Bisognin v Hera Project Pty Ltd

[2016] VSC 75

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE
COMMERCIAL COURT

S CI 2015 04285

IN THE MATTER of an Application pursuant to section 49(1) of the Property Law Act 1958

BETWEEN:

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

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JUDGE:	SLOSS J
WHERE HELD:	Melbourne
DATES OF HEARING:	7, 8, 9, 10 and 14 December 2015
DATE OF JUDGMENT:	4 March 2016
CASE MAY BE CITED AS:	Bisognin & Anor v Hera Project Pty Ltd
MEDIUM NEUTRAL CITATION:	[2016] VSC 75

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CONTRACT – Sale of Land – Sale of lot on an unregistered plan of subdivision - Construction of terms – Contract contained a special condition specifying date when contract could be terminated if plan of subdivision not registered – Whether the contract could be terminated unilaterally or whether mutual agreement is required – Whether the special condition is ambiguous – Reference to text, context and purpose to aid construction – Alternatively, whether the special condition should be rectified.

CONTRACT – Sale of Land – Sale of lot on an unregistered plan of subdivision – Planning permit required that agreements with relevant authorities for the provision of services to each lot be entered into before the plan of subdivision could be registered – Contract obliged the purchaser to use its best endeavours and do all things reasonably required to expedite and procure the registration of the plan of subdivision – Contract obliged the vendors to use their best endeavours to co-operate with the purchaser and do all acts and things necessary to give effect to the approval of the plan of subdivision – Whether vendors or purchaser were required to enter into agreements and pay fees and bonds for the establishment or provision of services.

CONTRACT – Sale of Land – Best endeavours clause – Whether the vendors were in breach of their obligation to use best endeavours – Plan of subdivision was not registered by date specified in contract – Effect of delay – Whether vendors are disentitled from terminating the contract.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr R S Hay QC and Mr W G Stark	Waters Lawyers Pty Ltd
For the Defendant	Mr G S  Clarke QC and Mr R E Cook	Russell Kennedy Solicitors

TABLE OF CONTENTS

Introduction........................................................................................................................................ 2

The trial................................................................................................................................................ 2

Factual background........................................................................................................................... 2

Background to the construction questions that arise under the new contract....................... 2

The Sale of Land Act 1962 (Vic)..................................................................................................... 2

The operation of the Sale of Land Act in its current form............................................. 2

The 2012 contract................................................................................................................. 2

Approach to the construction of the new contract....................................................................... 2

Construction of special condition 8................................................................................................ 2

The rival contentions advanced by the respective parties...................................................... 2

Conclusion on the proper construction of special condition 8 of the new contract............ 2

In the alternative, the vendors seek rectification of special condition 8 or rescission of the new contract........................................................................................................................................... 2

Relevant legal principles concerning rectification................................................................... 2

The mutual mistake contended for by the vendors................................................................. 2

Conclusion regarding rectification for mutual mistake.......................................................... 2

Alternatively, the vendors seek rectification of special condition 8 or rescission of the new contract on the basis of unilateral mistake............................................................................................. 2

Relevant principles concerning rectification for unilateral mistake...................................... 2

The rival contentions advanced by the parties......................................................................... 2

Conclusion on the vendors’ alternate claims for rectification and rescission for unilateral mistake................................................................................................................................................ 2

Was it open to the vendor to terminate the new contract on 25 August 2015 if the plan of subdivision was not registered by that date?......................................................................... 2

Construction of the relevant contractual obligations of the vendors and Hera respectively    2

The statutory scheme for certification and registration of plans of subdivision....... 2

The planning permit............................................................................................................ 2

The Growth Areas Infrastructure Contribution.............................................................. 2

What did the agreement between the parties require vis-à-vis payment of fees and bonds to the referral authorities?........................................................................................... 2

If the vendors failed to use their ‘best endeavours’, did that breach of special condition 10 disentitle them from terminating the contract of sale or having the contract set aside?  2

The contractual obligation to use ‘best endeavours’...................................................... 2

Were the vendors in breach of their obligation to use best endeavours?................... 2

Summary of conclusions.................................................................................................................. 2

HER HONOUR:

Introduction

1. The plaintiffs, Mr Gino Bisognin and Mrs Leah Bisognin (‘the vendors’), are jointly the registered proprietors of the land known as 1 Adrian Street Cranbourne East, being the whole of the land described in Certificate of Title Volume 9776 Folio 892.  The parcel of land, which is a rural block of 8,276 square metres in size (approximately 5 acres) with an old weatherboard home on it, adjoins Ballarto Road and is located in an ‘urban growth zone’.  The certificate of title bears an endorsement that the land is the subject of a notification from the Growth Areas Authority that a growth areas infrastructure contribution may be payable.[1] 

   [1]The notice is given under s 201UB of the Planning and Environment Act 1987 (Vic).

1. Mr and Mrs Bisognin run a poultry business in the local area.  Their matrimonial home is located on the northern portion of the land, where they have lived for more than 20 years.  Nowadays they also breed and train greyhounds on their property.

1. In 2012, the vendors received an unsolicited approach from Mr Stephen Parsons, on behalf of a developer named Joslin Street SA Developments Pty Ltd (‘Joslin’), who was seeking to buy the southern portion of their land, an area of 12,850 square metres (approximately 3 acres), as a site for the development of a supermarket.  Mr Parsons provided the vendors with a concept plan which showed the portion of the land that Joslin wished to purchase and the approximate location of the ‘full-line supermarket’[2] it proposed to develop on that site.  By that time, Joslin 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.

   [2]A ‘full-line supermarket’ has a minimum area of 3,200 square metres.

1. On 29 February 2012, Mr and Mrs Bisognin entered into a contract with Joslin for the sale of the southern portion of the land for a price of $3.6 million (the ‘2012 contract’).[3]  As the subject land was a lot on an unregistered plan of subdivision,[4] the sale was expressly subject to the provisions of the Sale of Land Act 1962 (Vic). A deposit of $1,000,000.00 was payable, of which $10,000.00 was paid on signing. Under the contract, which was prepared by Mr and Mrs Bisognin’s solicitor, Waters Lawyers Pty Ltd (‘the vendors’ solicitor’), 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.’ Accordingly, it was necessary for a plan of subdivision to be prepared and registered before settlement could take place.

   [3]On 29 February 2012, Mrs Joanne Faye Parsons, a director of Joslin and the wife of Mr Parsons, executed the form of Guarantee and Indemnity attached to the contract.

   [4]The ‘Property Address’ was described as ‘1 Adrian Street, Cranbourne East, Lot 1 on Plan of Subdivision No:  [left blank] being part of the land contained in Certificate of Title Volume 8766 Folio 892.’

1. The 2012 contract included a number of ‘special conditions’ as follows:

1.The balance of the deposit namely $990,000.00 is payable within 7 days of Plan of Subdivision being approved as referred to in clause 4 herein.

2.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.

3.	(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 proposed Plan of Subdivision is attached hereto[5] and shall not be amended without the consent of the Vendors;
I	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.

[5]Later correspondence from Hera’s solicitor suggests that all that was provided at that time was a ‘concept plan’, which did not have any measurements specified.

4.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.

5.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.

6.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.

7.The Vendors hereby agree to pay the sum of $100,000.00 (One hundred thousand dollars) to Media Movers as a consultancy fee.

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

1. On 26 July 2013, Joslin as purchaser under the contract of sale with the vendors, nominated Hera Project Pty Ltd (‘Hera’) as ‘substitute purchaser/s’ to take a transfer or conveyance of the southern lot, once created, in lieu of the purchaser.

1. In late 2013, Hera commenced proceedings in the Supreme Court against Mr and Mrs Bisognin.[6]  In its statement of claim, Hera sought an order that Mr and Mrs Bisognin be required to undertake all works required to procure an Urban Design Framework for the Adrian Street precinct and pay any necessary Growth Areas Infrastructure Contribution (and/or pay damages for misrepresentation to the effect that no such contribution was payable).   Hera also sought declarations to the effect that a purported rescission notice served by the vendors was of no effect and that it had an interest in the subject land sufficient to enable it to lodge a caveat. 

   [6]Proceeding No. 06591 of 2013.

1. Hera’s proceeding was subsequently transferred to the County Court of Victoria.  A mediation was held on 25 November 2014.  Terms of settlement were entered into between the parties that day, whereby they agreed to settle the proceeding.  The Terms of Settlement provided that the parties had agreed to enter into and execute a (new) contract of sale of land in respect of the southern lot in accordance with the terms and conditions of the 2012 contract but with some modifications and variations.  Importantly, for present purposes, they agreed that ‘[i]f the said plan of subdivision is not registered by 25 August 2015 either party may, by notice in writing to the other, end this contract.’  The new contract for the sale of the southern portion of the land was finally executed on 13 March 2015.

1. The plan of subdivision of the 1 Adrian Street land was certified by the Council on 3 August 2015 and Hera’s solicitor wrote to the vendors’ solicitor on 6 August 2015 enclosing a copy of the certification. On 1  August 2015, the vendors’ solicitor served a notice of default on Hera.  The default was relevantly said to be Hera’s failure to pay the balance of the deposit of $990,000.00 in accordance with special condition 1 of the contract.  That is, the vendors contended that the balance of the deposit was payable within 7 days of the plan of subdivision being ‘certified’ (as opposed to ‘registered’ at the Land Titles Office).  Hera disputed the correctness of this position.

1. On 17 August 2015, the vendors commenced this proceeding against Hera by way of Originating Motion, seeking answers to questions about the Contract of Sale pursuant to s 49(1) of the Property Law Act 1958 (Vic).[7]  Three questions were raised for determination by the Court as follows:

(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?

[7]Section 49(1) of the Property Law Act 1958 (Vic) provides:

A vendor or purchaser of any interest in land, or their representatives respectively, may apply to the Court, in respect of any requisitions or objections, or any claim for compensation, or any other question arising out of or connected with the contract (not being a question affecting the existence or validity of the contract), and the Court may make such order upon the application as to the Court may appear just, and may order how and by whom all or any of the costs of and incident to the application are to be borne and paid.

1. The matter initially came on for hearing before Cameron J in the Practice Court on 20 and 21 August 2015.  The critical issue for determination by her Honour at that point in time was Question 1, and relevantly whether the balance of the deposit was payable on registration of the plan of subdivision with the Registrar of Titles, as contended for by Hera, or on certification or approval by the Council, as contended for by the vendors.  Her Honour ruled that the balance of the deposit was payable within seven days of registration of the plan of subdivision with the Registrar of Titles.[8]  Questions 2 and 3 were not argued at that time and the matter was set down for further hearing on the remaining issues.  Since issuing their Originating Motion, the vendors had also issued a summons seeking rectification of special condition 8 of the contract.  In essence, they contended that if the Court were to hold that, on its proper construction, special condition 8 did not permit either party to end the contract by notice in writing to the other party if the relevant plan of subdivision was not registered by 25 August 2015, then the contract as executed did not reflect the parties’ mutual intention as recorded in the Terms of Settlement.  Hera responded by filing a summons dated 21 August 2015 seeking to restrain the vendors from relying on special condition 8 of the new contract.

   [8]Bisognin v Hera Project Pty Ltd [2015] VSC 647, at [29].

1. The date of 25 August 2015 passed without the plan of subdivision having been registered.  The vendors continue to seek to have the contract with Hera brought to an end.  Hera, on the other hand, wishes to keep the contract on foot, contending that conduct on the part of the vendors has effectively prevented it from obtaining a statement of compliance that would enable the plan of subdivision to be registered, and in those circumstances, the vendors should not be permitted to rely upon their own wrongful conduct as a ground for termination of the contract.

The trial

1. The trial of the substantive matter took place over a period of five days in December 2015.[9]  The vendors tendered affidavits from their solicitor, Mr Waters, sworn 18 August 2015, 1 September 2015 and 7 December 2015, from Mr Bisognin sworn on 16 November 2015 and 7 December 2015, and from Mrs Bisognin sworn 7 December 2015.  In addition, by direction from the Court, contentious matters were the subject of oral evidence given by Mr Waters and Mr and Mrs Bisognin, and each of them was cross-examined. 

   [9]Due to a technical issue there is no transcript available of the closing oral submissions made by each party on 14 December 2015.  Once the Court became aware of this, the solicitors for the respective parties were notified with a view to providing them with an opportunity to file a further written submission or make further oral submissions.  The parties jointly determined to file further written submissions.

1. On behalf of Hera, affidavits were tendered from Mr Konstandellos sworn 19 August 2015, 4 November 2015, 19 November 2015, 23 November 2015 and 2 December 2015,[10] Hera’s former solicitor, Mr Tasiopoulos, sworn 4 November 2015 and 23 November 2015, Hera’s planning consultant, Mr Perry, sworn 5 November 2015 and 23 November 2015, Hera’s urban design consultant, Mr Axford, sworn 9 November 2015, representatives of Taylors Development Strategists Pty Ltd, the planning consultants engaged by the Limoli family, namely Mr Lake sworn 12 November 2015 and 19 November 2015 and Ms Davidson sworn 12 November 2015 and 19 November 2015, Mr Stephen Parsons sworn 23 November 2015, Mr Kaziakouras sworn 3 December 2015, and Hera’s financier, Mr Herzberg, sworn 11 December 2015.  Statements of expected evidence from planning officers from the City of Casey, namely, Mr Rao (adopted on 10 December 2015) and Ms Richardson (adopted on 10 December 2015) were also tendered.  Of those witnesses, only Mr Konstandellos and Ms Richardson were cross-examined.  In respect of Mr Parsons’ affidavit, the affidavit was received subject to an agreement that was reached between the parties.[11]

   [10]In addition, two affidavits of Mr Konstandellos sworn on 29 July and 3 August 2015 respectively, and filed in the proceeding before Hargrave J (S CI 2015 3088) were included in the Court Book tender bundle.

   [11]See below, at paragraph [258].

1. The parties also provided to the Court a joint tender list of the documents in the Court Book (comprising three lever arch folders) relied upon, prepared by reference to Court Book page numbers.

Factual background

1. In light of the competing claims made and the relief sought by the respective parties it is necessary to set out the relevant factual background in considerably more detail than is set out in the brief introduction.

1. Following the vendors and Joslin entering into the 2012 contract on 29 February 2012, Mr Parsons and other representatives of Joslin were in contact with the Council to discuss their proposal for the development of a supermarket on the 1 Adrian Street site.   They informed Mr Asok Rao, the Council’s ‘Team Leader, City Strategy’ that they had entered into contractual arrangements with Mr and Mrs Bisognin in regard to purchasing the subject land.  By letter dated 20 April 2012, Mr Rao informed Joslin that as part of Council’s review of its ‘Activity Centres Strategy’ Council proposed to nominate the proposed Neighbourhood Activity Centre (‘NAC’) at 1 Adrian Street as a Medium Level NAC which would entail provision of ‘one full line supermarket above 3,000m2 (gross leasable floor area) as well as a range of local services and specialty retail.’  Mr Rao explained that in light of this, ‘Council strategically supports one full line supermarket at the Adrian Street NAC’.  He added, however, that the supermarket proposal is subject to a permit and this expression of support does not mean that the proposed planning permit will be approved by Council.  Mr Rao suggested that Joslin should continue its discussions with Council officers to ensure that more detailed planning and development issues ‘are resolved and expectations from all parties are clear’.  Against that background, Joslin continued discussions with Woolworths Limited (‘Woolworths’), which had earlier expressed interest in leasing a 3,200 sq m supermarket and 200 sq m liquor store in Joslin’s proposed development at Cranbourne East.

1. On 26 October 2012, in response to correspondence from Joslin complaining about the delay in Council ratifying the amendment of its Medium Level NAC, Mr Rao wrote to Joslin to confirm that ‘Council would still support a full line supermarket on [the 1 Adrian Street] site’ regardless of whether the draft Activity Centres and Non-Residential Uses Strategy is adopted in a timely manner or not.

1. On 27 February 2013 the vendors’ solicitors wrote to Joslin ‘out of an abundance of caution’ seeking confirmation that Joslin remains committed to performing the contract and seeking a current estimate of when settlement of the contract would take place.  As there was no response to that letter, the vendors’ solicitors again wrote to Joslin on 21 March 2013, noting that they were instructed that Mr Parsons had met with Sam and Rosa Limoli, the owners of the property located at 2 Adrian Street (opposite the Bisognins), to discuss pursuing an Urban Design Framework, but understood that nothing further had taken place.  

1. On 26 July 2013, Joslin as purchaser under the 2012 contract nominated Hera as ‘substitute purchaser/s to take a transfer or conveyance [of the southern lot] in lieu of the Purchaser’. 

1. A meeting was held at the vendors’ solicitor’s office on 14 August 2013.  The meeting was attended by Mr Nikolaos Konstandellos (representing Hera), Mr Vasilios (‘Laki’) Tasiopoulos (Hera’s solicitor), Myles Snow and Luciano Pozzebon (Town Planner, Charter Keck Kramer), and Mr and Mrs Bisognin and their solicitor, Mr Waters.  Mr Konstandellos said that at the meeting the representatives of Hera provided to the Bisognins and their solicitor a folder of plans and drawings concerning the supermarket development, and showing its proposed location.  Mr Bisognin agreed that during the meeting the town planner put a folder on Mr Waters’ desk, but he said it was closed and he did not look at the contents – the folder was left in Mr Waters’ office and no-one looked at it – and Mr Bisognin said he had not seen the contents of the folder until the drawings were shown to him during cross-examination.[12]

   [12]Transcript, 09/12/15, at 245-247.

1. On 18 October 2013, Hera entered into an agreement for lease with Woolworths of the supermarket and associated retail premises to be developed on the southern portion of the land.  In essence the development was for a ‘full-line supermarket’ with an additional space of 200 sq m.  The agreement for lease included a ‘proposed site plan’ (identified as ‘Plan Q3’) showing the approximate location of the supermarket, associated retail and car parking spaces.  The layout proposed was for the supermarket and associated retail space to occupy the northern portion of the site (closest to the portion of the land retained by the Bisognins) and for the car parking spaces to fill the land between there and the Ballarto Road frontage. 

1. On 21 October 2013, the vendors’ solicitor sent a rescission notice to Hera’s solicitor.  The particulars of default stated that the purchaser ‘is unable to obtain approval of a Plan of Subdivision in accordance with special condition 3 of the Contract of Sale’.  Hera’s solicitor responded by letter dated 1 November 2013 contending that the notice was premature and therefore defective and of no effect.  In essence, they maintained that at the meeting held on 14 August 2013 the process associated with the plan of subdivision was discussed and a timeline was put in place for that to be completed.  There was also discussion about a sale of the entirety of the land which led to new contracts being drawn up but they were not proceeded with.  In those circumstances, Hera’s solicitor contended that Hera must be given an opportunity to complete the plan of subdivision and allowed a reasonable time for settlement to take place.  Further, the letter informed them that Hera would be lodging a caveat on the property in order to preserve its rights under the contract.

1. On 3 October 2013, Mr Konstandellos sent an email to Mr Frank Perry of Perry & Associates requesting that he provide a quotation to Hera for the provision of ‘all services, reports and fees as a total package’ for the development of the Adrian Street/Ballarto Road site.  Mr Perry followed up with the Council and obtained quotations for the work required to be undertaken.  On 13 November 2013, Mr Perry emailed Hera’s solicitor and informed him as follows:

I rang the Council following our meeting and the following is clear:

·On 18 December 2012 the Council adopted an activity centres strategy that supported a full line supermarket for the land;

·The Council requires an urban design framework to be prepared for the land including lot 2 on the other side of Adrian Street as a prerequisite for subdivision and development; and

·We have obtained a quote for the Urban Design Framework at $7500 plus GST and $900 for estimated printing and travel disbursements.

The plan that we have been provided with is indicative only and we would need the precise dimensions of the land to be subdivided together with a copy of the existing title in order to proceed with the subdivision proposal.

I have asked Allister Sarris [Architectural Design Consultant] to provide a cost for the planning drawings for the supermarket.  As soon as I have the information on the dimensions of the land and the title details I will obtain a quote from a surveyor.

Other quotations I will obtain include landscape and traffic.

1. On 26 November 2013, Hera’s solicitor wrote to the vendors’ solicitor by way of further response to the rescission notice issued on behalf of the vendors and stated in relation to the plan of subdivision, as follows:

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 [a reference to the Limoli family at No 2 Adrian Street] 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.

1. The vendors’ solicitor responded by letter the next day. The vendors maintained that the contract had been rescinded and also pointed out that the concept plan attached to the contract ‘does provide measurements’. Further, the vendors’ solicitor stated ‘[i]t was not incumbent on our client to complete and submit to the Council an Urban Design Framework.’ The vendors’ solicitor followed up by making application to the Registrar of Titles pursuant to s 89A of the Transfer of Land Act 1958 (Vic) to remove Hera’s caveat over the land.

1. As was noted in the introduction, in late 2013, Hera commenced proceedings in the Supreme Court against Mr and Mrs Bisognin.[13]  In its statement of claim, Hera sought an order that Mr and Mrs Bisognin be required to undertake all works required to procure an Urban Design Framework for the Adrian Street precinct and pay any necessary Growth Areas Infrastructure Contribution.   Hera also sought declarations to the effect that the purported rescission notice was of no effect and that it had an interest in the subject land sufficient to enable it to lodge a caveat. 

   [13]Proceeding No. 06591 of 2013.

1. On 10 January 2014, the vendors’ solicitor wrote to Hera’s solicitor taking issue with the matters raised and pointing out the reasons why they believed the Statement of Claim was misconceived.  On 6 February 2014 they served Mr and Mrs Bisognin’s defence and request for further and better particulars.  In particular they contended that Joslin, the previous purchaser, was aware that it was their responsibility to file an Urban Design Framework for the Adrian Street precinct and that this was discussed at the conference held on 14 August 2013.  Further, in respect of the GAIC, their position was that the contribution is not payable until settlement and they were in any event exempt from this contribution.

1. In the meantime, while the litigation was underway, representatives of Hera, namely Mr Perry and Ms Aileen Chin, met with officers of the Council on 7 February 2014 to discuss the requirements for an Urban Design Framework for the Adrian Street precinct.

1. In April 2014, the vendors’ solicitor wrote to Hera’s solicitor to inform them that they had received advice that the contract of sale was void for uncertainty because the subject land was not sufficiently well described.  They encouraged Hera to discontinue the proceeding and withdraw its caveat whereupon the deposit of $10,000.00 would be refunded.  They enclosed a copy of their proposed amended defence and indicated that they would be seeking summary judgment.

1. Correspondence ensued between the solicitors for the parties.  Hera’s solicitor ‘categorically rejected’ the proposal for resolution, pointing out that their client had relied upon the contract as prepared by the vendors’ solicitor and, once nominated as the substitute purchaser, Hera had expended considerable amounts in briefing consultants and entered into an Agreement to Lease with Woolworths.  Further, they enclosed a preliminary plan of subdivision which had been prepared by or on behalf of Hera identifying the subject land.  Hera’s solicitor also stated that they believed Mr and Mrs Bisognin ‘are seeking to take advantage of the substantial improvements to the property including the securing of the long term lease with Woolworths Supermarket which has [sic] will result in a substantial increase in the value of the property.’  They regarded the conduct of Mr and Mrs Bisognin as ‘clearly unconscionable’ in circumstances where they would gain from being at liberty to sell the property to a third party for a higher consideration.

1. In September 2014, Sam and Rosa Limoli engaged Taylors Development Strategists Pty Ltd (‘Taylors’) to prepare an Urban Design Framework for the Adrian Street Medium Neighbourhood Activities Area.

1. On 20 October 2014, following a telephone conversation with Mr Perry, Hera’s solicitor emailed Mr Perry to inform him that the vendors’ solicitor had written to them in respect of the proposed plan of subdivision, enclosing a copy of the Precinct Structure Plan, and stating:

That the proposed Plan of Subdivision provided in the Section 32 and the proposed Plan of Subdivision recently provided by your client will not be accepted by the City of Casey on the grounds that the City of Casey require the whole of the commercial development to be along Adrian Street with the residential development at the rear.

1. The vendors’ solicitor followed up by letter to Hera’s solicitor dated 21 October 2014 in the following terms:

We refer to our telephone conversation on the 20 October 2014 and advise Taylors who have been engaged by Limoli to do an UDF plan advises us that the Council would not support the plan of subdivision attached to the section 32 as it does not appear to be in accordance with the Indicative Adrian Street Neighbourhood Activity Centre Plan as set out at Figure 2 Page 49 of the PSP which we provided to you recently.

Would you please get instructions as to whether your client will proceed with this matter or not.

We do not want to go to the expense of going to mediation if it appears that the Plan of Subdivision prepared by your client will not be accepted by Council.

1. In the meantime, on 20 October 2014, Mr Perry submitted Perry Town Planning’s fee proposal to Hera for the preparation of an Urban Design Framework to allow for the subdivision of the 1 Adrian Street land. 

1. On 28 October 2014, in preparation for the County Court mediation and at the request of Mr Konstandellos, Mr Parsons forwarded to Mr Konstandellos an email that he had sent to Mr and Mrs Bisognin at some earlier point (the date has been removed from the version of the email as forwarded) confirming the terms on which Joslin would acquire the land.  Mr Konstandellos said that he received the document from Mr Parsons because he had spoken with him ‘to clarify’ matters and wanted ‘something clear’.[14]  The email stated:

   [14]Transcript, 10/12/15, at 357-358.

1.        Price: $3.6 million which includes a $100,000 consultancy fee to us.

A $10,000 non-refundable fee is payable on the signing of Heads of Agreement.

5.The sale is totally in accordance with the plan submitted to council and attached to this document.

6.The vendor is to retain its existing home.

7.The purchaser agrees to attend to the two lot plan of subdivision.[15]

[15]The version of the earlier email included in the Court Book does not make clear whether other intermediate numbered paragraphs have been deleted, or whether the numbering was always as shown.

1. In late October 2014, Taylors prepared a draft Urban Design Framework and provided it to Mr Sam Limoli for review prior to a meeting with the Council on 30 October 2014.  Ms Amy Davidson of Taylors asked Mr Limoli to ‘print the document and show to Gino [Bisognin] to make sure he is happy with the references to his land and the images shown.’  Figure 6 of the draft UDF showed the ‘Cranbourne East Precinct Structure Plan’ with a ‘primary retail anchor’ and adjoining ‘non retail commercial’ located in the southern portion of the land towards the Ballarto Road frontage.  Taylors provided the draft UDF to the Council in advance of their proposed meeting with Council and adjacent landowners.

1. On 28 October 2014, the vendors’ solicitor wrote to Hera’s solicitor to inform them that the Council had confirmed that the draft design plan Mr Parsons had earlier prepared was inconsistent with the Cranbourne East Precinct Structure, and requested that they discontinue their proceeding and provide a withdrawal of caveat.  The vendors’ solicitor enclosed a letter of even date from Mr  Asok Rao, the Council’s Team Leader, City Strategy, confirming verbal advice that another Council officer had given earlier in respect of 1 Adrian Street, to the effect that the draft design plan for the supermarket prepared by Joslin Street SA Developments in 2012 ‘was inconsistent with the strategic directions of the Cranbourne East Precinct Structure Plan as the supermarket did not orientate towards Adrian Street frontage.’  In the letter Mr Rao also stated:

Council supports a full line supermarket and specialty shops on the 1 Adrian Street site and the design and use of the land is subject to an Urban Design Framework (as required by the Cranbourne East Precinct Structure Plan).  The landowners, LH & GA Bisognin, have also requested a full line supermarket on their land.

The Urban Design Framework applies to all the land known as 1 Adrian Street and 2 Adrian Street, Cranbourne East.

To date, no Urban Design Framework has been submitted to Council.

1. On 28 October 2014 Taylors prepared a further draft of the UDF for Mr Limoli in preparation for a meeting with the Council on 30 October 2014.  Taylors asked Mr Limoli to print a copy and give it to Mr Bisognin ‘to make sure he is happy with the references to his land and the images shown.’  That version of the UDF reproduced the Cranbourne East Precinct Structure Plan schematic for the Adrian Street precinct but did not include a layout of the proposed development. 

1. At the meeting with Council on 30 October 2014, one of the Council officers, requested some input and ideas from Mr Bisognin.  This led to him producing some hand-drawn sketches.  Mr Bisognin said that he did these drawings because he was requested to produce some ideas, and not because he was promoting a development plan of his own.  Under cross-examination, the following exchange took place with Mr Bisognin:

MR CLARKE:  This drawing shows a supermarket partly on the sold land and partly on your land?  That's correct isn't it?---I can't answer that because it's not to scale.  I'm not a draftsman.  I just got told, “Draw a picture”.  It's the same - the council told to - for the UDF to have no measurements.  They want mud maps.  They want colour pictures of - ah, supermarket's going there.  Shops are going there.  SOHO's going there because they've all said it comes to the planning and permit stage.  They said it's totally irrelevant so how can I interfere?  I'm not a town planner.  I was asked for my ideas, drawings.  Not one of them is a master plan. 

That is a plan that relates to both lots doesn't it?---I can't honestly answer you because I don't know what the council's going to accept.  I was told to draw a picture.  I drew a picture.  Now, then it is up to the developer or whoever's in charge to work out the sizes.

Well, one - - -?---If I asked you to draw a picture and it doesn't fit on the page is that my fault?

You knew I suggest at the time that this was drawn by you that the supermarket - that the land that you sold had to fit the (indistinct) a supermarket?---That's correct.  That's the whole concept of the sale.

Exactly and this - - -?---And that's why rooftop parking was suggested for Hera's benefit so it could fit all its elements into the parcel of land.

Yes, and do you say this drawing has all of the elements of the supermarket on the land that you sold?---It has all of the elements that the PSP [Precinct Structure Plan] has required.  The supermarket elements again is back to the developer because I have not signed a lease or an agreement or a contract with the supermarket.  My agreement is to have a full-line supermarket on Lot 1.  That's the lot, what it's called.

The southern lot?---All right, the southern lot and that's what I was working towards.

Yes, and your evidence to Her Honour is that this is a stepping along the way to having a full-line supermarket located on the land that you sold to Hera?---That's correct.  It is an idea because that's what I was asked for and that's what I produced.[16]

[16]Transcript, 08/12/15, at 196-197.

1. By letter dated 31 October 2014, Hera’s solicitor wrote to the vendors’ solicitor in relation to proceedings between the parties which by now had been transferred from the Supreme Court to the County Court.  The letter also made reference to the UDF as follows:

We confirm our advices to you that we are seeking not only our client’s instructions but also the advice of our client’s town planner regarding the issue of the Urban Design Framework and the Precinct Structure Plan.  Once we are in receipt of those instructions we shall provide you with our response.

In the meantime we confirm our advices as conveyed to you in our telephone conversation on 29 October 2014 that our client’s development is consistent with the requirements of the Council insofar as it relates to the land that our client has purchased.  If our client’s plans require redesign in order to better comply with the PSP and UDF once drawn, this is a matter for our client.

…

You state in your recent letter that Limoli (who is your clients’ relative) has appointed Taylors to prepare the Urban Design Framework for submission to Council.  Given our client’s interest in the land, no document should be lodged with the Council and, in particular, without our client’s prior written consent.  All communications with the Council regarding the development should be directed to our client for its review and comment.  Our client requires complete details of all discussions and communications that your clients and/or Limoli or their agents have had with the Council, particularly if your clients have prepared a UDF and are communicating with the planning department of the Council.

We have no objection to the UDF being prepared by Taylors on the strict condition that the property which is the subject of the proceeding contains a full line supermarket and, further, conditional on the final version of the report being approved by our client prior to its submission with the Council.

1. As noted in the introduction, a mediation of the County Court proceeding took place on 25 November 2014.  The mediation was attended by Mr and Mrs Bisognin as vendors and by Mr Konstandellos acting on behalf of Hera, pursuant to a power of attorney.  After a lengthy mediation, the parties entered into Terms of Settlement later that day which were prepared by counsel for the Bisognins.  In essence, the parties agreed to enter into and execute a new contract of sale of land in relation to the southern portion of the land, the form of which was to be in accordance with the terms and conditions of the 2012 contract, save as follows:

(a)        The purchaser is Hera.

(b)       Hera’s director will be the guarantor.

(c)        Special condition 2, which made the sale ‘subject to the City of Casey amending the Strategic Plan to accommodate a full line supermarket with associated shops on the site herein’, will be deleted.

(d)       For the purposes of clause 3(b), the plan of subdivision is the plan mentioned in clause 1 of the Terms of Settlement, namely ‘the proposed plan of subdivision prepared by Kevin Barge and dated 12 March 2014’, a copy of which was attached.

(e)        At the end of special condition 3(b), add in the words ‘save for any amendments of a technical nature required by any relevant authority to enable approval to be granted.’

(f)        Special condition 9 is added, as follows:

If the said plan of subdivision is not registered by 25 August 2015 either party may, by notice in writing to the other, end this contract.

(g)       Special condition 10 is added, as follows:

[The vendors] will provide all and any documents in relation to the draft Urban Design Framework (UDF) by 2 December 2014.

(h)       Special condition 11 is added, as follows:

[The vendors] will use their best endeavours to co-operate with [Hera], sign all documents and do all acts and things necessary 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 GAIC payment promptly if required by the relevant authority.

1. The parties also agreed that upon the execution of the new contract, the 2012 contract ‘shall be deemed to be cancelled and at an end and of no effect’[17] and that the 2012 contract would remain in full force and effect and with the variations agreed (as described above) ‘incorporated into the old contract until execution of the new contract’[18] by the vendors and Hera.  Hera was also required to procure the purchaser named in the 2012 contract, namely Joslin, to ‘confirm the cancellation of the old contract.’[19]  Further, upon exchange of the signed new contract, the parties would consent to an order that the County Court proceeding be dismissed with no order as to costs and ‘release each other from all claims in the proceeding.’[20]

   [17]Clause 3.

   [18]Clause 5.

   [19]Clause 4.

   [20]Clause 6.

1. The next day, Hera’s solicitor wrote to the vendors’ solicitor and requested that they provide the Urban Design Framework by 2 December 2014 together with any additional documents that are relevant, and also the contract of sale and section 32 certificate for perusal in order to give effect to the terms of settlement. That same day, Mr Ross Foenander, the Conveyancing Manager with the vendors’ solicitors, sent an email to the State Revenue Office advising that part of the 1 Adrian Street land had been sold and seeking guidance about the GAIC implications of the sale. In his email dated 26 November 2014, Mr Foenander stated:

…The Contract will contain a Special Condition that the Purchaser obtain all consents & permits required to Register the Plan of Subdivision at the Land Titles Office.

Registration of the plan will be the trigger for settlement to be effected.

As the Vendor has a GAIC, who is responsible to pay the GAIC or enter a payment plan or obtain a “No Liability” on the 12,850m2 being transferred/sold?

1. On 1 December 2014, the vendors’ solicitor wrote to Hera’s solicitor enclosing a copy of the draft UDF prepared by Taylors on behalf of the Limolis and a draft revocation of contract agreement, and inviting their comments. The vendors’ solicitor noted that they would forward the contract of sale and section 32 in due course and reiterated their request for payment of the sum of $330.00 in relation to the cost of room hire for the mediation. The parties to the draft revocation of contract agreement were shown as Mr and Mrs Bisognin as vendor, Joslin as the purchaser and Hera as the nominated purchaser, and the agreement sought to record the terms and conditions upon which the parties had agreed to the mutual rescission of the 2012 contract.

1. Hera’s solicitor acknowledged receipt of the draft UDF and requested that the vendors’ solicitor provide the contract of sale and section 32 statement ‘as a matter of urgency so that [they] may finalise this matter.’

1. Once the draft UDF was to hand, Hera’s solicitor forwarded a copy of it to Mr Perry on 2 December 2014.  Later that day  Mr Perry responded, noting that the draft UDF prepared by Taylors ‘requires considerable additional work’.  He pointed out that it does not include ‘a plan demonstrating how the site is to be developed’ and said that in order to protect Hera’s interests it ‘needs to show the location of the supermarket and the general positioning of pedestrian paths, car parking and the arrangement of buildings and works’.  Mr Konstandellos acknowledged, under cross-examination, that Mr Perry was of the view that a lot of work needed to be done in December, but he said that he was in a position to deal with Taylors himself – he did not need town planners and was in a position to deal with the Council about the UDF himself.[21]

   [21]Transcript, 10/12/16, 392.

1. On about 2 December 2014, Mr Konstandellos asked Mr Perry to provide a quotation for reviewing the UDF prepared by Taylors.[22]  On 4 December 2014, Mr Perry provided to Hera’s solicitor his fee proposal for the review of the UDF and preparation of a planning application for a supermarket at 1 Adrian Street.  In his covering email, Mr Perry suggested that if the proposal ‘looks ok’ they ‘should get into it immediately.’  A revised fee proposal was submitted by Mr Perry under cover of an email dated 9 December 2014 and copied to Mr Konstandellos.  In his email, Mr Perry stated:

Here as discussed is a revised fee proposal together with an idea as to how the UDF plan would have to look.  We consider that features of the plan should include a clear depiction of the core retail elements on 1 Adrian Street with supporting retail on number 2 Adrian Street.  Parking would be shared and there would have to be excellent pedestrian connections between the sites.

If the proposal is acceptable I request that we receive confirmation by email.  I believe that it is important that we produce the UDF in order to protect our client.

[22]See Affidavit of Mr Konstandellos sworn 4 November 2015, at [67].

1. On 3 December 2014, Hera’s solicitor wrote to the vendors’ solicitors to chase up the contract of sale and section 32 certificate. It seems that they had not been provided thus far because the vendors’ solicitors were following up the provision of a GAIC certificate by the State Revenue Office for inclusion in the section 32 statement, as required by the Sale of Land Act.[23] Hera’s solicitor sent a further letter to the vendors’ solicitors on 12 December 2014 following up the whereabouts of the contract of sale and section 32 statement. They also requested that the vendors’ solicitors confirm that they have advised Taylors to cooperate with Perry Town Planning in order to ensure that the UDF prepared by Taylors is finalised. To this point, however, Hera had not engaged Perry Town Planning.

   [23]Section 32G.

1. The vendors’ solicitors responded to Hera’s solicitor on 15 December 2014 to inform them that they were ‘still waiting the GAIC Certificate’ and would forward the contract and section 32 statement as soon as it is to hand. On 17 December 2014, they also obtained an ASIC search of Hera, which showed that from 11 December 2014 ‘Christopher Pizone’[24] [sic] was both the director and secretary of Hera, in place of Mr John Kaziakouras, and also the holder of all of the issued shares formerly held by AEM Investments Pty Ltd. 

   [24]It appears that the correct spelling is Pinzone.

1. On 18 December 2014, Mr Oldaker of the State Revenue Office replied to Mr Foenander’s email enquiry about the GAIC, and copied it to Mr Waters.  Mr Oldaker attached ‘a current GAIC Certificate of Estimate’ for the land at 1 Adrian Street and explained the ‘GAIC event’ regime as follows:

The liability to pay GAIC arises when the first of the following trigger events (GAIC event) occurs in respect of land in the contribution area:

1.        the issue of a statement of compliance for a plan of subdivision;

2.the making of an application for a building permit to carry out building works, or

3.the occurrence of a dutiable transaction relating to the land.

For a subdivision of land, GAIC must be paid within three months after the liability arises, unless there is a staged payment approval.

Please note that there are a number of exemptions that could apply in the event of a statement of compliance being issued for a plan of subdivision.

I have attached a copy of our GAIC practitioners guide for your reference.

Additionally, please find attached a current GAIC Certificate of Estimate for the land at 1 Adrian Street, Cranbourne East.[25]

[25]See Exhibit D1, email from Mr Oldaker (SRO) to Mr Foenander and Mr Waters dated 18 December 2014.

1. The GAIC Certificate stated that the total GAIC that would be imposed if a GAIC event were to occur in respect of the whole of the 1 Adrian Street land in the financial year ended 30 June 2015 is $187,568.34. The next morning, the vendors’ solicitors emailed the contract of sale and section 32 statement to Hera’s solicitor ‘for comment’. Mr Waters said that when preparing the contract, Mr Foenander conducted an ASIC search of Hera whereupon they became aware of a change in the director of Hera. Accordingly, the contract of sale prepared by the vendors’ solicitors showed the new director, ‘Christopher Pizone’, as the named person to sign on behalf of Hera and also as the guarantor.

1. Once the contractual documents were received by Hera’s solicitor on 19 December 2014, they were forwarded on by email to Mr Konstandellos and to Mr Simon Raleigh of Best Hooper for consideration.  Mr Konstandellos said that Mr Raleigh was considering investing in the project.[26]  He said it was Mr Raleigh who had first noticed Mr Pizone (rather than Mr Konstandellos and his son in law, Mr Kaziakouras) was shown as a director of Hera on the draft contract and he had conducted an ASIC search of Hera which showed that there had been a change of control.  Mr Raleigh then contacted Mr Konstandellos and asked him what was going on.  Mr Konstandellos said that he had no idea and was unable to give Mr Raleigh any explanation.[27]

   [26]Affidavit of Mr Konstandellos sworn 4 November 2015, at [74].

   [27]Affidavit of Mr Konstandellos sworn 4 November 2015, at [75].

1. On 19 December 2014, Mr Pinzone’s lawyer, Mr George Bouhalis of George James Lawyers, wrote to Hera’s solicitor and said that he had been instructed to inform them that ‘any instructions regarding the affairs and business of Hera Project Pty Ltd and any other matters relating to this company are to be taken solely from Mr Pinzone.’

1. On 22 December 2014, Mr Konstandellos’s daughter, Ms Angellique Konstandellos, filed an eComplaint with ASIC, complaining that her husband, Mr Kaziakouras, had been removed as a director and she had been removed as a shareholder of Hera by Mr Pinzone without any authority or consent and the address of the company had also been changed without their knowledge.

1. On 23 December 2014, Taylors sent to Mr Limoli an Activity Centre Concept sketch which they had prepared as a ‘first attempt’ of the plan they had worked up for 1 and 2 Adrian Street, noting that it ‘is subject to review by the planners, Council and yourself.’  In their covering email, Taylors pointed out that they have ‘extended the sketch to cover Gino’s land’ but added that ‘he has not had any input to this either and he will be required to provide input before we take the plan to Council.’  Further they noted that the ‘inclusion of a full line supermarket has required additional car parking and Council will require this to be co-located on Gino’s land’ and accordingly, ‘the residential on Gino’s land has been reduced to accommodate this’.  On the sketch, the supermarket was positioned in the middle of the 1 Adrian Street land.

1. On 5 January 2015 the vendors’ solicitors sent the Contract of Sale and section 32 statement to Hera’s solicitor in duplicate and said they ‘await receipt of signed copy by way of exchange.’

1. On 13 January 2015, a meeting was held at the City of Casey premises between Council officers, Sam and Mario Limoli, Mr and Mrs Bisognin and their solicitor, and representatives of Taylors.  No representative of Hera was present.  The handwritten notes of the meeting prepared by Taylors record that there was discussion at the meeting about a ‘full line supermarket’ and a need to ‘update the plan to correspond.’  A further meeting was held between representatives of Taylors, Sam, Rosa and Mario Limoli, and Mr and Mrs Bisognin on 21 January 2015.  Mrs Bisognin said the purpose of the meeting was that Sam Limoli wanted Taylors to do the framework because Stephen Parsons had engaged Taylors to do it in 2012/2013 but Mr Parsons did not proceed and so ‘Sam Limoli said, I’m going to do it.’[28]  According to the handwritten notes of the meeting prepared by Taylors, reference was made to the possibility of ‘carparking on roof’ in the context of considering ‘2 options for PSP on Gino land’. 

   [28]Transcript, 09/12/15, at 296.

1. On 27 January 2015, the vendors’ solicitors wrote to Hera’s solicitor, referring to their earlier correspondence and noting that they await receipt of the signed contract of sale and section 32 statement in duplicate by way of exchange and also the $330.00 for the room hire costs. A further letter to similar effect was sent on 9 February 2015, and requesting a response as soon as possible. In their letter the vendors’ solicitors also stated:

We are advised by Mr Sam Limoli the adjoining landowner that he has prepared a Plan in accordance with the Urban Design Framework and we understand has submitted same to Council.  Limoli advises us that he has not heard from your client.  He also advises that Taylors have not heard from your client.

Please provide us with an update.

No update or response was forthcoming.

1. In mid-February 2015, Taylors sought to schedule a further meeting with the Council.  Mr Asok Rao, the Council officer, indicated that he was hoping to invite representatives of the Urban Design and Traffic teams as well and requested that the draft UDF be provided in advance of the meeting.  On 17 February 2015, Taylors circulated the draft concept plan to the Limolis and the Bisognins, noting that it had been sent to the Council and VicRoads for comment also.  This iteration of the draft concept plan showed the supermarket located in the middle of 1 Adrian Street land and with rooftop parking.

1. On 19 February 2015, Hargrave J made orders in proceeding S CI 2014 6875, which is the related proceeding concerning the dispute about the management of Hera.   Relevantly for present purposes, his Honour ordered:

4.The Australian Securities and Investments Commission shall correct the Register it kept by:

(a)Removing Christopher Pizone as a director of the Hera Project Pty Ltd (ACN 163 685 041) (the Company) as from 11 December 2014 and reinstating John Kaziakouras as a director of the Company as from 11 November 2014;

(b)Removing Christopher Pizone as secretary of the Company as from 11 December 2014 and reinstating John Kaziakouras as secretary of the Company as from 11 November 2014;

(c)Removing Christopher Pizone as a shareholder of 120 fully paid shares in the Company from 12 December 2014 and replacing AEM Investments Pty Ltd (ACN 106 170 165) as the registered holder of 120 Class A fully paid shares in the Company from 12 December 2014.

5.The plaintiffs, including the added plaintiff, Nikolaos Konstandellos, shall:

(a)Forthwith cause the Company to execute the ‘New Contract’ described in the terms of settlement exhibit NK-5 to the affidavit of Nikolaos Konstandellos sworn 23 December 2014; and

(b)Until the hearing and determination of the proceeding or further order, take all reasonable steps to ensure that the Company is able to complete the New Contract.

1. Hera’s solicitor first notified the vendors’ solicitors of the orders made by Hargrave J by letter dated 4 March 2015.  They requested ‘by way of completeness’ that the vendors’ solicitors forward the final version of the contract of sale denoting John Kaziakouras as the guarantor.  In their letter they also stated:

Our client and our client’s town planner have reviewed the UDF report prepared by Taylors however this report is not satisfactory as it does not take into consideration a full line supermarket.  Please ensure that you advise Taylors that they are not to lodge the said UDF Report unless it is first approved by our client or its town planning consultant.

Please ensure that Taylors provide our office a complete set of all plans prepared for the UDF report, such as the master plan.  Our client’s town planner shall shortly be in communication with Taylors regarding these matters  Please advise Taylors of this.  We remind you of your client’s obligation to cooperate in respect of the UDF report and plans which to date have not been provided.  Please ensure that your clients or their consultants attend to this matter by the end of this week to avoid our client deeming this a breach of the Terms of Settlement.

Our client has also requested that the sunset clause set out in the Terms of Settlement be extended for a period of at least sixty (60) days.  This request follows the lengthy delay in providing us with a copy of the final version of the contract of sale.  You will note that this matter was settled on 25 November 2014 however it was not until 14 January 2015, after we re-opened our office following the Christmas break that we received the contract of sale.  Our client in that regard should not be compromised.  Please confirm that this is acceptable so that there may be a proper exchange of letters in verification of the extended sunset date.

We await hearing from you.

1. The meeting with the Council was scheduled to take place on 3 March 2015.  The draft concept plan was forwarded to the Council on 20 February 2015.  On 24 February 2015, following a meeting with Mr Konstandellos, Hera’s solicitor re-sent the UDF that Taylors had prepared to Mr Perry for his attention. 

1. At the meeting on 3 March 2015, various Council officers and representatives of Taylors were in attendance along with Mr and Mrs Bisognin and Mario and Paul Limoli.  Neither Mr Waters nor any representative of Hera was in attendance.   Taylors prepared typed minutes of the meeting, recording that it was attended by the landowners (represented by Mario and Paul Limoli, and Mr and Mrs Bisognin), Taylors (represented by Stephen Lake and Amy Davidson), and the Council (Lauren Richardson, Asok Rau and others).  The minutes noted that Council had suggested that the supermarket be pushed further to the south and that the car parking be consolidated to its north.  Council was also ‘comfortable’ with roof-top parking and agreed that it would assist in future proofing the structure.  Under the headings ‘Landowner feedback’ and ‘Further Actions’ the minutes relevantly recorded:

Landowner feedback

·     Mario Limoli, Paul Limoli happy with the layout.

·     Gino & Leah Bisognin noted that Council is supportive of a full-line supermarket within No.1 Adrian Street.

·     Gino & Leah Bisognin support the draft layout including roof-top parking as being an efficient solution to parking requirements.  Gino noted that in particular roof-top parking would serve employees thus freeing up ground-level spaces for customers.  They did not object to shifting the shopping centre to the south.

…

Further Actions

·     Taylors to amend the draft UDF per Council comments including shifting the shopping centre to the south and the inclusion of a secondary anchor.

1. The Council Officer, Ms Lauren Richardson, also made a handwritten note of the meeting.  Her note records as follows:

Subject: Adrian Street NAC UDF  Date: 3/3/15

PSP [Precinct Structure Plan] shows smaller supermarket but Activity Centre Strategy supports full provision

Non retail commercial to Ballarto

Rooftop car parking for supermarket

Blank walls an issue – Access arrangements

1. As noted earlier, Mr Waters was not present at the meeting on 3 March 2015.  Mr Waters said he was not aware that Hera did not want rooftop car parking.  He was of the view that rooftop parking was a good suggestion and said it would have assisted Hera and alleviated some of its problems because the Council had suggested there was not enough land available for car parking.[29]  He said that at this point in time, Hera was not providing them with any input, and the vendors did not know who to deal with at Woolworths, so they did not know whether Woolworths were happy with it or not.[30]  

   [29]Transcript, 08/12/15, at 131,  134.

   [30]Transcript, 08/12/15, at 132.

1. Mr  Perry was formally engaged by Hera in, or by, early March 2015.[31]  Mr Perry said that his diary records him as having a meeting with Mr Konstandellos at his office on 23 February 2015 but he cannot recall what was discussed.[32]  On 6 March 2015, Mr Perry emailed Taylors to confirm that he was acting for Hera and that the southern lot is to be the site of a proposed full line supermarket.  He noted that he understood the Council officers had requested changes which ‘indicate a southward shift in the location of the supermarket on lot 1’ and added that whilst his client had not been involved in those discussions, Hera ‘has negotiated a proposed layout with the prospective supermarket operator who has very specific requirements’ and thus ‘it is essential that our client has the opportunity to review the proposed Urban Design Framework Plan prior to it being submitted to the Council.’  He requested that Taylors provide his firm with ‘a copy of the plan which shows the layout of Lot 1 prior to lodgement with the Council’ so that the UDF ‘can be agreed in the shortest possible time.’

   [31]Transcript, 10/12/15, at 386.

   [32]See Affidavit in reply of Mr Perry sworn on 23 November 2015, at [3].

1. On 10 March 2015, Hera’s solicitor wrote to the vendors’ solicitor to ‘require as a matter of urgency the amended Contract of Sale for execution and return to complete exchange.’  He informed the vendors’ solicitor that Mr Perry had ‘conferred with both Council and your clients’ town planner who advised that they had meetings and discussions with both your clients and the Council.’  Hera’s solicitor complained that Taylors had not been informed by the vendors of Hera’s interest or involvement.  Further, he said Taylors had ‘advised that [the vendors] were at the meeting with Council and making representations in respect to where the supermarket should be located’ which is ‘contrary to the spirit of the terms of settlement pertaining to the UDF.’   He also said that the vendors and their solicitors had failed to supply them with master plans of the subject area and that they had that day received a version of the master plan which Hera’s town planner says ‘makes no sense and [was] not in accordance with the plan approved by Woolworths.’  The letter continued, asserting that:

Your clients have acted against our client’s interests  contrary to special condition 9 and 10 of the Contract of Sale.  [Hera’s] town planner is now conferring with Taylors with a view to finalising this matter as soon as possible.  [Hera] shall also be taking steps to lodge the Plan of Subdivision once the UDF has been in principle accepted.

Please obtain your clients’ instructions for the date set out in special condition 8 to be extended as per our letter dated 4 March 2015.  Your client in providing their consent to the extension of time should also take into account the non-compliance of special conditions 9 and 10 of the Contract.

We await your early response.

1. On 10 March 2015, Taylors forwarded to the Limoli’s two alternative sketches for 1 and 2 Adrian Street reflecting the discussion that took place at the meeting with the Council.  Taylors noted that:

… As required by Council, the supermarket has been moved to the south of Gino’s land and a secondary anchor added to [the Limoli’s] land.  Access to Gino’s land has been further investigated and VicRoads will require a deceleration lane.  …

Two versions of the concept plan, marked Nos. 6 and 7 respectively, were enclosed, each of which relevantly showed the supermarket on 1 Adrian Street located at the southern end towards Ballarto Road.  Taylors asked them to review the plans and to provide a copy to the Bisognins.

1. On 11 March 2015, Mr Perry forwarded by email to Hera’s solicitor and Mr Konstandellos a plan that he ‘was able to get from Gino’s lawyer’.  He said the plan ‘does not seem to make any sense and is not in accordance with the plan that was signed off by Woolworths.’  The plan appears to be an earlier iteration of what was proposed, and was probably the 16 February 2015 plan, showing the supermarket as being located towards the middle of the 1 Adrian Street land.  As noted earlier, however, by this point Mr Perry had already been in contact with Taylors and had requested that they provide ‘a copy of the plan which shows the layout of Lot 1 prior to lodgement with the Council’.  Mr Perry followed the matter up with Taylors, first by email on 10 March 2015 (referring to the vendors’ obligation under the terms of settlement to use their best endeavours to cooperate with the finalisation of the UDF), and then by phone on 11 March 2015, seeking a copy of the UDF.  Mr Lake of Taylors told him that he would only provide a copy of the UDF if instructed by the Limoli’s to do so.

1. On 11 March 2015, following a telephone conversation with Hera’s solicitor, the vendors’ solicitor wrote to them and confirmed the vendors’ position as follows:

1.That we have already provided to you by way of email the amended Guarantor [sic].  Please sign the Contract and return it to our office together with a cheque in the sum of $330.00 being your contribution to the room hire.

2.The UDF prepared by Taylors on behalf of Limoli does take into consideration the full line supermarket.

3.We note that your client has contacted our client advising that a framework plan has been done and if so could you please provide us with a copy.

4.We are dismayed at your allegation that we are not co-operating with you in this matter and we point out the following:-

(a)Your client has had three (3) years to prepare plans for Council approval.

(b)We have written to you on several occasions requesting that your client lodge plans.

(c)Your client engaged Taylors originally to prepare plans but it appears that nothing was done.

(d)Limoli and Taylors are still waiting to hear from your client and/or yourselves and we note that at Mediation on the 25 November 2014 we gave you the telephone contacts for Taylor and Limoli yet no contact has been made.

(e)At Mediation your client told our client that he would get cracking on having plans done.

(f)Prior to Christmas your client contacted our client that he had engaged Town Planners who would contact Limoli as he did not want to use Taylors.

5.Yesterday the writer spoke with your client’s Town Planner Frank Perry and provided him with a UDF plan that our client obtained from Limoli on Tuesday night.

6.The writer advised Frank Perry to contact Limoli direct to get permission to speak with Taylors as Limoli engaged Taylors.

1. Under cross-examination, Mr Konstandellos said he could not recall having told Mr Bisognin that he had engaged town planners who would contact Mr Limoli.  Rather, Mr Konstandellos maintained that he told Mr Bisognin he had obtained quotes from town planners and that he did not want to use Taylors.[33]

   [33]Transcript, 10/12/15, at 413.

1. On 12 March 2015, the vendors’ solicitor emailed the contract of sale and associated documents to Hera’s solicitor.  At about this time, representatives of Hera, namely Mr Perry, Mr Konstandellos, Mr Pozzebon and Mr Axford met with Council officers, Mr Rao and Mr Jayden Mizzi, regarding Adrian Street.  Afterwards, Mr Perry prepared a note summarising what took place at the meeting, as follows:

Yesterday Nick, Luciano, Steve Axford and I met with Asok and Jayden to explain the position in regard to Hera and its purchase of the southern section of lot 1 Adrian Street.  It was apparent that despite the fact that the week before the two officers had met with Sam Limoli and Gino it was not clear to them that Hera was an essential stakeholder with regard to the site.  We advised the Council officers that the supermarket needed to be located and serviced in accordance with a lease agreement that had been worked out with Woolworths and they were given a plan that formed the basis of the agreement.  We also indicated that we would design the layout of the site in order to activate the Adrian Street frontage with some activity on the Ballarto Road frontage at the junction with Adrian Street.

We also indicated that we had no objection to the Urban Design Framework being prepared by Taylors provided that the document provided for the location of the supermarket on the site contracted to Hera and we would be prepared to meet with the Council officers and Taylors to workshop the details of the framework that affects the Hera Land.  Asok indicated that he would find that a suitable outcome.  We will respond to the Council with a design that reflects the discussion and which can be integrated into the framework plan being prepared by Taylors.

I indicated to Asok that there should be no impediment to the changes proposed because we do not seek any changes to lot 2 which is the Limoli land and Gino is committed to everything he can to achieve finalisation of the UDF and to facilitate the subdivision of the land.

The Council is now well aware of Hera’s interest in the UDF and the supermarket site and will proceed with our involvement.

1. This email demonstrates that there was no impediment to Hera being directly involved in the UDF process. 

1. On 16 March 2015, in an email to the Limoli’s, Taylors reported that the vendors’ solicitor had phoned and advised that Perry Town Planning are looking to lodge a UDF over 1 and 2 Adrian Street, and that he believed they would lodge their design for the 1 Adrian Street land and overlay the Taylors’ design for the 2 Adrian Street land.  Taylors also included a copy of the concept plan sketch that the vendors’ solicitor had sent them ‘illustrating how a supermarket could be configured for 1 Adrian Street’.  This concept plan was the plan that Mr Parsons of Joslin had earlier provided.  Taylors added that they understood that the concept plan was the plan that was earlier sent to Council and which Council had advised was not acceptable from a layout and design perspective.

1. On 16 March 2015, the vendors’ solicitor wrote to Hera’s solicitor expressing dismay that they had ‘misplaced the Contracts we sent to you on 5 January 2015.’  They also noted that they have not yet received a plan in accordance with the UDF from either the solicitors or Hera’s Town Planner and enquired as to when this would be done.  On 17 March 2015, Taylors provided to the Council a draft UDF incorporating the changes requested by Council at the meeting on 3 April 2015, including shifting the shopping centre on 1 Adrian Street to the south and providing for a secondary anchor on 2 Adrian Street.[34]   The schematic for the ‘Adrian Street proposed Activity Centre’, which appears as Figure 7, shows the full line supermarket located towards the Ballarto Road frontage and with roof-top car parking.

   [34]This letter is dated incorrectly as being sent on ’17 March 2013’ but it was received by the Council on 20 March 2015.

1. On 19 March 2015, Taylors emailed the Limoli’s and their solicitor, Mr John Cicero of Best Hooper, to let them know that the Council would be inviting Woolworths, in addition to Mr Perry, to attend a meeting scheduled to take place on 27 March 2015.

1. On 20 March 2015, Hera’s solicitor responded to the vendors’ solicitors’ letter of 11 March 2015, complaining about their (alleged) failure to inform Council of their client’s interest and of the existence of the Woolworths supermarket on the southern lot, and the generally negative conduct on the part of the vendors.  They also sought confirmation that the vendors will cooperate and support Hera’s recommendations and proposals with respect to the master plan and ‘consent to the extension of the sunset date from 25 August 2015 to 25 October 2015’.  The vendors’ solicitor responded by letter dated 23 March 2015 addressing the various matters raised.  Relevantly, they expressly denied the suggestion that Council was unaware of the existence of a purchaser of the southern lot and the role of Woolworths in the purchaser’s plans and set out the number of occasions when that matter had been drawn to the attention of the Council.  They also noted that they only became aware of the involvement of Perry Town Planning on 4 March 2015 and whilst Mr Perry had stated that a UDF had been prepared by his firm, no copy had been provided to the Bisognins as yet.  They requested that Hera’s solicitors provide a copy of the UDF and also the signed contract of sale.

1. On 23 March 2015, Mr Perry sent an email addressed to Mr Konstandellos, Hera’s team of consultants and its solicitor, enclosing an extract from the UDF that Taylors had lodged with the Council.  He had obtained the UDF plan from Mr John Cicero, the solicitor acting for the Limoli’s.  Mr Perry noted that the ‘plan shows parking on the roof of the supermarket and solid development along the frontage to Ballarto Road with very little surface parking’ and said ‘it is not an acceptable plan’.  He added that he has been in contact with the vendors’ solicitors ‘who profess to know nothing of the lodgement of the UDF.’  Mr Perry followed the matter up with Mr Cicero, sending him a copy of the plan that was signed off by Woolworths and suggesting that ‘with some tinkering the plan for our site can be adjusted and integrated into the UDF.’

1. Over the ensuing week a further volley of correspondence took place between Hera’s solicitor and the vendors’ solicitor, with each bemoaning the other party’s shortcomings.  On 25 March 2015, Hera’s solicitor finally returned the executed contract of sale to complete the exchange.  In a letter dated 26 March 2015, the vendors’ solicitor informed Hera’s solicitor that they understood Perry Town Planning, in consultation Taylors, has arranged a meeting with the Council on Friday, 27 March 2015 and advised that Mr Waters would now be attending on behalf of the Bisognins.  The meeting with the Council took place and was attended by representatives of the respective landowners, the Council officers, Mr Perry and Mr Axford (an urban designer) on behalf of Hera and Mr Brad Karge, a representative of Woolworths.  It appears that much of the focus of the meeting was on Woolworths and the Council’s aspirations rather than the Limoli’s plans for 2 Adrian Street.  During the meeting Woolworths made it clear that it was not keen on roof-top parking.

1. After the meeting, Mr Axford reported ‘some quick feedback’ to Mr Konstandellos, copied to Mr Perry, noting that while the Council wants them to come back with a revised plan they nevertheless made progress.  Under cross-examination, Mr Konstandellos acknowledged that once the Council came up with their own design vis-à-vis the proposed supermarket development, with an active frontage to Ballarto Road and the main access to the car park from Adrian Street, they had to ‘accept what the Council want’.[35]  Taylors also reported back to the Limoli’s by email.  On 30 March 2015, Messrs Perry and Axford prepared a more formal document headed ‘Recollection of a statement made by Noel Waters’ at the meeting on 27 March 2015.  Relevantly, the document stated:

Noel Waters then commented more than once that if the subdivision did not proceed there would be ample space for car parking, as lot one would revert back in its entirety to the ownership of his client [Mr and Mrs Bisognin].  The clear implication was that there would be no significant constraint on the layout of the site if the subdivision did not proceed.

[35]Transcript, 10/12/15, T433-434.

1. Hera’s solicitor wrote to the vendors’ solicitor by letter dated 14 April 2015 referring to what transpired at the meeting with Council and asserting that the vendors’ solicitor did not support Hera’s proposed plans.  However, ‘in the spirit of the terms of settlement’ they attached a copy of their revised plan as sent to Council, which took into account the Council’s requirements, and requested that the vendors support that plan to move matters forward.  The vendors’ solicitor responded by letter that same day refuting their suggestion of a lack of support, and reiterating the expressions of support that were given by Mr Waters during the course of the meeting.

1. On 27 March 2015, the Council’s Planning Department acknowledged that Taylors had lodged the Limoli’s UDF documentation and advised that Ms Richardson would be handling the matter.  On 30 April 2015, Mr Lake of Taylors wrote to Ms Richardson by email requesting that because of the difference of opinion between Woolworths and the Council in respect of 1 Adrian Street, the Council give consideration to supporting a staged UDF so that the Limoli’s ‘not be held hostage to matters over which they have no control.’  Taylors proposed that such an approach would allow the Limoli’s to proceed with a two lot subdivision for their land and allow the owner/future owner of 1 Adrian Street to work with Council and then seek an amendment to the UDF.  Ms Richardson responded a few days later, by email dated 2 April 2015.  She explained that Council are not in a position to support a staged UDF or a UDF done in two parts.   She added that the Limoli’s had been advised of this position earlier in 2014.  Ms Richardson stated that Council:

Were the vendors in breach of their obligation to use best endeavours?

1. The vendors contend that there is no evidence that they caused any relevant delay.  Rather, they say, the overwhelming evidence is that Hera was responsible for any delay.  Further, the vendors say that Hera did not call any expert evidence to assist the Court in understanding the time that it should have taken to register the plan of subdivision, and submitted that the Court does not know if the plan of subdivision could have been registered in the nine month period between 25 November 2014 and 25 August 2015.

1. In the absence of any evidence to the contrary, the starting point is that the parties, having reached agreement allowing for a period of nine months for registration of the plan of subdivision, must be taken to have adopted that period as a reasonable period for achieving that object.  Otherwise the agreement would not make commercial sense.

1. The evidence before the Court demonstrates that there were delays in commencing the process for registration of the plan of subdivision that were attributable to Hera.  In his affidavit sworn and filed in the related proceeding brought against Mr Pinzone, Mr Konstandellos has effectively acknowledged that the insinuation of Mr Pinzone into Hera and his taking control of the company meant that they lost a ‘period of 3-4 months’ which had ‘caused huge risk to the Cranbourne project not proceeding’.[241]  At trial, however, he sought to resile from this position, contending that Mr Pinzone’s action in taking control of Hera between December 2014 and February 2015 did not cause any delay in registration of the plan of subdivision. 

   [241]See affidavit of Mr Konstandellos sworn on 29 July 2015 in proceeding 3088 of 2015.

1. In my view, while that event had the effect of de-railing the process somewhat, I am not satisfied that it was an effective cause of delay in achieving registration of the plan of subdivision in the present case.  Likewise, I am not satisfied that Hera’s delay in involving Mr Perry in the process of obtaining the UDF, and in applying for and obtaining the planning permit, were an effective cause of delay in achieving registration of the plan of subdivision.  The evidence given by Ms Richardson, the Council officer, was that the UDF under consideration here was not a standard one and there were a lot of complicated factors at play.  In those circumstances, in the absence of any expert evidence, I am unable to determine whether any, and if so which, conduct on the part of the vendors or Hera was a relevant cause of delay in obtaining the UDF.

1. What is clear, however, is that from the time the planning permit issued on 11 June 2015, all that remained was for the statement of compliance to be obtained, and thereafter for the GAIC amount to be assessed by the Commissioner and paid by the vendors, for the duplicate certificate of title to be produced and for the mortgagee and any caveator to consent to the registration of the plan.

1. From at least early in May 2015 Charter Keck Kramer, on behalf of Hera, had set about taking the steps required for registration of the plan of subdivision, having procured the vendors’ consent to do so.  On 2 May 2015, they applied to the Council for certification of the plan and this was achieved on 3 August 2015.  It appears that contemporaneously with the application for certification, applications for the establishment of the relevant services were lodged with each of the relevant referral authorities in late May and early June 2015.

1. On 16 June 2015, Hera’s solicitor wrote to the vendors’ solicitor, enclosing for his attention copies of the planning permit, the plan of subdivision and the plan of subdivision application form (to be lodged at the Titles Office).  They informed Mr Waters that Hera ‘is in the process of obtaining the statement of compliance’ and requested that the vendors ‘take immediate steps’ to ensure that their mortgagee makes the title available at the Titles Office in order for registration of the plan of subdivision.  One month later, they wrote again to the vendors’ solicitor requesting confirmation by return mail that the title has been made available.  The response from the vendors’ solicitor was to the effect that the Bank wished to sight the certified plan before it would produce the title, and would require payment of its fees. 

1. The Council’s certification issued on 3 August 2015,  seven days elapsed, and on the next day, being 11 August 2015, the vendors served a default notice on Hera.  The notice specified the default as being Hera’s ‘failure to pay the balance of deposit $990,000.00 in accordance with special condition 1 of the contract’.  That is, the vendors’ notice proceeded on the basis that the balance of the deposit was payable within 7 days of certification of the plan, whereas Cameron J has since held that it was payable within 7 days of registration of the plan.  Accordingly, the position is, as Hera’s solicitor contended in the letter of 11 August 2015, that the vendors’ notice was ‘premature and as such defective and invalid’.

1. Further, in their letter of 11 August 2015, Hera’s solicitor advised the vendors’ solicitor that the Council is in a position to issue a statement of compliance once the relevant authorities provide their consent.  To this point in time, however, Hera’s solicitor had not raised the issue of the connection fees and bond moneys with the vendors’ solicitor nor had they asserted that the normal practice is such connection fees and bond moneys are payable by the vendors.  Their letter of 11 August 2015 summarises their instructions regarding the consent from the relevant referral authorities and enclosed the relevant correspondence which indicates that a total sum of approximately $920,000.00 was required to be paid in order for the consents to be granted. 

1. Hera’s solicitor also made enquiries as to the status of the GAIC payment and whether the requisite arrangements had been made with the relevant authorities. It will be recalled that an assessment of GAIC was required to be made and issued by the Commissioner, using the rates applicable for the 2015-2016 financial year,[242] and then paid promptly by the vendors following the issue of the statement of compliance.

   [242]The GAIC certificate included in the section 32 statement was not an ‘assessment’ and the amount of GAIC specified was based on the rates applicable in the 2014-2015 financial year.

1. Hera contends that after receipt of the planning permit on 16 June 2015, whilst there was likely still sufficient time to obtain registration of the plan of subdivision by 25 August 2015 ‘the earlier delays made achieving this date “tight”’ and ‘it required the parties to actively co-operate, including entry by the vendors into the service agreements, the vendors organising production of title from the bank and the vendors organising the ability to pay GAIC upon lodgement of the plan of subdivision for registration.’[243]  When the planning permit was issued on 11 June 2015, it included several conditions requiring ‘the owner’ to obtain the requisite consents from the referral authorities in respect of both lots on the plan of subdivision.  If one were to enquire (to borrow Buckley LJ’s formulation in IBM United Kingdom Ltd v Rockware Glass Ltd[244]), ‘What would an owner of the property … who was anxious to obtain planning permission [here, the statement of compliance so as to facilitate registration of the plan of subdivision], do to achieve that end’ it is likely that the response would be to the effect that some consultation would take place between the solicitors to co-ordinate the respective roles of the vendors and Hera, with a view to each party using their best endeavours as required under the contract to perform all of the steps required to bring the registration of the plan of subdivision to fruition. 

   [243]See Hera’s (Supplemented) Outline of Closing Submissions dated 22 December 2015, at [34].

   [244](1980) FSR 335, at 343 (Buckley LJ).

1. In the present case, however, it would appear that the vendors seemingly stood by and took little or no steps directed to achieving that outcome. Even if they were of the view that it was a matter for Hera to procure the requisite consents from the referral authorities, the vendors were aware that Hera had no authority to act in respect of the northern lot being retained by them. The vendors, through their solicitors even if not personally, knew from the terms of the planning permit that the referral authorities were concerned with arrangements for the provision of water supply, drainage, sewerage facilities, electricity and gas services and telecommunications to each lot. Furthermore, and notwithstanding that the vendors in their section 32 statement had represented to Hera that all but the sewerage facilities were connected to the southern lot, they must also have known that these other services were not in fact connected, in the relevant sense, to the southern lot.[245]  Yet this did not provoke any correspondence from them to Hera or its solicitors following the issue of the planning permit.  Rather, it would appear that the vendors adopted the stance that no action was required to be taken by them, by way of co-operation with the purchaser, directed towards satisfying those conditions of the planning permit and obtaining registration of the plan. 

   [245]See Urban No 1 Co-Operative Society v Kilavus [1993] 2 VR 201, where Hedigan J held that neither electricity supply nor gas supply is ‘connected’ to land within the meaning of s32(2)(ea) if they have not been so connected to any dwelling house on it so as to enable lawful and safe supply to the dwelling house to be commenced.

1. 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. 

1. 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.

1. 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. 

1. It is clear that once a statement of compliance was issued, the vendors were required to pay promptly the GAIC so assessed.  But under the statutory regime, until the statement of compliance was issued, no occasion arose for the making of an assessment.  Nevertheless, in a case where the vendors were subject to a best endeavours obligation directed to achieving registration of the plan in a timely way, the prudent course was for them to have made all necessary preparations for that to occur as soon as the statement of compliance issued.  Mr Waters gave evidence that the GAIC is normally paid upon settlement.[246]  But reference to the statutory regime suggests that is not the position in the case of a subdivision.  Mr Konstandellos maintained that the GAIC was payable in advance of any settlement, and that a certificate of release (issued by the State Revenue Office) confirming that the GAIC had been paid was required to be produced upon registration of a plan of subdivision.[247]

   [246]Transcript, 08/12/15, at 117-118.

   [247]See Affidavit of Mr Konstandellos sworn 2 December 2015, at [3.10.7].

1. Registration of the plan of subdivision also required the production of the duplicate certificate of title at the Land Titles Office.  As the 1 Adrian Street land was subject to a mortgage, the vendors were required to make arrangements with their mortgagee to produce the duplicate certificate of title. 

1. Hera contends that the Court ought infer that in taking the approach he did, as set out in the correspondence that passed between the parties, Mr Waters (doubtless upon instructions) was being deliberately obstructive and that his letters and the vendors’ refusal to take any steps to obtain title from the mortgagee bank or to organise themselves to be in a position to pay GAIC upon lodgement of the plan of subdivision for registration, was reflective of their desire to ensure that even if a statement of compliance issued, registration of the plan of subdivision could not take place by 25 August 2015.[248]

   [248]See Hera’s (Supplemented) Outline of Closing Submissions dated 22 December 2015, at [57].

1. If, as seems to be the case, the vendors’ solicitor was proceeding on the erroneous basis that the GAIC was payable at settlement, rather than upon the making of the application for registration of the plan of subdivision at the Land Titles Office, it is not clear that the vendors would have been in a position to promptly pay the GAIC following the issue of the statement of compliance.  In that event, it is likely that the vendors would not be found to have used their best endeavours to do all things necessary to give effect to the approval of the plan of subdivision.  Furthermore, if, as I have found, it was a matter for the vendors (rather than Hera) to enter into the various agreements with the referral authorities, that exercise would involve significant expenditure, in the order of approximately $920,000.00.  If the vendors were to comply with their best endeavours obligation, they would need to have made arrangements for funds to be available to meet those fees and charges when called upon to do so.  There was no evidence to suggest that any steps had been taken by the vendors in that regard.

1. If the statement of compliance were issued and the plan of subdivision were registered, the balance of the deposit, being $990,000.00 would be payable by Hera within 7 days.[249]  The balance of the purchase price, or ‘residue’, of $2,600,000.00 was payable ‘on or within 14 days of approval of the Plan of Subdivision by the Registrar of Titles’.[250]  As the vendors’ conduct operated to defeat any prospect of Hera achieving the first step, namely the issue of the statement of compliance, no occasion arose to test the financial ability of Hera to complete the sale.  The evidence that was filed on behalf of Hera seeking to demonstrate that it had the ability to settle at or around 25 August 2015 and also at or around the time of trial was, in my view, weak, vague and unsubstantiated.  Having said that, however, things may well have been different if Hera’s efforts to achieve a statement of compliance and registration of the plan of subdivision had not been affected by the vendors’ conduct.  On any view, the agreement for lease that Hera had entered into with Woolworths was a valuable corporate opportunity, and one that was likely to be of interest to developers generally, even if not able to be pursued by Hera on its own.

   [249]Cameron J found that this was what special condition 1 required.

   [250]See the Particulars of Sale for the new contract under the heading ‘Payment of Balance’,  and reading the word ‘approval’ in a manner consistent with the construction of that word in special condition 1 as determined by Cameron J.

Summary of conclusions

1. Of the three questions raised in the Originating Motion for determination by the Court, only two remain to be answered.  For the reasons set out above, I would answer those questions as follows:

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?

Answer:         Yes

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?

Answer:         Yes.  The plaintiffs, 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 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 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.

1. The vendors’ summons dated 1 September 2016 sought, in the alternative to the proper construction of special condition 8 contended for by them, relief by way of rectification.  As I have found that the proper construction of special condition 8 is that the contract could 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, no rectification is necessary.  However, were the proper construction otherwise, relief by way of rectification would be granted in the terms sought.

1. Hera also issued a summons seeking certain relief, including a declaration that the default notice or notice of rescission served by the vendors on Hera dated 11 August 2015 is invalid.  For the reasons set out above, I am satisfied that it is appropriate for the Court to make a declaration in those terms.

1. Hera also sought relief by way of declaration and injunction, declaring that the vendors are not entitled to terminate the contract pursuant to special condition 8, and an injunction restraining them from terminating or purporting to terminate the contract pursuant to special condition 8, together with an injunction restraining them from selling, encumbering or otherwise dealing with the land the subject of the contract.  I am not satisfied that it is appropriate to grant relief of this kind.  Rather, in circumstances where I have found that conduct on the part of the vendors operated to deny Hera the opportunity to demonstrate that it was possible for it to achieve registration of the plan of subdivision by 25 August 2015, I propose to order that the period of time specified in special condition 8 for registration of the plan of subdivision be extended. 

1. 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.  Fairness suggests that Hera should be provided a further period of 70 days or thereabouts[251] to enable it to seek to achieve registration of the plan of subdivision.  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. 

   [251]The relevant period to be fixed should conclude on a business day.

1. I will hear the parties on the form of orders to be made and on the issue of costs.