Bisognin v Hera Project Pty Ltd

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2016 0117

GINO ANDREW BISOGNIN

and

LEAH JOAN BISOGNIN

Applicants

v

HERA PROJECT PTY LTD (ACN 163 685 041)

Respondent

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JUDGES:	SANTAMARIA and FERGUSON JJA, RIORDAN AJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	9 November 2016
DATE OF JUDGMENT:	16 December 2016
MEDIUM NEUTRAL CITATION:	[2016] VSCA 322
JUDGMENT APPEALED FROM:	Bisognin v Hera Project Pty Ltd [2016] VSC 75 (Sloss J)

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CONTRACTS – Contract for sale of land – Applicants received unsolicited approach from developer seeking to purchase a portion of their land – Special conditions included obligation that the purchaser at its own cost and expense prepare a plan of subdivision and use its best endeavours and do all things reasonably required to expedite and procure registration of plan – Further special condition added stating that if plan of subdivision not registered by 25 August 2015 either party may terminate contract – Pre-requisite for approval of plan was entry into agreements with service suppliers – Agreements included financial obligations – Dispute as to which party obliged to pay – Effect of special conditions to shift risk of registration and associated financial obligations from vendor to the purchaser – Sale of Land Act 1962 – Subdivision Act 1988 Part 2, Part 4 – Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 – Royal Botanical Gardens and Domain Trust v South SydneyCity Council (2002) 240 CLR 45.

PRACTICE AND PROCEDURE – Application to set aside Judicial Registrar’s orders extending time to file application for leave to appeal – Court will not extend time if appeal so devoid of merit it would be futile to do so – Court will consider length of delay, reasons for delay and extent of any prejudice suffered by respondent if extension granted – Applicants had adequately explained reasons for delay – Appeal had substantive merits – Failure to extend time would lead to unjust outcome – Application dismissed.

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APPEARANCES:	Counsel	Solicitors
For the applicants	Mr J Ribbands with Mr W Stark	T F Grundy
For the respondent	Mr N Pane QC with Mr J Whelen	Russell Kennedy Solicitors

SANTAMARIA JA
FERGUSON JA
RIORDAN AJA:

Introduction

Gino Andrew Bisognin and Leah Joan Bisognin (‘the applicants’) are the joint owners of a rural block at Cranbourne. In 2012, they received an unsolicited approach on behalf of a developer who was seeking to buy the southern portion of their land. The developer told the applicants that he proposed to develop the southern portion of their land by the construction of a supermarket. He said he had already discussed the matter with the local municipality. In 2012, the parties entered an agreement for the sale and purchase of a plot on the unregistered plan of subdivision. Subsequently, Hera Project Pty Ltd (‘the respondent’) was nominated as the ‘purchaser.’ The contract was in standard form save that it contained a number of special conditions relating to the preparation and eventual registration of a plan of subdivision. After a delay in performance, the applicants issued a notice of default. The respondent commenced proceedings to restrain the termination of the contract. The proceedings settled on terms that a new contract was to be executed that contained the same special conditions as well as two further special conditions: (1) a sunset clause such that, if the plan of subdivision had not been registered by 25 August 2015, the parties could terminate the contract; and (2) an obligation upon the applicants to use their best endeavours to assist in the registration of the plan.

The second contract was executed in March 2015. The respondent set about taking the steps necessary to have the plan of subdivision registered by the Registrar of Titles. Having secured certification of the plan by the municipality, it was necessary to enter into agreements with so called ‘referral authorities’ with a view to their providing services such as telecommunications, water and sewerage to the blocks after subdivision. Entry into these agreements required the ‘owner of the land’ to undertake financial obligations. The applicants refused to undertake those obligations contending that, under the special conditions, the respondent had undertaken that risk. The applicants issued a summons pursuant to s 49 of the Property Law Act 1958 (the ‘Property Law Act’) in which they sought answers to three questions that related to the construction of the special conditions in the second contract. The respondent brought a cross-application seeking injunctive relief against termination of the contract upon the basis that the applicants’ conduct had prevented it registering the plan of subdivision by 25 August 2015. In particular, it said that on 16 June 2015 it had provided to the applicants the planning permit for the subdivision, which required the agreements with the referral authorities to be entered into, and that thereafter the applicants had taken no steps to ensure settlement occurred by 25 August.

The primary judge held that, in order to make good title, the applicants were obliged under the second contract to enter the relevant agreements and undertake the associated financial obligations to the referral authorities. Having found that the applicants were responsible for the delays that prevented settlement by 25 August, she ordered that the sunset clause under the contract be extended for a period of 70 days.

The applicants have sought leave to appeal. In substance they have contended that the primary judge erred in holding that, upon the proper construction of the contract of sale, the applicants were required to pay for the establishment or provision of services to the property.

For the reasons that follow, the application for leave to appeal should be granted and the appeal allowed. In essence, whilst ordinarily a vendor would bear the burden of performing all steps required to register a plan of subdivision (including the burden of entering into agreements with referral authorities and making payments to them) the parties here chose to shift the burden from the vendors to the purchaser. That is reflected in the contract that they made.

Background

The applicants are the joint registered owners of the land known as 1 Adrian Street, Cranbourne East, Victoria, being the whole of the land described in Certificate of Title Volume 9776 Folio 892 (‘the Cranbourne East property’).

The parcel of land is a rural block of 21,126m² in size (approximately 5 acres) with an old weatherboard home on it. It adjoins Ballarto Road and is located in an ‘urban growth zone.’ In 2012, the applicants received an unsolicited approach on behalf of a developer who was seeking to buy the southern portion of their land, an area of 12,850m² (approximately 3 acres), as a site for the development of a supermarket. The developer provided the applicants with a concept plan which showed the portion of the land that it wished to purchase and the approximate location of the ‘full-line supermarket’ it proposed to develop on that site. By that time, the developer had been in contact with the local council, the City of Casey, to discuss what could be developed on that site given the constraints of the Cranbourne East Precinct Structure Plan.

On 29 February 2012, the applicants entered into a contract for sale of land to sell the southern portion of the Cranbourne East property (‘the southern lot’) to the original purchaser, Joslin Street SA Developments Pty Ltd (‘Joslin’) (‘the 2012 contract’). The purchase price was $3.6 million, with a deposit of $1 million payable, $10,000 of which was paid on signing. By special condition 1 of the 2012 contract, the balance of the deposit ($990,000) was payable within seven days of the plan of subdivision being approved.

Under the 2012 contract, 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.’ As the southern lot was only part of the land contained in the certificate of title for the Cranbourne East property it was necessary for a plan of subdivision to be prepared and registered before the applicants could give title to it to Joslin. Accordingly, the sale was expressly subject to the provisions of the Sale of Land Act 1962 (the ‘Sale of Land Act’).

In summary, before the plan of subdivision could be registered, it was necessary to obtain a planning permit, to have the plan certified by the council and to obtain a statement of compliance from the council. Before the council could certify the plan, every ‘referral authority’ (relevantly here, South East Water, Melbourne Water and AusNet) had to give its consent.[1] Before the council could issue a statement of compliance, it had to be satisfied that agreements were in place with the referral authorities.[2]
[1]Subdivision Act 1988 s 6(1)(c) (‘Subdivision Act’). Other pre-requisites for certification are set out in s 6(1) of the Subdivision Act but they are not relevant for present purposes.
[2]Subdivision Act s 21(1)(b)(ii). There are other pre-requisites specified in s 21(1) before a council is required to issue a statement of compliance but they are not relevant for present purposes.

The 2012 contract contained several special conditions: special condition 3(a) was to the effect that 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’.[3]

[3]Special condition 3(a) became special condition 2(a) in a subsequent contract entered into between the parties in 2015: see [29] below.

On 26 July 2013, Joslin nominated the respondent as the ‘substitute purchaser/s to take a transfer of conveyance [of the southern lot] in lieu of the Purchaser’.

On 18 October 2013, the respondent entered into an agreement for lease with Woolworths Limited (‘Woolworths’) of the supermarket and associated retail premises to be developed on the southern lot.

On 21 October 2013, the applicants’ solicitor sent a rescission notice to the respondent’s solicitor. The particulars stated that the respondent ‘is unable to obtain approval of a Plan of Subdivision in accordance with special condition 3 of the Contract of Sale’.

On 1 November 2013, the respondent’s solicitor contended that the notice was premature and therefore defective. The respondent’s solicitor informed the applicants that a caveat would be lodged on the property to preserve the respondent’s rights under the contract.

On 26 November 2013, the respondent’s solicitor wrote to the applicants’ solicitor by way of further response to the rescission notice and said in relation to the plan of subdivision:

Pursuant to Council requirements prior to the Plan of Subdivision being lodged for approval by Council it is also incumbent upon your client to complete and submit to the Council the Urban Design Framework. This process also involves the preparation of an Urban Master Plan with the neighbour which we understand your client has already commenced discussions. Given our client’s involvement any such material to be submitted to the Council must first be approved in writing by our client to ensure its rights are not in any way compromised.

On 27 November 2013, the applicants’ solicitor wrote to the respondent’s solicitor stating that the contract had been rescinded; that the concept plan attached to the contract ‘does provide measurements’; and that it was not incumbent on the applicants to complete and submit an Urban Design Framework (‘UDF’) to the local City of Casey Council.

2013 proceedings

In late 2013, the respondent commenced proceedings in the Supreme Court of Victoria against the applicants. The respondent sought an order that the applicants be required to undertake all works required to procure an UDF and pay any necessary Growth Areas Infrastructure Contribution (‘GAIC’). The respondent also sought declarations that the rescission notice was of no effect and that the respondent had an interest in the Cranbourne East property sufficient enough to enable it to lodge a caveat.

On 10 January 2014, the applicants wrote to the respondent’s solicitor taking issue with the matters raised in the statement of claim. In their defence of

6 February 2014, they requested further and better particulars and contended that Joslin, the original purchaser, was aware that it was its responsibility to file the UDF for the purchased lot. The applicants further contended that the GAIC was not payable until settlement and that they were, in any event, exempt from this contribution.

In April 2014, the applicants wrote to the respondent’s solicitor to inform them that the 2012 contract was void for uncertainty because the southern lot was not sufficiently well described. The applicants encouraged the respondent to discontinue the proceeding and withdraw its caveat over the land, at which point the deposit of $10,000 would be refunded. The respondent rejected this offer of resolution, on the basis that it had relied upon the contract to enter into a lease agreement with Woolworths and believed that the applicants were seeking to take advantage of the resulting increase to the property’s value made possible by the lease agreement.

Settlement of 2013 proceedings

The matter was moved from the Supreme Court to the County Court in the period between April and November 2014. On 25 November 2014, a mediation of the County Court proceeding took place during which the parties reached agreement to resolve their dispute.

Terms of settlement were prepared to the effect that the parties agreed to enter into and execute a new contract of sale of land in relation to the southern portion of the land (at which time the 2012 contract was to be cancelled, at an end and of no effect) upon conditions the form of which was to be in accordance with the terms and conditions of the 2012 contract, subject to there being amendment to the special conditions. The respondent remained under the obligation to use its best endeavours and do all things reasonably required to expedite and procure the registration of the plan of subdivision.

The terms provided that the new contract was to include further special conditions: one provided that, if the plan of subdivision was not registered by 25 August 2015 the parties may terminate the contract (‘special condition 8’); another imposed on the applicants the obligation, among other things, to use their best endeavours to co-operate with the respondent, sign all documents and do all acts and things necessary to give effect to the approval and registration of the plan of subdivision (’special condition 10’).

Even though the new contract had yet to be executed, the parties set about implementing what they had agreed.

December 2014

On 2 December 2014, the applicants’ solicitor provided to the respondent’s solicitor a draft UDF application.

On 18 December 2014, the applicants were advised by the State Revenue Office that GAIC for the Cranbourne East property for the financial year ended 30 June 2015 was $187,568.34.

On 19 December 2014, the applicants’ solicitor provided to the respondent’s solicitor a draft contract for sale of land and a s 32 vendors’ statement. The s 32 statement for ‘Southern Lot 1, being 12,850m² being part of 1 Adrian Street, Cranbourne East Vic 3977’ relevantly stated:

1.32A(a) Information concerning any rates, taxes, charges or other similar outgoings
…
Their total does not exceed $6,000-00.
Any further amounts … for which the Purchaser may become liable as a consequence of the purchase of the property are as follows:- None to the vendor’s knowledge.

2. 32C LAND USE
…

(d) PLANNING
…
Planning Scheme: Casey;
…

3. 32H SERVICES

Service            Status
Electricity Supply  Connected
Gas Supply  Connected
Water Supply  Connected
Sewerage  Not connected
Telephone services  Connected
Connected indicates that the service is provided by an authority and operating on the day of sale. …

The 2015 contract

As indicated above, the 2012 contract contained a number of special conditions. After the settlement of the dispute about the 2012 contract, a new contract was to be prepared. On 13 March 2015, the applicants and the respondent entered into the new contract of sale for the southern lot (‘the 2015 contract’). In the event, the 2015 contract was in accordance with the 2012 contract save that three new special conditions were added.[4]
[4]The 2012 contract contained as Special Condition 2 the following: ‘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.’ When the 2015 contract was engrossed, it was deleted and the other conditions were renumbered. The terms of settlement of the original dispute provided for the addition of special conditions 9, 10, and 11. Because the original special condition 2 had been excluded, the new special conditions were numbered 8, 9 and 10 respectively. The old special condition 3 became special condition 2 in the 2015 contract.

Special conditions

When the 2015 contract was executed, the special conditions were numbered as follows:

1.The balance of deposit namely $990,000.00 is payable within 7 days of Plan of Subdivision being approved in accordance with Special Condition 3 herein.
2.
(a)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;
(b)The Plan of Subdivision referred to, is the Plan mentioned herein and a copy is attached and shall not be amended without the consent of the Vendors save for any amendments of a technical nature required by any relevant authority, to enable approval being granted;
(c)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.

3.The deposit and all 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.
4.If the Purchaser shall be or include a company, the company will forthwith upon execution of this Contract procure the execution by each of its directors of the Guarantee annexed to that part of this Contract to be held by the Vendor.
5.The right of the Purchaser to nominate or substitute a Purchaser pursuant to General Condition 18 hereof shall be exercised so that notice thereof is received by the Vendors or his solicitors within fourteen (14) days of the date of settlement, after the expiration of which the said General Condition 18 shall no longer be of any force or effect.
6.The Vendors hereby agree to pay the sum of $100,000.00 (One hundred thousand dollars) to Media Movers as a consultancy fee.

7.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.
8.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.
9.The Vendors will provide all and any documents in relation to the draft Urban Design Framework (UDF) by 2 December 2014.
10.The Vendors will use their best endeavours to co-operate with the Purchaser, sign all documents, do all acts and things necessary and to give effect to the approval and registration of the plan of subdivision and to give effect to the UDF including making the duplicate title available for the purposes of registration, and will make any Growth Areas Infrastructure Contribution (GAIC) payment promptly if required by the relevant authority.[5]

[5]Emphasis in original.

April 2015 – June 2015

On 8 April 2015, a UDF was submitted by the respondent’s town planning agent, Perry & Associates (‘Perry’), to the Council. The plan was well received and later forwarded to the applicants’ solicitor for approval. On 26 May 2015, the Council determined that the ‘1 & 2 Adrian Street Activity Centre Urban Design Framework’ was satisfactory and could be approved under Clause 3.1 of the Schedule of the Urban Growth Zone.

On 7 May 2015, Perry lodged with the council an application for the subdivision of the Cranbourne East property.

On 21 May 2015, Charter Keck Cramer, on behalf of the respondent, applied for certification of the plan of subdivision.

On 11 June 2015, the City of Casey notified the respondent that its application for the planning permit for the subdivision had been approved. The planning permit Pln A00338/15 (‘Permit’) contained a number of conditions. Relevantly, for present purposes, it required that:

Conditions: 1–9 (inclusive)
…
2. The owner of the land must enter into agreements with the relevant authorities for the provision of water supply, drainage, sewerage facilities, electricity and gas services to each lot shown on the endorsed plan in accordance with the authority’s requirements and relevant legislation at the time.
Telecommunications Conditions
5. The owner of the land must enter into an agreement with:
(a)a telecommunications network or service provider for the provision of telecommunications services to each lot shown on the endorsed plan in accordance with the provider’s requirements and relevant legislation at the time; and
(b)a suitably qualified person for the provision of fibre ready telecommunications facilities to each lot shown on the endorsed plan in accordance with any industry specifications or any standards set by the Australian Communications and Media Authority, unless the applicant can demonstrate that the land is in an area where the National Broadband Network will not be provided by optical fibre.

6. Before the issue of a Statement of Compliance for any stage of the subdivision under the Subdivision Act1988, the owner of the land must provide written confirmation from:
(a)a telecommunications network or service provider that all lots are connected to or are ready for connection to telecommunications services in accordance with the provider’s requirements and relevant legislation at the time; and
(b)a suitably qualified person that fibre ready telecommunications facilities have been provided in accordance with any industry specifications or any standards set by the Australian Communications and Media Authority, unless the applicant can demonstrate that the land is an area where the National Broadband Network will not be provided by optical fibre.

Servicing Requirements
7.Prior to the issue of a Statement of Compliance for the subdivision the owner must ensure that:
(a)The 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.

On 16 June 2015, the respondent’s solicitor sent the applicants’ solicitor a copy of the application for subdivision, the plan of subdivision and the planning permit and noted that the respondent would be in a position to lodge the plan of subdivision at the Land Titles Office in or about mid-July 2015 once the statement of compliance had been completed. The respondent’s solicitor further requested that the applicants take immediate steps to ensure that the title was available at the Land Titles Office for the registration of the plan of subdivision.

On 17 June 2015, South East Water consented to certification of the plan of subdivision.

On 19 June 2015, Melbourne Water consented to the certification of the plan of subdivision.

On 26 June 2015, AusNet consented to the certification of the plan of subdivision.

The referral authorities (relevantly, South East Water, Melbourne Water and AusNet) required that agreements with each of them be entered into before they would consent to the City of Casey issuing a statement of compliance.

July – August 2015

On 16 July 2015, the respondent’s solicitor requested that the applicants’ solicitor confirm that the title was available for lodgement of the application for registration of the plan of subdivision.

On 23 July 2015, the applicants’ solicitor undertook an ASIC search of the respondent, which showed a strike-off action was in progress due to non-payment of fees. The applicants relied on this fact, together with their unsatisfied requests that the respondent pay the sum of $330.00 for its share of the cost of hiring the November 2014 mediation room, to suggest that the respondent was experiencing financial difficulties and was not able to settle on the purchase of the subject land.

On 3 August 2015, the City of Casey certified the plan of subdivision.

On 6 August 2015, the respondent’s solicitor wrote to the applicants’ solicitor enclosing a copy of the certification of the plan of subdivision.

Applicants serve a notice of default

On 11 August 2015, the applicants’ solicitor wrote to the respondent’s solicitor enclosing a copy of a Notice of Default, particularised as being the respondent’s ‘failure to pay the balance of the deposit of $990,000.00 in accordance with [the Special Conditions] of the Contract’. The respondent responded by letter, stating that the applicants’ notice was premature according to the terms of settlement and ‘should be immediately withdrawn’.

Dispute over who is to pay moneys to referral authorities

On 11 August 2015, the respondent’s solicitor wrote to the applicants’ solicitor enclosing a copy of agreements that the respondent asserted that the applicants must enter into with the referral authorities (relevantly, South East Water, Melbourne Water and AusNet), so that the council would issue a statement of compliance. The agreements included financial obligations. The respondent’s solicitor said:

You will note from the attached correspondence from the relevant authorities that in order for consent to be granted for the purposes of the statement of compliance fees/bond monies in the sum of approximately $920,000 will need to be paid/provided. This is a vendor obligation as it is usual practice that the vendor assumes the responsibility for payment of these fees in their entirety. Accordingly we request as a matter of urgency that you confirm with us once payment of the fees and bond monies have been made so that the requisite consent from the referral authorities may be obtained for the statement of compliance to be issued.
Please note that our client has used its best endeavours at its own cost and expense to prepare the Plan of Subdivision in readiness for it to be lodged at the Land Titles Office. Your clients [sic] cooperation is therefore required for the requisite consents to be granted for the Plan of Subdivision to be lodged and registered.[6]

[6]Emphasis added.

Relevantly, the documents enclosed were:

(a) South East Water – Application to enter into a Development Agreement – Works. The letter identified several financial undertakings: (1) a new customer contribution; (2) connection/developer fees; (3) construction costs (to facilitate early release); and (4) a warranty bond. The total financial undertaking involved several hundred thousand dollars.

(b) AusNet Services – Electricity Supply. The letter contained an estimate for the supply of electricity ‘within the range of $16,940.00 to $20,570.00 (GST inclusive’).

(c) Melbourne Water. The letter identified several financial undertakings relating to drainage contributions amounting to $154,998.

In each case, the referral authority had corresponded with Mr Pezzano of Charter Keck Kramer who acted on behalf of the respondent.

On 11 August 2015, the applicants’ solicitor wrote to the respondent’s solicitor denying the respondent’s contention that the applicants ought to enter into agreements with the referral authorities and pay the relevant bonds, fees and charges.

On 13 August 2015, the respondent’s new solicitor, Russell Kennedy Lawyers, wrote to the applicants’ solicitor to confirm that the respondent was ‘ready, willing and able to fulfil its obligations under the Contract’ and had the necessary finances to pay the balance of the Contract sum as soon as the applicants could give clear title to the property. The respondent then put forward the following offer on an open basis:

1.[The respondent] will pay [the applicants] 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 applicants’] firm for both parties until settlement.
2.[The applicants] confirm that they will forthwith meet all the conditions set out in [the Permit]. In order to assist [the applicants] to meet those conditions, [the respondent] will pay on behalf of [the applicants] the relevant authorities’ charges under [the Permit] and the total of the amounts so paid will be deducted from the balance payable to [the applicants] at settlement. [The respondent] will direct the authorities to pay the refundable portion of those charges to [the applicants].

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

The applicants’ solicitor wrote to the respondent’s solicitor rejecting the offer of settlement and contended that the respondent was obliged to use its best endeavours and do all things reasonably required to expedite and procure the registration of the plan of subdivision, including ‘preparing all the documents and paying any costs involved in complying with the Planning Permit.’ Further, the applicants maintained that ‘if the Plan of Subdivision is not registered by 25 August [2015] either party may terminate the contract.’

Summary of Proceedings and Issues

On 17 August 2015, the applicants commenced the present proceeding against the respondent by way of originating process in which they sought answers to the following questions pursuant to s 49(1) of the Property Law Act:

(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 seve n 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 Grown [sic] 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?

On 21 August 2015, the respondent brought a cross-application seeking injunctive relief against termination of the 2015 contract upon the basis that the applicants’ conduct had prevented it registering the plan of subdivision by 25 August 2015.

On 25 August 2015, a judge in the Practice Court answered the first question by holding that the balance of the deposit was payable within seven days of registration of the plan of subdivision. The other questions were remitted to a judge in the Trial Division.[7]
[7]Bisognin v Hera Project Pty Ltd [2015] VSC 647 (Cameron J).

Reasons of the primary judge

The balance of the application and the cross-application was heard by the primary judge in December 2015. On 4 March 2016, the primary judge delivered reasons for decision.[8] She relevantly held that:
[8]Bisognin v Hera Project Pty Ltd [2016] VSC 75 (Sloss J) (‘Reasons’)

(d) Question two: on its true construction, special condition 8 did provide that, if the relevant plan of subdivision was not registered by 25 August 2015, then either party may end the 2015 contract by notice in writing to the other party.[9]

(e)
Question three: the applicants had, as vendors of a lot on an unregistered plan of subdivision, undertaken by special condition 10 of the 2015 contract 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 applicants, as ‘owner of the land’, to enter into agreements with the relevant authorities in respect of each of the 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 telecommunication services (and fibre ready telecommunications facilities). In each case the agreements were to be in accordance with the relevant authority’s requirements and relevant legislation at the time. The applicants were to ensure that the land was 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 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 were to be satisfied by the applicants as owners of the land.[10]

[9]The primary judge held that, upon its proper construction, special condition 8 enabled the contract to be brought to an end in the event that the plan of subdivision was not registered by 25 August 2015, by either party giving notice in writing to the other: at Reasons [167]. In doing so, she rejected a contention of the respondent that, on its proper construction, special condition 8 of the new contract operated such that the contract could only be brought to an end under that clause if both parties agreed. Further, she held that, if the respondent’s contention as to construction of special condition 8 was correct, the 2015 contract should be rectified: at Reasons [168]–[213]. There is no appeal from these holdings.

[10]Reasons [312].

The primary judge said:

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.
…
Under the planning permit, the obligation to perform each of the conditions concerning agreements for the provision of services is placed on ‘the owner’ and is expressed in terms of entering into agreements in respect of each lot. Hera, as purchaser of the southern lot only, had no ability to do anything in respect of the northern lot retained by the Bisognins. That is, 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. 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.
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 and 9AE 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.
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.[11]

[11]Reasons [276]–[281].

On 16 June 2015, the applicants had been notified of the issue of the planning permit. The primary judge said that the applicants had done nothing thereafter to advance settlement. She held that the applicants had adopted the stance that no action was required to be taken by them, by way of co-operation with the respondent, directed towards satisfying those conditions of the planning permit and obtaining registration of the plan. They had, for example, failed to enter into the agreements with the referral authorities and to make any payments to them. Accordingly, by reason of their breach of special condition 10, the applicants should be prevented from exercising their power to terminate the contract of sale if the plan of subdivision was not registered by 25 August 2015.

The primary judge calculated that the inaction of the applicants had caused the respondent to lose the benefit of approximately 70 days. The judge held that fairness suggested that the respondent should be provided with a further period of about that length to enable it to seek to achieve registration of the plan of subdivision.[12]
[12]Reasons [305].

Orders made below

On 22 June 2016, the primary judge gave judgment in accordance with her Reasons and made consequential orders, including that:

(f)
the period of time specified in special condition 8 of the 2015 contract for registration of the plan of subdivision be and is hereby extended to

31 August 2016 (that being 70 days from the date of the orders);

(g) during the period of extension of time, the applicants are to use their best endeavours to co-operate with the respondent and do all acts and things necessary to give effect to the approval of the plan of subdivision and give effect to the UDF (as approved by the City of Casey) as required by special condition 10 including:

(i) 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;

(ii) making arrangements with their mortgagee to produce the duplicate Certificate of Title at the Land Titles Office (at the cost of the respondent); and

(iii) promptly paying any GAIC, with a view to assisting the respondent to obtain the statement of compliance and thereby procure the registration of the plan.

Extension of time for application for leave to appeal

On 14 July 2016, the primary judge refused an application made by the respondent to extend the period for settlement of the 2015 contract. On 29 July 2016, she refused a further application by the respondent to have the time for settlement extended.

On 29 August 2016, the applicants attempted to file an application for leave to appeal the orders of the primary judge and, at the same time, applied for an extension of time in which to file their application for leave to appeal. The application for an extension of time was opposed by the respondent. On 29 September 2016, the Judicial Registrar made an order extending to 29 August 2016 the time by which the applicants may file their application for leave to appeal.

On 10 October 2016, the respondent applied for an order setting aside the orders made by the Judicial Registrar.[13]
[13]The respondent referred to r 62.42(8) of the Supreme Court (General Civil Procedure) Rules 2015 (‘the Rules’). We take it that this reference was a typographical error and that the respondent relies upon r 64.42(8) which provides: ‘Without limiting the generality of paragraph (7), the Court of Appeal constituted by one or more Judges of Appeal may set aside or vary any direction given or order made by an Associate Judge or the Registrar.’

Proposed grounds of appeal

The applicants have proposed three grounds of appeal:

(h) the primary judge erred in determining that, on its true construction, special condition 10 of the 2015 contract required the applicants to make payments to third parties that were necessary to be made to secure registration of the subdivision;

(i) the primary judge erred in finding[14] that no express agreement was reached between the respondent and the applicants 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 applicants as owners were required to do so;

(j) the primary judge erred in finding that the applicants 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.

[14]Reasons [260], [276].

Issues on application for leave to appeal

The applicants contend that, in reaching her decision, the primary judge erred by interpreting special condition 10 of the 2015 contract to give effect to the literal meaning of the planning permit issued by the City of Casey. The applicants contend that she failed to read special condition 10 by reference to special condition 2(a) of the 2015 contract, which made it plain that the obligation was with the respondent to do all things reasonably required to procure registration of the Plan of Subdivision, and special condition 2(c), which imposed an obligation on the applicants to allow the respondent access to the property for the purpose indicated.

Contentions of the applicants

The applicants contended that the 2015 contract was unambiguous. The primary obligation falls unequivocally upon the respondent to pay for the costs and expenses of the plan of subdivision including the bonds payable to the referral authorities and so on. To the extent that there is an obligation imposed upon the applicants, it is to co-operate with the respondent in enabling the respondent to bring those matters about. ‘To procure’ means ‘to obtain by effort’, ‘to bring about.’ Special condition 2(a) is the ‘primary obligation’: in so far as the purchaser is to ‘procure’ registration, it is to pay. The applicants submitted that special condition 10 simply imposed an obligation on them to facilitate the respondent’s obligation to procure registration. This obligation required them to sign documents and do other things on the way to registration of the plan of subdivision but it did not impose any obligation on them to pay anything except the GAIC payment. So they argue, the alternative interpretation, namely to require the applicants to pay amounts to the referral authorities, would work to impose a potentially indeterminate liability on them as vendors, which is commercially unsound.

Alternatively, if the 2015 contract is ambiguous, it is permissible to consider the circumstances surrounding its making. In the standard case, it is the responsibility of a vendor of land to make title. However, the present case was not standard. The very existence of the special conditions altered the normal course of things. There had been no prior consideration to the sale of the property by the applicants. The primary purpose of this transaction was to facilitate an opportunity for the purchaser to engage in a commercial property development. The purchaser was to be responsible for the size, scale and nature of the proposed development and, in particular, the construction thereof. Litigation occurred because there was delay in the settlement of the first contract. That proceeding was settled on the basis that the 2012 contract was replaced by the 2015 contract. In bringing about the 2015 contract, a sunset clause, which required registration of the plan by 25 August 2015, was added. It was added to address the very matter (the delay in completion) which brought the parties to the dispute that led to the first proceeding.

Importantly, special condition 10 was also added. It similarly did not exist in the 2012 contract. Special condition 10 was inserted to impose a specific requirement upon the vendors to cooperate and use their best endeavours and do all those various other matters that are set out elsewhere in the other special conditions. Again the applicants submitted that it requires them to facilitate the respondent’s endeavours to procure registration within the time limited by the sunset clause. They re-emphasised that special condition 10 does not override the primary obligation of the respondent under special condition 2. Rather, it provides a level of assistance to the respondent so as to help it comply with special condition 2 within the period confined by the sunset clause.

The payment of (bond) moneys to referral authorities is not a payment of the deposit within the meaning of the Sale of Land Act. Special condition 7 requires all moneys, apart from $10,000, to be repaid if the contract does not go ahead. Accordingly, if the purchaser might be required to pay an amount of $500,000 to, say, Melbourne Water, and if Melbourne Water were to refund that money, whether it goes back to the owner of the property or the purchaser, it is not received by way of a deposit and it is not required to be held in trust pursuant to the provisions of the Sale of Land Act.

Certain statutes impose obligations upon the owner of land that is to be subdivided. However, under the 2015 contract, the special conditions made particular provision between the parties to it. It was for the purchaser to satisfy all the requirements of the City of Casey and the various referral authorities, particularly by preparing the necessary agreements.

Ground 3 arises only if, upon its proper construction of the 2015 contract, the vendors are required to make the (bond) payments to referral authorities. The vendors were subject to a best endeavours clause; so too was the purchaser.

Contentions of the respondent

The respondent contended that the special conditions in the 2015 contract were ambiguous and therefore resort to the circumstances surrounding the making of the contract was justified.

In order to complete the sale, the owner had to ‘make title’ to the land the subject of the 2015 contract. That land was a portion of land in an unregistered plan of subdivision. In order to ‘make title’, the plan of subdivision had to be registered. Under the relevant legislation, various steps had to be taken to bring about the registration of the plan of subdivision. The regulatory background required the owner of the land that is to be subdivided to enter agreements with referral authorities (such as the providers of water, telecommunications and sewerage services). Those agreements impose payment obligations upon the owner of the land. Special conditions 2(a) and 2(c) do not contain words sufficiently express to remove from the owner the obligation to sign agreements with the relevant authorities and to pay whatever moneys are necessary to undertake the works required. Special condition 2(a) excises some of the obligations and passes them to the purchaser, but not all of the others. Moreover, in complying with its obligations under those agreements, the vendors are establishing a benefit in respect of the land they retain. The purpose of the transaction was to bring about a two lot subdivision. It was to permit the vendors to sell the southern portion of their land while retaining the northern portion.

Ground 3 is without merit. Special condition 2(a) was not intended to relieve the applicants from the burden imposed by special condition 10. Rather, it was intended to require the respondent to use its best endeavours to do all things reasonably required.

Even if the grounds of appeal have a prospect of success, the respondent submitted that the Court should exercise its residual discretion to refuse the application for leave to appeal as there were other bases upon which the primary judge decided the case against the applicants. It relied upon the following passage from the judge’s reasons:

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 circumstances where no expert evidence was adduced by either party to assist the Court in forming a view about whether it was possible for Hera to obtain a statement of compliance in time for the plan of subdivision to have been registered by 25 August 2015, I am not satisfied that it was not possible for Hera to do so.
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.[15]

[15]Reasons [304]–[306].

Even if the grounds of appeal were upheld, the respondent submitted it would not follow that the applicants would be entitled to terminate the 2015 contract by reason of non-registration of the plan of subdivision.

Analysis

The principal question is whether the primary judge erred in holding that, by reason of the terms of the 2015 contract, the applicants were required to enter into the relevant agreements with the referral authorities and to make payments to them under those agreements. No provision in the agreement expressly dealt with the entry into those agreements, nor with who was responsible for meeting the financial commitments under them. Accordingly, the question became whether the special conditions imposed the obligation upon the applicants or the respondent.

In Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd,[16] French CJ, Nettle and Gordon JJ stated:
[16](2015) 256 CLR 104 (‘Mount Bruce Mining’).

The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose.

In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That inquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract.

Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning.[17]

[17]Ibid 116 [46]–[48], 132 [109] (Kiefel and Keane JJ), 134 [120] (Bell and Gageler JJ). See also Simic v New South Wales Land and Housing Corporation [2016] HCA 47 [72] (Gageler, Nettle and Gordon JJ); Eureka Operations Pty Ltd v Viva Energy Australia Ltd [2016] VSCA 95 [45]–[47] (Santamaria, Ferguson and McLeish JJA).

In Royal Botanical Gardens and Domain Trust v South SydneyCity Council,[18] Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ said:

In Codelfa, Mason J (with whose judgment Stephen J and Wilson J agreed) referred to authorities which indicated that, even in respect of agreements under seal, it is appropriate to have regard to more than internal linguistic considerations and to consider the circumstances with reference to which the words in question were used and, from those circumstances, to discern the objective which the parties had in view. In particular, an appreciation of the commercial purpose of a contract: ‘presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating’. Such statements exemplify the point made by Brennan J in his judgment in Codelfa:
‘The meaning of a written contract may be illuminated by evidence of facts to which the writing refers, for the symbols of language convey meaning according to the circumstances in which they are used’.[19]

[18](2002) 240 CLR 45.

[19]Ibid 52–3 (citations omitted). In Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451, 461–62 (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ ) (citations omitted) said:

In Codelfa Constructions Pty Ltd v State Rail Authority of NSW, Mason J set out with evident approval the statement by Lord Wilberforce in Reardon Smith Line Ltd v Hansen-Tangen: ‘In a commercial contract it is certainly right that the court should know the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating’

So it is that at least where the contractual language is ambiguous or susceptible of more than one meaning, evidence of events, circumstances and things external to the contract is permissible.[20]
[20]Mount Bruce Mining (2015) 256 CLR 104, 117 [50] (French CJ, Nettle and Gordon JJ). See Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337, 352 (‘Codelfa’) where Mason J (with whom Stephen and Wilson JJ agreed) said:
[T]hat evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties.

The contention of the applicants that the special conditions are unambiguous is untenable. They are expressed in general terms and are poorly drafted. Other things to one side, special condition 2(a) makes reference to the purchaser being under an obligation to submit a plan of subdivision ‘to the City of Casey for sealing in accordance with the provisions of Part 1 of the Act’ and to it being under the further obligation to ‘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.’ The special conditions themselves do not identify ‘the Act’ that is being referred to. Obviously enough, it is the Subdivision Act which sets out the procedure for the subdivision and consolidation of land. However, under that legislation, other than in respect of transitional provisions which do not apply in this case and which are found in Part 6 not Part 1, there is no reference to a council sealing a plan of subdivision. That is because plans of subdivision are no longer sealed by councils. That was the process under provisions of the Local Government Act 1958, the Strata Titles Act 1967 and the Cluster Titles Act 1974. Those provisions were repealed by the Subdivision Act. Under the Subdivision Act, the process is one of certification by councils. Further, special condition 2(a) speaks of ‘the registration of the said Plan pursuant to the provisions of Part II of the Act’, but Part 2 of the Act deals with the certification of plans of subdivision and Part 4 deals with their registration. In the conduct of the appeal before us, the applicants said that the reference to ‘Part II’ was in error: the condition was dealing with registration; the reference should have been to ‘Part 4’. However, the respondent said that the reference to ‘Part II’ was controlling: the condition was dealing with certification which is the subject of ‘Part 2’ of the Act. On any view, the language used in special condition 2(a) is ambiguous.

Consequently, in construing the contract and, in particular, special conditions 2(a) and 10, 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.

In our opinion, 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 vendors to the purchaser. In part, our opinion depends upon the text and context of the special conditions; in part, it depends upon a consideration of the circumstances surrounding the making of the 2015 contract.

It will be recalled that the special conditions are as follows:

2.
(a)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;
(b)The Plan of Subdivision referred to, is the Plan mentioned herein and a copy is attached and shall not be amended without the consent of the Vendors save for any amendments of a technical nature required by any relevant authority, to enable approval being granted;

(c)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.

3.The deposit and all 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.
…
8.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.
…
10.The Vendors will use their best endeavours to co-operate with the Purchaser, sign all documents, do all acts and things necessary and to give effect to the approval and registration of the plan of subdivision and to give effect to the UDF including making the duplicate title available for the purposes of registration, and will make any Growth Areas Infrastructure Contribution (GAIC) payment promptly if required by the relevant authority.

Special condition 2(a) deals expressly with registration. It casts all the obligations that it identifies upon the purchaser. Its terms seem to mirror the provisions of Part 2 and Part 4 of the Subdivision Act and provide for each of the principal steps along the path to and including registration: preparation of the plan; submission to council for ‘sealing’; registration. The contention of the respondent that the reference to ‘Part II of the Act’ means that the condition refers to the certification of the plan seems to us to be strained; it would make the whole provision depend upon its last phrase and, in doing so, appear to make redundant the earlier obligations (that refer expressly to ‘sealing in accordance with the provisions of Part I of the Act’) that the condition imposes. Moreover, the reference to ‘sealing’ (which as we have said has now been replaced with certification) suggests that the reference to ‘Part II of the Act’ is in error and should instead be a reference to Part 4.

Further clause 2(a) requires the purchaser to ‘use its best endeavours and do all things reasonably required to expedite and procure the registration of the said Plan.’[21] The Shorter Oxford Dictionary defines the word ‘procure’ to mean ‘to bring about; to effect; produce.’ In a commercial context, the word means ‘to see to it’ or ‘to make sure it is done.’ It is the word customarily used by lawyers to place the risk of performance of some necessary step onto a party that might not necessarily be able to perform that step without the involvement of another person. If the step cannot be performed by the party which is charged with procuring it, that party will nonetheless be in breach of covenant if the obligation is not performed.
[21]Emphasis added.

Special condition 10 is auxiliary to special condition 2: it imposes obligations upon the vendor to assist in securing the registration of the plan of subdivision. One of those obligations is to make ‘the duplicate title available for the purposes of registration’ (of the plan of subdivision). If the obligation to register the plan of subdivision rested upon the vendors, the obligation cast on them to make the duplicate certificate of title available would be redundant. The natural meaning of the obligation is that the title is to be made available at the request of someone else: the person charged with the task of registration.

Special condition 10 also expressly carves out from the financial obligations to be borne by the purchaser under special condition 2(a), being any GAIC payment. That obligation remains with the vendors.

The 2015 contract provided that its terms were contained in the particulars of sale, special conditions, general conditions in the form of the Estate Agents (Contracts) Regulations 2008 and the s 32 vendors’ statement. The s 32 statement[22] stated that outgoings did not exceed $6,000 and that to the vendors’ knowledge, there were no further amounts for which the purchaser may become liable as a consequence of the purchase of the southern lot. It also stated that electricity, gas, water and telephone services were connected, that is, ‘the service is provided by an authority and operating on the day of sale [13 March 2015]’. We do not think that those matters take the task of construction very far. They are simply a disclosure by the vendors that may or may not have been in error. They do not assist in determining how the special conditions operate.
[22]See [27] above.

Turning then to the statutory and regulatory matrix. It is uncontroversial that, ordinarily, responsibility for taking the steps necessary to have a plan of subdivision registered is placed upon a vendor.

For instance, although various people can apply for permits, the City of Casey Planning Scheme contemplates that it will be the ‘owner of the land’ that must enter agreements with the referral authorities. For example, it provides that before the issue of a Statement of Compliance:

the owner of the land must provide written confirmation from:
·a telecommunications network or service provider that all lots are connected to or are ready for connection to telecommunications services in accordance with the provider’s requirements and relevant legislation at the time.

It also states that:

[a] permit granted to subdivide land in a manner that does not require referral under Clause 66.01 must contain the following conditions:
·The owner of the land must enter into agreements with the relevant authorities for the provision of water supply, drainage, sewerage facilities, electricity and gas services to each lot shown on the endorsed plan in accordance with the authority’s requirements and relevant legislation at the time.

In addition, as the judge observed, the scheme of the Sale of Land Act provides significant protection for purchasers of lots on unregistered plans of subdivision.[23] In this regard, s 9AA provides that a deposit must not be more than ten percent of the purchase price and it must be held on trust for the purchaser until registration of the plan of subdivision. If either of these requirements is infringed, s 9AE(1) provides a right to the purchaser to rescind the contract. If the plan of subdivision is not registered within a specified period, the purchaser may rescind the contract.[24] Section 9AF(1)(b) then provides for the return of the deposit to the purchaser if the contract is rescinded. Any agreement purporting to waive any of these rights is void.[25]
[23]Reasons [129]–[132].
[24]Sale of Land Act s 9AE(2).
[25]Sale of Land Act ss 9AA(1), 9AE(2), 9AF, 14.

Moreover, under the 2015 contract, the applicants had to be in a position to transfer to the respondent the southern lot: to make title.

On the other hand, with the written consent of the owner, any person may submit a plan of subdivision to the Council for certification.[26] With the co-operation of the land owner, other steps along the way to registration of the plan of subdivision may be facilitated and progressed by someone who is not the owner. The parties to a contract for the sale of land on an unregistered plan of subdivision are able to shift between themselves the risks and costs associated with the registration. Whereas the owner must execute the relevant agreements with the referral authorities, the parties can agree that the agreements will be prepared by the purchaser, and at its expense.
[26]Subdivision Act s 5(5).

As recounted by the respondent, the agreements with the relevant authorities are about the connection of services to allow each of the subdivided lots to exist independently. But that does not affect the analysis. Unless the agreement was to share the costs (a construction which neither party contended for), one or other of the parties would bear the costs with the other party taking the benefit of the connection of services to the lot which would be owned by that party following settlement.

The primary judge considered that a construction of the 2015 contract that worked to impose the cost and expenses associated with the registration of the plan of subdivision upon the respondent would (a) 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 and would be inconsistent with the provisions of ss 9AA and 9AE of the Sale of Land Act; and (b) 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 that Act.

We disagree.

The Sale of Land Act should not be construed as imposing more restrictions upon freedom of contract than is necessary. If the moneys to be paid to the referral authorities are paid by the respondent, those amounts do not constitute part of the deposit nor are they part of the purchase price to be received by or on behalf of the applicants. Consequently, the protections afforded by the Sale of Land Act to purchasers are not impinged.

Further, if on a proper construction of the contract, the parties agreed that it would be the respondent who would bear the financial responsibilities associated with registration of the plan of subdivision, then, provided the vendor performed its obligations, there would be no impediment to the applicants making title.

Both parties urged on the Court the importance of the genesis and background of the 2015 contract. However, they differed as to the nature of the transaction that it was intended to implement. While accepting that, in the usual case involving the need for a subdivision, the landowner will be the developer who undertakes all the risks associated with the development, in the present case, the applicants had done no more than respond to the initiative of the respondent for the development of their land. In those circumstances, the usual case did not obtain.

For its part, the respondent cast the vendors into the role of a developer that wished to part with some of its land and to retain the rest.

We think that the applicants’ version of the circumstance in which this contract was made better reflects the reality. It is to be recalled that special condition 2(a) formed part of the 2012 contract (as special condition 3). The vendors had taken no steps to develop, let alone sell all or any part of their land. They were approached by a developer who had already developed plans for the commercial exploitation of the southern portion of their land. As 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. 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.

Special condition 10 was added as part of the terms of settlement of the 2013 proceeding. This confirms our view that it is best understood as auxiliary to special condition 2(a) and special condition 8. Unless the plan of subdivision was registered by 25 August 2015, the parties could terminate the 2015 contract. If we are correct that the risk of registration was to lie with the purchaser, there was every reason to ensure that the process was facilitated by the vendors.

In her Reasons, the primary judge referred to the conditions that had been attached to the relevant planning permit that the City of Casey made available to the respondent’s solicitor on 11 June 2015. In particular, she drew attention to the circumstance that a permit required the ‘owner of the land’ to enter agreements with ‘relevant authorities for the provision of water supply, drainage, sewerage facilities, electricity and gas services to each lot shown on the endorsed plan’. It also provided that this must happen prior to the issue of a ‘Statement of Compliance for the subdivision’.[27] It is true that the permit is not a circumstance surrounding the making of the 2015 contract; it post-dated it by a considerable period. However, as we have noted above when considering the regulatory matrix, the relevant planning scheme which pre-dated the 2015 contract provided that a permit will impose obligations upon ‘the owner of the land’.[28] As we have said, this does not mean that the parties cannot (as between themselves) allocate responsibility for which of them is to bear the financial costs of those obligations.
[27]Reasons [104]
[28]See [87] above.

It follows from what we have said that on its proper construction the 2015 contract required the respondent to pay the amounts provided for in the referral agreements, albeit that it was for the applicants to enter into those agreements. As such, the appeal on the first ground must be allowed, subject to consideration as to whether the decision of the Judicial Registrar to extend time for filing the application for leave to appeal should be set aside. Before dealing with that issue, we will briefly mention the second and third grounds of appeal.

It will be recalled that the second ground of appeal concerned the finding by the judge that no express agreement was reached between the parties as to who was responsible to pay for the establishment of services to the southern lot and that in the absence of any such agreement the applicants as owners were required to do so. The judge appears to have reasoned that because the 2015 contract did not specifically state that moneys payable to referral authorities were the responsibility of one party or the other, it was necessary to look outside the contract and also to consider post-contractual conduct and the like to see if there was a separate agreement about where the burden for payment was to fall.[29] Her Reasons do not disclose that she considered whether the obligation to pay was captured by special condition 2. Her Honour erred in taking this approach. The task was to construe the contract, including special condition 2. For the reasons we have given, on its proper construction, the contract imposed the obligation to make the payments to the referral authorities on the respondent.
[29]Reasons [255]–[276].

To recap, the final ground of appeal concerns the right of the applicants to terminate the 2015 contract. As the respondent observed, the judge found that there were other breaches of the best endeavours requirement imposed on the applicants by special condition 10, including their failure to enter into the relevant agreements with the referral authorities.[30] The applicants 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 applicants 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 the respondent, it was incumbent on the applicants to enter into the relevant agreements with the referral authorities. Those agreements were provided to the applicants’ 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 applicants were not entitled to terminate the contract as at 25 August 2015.[31] Consequently, proposed ground 3 would fail.
[30]Reasons [304]–[310].
[31]Joseph Street Pty Ltd v Tan (2012) 38 VR 241, 257 [47].

In passing we would note that the applicants have now executed the relevant agreements with the referral authorities.

The application to set aside the Judicial Registrar’s order

As noted above,[32] the Judicial Registrar granted to the applicants an extension of time (40 days) within which to file their application for leave to appeal and the respondent has applied to set that order aside. The application to set aside the extension of time proceeds as a hearing de novo.[33]
[32]See [58]–[59] above.
[33]The application is made under r 64.42(8) of the Rules. Unless leave is obtained, the application to set aside an order proceeds on the basis of the application, written cases (if applicable) and documents filed by the parties before the decision of the Registrar: r 64.42(9), (10). It follows that this Court considers the application afresh on the basis of the material originally filed.

Several factors are relevant when considering whether an extension of time to seek leave to appeal should be granted, including: (a) the length of delay; (b) the reasons for delay; and (c) the extent of any prejudice suffered by the respondent if the extension is granted.[34] The Court will not extend time if the appeal ‘is so devoid of merit that it would be futile to do so.’[35]
[34]Jackamarra v Krakouer (1998) 195 CLR 516, 519–24 (Brennan CJ and McHugh J).
[35]Muto v Secretary, Department of Planning and Community Development[2013] VSCA 85 [13] (Nettle AP and Neave JA).

On 13 and 14 July 2016, the applicants told the respondent and the primary judge that they would pay the referral authorities and that they had organised the necessary finance for that purpose. At a hearing before the primary judge on 29 July, the applicants did not disavow their earlier position that their bank would provide finance.

On 26 August 2016, the respondent commenced a fresh proceeding to enforce the contract and the judgment of the primary judge as a consequence of the applicants’ failures to satisfy both the non-financial conditions and the financial conditions. In doing so, the respondent proceeded on the assumption that the applicants had obtained the necessary funds, or at least approval to borrow the necessary funds, but were simply refusing to pay them over.

However, that assumption was in error.

On 29 August 2016, being 68 days after the orders below, and only 2 days before the expiration of the 70 day timeline, the applicants filed their application for leave to appeal with this Court. It transpired that they had not even applied for finance. By the combined approach of taking no steps to satisfy the non-financial conditions and financial conditions, and deferring their application for leave to appeal until the last possible moment, the applicants ensured that the 70 day timeline for obtaining registration of the subdivision would expire without registration being obtained.

The respondent submitted that that strategy is anathema to the Civil Procedure Act 2010, in particular ss 7, 8, 9 and 25. The interests of justice are not just the interests of the party advancing the claim but is a broader concept in the interests of the other party. Had the applicants been acting in accordance with the Civil Procedure Act, they would have immediately sought leave to appeal and a stay of the orders below. Had the applicants done this, they would have put the respondent on notice that they could not or would not be satisfying the financial conditions. The respondent would then have been in a position to try to obtain finance to satisfy the financial conditions, albeit under protest. The applicants permitted the 70 day timeline to pass without seeking a stay and stood in breach of the orders below.

The respondent observed that the applicants have not explained why they created the false impression that they had applied for finance.

In the absence of an explanation, the respondent contended that this Court should infer that the applicants embarked on a deliberate strategy to frustrate settlement of the contract, including by keeping the respondent in the dark about the question of funding, and to engineer a situation where the respondent would be at risk of the applicant seeking to terminate the contract by reason of non-registration of the plan of subdivision by 31 August 2016. In the circumstances, the respondents contended that the applicants’ conduct and lack of candour militate against granting the indulgence of the extension of time to bring their application for leave to appeal regardless of the merits of the grounds of appeal.

The conduct of the applicants in giving the impression that they had obtained finance to pay the referral authorities when they had not is not to be condoned. Nevertheless, when considered in conjunction with other matters we will mention, the substantive merits of grounds 1 and 2 of their appeal provide a sound basis for not disturbing the Judicial Registrar’s order. The consequence of setting aside his order would be to leave in place the primary judge’s decision which, in effect, imposed upon the applicants a liability to pay in excess of $900,000 which on the proper construction of the 2015 contract they had no obligation to pay. That would be a very unjust outcome. We also take into account our observations above that the applicants had no right to terminate the contract as at 25 August 2015 and that counsel for the applicants accepted that if the Court found in their favour, they could be restrained from exercising their rights under the 2015 contract for a period of time.[36] At the very least, those matters ameliorate some of the respondent’s concerns. In addition, whilst the length of the delay in filing their application for leave to appeal is regrettable, the applicants have adequately explained it. In short compass, among other things, it was brought about by their original solicitor withdrawing, new solicitors being instructed and the distraction brought about by two applications by the respondent to extend the period for settlement of the 2015 contract.[37]
[36]Neither party contended that the Court had power to extend the time for registration of the plan of subdivision in the 2015 contract, as the judge purported to do in order 3 of the judgment made 22 June 2016.
[37]See [57] above.

Conclusion

In our opinion, the special conditions in the 2015 contract imposed on the respondent, and not upon the applicants, the burden of paying the costs and expenses of the registration of the plan of subdivision, including the payments to the referral authorities under the relevant agreements.

The application for leave to appeal should be granted and the appeal allowed.

The application to set aside the Judicial Registrar’s orders extending the time within which to file the application for leave to appeal is refused.

The Court will hear the parties on the orders that should now be made.

Citations

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[2016] VSCA 322

16 December 2016