Allam Homes P/L v Vocata P/L - [2003] NSWSC 1052

No judgment structure available for this case.

CITATION: ALLAM HOMES P/L v VOCATA P/L [2003] NSWSC 1052

HEARING DATE(S): 10-11-2003

JUDGMENT DATE:
21 November 2003

JURISDICTION:
EQUITY

JUDGMENT OF: Bryson J at 1

DECISION: Judgment for defendant with costs [52].

CATCHWORDS: VENDOR and PURCHASER - Option to Put and Call lots in proposed subdivision - Plan annexed to Option showed 41 lots of which 39 were residential lots - plan approved allowed 33 residential lots - whether options available for lots in approved subdivision at prices fixed for lots in annexed plan - held - it was not - decision on construction of Deed of Put and Call

LEGISLATION CITED: Environmental and Planning Assessment Act 1979

CASES CITED: R v Justices of The County of London (1889) 24 QBD 341 at 345.
The Consolidated Credit Corporation v Gosney (1885) 16 QBD 24 at 25-6.
Codelfa Construction v. State Rail Authority of NSW (1982) 149 CLR 337
Walker v Wilson (1991) 172 CLR 195 at 199.1, 200.1, 207.7, 208.2.
Latitude Fisheries v Minister for Primary Industries and Energy (1993) 41 FCR 536 at 542-543

PARTIES :
Allam Homes Pty Limited - Plaintiff
Vocata Pty Limited - Defendant

FILE NUMBER(S): SC 3743/2003

COUNSEL: R.J. Ellicott QC & J. Drummond (P)
D.J. Fagan SC (D)

SOLICITORS: Bateman Battersby (P)
Colin Biggers & Paisley (D)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRYSON J.

Friday 21 November 2003

3743/2003 ALLAM HOMES PTY LIMITED v. VOCATA PTY LIMITED

JUDGMENT

1 HIS HONOUR: These proceedings, which were heard with expedition, arise out of a Deed of Put and Call dated 12 April 2002 in which the defendant Vocata is the Grantor of the Call Option and the plaintiff Allam Homes is the Grantee. In the contemplated sales of land on exercise of options the grantor would be the vendor and the grantee would be the purchaser. For the contemplated arrangements to have full effect it was necessary for the grantor to obtain development approval from the Wyong Shire Council and register a subdivision plan for two large parcels of land, so that the land would be available for residential development. The grantor’s land is situated in Sparkes Road Woongarrah, near Warnervale to the west of Budgewoi Lake in the Wyong Shire. The land is referred to (not completely accurately) as Lots 14 and 15 DP 7738.

2 The issues are defined by pleadings and the whole of the evidence is in documents in Exhibits A and B; neither party called a witness. Admissions in the pleadings establish a number of matters. The grantor’s land contains approximately 20 acres. Under the Deed the grantor agreed to lodge development applications to obtain consent of Council to permit subdivision of the Lands as set out in Plan A and Plan B attached to the Deed, Plan A having 27 proposed lots and Plan B having 41 proposed lots. The grantee paid a Call Option Fee of $100 per lot totalling $6,800. In 2002 there were changes in the deposited plans relating to the land in Plan A and the land in Plan B. After several changes the land in Plan A became known as Lot 2 DP 1042739 and then as Lot 4 DP 1045448. The Plan B land became Lot 1 DP 1042739. Council consented to a development application for subdivision of the land in Plan A, the grantor gave notice of the consent to the grantee, and the arrangements in the Deed about land in Plan A have not given rise to any dispute in this litigation. An effect of cl.7.3 of the Deed was that if Council had not granted development consent for subdivision of the land in Plan B by 12 April 2003 either party might thereafter by notice in writing to the other terminate the Deed in respect of the lands in Plan B.

3 In paras 12 and 13 in the Statement of Claim the grantee makes some allegations which the grantor denies. The grantee alleges that on 20 December 2002 Council gave its consent to Development Application 3059/00C being a development consent of the subdivision of the lands identified in Plan B. The grantor denies this allegation, the force of the denial being the grantor’s position that the development consent of that date was not a Plan B Development Consent within the meaning of cl.7.3 of the Deed. The substance of the grantor’s position is in para.4 of its Defence: that: “4.1 The Council did not issue Plan B Development Consent (as defined in the Deed of Put and Call Option) by 12 April 2003;”that a Notice of Termination which the grantor gave on 12 June 2003 was effective and that the Put and Call Option has been terminated with respect to the land in Plan B.

4 In para.13 of the Statement of Claim the grantee alleges that the grantor failed to notify the grantee of a Development Consent of Council dated 15 May 2002 in respect of the lands identified in Plan B, and this was a breach of cl.3.1(b) of the Deed. The grantor disputes this allegation and claims that Council’s communication of 15 May 2002 was a refusal of consent. On the terms of the document this was plainly right and the grantor did not maintain the allegation in para.13 at the hearing.

5 Some further matters in the Statement of Claim can be understood to have been admitted. The grantor lodged Deposited Plan 1052146 for registration: this subdivided the lands in Plan B in the manner to which Council consented on 20 December 2002. Deposited Plan 1052146 was registered on 3 June 2003 and the grantor notified the grantee of this on 5 June 2003.

6 On 21 May 2003 the grantee lodged Caveat 9634035R preventing dealings with the land in Plan B. The grantor initiated a lapsing notice and this court extended the caveat pending the hearing of these proceedings. The grantee seeks specific performance under the direction of the Court, and its readiness, willingness and ability to perform its obligations have not been disputed. The grantee also claims a number of declarations establishing its alleged entitlements under the Put and Call Option. The issue is whether in fact the plan in Development Consent of 12 December 2002 Ex B/7 falls within the definition of “Plan B Development Consent” in cl.1.2(b) and hence falls within that term in cl.7.3. If it does, cl.7.3 does not create a right to terminate the Deed, and the plaintiff succeeds. Unless the Development Consent of 20 December 2002 fulfils the condition it was not fulfilled at all by 12 April 2003.

7 Plan B in the Deed (at Exhibit B, p.4) provided for 41 residential lots numbered 101 to 141. Plan B also showed three small triangular segments of land which were not identified by lot numbers; these have been referred to as residue lots. Plan B also provided for a number of proposed roads, and for a large area to be proposed drainage reserve. Development could only take place in the context of development of other land; Plan B does not show how the roads connect with the general road system, and as a Development Consent has been given, Council must see some means by which development of adjacent land has made or will make access possible. Lots 101 and 105 as shown on Plan B do not fall wholly within the grantor’s land; the project of creating Lots 101 and 105 could only be carried out by acquiring title from or in some other way cooperating with the owner of contiguous land part of which falls within Lots 101 and 105 on Plan B. On the plan accompanying Council’s approval of 20 December 2002 Lots 101 and 105 are shown as Residue and numbered as Lot 2 and Lot 3. They came out of the process in the same state as they went in: they are not counted among the 33 residential lots referred to in the Development Approval, and they are referred to in Condition 18 among the lots which are not to be developed until consolidated with adjoining lots. Unless and until they became lots in a deposited plan the provisions of the Deed about selling them could not be given effect. They cannot be included in any realistic count of the residential lots shown in Plan B, although they are so spoken of in the Deed at some places. Counting the lots in Plan B on a realistic basis Lots 101 and 105 should not be treated as residential lots. In reality Plan B shows 39 residential lots.

8 In the plan accompanying Council’s approval Lots 101 to 105 are in the same form as in Plan B. Lots 106 to 121 form a block which was redrawn in some way (which I do not follow in detail) in the planning process; where those 16 lots stood in Plan B there are only 15 lots numbered 106 to 120 in the subdivision plan; one had been lost. In Plan B Lots 122 to 125 form another block of four lots. They are very little altered in the subdivision plan; what had been a small surplus segment in Plan B has been thrown into Lot 125 increasing its size.

9 Lots 126 to 140 in Plan B formed a block, and they were greatly altered in the subdivision plan. Where earlier there were 15 residential lots there came to be 11 residential lots, and two irregularly shaped pieces which could not form residential lots, although they could be developed as residential lots if other land owned by an adjacent proprietor were developed with them, in which case they could at maximum form 8 residential lots. What was previously Lot 141 became Lot 121 and this was thrown in with the other irregularly shaped parcels to form a single parcel, called Lot 3 although made up of three non-contiguous parcels, which plainly was not available for residential use, and for which there was no useful development consent, and none could be achieved without acquiring adjacent land and cooperating with its proprietor. So former Lot 141 was lost to residential development. To my reading former Lot 141 now Lot 121 and the other irregular pieces of land together form one lot. The Development Approval allows 6 fewer residential lots than Plan B.

10 The provisions of the Deed are elaborate. The purchase price to be paid by the grantee for each lot in Plan B is $130,000. As well as conferring the Call Options on the grantee the Deed confers Put Options on the grantor, exercisable at a later stage; these do not require close consideration. Presently significant provisions of the Deed are these:

11 The following definitions appear in cl.1.2.

“Plan B Development Consent

Lots

Plan of Subdivision

Plan B

12 The Deed contains mechanisms by which the grantee can call for, pay for and take title to particular lots. The grantee can do this directly under cl.3. After expiry of the grantee’s option it was open to the grantor to exercise its Put Option and put lots to the grantee. It is also open to the grantee under cl.10 to bring intending sub-purchasers to the grantor, who is then to enter into contracts to sell lots directly to the sub-purchasers; and the form of the contracts to be entered into with the sub-purchasers is Annexure C to the Deed.

13 By cl.3.1 it is open to the grantee to exercise the Call Option for a lot after the grantor notified the grantee that the relevant development consent had been issued; this could well be before the subdivision plan had been registered, as the Deed made nine months available to the grantor to register a plan after giving written notice that development consent had been issued.

14 Some provisions of cl.7 of the Deed must be set out at length. I omit some passages which refer only to Plan A and I also omit cl.8, which deals only with Plan A.

. . . .

7.3 If the Plan B Development Consent is not issued by the Council within 12 months from the date of this Deed either party may thereafter by notice in writing to the other terminate this Deed in respect to the Lots comprised in Plan B and the Call Options and Put Options in respect to the Lots in Plan B shall lapse and neither party should have any rights or obligations in respect thereto but this Deed shall continue to operate in respect to the Lots in Plan A unless this Deed is otherwise rescinded or terminated pursuant to the provisions of this Deed.

the Grantee may by notice in writing given to the Grantor at least 7 days prior to the relevant Call Option Expiry Date for that Lot terminate this Deed in respect to that Lot and neither party shall have any rights or obligations created under this Deed in respect to that Lot except the rights and liabilities created under clause 10 which will not merge in or be extinguished by such termination but which will continue to bind the parties.

. . . .

15 By cl.7.5(d) the grantee is unable to terminate the Deed with respect to any lot if there are variations of specified kinds, and those kinds of variations do not include changes in the number of residential lots. Clause 7.5(d) gives a right of termination where there are variations only to the grantee. It does not give any corresponding right to the grantor. The protection of the grantor’s position is the grantor’s opportunity to manage and control the application for development consent, and to make alterations to the plan of subdivision, acting reasonably, and in so doing to choose what alterations are to be made. At all times the acts of the grantor are subject to its obligation to use best endeavours to procure registration of the plan of subdivision, ancillary to which is an obligation to uses best endeavours to obtain development consent.

16 Subclause 7.6 enables the grantor acting reasonably to create easements, covenants and restrictions to comply with conditions in the Development Consent. Subclause 7.6 is similar in structure to cl.7.5.

17 Clause 10 deals with the purchasers of lots, or sub-purchasers. The form of contract into which they are to enter is in Annexure C to the Deed (Ex A/90) which in Additional Clause 34 contains elaborate provisions on the rights of the parties consequential on alterations to the plan to which the contract refers effected by a subsequent registered plan. The Subdivision Plan annexed to and referred to in this Contract (Ex A/124B) shows the land in Plan A and the land in Plan B, and the part showing the Plan B land appears to be an exact copy of Plan B. Unlike the provisions of cl.7 of the Deed which I have set out, Additional Clause 34 expressly shows contemplation that, among many other changes affecting lots, the total number of lots may change. Clause 34.4.2.1 defines the variations which entitle the purchaser to rescind the contract, and the variations stated do not include alteration in the total number of lots; but cl.34.4.1 limits the purchaser’s rights to make a claim, objection or requisition or to rescind or terminate in respect of several matters including any alteration in the total number of lots. Although the drafting show signs of confusion, the net effect appears to be that a purchaser has no remedy, by rescission or otherwise in respect of any alteration in the total number of lots. (Whatever this means, it does not mean that he has no remedy if the lot he contracted to buy disappears: that would be absurd.)

18 Clause 14 gives the grantee the right to enter the land at any time, and in the company of any parties to inspect the lots and place advertisements and signs on any lots.

19 Before the Deed was entered into on 12 April 2002 the grantor had been pursuing applications for development consents for subdivision of the land in Plan B for many months. Under Development Application 3059/00 the grantor obtained a development consent by Council dated 12 April 2001 for subdivision of the land into 31 residential lots: Exhibit A, p.15. On 11 July 2001 on Modified Development Application 3059/00A the grantor again obtained an approval for a 31 lot residential subdivision. Exhibit A, p.29. On 7 November 2001 Acor, Consultant Managers representing the grantor applied in Application 3059/00B under s.96 of the Environmental and Planning Assessment Act 1979 to vary the consent to allow 41 lots. The plan with this application appears to be the same as Plan B. On 12 December 2001 Council made a determination refusing consent on this application 3059/00B – Exhibit A, p.38. Written notification of the refusal was not issued by Council until 15 May 2002, later than execution of the Deed. Correspondence from Acor to Council of 22 February 2002, Exhibit A, p.43, shows knowledge that the application had been rejected by the Development Control Panel but asked for reconsideration. This showed an assumption that reconsideration was still available, and in the absence of notification of refusal, reconsideration would seem to have been available. Correspondence, communications and a site inspection continued in March 2002, and Council’s Development Planner wrote to Acor on 8 April 2002, Exhibit A, p.59, referring to the progress of the application and stating that:

As you are aware, Council is currently in the process of investigating flooding issues and the likely impact of additional filling within the flood plain/storage area. Your application is held pending these investigations and the amendment to the section 94 contributions plan. Council agrees to provide you with these flooding details as soon as they are known, which is likely to be in approximately two weeks.

20 Council’s concerns included the location of a zoning boundary which related to a flood line and whether works were adequate to deal with flooding. The evidence does not show how that concern was resolved, but I do not see any influence of that concern in the changes which took place between Plan B and the Development Consent of 12 December 2002.

21 The Development Planner went on to say that Council considered that the proposed variation to 41 lots warranted a new development application as it was substantially different from the approved subdivision, and recommended that the section 96 application be withdrawn and a new development application be lodged. This seems to show that the Development Planner shared in the understanding that the section 96 Modification Application had not been finally dealt with notwithstanding the decision of 12 December 2001. Acor wrote to Council on 2 May 2002 Exhibit A, p.125, calling for decision on the s.96 application and the proposal for 41 lots, there was a meeting with Council officers on 10 May 2002 and the Notice of Determination dated 15 May 2002, Exhibit A, p.129 followed.

22 The plaintiff’s senior counsel claimed that these events, the state of consideration of Plan B by Council including the decision of 12 December 2001 and continued consideration of the s.96 application for modification provide context in which the provisions of the Deed relating to the Plan of Subdivision and the identification of any later Council approval with the Plan of Subdivision are to be understood.

23 On 28 June 2002 by letter to Council Exhibit A, p131, Acor submitted an amended lot layout seeking 40 residential lots. The plan so submitted is at Exhibit B, p5, Exhibit A, p132. This was referred to as DA 3059/00C. After further communications with Council officers Acor on 8 October 2002 submitted an amended plan for a 33 lot residential subdivision; Exhibit A, p136, Exhibit B, p6. This plan was approved by Council on 20 December 2003; the approval related to a plan which was either exactly or substantially the same as that submitted on 8 October 2002 – Exhibit A, p151, Exhibit B, p7.

24 It seems that the residue lots, meaning the irregular pieces of land thrown together as Lot 3, not available for residential use, but suitable for residential use if consolidated with other adjacent land, resulted from Council’s wish to realise a concept plan for a larger area and to achieve overall planning objectives which were not limited to the very land the subject of the development application. Nothing in the Council’s determination made the residue lots available for any development. Council’s consent instrument dated 20 December 2002 set out conditions of consent including, at Exhibit A, p148:

7. A separate development application will be required to be submitted to and approved by Council for the further subdivision of the residue allotments indicated on the approved plans.

18. Lots 101, 105, 121, 137, 138 and 139 and those marked as red on the approved plan are to be created as residue lots and not to be developed until consolidated with adjoining lots and further subdivided.

25 There was no further determination of a development application by Council by 12 April 2003 or by 12 June 2002 when the grantor gave notice of termination with respect to Plan B. The documents in evidence do not enable it to be understood in detail how the approved plan submitted on 8 October 2002 with 33 residential lots evolved from the application for 40 residential lots made in June 2002, but there were communications with Council officers and it should be inferred that it arose from indications by Council officers about what would probably be approved, recalling that the determination of 11 July 2001 for a 31 lot residential subdivision was then still current. There is no allegation that the grantor acted in breach of any provision of the Deed, or in breach of any other obligation, by submitting the plan for the 33 lot subdivision on 8 October 2002 in the course of conducting section 96 Application 3059/00 C, or that the grantor failed in any other way in the management of a development application.

26 This narration then returns to me the question whether the consent dated 20 December 2002 for 33 residential lots, together with residue lots, was a Plan B Development Consent within the meaning of cl.7.3.

27 In the view of the facts contended for by senior counsel for the grantee an approval which the grantor obtained of its development application for the land in Plan B is a Plan B Development Consent, whether or not it differs in detail from Plan B, and however extensive the differences, if the differences result from an alteration or from alterations made by the grantor. In the view contended for, this is still so even if an alteration made by the grantor reduces the number of residential lots. The application for a Plan B Development Consent was already in progress at 12 April 2002, the then section 96 Modification Application had been refused by Council although the instrument had not yet issued, and the prospect of there being changes which might include changes in the number of residential lots was obvious. It was also obvious that pursuit of development consent would continue whether or not the need for modification was encountered. The grantor has an obligation under cl.7.5 to use its best endeavours to procure the registration of the plan of subdivision, to do which it had to pursue the application for development consent, and to use best endeavours to do that. Under cl.7.5(b) the grantor was entitled to make alterations which the grantor acting reasonably considered necessary or desirable to obtain development consent. The plaintiff’s counsel put forward the grantor’s application on 28 June 2002 for a development approval for 40 residential lots in total, and its modification in October 2002 to an application for 33 residential lots as instances of exercise of the power of alteration in cl.7.5(b) and of acting reasonably in doing so.

28 The plaintiff’s senior counsel laid stress on the centrality of the defined expression “Plan of Subdivision” in the workings of cl.7.1, and on the extension of that expression to Plan B as amended pursuant to cl.7.5. (Clause 7.5 contemplates alterations in para.(b) and variation in para.(d); both could be spoken of as amendment.) Counsel pointed to the initial capitals of the words “Plan” and “Subdivision” and to the centrality of the expression, with its incorporated reference to amendment, when repeatedly used in the workings of cl.5 and the obligations of the grantor, even including its use in the provision in cl.7.5(b) which itself authorises the grantor to make alterations. Counsel contended that as the parties were dealing in a commercial context, and were dealing in relation to a process of obtaining development consent which was already in progress and had reached the stage of an application for a s.96 modification, the parties should be taken to have understood that in the ordinary course of obtaining development consent it might be necessary to meet requirements of Council on many matters on which Council’s views might differ from what the applicant put forward, including lot dimensions, the number of lots, location of streets, provision of land and other provision for sewerage, drainage and environmental concerns, and on other matters. It was contended that in this commercial context the parties must be taken to have understood and contemplated the possibility of changes in the number of lots, including the number of residential lots, in the course of obtaining development consent. The possible impact of such changes on the grantee’s willingness to proceed with acquisition was, counsel contended, dealt with by cl.7.5(d), and he contended that subpara.(d)(iii), relating to a variation which materially and adversely affects the grantee’s use and enjoyment of a lot, extended to a change under which a lot no longer exists.

29 The plaintiff’s senior counsel submitted that the words “in accordance with” in cl.7.1 – “… an applications to the Council for development consent to subdivide the Land into, inter alia, the Lots in accordance with the Plan of Subdivision …” do not create a requirement to pursue only an application which strictly accords or exactly corresponds with Plan B, and further submitted that it does not follow from the fact that there had been a variation in the number of lots that the subdivision is not in accordance with Plan B. In support of this submission counsel referred to a number of authorities in which “in accordance with” or closely related expressions in a variety of statutory contexts have been held not to require strict compliance or exact correspondence. These authorities were:

R v Justices of The County of London

The Consolidated Credit Corporation v Gosney

Codelfa Construction v. State Rail Authority of NSW

Walker v Wilson

Latitude Fisheries v Minister

for Primary Industries and Energy

30 In none of these cases was the context in any way similar to the Deed or cl.7.1, but they illustrate what to my mind is the ordinary and natural meaning of the words “in accordance with”, which is not an appropriate choice of language for a requirement of strict compliance or exact correspondence. In any event the provisions of cl.7.5(b) relating to alteration show that there may be alterations and that strict compliance or exact correspondence is not essential.

31 The obligations in cl.7.5(a) and (b) to make best endeavours to procure registration of the plan, and the power to make alterations in order to obtain development consent are ancillary to the principal obligation of the grantor in cl.7.1, to pursue “an applications … for development consent to subdivide the Land into, inter alia, the lots in accordance with the Plan of Subdivision …”. (I have emphasised two words which show an anomaly in the number of applications.) “Lots” is a defined expression and for Plan B means “Lots 101-141 (inclusive)”. Notwithstanding that the grantor may make alterations to the Plan of Subdivision, the primary obligation to which the power to make alterations is ancillary is always found in cl.7.1, and always relates to the Lots (as defined) in accordance with the Plan of Subdivision (as defined). The definition of the lots is quite specific in its reference to Lots 101 to 141. The definition of Plan of Subdivision, by contrast, extends to the Plan of Subdivision as amended pursuant to cl.7.5. The definition of Plan B Development Consent refers to subdivision “in accordance with Plan B” and the definition of “Plan B” is quite specific in its reference to a Plan of Subdivision “… to create Lots 101-141 inclusive”.

32 Plaintiff’s senior counsel contended that his case is assisted by provisions of cl.10 of the Deed and the incorporated form of contract marked “C”. Clause 10.1 provides:

The Grantee may … locate and introduce to the Grantor Purchasers for any one or more of the Lots.

33 The Additional Clauses are not part of the contractual relations between the grantor and the grantee by which the obligations of one towards the other are to be established; neither of them is disentitled from rescission on the ground of an alteration in the total number of lots. The absence of a similar provision in the Deed is just as open to the interpretation that they would not be bound to each other at all if there were an alteration in the number of lots as it is open to the interpretation that one or other of them would have a right of rescission if there were an alteration in the number of lots, and to the interpretation that there was no contractual bar to such a rescission. The barring of a right of rescission by the terms of the contract Annexure C, and the absence of either a barring of the right of rescission or any reference to it in the Deed is altogether neutral for the interpretation of the Deed; there is no basis for the operation of the maxim expressio unius exclusio alterius because the two references are not in pari materia (and the necessary maxim would be exclusio unius expressio alterius). There is no room for the operation of the eiusdem generis principle, as one treatment of the subject in Annexure C does not create a genus. If anything, the presence of a provision dealing with reduction in the number of lots in Annexure C and its absence in the Deed, if they have any force, are slightly adverse to the plaintiff’s argument; but I do not think they have any real force in either direction.

34 The plaintiff’s senior counsel also contended that cl.3.1 contemplates that the grantee may exercise the Call Option prior to the grantor obtaining development consent and prior to registering the deposited plan, and that in that case cl.10 provides that the contract to be issued is to be in the same terms and conditions of Annexure C. It was contended that in that case the workings of cl.34.4.2 show that the parties would acknowledge that the Development Consent to be issued would not necessarily accord with Plan B. On my reading of the terms of cl.10 it is only the introduced purchaser, not the grantee, who is to enter into a contract in the form in Annexure C. In my view, if the parties acted in that way, their rights would on formation of a contract in the form of Annexure C pass from rights governed by the Deed to rights governed by that contract; conditional rights, as they would relate to the sale of a contract in an unregistered plan. The legal relationship which the parties would then enter into would cease to be regulated by the Deed, and the terms of that relationship do not in my view convey an implication for the meaning of the Deed. If the parties entered into such a contract after exercise of a Call Option for a particular lot they would stand in an altogether different relationship to each other to that in which they stand under the Deed.

35 It was further contended that Additional Clause 34 in Annexure C plays some part in construction of the Deed by providing a dictionary by which to understand the Deed. In my opinion there is no basis on which to conclude that the Deed and the meaning of expressions in it are governed by Additional Clause 34, or that Additional Clause 34 has any force between the parties unless and until they enter into an agreement in accordance with its terms after exercise of a Call Option, which has not happened and is not likely ever to happen in the ordinary workings of the Deed.

36 It is, I would think, simple and obvious to attribute to the parties an understanding that the process of obtaining development consent might result in a decrease or other change between the number of lots applied for and the number of lots consented to. It does not in any way follow that the parties should be understood to have provided for this contingency, either impliedly or by some reading of the expressions in their document which is not otherwise obvious, or is not available until this contemplation is brought to bear on its interpretation. Resort to surrounding circumstances and to commercial context is available to identify the subject matter of an agreement, and as an aid to understanding its meaning where that is ambiguous or obscure, but is not available where the words used in the document themselves have a plain meaning; with the qualification that it may be available to reveal that words which apparently have a plain meaning are in fact ambiguous.

37 In the text of the Deed itself (and for the moment I do not refer to Annexure C) there is no express address to the possibility that the number of lots in Plan B may be altered, and no express address to the consequences of any change in the number of lots for the working out the parties’ rights. The definition of Plan B at cl.1.2(w) not only identifies Plan B by its being annexed to the Deed and marked B, but also identifies it by the lots which it is to create – “Lots 101-141 inclusive.” This defined meaning is incorporated, without any qualification relating to amendment, into other definitions including the definition in cl.1.2(b) of “Plan B Development Consent”, and the definition of “Plan of Subdivision” in cl.1.2(u), there and there only with the cross-reference to amendment pursuant to cl.7.5. In the operative parts of the Deed a number of provisions turn on reference to Plan A, or to Plan B, in each case incorporating reference to the particular lots in Plan B; see cl.3.4, cl.5(c), cl.7.1, cl.7.3.

38 Each lot in Plan B from Lots 101 to 141 is mentioned in the schedule of purchase prices, and each is mentioned particularly by its number although the same price $130,000 is assigned to each of them. Similarly Lots in Plan A are each mentioned particularly in the schedule, from Lot 201 to Lot 227, although the same price $140,000 is assigned to each. With each diminution by one lot (and only residential lots are listed) the consideration payable on exercise of the Call Option or the Put Option to the total of the considerations payable to the grantor falls by the considerable sum of $130,000, and the proportion of the total amount payable to the total of the prices which the schedule shows the parties contemplated also falls. It would be surprising if in a commercial contract an impact like that was produced by a provision the ascertainment of which depends on an obscure reference, on implication or on addressing considerations arising from the commercial circumstances in which the contract was made; the amount is considerable and if the parties intended so large an impact on the grantor’s entitlements it is unlikely that they would have failed to say so in a clear way. The consideration for each of 39 residential lots in Plan B is about 2.56% of the total consideration for all residential lots in Plan B, and the loss of 6 residential lots in Plan B represents a reduction of over 15.38% in the total payments contemplated for 39 lots. It is unlikely that such a matter would be dealt with on a side wind.

39 No provision of the Deed confers any right on either party in the case of a lot going out of existence in the consent process. The possibility that that might happen is clear enough, and the absence of any reference confirms textual indications that the parties intended to be bound by a contractual relationship affecting all of the lots 101 to 141 that the Deed refers to. None of the variations for which cl.7.5(d) provides are or include or contemplate loss of any of Lots 101 to 141. The variations with which cl.7.5(d) deals are variations in criteria established for each lot by Plan B: the possibility that any one of those lots might go out of existence is not dealt with by cl.7.5(d), and only in an impossibly strained reading can cl.7.5(d) be made to apply to a lot which goes out of existence in the process of consideration of a development application.

40 Although the power of alteration created by cl.7.5 (b) is wide, it does not, in my view of the meaning of the Deed, extend to making an alteration which abandons any of Lots 101 to 141; if that were to happen, the exercise of seeking development consent would lose its identity with the exercise which by cl.7.1 the grantor is required to pursue, and the new exercise could not lead to a Plan B Development Consent as defined. Although a wide range of alterations is authorised by cl.7.5(b), an alteration which abandons any of Lots 101 to 141 moves outside what the grantor is required to do by cl.7.1, and is the point of embarkation on some other project.

41 On the broadest approach, the proposition that it should be found that the right of termination in cl.7.3 was not available because the development consent of 12 December 1992 was a Plan B Development Consent as defined in the Deed appears to be a very unlikely outcome, bearing in mind that the definitions of Plan B and Plan B Development Consent do not incorporate reference to “Plan of Subdivision” as defined, but explicitly refer to Lots 101 to 141 inclusive. A conclusion that the development consent for 33 residential lots fulfils the condition in cl.7.3 which referred by way of the definitions to 41 lots does not seem to me to be reasonably attainable. A finding of fact which equated the development consent which was obtained with Plan B Development Consent as defined and as referred to in cl.7.3 would be simply wrong in fact.

42 Involved in that finding would be the conclusion that the grantor could only sell 33 Plan B lots at $130,000 for total remuneration of $4,290,000 and would not sell 39 lots for a total remuneration of $5,070,000; a difference of $780,000. The plaintiff’s senior counsel submitted that the grantor has not suffered a loss or a reduction in the amount payable to it. No money is payable to it in respect of any lot unless and until it becomes a lot in a deposited plan and an option is exercised. If the process of obtaining development consent and registering the plan does not produce an earlier contemplated lot, there has been no loss. I do not see any force in this submission. The parties as people acting in commerce would not see matters that way.

43 The plaintiff’s senior counsel contended that there is no question of whether compliance with Plan B is substantial; the Court does not get into appraising whether compliance was substantial, but the Deed follows wherever the grantor’s exercise of the power of amendment takes Plan B. Counsel contended that there is power to alter; in this case the guarantor has decided to exercise it, in doing so the guarantor acted reasonably and whatever flows from the exercise the power will flow, even if it does reduce the number of lots available and the total amount payable. As counsel said, in this case the grantor did agree and the development consent and 33 lots have come out the other end.

44 Alterations in a residential lot, as to its dimensions or the lengths of boundaries are one thing; the disappearance of a residential lot or the incorporation of part of it into a parcel not available for residential use is an altogether different thing. The parties should not in my opinion be taken to have bound themselves contractually on a basis which was to continue to be effectual if the subject matter of the sale, or part of it, disappeared in the process of seeking development consent. Alteration and disappearance are altogether different things.

45 A change in the number of lots, with the corresponding change in the amount of remuneration is in my view a change which ends identification with the subject matter of the Deed. The commercial context makes this even clearer than it might otherwise be. The fact that the change is a reduction of eight lots, and of six residential lots, gives emphasis to the force of this reasoning, but it would be the same in principle if it were a reduction of one lot. Submissions at times dealt with whether the question was one of degree, and plaintiff’s senior counsel contended that it is not one of degree, and that if the grantor makes an alteration as empowered to do by cl.7.5(b) the identity of the plan of subdivision continues no matter how many lots are affected. I do not think that the matter is one of degree; a reduction of even one lot is a change in substance. If this were not correct, I would not see any room for doubt that a reduction of eight of 41 lots and of 39 residential lots to 33, would be a change beyond any degree that might be appropriate, so that Plan B and the Subdivision proposed by it could not be identified with the development consent and the plan which it authorised.

46 On the plaintiff’s argument, the obligations in the Deed follow whatever emerges from Plan B in the course of the grantor’s pursuit of development consent with any amendments which the grantor acting reasonably in fact makes. I did not think that this is a correct reading, or a reasonably available reading.

47 In the circumstances in which the parties stood on 12 April 2002 the grantor had already obtained the 31 lot subdivision and was pressing for a 41 lot subdivision, and the parties entered into the Deed by reference to the grantor’s application, then still pending, for a 41 lot subdivision. If this context has any implication for the meaning of the Deed it is adverse to the view that the parties intended their Deed to be applicable to the subdivision approval which already existed, or to a subdivision approval which was to be obtained in the future for any fewer than 41 lots, or to a subdivision approval which was to be obtained in the future for a number well below 41 lots.

48 The possibility, indeed the likelihood, that some modification would have to be made to a plan the subject of a development application or application for modification in the course of Council’s consideration of it was plain and obvious. At some points the correspondence or other documents of the grantor or its consultant reflect understanding of this, and the documents also at times reflect actual consideration of alterations arising in the course of dealings with Council officers. Amendment would not necessarily work for the benefit of the grantor; not necessarily for the benefit of one party or the other. The whole subject matter of an application for development consent places Plan B and what it provides for in a realm in which change is admissible, may be expected, and is provided for by the Deed. The parties should be taken to have contemplated this. What the plaintiff needs to establish is that there was contemplation that the change might go so far as to take part of the subject matter of the Call Option, that is residential lots, out of existence; or might go so far as to take a number of them out of existence, yet the structure of the parties’ contractual relationship would not change.

49 The tables in the Schedule clearly illustrate what it was that the parties to the Deed referred to as lots. They did not refer to residual lots, but to residential lots. At times plaintiff’s senior counsel strayed into observations which treated the residual lots as available or potentially available lots, observing that the owner of the adjoining land could be relied on to respond to his economic interest in making his parts of the Council’s planned lots available in consideration with the adjoining owner’s parts. There was no basis for this view; nothing is known about the adjoining owner or what his plans might be, or about whether and on what terms he might be prepared to join co-operatively in arrangements which would realise the residential potential of the various parts of residual lots. In the eye of reality they are not residential lots and any potential that they have is still in the bush and not in the hand.

50 I find that the development consent of 20 December 2002 is not a Plan B Development Consent as referred to in cl.7.3. For this reason the grantor’s Notice of Termination was effectual.

51 I give judgment to the defendant with costs.

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Last Modified: 12/22/2003

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Citations

Allam Homes P/L v Vocata P/L [2003] NSWSC 1052

Cases Citing This Decision

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Cases Cited

4

Statutory Material Cited

1

Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24

Winn v Director-General of National Parks and Wildlife [2001] NSWCA 17

Walker v Wilson [1991] HCA 8

CITATION:	ALLAM HOMES P/L v VOCATA P/L [2003] NSWSC 1052
HEARING DATE(S):	10-11-2003
JUDGMENT DATE:	21 November 2003
JURISDICTION:	EQUITY
JUDGMENT OF:	Bryson J at 1
DECISION:	Judgment for defendant with costs [52].
CATCHWORDS:	VENDOR and PURCHASER - Option to Put and Call lots in proposed subdivision - Plan annexed to Option showed 41 lots of which 39 were residential lots - plan approved allowed 33 residential lots - whether options available for lots in approved subdivision at prices fixed for lots in annexed plan - held - it was not - decision on construction of Deed of Put and Call
LEGISLATION CITED:	Environmental and Planning Assessment Act 1979
CASES CITED:	R v Justices of The County of London (1889) 24 QBD 341 at 345. The Consolidated Credit Corporation v Gosney (1885) 16 QBD 24 at 25-6. Codelfa Construction v. State Rail Authority of NSW (1982) 149 CLR 337 Walker v Wilson (1991) 172 CLR 195 at 199.1, 200.1, 207.7, 208.2. Latitude Fisheries v Minister for Primary Industries and Energy (1993) 41 FCR 536 at 542-543
PARTIES :	Allam Homes Pty Limited - Plaintiff Vocata Pty Limited - Defendant
FILE NUMBER(S):	SC 3743/2003
COUNSEL:	R.J. Ellicott QC & J. Drummond (P) D.J. Fagan SC (D)
SOLICITORS:	Bateman Battersby (P) Colin Biggers & Paisley (D)