Boyer v Kosciusko-Thredbo Pty Limited - [2002] NSWSC 653

No judgment structure available for this case.

CITATION: BOYER v KOSCIUSKO-THREDBO PTY LIMITED [2002] NSWSC 653 revised - 6/08/2002

CURRENT JURISDICTION: Equity Division

FILE NUMBER(S): SC 6007/01

HEARING DATE(S): 27/05/02 to 29/05/02 & 31/05/02

JUDGMENT DATE: 30 July 2002

PARTIES :

John Peter BOYER & Anor v KOSCIUSKO-THREDBO PTY LIMITED

JUDGMENT OF: Foster AJ at 1-115

COUNSEL :
P.M. Wood - Plaintiffs
J.M. Ireland QC - Defendant

SOLICITORS:
Landerer & Co - Plaintiffs
Lane & Lane - Defendant

CATCHWORDS: The defendant (a trading corporation) selling land at Crackenback Ridge, Thredbo to plaintiffs - dispute over size of certain blocks - Breach of covenant.

LEGISLATION CITED: Trade Practices Act 1974 (C'wlth)
Environmental Planning & Assessment Act 1979

DECISION: Short Minutes of Order to be brought in by the parties. ; (Refer para 114)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

CORAM: FOSTER AJ

6007/01 - John Peter BOYER & Anor v KOSCIUSKO-THREDBO PTY LIMITED

JUDGMENT

1 FOSTER AJ: The defendant in these proceedings is and was at all material times a trading corporation within the meaning of the Trade Practices Act 1974 (C’wlth) (“The Act”) and is and was a lessee from the State of New South Wales of land in an around the village of Thredbo in the Kosciusko National Park. The land with which these proceedings is concerned is in the area known as Crackenback Ridge. It is an area in which the sport of skiing is conducted and ski lodges and other facilities associated with that sport are constructed.

2 In the course of its business the defendant sells to purchasers portions of the land, the subject of its lease. It does so by entering into a contract described as an Agreement for Development (“Agreement”) and Sub-lease with those purchasers. In brief, a purchaser acquires from the defendant an area of land, described in the Sub-lease and given a lot number. The Development Agreement provides for the erection on the land, to be so acquired, of ski lodge buildings. Consent to the sub-lease and proposed development is required from the National Parks and Wildlife Service (NPWS) which is the determining Authority under Part 5 of the Environment Planning & Assessment Act 1979 (“The EPA Act”). In fact, the necessary consent is applied for by the defendant, not by the purchaser. Also, in practice, the Sub-lease is formally entered into after the development has taken place in accordance with the Agreement.

3 The defendant operates a sales office in the Thredbo area, to which intending purchasers may resort and where they can obtain information as to available lots for sale, be shown the actual sites and conduct negotiations for purchases. As part of its selling procedures, the defendant supplies brochures, plans and other promotional material to potential purchasers.

4 The office, at the time relevant to these proceedings, was staffed, inter alia, by Messrs. Huggett and Halsted, employees of the defendant. Mr Huggett was the property and development manager and Mr Halsted was a property manager of the defendant, in relation to its operations in the Thredbo Village area.

5 The plaintiffs, John Peter Boyer (“Mr Boyer”) and Graham Humphries (“Mr Humphries”) became the purchasers of a block of land from the defendant in the Crackenback Ridge area, the relevant Development Agreement being finalised in January 2001. The Sub-lease has not yet been finalised, its completion having been overtaken by this litigation. The land was described as Lot 270 in the Crackenback Ridge area. More detailed reference will be made to its location later in these reasons. For present purposes it may be indicated that it was bounded to the east by other residential lots, to the south by a golf course area and to the north and west by an area described as Pt 258. This latter area was a flora and fauna reserve to which I shall make more detailed reference later. The southernmost portion of Pt 258 consisted of a corridor of land which led to the golf course area and which separated the western boundary of Lot 270 from the eastern boundary of the closest lot to the west of Lot 270. This lot was Lot 229, to which further reference will be made.

6 In the course of negotiating the Agreement, the plaintiffs sought and obtained a covenant in respect of Pt 258 and the golf course. It appears that the defendant had never, previously, provided such a covenant. In its final form, in the Agreement of 3 January 2001, it provided as follows:-

7 In these proceedings the plaintiffs assert that the defendant has committed a breach of this covenant, in that it is seeking to allow development on Part 258 to the detriment of the plaintiffs. The proceedings were commenced by summons. Interlocutory relief was granted, after which, by consent, pleadings were ordered. These pleadings raise a number of issues which I shall consider later. It is convenient now to set out the background to the proceedings and, in the process, make some findings of fact.

8 Background

9 One of the maps referred to was attached to the plaintiffs’ summons and is now attached to the plaintiffs’ Statement of Claim. It is a copy of a plan prepared by Peter W. Burns Pty Limited, Registered Surveyors, (“Burns”) dated 10 December, 1999, entitled “Contour and Detail Survey Lots 268, 269 and 270 Crackenback Ridge”. In addition to those lots, it depicts also Lot 229, which is heavily edged in black, and also the area Pt 258 together with a large area to the south of these designated areas which is described as “Golf Course”.

10 This map is a copy of a map, a number of copies of which are annexed to affidavits in this case and are to be found in the bundle of documents which is Exhibit “A”. The annexed copies, however, do not have Lot 229 heavily edged in black. It is clear that the black edging in the plan annexed to the Statement of Claim has been put in place purely to make clearer the boundaries of the lot as shown in the other copies of the plan. Lot 229, as so portrayed, is irregular in shape and has an area of approximately 852 square metres.

11 This plan shows that the closest residential lot to the east of Lot 229 is Lot 270. Between the eastern side of Lot 229 and the western side of Lot 270 there is an area of non-residential land which is part of a larger area described as “Pt 258”, all of which appears to be un-subdivided open space. The “corridor” portion of Pt 258, to which I have made earlier reference, divides the two lots. The distance between the south-western corner of Lot 270 and the south-eastern corner of Lot 229 is approximately 22 metres.

12 Because plans involving Lots 270 and 229 and the intervening area of Pt 258 have achieved considerable significance in this case, it is convenient to make some preliminary findings as to the origin and use of sub-divisional type plans in the Thredbo area. The following outline would appear to be uncontested. In 1962, the predecessor-in-title of the present defendant, pursuant to a Crown Lease, became the tenant of the whole of the Thredbo Village area. The lease document is in evidence. There is no need to refer to it here. The intention was that the area which, of course, was close to ski fields was to be opened up for development by the granting of sub-leases and appropriate development approvals. Such approvals were, as previously indicated, to be granted by the NPWS, as determining Authority.

13 It appears that in 1993 appropriate environmental investigations were made in the area of Crackenback Ridge, with a view to its being opened for development by the defendant. Those investigations revealed the presence of a rare and vulnerable species of animal known as the Broad Tooth Rat which lived in tall, dense, wet heathland which existed in parts of the Crackenback Ridge area. A management program for this rare species was recommended as part of the Crackenback Ridge Development. In June 1994 the NWPS granted approval for the development of the area, which approval included the reservation of an area of wet heathland as the habitat for this species. The reserved area was split into two non-contiguous parts each of which appeared, on plans prepared at the time, as “ Pt Lot 258”.

14 Although development of the Crackenback Ridge area, after the approval of 1994, has proceeded by way of the granting of sub-leases over surveyed and numbered lots, this has not taken place as the result of the establishment in that year of full survey plans of the whole of the area. It appears that the opening up and development of the land has not involved any system similar to the registration of Deposited Plans under the Torrens system. In fact plans have been produced from time to time which have been the subject of alteration to accommodate changes in the defendant’s marketing strategies. The initial planning and mapping of the areas covering the lots in question in these proceedings was performed by Burns, for the defendant, in 1994. It may be noted that Burns has been the surveyor used, almost exclusively, by the defendant for the preparation of plans in relation to the Crackenback Ridge area, which plans have been utilised in its sales promotional material from 1994 onwards. The 1994 planning of the relevant area is described in the defendant’s written submissions as follows, there being no dispute as to the accuracy of this information:-

“The proposed lots for sublease which were formulated by the defendant in its application to NPWS in 1994 included an area to the south west of Crackenback Ridge designated as proposed Lot 229. In the survey plans prepared by Peter W Burns dated 7 September 1994, this Lot is shown as having an area of 1,000.4 sq. m. On the same plan, and to the west of Lot 229 was a proposed Lot 230 consisting of a relatively large area of 1,660.3 s. m. Between proposed Lots 229 and Lot 230 on the same plan was a corridor of land having a width of 12.4m shown as part of a larger area marked “Part 258” having an area of 4,625 sq. m. The narrow corridor between proposed Lots 229 and 230 provided a reserved natural bush area which linked the heath to the north of Lots 229 and 230 with the Golf Course in Thredbo Village. Proposed Lots 229 and 230 according to the Burns plan of 1994 were adjacent on their southern boundaries to the Thredbo Village Golf Course already established as part of the existing Thredbo Alpine Village development.”

15 The evidence establishes that Lot 230, as originally surveyed, was of considerable size. In 1999 a projected sale of it for the purpose of a major resort development fell through. In November of that year, Mr Hugget developed a fresh strategy for the sale of the land comprised in this lot. The strategy required its sub-division into four smaller lots. He obtained approval for this course from NPWS and Burns was engaged to produce a fresh plan of the area. The new strategy involved, in addition to the subdivision of Lot 230, the reduction in size of Lot 229 to approximately 900 square metres. This involved the moving of the eastern boundary of that lot towards the west and the moving of the southern and western boundaries into the area previously occupied by the adjoining Lot 228 and the golf course area. When Burns performed the detailed survey work, it transpired that Lot 229 had an area of 852 square metres rather than 900 square metres.

16 Burns drew up the following plans, (1) a plan dated 30 November 1999 by which Lot 230 was subdivided into Lots 270, 269, 268 and a much reduced Lot 230; Lot 270 had an area of 700 square metres and the distance between Lot 270 and Lot 229 at their southern boundaries was approximately 22 metres: (2) a lease boundaries plan dated 2 December 1999 showing Lot 270, Lot 229 and “Pt 258”: (3) a contour and detailed survey plan for Lots 268, 269 and 270 which was dated 10 December 1999: and (4) a contour and detailed survey plan for Lot 229 of the same date which showed it as having an area of 852 square metres. The third plan is the one annexed to the Statement of Claim. It may be noted that all the plans showed the new Lot 270 as having an area of 700 square metres, the new Lot 229 as having an area of 852 square metres and the distance between them at their southern boundary as being approximately 22 metres. Where dimensions were not directly indicated, they could be obtained by measurement, the plans being to scale.

17 The evidence makes it clear that all these plans were produced at about the same time by Burns, for the purpose of giving effect to Mr Huggett’s new sales strategy for this part of the Crackenback Ridge. These were the plans which were used for sales promotional purposes at the time that the plaintiffs made contact with the defendant in mid 2000 and also when Mr Zmisa, to whom reference will be made later, made enquiries relating to a proposed purchase of Lot 229 in June of that year.

18 In addition to these plans produced at the end of 1999, the defendant, through Messrs. Huggett and Halsted, made available to potential purchasers what have been referred to as “availability lists”, indicating the lots which were for sale, together with their asking prices and their areas. These lists all showed Lot 229 as having an area of 852 square metres and Lot 270 as having an area of 700 square metres. Furthermore, a publication, known as the “Thredbo Newsletter”, which was produced by the defendant and provided to the plaintiffs as part of the promotional material, also contained information as to available lots. This publication showed Lot 270 and Lot 229 as having those areas.

19 Both Messrs. Boyer and Humphries gave evidence as to their being each provided with the plans and other promotional material, after having made contact with the defendant. Their evidence is detailed. There is no dispute that they were given this material. I am satisfied that they relied upon it as being accurate and that it was a major inducement in their making a decision to acquire Lot 270.

20 It may be noted that some of the plans indicated the existence of a large rock within Lot 229 close to its south-eastern boundary which, as the evidence shows, was a clearly visible feature on this lot. The evidence also indicates that, from the point of view of a person standing near the western boundary of Lot 270, there were attractive views, to the south, of the golf course area, to the west, of that part of Pt 258 which formed the corridor between Lots 270 and 229, and to the north of the rest of Pt 258 which was to be found in that part of the Crackenback Ridge area. The views were of picturesque bushland.

21 In his written submissions, counsel for the plaintiffs provides the following summary of the documents that were provided. The summary is, in my opinion, accurate and sets out the main features of this documentation. It reads as follows:-

“THREDBO ALPINE VILLAGE
CRACKENBACK RIDGE
LEASE BOUNDARIES
March 2000 [or December 1999]”
(d) the 6 July 2000 facsimile stated: “I have attached the current pricelist and map of available blocks of land…”,
(e) three of the plans showed an area identified as “Pt 258”,
(f) one of the plans showed an area identified as “Golf Course”,
(g) two of the plans showed a distance between Lot 270 and Lot 229 on the southern boundaries of approximately 22 metres,
(h) two of the plans, the two availability lists and the tender documentation showed Lot 229 as having an area of 852 square metres, or approximately 852 square metres,
(i) in respect of the eight documents provided (five plans, two availability lists and the tender documentation) there were no inconsistencies between those documents in terms of the location of the boundaries of Lot 270, the location of the boundaries of Lot 229, the area of Lot 229, the distance between Lot 270 and Lot 229 at the southern boundaries, the location of “Pt 258” and the location of the “Golf Course”.

22 The first plaintiff had experience in real estate development and the second plaintiff was a distinguished architect. I regarded each as being honest and truthful witnesses. Although each was aware, in a general way, that NPWS had an approval role in relation to developments in the area, each man accepted the documentation as an accurate portrayal of the shape, dimensions and area of the lots shown and also of the distances separating them. In my opinion, they were amply justified in so doing. It was suggested by Mr Huggett, in his evidence, that they should have had regard to an earlier map of the area which was attached to the wall in his office. I am quite satisfied that, despite Mr Huggett’s evidence to the contrary, no reference was made to this map in any of the discussions with the plaintiffs, nor was their attention reasonably drawn to it. I shall refer to this map later in these reasons.

23 Each of the plaintiffs inspected Lot 270 before deciding to purchase. Each was singularly impressed with the views to which I have made reference. Mr Boyer made an inspection in the company of Mr Halsted in August 2000. He says that, on that occasion, Mr Halsted, when extolling the advantages of that lot, told him that the likely distance between any building on Lot 270 and Lot 229 would be in the vicinity of 30 metres because the eastern boundary of Lot 229 was only a little distance to the east of the large rock or boulder to which I have already made reference, with the result that any building on Lot 229 would necessarily be to the west of that feature.

24 Mr Halsted denies this conversation. I reject that denial. Having regard to his obvious knowledge of the distances as shown in his own promotional maps and to the significance of the bushland views to the west of Lot 270, it is very likely, indeed, that Mr Halsted, as a salesman on the site, would have made these comments. Moreover, I did not form a particularly favourable view of Mr Halsted as a witness and much preferred the evidence of Mr Boyer in all circumstances where their testimony was in conflict.

25 I am also satisfied that both plaintiffs had a clear recollection, from visits to the site, that there were surveyor’s corner pegs in position in respect of both Lot 229 and Lot 270, which were consistent with the position of the boundaries of those lots as shown on the plans with which they had been provided. Clearly enough, these pegs would have been placed in position when the Burns’ surveys of late 1999 were made, which led to the re-subdivision of the old Lot 230 and the repositioning to the west of the boundary of Lot 229. There was some reluctance on the part of Messrs. Huggett and Halsted to accept that these pegs were in position and visible. I consider that they would have been well aware of their presence and position and of their conformity with the new surveys that had been obtained from Burns, pursuant to Mr Huggett’s new strategy for the sale of the re-subdivided lots.

26 I am satisfied that the plaintiffs were attracted to Lot 270 because of the appealing views that could be obtained from it to the south-west and north and also because of its being separated from Lot 229 by an area of land which they understood to be reserve. I am satisfied that this quality of Pt 258 had been explained to them on behalf of the defendant. Indeed, Mr Humphries had noted information as to the reason for its reservation on one of the plans given to him; he had placed the word “rats” in the Pt 258 area. The plaintiffs decided to make an offer for Lot 270. This was done by Mr Boyer in a letter of 25 August 2000 addressed to the defendant. $400,000 was offered. The plaintiffs were careful to identify the land in respect of which the offer was made and also sought to preserve what they saw to be a significant feature of the land, by requiring a particular condition. The relevant parts of the letter were as follows:-

“1. The offer is for Lot 270 as shown in the detail survey prepared by Peter W Burns and dated 10.12.99.
………….
4. Kosciusko-Thredbo Pty Limited is to covenant that there will be no developments carried out on the area designated as Pt 258 and the area currently designated as Golf Course on the southern boundary of Lot 270.”

27 The survey referred to was the plan to which reference has already been made and which was supplied to each of them by the defendant in July 2000.

28 On the same day a reply was received from the defendant. It contained a counter offer of $432,000.00. It responded to the specific points noted above from the plaintiffs’ letter in the following way:-

29 Messrs. Huggett and Halsted each gave evidence as to their understanding of the covenant sought. I shall refer to this later.

30 On or about 1 September 2000, Mr Humphries was supplied with a further plan by the defendant, produced by Burns. It bore an issue date of 1 September 2000 and referred to the date of survey as being 10 December 1999. It was a Contour and Detailed Survey of Lot 270. It did not show Pt 258 or Lot 229. However, it showed an extended line heading in a westerly direction from the south-west corner peg of Lot 270, obviously to the next boundary peg, which would have been at the south-east boundary of Lot 229. The distance between these two pegs was shown as being 21.88 metres, a distance regularly indicated in other plans as being the distance separating the southern boundaries of Lot 270 and Lot 229, across the southern corridor area of Pt 258.

31 After further discussion and meetings, the plaintiffs decided to meet the asking price of the defendant. This decision was conveyed in a letter of 4 September 2000 to Mr Halsted, signed by each plaintiff. Apart from a reference to the provision of some annual lift passes as an additional incentive, the letter spoke of the provision of roadway and services “to a point where the right-of-way meets the boundary of Lot 270.” It also spoke of their design as being one which would “locate the building on the western boundary, and thereby maximise the set back from the right-of-way”. It requested the preparation of necessary documentation as soon as possible.

32 On the same day, Mr Halsted sent a facsimile, to the defendant’s solicitors, advising the sale of Lot 270 to the plaintiffs and requesting the preparation of “the standard Development Deed”. The area of Lot 270 was shown as “700 m approx – (survey follows)”. Under the heading “special conditions”, Mr Halsted advised “Kosciusko-Thredbo Pty Limited will covenant that there will be no developments carried out in the area designated as Pt 258 and the area designated “Golf Course” on the southern boundary of Lot 270.” This followed the wording of Mr Boyer’s letter of 25 August, except that “currently” was omitted.

33 Mr Halsted, in fact, attached to his letter a copy of Burns’s survey of 30 November 1999 which showed Lot 270 as having an area of 700 square metres and Lot 229 as having an area of 852 square metres, the distance between the southern boundaries across the reserve corridor being 21.88 metres. Additionally, the plan had written upon it, in Mr Halsted’s handwriting, the words “Golf Course” adjacent to the southern boundary of Lot 270 and “Pt 258” in the main area of the reserve roughly above the entrance to the corridor area between the two lots.

34 It is of significance, in my opinion, that this plan was forwarded with the instructions to the defendant’s solicitors, notwithstanding that the reference to a survey in the body of the letter was in the context of the reference to the area of Lot 270. Mr Halsted had available a survey which related only to Lot 270. Such a survey had, in fact, been sent to Mr Humphries on 1 September 2000. The attachment of the survey of 30 November 1999, in my view, clearly was intended to provide clarification of the special condition intended to be included in the Development Deed.

35 Pursuant to this letter of instructions, the defendant’s solicitors forwarded to the plaintiffs’ solicitors a draft of the document which Mr Halsted had referred to as “a standard Development Deed”. This was a draft Agreement for Development and Sub-Lease in respect of Lot 270, which was shown in an annexed plan forming part of the draft document. Not surprisingly, this plan was identical to the one supplied by Mr Halsted in his letter to the solicitors of 4 September 2000.

36 The draft Agreement contained Clause 3.7 which read as follows:-

“The Company covenants and agrees that it shall not permit developments to be carried out in the area designated “Pt 258” and the area designated “Golf Course” on the Southern Boundary of Lot 270.”

37 It may be noted that the inclusion of this clause corresponded with instructions that Mr Boyer had given to his own solicitors, to the effect that a term had been agreed that: “KT is to covenant that there will not be any developments carried out on the areas designated as Pt 258 and Golf Course on the survey provided to us.”

38 It is completely plain, in my view, that the parties were seeking to give effect, at this stage, to an understanding reached between them that, as part of their overall agreement, the defendant would not permit development in the areas referred to, as delineated in the Burns’ survey plan of November 1999, which, in itself, represented the sub-division which the defendant was marketing in the year 2000.

39 It appears that towards the end of September 2000, Mr Humphries, as architect for the project, was experiencing difficulties in relation to obtaining an optimum siting for the proposed buildings on Lot 270. He had discussions with Mr Halsted, as a result of which he produced a proposal which involved some alterations of the boundaries of Lot 270 in Burns’ survey. It is clear that Mr Halsted felt that he was able to agree to such alterations, for reasons that I will advert to later. The alterations were, indeed, relatively minor. They involved a rotation of the western boundary of the lot, which Mr Humphries in a facsimile directed to Mr Halsted described as “a vast improvement without any detrimental effects, and would allow the optimal use of the site and minimise impact on adjacent Lot 269”. The proposal involved a short extension of the north-west boundary of the lot into the Pt 258 corridor and the retraction by a correspondingly small amount of the south-west boundary away from Pt 258. These alterations of dimension were not large and could properly be described as minor adjustments. Significantly, there was to be no alteration in the overall area of Lot 270, which would remain at 700 square metres.

40 The parties’ solicitors were informed of this agreed alteration. When the plaintiffs’ solicitors replied to the defendant’s solicitors letter of 21 September 2000, by letter dated 23 October 2000, the following passages were included:-

41 On 17 October 2000 the plaintiffs provided the defendant with architect’s plans for the development proposed on Lot 270. These were to be forwarded by the defendant to NWPS for the purpose of obtaining appropriate approval “to carry out an activity”. Mr Humphries’ letter referred to the need for construction to start on the site before December 2000 and the existence of a consequent “time constraint”. This was a clear reference to the necessity for building to be commenced and completed within the summer period. Although not mentioned in the letter of 17 October 2000, it is clear that, at this time, consideration was being given by the parties to the provision of a right-of-way for pedestrians and vehicles affecting Lot 270 and Lots 268 and 269 to its east. When the defendant’s solicitors replied to the plaintiffs’ solicitor’s letter of 23 October 2000, on 25 October 2000, they referred to the “small adjustment…to the lot boundaries” and indicated that the defendant was “awaiting NPWS’s confirmation that this is acceptable”. The small addition to Clause 3.7 was agreed to, together with an indication that the clause, as altered, would also appear in the Sub-lease. In addition, the right-of-way question was addressed by the following proposed alteration to the Agreement:-

“Clause 8.13. The following sentence shall be added to the clause “Without limitation the Company confirms that a right of way in that location of the eastern boundary of the said Lot 270 shown on the annexed plan “B” shall be granted to the Developer for use for pedestrian access and a vehicular right of way in common with the Sub-Lessees of Lots 268 and 269.”

42 On 6 November 2000 the plaintiffs’ solicitors replied to that letter requesting “a copy of the adjusted plan” and seeking clarification in respect of the right-of-way proposal, asking that it be “limited to being for the benefit of the Sub-lessee of Lots 268, 269 and 270 and their invitees only”. It is clear that the position and proposed use of this right-of-way was a matter of concern to the plaintiffs, in relation to their proposed development of Lot 270.

43 Mr Humphries produced a plan of the proposed building and also of the right-of-way. These were forwarded, by Mr Boyer, to the plaintiffs’ solicitor “for attachment to the Sub-leases” by letter of 13 November 2000. It would appear that, at about the same time, it was also provided to the defendants and their solicitors.

44 By letter of 13 November 2000, the defendant’s solicitors replied to the plaintiffs’ solicitor’s, letter of 6 November 2000 and, in response to the request to provide a copy of the adjusted plan, enclosed “a copy of the site plan for Lot 270 with which I have been instructed by my client.” This plan showed the re-located boundaries of Lot 270 and the site of the proposed building but made no reference to Pt 258 or the “Golf Course”. It was, in fact, a plan relating to Lot 270 and did not seek to depict Pt 258 or Lot 229.

45 On 18 December 2000 the plaintiffs’ solicitors wrote to Mr Boyer. They enclosed the proposed Agreement for signature by the plaintiffs and made the following observation:-

“1. Annexure B which is supposed to be a plan of lot 270. The plan attached is in fact the same plan as provided by Graham Humphries to us. In itself this is not a problem. However, elsewhere through the documents it is specified that on this relevant plan should be shown a site of the right of way over lots 270, 269 and 268. We were previously provided with a plan which showed the site of the right of way. At the time of dictation we have telephoned the solicitor for Kosciusko Thredbo to take the issue up with her. However, at the time of dictation she had not been in her office. We have now been told by her to add the original site plan showing the right of way. A copy is attached. Please confirm that the old plan is still suitable”

46 The Agreement thus forwarded for signature included other annexures, one being the Sub-lease, another being the Constitution of the Crackenback Ridge Association to which I shall make reference later.

47 In what appears to be late December or early January Mr Boyer, under cover of an undated letter, returned to the plaintiffs’ solicitors the signed “Agreements to Develop and Sub-lease.” Some changes were noted. Some cheques, to be used in settlement, were enclosed. The letter included the statement:

“I attach the two sets of plans as requested and confirm that the Sub-division Plan marked “B” does show the correct Right-of-Way location. The attachment “B” showing Lot 270 should be replaced by the enclosed Plans as they show the correct road location.”

48 NPWS approval of the building plans for Lot 270 was given on 2 January 2001. On the following day notification of the approval was forwarded to the defendant. On 3 January 2001 the plaintiffs’ solicitors forwarded to the defendant’s solicitors a signed copy of the Agreement. They requested that a counterpart of the Agreement, executed by the defendant, be forwarded to them.

49 That letter contained, inter alia, the statement:

“Our client has provided us with a substitute plan “B” which correctly identifies lot 270 together with noting the common right-of-way between lots 268, 269 and 270. This plan has been substituted for the previous plan which did not show the site of the right-of-way.”

50 The substituted plan “B”, referred to, has been productive of some difficulty in the case. As things turned out, it was substituted for the plan, originally intended to be annexed to the Agreement, which was the Burns’ subdivision plan of November 1999 and which, as I have previously found, was intended to be read with, and in explanation of, the covenant against development on Pt 258 and on the adjoining portions of the Golf Course. The substitute plan, however, showed the new boundary for Lot 270, in the rotated position already referred to. It showed the site of the building intended to be erected on the lot. It also showed the position of the right-of-way which had been the subject of the earlier discussion. Because of the rotation of the western boundary, the southern boundary had been reduced in length to 18.75 metres, the northern boundary increased to 30.24 metres and the western boundary was, itself, reduced to 20.05 metres. However, as previously indicated, the overall area of the lot remained at approximately 700 square metres. Importantly, however, there was no reference on this substituted plan to “Pt 258” or “Golf Course”. Lot 229 was not depicted, although, it would appear, its western boundary and part of its southern boundary were shown.

51 Clause 3.7 was, however, included in its amended form. It read as follows:-

52 In the result, the Agreement, as executed, did not contain the November 1999 Burns’ plan. Indeed, it contained no plan which “designated” Pt 258 or the “Golf Course” area.

53 It is part of the defendant’s case that the substitution of Mr Humphries’ plan for the November 1999 Burns’ survey plan was “deliberate” on the part of the plaintiffs, indicating that, as at the time of execution of the Agreement, they placed no reliance upon that Burns’ plan or any similar plans they had been shown by the defendant during the course of negotiations. The substitution of the plan which, in effect, showed only Lot 270, with its slightly altered boundaries and the position of the proposed development, indicated that the distance between the western boundary of Lot 270 and the eastern boundary of Lot 229, together with the absence of development between the two lots as so defined and upon the Golf Course to the south, had ceased to be of any concern to the plaintiffs and was indicative of those considerations having no contractual or representational force at the time of the execution of the Agreement.

54 Having heard the witnesses and observed them and considered the circumstances in which the substitution took place, I am firmly of the view that this submission should be rejected. I am satisfied that, because concentration was being focused on concerns in relation to the right-of-way and upon the amendment of the boundaries as shown in the earlier plan, the failure to include that earlier plan in support of the covenant in Clause 3.7, which remained unchanged, clearly indicates that the omission was occasioned by inadvertence and mistake. I am also satisfied that this mistake would, reasonably, have been obvious to the defendant and its solicitors, as I find that, at all relevant times, up to and including the execution of the Agreement, there was a common understanding that, subject to the minor adjustments that had been made to Lot 270, the boundaries of Lot 270 and its adjoining lots to the east and west were as depicted on the Burns’ subdivision plans of late 1999.

55 I am satisfied that this was the position at the time of the execution of the Agreement in January 2001. Since that execution, the plaintiffs’ development, in accordance with the approved plans, has taken place, with the result that the buildings have been occupied and used since the winter of that year.

56 It is now necessary to refer to the sequence of events in relation to Lot 229.

57 I am quite satisfied, on the evidence, that this particular lot had, for a considerable period of time prior to 2001, presented significant marketing difficulties. It had topographical features which presented difficulties for any development upon it, one of which was the large boulder, close to its eastern boundary, to which reference has already been made.

58 Mr Zmisa, to whom reference has already been made, was interested in creating a development in the Crackenback Ridge area. Sometime in the vicinity of June 2001, he interested himself in Lot 229. With the assistance of his architects, Darryl Jackson Robin Dyke Pty Limited (“Jackson”) he began to consider plans for its development. The defendant, through Messrs. Halsted and Huggett, provided him with the same information in relation to lot availability and sub-divisional layout as had been provided to the plaintiffs. Accordingly, he commenced an investigation on the basis that Lot 229 had an area of 852 square metres and had the dimensions shown on the November 1999 Burns’ plan. It appears, quite clearly, that, having regard to the configuration of the lot and its area, it was not suitable for the type of project that Mr Zmisa and Jackson had in mind. Accordingly, discussions were entered into with the defendant, through Mr Halsted, as to the increasing of the size of Lot 229 in order to accommodate a more suitable development.

59 Initially, the proposal was that the lot be increased in size on the northern, southern and eastern boundaries. The northern and southern boundaries were to be moved about three metres to the north and south respectively and the eastern boundary moved some seven or eight metres. It appears that this would have increased the size of the lot to 1,225 square metres. On 10 October 2001 Jackson was provided by the defendant with an earlier survey plan of Burns dated 24 July 1996. This earlier plan had produced a significantly larger area for Lot 229. It obviously preceded the radically different sub-divisional layout that had been prepared for the marketing scheme of 1999. I would certainly expect that Mr Halsted would have regarded that plan as having been superseded. He gave no satisfactory explanation as to why he did not so regard it. However, he provided this plan to Mr Myson, the architect considering the matter on behalf of Jackson. In relation to the proposed increase in size of Lot 229 he said, in a facsimile to Mr Myson of 10 October 2001, “using this survey, the required lot variations would be minimal”. It cannot be gainsaid that, in his effort to dispose of Lot 229 to Mr Zmisa and any purchasing syndicate that Mr Zmisa was setting up, he was prepared to enter into arrangements whereby the area and dimensions of Lot 229 would be significantly increased to the north, south and east. It may be noted that any increase to the east would cause Lot 229 to intrude significantly into the Pt 258 corridor, as shown in the Burns’ November 1999 plan. Also, extension to the south of the southern boundary would intrude into the Golf Course area.

60 The Jackson plan, increasing the size of Lot 229 to 1225 square metres, was, in fact, only the first of a number of plans produced after October 2001, whereby changes in the area and dimensions of Lot 229 were proposed, with a view to accommodating the requirements of Mr Zmisa and Jackson for the development on that lot. It is not necessary to set out the detail of the various changes proposed in the comparatively large number of plans that were produced. The last such plan increased the area of Lot 229 by approximately 50%. This increase resulted in significant intrusion into the Pt 258 corridor. It placed the eastern boundary of Lot 229 well to the east of the large boulder previously referred to. The building plans associated with this projected increase in lot size involved the creation of substantial structures in the corridor area in relatively close proximity to the western boundary of Lot 270.

61 It is quite plain, of course, that this proposed development on, and increase in size of, Lot 229, would have caused great concern to the plaintiffs, had they been aware of it. It is quite clear that they were of the view that they were protected by Clause 3.7 of the Agreement from any development in the corridor of Pt 258 to the west of their boundary.

62 I am satisfied that in or about October 2001, Mr Boyer became aware of Mr Zmisa’s interest in a proposed purchase of Lot 229 and that there was, at that time, a conversation between them, in the course of which the question of their becoming neighbours was discussed. I am satisfied that Mr Boyer mentioned to Mr Zmisa the existence of the covenant and the fact that, although they would be neighbours, they would be well separated. I am satisfied that Mr Boyer suggested, in that conversation, that Mr Zmisa should speak to Mr Huggett to clarify the question of the distance that should separate Lot 229 from Lot 270.

63 The matter came to a head in December 2001. Mr Boyer, as a result of speaking to Mr Myson, obtained a clearer idea of the nature of Mr Zmisa’s plans for the development of Lot 229. This led him to speak to Mr Huggett about the proposed development of Lot 229 including the location of any proposed buildings. He obtained, I am satisfied, an assurance from Mr Huggett that the defendant would not carry the matter any further until the question of the plaintiffs’ rights in relation to any development on Lot 229 were clarified.

64 Mr Boyer followed up this discussion by sending a facsimile to Mr Huggett on 3 December 2001. He enclosed a “Contour and Detailed Survey” prepared by Burns on 10 December 1999 and which had been supplied to him previously by the defendant. He indicated, in the facsimile, that the plans showed “a width of 21.88 metres between Lot 270 and Lot 229”. On 4 December 2001 Mr Boyer sent a further facsimile to Mr Huggett, dealing with the question in greater detail. That facsimile read as follows:-

“We refer to our recent telephone conversation and reiterate our concern that it is proposed that development occur on Lot 258. We attach, for good order’s sake, a copy of plans that have been provided by Kosciusko Thredbo Pty Ltd to us, upon which we based our Agreement with yourselves. These clearly show that Lot 258 is almost 22 m wide where it abuts the Golf Course.

As you are aware, this was a fundamental condition and covenant of us entering into the Agreement with yourselves, and these representations have been incorporated into our Agreement. We would naturally expect and request that whilst you investigate the confusion, no deposit or Agreement be entered into over the land that we believe is comprised by Lot 258, and that no development or other work occurs on such land.

We would appreciate if you could confirm to us by return fax that you concur with the above, and we are looking forward to your confirmation in due course as to our Agreement in respect of Lot 258”

65 Mr Huggett responded to this letter, by facsimile on 10 December 2001. His letter read as follows:-

You will note that the boundaries of lot 229 and lot 270 differ from those shown in the plan you refer to in your letter dated 4 December 2001. Given the number of large trees on the site, the boundaries of lot 229 have been amended in an effort to retain as many established trees on the site as possible. A design involving one large building bulk, similar to your building on lot 270, was not possible due to the number of trees which would be required to be removed. Plans of the proposed development follows.

We understand your concerns regarding any development on Pt lot 258. We acknowledge we made representations regarding this issue and we advise that the company will honour this commitment not to build on Pt lot 258. The original sub-division approval for the Crackenback Ridge prohibits building in this area. Following is the December 1995 plan of the original approved subdivision showing Lots 229 and the then un-subdivided lot 230. You will note that the gap from the golf course to Pt lot 258 is shown at 12.4 m wide.

We reserve our rights to make minor boundary adjustments in the interests of good design and retention of established trees. You will recall that this was the case with lot 270, whereby on a request from yourselves, we allowed boundary adjustments. The Northern boundary was extended some 5 m changing the Northern and Western boundaries of your lot. In addition, at your request, we permitted the Western side of the building to encroach well into the 3 m setback, which obviously has placed you closer to any development on lot 229. A copy of your “as built” plan for lot 270 follows.

The contour plan you have referred to, showing the corridor to the golf course at 22m wide is dated 10 December 1999 is not intended to be a survey of lots 229 or 270 and does not reflect the final boundaries of lot 229 or lot 270.

We have been on site and feel that the amendments to lot 229 will in no way, compromise your privacy or outlook. In fact your outlook to the North West should be enhanced by the retention of trees and the final building design.

The lot 229 negotiations proceeded on the basis that any additional site area resulting from boundary alterations did mot result in increased development on the site. The allowable site coverage in Crackenback Ridge is 35%, the proposed site coverage for lot 229 is 28%. Two bed allocations have also been deleted from the overall site capacity.

We will be happy to meet you on site to discuss the issue”.

66 It is clear that the “current survey plan” forwarded with this letter had been brought into existence by Burns at Mr Huggett’s request. It is dated 10 December 2001. It shows Lot 229 as having an area of 1301 square metres. On this plan the distance between the south-western corner of Lot 270 and the south-eastern corner of Lot 229 was 15.68 metres and that between the north-western corner of Lot 270 and the eastern boundary of Lot 229 was less than 10 metres.

67 It is convenient, at this stage, to note other matters that I find to have been occurring in late 2001.

68 During the period that Burns was producing a series of plans, altering the dimensions and increasing the size of Lot 229 to accommodate the development proposals being put forward by Mr Zmisa on behalf of a syndicate to be formed, the plaintiffs’ solicitors were approaching the finalising of the Sub-lease between the plaintiffs and the defendant in respect of Lot 270. In accordance with the established practice, the Sub-lease was to be settled and finalised after development had taken place in accordance with the Agreement. I have already noted that the Sub-lease was to contain a covenant in identical terms with Clause 3.7 of the Agreement.

69 On 24 October 2001 the plaintiffs’ solicitors wrote to the defendant’s solicitors in relation to the finalising of the terms of the Sub-lease. In that letter reference was made to the “site plan” to be attached to the document. They noted that this plan “should have written on it Golf Course and Pt 258 as noted on the plan attached to this facsimile.” Confirmation was sought that the site plan could be so amended. The attached plan was the “Lease Boundaries” plan produced by Burns on 2 December 1999. It clearly showed the distance between Lots 229 and 270 and the configuration of those lots which had been depicted in all the plans provided by the defendant to the plaintiffs, leading up to the execution of the Agreement. This letter was not replied to by the defendant’s solicitors until 6 December 2001, after Mr Boyer had spoken to Mr Huggett about the problems in relation to Lot 229. Their letter indicated that the plaintiffs had raised a further matter with the defendant that was “being resolved between the parties”. The letter continued:-

“I am instructed to advise that I shall respond to you upon receipt of instructions regarding not only the matters which you have raised in your correspondence but also the additional matter which our clients are discussing.”

70 As at 3 December 2001, the evidence establishes that Mr Zmisa, who had been busily engaged, together with Mr Myson, in negotiations with the defendant in relation to the alterations proposed for Lot 229, had not established, in any final form, the syndicate which was to develop Lot 229. It was intended that a company, First Tracks Pty Limited (“First Tracks”) should be constituted as the Trustee of the proposed investing syndicate. However, no agreement had been brought into existence to record the terms of any proposed joint venture between Mr Zmisa and other interested parties. Moreover, there was no form of agreement reached between Mr Zmisa, the syndicate, the Trustee, and the defendant in relation to the acquisition and development of Lot 229.

71 Notwithstanding this, on 3 December 2001, the date of Mr Boyer’s conversation with Mr Huggett and of his facsimile enclosing the plan referred to in the covenant, Mr Zmisa paid a deposit of $21,000 in respect of the acquisition of Lot 229. This deposit was paid by him by the utilisation of his American Express card at the Thredbo Sports Centre in Thredbo Village. He denied paying the deposit at that time and in that manner because he had been advised by the defendant of the problems being raised by the plaintiffs. He said that, despite the matter of the plaintiffs’ agreement with the defendant in relation to the boundaries of Lot 229 having been raised with him earlier by Mr Boyer, he had not had any communication with Mr Huggett about the matter. Nor had Mr Huggett or Mr Halsted communicated with him in relation to Mr Boyer’s conversation with Mr Huggett and his facsimile of 3 December. Mr Zmisa agreed that, although Lot 229 was on the market, there was no apparent competing potential purchaser at that time. I was not satisfied with Mr Zmisa’s evidence in this regard. I formed the view that he was aware of the problems being raised by the plaintiffs and that he hastened to pay the deposit, in the way he did, in order, so far as possible, to secure the purchase of Lot 229 in its enlarged form.

72 The evidence also establishes that on 6 December 2001, shortly after Mr Boyer’s conversation with Mr Huggett and his sending of the facsimiles of 3 and 4 December 2001 and Mr Huggett’s request to Burns to prepare the new plan, showing the altered boundaries of Lots 229, 268, 269 and 270, the defendant made application to NPWS for approval for the construction of buildings on Lot 229 as shown on a Jackson plan which attributed an area of 1,299 square metres to that lot. The greater part of the proposed building was located on the corridor area of Pt 258 as shown in the plans relied upon by the plaintiffs. Other parts of the proposed building were located on the Golf Course area shown in those earlier plans. I observe that this activity on the part of the defendant took place very shortly after the plaintiffs had raised the problem in relation to the covenant and did not, in fact, utilise the final plan prepared by Burns and forwarded to Mr Boyer as being “the current survey plan” of the relevant lots, with the defendant’s letter of 10 December 2001. In my opinion, the inference is irresistible that, having been appraised of the plaintiffs’ complaint about a potential breach of the covenant, the defendant acted in great haste in an attempt to obtain approval of the changed dimensions of Lot 229 and of Mr Zmisa’s proposed development upon it, before the proposed development might be obstructed by activity on the part of the plaintiffs.

73 That activity commenced on 11 December 2001, when the plaintiffs’ solicitors in a facsimile to the defendant’s solicitors and to Mr Huggett, drew attention to Clause 3.7 of the Agreement, which was to be repeated in Clause 16.12 of the Sub-lease. The letter continued:-

“Your client now seeks to:

(a) unilaterally change the boundaries of part lot 258;

(b) unilaterally reserve the right to make “minor” boundary adjustments.

Your client’s representations and covenants do not permit it to do so in a way will result in its breaching the covenants and representations.

In the circumstances would you please provide your client’s written undertaking within 7 days not to do the following without 14 days prior written notice to us:

1. Enter into any sub-lease, agreement for sub-lease or similar arrangement in relation to lot 229;

2. Take any steps in connection with the development of lot 229.

Failing receipt of the written undertaking as requested our client reserves the right to take such steps as are necessary to protect its rights.”

74 On 11 December 2001, also, a Joint Venture Development Deed was entered into between Mr Zmisa and certain persons as his co-venturers, together with First Tracks for the development of Lot 229. The document was, however, incomplete. It did not provide details as to the allocation of the apartments in the planned buildings between the joint venturers. Nor did it contain a plan of Lot 229 or any drawings of the proposed building.

75 On 12 December 2001, First Tracks forwarded to the defendant a copy of an Agreement for Development and Sub-lease of Lot 229. The plan annexed to this Agreement was one dated 16 October 2001 which showed Lot 229 as having an area of 1,242 square metres. It did not correspond with the plan provided to NPWS by the defendant in its application for approval of 6 December 2001. Again, I find the inference irresistible that hasty steps were being taken in the hope of thwarting any attempt on the part of the plaintiff to obstruct the sale of Lot 229 in its radically changed form.

76 On 14 December 2001 the defendant, by facsimile, to the plaintiffs’ solicitors and to the first plaintiff refused to give the undertakings requested in the plaintiffs’ solicitors’ letter of 11 December 2001.

77 On 18 December 2001 Mr Boyer advised Mr Zmisa, by facsimile of the existence of the covenant relied on by the plaintiffs. The plaintiffs, also, commenced these proceedings. On that date, the plaintiffs secured an interim injunction until 4.00pm on 19 December 2001. On 19 December 2001 the defendant, through its solicitor, gave the following undertaking to the Court:-

“That it will not whether by itself, its officers, servants, agents or otherwise take any further step by way of execution or exchange or completion of the agreement for development and sublease of lot 229 of Thredbo Village nor take any step to permit or allow any developments to be carried out in the area designated part 258 of Thredbo Village shown in the plan attached hereto without having furnished to the Plaintiffs through their Solicitors twenty one (21) days’ prior written notice of its intention to do either or any of the above acts.”

78 On 18 December 2001 Mr Boyer had sent a facsimile to Mr Zmisa, which was in the following terms:-

“As you are aware Graham Humphries and I have developed Lot 270 at Crackenback Ridge Thredbo. The attraction of this lot for us was the fact that to the north, east, and south it is surrounded by a non developable reserve and the Golf Course respectively. Whilst this information and undertaking was given to us prior to documentation, we have requested, and were given the appropriate fully documented covenants. We were also advised by the representatives of the Lease Holder that a large rock and certain trees will be maintained on Lot 229 located some 21 metres to the west of Lot 270.

We became aware that you were interested in the development of Lot 229, located to the west of Pt 258, which is to the west of our Lot. We were interested in the appearance of the proposed building, and in the process of our enquiry, on the 3rd of December, we were advised that Lot 229, has been changed to incorporate some of Pt 258 and some land of the Golf Course. This is in breach of the covenant we hold from Kosciusko Thredbo Pty. Limited and we have immediately advised that Company that we intend to protect our rights. We have also pointed out to them that to avoid any further complications it would be prudent if they did not enter into any contractual arrangements regarding Lot 229, until the boundary issues are resolved. At that time we were advised that they have not entered into any binding Contract with anyone.

As we understand that you may be interested in developing Lot 229, it is important that you are aware of the above facts and our commitment to protect our position. We also suggest that you make any joint venture partners, or associates (who may develop the land with you) aware of your position.”

79 After the undertaking had been given on 19 December 2001 Mr Huggett told Mr Zmisa that it had been given and what its terms were. Mr Zmisa took legal advice as to the effect of the undertaking and of the letter of 18 December addressed to him by Mr Boyer. He said in evidence:-

“Basically his advice was that it has nothing to do with us, we are the contracting party with K-T and we are an independent party.”

80 He further said that he didn’t see any problem with going ahead with “what (he) wanted”.

81 Also, on 19 December 2001 NPWS, by letter, requested further information from the defendant in relation to the application in respect of Lot 229. The same letter was set to Mr Myson on 20 December 2001. The letter raised concerns about the apparent encroachment of the enlarged boundaries of Lot 229 into the protected habitat of the broad tooth rat. On 20 December 2001 Mr Myson, by facsimile to NPWS, with copies to Mr Huggett and Mr Zmisa, provided the further information requested in the letter from NPWS.

82 NPWS dealt with the application in respect of Lot 229. On 15 January 2002 it granted conditional approval of the application. In doing so it relied (inter alia) on the information supplied by Mr Myson on behalf of Jackson on 20 December 2001. It was not informed of the covenant that had been given by the defendant. It is clear that if building were to proceed in accordance with the conditional approval, the distance between the eastern boundary of Lot 229 and the western boundary of Lot 270 at the southern end would be reduced to 15.68 metres and, at the northern end, to less than 10 metres. Moreover, two large buildings would be situated in the corridor area of Pt 258 as defined in the plans in respect of which the plaintiffs had contracted. Two other units would be situated partly on the Golf Course.

83 On 24 January 2002, the defendant, by leave, withdrew the undertaking of 19 December 2001. Injunctive orders were substituted for it, to continue until the determination of the proceedings.

84 The proceedings

“1. .. upon the proper construction of clause 3.7 of the Agreement for Development and Sub-Lease between the Plaintiffs and the Defendant dated 3 January 2001 (“the Agreement”) and in the events that have happened the Defendant is obliged not to permit or suffer developments to be carried out in the area designated “Pt 258” of the leasehold estate at Thredbo, New South Wales referred to in the following Schedule and identified as “Pt 258” on the plan attached hereto, adjusted to accommodate the changes in the boundaries of Lot 270 shown on annexure B to the Agreement, without the consent of the Plaintiffs.”

85 The Schedule referred to is as follows:-

“Leasehold estate created by Deed of Lease dated 29 June, 1962 Registered Number 131 Book 2629 between The Honourable Keith Clive Compton, Minister for Lands of the State of New South Wales, the Kosciusko State Park Trust and the Defendant’s predecessor in title as varied by deeds dated:-

(a) 20 October, 1971, Registered Number 468 Book 3131; and

(b) 25 September, 1990 Registered Number 799 Book 3823,

which leasehold estate comprises, inter alia, those pieces of land situate in the Parish of Kosciusko County of Wallace being respectively Lots 229 and Pt 258 in the Village of Thredbo.”

86 The plaintiffs also seek:

“A declaration that the Defendant is estopped and precluded from asserting a construction and operation of clause 3.7 of the Agreement inconsistent with the construction set out in prayer 1.”

87 In the alternative, orders are sought for rectification of the Agreement by, in effect, adding the plan which I have found was omitted by mistake. Declarations as to contraventions of ss 51AA and 52 of the Trade PracticesAct 1974 are also sought, in the alternative.

88 Appropriate injunctive orders are also sought, the detail of which need not be referred to here.

89 It is apparent that the major question in the case is the proper construction of Clause 3.7 of the Agreement. If the plaintiffs submissions be upheld, then the issues of estoppel, rectification and breaches of the Trade Practices Act do not arise.

90 The plaintiffs’ case on construction is comparatively simple. It is put that, had the mistaken omission of the plan from the Agreement not occurred, then the construction question could not have arisen. In the absence of the plan it is not clear what is meant by the words “in the area designated Pt 258 and the area designated ‘Golf Course’ on the southern boundary of Lot 270”.

91 It was argued, but faintly, on behalf of the defendant, that the clause should be treated as being void for uncertainty. In my view, there is no basis for this submission. I reject it.

92 On established principles, based upon well known authorities, to which there is no need to make reference, I can and should approach the construction of this clause by having regard to the genesis of the transaction, its background and factual matrix, including facts known to both parties and communications between them capable of resolving ambiguity in the language used.

93 Applying these principles, I am, prima facie, satisfied, to a high degree, that the uncertain words are rendered certain by reference to the map which was mistakenly omitted from the Agreement and which is annexed to the Statement of Claim. I have set out in some detail, in the earlier part of these reasons, the course of events in relation to this map and similar ones which, in my opinion, clearly points to a common understanding on the part of the parties that the words “Pt 258” and “Golf Course” refer to those areas as “designated” on that map.

94 Should that prima facie view be displaced by the defendant’s submissions on the construction of the clause? I turn now to consider the defendant’s arguments, as they appear from its evidence, affidavit, oral and documentary, and submissions made on its behalf.

95 In his affidavit of 30 January 2002, Mr Huggett made a number of assertions in reply to the plaintiffs’ reliance on the plan annexed to their Summons and now annexed to the Statement of Claim, being the plan which should have found its way into the Agreement. He denied, in effect, that the areas of Pt 258 and Golf Course “designated” in Clause 3.7 were the areas shown on that plan. He asserted that they were “designated” on other and different plans which showed a different configuration of the relevant lots.

96 In his affidavit he asserts that “the only true composite plans being formal sales plans or plans of the subdivision area adopted by the defendant are those designated ‘sales plan’ and dated respectively December 1996 and January 1998”. Copies of these plans were annexed to his affidavit. Each show the distance between Lots 229 and a lot described as Lot 230 as being 12.4 metres, it being noted that Lot 230 on those plans was “subsequently subdivided into Lots 268, 269, 270 and 230 as represented by the Survey Plan of Lots 268, 269 and 207” in the plan relied upon by the plaintiffs. He further asserted that the plan relied on by the plaintiff “was prepared for the sole purpose of indicating the subdivision of the previous Lot 230 and was not designated or represented as being a comprehensive plan of the dimensions either of Pt lot 258 or Lot 229.” He further denied that he had ever represented to the plaintiffs that the plan they relied on “was an accurate representation of Pt lot 258”. He said: “As the title to the plan itself shows, it was intended to be nothing more than a composite contour and detail survey of Lots 268, 269 and 270 and was never intended to be descriptive of either the dimensions of Pt lot 258, the Golf Course or Lot 229 or any other lot described on it.”

97 Mr Huggett, in his affidavit, also referred to the fact that the plaintiffs had not at any time asked for a plan showing the exact boundaries of Pt lot 258 or Lot 229. Had they asked they would have been shown the survey plans of 1996 and 1998. The Development Plan submitted for Lot 229 by the intending developers did not allow construction “of any portion of that development outside the boundary of Lot 229 as designated” on the 1996 and 1998 survey plans.

98 These assertions appear to have been somewhat expanded in his oral testimony. It was said that the plans provided to the plaintiffs, including, apparently, the plan which he had forwarded to his solicitor for the purpose of annexure to the Agreement, were “indicative” only and were in the nature of “mud maps”. I totally reject this suggestion. As already indicated, the plans were to scale and, indeed, were the very plans brought into existence in 1999, on Mr Huggett’s instructions to Burns, to assist in his new marketing program for that part of the Crackenback Ridge. They were professionally prepared and scaled survey plans. No suggestion was made to the plaintiffs that they were not accurate and reliable, or that the dimensions of the lots were subject to arbitrary change.

99 I have already rejected another assertion by Mr Huggett that the “real” plan of the area was one which he had hanging in his office. This plan was, I am fully satisfied, never shown to the plaintiffs and was not one that they should reasonably have had regard to, especially in the circumstances that they were provided with up-date lots 1999 plans of the relevant areas. In any event, it transpired that the wall plan was not one of the 1996 or 1998 plans later relied upon but was an earlier plan brought into existence in 1994.

100 In his oral evidence, Mr Huggett said that, when he received the facsimiles from the plaintiffs in early December 2001, enclosing the plans upon which they relied, he was greatly surprised. He realised, for the first time, that the plans were wrong in that they showed the wrong distance between Lots 229 and 270. It should have been considerably less. I found this evidence totally unacceptable. Mr Huggett had, himself, obtained these surprisingly inaccurate plans from Burns as part of the new marketing plan. It is inconceivable that he would have not regarded the earlier plans as having been superseded. Indeed, he had been dealing with Mr Zmisa, in June 2000 on the basis that Lot 229 had an area of 852 square metres. I find his assertion that he was surprised by the plans forwarded by the plaintiffs in early December to reflect most adversely on his credit.

101 The same may be said of his contention that the plaintiffs knew from their observation of the map on the office wall that the relevant distance between the boundaries of Lot 270 and Lot 229 was about 12 metres. This has every appearance of being an after thought designed to assist his case. If he knew that the plaintiffs had dealt with him on the basis of the dimensions of that map, why did he not immediately respond to their communications of 3 and 4 December by asserting that they were well aware at all times that the true dimensions were shown on that map and not on the “indicative” or “mud maps” that they were, apparently, relying on?

102 In submissions on behalf of the defendant, reliance has been placed upon the existence of earlier subdivisional maps of the area showing Lot 229 in closer proximity to what became Lot 270. I am quite unable to attribute any particular significance to these earlier maps. It is clear from the evidence of Ms Riley, a planner employed by NPWS, that there has never been in existence any authoritative subdivisional plan of the area which could be regarded, in some way, as “the true” plan to which all later plans were related and to which they must defer. In my view, the position is, quite simply, that the 1999 plans produced by Burns at Mr Huggett’s request, had the effect of superseding earlier subdivisional plans of the relevant area, a fact which, I am satisfied, would have been well-known to Mr Huggett, at whose direction they had been brought into existence. Accordingly, I do not accept Mr Huggett’s contention that “Pt 258” and “Golf Course” appearing in Clause 3.7 of the Agreement referred to those areas as shown on some plans that came into existence earlier than the 1999 Burns’ plans relied upon by the plaintiffs.

103 Mr Halsted gave a different version as to the meaning of “Pt 258” in the Agreement. He relied upon what he claimed he had made clear to the plaintiffs in August, namely that the part of Lot 258 to the north of Lot 270, protected from development because of its being the habitat of the protected species, was the “Pt 258” referred to in the Agreement. The corridor portion of Pt 258, however, was to be regarded in a different way. The eastern boundary of Lot 229, being the western boundary of that corridor portion, was always susceptible to change, dependent upon appropriate approval from NWPS. The corridor portion of Pt 258 was, therefore, only free from development insofar as NWPS did not, in its overall discretion, permit changes to the area, in particular by allowing the eastern boundary of Lot 229 to be moved further to the east. In effect, his view of the meaning of “Pt 258” was that the expression embraced the whole of the area to the north of the corridor but only so much of the corridor as NWPS might, from time to time, reserve from development. Mr Halsted, indeed, said that, at the time the covenant was agreed to, he and Mr Huggett discussed the meaning of it and agreed with this formulation. I do not accept that any such discussion took place. It would have been quite inconsistent with the statements made by Mr Halsted to Mr Boyer on site as to the distance between the lots, the significance of the large boulder close to the eastern boundary of Lot 229 and the positions of the pegs which were, in my view, clearly observable. In his evidence, Mr Halsted said that, in his dealings with Mr Zmisa in relation to the increasing in size of Lot 229, he had forgotten the existence of the covenant. I think that this is probably the true position and that his attempts to read a different meaning into the covenant are merely afterthoughts designed to assist his case.

104 Consequently, I do not accept the interpretation sought to be placed upon the covenant by Messrs Huggett and Halsted.

105 It was submitted that the covenant should be read down, or an appropriate term implied, to accommodate the situation that the plaintiffs must, at all times, have been aware that the boundary of Lot 229 could be changed if NPWS granted approval for it to be moved in an easterly direction into the area of Pt 258. In other words, the plaintiffs could not reasonably have expected that there would be no change in that boundary. I am quite certain that, in the course of negotiations for the acquisition of Lot 270, no suggestion was made to the plaintiffs by Mr Huggett or Mr Halsted that the area or dimensions of Lot 229 could be changed from those shown on the 1999 Burns’ plan and that the benefit of the covenant could be eroded in this way by the defendant seeking the approval of NPWS to change the boundaries of Lot 229.

106 It is clear that the plaintiffs were aware that NPWS had a role in the granting of approvals for the design and location of buildings and could also approve minor boundary changes such as those they obtained in relation to the western boundary of Lot 229. These facts, however, fell far short of their having any understanding that the covenant they had obtained, which related to “Pt 258” as clearly defined in a particular map, was subject to total or partial destruction by the defendant agreeing to an alteration of those boundaries and obtaining approval for that alteration from NPWS. I am satisfied that the plaintiffs had no such understanding; nor should they have had any such understanding as a result of general knowledge of the area. They were not so informed by Messrs Huggett and Halsted.

107 A further submission on behalf of the defendant was based, as I understand it, upon the Sub-lease into which the plaintiffs were to enter as part of the overall agreement with the defendant. I have already indicated that the Sub-lease, which is yet to be executed, is to contain a clause identical with Clause 3.7 in the Agreement. It requires that the plaintiffs enter into membership of the “Crackenback Ridge Association Inc.” The Constitution of this Association provides for reciprocal rights and duties amongst members. However, I can see nothing in it which would prevent the defendant from entering into the covenant with the plaintiffs or which would, necessarily, cut down its effect. Pt 258 is, apparently, referred to as Lot 258 and is referred to as “Common Property”. This fact would, if anything, tend to reinforce the view that the defendant would take no steps substantially to reduce the size of the Common Property by allowing a substantial encroachment upon it, as is clearly envisaged by the arrangements it is seeking to enter into for the extension of Lot 229 into the corridor. Clause 19.4 (c) of the Sub-lease provides (inter alia) that “the company may make minor variations to the boundaries of the Demised Premises and Common Property.” I am satisfied that this is the power to which Mr Huggett made reference in his letter of 11 December, set out above. The alteration to the boundary of Lot 270, at the plaintiffs’ request, was such a minor variation. It made no change to the overall area of the lot. Quite clearly, the changes contemplated for Lot 229 were not “minor” and fell outside the ambit of this clause.

108 A somewhat emotional argument was put on behalf of the defendant to the effect that the plaintiffs were seeking a right to control development in their own interests which was not available to anyone else becoming a member of the Crackenback Ridge Association. Of course, this is precisely what the plaintiffs sought to do by asking for and obtaining the covenant in this case. This argument goes nowhere.

109 I am satisfied that the construction contended for by the plaintiffs is correct. Accordingly, I propose to make the declaration sought. Were it necessary, I should also hold that the representations made by the plaintiffs, including their indication of a clear intention that the area “designated” as Pt 258 should be the area as designated in the 1999 Burns’ plans, would estop them from asserting that the area was as designated in some other earlier or later plans. I do not need to consider the question of rectification, or of causes of action based upon breaches of the Trade Practices Act 1974. These questions do not arise.

110 I must however consider the question whether, as a matter of discretion, injunctive relief should be granted. It is submitted, on behalf of the defendant, that this discretionary relief should not, in the circumstances, be granted to the plaintiffs.

111 I am quite satisfied that, as a matter of discretion, the plaintiffs are entitled to the injunctions they seek. In the first place, they have made a very substantial financial investment in the acquisition of Lot 229 and its development by the erection upon it of substantial buildings. The lot was selected because of its outstanding views. The continuance of those views was sought to be secured by the covenant obtained from the defendant. Obviously, the views significantly increased the value of the lot and its development, besides greatly enhancing the pleasure of the plaintiffs as owners.

112 I am satisfied that the development of Lot 229, involving its significant increase in size and its intrusion into the corridor of Pt 258, together with the erection, in this encroachment, of substantial buildings would most adversely affect the plaintiffs’ use and enjoyment of Lot 270. A number of photographs have been placed in evidence which, in my opinion, amply demonstrate the adverse effect on the amenity of Lot 270 that would be produced by the introduction into Pt 258 of the proposed buildings.

113 Moreover, the conduct of Messrs. Huggett and Halsted, on behalf of the defendant, does not, in my view, attract the exercise of discretion in favour of the defendant. In my view, they should plainly have been aware of the existence of the covenant whilst entering into arrangements with Mr Zmisa for the alteration to Lot 229, which would clearly have been in breach of it. Mr Zmisa, at an early stage, was acquainted with the plaintiffs’ position. I have already referred to the inferences to be drawn from the unusual way in which the deposit was paid and the speed with which the development proposal was placed before NPWS without any reference to the existence of the covenant. I particularly note that Mr Huggett agreed that he had assured Mr Boyer on 3 December that he would not go ahead with dealings in respect of Lot 229 until the question of where buildings on that lot could be located, was clarified. It would have been quite clear that the proposed location of those buildings to the east of the large boulder would have been a matter of great concern to the plaintiffs. His approach to clarification was to obtain a fresh survey from Burns and, in effect, to treat the substantial variations in the dimensions of Lot 229 as being “minor”. Despite his assurance to Mr Boyer, and without any further notice to him, he forwarded the development application in respect of Lot 229 to NPWS which, if granted, would clearly produce the situation which Mr Boyer was seeking to prevent.

114 I consider that the plaintiffs are entitled to the injunctive relief they seek and also to their costs of these proceedings.

115 In the circumstances, I think it appropriate that counsel bring in Short Minutes of the Orders necessary to give effect to my findings. I direct that these Minutes be brought in on Thursday, 8 August, 2002. I adjourn these proceedings until 9.30am on that day.

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Last Modified: 08/07/2002

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Boyer v Kosciusko-Thredbo Pty Limited [2002] NSWSC 653

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CITATION:	BOYER v KOSCIUSKO-THREDBO PTY LIMITED [2002] NSWSC 653 revised - 6/08/2002
CURRENT JURISDICTION:	Equity Division
FILE NUMBER(S):	SC 6007/01
HEARING DATE(S):	27/05/02 to 29/05/02 & 31/05/02
JUDGMENT DATE:	30 July 2002
PARTIES :	John Peter BOYER & Anor v KOSCIUSKO-THREDBO PTY LIMITED
JUDGMENT OF:	Foster AJ at 1-115

COUNSEL :	P.M. Wood - Plaintiffs J.M. Ireland QC - Defendant
SOLICITORS:	Landerer & Co - Plaintiffs Lane & Lane - Defendant
CATCHWORDS:	The defendant (a trading corporation) selling land at Crackenback Ridge, Thredbo to plaintiffs - dispute over size of certain blocks - Breach of covenant.
LEGISLATION CITED:	Trade Practices Act 1974 (C'wlth) Environmental Planning & Assessment Act 1979
DECISION:	Short Minutes of Order to be brought in by the parties. ; (Refer para 114)