Bisognin v Hera Project Pty Ltd

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2017 0079

GINO ANDREW BISOGNIN and LEAH JOAN BISOGNIN	Applicants
v
HERA PROJECT PTY LTD (ACN 163 685 041)	Respondent

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JUDGES:	TATE, KYROU and COGHLAN JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	29 August 2017
DATE OF JUDGMENT:	17 April 2018
MEDIUM NEUTRAL CITATION:	[2018] VSCA 93
JUDGMENTS APPEALED FROM:	[2017] VSC 268 (Riordan J), [2017] VSC 383 (Riordan J) and [2017] VSC 439 (Riordan J)

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CONTRACT – Contract for sale of land – Specific performance – Whether purchaser ready, willing and able to perform its obligations – Best endeavours obligation to expedite and procure the registration of subdivision – Obligation to pay fees to referral authorities clarified as imposed on purchaser, not vendors, by earlier decision of the Court of Appeal – Failure by purchaser to pay fees to referral authorities, or deduct amount from final settlement, before decision of the Court of Appeal – Purchaser made relevant payments after decision of Court of Appeal – No obligation in circumstances to entertain alternative interpretation of contractual obligations – Relevance to delay of vendors’ misleading conduct that they could obtain finance – Bishop v Taylor (1968) 118 CLR 518, DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423, Joseph Street Pty Ltd v Tan (2012) 38 VR 241 applied – Appeal dismissed.

PROPERTY – Whether judge erred in granting the purchaser access to the land – Whether proposed development must be identified in the contract of sale – Sale of Land Act 1962 s 9AD(3).

COSTS – Whether judge erred in not attaching a security for costs condition on grant of specific performance – Whether judge erred in awarding costs on an indemnity basis – Effect of late production during trial of alternative contract inconsistent with the vendors’ obligations under contract of sale – Effect of vendors’ misleading conduct – Oshlack v Richmond River Council (1998) 193 CLR 72 applied.

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APPEARANCES:	Counsel	Solicitors
For the Applicants	Mr J Ribbands with Mr W Stark and Mr L Wirth	T F Grundy Lawyers
For the Respondent	Mr N Pane QC with Mr J Whelen	Russell Kennedy

TATE JA:

TABLE OF CONTENTS

Introduction and summary . ...................................................................

2

Grounds of appeal   ...................................................................................

3

Background – Protracted litigation from contract of sale of land ....

4

(1)   The 2015 Contract ........................................................................

5

(2)   Steps taken between March and August 2015 .............................

8

(3)   Hearings before Cameron J (Practice Court) and Sloss J — dispute over contractual obligations ..........................................................

12

(4)   Steps taken after Sloss J judgment; appeal to the Court of Appeal (4 March 2016 to 16 December 2016)   .........................................

20

(5)   Steps taken after Court of Appeal judgment until the hearing before Riordan J (17 December 2016 to 28 March 2017) .........................

32

(6)   The hearings before Riordan J and his findings .............................

35

Ground 1: Did the judge find that, as at the commencement of the proceeding, Hera was ready, willing and able to perform its obligations? ...............................................................................................

46

Ground 2: Was Hera ready, willing and able to perform its obligations? ...............................................................................................

48

(1)   The Bisognins’ submissions ...........................................................

48

(2)   Hera’s submissions ........................................................................

54

(3)   Analysis .........................................................................................

56

Ground 4: Was there an error in not attaching a security for costs condition to the grant of specific performance? ....................................

65

Ground 5: Was there an error in construing s 9AD of the Sale of Land Act?

68

Ground 6: Should indemnity costs have been ordered? ......................

71

Conclusion on leave to appeal ................................................................

77

Conclusion on the appeal .........................................................................

77

- - -
Introduction and summary

This proceeding concerns a contract for the sale of land. When the registration of a plan of subdivision did not occur by the date specified in the contract, the vendors sought to terminate the contract. The purchaser obtained an injunction restraining the vendors from bringing the contract to an end and an order for specific performance of the contract. The issue arises whether the judge who granted specific performance fell into error by failing to determine, or by determining wrongly, that the purchaser was ready, willing and able to perform its obligations under the contract when the purchaser had not taken steps that the contract obliged it to take.

Gino and Leah Bisognin (‘the Bisognins’) are the registered proprietors of rural land known as 1 Adrian Street, Cranbourne East. This is located in an urban growth zone of Melbourne. By contract dated 13 March 2015, which was executed on 25 March 2015, they agreed to sell southern Lot 1 (‘the land’) as vendors, to the purchaser, Hera Project Pty Ltd (‘Hera’), for $3.6 million (‘the 2015 Contract’). The land formed part of a larger parcel of land owned by the Bisognins. The Bisognins’ matrimonial home is situated in the northern portion of the rural block. If registration of a plan of subdivision did not occur by 31 August 2016,[1] the parties were free to terminate the 2015 Contract and the Bisognins sought to do so. Hera sought and obtained an injunction restraining the Bisognins from exercising a power of termination under the 2015 Contract.[2] Hera also sought specific performance. Riordan J granted specific performance against the Bisognins on 22 May 2017.[3] On 29 June 2017 he gave directions for certain steps to be taken by the Bisognins in aid of specific performance, including giving Hera reasonable access to the land.[4]
[1]The original date was 25 August 2015 but this was extended by court order by Sloss J. See [62] below.
[2]Macaulay J granted an interim injunction on 30 August 2016 and an interlocutory injunction on 5 October 2016. A later application by the Bisognins for the injunction to be discharged was refused. The injunction remains in effect. See [87]-[88] and n 104 below.
[3]See [123] below.
[4]See, especially, [127]-[128] below.

The Bisognins seek leave to appeal and, if leave is granted, to appeal[5] from the orders made by Riordan J on 22 May 2017 and 29 June 2017.[6]
[5]For convenience, in what follows the application for leave to appeal is referred to simply as ‘the appeal’.
[6]Hera Project Pty Ltd v Bisognin [No 3] [2017] VSC 268 (‘Riordan J reasons’). The orders made by the judge on 29 June 2017 were amended under the ‘slip rule’ on 30 June 2017. All references in these reasons to Riordan J’s order of 29 June 2017 are to that order as corrected on 30 June 2017. The orders made on 29 June 2017 were supported by the reasons of the same date: Hera Project Pty Ltd v Bisognin [No 5] [2017] VSC 383 (‘Riordan J No 5 reasons’). In addition Riordan J made orders for costs on 29 June 2017: Hera Project Pty Ltd v Bisognin [No 7] [2017] VSC 439 (‘Riordan J Costs reasons’).

For the reasons set out below, I would refuse leave to appeal on grounds 1, 4, 5, and 6, and grant leave to appeal on ground 2.[7] I would dismiss the appeal.
[7]Ground 3 was abandoned by the Bisognins. See n 8 below.

Grounds of appeal

The Bisognins seek leave to appeal on the following proposed grounds:

Ground 1
The judge failed to determine whether, as at the date of commencement of the proceedings on 26 August 2016, the Purchaser was ready, willing and able to perform its obligations under the contract of sale by either:
(a) 31 August 2016; or
(b)an appropriately extended date by application of the prevention principle.

Ground 2
Alternatively, the judge erred in determining that the Purchaser was ready, willing and able to perform its obligations under the contract of sale in circumstances where:
(a)it was subject to an obligation to use its best endeavours to expedite and procure the registration of the plan of subdivision, and it had not performed that obligation; and
(b)notwithstanding any conduct on the part of the Applicants which might have caused delay the Purchaser took no steps to perform its contractual obligations by either:
(i) 31 August 2016; or
(ii)an appropriately extended date by application of the prevention principle.

...
Ground 4
The judge erred in concluding that the interests of justice did not require that the Court impose a condition whereby the Purchaser pay into Court a sum which provided security for the amount of costs which had been ordered to be paid by the Purchaser to the Vendors in circumstances where:
(a)the Purchaser was not truly ready, willing or able as at the time of the commencement of the proceeding or within a reasonable time thereafter to perform its obligations under the contract of sale;

(b) the Purchaser did not have clean hands;
(c) in seeking equity, the Purchaser ought to do equity;
(d)the orders for costs arose directly from proceedings that were directed towards establishing the true construction of the contract;
(e)the financial position of the Purchaser was such that it was appropriate that it should provide that security; and
(f)the imposition of such a condition would achieve equity as between the parties.

Ground 5
The judge erred in construing the provisions of section 9AD of the Sale of Land Act 1962.
Ground 6
The judge erred in the exercise of the discretion in making an order for indemnity costs.[8]
[8]The Bisognins abandoned an earlier proposed ground 3, namely, that the judge erred in granting specific performance in circumstances where the orders made by his Honour: (a) fail to identify any specific obligation to perform; (b) involve the continual supervision of the Court; and (c) were not subject to any time constraints but have, rather, been left at large.

Background – Protracted litigation from contract of sale of land

The dispute between the parties has been a complex one, involving several proceedings and applications and appeals in this and other courts. These include proceedings before Sloss J[9] and a subsequent appeal.[10] Allegations have been made by both sides about delay. The conduct of the parties in the course of these proceedings is relevant in particular to the first two grounds of appeal and the examination of whether Hera was ready, willing and able to use its best endeavours to procure and expedite the registration of a plan of subdivision for the land, an obligation which fell on Hera under the 2015 Contract.[11]
[9]Bisognin v Hera Project Pty Ltd [2016] VSC 75 (‘Sloss J reasons’).
[10]Bisognin v Hera Project Pty Ltd [2016] VSCA 322 (‘Court of Appeal reasons’).
[11]Special Condition 2 (a). See [16] below.

(1) The 2015 Contract

In 2012 the Bisognins were approached by a representative of a developer, Joslin Street SA Developments Pty Ltd (‘Joslin’), who sought to purchase the land. The Bisognins entered into a contract for the sale of the land with Joslin in February 2012 (‘the 2012 Contract’) for $3.6 million.[12] The 2012 Contract contained a special condition that: ‘This sale is subject to the City of Casey amending the Strategic Plan to accommodate a full line supermarket with associated shops on the site herein.’
[12]Riordan J reasons [4].

Since the land was a lot on an unregistered plan of subdivision, it was necessary for a plan of subdivision to be prepared and registered before settlement could take place. The 2012 Contract provided that the sale was subject to the Sale of Land Act 1962 (‘the Act’) and that settlement was due to take place on 31 December 2012

unless the land is a lot on an unregistered plan of subdivision, in which case settlement is due on the above date or 14 days after the vendor gives notice to the purchaser of registration of the plan, whichever is later.[13]

[13]Sloss J reasons [4].

Joslin entered into discussions with Woolworths Ltd (‘Woolworths’) to use the land for the development of a supermarket. On 26 July 2013, Joslin nominated Hera as the ‘substitute purchaser’. A meeting was held on 14 August 2013 between the Bisognins, Hera, and their legal representatives and Hera’s town planning consultants. Hera entered into an agreement for a lease with Woolworths in respect of the land on 18 October 2013.

The parties fell into dispute in relation to the 2012 Contract. The Bisognins served a rescission notice on 21 October 2013 on the basis that Hera had been unable to obtain approval of the plan of subdivision. Hera maintained the notice was premature and of no effect. It lodged a caveat over the land. It then issued proceedings in late 2013 seeking an order that the Bisognins undertake works to procure an Urban Design Framework (‘UDF’) and pay any Growth Areas Infrastructure Contribution (‘GAIC’), and a declaration that the rescission notice was of no effect. Following a mediation in November 2014, Hera’s proceeding was settled on terms which included that the parties would enter into a new contract on substantially the same terms but with some modifications, including the addition of what became Special Conditions 8, 9 and 10.[14] Of particular importance is Special Condition 8 which provides that if the Plan of Subdivision was not registered by 25 August 2015, the parties could bring the contract to an end. Special Condition 8 is occasionally referred to as ‘the sunset clause’.
[14]See [20]-[22] below.

There was a delay in the execution of the new contract. One of the issues that was raised was a purported change in control of Hera, discovered after an ASIC search in December 2014 showed Mr Christopher Pinzone had been substituted as a director, company secretary and a shareholder of Hera without, it was said, any authority or consent of the existing shareholders and directors. On 19 February 2015, Hargrave J directed that ASIC correct the Register to remove Mr Pinzone.[15] Mr Pinzone is associated with CMJ Property Group Pty Ltd (‘CMJ’), another developer with whom the Bisognins later agreed to use their best endeavours to terminate the contract with Hera.[16]
[15]Sloss J reasons [50], [53]-[55], [61]. This was proceeding S CI 2014 6875.
[16]See [29] below.

As mentioned,[17] the new contract is dated 13 March 2015 and was executed on 25 March 2015 (‘the 2015 Contract’). The land is identified in the 2015 Contract as:

The southern Lot 1, 12,850 m² on the ‘Preliminary’ Plan of Subdivision prepared by Kevin J Barge dated 12 March 2014 being part of land particularly described in Certificate of Title Volume 8776 Folio 892.

[17]See [2] above.

The purchase price is $3.6 million. The deposit is $1 million. Of this, $10,000 was paid by the time of the execution of the 2015 Contract. Special Condition 1 provides that:

The balance of deposit namely $990,000.00 is payable within 7 days of the Plan of Subdivision being approved in accordance with Special Condition 3 herein.

The ‘Residue’ is specified in the Particulars of Sale as $2.6 million which, as the balance of the purchase price, is to be paid:

on or within 14 days of approval of the Plan of Subdivision by the Registrar of Titles, whichever is the latter refer Special Condition 8.

‘Settlement Date’ is defined as:

[T]he date upon which vacant possession of the Property and the Chattels (or receipt of their rents and profits) shall be given by the Vendor to the Purchaser, namely upon acceptance of title and payment of the purchase price in full.

Special Condition 2(a) imposes an obligation on Hera to prepare a plan of subdivision and an obligation to use its ‘best endeavours’ to expedite and procure the registration of the plan:

The Purchaser shall at its own cost and expense prepare a Plan of Subdivision in respect of the land comprised in the Parcel in or to the like effect of the Plan of Subdivision annexed hereto and submit the same to the City of Casey for sealing in accordance with the provisions of Part 1 of the Act and shall use its best endeavours and do all things reasonably required to expedite and procure the registration of the said Plan pursuant to the provisions of Part II of the Act.

Special Condition 2(c) provides:

The Purchaser shall have the right and the Vendors will do all things necessary to assist the Purchaser or their agents having access to the property for the purpose of surveys and studies with a view to prepare a Plan of Subdivision.

Special Condition 3 provides:

The deposit and other monies paid or payable by the Purchaser hereunder until such time as the said Plan of Subdivision shall have been so registered shall be held by Waters Lawyers Pty Ltd on trust for the Purchaser in accordance with the provisions of Section 9AA of the Sale of Land Act.

Special Condition 7 provides:

The Vendors and Purchasers agree that if this Contract of Sale does not proceed, then all monies paid herein shall be refunded less the sum of $10,000.00 to the Purchaser.

Special Condition 8 provides:

If the said Plan of Subdivision is not registered by 25^th August 2015, then the parties may by notice in writing to each other end this Contract of Sale.

Special Condition 9 requires the Bisognins to provide certain documents:

The Vendor will provide all or any documents in relation to the Urban Design Framework (UDF) by 2 December 2014.

Special Condition 10 imposes a ‘best endeavours’ obligation on the Bisognins and an obligation on them to pay a GAIC promptly if required:

The Vendor will use their best endeavours to co-operate with the Purchaser, sign all documents, do all acts and things necessary to give effect to the approval of the Plan of Subdivision and to give effect to the UDF, making the duplicate title available at the Land Titles Office for the purpose of registration of the Plan of Subdivision, and will make any Growth Areas Infrastructure Contribution (GAIC) payment promptly if required by the relevant authorities.

General Condition 16.1 provided: ‘Time is of the essence of this contract’.

(2) Steps taken between March and August 2015

Between April and June 2015 Hera or its agents took a number of steps to facilitate the development. There were delays in negotiations with the relevant council, the City of Casey, given that, as one council officer described it, this was ‘not a standard UDF and there are a lot of complicated factors at play’.[18] Those factors appeared to include that an Urban Master Plan was also being negotiated with a neighbour, the Limoli family, in relation to the site opposite at 2 Adrian Street.[19] The Limoli family are related to the Bisognins. It appears that the Bisognins and the Limolis held discussions with the City of Casey and attended meetings about the location of the proposed supermarket in 2013, 2014 and early 2015 without the attendance of Hera.[20]
[18]Sloss J reasons [86].
[19]Sloss J reasons [25].
[20]Sloss J reasons [25], [32], [34], [37], [39], [56], [58]-[60], [64], [69], [73], [75], [77]-[78].

Hera’s agent lodged an application for subdivision on 7 May 2015 and sought its certification under the Subdivision Act 1988 on 21 May 2015.[21]
[21]Sloss J reasons [92]-[93].

Following a series of meetings, discussions and communications with council officers, consultants engaged by the Limoli family, representatives of Woolworths, and the Bisognins’ solicitor, Hera’s planning consultant arranged for the submission of a re-vamped version of the UDF to the City of Casey, ‘1 & 2 Adrian Street Activity Centre Urban Design Framework (May 2015)’. This was approved on 26 May 2015.[22] Riordan J later noted that ‘the “Vision” in the framework plan was that “the centre will include a supermarket and complementary retail uses along Adrian Street’’‘.[23]
[22]Sloss J reasons [80]-[91].
[23]Riordan J No 5 reasons [13].

On 11 June 2015, the City of Casey notified Hera that its application for the planning permit for the two lot subdivision for the land was approved (that is, the subdivision of 1 Adrian Street).[24] That permit contained a number of conditions that required the ‘owner’ of the land to enter into agreements with the relevant authorities (‘the referral authorities’) for such things as water supply, drainage, sewage facilities, electricity and gas, as well as for telecommunications services. Various bonds, fees and charges were payable under these agreements (‘the referral fees’).
[24]Sloss J reasons [92], [104].

Hera’s solicitor sent copies of the application for subdivision, plan of subdivision, and the planning permit to the Bisognins’ solicitor on 16 June 2015, and noted that Hera would be in a position to lodge the plan of subdivision at the Land Titles Office once a statement of compliance from the City of Casey had been issued. By 26 June 2015, the three relevant referral authorities (Melbourne Water, South East Water and AusNet Services) had consented to certification of the plan of subdivision, but required that agreements with each of them be entered into before they would consent to the City of Casey issuing a statement of compliance.

Unbeknownst to Hera, on 9 July 2015 the Bisognins had entered into a contract of sale of the land with CMJ, which had been executed on 6 and 9 July 2015 (‘the CMJ Contract’). The contract price for the land under the CMJ Contract was $7.1 million. Special Condition 3.1 of the CMJ Contract provided that the CMJ Contract became legally binding on the condition that the Bisognins terminated the 2015 Contract:[25]
[25]Riordan J reasons [92].

3. Contract Conditional and Settlement requirement
3.1 The formation of a binding agreement by this Contract, other than this special condition 3 and special condition 2, is subject to the Hera Project Contract [defined as ‘the contract of sale for the Property entered into by the Vendor and Hera Project Pty Ltd’] being terminated (Condition).
3.2 The Vendor [defined as ‘Gino Andrew Bisognin and Leah Joan Bisognin’] must:
(a) terminate the Hera Project Contract at the earliest lawful opportunity, and in any event no later than 26 August 2015 (or such later date as advised by the Purchaser acting reasonably) (Condition Expiry Date); and
(b) act at all times in a manner consistent with facilitating the earliest termination of the Hera Project Contract and not take any action that would, or would be likely to, prevent or hinder the fulfilment of the Condition.

3.3 Each party must use its best endeavours (within its own capacity) to ensure that the Condition is fulfilled on or before the Condition Expiry Date.

The existence of the CMJ contract was not disclosed until 30 March 2017, the fourth day of the trial before Riordan J.[26] In particular, it was not known at the time of the proceedings before Sloss J or the appeal to the Court of Appeal.
[26]Riordan J reasons [91].

On 3 August 2015, the City of Casey certified the plan of subdivision.[27] Hera’s solicitor sent a copy of that certification to the Bisognins’ solicitor on 6 August 2015.
[27]Sloss J reasons [111].

A dispute arose between the Bisognins and Hera about certain obligations under the 2015 Contract, namely, the circumstances in which the balance of the deposit would be payable; when a party might be entitled to terminate the 2015 Contract under Special Condition 8; and issues concerning agreements with the referral authorities and payment of the referral fees. By 11 August 2015 the solicitor for the Bisognins had served a Notice of Default on Hera alleging that it was in breach of the Special Conditions because it had failed to pay the balance of the deposit of $990,000. Hera responded that the Notice of Default was premature and sent copies of various agreements it said that the Bisognins were required to enter into with the referral authorities so that the City of Casey could issue a statement of compliance. These arrangements would require the payment of the referral fees of approximately $975,000.[28] The Bisognins denied that they ought to enter into the agreements or pay the referral fees. This raised the question of who should pay the referral fees as a contested issue between the parties.
[28]Sloss J in her reasons gives a figure of approximately $920,000 (Sloss J reasons [300]). However, the agreed summary prepared for this Court indicates that the referral fees would be about $975,000.

On 13 August 2015, Hera’s new solicitors confirmed that Hera was ‘ready, willing and able to fulfil its obligations under the [2015] Contract’ and ‘has the finance in place to pay the balance of the Contract sum as soon as the vendors are able to give clear title to Lot 1’.[29] They complained that the Bisognins had caused, and were continuing to cause, delays. They also conveyed the following offer on an open basis:

1. Hera will pay [the Bisognins] the balance of the deposit of $990,000.00 upon registration of the Plan of Subdivision. Those moneys must be held in trust by [the Bisognins’] firm for both parties until settlement.
2. [The Bisognins] confirm that they will forthwith meet all the conditions set out in [the Permit]. In order to assist [the Bisognins] to meet those conditions, [Hera] will pay on behalf of [the Bisognins] the relevant authorities’ charges under [the Permit] and the total of the amounts so paid will be deducted from the balance payable to [the Bisognins] at settlement. [Hera] will direct the authorities to pay the refundable portion of those charges to [the Bisognins].

3. The termination clause in SC8 of the Contract be deleted.[30]

[29]Sloss J reasons [118].

[30]Sloss J reasons [119], Court of Appeal reasons [47] (emphasis added).

The Bisognins rejected this offer and insisted that Hera was obliged to prepare all the documents and pay all the referral fees.[31] They reiterated their view that under Special Condition 8, if the plan of subdivision was not registered by 25 August 2015, either party would be at liberty to terminate the 2015 Contract.

(3)Hearings before Cameron J (Practice Court) and Sloss J - dispute over contractual obligations

[31]Sloss J reasons [120].

On 17 August 2015, the Bisognins filed proceedings[32] in the form of an Originating Motion seeking answers to three questions about the parties’ contractual obligations, pursuant to s 49(1) of the Property Law Act 1958:

(a) Question one: On its true construction, does special condition 1 of the Contract provide for the balance of the deposit in the sum of $990,000 to be paid within seven days of the relevant plan of subdivision being certified by the City of Casey pursuant to s 6 of the Subdivision Act 1988 or within seven days of the plan of subdivision being registered by the Registrar of Titles pursuant to s 22 of that Act?
(b) Question two: On its true construction, does special condition 8 of the Contract provide that if the relevant plan of subdivision is not registered by 25 August 2015 then either party may end the Contract by notice in writing to the other party?
(c) Question three: On its true construction, apart from any Growth Areas Infrastructure Contribution Payment, does special condition 10 of the Contract require the plaintiffs to make any payment to a third party that is necessary to be made to secure registration of the plan of subdivision?[33]

[32]Proceeding S CI 2015 04285.

[33]See Sloss J reasons [10]. On 21 August 2015, Hera filed a summons seeking an injunction to prevent the Bisognins terminating the 2015 Contract. The Bisognins through their counsel gave an undertaking on the same day to Cameron J not to deal with the land pending further order of the Court.

Cameron J, sitting in the Practice Court, heard submissions in relation to question one. For convenience I set out Special Condition 1 again:

The balance of deposit namely $990,000.00 is payable within 7 days of the Plan of Subdivision being approved in accordance with Special Condition 3 herein.[34]

[34]Special Condition 3 makes provision for the deposit and other monies to be held on trust. See [18] above.

She held that the balance of the deposit was payable by Hera upon registration of the plan of subdivision by the Registrar of Titles, rather than upon certification of that plan by the City of Casey.[35]
[35]Bisognin v Hera Project Pty Ltd [2015] VSC 647 [29] (‘Cameron J reasons’).

Questions two and three were dealt with later by Sloss J, following five days of hearing in December 2015, in reasons delivered on 4 March 2016. In relation to question two, Sloss J observed that, if literally construed, Special Condition 8 does ‘no more than present an opportunity on and from 25 August 2015 for the parties to mutually agree to bring the contract to an end, which was a course that was always open to them.’[36] Her Honour observed that this literal construction would be anomalous, make no commercial sense and produce a result that could not have been reasonably intended by the parties. It would also fail to recognise the need for a contract to be brought to an end where a plan of subdivision is not registered 18 months after the date of the contract, as provided for by the Act.[37] She said:

In the present case, the new contract came into existence as a direct result of the parties having entered into Terms of Settlement directed to clarifying aspects of the 2012 contract and their respective obligations and imposing a ‘sunset clause’ or end date. Viewed objectively, it is clear from the Terms of Settlement that the parties regarded the ability to bring the contract to an end as a commercial imperative, and each side was to use their best endeavours and take steps directed to achieving the registration of the plan of subdivision promptly within the ensuing nine months failing which the contract could be brought to an end by either party.[38]

[36]Sloss J reasons [163].

[37]Section 9AE of the Act relevantly enables a purchaser to rescind the contract before registration of the plan where the plan is not registered within 18 months after the date of the contract, or another period specified by the contract. See n 54 below.

[38]Sloss J reasons [164].

Sloss J held that, rather than Special Condition 8 being construed to provide an opportunity to end the 2015 Contract if the plan of subdivision was not registered by 25 August 2015, based upon a requirement of mutual consent, on its true construction, Special Condition 8 enabled either party to end the contract by notice in writing to the other party in such circumstances.[39]
[39]Sloss J reasons [167], [312].

Sloss J also found, however, that the Bisognins could not take advantage of Special Condition 8 because they were responsible for causing the delays that prevented the registration of the plan of subdivision by 25 August 2015. She held that the Bisognins, being obliged to use their best endeavours to make the land available for transfer to Hera, were required to enter into the relevant agreements with the referral authorities even if it was for Hera to undertake the preliminary steps to establishing those agreements.[40]
[40]Sloss J reasons [304], [306].

In relation to question three, Sloss J determined that it was for the Bisognins to pay the referral fees to the referral authorities. She held that, on its true construction, apart from any GAIC payment, Special Condition 10 of the 2015 Contract required the Bisognins to make any payment to a third party that was necessary to secure registration of the plan of subdivision.[41]
[41]Sloss J reasons [312].

In light of the submissions in this Court with respect to whether Hera was ready, willing and able to perform its obligations under the 2015 Contract, it is instructive to consider in some detail how her Honour dealt with the question of the obligation to pay the referral fees.

Sloss J noted that the 2015 Contract does not deal expressly with the question of which party is obliged to pay the referral fees.[42] Nor was there any evidence about whether the need for payment of those fees formed part of the negotiations between Joslin and the Bisognins when the purchase price was arrived at with respect to the 2012 Contract, while the purchase price in the 2015 Contract simply adopted that used in the earlier contract.[43]
[42]Sloss J reasons [255].
[43]Sloss J reasons [256].

She considered the conflicting evidence about whether there had been any understanding about which party would be responsible for payment of the referral fees. Affidavit evidence was given by Mr Stephen Parsons, who had made the initial unsolicited approach to the Bisognins on behalf of Joslin, that the Bisognins, as the vendors, would organise and pay for the services to the whole of the un-subdivided land ‘as the entire subject property (and not just Lot 1) would benefit from those services’.[44] He also said that Joslin, as the developer and prospective purchaser, had offered the purchase price on that basis and could not have afforded to pay for services to be brought to the whole of the parcel of land.[45] Mr Bisognin disputed that evidence. However, Mr Bisognin did not dispute that there was no express agreement that Joslin would pay for the establishment of services to the subject property.[46]
[44]Sloss J reasons [257], [258].
[45]Sloss J reasons [257], [258].
[46]Sloss J reasons [260].

Sloss J noted that Nick Konstandellos, a developer who acted as a representative of Hera under a power of attorney granted by Hera, had initially laboured under the misapprehension that Hera was obliged to satisfy the requirements of the referral authorities, including the payment of the fees, but later considered that position to be mistaken.[47] There was also a conflict in the evidence about whether Mr Konstandellos and Mr Bisognin had discussed the need for payment of the referral fees in June 2015. Her Honour held that:

the first time Hera’s solicitor raised with the vendors’ solicitor the issue of the payment of the fees and bond moneys to the referral authorities and made them aware that Hera contended it was the vendors’ responsibility, in accordance with ‘usual practice’, to make payment of them was in their letter of 11 August 2015. I am not satisfied that there was any earlier communication to this effect by Mr Konstandellos to Mr Bisognin by telephone.[48]

[47]Sloss J reasons [262], [267].

[48]Sloss J reasons [274].

Sloss J was of the view that there was no utility in speculating whether the Bisognins had made allowance for the provision of the services when they agreed on the purchase price with Joslin. The important point was that once the Bisognins agreed to sell the land to Joslin, at a time when it was a lot on an unregistered plan of subdivision, they had the obligation to make good the title which was only possible if the subdivision was registered:

[I]t was a matter for the vendors to make good the title to that lot, and that only became possible if the plan of subdivision were registered. There was no change to the agreed purchase price when the 2012 contract was assigned to Hera, nor when the new contract was made between Hera and the vendors. In my view, it remained the case throughout that it was a matter for the vendor to make title to the southern lot available. And in the absence of any evidence to suggest that the parties agreed otherwise, the vendors as owners were required to meet the costs and fees and pay the bonds associated with establishing the provision of services to the southern lot, in order that a statement of compliance might issue.[49]

[49]Sloss J reasons [276].

She further noted that the s 32 statement gives no indication that the purchaser would be required to meet the cost of establishing the supply of electricity, gas, water and telephone services to the land because it stated that each of those services was ‘connected’ and operating on the day of sale.[50]
[50]Sloss J reasons [277]-[278].

Having observed that Hera had no ability to do anything in respect of the northern lot retained by the Bisognins, her Honour said:

Hera was not empowered to enter into agreements with the relevant authorities for the provision of services to the northern lot. Nor was it in a position to ensure that the servicing requirements set out in conditions 7 and 8 of the planning permit were met. ^[[51]^] Even if Hera had purported to do so, it is unlikely that a statement of compliance would issue because the service agreements would not comply with the permit conditions. Furthermore, in those instances where the connection of the relevant services involved the payment of a bond, it would be surprising if the purchaser were required to pay the bond as a precondition to obtaining the statement of compliance and registration of the plan of subdivision. That is because, if the contract was brought to an end by the vendors in circumstances where the plan was not registered by 25 August 2015, the vendors would have the ongoing benefit of the service agreements which the purchasers had entered into and paid for.[52]

[51]Condition 7 of the planning permit required that, before the issue of a Statement of Compliance, the owner must ensure that ‘[t]he land shown on the endorsed plans is drained to the satisfaction of the Responsible Authority with outfall drainage constructed to provide a legal point of discharge to each allotment’. Condition 8 provided that ‘[a]ll services currently connected to the existing dwelling must be confined within the boundaries of the lot on which it is to be located’.

[52]Sloss J reasons [279].

She also remarked:

Further, a construction of the special conditions of the contract which would require the purchaser to enter into service agreements with referral authorities in advance of registration of the plan of subdivision and pay in respect of them a total sum being considerably in excess of 10% of the purchase price, would be inconsistent with the provisions of ss 9AA^[[53]^] and 9AE^[[54]^] of the Sale of Land Act. Such a construction would also operate to defeat the statutory mechanisms for protection of a purchaser in respect of moneys paid before registration of the plan of subdivision that are embodied in the legislation. In this regard, the vendors accept that if (a) Hera had entered into agreements with the relevant authorities; and (b) the vendors were entitled to and did end the contract pursuant to special condition 8, then they would, by reason of special condition 7, be required to refund to Hera any moneys so paid to the referral authorities.[55]

[53]Section 9AA(1) relevantly provides that a person shall not sell a lot in an unregistered plan of subdivision unless the contract of sale provides for deposit moneys to be held on trust until registration of the plan, and the deposit moneys do not exceed 10 per cent of the purchase price.

[54]Section 9AE enables a purchaser to rescind the contract before registration of the plan where there is a failure to comply with s 9AA(1) or (2), or where the plan is not registered within 18 months after the date of the contract, or another period specified by the contract.

[55]Sloss J reasons [280] (citation omitted).

She observed:

In the circumstances, when the contract is viewed and interpreted in the context of the relevant statutory scheme and the planning permit, the obligation on the part of the vendors to ‘use their best endeavours to co-operate with [Hera], sign all documents, do all acts and things necessary to give effect to the approval of the Plan of Subdivision and to give effect to the UDF’ encompassed the obligations that were imposed on ‘the owner’ under the planning permit. That is, in the context of using their best endeavours to give effect to the approval of the plan of subdivision, it was a matter for the vendors, and not Hera, to make payment of any necessary fees and bonds to the referral authorities or the responsible authority in order that a statement of compliance may issue.[56]

[56]Sloss J reasons [281].

Given these findings, Sloss J summarised her conclusion that the obligation to make payments to the referral authorities fell upon the Bisognins in the following way:

The [Bisognins], as vendors of a lot on an unregistered plan of subdivision, undertook by special condition 10 of the Contract with Hera to use their ‘best endeavours to co-operate with the Purchaser, sign all documents, and do all acts and things necessary to give effect to the approval of the Plan of Subdivision and to give effect to the UDF …’. The planning permit issued by the City of Casey dated 11 June 2015 to allow the two lot subdivision of the 1 Adrian Street land, required the vendor as ‘owner of the land’ to enter into agreements with the relevant authorities in respect of each of the southern lot … and northern lot … for the provision of water supply, drainage, sewerage facilities, electricity and gas services, and telecommunication services (and fibre ready telecommunication facilities) in each case in accordance with the relevant authority’s requirements and relevant legislation at the time, and also to ensure that the land is drained to the satisfaction of the Responsible Authority with outfall drainage constructed to provide a legal point of discharge to each allotment. To the extent that entry into any such agreements required the payment of moneys, by way of fees and other charges, and the provision of bond moneys, those were obligations that were to be satisfied by the vendors.[57]

[57]Sloss J reasons [312].

She further held that the Notice of Default served by the Bisognins on Hera dated 11 August 2015 was invalid.[58] However, she declined to grant the further relief sought by Hera by summons, namely, a declaration that the Bisognins were not entitled to terminate the 2015 Contract pursuant to Special Condition 8, and an injunction restraining them from terminating or purporting to terminate the 2015 Contract pursuant to Special Condition 8, together with an injunction restraining them from selling, encumbering or otherwise dealing with the land.[59] Instead she calculated that the duration of the delay caused by the Bisognins was about 70 days and determined that the sunset clause under the 2015 Contract should be extended for a period of 70 days from the date upon which she made her orders for the purpose of facilitating the registration of the plan of subdivision.
[58]Sloss J reasons [314]. See [32] above.
[59]Sloss J reasons [315].

She said:

In my view, the vendors having entered into a contract with Hera for the sale of a lot on an unregistered plan of subdivision, were required to use their best endeavours to give effect to the approval of the plan of subdivision, and in so doing take active steps to make the southern lot available to be transferred to the purchaser in a timely way. I have found that they were required to comply with the requirements of the planning permit and to enter into the relevant agreements with the referral authorities in respect of both lots, even if it was a matter for Hera to undertake all of the preliminary steps directed to establishing those agreements between the vendors and the referral authorities. Further, the vendors were required to co-operate with Hera, with a view to assisting Hera to obtain the statement of compliance and thereby procure the registration of the plan. If the vendors had taken an active interest in the matter from 16 June 2015 or thereabouts, and entered into the relevant agreements in a timely way, it may have been possible for Hera to obtain a statement of compliance in time for the plan of subdivision to be registered by 25 August 2015. But the conduct on the part of the vendors, or perhaps more correctly their failure to engage with the task of satisfying the planning permit conditions and actively co-operate with the purchaser, and their service of the notice of default, denied Hera the opportunity to demonstrate that such an outcome was possible.
…
In these circumstances, in my view, the vendors should not be permitted to rely upon their own shortcomings to bring the contract to an end because the plan was not registered by 25 August 2015. The period between 16 June 2015 (when the planning permit was notified to the vendors’ solicitor) and 25 August 2015 is a period of approximately 70 days. In my view, because of conduct on the part of the vendors, Hera effectively lost the benefit of that period of time. [60]
...
Fairness suggests that Hera should be provided a further period of 70 days or thereabouts to enable it to seek to achieve registration of the plan of subdivision.[61]

[60]Sloss J reasons [304], [306].

[61]Sloss J reasons [316] (footnote omitted).

She concluded that if registration of the plan of subdivision could not be achieved in the further period of 70 days that she had ordered, then either party could bring the 2015 Contract to an end, by giving notice in writing to the other:

If, despite the best endeavours of both parties, registration is not achieved during the period of extension, then either party may bring the contract to an end, by giving notice in writing to the other. Further, during the period of extension of time, it remains the position that the vendors are required to use their best endeavours to co-operate with Hera and do all acts and things necessary to give effect to the approval of the plan of subdivision and to give effect to the UDF as required by special condition 10, including satisfying the conditions of the planning permit by entering into the agreements with the relevant referral authorities, the Responsible Authority and the relevant telecommunications service provider in a timely way.[62]

[62]Sloss J reasons [316].

After the delivery of judgment, disagreements continued between the Bisognins and Hera and the Bisognins brought an appeal, out of time, against the orders of Sloss J.

(4)Steps taken after Sloss J judgment; appeal to the Court of Appeal (4 March 2016 to 16 December 2016)

Sloss J allowed the parties an opportunity to file submissions on the form of orders to be made and on costs, and deferred making final orders until 22 June 2016.

In the meantime, on 3 May 2016 Hera’s solicitor requested permission from the Bisognins for contractors to have access to the land to carry out a cultural heritage management plan (‘CHMP’). The next day the solicitor sent an email attaching a plan showing that both lots in the subdivision required a CHMP.[63] The request for access was later denied.[64]
[63]Riordan J No 5 reasons [21].
[64]See [66] below.

On 16 May 2016, proceedings brought by Hera against Mr Pinzone[65] and Mr Michael Wu, who were associated with CMJ, were settled on the basis that Mr Pinzone and Mr Wu agreed not to interfere, directly or indirectly, with the 2015 Contract. The Deed of Settlement and Release was entered into on behalf of Hera by Mr Konstandellos and its director, John Kazakouras.[66]
[65]See [11] above.
[66]Sloss J reasons [176].

It appears that Hera and the Bisognins also engaged in settlement discussions during this period, but these failed. By 31 May 2016, Hera’s solicitor was emailing agreements with South East Water and Melbourne Water to the Bisognins’ solicitor for the Bisognins to complete.

On 4 June 2016 Hera’s solicitor sent a further email stating:

Your clients have an obligation to fulfil their obligations under the Contract whether or not Orders have been made. Please have your clients immediately sign the agreements and confirm they have done so.
You have not answered whether or not your clients have organised the ability to pay GAIC, the utility fees and the SC 6 amount, and whether or not they have organised production of the duplicate title. Please respond in that regard immediately.

On 21 June 2016, Myles Snow, a supermarket leasing expert engaged by the Bisognins and CMJ, sent an email to a number of people, including Mr Bisognin, Mr Pinzone, the Bisognins’ solicitor, and solicitors for CMJ, noting that he had briefed Andrew Lovelock of Speedies Land Surveyors in respect of the proposed development and how it aligned with the southern and northern lots respectively.

On 22 June 2016 Sloss J ordered that the period of time specified in Special Condition 8 for registration of the plan of subdivision be extended to 31 August 2016, that date being 70 days from the date of her orders. She confirmed that her answer to question three was ‘Yes’; that is, that the obligation to make the payments to the referral authorities fell on the Bisognins. In her orders she repeated her conclusions and said:

Question three: On its true construction, apart from any Growth Areas Infrastructure Contribution Payment, does special condition 10 of the contract require the plaintiffs [the Bisognins] to make any payment to a third party that is necessary to be made to secure registration of the plan of subdivision?
Answer: Yes. The plaintiffs, as vendors of a lot on an unregistered plan of subdivision, undertook by special condition 10 of the Contract to use their ‘best endeavours to co-operate with the Purchaser [Hera], sign all documents, and do all acts and things necessary to give effect to the UDF ...’. The planning permit issued by the City of Casey dated 11 June 2015, to allow the two lot subdivision of the 1 Adrian Street land, required the vendor as ‘owner of the land’ to enter into agreements with the relevant authorities in respect of each of southern lot 2 and northern lot 1 (to be retained by them) for the provision of water supply, drainage, sewerage facilities, electricity and gas services, and telecommunications services (and fibre ready telecommunications facilities) in each case in accordance with the relevant authority’s requirements and relevant legislation at the time, and also to ensure that the land is drained to the satisfaction of the Responsible Authority with outfall drainage constructed to provide a legal point of discharge to each allotment. To the extent that entry into any such agreements required the payment of moneys, by way of fees and other charges, and the provision of bond moneys, those were and remain obligations that are to be satisfied by the vendors.[67]

[67]Emphasis added.

She further ordered that:

4.During the period of extension of time, the [Bisognins] are to use their ‘best endeavours’ to co-operate with [Hera] and do all acts and things necessary to give effect to the approval of the plan of subdivision and give effect to the Urban Design Framework (as approved by the City of Casey) as required by special condition 10, including:
(a) satisfying the conditions of the planning permit issued on 11 June 2015 by entering into the agreements with the relevant referral authorities, the Responsible Authority and the relevant telecommunications service provider in a timely way in respect of both lots on the plan of subdivision;
(b) making arrangements with their mortgagee to produce the duplicate Certificate of Title at the Land Titles Office (at the cost of [Hera]); and
(c) promptly paying any Growth Areas Infrastructure Contribution Payment,

with a view to assisting [Hera] to obtain the statement of compliance and thereby procure the registration of the plan.

On 23 June 2016 the Bisognins’ solicitor informed Hera’s solicitor that the ANZ Bank was prepared to make the certificate of title available for registration and that his clients were applying to the bank for finance to pay the referral fees. He then sent agreements with Melbourne Water, South East Water and AusNet Services to Hera’s solicitor, which were received on 28 June 2016, attached to a letter which stated: ‘Our client has made an application to the Bank in relation to those Authorities’. He confirmed by email on 28 June 2016 that the agreements had been sent to Hera’s solicitor so they could be lodged with the referral authorities, proposed that the GAIC could be paid from the settlement funds, asked to see a copy of the application for a permit with respect to the CHMP, and again confirmed that: ‘As stated our client has made application for a loan/guarantee with his Bank’.

On 29 June 2016, Hera’s solicitor sent an email with the further steps needed, which included the following:

Please confirm timing of payments to the authorities. The authorities will not proceed and permit the issue of a statement of compliance until payment is received. Your clients have been on notice as to the amounts to be paid to the authorities well prior to the court orders being made, but appear to have done nothing until the orders were made. If the plan of subdivision is not registered by 31 August 2016, our client will rely on your clients’ delays to assert that your clients cannot terminate on that date.

By letter dated 30 June 2016 to Hera’s solicitors, the Bisognins’ solicitor stated that his clients were under no obligation to Hera to provide access to the land for the purpose of obtaining a planning permit, and confirmed that funding had been sought for the payment of the referral fees:

As previously stated our client has made application to his bank to provide the funding/bond/guarantee for the authorities. As soon as we have had a response from his bank we shall advise you.

The solicitors for the parties then engaged in a series of communications on 4 July 2016 about whether the Bisognins were using their best endeavours to obtain finance to pay the referral fees or were seeking to delay the registration of the plan of subdivision so they could terminate the 2015 Contract. In an email on 4 July 2016, the solicitor for the Bisognins advised that his clients were doing their best to review and sign the agreements with the referral authorities and find sufficient funds, and said they were considering an appeal against the orders of Sloss J:

As previously advised our client is seriously considering an appeal. As part of our appeal our clients will be seeking a stay of the required timeframe until the termination [sic] of the matter.

On 5 July 2016, Hera’s solicitor responded by email saying the payments ‘must be made by your clients to the authorities by noon on Friday, failing which we will go back before her Honour pursuant to the liberty to apply’.

On 6 July 2016, Hera’s solicitor sent an email to the Bisognins’ solicitor noting that the Bisognins had not made payment nor indicated when payment would be made. He advised that the time period was ‘tighter than previously indicated’ because the City of Casey had said that it may take two weeks after they received confirmation from the referral authorities before it could issue a statement of compliance. By email of 7 July 2016, the Bisognins’ solicitor replied stating: ‘I expect to hear from the Bank on Monday re Bond’.

On 8 July 2016, the Bisognins’ solicitor emailed a letter to Hera’s solicitor with an offer that Hera pay the referral fees and deduct them from the balance of the purchase price due at settlement:

We refer to the numerous emails received from you recently and we advise that our client is anxious to settle as we know your client is and we believe that there is a possible solution to expedite this matter.
We confirm your advice your client has loan funds available and is paying interest on that loan and we can only presume that it is secured over other property which you would not confirm. We suggest that your client pay the bonds to South East Water and Melbourne Water and deduct it from the purchase price. We are advised that in relation to the South East Water bond you may only need to pay the bond in respect of the lot that your client is acquiring thus reducing the amount payable. If your client is prepared to pay the bond forthwith we cannot see why settlement cannot take place within the next fourteen (14) to twenty-one (21) days.
We await your response.[68]

[68]A copy of this letter was handed to the Court during the hearing by senior counsel for Hera.

No response was given by Hera on that day. Later on 8 July 2016 Hera’s solicitor emailed the Bisognins’ solicitor asking what his clients were doing to comply with the drainage requirements and other requirements under the agreements with the referral authorities.

On Monday 11 July 2016, Hera’s solicitor had a conversation with the Bisognins’ solicitor in which he said that his client was amenable to paying the referral fees if the Bisognins were prepared to extend the settlement date.[69] It seems that the Bisognins considered that this counter-offer was not capable of acceptance.[70] Hera’s solicitor also gave evidence that the Bisognins’ solicitor said his clients had decided not to appeal from Sloss J. That was disputed by the Bisognins’ solicitor.[71]
[69]Riordan J Costs reasons [6(c)].
[70]Riordan J Costs reasons [6(c)], [10(b)].
[71]Riordan J accepted Hera’s evidence on this point because it was supported by a detailed contemporaneous file note made by Hera’s solicitor, whereas the Bisognins’ solicitor had no file note: Riordan J reasons [64].

On 11 July 2016, Hera filed a summons pursuant to liberty to apply seeking detailed orders to ensure that the Bisognins complied with their best endeavours obligations, including paying the referral fees. Sloss J heard that application on 14 July 2016. The hearing proceeded on the basis of representations that the Bisognins had secured finance. The solicitor for the Bisognins had deposed in an affidavit sworn 13 July 2016 that he had been told on that day by Mr Bisognin that the ANZ Bank would provide a guarantee for payment of the referral fees. Mr Bisognin later deposed to the same effect.[72] Sloss J adjourned the application and granted further liberty to apply.
[72]Riordan J reasons [65]-[69].

By email of 14 July 2016 the solicitor for Hera forwarded an email to the solicitor for Bisognin from Melbourne Water which stated that, because of the urgency, Melbourne Water would accept deferring obligations under the agreement until the ultimate development through the use of a s 173 agreement. (Section 173(3) of the Planning and Environment Act 1987 allows a ‘responsible authority’ to enter into an agreement with a person in anticipation of that person becoming the owner of land.) This arrangement would enable Melbourne Water to consent immediately to the council issuing the statement of compliance.[73]
[73]Riordan J Costs reasons [6(d)].

On 20 July 2016, the time provided for filing an application for leave to appeal against the orders of Sloss J expired. On that date the Bisognins informed Hera that they intended to seek leave to appeal from Sloss J. On the same day Hera’s solicitor also sent an email to the Bisognins’ solicitor indicating that Hera was willing to consent to Melbourne Water’s proposal. The proposal was rejected by the Bisognins. On 21 July 2016, the Bisognins’ new solicitor sent an email to Hera’s solicitor stating:

Our clients do not accept that proposal. As advised in our letter yesterday, our clients intend to apply for an extension of time for leave and appeal of Justice Sloss’ decision.

It would appear that the Bisognins rejected Melbourne Water’s proposal because the Bisognins formed the view that it required them to accept a liability which on a true construction of the 2015 Contract was not theirs.[74]
[74]Riordan J Costs reasons [10(c)].

On 22 July 2016, Hera’s solicitor emailed the Bisognins’ solicitor pointing out that an application for leave to appeal does not act as a stay and that the Bisognins were obliged to comply with the orders made by Sloss J. He further said:

Your client has said on oath that the bank has agreed to provide the bonds required by the referral authorities.
Please let me know by return when your clients will pay or provide the authorities’ fees, charges and bonds and otherwise comply with the referral authorities’ agreements and permits.

On about 25 or 26 July 2016, Mr Bisognin was told by the ANZ Bank that it would refuse his application for finance. He did not disclose that to Hera at the time and only deposed to that conversation in an affidavit sworn on 7 September 2016 as follows:

Subsequently, on about 25-26 July 2016 I again telephoned [Ms Hajj] at the ANZ Bank. I outlined what I understood to be the full extent of what was required, and also told her that my business had by this stage ceased operations due to its unprofitability. [Ms Hajj] said to me that she doubted whether any such loan facility or guarantee for the amount that was required would be granted. That was largely because I had no income and no capacity to meet the Bank’s guidelines for servicing any such facility.[75]

[75]Riordan J reasons [77].

On 29 July 2016, the parties appeared again before Sloss J.[76] At the hearing, counsel for the Bisognins acknowledged that the orders of 22 June 2016 made by Sloss J were clear and that nothing had changed since the previous hearing. He informed her Honour that his clients were intending to apply for an extension of time within which to file an application for leave to appeal, but he accepted her Honour’s observation that ‘that doesn’t do anything about the obligations that are on foot at the moment’.[77] He opposed the making of any further orders on the basis that:

Your Honour’s orders are clear in what they say and they articulate the obligations that the parties have to each other. And if those parties fail in the discharge of those obligations to each other, rights will accrue.[78]

[76]This was pursuant to the further liberty to apply granted on 14 July 2016. Hera brought on the summons of 11 July 2016 again for mention.

[77]Riordan J reasons [78].

[78]Riordan J reasons [78].

Sloss J decided not to make further orders on that day, but reiterated that the Court expected the parties to adhere to their obligations and that the legal representatives for both sides had indicated they understood those obligations.[79]
[79]Riordan J reasons [79].

By letter dated 12 August 2016 to Hera’s finance broker, Mr Darren Smith (‘Mr Smith’) of Balmain NB Commercial Mortgages Ltd, the financier for Hera’s purchase of the land, Jadig Group, confirmed an increase in its offer of finance to Hera from $3 million to $3.85 million with respect to the ‘Cranbourne East Supermarket Project’.[80]
[80]Riordan J reasons [81].

On 26 August 2016, Hera filed new proceedings seeking interlocutory and permanent injunctions restraining the Bisognins from terminating the 2015 Contract and orders in the nature of specific performance (‘the 2016 proceeding’).[81] This is the proceeding ultimately heard by Riordan J and from which this application for leave to appeal is brought.
[81]Proceeding S CI 2016 03457.

In summary, in the 2016 proceeding, Hera alleged that the Bisognins were not entitled to terminate from 31 August 2016, the date specified by Sloss J,[82] because, subsequent to the 22 June 2016 orders made by Sloss J:
[82]See [62] above.

(1) their acts ‘have prevented and are continuing to prevent registration of the plan of subdivision’;

(2) in breach of Special Condition 10, the Bisognins have failed to use their best endeavours to co-operate with Hera; and

(3) they breached order 4 of the Sloss J orders in failing to taking relevant steps to effect registration of the plan of subdivision.[83]

[83]See [62] above.

Macaulay J, sitting in the Practice Court, made an interim order on 30 August 2016 (without opposition from the Bisognins) in the 2016 proceeding restraining the Bisognins from terminating the 2015 Contract until further order of the Court.[84] By 31 August 2016, the Bisognins had not paid the referral fees and the plan of subdivision had not been registered.
[84]Hera Project Pty Ltd v Bisognin [2016] VSC 591 [3] (‘Macaulay J reasons’).

On 7 September 2016, the offer made by the Bisognins on 8 July 2016 was repeated for Hera to pay the referral authorities and an ‘adjustment’ to be made at settlement. The offer was in different terms from the earlier offer, however, suggesting that the proceeds of settlement not be dispersed for seven days to permit Hera to bring an application to restrain distribution if Hera had had to pay the referral authorities in order to obtain registration. The offer was conveyed to Hera by the Bisognins, it seems in the form of a statement in an affidavit sworn that day by Mr Bisognin, who deposed:

For the avoidance of doubt, both Leah and I are prepared to undertake that the proceeds of settlement will not be dispersed for a period of 7 days after settlement. The object is to allow sufficient time for Hera to bring an application to restrain distribution of those funds if Hera has had to pay bond moneys to the referral authorities in order to procure the registration of the plan of subdivision.

It is unclear what response, if any, Hera made to this offer.

On 3 October 2016, following a hearing held on 13 September 2016, Macaulay J found that there was a serious question to be tried, namely, whether the Bisognins were ‘in breach of their obligations to use best endeavours to do all acts and things necessary to give effect to the approval of the plan of subdivision’.[85] On 5 October 2016, he granted the application for an interlocutory injunction:

1. Until further order, the defendants and each of them, whether by themselves or their servants or agents or otherwise, be restrained from:
(a) Selling, encumbering or otherwise dealing with the land the subject of the contract for the sale of real estate dated 13 March 2015 in respect of Lot 1 Adrian Street, Cranbourne East (‘the Contract’), other than with the prior written consent of the plaintiff; and
(b) Terminating or purporting to terminate the Contract pursuant to Special Condition 8 on 31 August 2016 or any other date.

[85]Macaulay J reasons [21].

An application was later made by the Bisognins by summons filed 10 February 2017 seeking to dissolve the injunction granted by Macaulay J, but the injunction remains in effect.[86]
[86]See n 104 below.

Simultaneously with these developments, on 29 August 2016 the Bisognins, as they had foreshadowed, filed an application for an extension of time within which to file an application for leave to appeal from Sloss J. The Judicial Registrar granted that extension on 29 September 2016. In their application for leave to appeal,[87] the Bisognins relied on the following proposed grounds of appeal:
[87]Proceeding S APCI 2016 0117 (the application for leave to appeal from Sloss J).

(4) Sloss J erred in determining that, on its true construction, Special Condition 10 of the 2015 Contract required the Bisognins to make payments to third parties that were necessary to be made to secure registration of the subdivision;

(5) Sloss J erred in finding that no express agreement was reached between Hera and the Bisognins as to who was responsible to pay for the establishment or provision of services to the subject land and that in the absence of any such agreement the Bisognins as owners were required to do so;

(6) Sloss J erred in finding that the Bisognins as vendors were unable to avail themselves of the right to terminate the 2015 Contract because they had breached their obligations under Special Condition 10 of the 2015 Contract in failing to use their best endeavours to make payments to referral authorities.[88]

[88]Court of Appeal reasons [60].

On 16 December 2016, the Court of Appeal (Santamaria and Ferguson JJA and Riordan AJA) published reasons indicating it would grant leave to appeal and allow the appeal. The Court held that the Special Conditions are ‘expressed in general terms and are poorly drafted’[89] and as such, in construing those terms, ‘regard must be had to the text, context and purpose aided by reference to the surrounding circumstances known to the parties at the time that the contract was entered into’.[90] They concluded that the effect of the Special Conditions in the 2015 Contract is to shift the risk of registration of the plan of subdivision and the financial expenses associated with it from the Bisognins, as vendors, to Hera, as the purchaser.[91] Although they acknowledged that ordinarily under the statutory and regulatory matrix relevant responsibility for taking the steps necessary to have a plan of subdivision registered is placed upon a vendor, the parties to a contract for the sale of land on an unregistered plan of subdivision are able to shift the risks between themselves, including the costs associated with the registration.[92] While the Court acknowledged that it is the owner who must execute the relevant agreements with referral authorities, parties can jointly decide that the agreements will be prepared by the purchaser, and at its expense. That is what occurred in this instance. They rejected the submission put by Hera that the Bisognins had assumed the role of developer; rather, the Bisognins had been approached unsolicited by a developer who had already developed plans for the land. In those circumstances, ‘[a]s a matter of common sense, one would not expect the vendors to have taken on the commercial risk involved in the registration of the necessary plan of subdivision’.[93] They concluded:

The cost of registration (including the payment of bonds and fees to referral authorities) was unknown; had it been at the vendors’ risk, the impact on the purchase price might have been very significant and made the sale unattractive.[94]
...
It follows from what we have said that on its proper construction the 2015 contract required [Hera] to pay the amounts provided for in the referral agreements, albeit that it was for the [Bisognins] to enter into those agreements.[95]

[89]Court of Appeal reasons [77].

[90]Court of Appeal reasons [78].

[91]Court of Appeal reasons [79].

[92]Court of Appeal reasons [86], [90].

[93]Court of Appeal reasons [98].

[94]Court of Appeal reasons [98].

[95]Court of Appeal reasons [101].

The Court also upheld proposed ground 2 to the same effect, concluding that ‘on its proper construction, the [2015 Contract] imposed the obligation to make the payments to the referral authorities on [Hera].’[96]
[96]Court of Appeal reasons [102].

However, the Court found that proposed ground 3 failed. The submission that had been made in support of proposed ground 3 was that Hera had a duty to rectify any default of the Bisognins in failing to enter into relevant agreements with the referral authorities. The Court rejected the view that an innocent party under a best endeavours obligation has a responsibility to rectify a breach by the party in default:

As [Hera] observed, the judge found that there were other breaches of the best endeavours requirement imposed on the [Bisognins] by special condition 10, including their failure to enter into the relevant agreements with the referral authorities. The [Bisognins] contended that, even if they did fail to do the things identified by the primary judge, it was incumbent on the purchaser to step in and perform them. We do not accept that contention. The [Bisognins] could point to no authority which stands for the proposition that it is the responsibility of an innocent party under a best endeavours obligation, in effect, to rectify the breach by the defaulting party. In our opinion, albeit that responsibility for making payments to the referral authorities fell to [Hera], it was incumbent on the [Bisognins] to enter into the relevant agreements with the referral authorities. Those agreements were provided to the [Bisognins’] solicitor on 11 August 2015, two weeks before the sunset date in special condition 8. Having failed to execute those agreements in a timely manner, the [Bisognins] were not entitled to terminate the contract as at 25 August 2015. Consequently, proposed ground 3 would fail.[97]

[97]Court of Appeal reasons [103] (emphasis added) (citations omitted).

The submission which was rejected by the Court of Appeal continues to be reflected in the submissions made by the Bisognins in the application for leave to appeal against Riordan J.

The Court of Appeal deferred making orders until 31 January 2017.[98]

(5)Steps taken after Court of Appeal judgment until the hearing before Riordan J (17 December 2016 to 28 March 2017)

[98]See [101] below.

In anticipation of the Court of Appeal decision, Hera’s solicitor had undertaken enquiries with Melbourne Water about what arrangements could be made in the event the Court decided that Hera was obliged to pay the referral fees. On 9 December 2016, the solicitor sent an email to Melbourne Water regarding a proposal made by Hera that Melbourne Water would consent to the statement of compliance if Hera would give an undertaking that, upon purchasing the land, it would enter into a s 173 agreement and pay a financial hold bond, notwithstanding any undertakings to be given by the Bisognins for the northern portion of the larger parcel of land. (An earlier proposal had been made to much the same effect on 14 July 2016.)[99]
[99]See [74] above.

On 14 December 2016, Melbourne Water sent an email in reply to Hera’s solicitor confirming that consent would be given to the release of the proposed subdivision if an appropriate s 173 undertaking could be given and a bond of $250,000 provided.

After being provided with a fresh valuation report on 10 January 2017 confirming the value of the land at $7 million,[100] on 11 January 2017 Jadig Group emailed Mr Smith regarding a proposed loan to Hera for the purchase price together with $770,000 for the referral fees for Melbourne Water and South East Water.
[100]The land had previously been valued at $7 million on 24 June 2016 by In Property Mortgage Valuations Pty Ltd (see Riordan J reasons [42]).

Hera’s financier raised concerns with Hera’s solicitor about any refund of the referral fees should the Bisognins terminate the 2015 Contract because the Bisognins had not given any undertaking that they would direct the referral authorities to make the refunds to Hera or its financier. On 13 January 2017, Hera’s solicitor sent a letter to the Bisognins’ solicitor seeking confirmation that the Bisognins would refund to Hera any moneys paid to the referral authorities in the event of termination, and noting that the failure to provide that confirmation was preventing Hera from paying the referral fees, further delaying the registration of the subdivision plan and settlement of the 2015 Contract.

The Bisognins’ solicitor responded in an email on the same day indicating that his clients would be in a position to ascertain their next steps once the orders of the Court of Appeal were made. The letter continued:

You have repeatedly made reference to a purported obligation on the part of our clients to refund to Hera Project any bond monies that have been paid to referral authorities. For the avoidance of doubt, any such obligation does not extend to create some form of indemnity in favour of your clients.
Rather, it obliges the vendors to pay back to the purchasers any amounts which the referral authorities refund to the vendors which were originally paid by the purchasers.

On 25 January 2017, Hera’s solicitor sent a letter to the Bisognins’ solicitor indicating that Hera anticipated that a statement of compliance for the proposed plan of subdivision would issue soon. With that in mind, he set out the steps to be taken by the Bisognins, pursuant to Special Condition 10, including paying the GAIC and obtaining the relevant GAIC notices; executing the consent by the Bisognins’ solicitor as a caveator in his own capacity; executing the application to register; and producing the certificate of title by the ANZ Bank.

On 31 January 2017, the Court of Appeal pronounced orders refusing Hera’s application to set aside the extension of time orders made by the Judicial Registrar,[101] granting leave to appeal and allowing the appeal. It also set aside the order made by Sloss J in relation to question 3,[102] and in its place answered ‘no’; that is, Special Condition 10 does not require the Bisognins to make any payment to a third party that is necessary to be made to secure registration of the plan of subdivision. The Court also made the following costs orders:

5.Order 9^[[103]^] of the orders of Sloss J made on 22 June 2016 is set aside and in its place it is ordered that [Hera] pay [the Bisognins’] costs of the proceeding (including any reserved costs) below.
6.There be no order as to costs in respect of the application for an extension of time for leave to appeal filed 29 August 2016.
7.[Hera] pay [the Bisognins’] costs of the application to set aside the Judicial Registrar’s orders made 21 September 2016.
8.[Hera] pay [the Bisognins’] costs of the application for leave to appeal and the appeal.

[101]See [89] above.

[102]See [35] and [51] above.

[103]Sloss J had ordered that each party bear its own costs of the proceeding heard in December 2015.

On 20 February 2017,[104] Hera and Jadig Group entered into a loan agreement for the payment of the referral authority bonds. Hera paid those fees to South East Water and Melbourne Water (totalling approximately $770,000) on or about 6 March 2017. On 8 and 9 March 2017 respectively, each of South East Water and Melbourne Water consented to the issue by the City of Casey of a statement of compliance.
[104]Before this, on 1 February 2017, the Bisognins’ solicitor sent a letter to Hera’s solicitor stating that the Bisognins proposed making an application to the Court to discharge the injunction granted by Macaulay J. On 10 February 2017, the Bisognins filed a summons returnable on 24 February 2017 seeking the discharge of orders 1(a) and (b) made on 5 October 2016. The injunction was not discharged.

However, on 23 March 2017, the City of Casey issued a report noting that it had requested evidence that an agreement had been entered into with either Telstra Smart Communities or NBN Co for the provision of telecommunication services as required by condition 5 of the planning permit but had only received a letter of agreement from ‘Clear Broadband’. It did not know if this was sufficient. On 23 March 2017, Hera’s solicitor sent an email to the Bisognins’ solicitor attaching a NBN telecommunications services agreement for the Bisognins to sign, but the Bisognins’ solicitor responded that this was the first time a request to execute an agreement for the provision of telecommunication services had been made, and ‘given that the provision of such services goes to the matter of the trial commencing next Monday, it would not be appropriate to execute such a contract until the final determination of this proceeding.’ Hera’s solicitor then sent a further email on 28 March 2017, again attaching the agreement as well as a ‘provisioning letter’ from Clear Networks Pty Ltd. Hera indicated that it proposed to tender the email and the Bisognins’ response into evidence. It appears that the Bisognins refused to sign the agreement.[105]
[105]Riordan J ordered on 29 May that the Bisognins complete, sign and return to Hera’s solicitor authority forms to the City of Casey and Clear Networks regarding the NBN agreement which had been emailed to them on 28 March 2017. He made similar orders on 7 June 2017 with respect to a NBN agreement emailed from Hera’s solicitors to the Bisognins’ solicitors on 2 June 2017.

In any event, the offer of 8 July 2016 was overtaken by the Bisognins’ representations on 13 and 14 July 2016 that they had obtained finance and would pay the referral fees.[202] It was also relevant that the offer of 8 July 2016 did not address the non-financial requirements the Bisognins needed to complete, such as entering into a s 173 agreement with Melbourne Water.
[202]See [73] above.

In these circumstances it could not be concluded that the rejection of the offer of 8 July 2016 was proof that Hera was persisting in its interpretation of the 2015 Contract ‘willy nilly’.[203]
[203]Mona Homes (1978) 138 CLR 423, 432.

As for the fact that Hera did not accept the Bisognins’ offer of 7 September 2016[204] for the purchase price moneys not to be immediately disbursed to allow for Hera to apply to restrain distribution in the event that it had made payments to the referral authorities, I also consider that this does not demonstrate that Hera was not willing, ready and able to complete its obligations under the 2015 Contract, largely for the same reasons canvassed above. Hera was under no obligation to step into the shoes of the Bisognins. The scope of its best endeavours clause did not extend that far. Moreover, the date of the offer post-dated both the commencement of the proceeding before Riordan J (26 August 2016) and the extended sunset clause (31 August 2016). It would seem that the Bisognins see this offer as relevant on the basis that the assessment of Hera’s readiness, willingness and ability could be made at some appropriate date beyond 31 August 2016 extended by reason of the prevention principle.[205] It is unnecessary to consider this issue further as Hera’s willingness, readiness and capacity was assessed by Riordan J at a time that included 31 August 2016.[206] In any event, if the appropriate time was extended further by reason of the prevention principle it may be relevant that it was conceded at trial that as at February or March 2017 Hera was ready, willing and able.[207] In particular, it will be recalled that Hera had paid Melbourne Water and South East Water on 6 March 2017.[208] This preparedness to pay the referral fees once ‘a clear enunciation of the true agreement’ was made by the Court of Appeal is also evidence of Hera’s readiness, willingness and ability to comply with the 2015 Contract, if the appropriate time for assessment is extended.
[204]See [85] above.
[205]See [5] above.
[206]See [114] and [122] above.
[207]See n 151 above.
[208]See [102] above.

I reject the submission that the evidence upon which Riordan J relied to arrive at his findings can be impugned because it was given with hindsight. Given the protracted nature of the litigation between these parties, and the understanding of the parties’ obligations as informed by the judgment of Sloss J, the evidence given about Hera’s ability to pay the referral fees was necessarily hypothetical.[209] Until the delivery of judgment by the Court of Appeal in December 2016, Hera was not aware that it had an obligation to pay the referral fees nor had it been called upon to demonstrate that it could make those payments if necessary. There was no need in August 2016 for Hera to obtain finance for those purposes.
[209]This appears to have been acknowledged by counsel for Hera before the judge below.

The Bisognins’ submission again demonstrates the error of their approach. At its core is the proposition that, as at the commencement of the proceeding before Riordan J, 26 August 2016, Hera was not ready, willing and able to complete the 2015 Contract because it had not taken the necessary steps to perform an obligation which it understood (wrongly) lay with the Bisognins. By disparaging the evidence relied upon by Riordan J as given with hindsight, the Bisognins urge, in effect, that it is only if Hera could demonstrate that, as at 26 August 2016, it was actually in the position of being prepared to perform the obligation in respect of which it considered the Bisognins to be in default, that it could be properly found to have been ready, willing and able. In other words, the fact that Hera had not paid the referral fees as at the commencement of the proceeding is relied upon to establish that Hera was not ready, willing, and able to comply with the 2015 Contract. This submission suffers from the same vice as the submission based upon Mona Homes which I have rejected as without support.[210] In the circumstances, the mere fact of non-payment at a time when it considered the obligation to lie with the Bisognins, as supported by an order of the Court, cannot establish Hera’s lack of readiness, willingness or ability.
[210]See [158]-[165] above.

In my view the judge was correct to rely upon the evidence of Mr Smith and Mr Gringlas,[211] and the specific sources of funding to which they referred for payment of the referral fees, as well as for payment of the balance of the deposit, and payment of the residue of the purchase price. This included evidence of finance offers from the Jadig Group, with respect to the acquisition of the land, of $3,000,000 (7 September 2015); $3,850,000 (12 August 2016); $3,850,000 including specifically $250,000 for Melbourne Water and $520,000 for South East Water (11 January 2017); and $805,000 plus $4,750,000 on settlement (18 January 2017). I consider that there was no error in the judge’s conclusion that Hera was ready, willing and able to perform its obligations under the 2015 Contract.
[211]See [120] above.

While I would grant leave with respect to this ground, I consider the ground fails.

Ground 4: Was there an error in not attaching a security for costs condition to the grant of specific performance?

The Bisognins submit that the judge erred in the exercise of his discretion, when granting specific performance, in not requiring Hera to pay money into court as security for the costs awarded to them following the successful appeal against the decision of Sloss J.[212] Those costs were incurred in order to have the Court of Appeal determine the true construction of the 2015 Contract. The condition sought was necessary, they submit, to protect their position and to achieve equity between the parties because they allege there is a risk that Hera will delay, or even avoid, paying their costs. They submit there was evidence before Riordan J that Mr Konstandellos had tried to conceal his poor financial performance in previous property developments, that Hera is in parlous financial difficulties and will need to borrow all moneys required to perform its obligations under the 2015 Contract, and those standing behind Hera (in particular Mr Konstandellos) have a poor financial history in the conduct of previous developments. The Bisognins assert that they:

therefore face the risk of [Hera] financially mismanaging its development project and avoiding and delaying payment of the [Bisognins’] costs. It is a reasonable inference that those behind [Hera] will structure the development with the effect of keeping [Hera] insolvent. The sole role of [Hera] would be the holding of the property while other corporate entities carry out any development, should it proceed.

[212]The costs orders of the Court of Appeal are set out at [101] above.

The judge erred, the Bisognins submit, because he relied on the fact that the costs had not yet been taxed. Riordan J said:

In my opinion, I do not consider that any order for specific performance should be subject to the conditions proposed by the vendors or any other conditions for the following reasons:
…
(d) … there is no evidence as to the amount owing by one party to the other under the outstanding costs orders, which are yet to be taxed.[213]

[213]Riordan J reasons [149(d)].

The Bisognins submit that the fact that taxation had not yet occurred was not a relevant consideration for the judge to take into account in circumstances where all they sought was the mere security for costs and not payment of costs. This was so particularly when there had been insufficient time for any taxation to take place between the making of the costs order on 31 January 2017 and when the judge made his orders for specific performance on 22 May 2017. They emphasise that the costs incurred are not insignificant, being in the order of some $600,000.

Counsel for the Bisognins concede that the costs awarded by the Court of Appeal were in a different proceeding,[214] albeit involving the same parties.[215]
[214]S APCI 2016 0117.
[215]Should the Bisognins fail on grounds 1 and 2, but succeed on ground 4, they would seek to have the judge’s order for specific performance varied to grant the condition sought.

Hera submits that the issue of taxation was not an irrelevant or unreasonable matter for the judge to take into account in the exercise of his discretion given that the Bisognins had sought that a sum of $600,000 be paid into court. There had been no agreement by the parties that this figure was a reasonable approximation of the Bisognins’ costs on a standard basis, and no evidence was provided to the judge to support such a figure. There was no particularity before the judge of the quantum involved in the costs orders that had been made. Moreover, the fact that taxation had not yet occurred was only one of a number of matters the judge considered when he exercised his discretion, including that he intended to make a costs order in favour of Hera and the amount of Hera’s costs would likely exceed the quantum of any past orders for costs in favour of the Bisognins.

In my view, the discretion exercised by Riordan J in granting specific performance without attaching a condition for security for costs did not miscarry. At the same time as he delivered his reasons for granting specific performance he also delivered a judgment with respect to the costs of compliance by Gadens Lawyers with the subpoena that had been issued.[216] He ordered that the ultimate responsibility for the costs of compliance with the subpoena and the application for costs ‘be costs in the proceeding’.[217] At that time he said:

As a result of the decision in the trial of this proceeding, the ultimate burden of these costs will be borne by the [Bisognins].[218]

[216]See [109] above.

[217]Hera Project Pty Ltd v Bisognin [No 4] [2017] VSC 270 [72].

[218]Hera Project Pty Ltd v Bisognin [No 4] [2017] VSC 270 [73].

Thus, when refusing to attach a condition for security for costs to the grant of specific performance Riordan J well knew that the ultimate burden of the costs of the trial before him would be borne by the Bisognins. Although the ultimate order for costs in favour of Hera was not made until 29 June 2017,[219] and thus the final terms of the orders made may not be relevant to an examination of the judge’s exercise of discretion when he granted specific performance on 22 May 2017, it is clear that Riordan J was aware when granting specific performance that until a taxation had taken place it would not be possible to tell what the final outcome of the various costs orders would be. In those circumstances there was no proper foundation for an order to be made for Hera to make a payment into court, and especially not at the quantum the Bisognins sought.
[219]See [200] below.

I consider that leave should be refused with respect to ground 4.[220]
[220]Following directions made during the course of the hearing before this Court, the parties each filed a table of the various costs orders made to enable an evaluation of whether any set-off may apply. The tables demonstrated only that it is not easily ascertainable which party will ultimately be ahead in net terms after all costs are taxed. Hera had also foreshadowed that it will seek to have the costs orders made by the Court of Appeal against it following the appeal from Sloss J reversed, on the basis of new evidence in the form of the CMJ Contract.

Ground 5: Was there an error in construing s 9AD of the Sale of Land Act?

As mentioned, Hera sought an order from Riordan J pursuant to s 9AD of the Act granting it reasonable access to the land for the purpose of completing the CHMP.[221] On 29 June 2017 the judge granted the order.[222]
[221]See [57] and [66] above.
[222]Riordan J No 5 reasons. See [127] above.

Section 9AD(3) of the Act provides:

The vendor shall allow the purchaser under a prescribed contract of sale reasonable access to the lot for any purpose connected with the proposed development or use of the lot.

The Bisognins had urged the judge to give s 9AD(3) a restrictive interpretation on the basis that the reference to ‘the’ proposed development contemplates an existing proposed development, with any such proposed development to be identified in the contract of sale.

Hera argued that such a narrow reading of the provision was not justified. It submitted before the judge that, looked at in context, s 9AD(3) forms part of a broad suite of protective measures for purchasers introduced into the Act in 1985 and it would be unnecessarily restrictive to demand that the contract of sale identify the proposed development.

The judge accepted the expansive reading of s 9AD(3) proposed by Hera, saying:

In particular, I consider that reading the subsection in its legislative context supports the contention that the provisions were introduced for the benefit of purchasers particularly in circumstances when a proposed sale of land is delayed while awaiting registration of a plan of subdivision. I accept the purchaser’s submission that such an intention is readily inferred from ss 9AA, 9AAA, 9AB, 9AC, 9AE, 9AF and 9AG, which were also introduced into the Principal Act by [the] Sale of Land (Allotments) Bill 1985.[223]

[223]Riordan J No 5 reasons [41].

The judge found support for this interpretation from the second reading speech, in which the relevant minister noted that the amendments were the result of recommendations ‘primarily designed to simplify the subdivision procedure and thereby reduce the end cost to the purchaser’.[224] And in relation to s 9AD(3), the relevant Minister stated:

The purchaser cannot take legal possession of the land until the plan has been approved by the Registrar but is to be given reasonable access to the land for any purpose [connected] to the proposed development of the land.[225]

[224]Riordan J No 5 reasons [42].

[225]Riordan J No 5 reasons [42] quoting Victoria, Parliamentary Debates, Legislative Assembly, 17 October 1985, 979, 981 (James Simmonds), Minister for Agricultural and Rural Affairs.

The judge concluded:

Accordingly, I consider that the literal meaning of the text is consistent with the legislative purpose and must therefore be accepted as the legal meaning.
Further, in my opinion, the interpretation advanced by the vendors effectively requires the insertion of the words to the effect of ‘as identified in the prescribed contract of sale’ after the words ‘any purpose’.
Although the insertion of such words would provide greater certainty as to the purposes that give rise to the right of access, I reject the vendors’ submission for the following reasons:
(a) The insertion of the words [is] not consistent with the plain meaning of the text.
(b) The text of the legislation does not indicate any intention that the Parliament wanted certainty to have priority over a bona fide intention of the purchaser within the ambit of the subsection.
(c)If the legislature had intended that only purposes identified in the contract of sale could give rise to the right of access provided by the subsection, it could easily have so stated.[226]

[226]Riordan J No 5 reasons [44]-[46].

Before this Court, the Bisognins submit that the judge erred in his reading of s 9AD(3) in that he in effect treated the word ‘the’ before ‘proposed development’ as meaning ‘any’. They submit that in order to give meaning to the phrase ‘the proposed development’, it must be identifiable in the contract of sale. The broad interpretation adopted by the judge is said to render the rights of the parties as affected by s 9AD(3) objectively immeasurable. It also invites speculation and creates uncertainty, where ‘the proposed development’ is not identified and ‘may reside peculiarly within the mind of the purchaser’.

During oral submissions counsel for the Bisognins also relied on the principle of statutory interpretation that where two alternative constructions of legislation are open, that which is consonant with the common law is to be preferred.[227] He argued that the common law gives primacy to respecting the privacy of an individual’s place of residence or property, which would favour a narrow interpretation of s 9AD(3).
[227]Balog v Independent Commission Against Corruption (NSW) (1990) 169 CLR 625, 635-6.

This Court was informed that access pursuant to the judge’s order has taken place, but the Bisognins continue to press this ground on the basis that there may be future issues about access.

Hera submits that the judge adopted an orthodox approach to interpreting s 9AD(3).[228]
[228]See also Kameel Pty Ltd v Commissioner of State Revenue (2016) 103 ATR 71, 87 [68] (Victorian Court of Appeal).

I agree. There is no reason to read down the plain words in the provision which do not contain any express or implied requirement that access is to be given only for a specific known proposed development that is identified within the contract of sale. While the Bisognins’ construction would carry greater certainty, as Riordan J acknowledged, in my view it would risk s 9AD(3) not achieving the purpose for which it was introduced. Reliance on the privacy of a property owner would ignore the fact that the context is one of the sale and purchase of the very property at issue with the corresponding interests such a transaction generates.

In any event, the 2015 Contract was not silent about the proposed development or use: it referred to the UDF in Special Conditions 9 and 10[229] and the ‘Vision’ of the UDF included a supermarket and complementary retail stores.[230] Further, the judge noted that the s 32 statement (expressly incorporated into the 2015 Contract) also referred to the need for a CHMP. He said:

The 2015 Contract specifically incorporated the vendor statement required under s 32(1) of the Sale of Land Act 1962. The vendor statement attached a property report which included ‘indicative information about the location and extent of areas of Aboriginal cultural heritage sensitivity and is provided to assist with the decisions about the potential need to prepare a Cultural Heritage Management Plan in relation to the proposed activities on this property’.[231]

[229]See [21] and [22] above.

[230]See [26] above.

[231]Riordan J No 5 reasons [12].

There was evidence that it was common knowledge between the parties that the land was being sold and subdivided for the purpose of developing a supermarket on the land and access was required for the purpose of preparing a CHMP. In those circumstances, I consider that the judge made no error in construing s 9AD(3) or granting Hera reasonable access to the land.

In the circumstances, I would refuse leave with respect to ground 5.

Ground 6: Should indemnity costs have been ordered?

As noted above,[232] Riordan J found that Mr Bisognin deliberately concealed the existence of the CMJ Contract from Hera and from the Court until it was produced on the fourth day of the trial.[233] He also noted that counsel and the current instructing solicitors for the Bisognins confirmed that they had not been instructed about the existence of the CMJ Contract prior to its production.[234] On 9 June 2017 the judge directed the parties to file submissions in relation to whether the Bisognins should pay Hera’s costs on an indemnity basis.
[232]See [109]–[110] above.
[233]Riordan J reasons [99].
[234]Riordan J reasons [98(c)].

On 29 June 2017 the judge delivered an ex tempore judgment on costs.[235] The judge referred to the well-established principles and special circumstances for the making of an indemnity costs order, including the failure of a party until after the commencement of the trial, and without explanation, to discover documents the timely discovery of which would have considerably shortened, and very possibly avoided, the trial.[236] In addition to the deliberate concealment by the Bisognins, the judge noted that no explanation for this conduct was proffered and there had been a ‘blatant denial’ by them of having any communications with any other person regarding the sale of the land between October 2014 and 25 August 2015 when the CMJ Contract was executed on 6 and 9 July 2015.[237] The judge emphasised the significance of the CMJ Contract to the trial and the directly inconsistent obligations it imposed on the Bisognins with their obligations under the 2015 Contract concluding that had the CMJ Contract been disclosed, the trial before him would probably have been avoided:

The significance of the CMJ Contract to the issues in this case extended beyond providing the [Bisognins] with a strong financial incentive to bring about the termination of the 2015 Contract. By its terms, the obligations under the CMJ Contract were in direct conflict with the [Bisognins’] best endeavours obligations under the 2015 Contract.
I consider that, if the [Bisognins] had disclosed the CMJ Contract, it is likely that a trial in this proceeding would have been avoided. The significance of the non-disclosure of the CMJ Contract to the [Bisognins’] perception of their prospects of succeeding in this claim is indicated by the lengths to which they were prepared to go to avoid its disclosure … These steps included the destruction of the former solicitors’ file and the withholding of instructions about the CMJ Contract from their own counsel and their current solicitors.
I do not accept the [Bisognins’] submissions that the non-disclosure of the CMJ Contract had no significant effect on the conduct of this proceeding. It was not explained how the [Bisognins] could have sensibly defended these proceedings in circumstances where their obligations under the CMJ Contract were in direct conflict with the vendors’ best endeavours obligations under the 2015 Contract.
In my opinion, the [Bisognins’] decision to defend this proceeding, without disclosing the existence of the CMJ Contract, could properly be described as ‘high-handed’ and ‘the Court ought to do what it can to ensure that [Hera] is not out of pocket over it’.[238]

[235]Riordan J Costs reasons.

[236]Riordan J Costs reasons [17] citing Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189 [7] (Harper J).

[237]Riordan J Costs reasons [20]. See [29] above.

[238]Riordan J Costs reasons [21]-[24] citing Australian Guarantee Corporation Ltd v De Jager [1984] VR 483, 502 (Tadgell J).

The judge accordingly ordered that:

The defendants pay the plaintiff’s costs, including the costs of transcript and those costs reserved up to and including today, such costs to be taxed on an indemnity basis.

On the appeal, the Bisognins submit that there must be a rational connection between the conduct complained of and the costs which have been incurred before an order for indemnity costs is made. They refer to Liverpool City Council v Estephan[239] in which Giles JA emphasised that where the conduct of a party has prolonged the proceedings and caused additional costs to be incurred, a costs order must bear a rational connection to the reason for departing from the ordinary costs order and should be limited to the extent of that connection.[240]
[239][2009] NSWCA 161.
[240]Liverpool City Council v Estephan [2009] NSWCA 161 [95].

The Bisognins submit there was a genuine dispute about whether Hera was ready, willing and able to perform the 2015 Contract as at August 2016. They argue that the CMJ Contract had only tangential relevance to those issues in the trial; the case put on behalf of the Bisognins before the judge was that, whatever their conduct might have been, the focus should be on whether Hera, as the party seeking specific performance, was ready, willing and able to perform the 2015 Contract. The majority of the evidence related to that argument. The issues raised by the Bisognins at trial were ventilated expeditiously and appropriately. In any event, even if the existence of the CMJ Contract has some relevance for the over two month delay caused by the Bisognins in failing to tell Hera they were unable to pay the referral fees, that was compensated for by the extension of time before any right to terminate arose.[241] They claim that the judge therefore erred in finding that, had they not concealed the CMJ Contract from their own solicitors and counsel, the advice they would have received would have materially altered their view of their prospects of success.
[241]See [137] above.

The Bisognins seek to have the judge’s costs order set aside and say it is appropriate that there be no order as to costs. They return again to the submission that it was readily open to Hera, pursuant to its best endeavours obligation under Special Condition 2(a), to raise the funds to pay the referral fees and then adjust the settlement sum. They submit that had it done so, it would have avoided protracted litigation and, even if a dispute remained about obtaining the consent of the Bisognins’ mortgagee and producing a certificate of title, that would not have involved the costs and expenses of the current litigation.

The Bisognins further submit that Hera’s conduct of the proceedings below was contrary to the overarching obligations under the Civil Procedure Act 2010.[242] They rely upon one example where costs were unnecessarily incurred, namely, the use of an interpreter when Mr Konstandellos gave his evidence, which they submit was plainly not needed.
[242]The obligations identified include the obligation to take steps to resolve or determine the dispute, to use reasonable endeavours to resolve the dispute, to narrow the issues in dispute, to ensure that costs are reasonable and proportionate, and to minimise delay: ss 19, 22, 23, 24, 25.

Hera responds by submitting that it was open to the judge to exercise his discretion in the way he did. The judge ‘saw firsthand the unfolding subterfuge regarding the CMJ Contract and the lengths to which [Mr Bisognin] went to conceal it.’ Hera urges that this Court should be slow to disturb the judge’s findings of fact made in that context. Further, the majority of the submissions made on behalf of Hera below dealt with what it describes as the ‘inexplicable conduct’ of the Bisognins in the period March to December 2016, when they were representing they had finance and were willing to pay the referral fees and yet not acting in accordance with those representations. That disparity was explained by the existence of the CMJ Contract. The late revelation of its existence also raises the issue of what effect it would have had on the outcome before Sloss J and the Court of Appeal.

In this context, I note that Sloss J considered evidence given by a council officer that the Bisognins had sought to delay the approval of the UDF in April 2015 so that the 2015 Contract would expire and they would be free to negotiate with Woolworths, and observed that:

Mr Bisognin also indicated that he was not looking to sell the property to a third party after 25 August 2015, despite having received a number of unsolicited phone calls and enquiries. Under cross-examination about what was in his mind as being in prospect he responded:
I’m not sure, ah, of the future. If I had a crystal ball I could tell you. Um, I am genuinely thinking, well at the moment I’m in the position where I’m rearing greyhounds, I do need land space, so that is a professional hobby of mine. So I’m genuinely thinking of keeping it at the moment.[243]

[243]Sloss J reasons [102].

This evidence was clearly misleading.

In my view it was open for Riordan J to award indemnity costs in favour of Hera.

I consider that an award of indemnity costs was appropriate in the circumstances where the Bisognins not only misled Hera as to their financial capacity to pay the referral fees, which caused delay, but also concealed from Hera, from its own legal advisors, and from the Court, the CMJ contract under which they undertook, as a contractual obligation, to terminate the 2015 Contract and to do so by way of ‘facilitating the earliest termination’,[244] and where this obligation was directly inconsistent with their obligations under the 2015 Contract. As the judge found, had the CMJ Contract been disclosed earlier, the entire trial would have been considerably shortened and may have been avoided altogether.[245] Questions as to whether an interpreter was needed for a particular witness pale into insignificance by comparison with the extent of the costs unnecessarily incurred by reason of the Bisognins’ concealment. In my view there is a rational connection between the conduct complained of and the costs which have been incurred. The need for Hera to receive greater and more adequate compensation than it would have received if costs had been awarded on a standard basis is properly established.
[244]See [29] above.
[245]See [199] above.

In this context, there are relevant observations made by Gaudron and Gummow JJ in Oshlack v Richmond River Council[246] to the effect that delinquent conduct may require that more adequate compensation be given:

It may be true in a general sense that costs orders are not made to punish an unsuccessful party. However, in the particular circumstance of a case involving some relevant delinquency on the part of the unsuccessful party, an order is made not for party and party costs but for costs on a ‘solicitor and client’ basis or an indemnity basis. The result is more fully or adequately to compensate the successful party to the disadvantage of what otherwise would have been the position of the unsuccessful party in the absence of such delinquency on its part.[247]

[246](1998) 193 CLR 72 (‘Oshlack’).

[247]Oshlack (1998) 193 CLR 72, 89 [44] (emphasis added) (citations omitted).

To similar effect, Dal Pont in his Law of Costs[248] notes that:

It must be recalled that an indemnity order aims to compensate an opponent for unnecessary costs incurred as a result of the misconduct in question. The ills underscoring fabrication of evidence are chiefly addressed in other ways. But where the fabrication of evidence, or other misleading conduct, has a direct correlation with unnecessarily exposing the successful party to the incurrence of costs, an indemnity costs order is appropriate.[249]

[248]G E Dal Pont, Law of Costs (LexisNexis Butterworths, 3^rd ed, 2013) (‘Dal Pont’).

[249]Dal Pont 559 [16.67] (emphasis added).

I have already rejected the proposition that it was incumbent upon Hera, pursuant to its best endeavours obligation, to accept the offers made by the Bisognins for it to pay the referral fees with an adjustment to be made at the time of settlement. I do not consider that the proposition that had Hera done so it would have avoided protracted litigation has any greater weight in a contest over costs than in the earlier context. A party to litigation that is deceived by the other party as to its financial capacity is not obliged, as a matter of law or a matter of prudence, upon

discovering that the other party is not able to perform its contractual obligations, to step into its shoes and perform the obligation itself.

I consider ground 6 to be without merit. I would refuse leave to appeal on ground 6.

Conclusion on leave to appeal

I would grant leave to appeal on ground 2 but refuse leave on all other grounds.

Conclusion on the appeal

I would dismiss the appeal.

KYROU JA:

I agree with Tate JA.

COGHLAN JA:

I agree with Tate JA.

- - -

*Introduction and summary* . ...................................................................	2
*Grounds of appeal* ...................................................................................	3
*Background – Protracted litigation from contract of sale of land* ....	4
*(1) The 2015 Contract ........................................................................*	5
*(2) Steps taken between March and August 2015 .............................*	8
*(3) Hearings before Cameron J (Practice Court) and Sloss J — dispute over contractual obligations ..........................................................*	12
*(4) Steps taken after Sloss J judgment; appeal to the Court of Appeal (4 March 2016 to 16 December 2016) .........................................*	20
(5) Steps taken after Court of Appeal judgment until the hearing before Riordan J (17 December 2016 to 28 March 2017) .........................	32
(6) The hearings before Riordan J and his findings .............................	35
*Ground 1: Did the judge find that, as at the commencement of the proceeding, Hera was ready, willing and able to perform its obligations?* ...............................................................................................	46
*Ground 2: Was Hera ready, willing and able to perform its obligations?* ...............................................................................................	48
*(1) The Bisognins’ submissions* ...........................................................	48
*(2) Hera’s submissions* ........................................................................	54
*(3) Analysis* .........................................................................................	56
*Ground 4: Was there an error in not attaching a security for costs condition to the grant of specific performance?* ....................................	65
*Ground 5: Was there an error in construing s 9AD of the Sale of Land Act?*	68
*Ground 6: Should indemnity costs have been ordered?* ......................	71
*Conclusion on leave to appeal* ................................................................	77
*Conclusion on the appeal* .........................................................................	77

[2018] VSCA 93

17 April 2018