle Circuit, Green Valley, in this State (Lot 215). The purchase price was $385,000, of which the plaintiffs paid $38,500 as a deposit on exchange of contracts.

2. At the time the contract for sale was entered into, the defendants had not yet registered the plan of subdivision of which the subject property, Lot 215, was to be a part. Various works were required to be completed before the defendants could lodge the plan of subdivision for registration.

3. The defendants’ son, Mark Topic, who I will call Mr Topic, acted on behalf of his parents in all matters concerning the conduct of the works necessary to achieve registration of the plan of subdivision, as well as in their dealings with the plaintiffs. The evidence was somewhat obscure on the issue of Mr Topic’s authority to act for his parents, but it is clear that he had their authority to do so in all respects. In practical and legal terms, for all relevant purposes, Mr Topic’s acts were the acts of the defendants, as were his omissions.

4. The contract for sale contained terms which, subject to certain requirements, permitted both the plaintiffs and the defendants to rescind the contract for sale, if the plan of subdivision was not registered within 12 months from the date of the contract.

5. One year passed and, on 16 January 2015, the plan of subdivision was still not registered. On 31 March 2015, Mr Topic on behalf of the defendants purported to rescind the contract for sale.

6. The primary issue in these proceedings is whether the rescission of the contract for sale by the defendants was effective.

The plaintiffs’ claim

7. The plaintiffs filed a summons on 4 June 2015, in which they sought the following final relief:

4   A declaration that the Contract for Sale of Land dated 16 January 2014 is not rescinded.

5   An order for specific performance of clause 28.2 of the Contract for the Sale of Land dated 16 January 2014.

8. Clause 28.2 of the contract for sale imposed upon the defendants an obligation to do everything reasonable to have the plan of subdivision registered within 12 months after the date of the contract. Depending upon the nature and extent of the work remaining to be done, before the defendants could submit the plan of subdivision for registration, an order for specific performance, as sought in par 5 of the summons, might require the court to supervise the work to be done, and other steps to be taken by the defendants. During the course of the hearing, I raised with the parties the difficulties that might be involved in the application to the court to make the order in par 5 of the summons. The parties agreed to give their attention to those difficulties, and I will return to that issue below.

9. At this stage, the primary question for the court is whether it should make the declaration sought in par 4 of the summons.

10. Pleadings have not been filed in this matter. Accordingly, the plaintiffs were not required to formally specify the steps that they allege the defendants failed to take that were required if the defendants were to do everything reasonable to have the plan of subdivision registered within the 12 month period. The defendants have apparently been content to go to trial on that basis. This has had the effect of introducing an element of imprecision in the determination of the issues in dispute between the parties.

Contract for sale

11. The contract for sale was in the form of the 2005 edition published by The Law Society of New South Wales and the Real Estate Institute of New South Wales.

12. The Vendor’s Solicitor was expressed to be Lyn’s Conveyancing Pty Ltd, which operated as a registered conveyancer. The Purchaser’s Solicitor was described as Johnsons Solicitors.

13. The Land the subject of the contract for sale was described in the following terms:

Land            Lot 215, Thistle Circuit Green Valley NSW 2168

(Address, plan details   Proposed Lot 215 in a subdivision of Lot 1013 Plan 1126014

and title reference)      Folio: part 1013/1126014

14. The terms of the contract for sale that are most relevant to the present dispute are the terms that deal with the need for the plan of subdivision to be registered, and the consequences of the plan not being registered within 12 months.

15. Clause 28 in the printed contract for sale relevantly provides:

28   Unregistered plan

28.1   This clause applies only if some of the land is described as a Lot in an unregistered plan.

28.2   The vendor must do everything reasonable to have the plan registered within 6 months after the contract date, with or without any minor alteration to the plan or any document to be lodged with the plan validly required or made under legislation.

28.3   If the plan is not registered within that time and in that manner –

28.3.1   the purchaser can rescind; and

28.3.2   the vendor can rescind, but only if the vendor has complied with clause 28.2…

16. The copy of the contract for sale that is in evidence is the copy signed by the defendants. In clause 28.2, the number “6” in the expression “6 months” has been struck through with a diagonal line. The number “12” has been written on the contract for sale immediately above the word “unregistered” in clause 28.1. Neither amendment to the contract of sale was initialled. The defendants accepted that the amendments formed part of the contract. The amendments are consistent with a special condition to which I will refer shortly.

17. The contract for sale did not in specific terms describe the Land as a lot in an unregistered plan. However, it is clear that, in substance, the description of the Land that has been set out above is a description of a lot in an unregistered plan. The defendants accepted that clause 28.1 of the contract for sale was engaged.

18. Under the heading “Special Conditions”, under which the special conditions of the contract for sale were set out, the following words appear:

In the event of there being any inconsistency between the printed form of Contract and the Special Conditions then these Special Conditions shall prevail.

19. The first of the Special Conditions, however, dealt with “Amendments to the Printed Conditions”. Special condition 30 relevantly provides:

30.   Amendments to the Printed Conditions

The standard printed conditions (clause 1 to 29 inclusive) of this contract are amended as follows:

…

30.11 Clause 28.2   Delete “6 months” and replace it with “12 months”.

20. It may also be significant that special condition 30, in addition to making amendments to various other clauses in the printed form, also expressly omitted a number of the terms in the printed form; being cll 3, 7.1.1, 14.4.1, 14.4.2, 16.8, 23.14 and 23.18. The content of these terms is not material to the resolution of the present dispute. However, it may be legitimate, when seeking to determine how the parties objectively intended the terms in the printed form to be read with the special conditions, to note the fact that the parties expressly omitted terms in the printed form, when they did not want them included in the contract for sale.

21. Special condition 48 provides as follows:

48.   The purchaser acknowledges the sale is subject to registration of plan of subdivision, a copy of which is annexed to this contract (the Plan). If the plan has not been registered within twelve (12) months from the date of this contract either party may rescind this contract in writing to the other party, clause 19 shall apply.

22. Clause 28 and special condition 48 are superficially inconsistent. Special condition 48 does not impose any obligation on the defendants to do anything to have the plan of subdivision registered, while cl 28.2 obliges the defendants to do everything reasonable to have the plan registered within 12 months. Special condition 48 appears to give both the plaintiffs and the defendants an unfettered right to rescind the contract for sale, if the plan of subdivision has not been registered within 12 months; while cl 28.3.1 gives an unfettered right only to the plaintiffs. Clause 28.3.2 gives the defendants a right to rescind, but only if they have complied with the requirement in cl 28.2 that they have done everything reasonable to have the plan of subdivision registered within the allotted time.

23. I will return to the question of the proper construction of the contract for sale below.

The contending arguments

24. The plaintiffs delivered a written outline of submissions before the commencement of the hearing and final written submissions after its completion.

25. The position adopted by the plaintiffs, as I understand it, was that cl 28.3.2 gave the defendants a right to rescind the contract for sale, but only if they satisfied the condition that they had complied with cl 28.2. As such, the defendants had the burden of proving that they had satisfied the condition. Clause 28.2 required the defendants to do everything reasonable to achieve registration, and not just that the defendants act reasonably. If a particular step was reasonable at the time it could have been taken, then it had to be taken, and it is immaterial that it can retrospectively be shown that registration would not have taken place within the 12 months, even if the steps had been taken. Even if the plaintiffs had the legal burden of proving that the defendants did not comply with cl 28.2, the great disparity in the availability of relevant evidence and information to the parties meant that a burden of adducing evidence would readily shift to the defendants. Finally, on the evidence in this case, the purported rescission of the contract for sale by the defendants was ineffective, because the evidence establishes that the defendants did not comply with the condition in cl 28.3.2.

26. The defendants delivered a short written outline of submissions before the hearing, which they supplemented by an outline of submissions in reply. The defendants also delivered written submissions on the evidence after the conclusion of the hearing.

27. The defendants varied their position in this sequence of documents. In the initial outline, the defendants appeared to put the submission that special condition 48 is inconsistent with cl 28.2, as it does not expressly impose upon the defendants any condition to the exercise of the right to rescind. The defendants suggested that the only restriction on the right of the defendants to rescind the contract for sale, if registration of the plan of subdivision had not been achieved within the 12 month period, was that they had complied with an implied duty of good faith.

28. That position subsequently changed. The defendants appear to have admitted the possibility that special condition 48 and cl 28.2 could be read together. They said in their reply that the plaintiffs’ position that the two clauses may be read together is well open to the court. The defendants’ final written submissions would appear to accept that it is a reasonable and proper construction of the contract for sale that cl 28.1 was imported into the special conditions by special condition 30.11, and may be read with, and is not in conflict with, special condition 48.

29. The primary position of the defendants appears to be that, even if the contract for sale requires the defendants to have done everything reasonable to have the plan of subdivision registered within the 12 month period, as a condition to their entitlement to rescind, if the plan is not registered within that period, the plaintiffs had the burden of proving that the defendants’ had not satisfied the condition.

30. In relation to the proper satisfaction of the burden of proof, the defendants emphasised that the plaintiffs had not taken up an offer made on behalf of the defendants to produce whatever evidence they required to be satisfied that everything reasonable had been done. The plaintiffs only called one subcontractor, Mr Colussi. They did not seek discovery from the defendants. They did not adduce evidence from any authority or instrumentality, either by the issue of subpoenas to give evidence or for the production of documents.

Construction of cl 28 and special condition 48

31. If I have understood the defendants’ submissions as finally made correctly, they accept that the right of rescission given to the vendors by special condition 48 is qualified by the condition imposed by cl 28.3.2 that the right may only be exercised by the vendors if they have complied with their obligation in cl 28.2 to do everything reasonable to have the plan registered within 12 months after the date of the contract for sale.

32. In my view, the defendants were correct to make that concession as to the proper construction of the contract for sale, although it must be said that the printed terms and the special conditions do not always fit neatly together, and the drafter of the contract has not addressed all possible inconsistencies.

33. The present is not a case for the straightforward application of the principle that specifically negotiated clauses will prevail over printed clauses forming part of a standard form of contract to the extent of any consistency. This principle was explained by Lord Bingham of Cornhill in Homburg Houtimport BV v Agrosin Ltd [2004] 1 AC 715; [2003] UKHL 12 at [11] in the following way:

It is common sense that greater weight should attach to terms which the particular contracting parties have chosen to include in the contract than to pre-printed terms probably devised to cover very many situations to which the particular contracting parties have never addressed their minds.

34. As the printed terms in the present case consist of the 2005 edition of the standard contract for the sale of land, they perhaps have a generality of application that would accord them a higher status than the pre-printed terms referred to by Lord Bingham. Further, the special conditions themselves have the appearance in some respects of a standard form; albeit limited perhaps to contracts for sale prepared by the vendors’ solicitor for use in the sale of lots in a proposed subdivision whose plan has not yet been registered.

35. The special conditions in the present case were probably not directly negotiated between the parties in any real sense. Rather, the drafter of the contract appears to have combined a printed form of contract containing standard terms and a precedent containing special conditions; and to have regulated the relationship between the two forms by the terms of special condition 30.

34. However, the chapeau to the special conditions, in providing for the special conditions to prevail over the printed terms in the event of there being any inconsistency, gives effect to the principle referred to by Lord Bingham.

35. As special condition 30 is itself a special condition, the effect it has in amending the printed terms will be given prevalence by the chapeau, in the sense that special condition 30 may amend a printed term in a way that shows that the term was intended to have effect as amended, which is a result that cannot be inconsistent with the special conditions.

36. If the proper construction of the contract of sale were an issue between the parties, the first question would have been whether cl 28.3.2 and special condition 48 are inconsistent.

37. Are two terms of a contract inconsistent where one term gives an unfettered right to both parties to rescind the contract if an event does not occur within a specified period, and another term creates an obligation on one party to do everything reasonable to cause that event to happen within the period, and makes rescission by that party conditional upon the obligation being satisfied?

38. There is no simple answer to this question. As Hamilton J said in Rivat Pty Ltd v B & N Elomar Engineering Pty Ltd [2007] NSWSC 638; (2007) 13 BPR 24,473, in relation to the resolution of a possible inconsistency between cl 28 of the standard contract and a special condition that only gave the purchaser a right of rescission:

[45] The last of his Lordship’s words must be treated with some caution. It is clear that if the written or typed words are really inconsistent with the printed form, then the written or typed words must prevail. But his Lordship should be taken to be emphasising that the written words should not lightly or automatically prevail and that the contract should be read so as to give effect so far as possible to all its provisions.

[46] This last principle was stated as follows by Lord Romilly LR in Re Strand Music Hall Co Ltd (1865) 35 Beav 153 at 159; 55 ER 853 at 856:

The proper mode of construing any written instrument is, to give effect to every part of it, if this be possible, and not to strike out or nullify one clause in a deed, unless it be impossible to reconcile it with another and more express clause in the same deed. I think that I must, if possible, give effect to both these clauses in the articles in question…

More recently, in Lewis v Barnett (1982) 264 EG 1079 at 1080 Stephenson LJ said:

I have not the smallest hesitation in saying that no principle of construction and no authority of any court compels or even justifies a judge in finding one paragraph in a written document (in this case a sealed lease) to have effect. Effect must be given to the paragraph if it possibly can be.

[47] In my view, what flows from these principles is that, whilst clearly inconsistent provisions of the printed form must be treated as excluded by the typed provisions, the operation of the printed clauses should be preserved so far as is possible. The Court should not lightly accede to a submission that the typed provision covers the field and excludes in whole the corresponding printed clause, if parts of that provision can coexist with the typed clause and still be given effect. In this regard, I note the decision of Ashdown v Kirk [1999] 2 Qd R 1, in which McPherson JA said at 8:For all these reasons, there is no basis for supposing that Special Condition 3 was designed to be exhaustive or in some way to ‘cover the field’ of non-payment of the deposit moneys to the exclusion of the detailed provisions of Standard Condition 13.3. Indeed, in at least two instances (cll 2 and 8) where it was intended to displace provisions of the Standard Conditions, the Special Conditions expressly so provide.

41. Hamilton J’s reference to “The last of his Lordship’s words” in [45] is to a statement by Blackburn J in Joyce v Realm Marine Insurance Co (1872) LR 7 QB 580 at 583, where his Lordship referred to the same principle explained by Lord Bingham.

42. In accordance with the approach discussed by Hamilton J, the superficial appearance that an unfettered right of rescission and a term that makes the exercise of that right conditional are inconsistent may not have the effect that the proper construction of the contract requires a finding of inconsistency, if the consequence is that a significant part of the agreed wording of the contract will be given no effect at all. The better construction may be that the apparently unfettered right of rescission should be construed simply as a right of rescission that continues to have effect, even if another term of the contract qualifies that right by imposing a condition on its exercise.

43. The proper construction of the contract will depend on the effect to be given to the relevant wording of the contract in the context of the contract as a whole, and the general principles that are applicable to the proper construction of contracts: see for example Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7, where the majority (French CJ, Hayne, Crennan, and Kiefel JJ) said at [35]:

[T]his Court has reaffirmed the objective approach to be adopted in determining the rights and liabilities of parties to a contract. The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding “of the genesis of the transaction, the background, the context [and] the market in which the parties are operating”. As Arden LJ observed in Re Golden Key Ltd, unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption “that the parties … intended to produce a commercial result”. A commercial contract is to be construed so as to avoid it “making commercial nonsense or working commercial inconvenience“. [Footnotes omitted.]

44. In the present case, special condition 30.11 expressly amended cl 28.2, by varying the period from six months to 12 months. The special conditions therefore recognised the effectiveness of cl 28.2, albeit as amended by special condition 30.11. It is implicit from special condition 30.1 having conformed the period in cl 28.2 to that contained in special condition 48, that at least cl 28.2 was intended to have continuing effect. If the intention had been that special condition 48 was to prevail over cl 28.2, special condition 30.11 would have been unnecessary. The express conformance of special condition 48 and cl 28.2 as to the length of the period carries with it the implication that at least the balance of cl 28.2 was intended to have effect. The balance consists of the obligation on the vendors to do everything reasonable to have the plan registered within 6 months after the contract date.

45. If cl 28.2 is amended and impliedly confirmed by special condition 30.11, it cannot be inconsistent with the special conditions for the purposes of the chapeau to those conditions.

46. Special condition 30.11 only refers to and amends cl 28.2. The question is whether the partly express and partly implied confirmation that cl 28.2 is to have effect extends to cl 28.3.2, which creates the condition governing the exercise of the right to rescind by the vendor.

47. One textual consideration in support of an affirmative answer to that question is that special condition 30.11 is headed “Amendments to the Printed Conditions”, and the chapeau to special condition 30 reads: “The standard printed conditions (clauses 1 to 29 inclusive) of this contract are amended as follows”. That wording suggests that special condition 30 was intended to make amendments to the printed terms, and impliedly that any part of the printed terms that was not amended was intended to take effect.

48. Furthermore, special condition 30 is not limited to making amendments to the text of the printed terms. Special condition 30.2, 30.3, 30.5, 30.6, 30.8, 30.9 and 30.10 all provide that particular printed terms are omitted. Most of the omitted terms are in fact sub-clauses of printed terms. This approach to the printed terms supports an inference that, if the parties had wanted a printed term to be omitted, that printed term would have been listed in special condition 30. That approach would leave the chapeau to the special conditions as a whole to have effect where there are textual differences between the printed terms and the special conditions, but not have the effect of wholly omitting a printed term that is not expressly listed in special condition 30 as being omitted.

49. There is then the question of why the parties would have confirmed the obligation on the vendor created by cl 28.2, without also impliedly intending to confirm the effect of cl 28.3, which creates a right of rescission, and in the case of cl 28.3.2, stipulates the consequences of the failure by the vendor to comply with its obligation in cl 28.2. That question may be put another way. Special condition 48 grants both parties a right to rescind, without obliging the vendor to do anything before exercising that right. Once the parties have confirmed the effect of cl 28.2 in obliging the vendor to do everything reasonable to have the plan registered within 12 months after the contract date, why would the parties want to stop there, and not confirm the effect of cl 28.3.2 in providing for the consequence of the vendor not having performed the vendor’s obligation?

50. The better view is, in my opinion, that on its proper construction the contract for sale included cl 28.3.2; and that it was a condition of the defendants’ right to rescind the contract that they had done everything reasonable to have the plan of subdivision registered within 12 months after the contract date. There is no apparent reason why the parties would have intended to confirm the effect of cl 28.2, notwithstanding its superficial inconsistency with special condition 48, but not have intended to confirm the effect of cl 28.3.2, which stipulates the consequence of a failure on the part of the vendors to comply with cl 28.2.

The burden of proof

51. The question therefore, is whether the attempt by the defendants to rescind the contract for sale was ineffective because they did not satisfy the condition of the contract in cl 28.3.2 that they do everything reasonable to have the plan registered within 12 months after the date of the contract.

52. The defendants have put at the forefront of their submissions the argument that the plaintiffs have not carried the burden of proving that the defendants are not entitled to exercise the right in cl 28.3.2 of the contract for sale to rescind the contract.

Basis of defendants’ argument

53. The defendants supported this submission on two bases. First, they relied upon the following statement of the relevant principles as set out in The Standard Contract for Sale of Land in New South Wales (2 ed), by Professor Peter Butt, at [28.16]:

The onus of proving whether or not the vendor has complied with the obligation to do “everything reasonable” it will depend on the way the issue arises. Since compliance with the obligation to do “everything reasonable” is a pre-condition of the vendor’s right to rescind, a vendor who brings action to justify rescission normally bears the onus of proving compliance. However, a purchaser/plaintiff who brings an action that involves challenging the validity of the vendor’s rescission bears the onus of proving the vendors non-compliance.

54. They also relied upon the decision of McClelland CJ in Eq in Plumor Pty Ltd v Handley (1996) 41 NSWLR 30, and the many authorities that have followed that decision, including the recent decision of Stevenson J in Wang v Kaymet Corporation Pty Ltd [2015] NSWSC 1459 at [71] to [73].

55. The defendants relied specifically upon the following statement of principle by McClelland CJ in Eq in Plumor Pty Ltd v Handley at 36 and 37:

… it should be held in the present case that the onus of proof on the issue of whether the non-obtaining of the requisite consent or advice within the period stipulated in special condition 28 resulted from a breach by the defendant of his contractual obligations, rests on the plaintiff. In other words, the relevant principle can be briefly formulated as: “Non-fulfilment of the condition will justify rescission unless it is proved to be self-induced”, rather than as: “Non-fulfilment of the condition will not justify rescission unless it is proved not to be self-induced”.

56. The defendants recognised the observation made by McClelland CJ in Eq in Hunyor v Tilelli (1997) 8 BPR 15,629 at 15,631:

It is necessary however to bear in mind that all evidence is to be weighed according to the proof which it was reasonably within the means of one party to produce or of the other to contradict. This has particular significance in respect of the evidentiary facts which are peculiarly within the knowledge of one party rather than the other…

57. It should be noted that there is some contradiction involved in the reliance by the defendants on the principles as stated by Professor Butt on the one hand, and by McClelland CJ in Eq on the other. The former places the burden of proof on the moving party, so that, if the vendor is the plaintiff, the vendor has the onus of proving compliance with cl 28.2, but if the purchaser is the plaintiff, it is the purchaser who must prove non-compliance by the vendor. McClelland CJ in Eq, on the other hand, in the passage relied upon by the defendants, appears to place the onus always on the party who claims that the rescission was ineffective, because the basis for the entitlement to rescind was “self-induced”.

58. It will be convenient to consider first the authorities that are relevant to the placement of the burden of proof, before I deal with the significance of Professor Butt’s statement of principle.

Summary of applicable legal principles

59. First, I will outline the nature of the problem and state my conclusions concerning the general principles that are relevant to the determination of the present dispute.

60. Clause 28.3.2 gives the vendors a right to rescind. The right of rescission is conditional on compliance by the defendants with cl 28.2. Clause 28.2 obliges the defendants to do everything reasonable to have the plan registered within 12 months after the contract date. The acts required to be done are not specified. They are described by reference to (a) a defined purpose, being to achieve registration within a specified time, and (b) an indefinite qualifier to identify those actions that are required, being that they are reasonable to achieve the purpose. The criteria for judging reasonableness are not specified.

61. In the present case, the Council had exercised its administrative discretion to grant the development approval for the plan of subdivision before the date of the contract for sale. It did so on certain conditions, which had to be fulfilled before the plan of subdivision could be lodged for registration. Satisfaction of the conditions would, in broad terms, require development work by the defendants on the property to be subdivided. This would require the defendants to obtain all necessary approvals of the adequacy of the works done by relevant authorities; and for them to lodge the plan of subdivision in time for it to be registered within the 12 month period. Some of the actions necessary could be done by the defendants, but others would require the actions of specialist contractors. Some of the actions required by this process could be carried out independently of others. Some actions would be dependent on the prior completion of other actions. Some series of actions could be carried out sequentially in parallel, but of all the actions necessary to be done, some might be on the critical path; meaning that the completion of the actions was an essential pre-requisite to further necessary actions being completed. All of this gives rise to a complex problem in identifying reasonable actions required of the defendants by cl 28.2 that were not undertaken by them.

62. The authorities that will be considered below support the following principles, and related considerations:

1. Where a contract for the sale of land gives a party a right to rescind the contract upon the occurrence or non-occurrence of a particular event, the party is subject to an implied obligation to do, or cooperate in doing, what is reasonably necessary to avoid the right to rescind arising, in order to permit completion of the contract.

2. The party is precluded from exercising the right to rescind if (a) the party has not performed its implied obligation; and (b) the failure has caused the event which entitles the party to rescind. Mere breach of the implied obligation is insufficient to preclude the right of rescission.

3. The same result arises where there is an express obligation upon a party to take steps to avoid the event that gives rise to the right of rescission, provided that performance of the obligation is not made a condition to the exercise of the right to rescind. Where performance of the obligation is not made a condition of the right to rescind, mere breach does not preclude rescission, but only does so if the breach has caused the right to rescind to arise.

4. The burden of proof falls on the party who denies the right of the party who has rescinded to do so, to prove both the breach of the implied or express obligation by the rescinding party, and that the breach caused the event that has given rise to the right to rescind.

5. Notwithstanding the placement of the legal burden of proof, the tender of limited evidence by the party subject of that burden may cause a burden of adducing evidence to shift to the other party, because relevant facts are peculiarly within the knowledge of the rescinding party, to lead evidence as to what happened, because otherwise inferences may be drawn against the rescinding party.

6. The rules that are applicable are materially different where, as in the present case, the contract makes the right of one party to rescind conditional upon the performance by that party of an obligation to take action intended to avoid the right to rescind arising.

7. If an action required by the obligation imposed on the rescinding party is not done, the right to rescind is lost, and it is immaterial that the breach of the obligation did not cause the right to rescind to arise.

8. If an action is required by the obligation imposed on the rescinding party, it must be done, even if the doing of that action would not necessarily avoid the right to rescind arising.

9. The issue of where the burden lies depends upon an analysis of the effect of the contract, to determine the substance of what must be proved by the parties to establish, or negate, the right to rescind. It should not depend solely on the fortuity of who is the plaintiff and who is the defendant.

10. In principle, the substance of the obligations should require the party who resists the validity of the rescission to prove that the right of rescission was conditional, and to establish the terms of the condition. It should then fall upon the rescinding party to prove that the condition has been satisfied, as the right to rescind will only exist in that event.

11. The possible shifting of the evidentiary onus may also arise in this context.

The Plumor Pty Ltd v Handley line of authority

63. In Plumor Pty Ltd v Handley, a term of the contract for the sale of residential property provided that the contract was subject to the purchasers obtaining the consent of the Foreign Investment Review Board (FIRB) within 14 days, and if that consent was not obtained within time, either party was entitled to rescind the contract. The contract contained an express term that required the purchasers to apply for the consent of the FIRB within 24 hours of the time of the contract, but did not impose any other express obligation on the purchasers to prosecute the application. The contract did not impose a positive obligation on the purchasers to do everything reasonable to obtain FIRB approval, or any similar obligation. The contract did not contain a condition that the purchasers could only rescind if they had complied with such an obligation.

63. This case may be distinguished from the present, as there was no express obligation on the purchasers to take steps to obtain the required FIRB approval, and further, the performance of such an obligation was not a condition of the purchasers’ right to rescind.

64. His Honour found, at 34:

There is a further difficulty with both these submissions. Compliance with the express obligation imposed on the defendant to "apply for the said consent within twenty four (24) hours of the date of this contract" is not, by the terms of special condition 28, made a condition of the exercise by the defendant of the right of rescission conferred by that provision, nor should there be any implication to that effect. It is only if non-compliance with that obligation had a sufficient causal relationship with the defendant's failure to obtain the requisite consent within the 14 day period that the defendant would be precluded from exercising the right of rescission arising by virtue of that failure, in accordance with the principle to be later discussed. If that failure would have occurred in any event, non-compliance with the obligation would not affect the defendant's right of rescission (see Nina's Bar Bistro v MBE Corporation 1983 3 NSWLR 613 at 614F, 620E-621F, and 631G-632D; Italo-Australian Club v National Australia Bank 1989 NSW Conv R 58328 at 58336-7).

The plaintiff's third submission is based on the proposition that in addition to the express obligation to apply for the requisite "consent" within 24 hours of the date of the contract, special condition 28 imposed on the defendant an implied obligation to take all reasonable steps available to him to obtain that "consent" within the stipulated 14 day period. That proposition is undoubtedly correct (see e.g. Butts v O'Dwyer 87 CLR 267 at 279-80). If the failure by the defendant to obtain "consent" within the 14 day period resulted from any default by him in the performance of either his express or implied obligations, then the defendant was not entitled to exercise the right of rescission of the contract otherwise available to him under special condition 28 (see Suttor v Gundowda 81 CLR 418 at 440-3 applying New Zealand Shipping Co v Societe des Ateliers et Chantiers de France 1919 AC 1). This is an application of the principle that a party to a contract is not entitled, as against the other party, to rely on an event resulting from the first party's wrongful act.

66. His Honour therefore held that the purchasers were not entitled to rescind the contract, if the consent of the FIRB was not obtained within the 14 day period, as a result of a default in compliance with the implied obligation to take all reasonable steps to obtain that consent. The right to rescind would be lost if (a) the purchasers did not take all reasonable steps, and (b) the failure to take all reasonable steps caused the consent not to be obtained within the 14 days.

67. McClelland CJ in Eq, in reaching this conclusion, applied the following aspect of the judgment of Latham CJ, Williams and Fullagar JJ in Suttor v Gundowda Pty Ltd (1950) 81 CLR 418; [1950] HCA 35 at 441:

… The provision in question is to be construed as making the contract not void but voidable. The question of who may avoid it depends on what happens. If one party has by his default brought about the happening of the event, the other party alone has the option of avoiding the contract. If the event has happened without default on either side, then either party may avoid the contract…

68. His Honour dealt with the issue of who had the burden to prove these matters at 35 and 36. He recognised that conflicting opinions on these issues had been expressed in the cases, and said at 35:

The question of where the onus of proof lies on the issue of whether an event, on the happening of which an entitlement by a party to rescind or avoid a contract arises, has resulted from that party's breach (unless, as in Yeung v Desnor (1989) 5 BPR 11343, the terms of the contract make this sufficiently clear), has been the subject of conflicting opinions in the cases. Favouring the view that the onus lies on the party seeking to establish an entitlement to rescind or avoid the contract are Brauer and Co v James Clark 1952 2 AER 497, Barber v Crickett 1958 NZLR 1057, Zieme v Gregory 1963 VR 214, Adina Constructions v Whitehead (1976) 1 BPR 9173, and Earle Cameron v Comprador Properties (1987) 3 BPR 9657. Favouring the view that the onus lies on the party resisting rescission or avoidance are Strati v JAG Investments (1980) 1 BPR 9600, Nina's Bar Bistro (supra) and City of Gosford v Marim (1990) 6 BPR 13871. Nina's Bar Bistro was a decision of the NSW Court of Appeal in which all three Judges expressed themselves in terms which appear to me to support the proposition that the onus of proof lies on the party alleging the absence of an entitlement to rescind (Glass JA at 614F, Mahoney JA at 621A, Priestley JA at 631G-632D), but I do not think that that case could properly be regarded as a binding decision on the point. None of the other decisions referred to is binding on this Court.

69. The parenthetical reference by McClelland CJ in Eq to the decision of Yeung v Densor is significant, although not explained by his Honour, and it will be necessary to return to it below.

70. McClelland CJ in Eq followed the following cases, in preferring the line of authority that imposed the burden of proof on the party challenging the validity, over the authorities that supported the principle that a party for whose benefit a right of rescission is inserted into the contract should have the burden of proving that the party’s conduct has not caused the right to arise.

71. In Nina’s Bar Bistro Pty Ltd v MBE Corporation (Sydney) Pty Ltd [1984] 3 NSWLR 613, a contract for the sale of a restaurant business was conditional upon the consent of the lessor of the premises from which the business was conducted being obtained by a stipulated date. The parties covenanted to use their best endeavours to obtain the lessor’s consent. The lessor required guarantors for the assigned lease, but after the intended guarantors withdrew, the purchaser did not seek to obtain the lessor’s consent to the assignment without guarantors of the obligations of the assignee. As the lessor’s consent had not been obtained by the relevant date, the purchaser exercised the right to terminate the contract, which the vendor treated as a repudiation of the contract for sale.

72. This case differed from Plumor Pty Ltd v Handley in that both parties were subject to an express covenant to use their best endeavours to obtain the lessor’s consent. The contract did not expressly make performance of that covenant a condition to each party’s right to rescind, if the lessor’s consent was not given.

73. Glass JA relevantly agreed, at 614, with the judgments of Mahoney and Priestley JJA.

74. Mahoney JA found, at 620, that, in doing nothing towards obtaining the lessor’s consent, after the intended guarantors withdrew, the purchaser had breached its obligations under the contract and continued:

The question to be determined therefore is whether the purchaser’s failure to seek consent in the time between 21 and 27 September 1982 deprived it of the right which otherwise it would have had to terminate the agreement, under cl 5(f) or for failure to complete.

… I do not think that compliance with such obligations constitutes a condition precedent, as such, to the exercise either of the right to terminate for failure to complete on the specified date, or the right to terminate under cl 5(f) of the agreement. Thus, for example, if it appeared clearly that, if the obligations had been performed in full, the lessor’s consent would not have been obtained, the fact of non-compliance with them would not, in my opinion, have prevented the exercise of the right to terminate under cl 5(f).

75. Mahoney JA then raised the question of who had the onus of proving the necessary relationship between the purchaser’s non-compliance and the failure of the lessor to give its consent. His Honour then said, at 620 and 621:

Mr Bennett QC, for the purchaser, submitted that the onus lay on the vendor to show that, had the purchaser performed the relevant obligations, the lessor’s consent would have been obtained and/or completion would have taken place on the specified date. The question of onus is, the submission suggested, of particular importance in this case because the parties at the trial directed little or no attention to this question and there was little or no evidence relating to the matter.

I am not satisfied that, if the purchaser had set about obtaining the lessor’s consent when, e.g., the first telephone conversation between the solicitors took place, the consent would have been obtained. As a matter of probability, I think that it would not.

76. It is clear that Mahoney JA held that compliance by the purchaser with its obligation to use its best endeavours to obtain the lessor’s consent was not a condition to its right to rescind the contract; and also that the purchaser’s default was not the cause of the failure of the lessor to consent. Mahoney JA did not deal explicitly with the issue of the onus of proof. However, in expressing his conclusion (contained in the extract set out immediately above) in the form that he was not satisfied that, if the purchaser had taken steps to obtain the lessor’s consent, the consent would have been obtained, his Honour appears implicitly to have placed the burden of proof on the vendor. If his Honour had considered the purchaser to bear the onus of proof, it would have been more natural for Mahoney JA to have expressed his conclusion in the form being: “I am satisfied that, if the purchaser had performed its obligations, the consent would still not have been obtained”. Mahoney JA concluded at 621:

In arriving at this conclusion, I am conscious that, in general, inferences should not be drawn in favour of a defaulting party and that, accepting that the purchaser was in default, it is not to be assumed that, had it done what it should, the purpose of its obligations would not have been achieved. However, in the end, the question is whether, had those obligations been performed, the consent would in fact of been obtained. I do not think that it would…

77. Priestley JA, who was in dissent, noted, at 632, that counsel for the purchaser had submitted that “the onus is on the vendor to show that the purchaser’s default caused the non-obtaining of the consent and that either there is no evidence to support the appropriate finding or that the vendor has not discharged the onus of showing that the purchaser by its default caused the non-obtaining of the consent”. Priestley JA then set out the substance of the purchaser’s submission as to why its conduct was not responsible for the failure of the lessor to give its consent to the assignment, and said, at 632: “To this point I agree with the purchaser’s argument”. Priestley JA then proceeded to decide that the purchaser was not entitled to rescind the contract, because other conduct of the purchaser constituted a repudiation of its obligations.

78. In Italo-Australian Club Ltd v National Australia Bank Ltd (1989) NSW ConvR 55-461, the Court of Appeal was concerned with an appeal from a decision of Bryson J. The case concerned a contract for sale of land which contained a term to the effect that completion of the agreement was conditional upon the purchaser obtaining from the Council development approval to use the property as a club. It was anticipated that any approval would be conditional upon the purchaser obtaining a lease from the State Rail Authority (SRA), of sufficient land adjoining the property to be used as a car park. The term required the purchaser to use its best endeavours, and do all things required by the SRA, to obtain such a lease. If the development approval was refused, or if the SRA declined to grant the lease, either party was entitled to rescind the contract. Bryson J found that the purchaser had breached its obligation to apply for a development approval, and to pursue such application diligently and expeditiously, and do all things required by the Council for the granting of development approval.

79. The purchaser, who was the appellant, relied upon a submission that, even if it had failed to use its best endeavours to obtain the lease from the SRA that the conditions of the development approval required, that would not prevent it from exercising the right to rescind the contract, unless its default was the cause of the SRA not granting the lease.

80. Kirby P and Samuels JA agreed with the judgment of Mahoney JA. Mahoney JA found that the appellant was in default, and that the default was a cause of the failure of the SRA to grant the required lease in time. On the issue of whether the existence of a default precluded the appellant from rescinding the contract; or whether it was also necessary that the default was a cause of the failure of the condition to be satisfied, his Honour referred to the Nina’s Bar case and said, at 58,336 to 58,337:

Upon the construction of the agreement there in question, I held that compliance with the purchaser's obligation in that regard did not constitute a condition precedent, as such, to the exercise of its right to terminate for failure to complete on the specified day or its right to terminate under the relevant clause of the agreement. I said:

Thus, for example, if it appeared clearly that, if the obligations had been performed in full, the lessor's consent would not have been obtained, the fact of non-compliance with them would not, in my opinion, have prevented the exercise of the right to terminate under CL5(f).

Therefore, if non-compliance with such obligations is to take away the purchaser's right to terminate, it must be because there is a relationship between that non-compliance and the failure to settle on the due date or to obtain the lessor's consent.

The effect of a "best endeavours" clause is to be determined in the context of the document in which it appears. In the Nina's Bar case the relevant clause was, in my opinion, not a condition precedent as such to the purchaser's right to terminate under the relevant clause in the sense that compliance with it, as such, destroyed that right. There was, in that case, an unexpressed assumption in the relevant clause that if default under the "best endeavours" clause resulted in the consent not being obtained, then because the purchaser was in default, it could not rely upon what its own default had produced.

There is, I think, to be found in the present clause an assumption of that kind. As I have said, it is not necessary to pursue, by way of conceptual analysis, the formulation of that assumption. That, in my opinion, is the basis of the operation of the "best endeavours" clause in the present case.

And it would, I think, be part of that assumption that if the Club's failure to use its best endeavours did not result in the lease not being obtained, that would not deprive the Club of its right to rely on the fact that the lease was not obtained.

81. On the issue of which party had the burden of proof, Mahoney JA noted, at 58,342, that the appellant had conceded before the trial judge that the appellant, being the purchaser who had purported to rescind the contract, had the burden of proving that any default by the purchaser was not a cause of the failure of the condition.

82. The next case referred to by McClelland CJ in Eq was The City of Gosford v Marim Pty Ltd (1990) 6 BPR 13,871. The plaintiff, as purchaser, and the defendant, as vendor, entered into a contract for sale dated 22 April 1988. The contract was subject to and conditional upon registration of a plan of subdivision within six calendar months of the date of the agreement. If registration was not achieved within that time, either party could rescind the agreement by notice. The vendor was required to do all things and take all necessary steps to have the subdivision approved and registered as quickly as possible.

83. The contract did not contain a term that made it a condition of the vendor’s right to rescind that the vendor had complied with its obligation concerning the registration of the plan of subdivision.

84. The vendor rescinded the contract, on the ground that the plan of subdivision had not been registered by the required date. The purchasers sought an order for specific performance of the contract for sale. That order could only be made on the basis that the rescission of the contract was ineffective.

85. Powell J (as his Honour then was) said at 13,874:

I accept that, in a case such as this, where a contract provides that one, or other, or both, of the parties to it may terminate the contract in futuro if an event does not occur, and where that event is one, the non-occurrence of which may well be due to the default of one, or other, of the parties to the contract, if it appears that a party to the contract has defaulted in his obligations under the contract, and if that default has a direct, and substantial, causal relationship to the non-occurrence of the relevant event, the party in default is not entitled to invoke the provisions of the condition so as to terminate the contact in futuro.

It is, however, to be observed that the reason why this is so is that the law sets its face against a party taking advantage of a situation which has been brought about by his own default; that is to say, the law sets its face against permitting someone to take advantage of a provision in a contract in circumstances in which it would be unconscionable for him to do so.

I turn, then, to the question of the onus of proof. With respect, it seems to me that it is not sufficient to dispose of this question merely to refer, as did Mr Davison, to what was said by a particular judge in a particular case. Rather, it seems to me that this question must be looked at in terms of basic principle, and the cases examined to determine whether the result in each was in accordance with basic principle. It seems to me that in each of the cases to which reference has been made in the course of argument, the statement of the presiding judge as to who bore the onus of proof in the particular circumstances is readily explicable by reference to what was the ultimate issue for determination in the particular case, and who was the person who propounded that issue for determination. Thus it seems to me the question is ultimately a very simple one: what are the issues propounded in the present case, and who is it who propounds the ultimate issue upon which success or failure depends?

In the present case, the Plaintiff seeks specific performance of an Agreement for Sale. That being so, the Plaintiff must, in effect, plead, and prove, that there was an Agreement for Sale, and it is still on foot, and that it is, and at all time has been, ready, willing and able to carry that Agreement for Sale into effect. The Defendant then seeks to rebut that case by, in effect, pleading the provisions of Special Condition 1, the non-occurrence of the relevant event, and that it has delivered a Notice of Rescission. To meet that case, the Plaintiff then, in effect, pleads that, by reason of its actions, the Defendant had disqualified itself from relying upon the provisions of Special Condition 1. In these circumstances, the non-occurrence of the relevant event, and the delivery of the Notice of Rescission being admitted, the Plaintiff must prove that, by reason of the Defendant's default, it is disentitled to rely on the non-occurrence of the relevant event so that the Agreement for Sale remains on foot. I therefore conclude that, whatever may be the position in any other Vendor and Purchaser case, in this case the Plaintiff bears the onus of proving that it was the Defendant's default which led to the non-occurrence of the relevant event.

86. The approach adopted by Powell J was to deal with the issue of burden of proof as a function of which party was required by its pleadings to put particular matters in issue. His Honour held that, once the purchaser pleaded that the contract was on foot, the vendor could allege in its defence that it had rescinded the contract, and it would then be necessary for the purchaser to reply that the vendor had lost the right to rescind, because it had breached its obligation to take reasonable steps to cause the event to happen, the failure of which event to occur was the basis of the vendor’s entitlement to rescind.

86. Powell J’s finding, that it would be necessary for the purchaser to reply that the vendor had lost the right to rescind, is consistent with the principle established by the two Court of Appeal cases, and accepted by McClelland CJ in Eq, that where the contract does not impose a condition on the exercise of the right of rescission, the party who asserts that the right has been lost because the wrongful conduct of the rescinding party has caused the right to arise, has the burden of proving those matters.

87. In Plumor Pty Ltd v Handley, McClelland CJ in Eq resolved the difference of judicial opinion between the two lines of authority in the following way, at 35:

In Joseph Constantine Steamship Line v Imperial Smelting Corporation 1942 AC 154 the House of Lords, in a case involving an event alleged by one party to a contract to have brought the contract to an end by frustration, held that on the issue of whether the alleged frustrating event resulted from that party's breach (ie was "self-induced"), the onus of proof lay on the other party. The question of where the onus of proof lay was the sole issue in the appeal, being starkly defined by Lord Russell of Killowen (at 177) as follows: "The rival contentions may be stated thus:

(1) The appellants say: 'Frustration will excuse unless it is proved to be self-induced'.

(2) The respondents say: 'Frustration will not excuse unless it is proved not to be self-induced'."

It was the former contention that was held to propound the preferable formulation of the principle. That is a decision of great persuasive weight: there was a strong bench of five members, each of whom gave a separate reasoned speech, the decision was unanimous, and to my mind the reasoning carries conviction. The analogy between the application of the relevant principle in cases of frustration and in cases of rescission is very close indeed.

None of the other decisions mentioned above refer to Joseph Constantine, nor, with one exception, do they include any analysis of the question of onus as a matter of principle. The exception is the decision of Powell J in City of Gosford, in which his Honour did deal with that question as a matter of principle, on the basis of which he decided (consistently with Joseph Constantine) that the onus of proof rests on the party resisting rescission.

In my opinion, the decision in Joseph Constantine should be applied, and the dicta in Nina's Bar Bistro and the decision in City of Gosford should be followed…

89. The judgment of McClelland CJ in Eq has been consistently followed: see Hunyor v Tilelli (unreported 24 April 1997, McClelland CJ in Eq); Chopard v Vamiso Pty Ltd (1998) 9 BPR 16,813 per Young J at 16,820; Masters v Belpate Pty Ltd [2001] NSWSC 169 per Hodgson CJ in Eq at [58]; Schenk v ACN 081 123 140 Pty Ltd [2002] NSWSC 123; (2002) 11 BPR 20,375 per Bryson J at 20,380; Munro v Bodrex Pty Ltd [2002] NSWSC 122; (2002) 10 BPR 19,403 per Bryson J at [52]; Pelly v Tebran Pty Ltd [2006] NSWSC 1072 per Hall J at [155]; Kayserian Nominees (No 1) Pty Ltd v JR Garner Pty Ltd [2008] NSWSC 803 per Brereton J at [27]; Sharjade Pty Ltd v Commonwealth [2009] NSWCA 373; (2009) 15 BPR 28,443 per Hodgson JA (with whom Young JA and Sackville AJA agreed) at [56]; and Wang v Kaymet Corporation Pty Ltd [2015] NSWSC 1459 per Stevenson J at [31].

An historical diversion

90. It may now only be of historical interest, but it will be instructive to consider briefly the authorities considered by McClelland CJ in Eq in Plumor Pty Ltd v Handley (see par 68 above), which supported the proposition that the burden of proof lay on the party who claimed a right to rescind the contract by reason of the non-occurrence within time of an event, which that party was required to take reasonable steps to cause to occur, to prove that the reasonable steps had been taken, and any breach did not cause the non-occurrence of the event.

91. In Brauer & Co (Great Britain) v James Clark (Brush Materials) Ltd [1952] 2 All ER 497, Denning LJ (as his Lordship then was) said in the English Court of Appeal, in a case in which a contract for the shipping of goods was subject to the sellers obtaining an export licence, at 501:

… The answer to all these questions is, I think, that this clause is a special exemption inserted in favour of the sellers. In order to enable them to take advantage of it they must show that, notwithstanding that all reasonable steps were taken by them, they could not obtain a licence to export during any part of the shipment period, or, alternatively, that it was useless for them to take any such steps, or any further steps, because it was quite impossible for them to obtain a licence.

92. Denning LJ, in using the words “notwithstanding that all reasonable steps were taken by them” required that, not only were the sellers required to prove that they had taken all reasonable steps, but also that the export licence had not been granted “notwithstanding” the taking of those steps. Thus, the sellers were required to prove that their breach did not cause the failure of the export licence to be issued. Singletons LJ appears to have adopted a similar position, at 500, and Romer LJ agreed with the two other Lords Justices.

93. The contract in this case also provided that it was “subject to” the relevant export licence being granted. The granting of that licence was likely to be a matter of administrative discretion.

94. Cleary J, in the Supreme Court of New Zealand, followed Brauer & Co in Barber v Crickett [1958] NZLR 1057 at 1060. The contract was expressed to be conditional on the purchaser arranging the necessary mortgage finance to purchase the property, and was to be null and void if the finance could not be secured. The decision by any bank or finance company to which the purchaser applied for finance will have been a matter for the commercial discretion of the relevant company.

95. In Zieme v Gregory [1963] VR 214, the Full Court of the Supreme Court of Victoria (Lowe, Smith and Gowans JJ) found, at 223, that the right of the purchaser to rescind for non-occurrence of the event that the purchaser was obliged to take reasonable steps to achieve, being the obtaining of a first mortgage loan for a specified amount, was “conditional upon the purchaser not being in default”. Their Honours, at 223, followed Brauer & Co and Barber v Crickett.

96. In Adina Constructions Pty Ltd (in liq) v Whitehead (1976) 1 BPR 97,013, Needham J, without referring to the above authorities, found that the plaintiff could not rely upon non-fulfilment of the relevant condition without showing that it was not in default in respect of its obligations under it. His Honour derived that result from the principle in New Zealand Shipping Co Ltd v Societe des Ateliers et Chantiers de France [1919] AC 1 at 9, as cited by the High Court in Suttor v Gundowda Pty Ltd (1950) 81 CLR 418; [1950] HCA 35 at 441. The contract was not expressed to be conditional. The plan of subdivision which was annexed to the contract had not been registered as a deposited plan at the Land Titles Office. If the plan of subdivision was not registered within 12 months, either party could rescind the contract.

97. I infer, from the brief report, that the plan of subdivision in question had been approved by the relevant local government authority, and what was required to occur was that the vendor take all of the steps necessary to satisfy the conditions of the approval, in order for the plan of subdivision to be registered at the Land Titles Office.

98. In Earle Cameron (Industrial) Pty Ltd v Comprador Properties Pty Ltd (1987) 3 BPR 97,235, Hodgson J (as his Honour then was) noted various authorities that suggested that it was incumbent on the party who claimed that the rescission was ineffective to prove that the party who was under the obligation to take reasonable steps to avoid the event occurring that gave rise to the right to rescind had breached the obligation. Hodgson J concluded:

… However, the cases to which I earlier referred seem strongly to suggest that in the absence of any clear indication to the contrary, the onus does lie on the party seeking to take advantage of the condition to escape from the contract. I think I should follow those cases, and find that the onus lay on the plaintiff in this case. If the decision in Strati cannot be distinguished on the basis of the terms of the particular contract being there considered, I consider that I should not follow that decision.

99. In Plumor Pty Ltd v Handley, McClelland CJ in Eq resolved the difference of judicial opinion in the following way, at 35:

In Joseph Constantine Steamship Line v Imperial Smelting Corporation 1942 AC 154, the House of Lords, in a case involving an event alleged by one party to a contract to have brought the contract to an end by frustration, held that on the issue of whether the alleged frustrating event resulted from that party's breach (that is, was "self-induced"), the onus of proof lay on the other party. The question of where the onus of proof lay was the sole issue in the appeal, being starkly defined by Lord Russell of Killowen (at 177) as follows:

"The rival contentions may be stated thus:

(1) The appellants say: 'Frustration will excuse unless it is proved to be self-induced'.

(2) The respondents say: 'Frustration will not excuse unless it is proved not to be self-induced'."

It was the former contention that was held to propound the preferable formulation of the principle. That is a decision of great persuasive weight: there was a strong bench of five members, each of whom gave a separate reasoned speech, the decision was unanimous, and to my mind the reasoning carries conviction. The analogy between the application of the relevant principle in cases of frustration and in cases of rescission is very close indeed.

None of the other decisions mentioned above refer to Joseph Constantine, nor, with one exception, do they include any analysis of the question of onus as a matter of principle. The exception is the decision of Powell J in City of Gosford, in which his Honour did deal with that question as a matter of principle, on the basis of which he decided (consistently with Joseph Constantine) that the onus of proof rests on the party resisting rescission.

In my opinion, the decision in Joseph Constantine should be applied, and the dicta in Nina's Bar Bistro and the decision in City of Gosford should be followed…

100. In the extract from Plumor Pty Ltd v Handley that is set out above at par 88, McClelland CJ in Eq resolved the choice as to which line of authority should prevail in part by relying on the decision of the House of Lords in Joseph Constantine Steamship Line v Imperial Smelting Corporation [1942] AC 154.

101. The Joseph Constantine case involved frustration of a charter party as a result of an unexplained explosion aboard the ship that had the effect of frustrating the commercial object of the venture. As Viscount Simon LC noted at 158, it was not disputed that the time needed to repair the damage and to make the ship fit for her voyage was so great as to frustrate the commercial object of the venture. The charterers had sued the shipowner for damages for breach of the contract, and the issue was whether the shipowner was not entitled to rely upon the fact that the charter party had been frustrated, because the event that frustrated the contract had been brought about by the default of the shipowner. Their Lordships held that, where a contract is frustrated by events, the contract is automatically brought to an end, and it is not a requirement for a party to be entitled to rely upon the fact of the frustration of the contract, that the party first prove that the event causing the contract to be frustrated was not caused by that party’s breach of the contract. The automatic effect of the frustrating event was of particular significance to Viscount Simon LC at 163 (“It kills the contract itself and discharges both parties automatically”), Viscount Maugham at 170 (“… I attach so much importance to these conclusions, and especially to the conclusion as to the automatic effect of the event which prima facie effects a frustration…”) and Lord Wright at 187 (“Frustration operates automatically”). Lord Wright at 187 went so far as to distinguish the automatic effect of the frustrating event from the case where it is the act of the party who rescinds the contract:

This position must, accordingly, the distinguished from a somewhat analogous, but really quite different, position, which arises when a contract is terminated by the injured party, who rescinds it on the ground of a fundamental breach by the other party and who further claims damages for the breach while treating it as no longer binding for the future. Such a procedure involves a choice or option by the party who rescinds. But in the case of frustration the contract is ended and dead, simply by the frustrating event.

102. Their Lordships were concerned with the frustration of a charter party in time of war, and they held that the shipowner who sought to rely upon the contract being frustrated should not have had the burden of proving the negative that the frustrating event was not caused by the default of the shipowner’s servants. As Viscount Simon LC said at 161:

I may observe, in the first place, that, if this were correct, there must be many cases in which, although in truth frustration is complete and unavoidable, the defendant will be held liable because of his inability to prove a negative – in some cases, indeed, a whole series of negatives. Suppose that a vessel while on the high seas disappears completely during a storm. Can it be that the defence of frustration of the adventure depends upon the owner’s ability to prove that all his servants on board were navigating the ship with adequate skill and that there was no “default” which brought about the catastrophe? Suppose that a vessel in convoy is torpedoed by the enemy and sinks immediately with all hands. Does the application of the doctrine require that the owners should affirmatively prove that those on board were keeping a good look-out, were obscuring lights, were steering as directed, and so forth?

103. McClelland CJ in Eq said in Plumor Pty Ltd v Handley at 35: “The analogy between the application of the relevant principle in cases of frustration and in cases of precision is very close indeed”.

104. His Honour thus resolved the differences in judicial opinion that appeared to have arisen from the authorities by analogy with the principle of frustration. Plumor Pty Ltd v Handley was, it will be remembered, a case involving a contract that was expressed to be subject to the consent of the FIRB being obtained. The failure of that consent to be given may well be treated as having a materially equivalent effect to the occurrence of a frustrating event, as ultimately the decision to grant or withhold approval was a matter of administrative discretion.

105. As the decision of McClelland CJ in Eq in Plumor Pty Ltd v Handley has come to be accepted as stating the correct principle to be applied in all cases where a party to a contract challenges the validity of the rescission made by the party subject to an obligation to take reasonable steps to avoid the event that gives rise to the right to rescind occurring, the burden of proof now falls on the party challenging the rescission not only in cases where the relevant event depends upon the election of some third party (and thus is equivalent to a frustrating event), but also in cases where it is in the practical control of the rescinding party to avoid the event, and where the rescinding party may be the only one who has the requisite knowledge to be able to establish that it performed the obligation to take reasonable steps.

106. This development in the law may at least be partly responsible for the outcome that purchasers, with the benefit of an obligation on vendors to take reasonable steps to cause plans to be registered, find themselves unable to prove that the plans were not registered because of a breach of the obligation by the vendors, by reason of the inadequacy of the information available to the purchasers concerning the reasons for the failure of the plans to be registered in time.

Shifting evidentiary burdens

107. The difficulties caused by this approach to parties who resist the rescission of contracts for sale by parties, who are required by the contract to take steps to avoid the right to rescind arising, may be ameliorated, in particular cases, by the principles concerning the shifting of the burden of adducing evidence.

108. As I have noted above, defendants accept that the principle stated by McClelland CJ in Eq in Hunyor v Tilelli (see par 56 above) applies in the present case.

109. In Masters v Belpate Pty Ltd, immediately after Hodgson CJ in Eq (as his Honour then was) had accepted, at [58], the rule concerning the burden of proof stated in Plumor Pty Ltd v Handley, his Honour said at 18,539:

However, because the relevant facts are peculiarly within the knowledge of the vendor, there may be an evidentiary onus on the vendor to lead evidence as to what happened, because if the vendor does not do this, inferences may be drawn against the vendor, for example by unexplained delays: see Apollo Shower Screens Pty Ltd v Building and Construction Industry Long Service Payments Corp (1985) 1 NSWLR 561 at 565–6; Hawes v Cuzeno Pty Ltd (1999) 10 BPR 18,011 at [41].

110. As will be seen, his Honour’s observations, concerning the possible significance of unexplained delays, will be relevant to the determination of the present case.

111. As Stevenson J explained in Wang v Kaymet Corp Pty Ltd, the source of this principle is the well-known case of Blatch v Archer (1774) 1 Cowp 63; 98 ER 969.

Position where the right to rescind is conditional

112. It is now appropriate to consider the authorities which deal with the situation (which is relevant to the present case) where compliance with the obligation to avoid the right to rescind arising is a condition to the entitlement to exercise that right.

113. It will be remembered that, in the extract from the judgment of McClelland CJ in Eq in Plumor Pty Ltd v Handley, set out above (at par 68), his Honour effectively excluded the decision in Yeung v Densor Pty Ltd from the field of the conflicting opinions to which he referred, on the basis that, in that case, the contract made the issue of where the onus of proof lies “sufficiently clear”.

114. In Yeung v Densor Pty Ltd (1989) 5 BPR 11,343, Waddell CJ in Eq was concerned with a claim by the plaintiffs for specific performance of contracts, which the vendor had purported to rescind on the ground that the contracts gave the vendor a right to do so, because completion of the contracts was subject to the registration of a strata plan, in the Land Titles Office, annexed to the contracts that was intended to create the units the subject of the contracts for sale. The relevant special condition obliged the vendor to use its best endeavours to procure the early registration of the strata plan. The special condition also provided that, if the strata plan was not registered within 12 months from the date of the agreement “the Purchaser shall and provided that there is no default on the part of the Vendor, the Vendor shall… have the right to rescind this agreement”. In effect, the vendor’s right to rescind was subject to the same qualification as is contained in cl 28.3.2 in the present case.

115. His Honour found, on the facts, that the vendor was not entitled to rescind, because it had not satisfied the condition concerning the use of its best endeavours; but added at 97,356:

Finally, although it is not necessary to do so, in case the matter goes further, I should express my opinion on some other matters. As to the question of onus, it seems to me that, having regard to the terms of condition 42, the defendant carried the onus of proving that there has been no default on its part because lack of default is expressed to be a condition of its entitlement to rescind. Apart from this consideration I would respectfully adopt what was said by Hodgson J in Earle Cameron (Industrial) Pty Ltd v Comprador Properties Pty Ltd (1986) NSW Conv R 56826 at 56832-3…

298. Much of the evidence provided by Mr Colussi provides an unsound basis for concluding that the defendants did not comply with cl 28.2 of the contract for sale.

299. The contract between Mr Topic and E C Civil was signed on 26 August 2013, and the electrical and lighting works were completed on 28 May 2014. That is a period of about nine months. The contract for sale was made almost exactly in the middle of that period. Conduct by Mr Topic, on behalf of the defendants, before the date of the contract for sale, could not constitute a breach of cl 28.2, even if it unreasonably jeopardised the plan of subdivision being registered within the period of 12 months after the date of the contract. Much of Mr Colussi’s evidence is indefinite as to the date to which it related. There is reason to suspect that a considerable part of the conduct of Mr Topic, of which Mr Colussi complained, occurred before the date of the contract for sale. It is a matter for speculation when most of the conduct of Mr Topic occurred.

300. Furthermore, cl 28.2 required the defendants to take every step reasonably necessary to have the plan of subdivision registered within 12 months. It did not require the defendants to take every step necessary to ensure that the works proceeded with reasonable expedition, irrespective of the relationship between the timing of the completion of parts of the works and the objective of achieving registration of the plan of subdivision within the 12 month period. Particularly early in the 12 month period, delays in the completion of parts of the works may not have put the registration of the plan within the 12 month period in jeopardy, if the part of the works in question was not a pre-requisite to the commencement or completion of other parts of the works.

301. To establish breaches of cl 28.2, it is therefore not sufficient for the plaintiffs to do no more than to show sundry unnecessary delays caused by Mr Topic, without showing that those delays had relevance to the registration of the plan of subdivision within the 12 month period that made it reasonable for Mr Topic to avoid those delays.

302. The parties did not provide detailed submissions concerning the relevance of particular delays in the achievement of the program of works to the registration of the plan of subdivision within the 12 month period.

303. The evidence on this issue primarily consists of Mr Topic’s explanation of the history of the works in his principal affidavit, and the timesheet prepared by Mr Topic that became Exhibit B.

304. Mr Topic divided the works that were required to be completed into potable water, electrical, waste water, gas, telecommunication works and civil works. After the completion of those works, surveying was required. Certificates had to be obtained from statutory authorities. Thereafter, a compliance certificate was required from the certifier. Then, a subdivision certificate had to be obtained from the Council. It is only then, that the application could be made for the registration of the plan of subdivision by the LPI.

305. Mr Topic gave evidence that the waste water works were finished on 30 March 2014, the gasworks on 10 April 2014, and the telecommunication works on 15 August 2014. There is no evidence of any conduct by Mr Topic in relation to these works that put in jeopardy the plan of subdivision being registered by 16 January 2015. On the face of it, all of these works were finished early enough to enable any necessary subsequent steps to be taken in a timely way to permit registration.

306. The electrical and the lighting works were finished by 28 May 2014. Although it is possible on the evidence that Mr Topic failed to take some reasonably necessary steps that would have permitted those works to be completed at an earlier time, for the reasons I have given above, the evidence is not sufficient to enable the court to make positive findings of breach of cl 28.2 in that regard.

307. However, as I have accepted Mr Colussi’s evidence concerning the late payment by Mr Topic of E C Civil’s invoices, I find that E C Civil could have forwarded the Works Complete Declaration and Handover of Assets form to Endeavour Energy so that it was effective soon after 28 May 2014 rather than about 4 August 2014, if Mr Topic had caused the invoices to be paid in a timely way. Reasonable conduct by the defendants for the purposes of cl 28.2 required Mr Topic to pay all invoices received from contractors within the agreed payment terms. Mr Topic’s conduct caused an unnecessary delay of about two months.

308. I infer from the evidence of Endeavour Energy’s response to the document delivered by E C Civil, that Endeavour Energy was required to respond to the document. It did not do so until 20 November 2014, at which time it asserted that the electrical works were not completed. The only step required was the provision of a signed duct declaration. Endeavour Energy also required copies of the final linen plan, the deposited plan administration sheet signed by the surveyor, and copies of any s 88B instruments. I infer that the documents would ordinarily be provided to Endeavour Energy after the surveying work had been completed, and that the only step immediately required of Mr Topic was that he provide the signed duct declaration.

309. The duct declaration was not provided to Endeavour Energy until 25 March 2015.

310. Mr Topic did not give any explanation of why he waited from about 4 August 2014 to 20 November 2014, which was a period of about 3 ½ months, without following up Endeavour Energy for a response to the document delivered by E C Civil. He did not give any explanation about why the duct declaration was not provided to Endeavour Energy until 25 March 2015. That is a further delay of about four months.

311. I accept Mr Colussi’s evidence that a proper duct declaration could be prepared within one week. Mr Colussi’s evidence on this issue was not challenged by the defendants.

312. Although Mr Topic’s conduct after 16 January 2015 cannot constitute a breach of cl 28.2 by the defendants, evidence of what occurred may permit proper inferences to be drawn that are relevant to the reasonableness of Mr Topic’s conduct before 16 January 2015.

313. Mr Topic said that he received an email from Endeavour Energy rejecting the duct declaration on about 27 March 2015; that is, two days after it was submitted. Mr Topic said that he proceeded to query Endeavour Energy as to the reason behind the rejection of the duct declaration. He did not say what he or his surveyor did in relation to communicating with Endeavour Energy. Endeavour Energy ultimately provided the required certification on 14 May 2015.

314. It is not necessary for the plaintiffs to prove that any breach by the defendants of cl 28.2 actually caused the plan of subdivision not to be registered within the 12 month period. However, it might be relevant to a consideration of whether a particular action was reasonably required to achieve registration within the period, whether taking that action was reasonably likely to promote that outcome being achieved. I find, in view of the absence of explanation by Mr Topic, that it was sufficiently likely that the electrical and lighting works could have been completed and certified at a time early enough to permit registration of the plan of subdivision by 16 January 2015, that the defendants failed to do everything reasonably required to have the plan registered by that time, in breach of cl 28.2, by reason of Mr Topic’s delay of about two months in paying the invoices, his not following up Endeavour Energy for about three months after E C Civil’s document was delivered, and by his failure to cause the duct declaration to be prepared by the surveyor and delivered by 16 January 2015; a further two months.

315. Mr Topic gave evidence that the potable water contract works were finished by 25 November 2014.

316. Delays were caused to the completion of those works, because of a water main design issue, which required a revision to the water main extension plan, which required the approval of Sydney Water, and some agreement as to how the additional costs would be shared as between Mr Topic and Sydney Water. The period of the delay that was caused by the need to revise the water main extension plan is not clearly delineated by the evidence. It appears that problems arose in about March 2014. After some inconclusive communications between Mr Topic’s water servicing co-ordinator and Sydney Water, Mr Topic instructed the contractor on 4 July 2014 to commence works on site to complete the water main, chlorination, connections, and mains to meter as per the latest drawing, and that if Sydney Water would not agree to fund any variations, payment would be made by Mr Topic. The contractor informed Sydney Water, on 11 July 2014, that the project had been on hold because of the variation for 12 weeks, and asked for advice as to whether the design variation was acceptable. Sydney Water advised, on 11 July 2014, that it accepted the design variation, and consented to the works continuing, given that Mr Topic had acknowledged that Sydney Water might not fund the variation.

317. Annexure B shows that there was no work by contractors on site between 14 April and 5 May 2014, and for three months between 22 June 2014 and 15 September 2014. There was also no work on site for almost two months between 16 September 2014 and 5 November 2014. In the absence of any detailed explanation in the evidence, it is not possible to relate these periods to the delays caused by the necessary revision of the design of the water mains, as dealt with in Mr Topic’s principal affidavit and the annexed correspondence.

318. As at 20 June 2014 (the beginning of the three months period when no work was apparently done on site, referred to in the preceding paragraph) the work by the electrical and lighting, waste water and gas contractors had been completed. The telecommunications works were not completed until 15 August 2014. Apart from those works, the only works that remained to be completed, before the civil works could be recommenced, were the potable water works.

319. As I have noted above, Sydney Water advised on 11 July 2014 that the potable water works could proceed.

320. On 10 October 2014, Mr Topic sent an email directly to Sydney Water, in which he complained that the contractor had completed the mains to meter connection over three weeks previously, and asked what the status was of the chlorination and potable water main connections. This would suggest that the relevant connection had been done by about mid-September, and that some action was required by Sydney Water.

321. Mr Topic sent his first text to the civil works contractor to recommence the civil works on 25 November 2014. That was the day on which the potable works contractor finished on site. I infer that the civil works could not be recommenced and completed until after the potable works were completed. That inference is justified by the timing of the first text, and the statement in it that “the water connection was completed today the site is ready to recommence”.

322. It follows, apparently, that the completion of the potable water works was on the critical path so far as the completion of the civil works was concerned.

323. As I have noted above, there is no evidence that Mr Topic had a plan to try to ensure that the plan of subdivision was registered before 16 January 2014, or that he proactively intervened in the progress of the works to attempt to ensure that outcome (subject to the exception to which I will refer below). These conclusions have specific relevance to the potable water works. There were extensive periods when there was apparently no works on site, which are not readily explained by Mr Topic’s evidence concerning specific reasons for delays in the completion of the potable water works. Furthermore, generally, there is no evidence that Mr Topic caused his water servicing co-ordinator to intervene with Sydney Water to expedite the steps required of it in order to progress the potable water works. There is some evidence that Sydney Water responded quickly when prompted of the need to do so (see the correspondence dated 11 July 2014 referred to above). The exception to which I referred is Mr Topic’s 10 October 2014 email directly to Sydney Water.

324. The evidence satisfies me that the defendants breached cl 28.2 of the contract for sale, by failing to act with reasonable expedition in ensuring that the potable water works were completed in a time that would enable the plan of subdivision to be registered by the 16 January 2015 deadline. I am reinforced in that conclusion by my finding that the burden lay on the defendants to prove that they had satisfied cl 28.2. The evidence does not permit precise findings as to what Mr Topic should have done on particular days in order to expedite the potable water works. The breach of cl 28.2 that he committed on behalf of his parents primarily consisted of his continuously allowing (save for the one, late exception that I have noted) nature to take its course in relation to the completion of the potable water works, without taking any steps specifically directed towards achieving registration of the plan of subdivision within the required period.

325. There is also some justification for a conclusion that Mr Topic acted too slowly in waiting until 4 July 2014 to end the stalemate as to whether he or Sydney Water would have to pay for the variation in the potable water works, given that the problem arose in about March 2014. However, I do not think that the evidence is sufficiently clear to warrant this conduct being found to be the subject of a separate breach of cl 28.2 of the contract for sale.

326. As of 25 November 2014, slightly less than two months remained of the 12 month period in which the plan of subdivision was required to be registered.

327. Mr Topic did not did not send another text to the civil works contractor until 26 February 2015.

328. The civil works contractor did not recommence works on site until 26 March 2015, some two months after the 12 month period had expired.

329. Mr Topic claimed in cross-examination that he had telephone conversations with the civil works contractor in order to try to persuade him to recommence the civil works, but he gave no evidence on that subject in his principal affidavit. Mr Topic simply did not deal in his evidence with the issue of why he was unable to cause the civil works contractor to recommence works on site soon after 25 November 2014.

330. It is difficult to assess whether, had the civil works contractor recommenced the civil works soon after 25 November 2014, those works could have been completed, surveyed, and certified in a period that would have permitted the plan of subdivision to be registered by 16 January 2015.

331. As I have said, the civil works were recommenced on 26 March 2015, and according to Mr Topic’s evidence, were not completed until 20 July 2015, after a number of items had been rectified as required by the certifier. Mr Topic did not receive an interim final compliance certificate for the civil works from the certifier until 28 August 2015.

332. On the evidence, Mr Topic, acting on behalf of the defendants, waited too long after 25 November 2014 to follow up his request to the civil works contractor to recommence the civil works. There is no evidence of any follow up until 26 February 2015, which is more than a month after 16 January 2015. After such delays, it is doubtful that the civil works could have been completed in the remaining time, to allow the surveying and certification steps to be taken, in order for the Council to issue the required certificate, and for the plan of subdivision to be lodged in time to enable registration to occur by 16 January 2015. However, cl 28.2 of the contract for sale may be breached by the failure to take a reasonably necessary step, even if that failure was not a cause of the plan of subdivision not being registered within time.

333. The principal cause of the failure of the plan of subdivision to be registered by 16 January 2015 was probably dilatoriness on Mr Topic’s part in failing to cause the potable water works to be completed at an earlier time, but it was nonetheless unreasonable for him not to follow up the civil works contractor soon after 25 November 2014, by which time the need for the completion of the works had become urgent. In particular, Mr Topic did not inform the civil works contractor of the urgency.

334. Mr Topic gave evidence that the surveyor commenced surveying the work as executed on about 28 May 2015. The surveyor completed services declaration and forwarded it to the certifier on about 17 August 2015.

335. In my view, the surveying, certification, and the following steps in the completion of the development works necessary before the plan of subdivision could be registered are not relevant to the issue of whether the defendants failed to comply with cl 28.2, for the simple reason that the delays that occurred in the completion of aspects of the works that were required to be completed before those steps could be commenced had the result that those steps could not be commenced until after the expiration of the 12 month period from the date of the contract for sale.

336. I therefore conclude that when, on 31 March 2015 and 2 April 2015, the defendants purported to terminate the contract for sale, they were not entitled to do so, because they had not satisfied the condition contained in cl 28.3.2 of the contract for sale, and accordingly the termination was ineffective.

337. As I have noted above, Mr Topic gave evidence that, on about 1 September 2015, he lodged the application for the subdivision certificate with the Liverpool City Council and paid the fee. He said that, on about 19 September 2015, he attended a site inspection with engineers from the Council. There was no evidence of the subdivision certificate having been issued by the Council.

338. I infer that, if the subdivision certificate is issued by the Council, it should only be an administrative exercise for the necessary documents to be lodged with the LPI to enable the plan of subdivision to be registered. When that occurs, there should be no impediment to the parties completing the contract for sale in this matter.

339. As it has turned out, even if, in the period since 1 September 2015, the subdivision certificate has not been issued by the Council, and the plan of subdivision has not been registered, it should be possible for those steps to be effected by relatively administrative arrangements, that would not involve the court being required to supervise the completion of any complex development works.

340. As I have decided that, on the proper construction of the contract for sale, cl 28.3.2 imposed a condition on the defendants’ right to rescind the contract that they had satisfied cl 28.2, and that the defendants had the burden of proving that they had satisfied the condition, I have decided this case on the basis that the defendants have not satisfied the burden of proof. Had I not found that cl 28 qualified the defendants’ right to rescind under special condition 48, the burden would have fallen on the plaintiffs to prove both that the defendants had not taken all steps reasonably necessary to cause the plan of subdivision to be registered within 12 months from the date of the contract, and also that their failure to take those steps was a cause of the plan of subdivision not being registered in time. If I had been required to decide the question of whether, on the evidence in the present case, the plaintiffs had carried that burden of proof, I would have held that they have. First, I would have held that the conduct and actions of Mr Topic on behalf of the defendants that I have described above amounted to a failure by the defendants to take steps reasonably necessary to cause the plan of subdivision to be registered within time. The real question would have been whether the plaintiffs had also proved that, if the defendants had taken all of the steps that were reasonably necessary, the plan of subdivision would have been registered within the 12 months. That would have been a conceptually difficult question to resolve, because I have found that Mr Topic acted in a dilatory way in relation to a number of aspects of the development works, and also did not have an overarching plan to proactively cause the works to be done as soon as reasonably possible. On balance, I would have held, however, that the plaintiffs had carried the burden of proof, and that the plan of subdivision could have been registered within the 12 month period, if Mr Topic had taken all reasonable steps on behalf of his parents to achieve that outcome. That is primarily because of the substantial number of days upon which no work was carried out on the property; the absence of any satisfactory explanation for those delays; and the failure on the part of the defendants to respond to the evidentiary burden that I think shifted to them to establish a positive reason why the plan of subdivision could not have been registered within the 12 months in any case.

Orders

357. In these circumstances, the plaintiffs are entitled to the declaration sought in order 4 of their summons, that the contract for sale dated 16 January 2014 has not been rescinded.

358. It is not appropriate that the court make an order for specific performance of cl 28.2 of the contract for sale, because the content of that order would not be sufficiently specific.

359. I propose to give the plaintiffs an opportunity to find out what specific steps, if any, remain to be taken to cause the plan of subdivision to be registered. If the defendants cannot, or will not, provide satisfactory information to the plaintiffs in that regard, I will be prepared to make appropriate directions to ensure that the plaintiffs receive the information they require. The court could then frame orders to require the defendants to take any specific steps that are required to cause the plan of subdivision to be registered.

360. The court should also make an order for specific performance of the contract for sale, in the conventional way, as well as the usual consequential orders to ensure that Lot 215 is transferred to the plaintiffs, after registration of the plan of subdivision has occurred.

361. The plaintiffs are also entitled to an order for payment of their costs of the proceedings on the ordinary basis.

362. I will invite the parties to bring in short minutes of order to give effect to these reasons for judgment. I will also hear the parties, if they wish to submit that the order for costs should be other than the order suggested in the preceding paragraph.

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