Dar-Alawda (Wendel Street) Community Centre Inc v Merri-Bek City Council

[2024] VSCA 214

+SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2023 0097

DAR-ALAWDA (WENDEL STREET) COMMUNITY CENTRE INC	Applicant
v
MERRI-BEK CITY COUNCIL	Respondent

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JUDGES:	EMERTON P, MACAULAY and LYONS JJA
WHERE HELD:	Melbourne
DATE OF HEARING:	4 June 2024
DATE OF JUDGMENT:	19 September 2024
MEDIUM NEUTRAL CITATION:	[2024] VSCA 214
JUDGMENT APPEALED FROM:	[2023] VSC 433 (Richards J)

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CONTRACT – Construction – Contract for sale of land by Council at below market value – Special condition that purchaser not impede or prevent access to land purchased by Council resident except pursuant to agreed ‘Public Access Rules’ annexed to contract – Rules provided that application by Council resident for access to land was to be processed by purchaser with due diligence and in accordance with purchaser’s Constitution – Whether contractual obligation for purchaser to process application by Council resident if application did not comply with form appended to Constitution – Contractual obligation to process any application whether or not in form appended to Constitution with due diligence to not impede or prevent access to land – Purchaser breached term – Leave granted – Appeal dismissed.

CONTRACT – Breach – Notice of default – Whether notice invalid because of failure to clearly set out nature of breach – Parties accepted that test was how notice is understood by an objective person in the position of defaulting party – Notice of default valid – Leave refused.

EQUITY – Relief against forfeiture refused by judge – Whether House v The King (1936) 55 CLR 499 error – Whether judge applied relevant principles – Whether judge took into account an irrelevant consideration or failed take into account a relevant consideration – No House v The King (1936) 55 CLR 499 error – Leave refused.

Moala v Free Wesleyan Church of Tonga in Australia (Vic) [2019] VSC 205, distinguished.

Mount Bruce Mining Pty Ltd v Wright Prospecting (2015) 256 CLR 104; [2015] HCA 37; House v The King (1936) 55 CLR 499; [1936] HCA 40; JPA Finance Pty Ltd v Gordon Nominees Pty Ltd (2019) 59 VR 393; [2019] VSCA 159; Legione v Hateley (1983) 152 CLR 406; [1983] HCA 11, applied.

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Counsel
Applicant:		Mr D Williams KC with Mr M Stirling
Respondent:		Mr A Meagher SC with Ms R Kelly
Solicitors
Applicant:	Zouki Lawyers
Respondent:	Gadens

EMERTON P
MACAULAY JA
LYONS JA:

1. The applicant is a not-for-profit incorporated association, whose objectives include supporting people from non-English speaking backgrounds and supporting the maintenance of community services networks for Victorian families, particularly in the City of Moreland, now Merri-Bek City Council.[1] For convenience, we will refer to the City of Moreland and/or Merri-Bek City Council as the ‘Council’ or ‘respondent’.

   [1]Dar-Alawda (Wendel Street) Community Centre Inc v Merri-Bek City Council [2023] VSC 433, [1], [86] (‘Reasons’).

2. The applicant purchased the adjacent properties at 98 Henkel Street and 1 Wendell Street, Brunswick (collectively, the ‘property’) from the Council in 2004 at less than market value. At the time of entry into the contract of sale, the property included a Scout hall used by the applicant as a community centre, located at 1 Wendell Street, and an undeveloped grassy patch of land at 98 Henkel Street known as Montfort Park (‘Montfort Park’).[2]

   [2]Reasons, [2].

3. The purchase agreements contained terms as to the basis upon which the applicant was to use the property for the benefit of the community. In particular, the applicant was to improve Montfort Park by constructing a basketball (or similar) court and provide access to the Council’s residents pursuant to an agreed set of ‘Public Access Rules’ (‘Rules’). A breach of the relevant terms of the purchase agreements entitled the respondent to exercise an option to repurchase the property.[3]

   [3]Reasons, [3].

4. A judge of the Trial Division concluded that the applicant breached two terms of the relevant agreements comprising part of the obligation not to prevent or impede access by local residents to Montfort Park: (a) by failing to process applications for membership of the applicant with due diligence (‘process term’); and (b), by not displaying the agreed Rules for use of the basketball court so as to be clearly visible from outside Montfort Park (‘display term’).[4] The judge also concluded that the respondent served a valid notice of default, with the result that the respondent validly exercised its option to repurchase the property.[5] The judge ordered the applicant to specifically perform its obligations under the option agreement to transfer the property back to the respondent.[6]

   [4]Reasons, [14(4)].

   [5]Reasons, [14(5)]–[14(7)].

   [6]Reasons, [190].

5. The applicant now seeks leave to appeal and, if leave is granted, to appeal from the judge’s decision and the orders made.

6. In summary, the applicant contends that:

   (a)it was not in breach of the process term: proposed grounds (a) and (b);

   (b)the judge erred in concluding that the notice of default was valid in relation to the breach of the display term and the process term: proposed grounds (c)(i) and (c)(ii) respectively; and

   (c)even if the breaches occurred and the notice of default was valid, the judge erred by failing to conclude that the applicant was entitled to relief against forfeiture given the nature of the breaches, the respondent’s involvement in them and the consequences to the applicant, namely the loss of the property: proposed ground (d).

7. For the reason that follow, we have concluded that leave to appeal should be refused in relation to proposed grounds (c)(i) and (d). We would grant leave in respect of the other proposed grounds but dismiss the appeal.

Background

1. On 29 July 2004, the Council as vendor and the applicant as purchaser entered into a contract for the sale of the property for $100,000 plus GST (‘Contract’).[7] Prior to that, the applicant was in possession of the property, having leased it from the Council.

Contractual terms

[7]Reasons, [3].

1. There are three principal documents that contain the key terms relating to sale of the property, all executed on 29 July 2004:

   (a)the Contract, which included various special conditions (‘SC’);

   (b)an agreement under s 173 of the Planning and Environment Act 1987 (‘s 173 Agreement’), which was Annexure F to the Contract; and

   (c)a deed of option to purchase, enabling the Council to buy back the property if the applicant breached the SC under the Contract (‘Option Deed’), which was Annexure D to the Contract.

2. Further, the Contract attached the Rules, which are defined in SC 16(2) of the Contract as:

   the rules adopted by [the applicant] and [the respondent] which govern access to the Open Space Land [defined to mean Montfort Park] by Moreland Residents, and until replaced or modified by agreement between [the applicant] and [the respondent], means those rules dated 8/12/2003 attached to this Contract and marked “G”.

3. ‘Moreland Resident’ was defined in SC 16(2) to mean any person who:

   resides within the municipal boundaries of City of Moreland as designated from time to time by order in Council of the relevant Minister under the Local Government Act 1989 or any legislation superseding or amending that Act.

4. We pause to note that it would appear from the date of the Rules (8 December 2003) that these rules were agreed between the applicant and the Council some seven months before the contractual documents for the purchase of the property were signed and appeared to have formed the basis for those contractual documents.

5. SC 16 of the Contract, headed ‘Acknowledgments, Agreements and Covenants by Purchaser’, is central to the determination of this application for leave to appeal.

6. Among other things, SC 16 contained an obligation to execute the s 173 Agreement and to enter into the Option Deed, to be executed and delivered at the same time as the Contract.[8] It also contained an acknowledgment that the purchase price was ‘significantly lower than market value’, as a result of which the applicant agreed to meet the requirements set out in SC 16.[9]

   [8]SC 16(4) and (6).

   [9]SC 16(1).

7. First, SC 16(3) imposed a requirement for the use of, and improvements to, the property. Relevantly, it provided that:

   (3)The [applicant]:

   (a)must not at any time prior to or after the completion of this Contract use the Land for any purpose other than the Permitted Use;

   …

   (c)must not construct any building, fence or other improvement on the Land, other than the Permitted Improvements;

   must as soon as possible after the Day of Sale construct a basketballcourt [sic] or similar court on the Open Space Land;

   …

8. In SC 16(2), ‘Open Space Land’ was defined, in substance, to mean Montfort Park. Further, under SC 16(2):

   (a)‘Permitted Use’ was defined to mean:

   (ii)in relation to the Open Space Land, use as a basket ball court or similar court, subject to the [applicant] first having obtained … all necessary municipal other approvals; and

   (iii)(in relation to that part of the Land not comprised in the Open Space Land, a community centre.

   (b)‘Permitted Improvements’ in relation to the Open Space Land was defined to mean ‘a basketball court or similar court or fence subject to the Purchaser first having obtained … all necessary municipal and other approvals’.

9. Secondly, SCs 16(3) and 16(5) contained provisions relating to access to the Open Space Land. Relevantly, SC 16(3)(e) provides that the applicant:

   must not impede or prevent access to the Open Space Land by a Moreland Resident except to the extent prescribed by the [Rules], a legible copy of which must be exhibited in a position which is clearly visible by any person from the outside of the Open Space Land.

10. Further, under SC 16(5), the applicant agreed that a number of encumbrances would run with the property, including the covenant in SC 16(5)(a)(iv) that the applicant and its transferees would not at any time

    except to the extent prescribed by the [Rules] impede or prevent access to the Open Space Land by any Moreland Resident.[10]

    [10]SC 16(5)(a)(iv).

11. Pursuant to SC 16(5), on 29 July 2004, the parties also entered the s 173 Agreement and the Option Deed. A restrictive covenant was also recorded on the title to the property.[11]

    [11]SC 16(5).

12. The s 173 Agreement contains terms that mirror SC 16 in the Contract. Most relevantly, cl 2.1.5 of the s 173 Agreement is in the same terms as SC 16(3)(e) of the Contract, set out in [‎17] above. The s 173 Agreement was registered on title on 2 September 2004 with registration number AD089654C.[12]

    [12]Reasons, [28].

13. We pause to note that SC 16(3)(e) of the Contract and cl 2.1.5 of the s 173 Agreement together make up the process term and the display term, each of which form part of the obligation to not impede or prevent access to the Open Space Land by a Moreland Resident.

14. As noted above, the Option Deed gave the respondent the option to buy back the property. Clause 6 sets out the circumstances in which the respondent could exercise the option:

    CIRCUMSTANCES ENABLING GRANTEE TO EXERCISE OPTION

    Subject to clause 3.5 the [respondent] may exercise the option during the Period of Option, at any time after the happening of any of the following events:

    (a)The [applicant]:

    (i)breaches its obligations as Purchaser under the First Contract of Sale; and/ or

    (ii)breaches its obligations under the Section 173 Agreement; and/or

    (iii)breaches its obligations under the Restrictive Covenant,

    and fails to remedy the breach, or, where the breach cannot be remedied, fails to satisfy the [respondent] that the breach should be excused, within 30 days of the date of the [respondents]’s written notice advising the [applicant] of the breach.

    …

15. Further, the mechanism for the exercise of the option was set out in cl 3 as follows:

    3.1Subject to clause 3.5 the Option may be exercised by the [respondent] during the Period of Option at any time following the happening of any one or more of the events specified in clause 6.

    3.2The Option shall be exercised by the [respondent] by delivering to the [applicant] a notice specifying that the [respondent] exercises the Option together with the Contract of Sale duly completed and executed by the [respondent] and a cheque payable to the [applicant] for the Deposit specified in the Contract of Sale. The Contract of Sale will bear as its date the date of its delivery to the [applicant].

    3.3Within 14 Business Days of the [respondent] exercising the Option, the [applicant] must complete and deliver to the [respondent] an identical counterpart, copy of the Contract of Sale executed by the [applicant] and bearing as its date the same date as the Contract of Sale delivered by the [respondent] to the [applicant] under clause 3.2.

    …

16. The Rules were attached to the Contract. As noted, they had previously been agreed between the applicant and the respondent in December 2003 and relevantly provide:

    1.The owner must erect and maintain a sign on or near the fence surrounding the land and visible and legible from the street informing residents of the means of contacting the owner to use the open space.

    2.A resident of the City of Moreland (“resident”), as defined by the boundaries of the City at the date of this Agreement, desiring to use the open space must only contact the Club as directed by the sign.

    3.The open space shall be available for use by residents who are admitted as Associate members between 10am and 5pm Tuesdays to Sundays excluding public holidays subject to not being required for use by the owner. During daylight savings time the above hours will be extended to 7pm.

    ...

    5.The open space shall be used by a resident solely for the purpose for which the Court or other markings on the open space are designed.

    6.The owner shall permit a resident to apply to become an Associate Member of the owner free of charge to enable the resident to apply to use the open space.

    7.The application for Associate Membership by a resident shall be processed by the owner with due diligence and in accordance with its constitution.

    8. The fee charged by the owner to a resident having access to the open space shall be a reasonable fee having regard to all the anticipated annual expenses and costs of the proper maintenance, supervision and general operation open (including all reasonable insurances) brackets of the open space.

    …

    11.A resident shall have access to the open space only in accordance with these Rules.

The Constitution

1. The applicant’s Constitution is Annexure I to the Contract. Amendments to the Constitution were made on 25 July 2004, shortly before the contract documents were signed. It would appear that a primary purpose of the amendments was to introduce membership for Moreland residents who wished to access the Open Space Land and the need for such a category of membership arose by reason of the proposed purchase of the property by the applicant, that is, by reason of the contract documents and the Rules. We deal with the different kinds of membership further below.

2. In summary, under the Constitution, the affairs of the applicant are to be managed by a Committee of Management (the ‘Committee’) consisting of four officers (the President, the Vice President, the Treasurer and the Secretary) with 18 ordinary members. The Committee is required to meet at least three times a year and special meetings of the Committee can be convened by the President or any four members of the Committee. A quorum of at least four members is required before any business can be conducted. Voting at Committee meetings is by a show of hands or, if requested by a member, a poll. The Secretary must keep minutes of the resolutions and proceedings of each general meeting, and each Committee meeting, together with a record of the names of persons present.

3. Rule 4(1) of the Constitution provides for several different types of membership:

   (a)ordinary members (r 4(1)(a));

   (b)associate members (r 4(1)(b));

   (c)associate gold sponsor members (r 4(1)(c));

   (d)associate sponsor members (r 4(1)(d));

   (e)honorary members (r 4(1)(e)); and

   (f)associate (open space land (Montfort Park)) members (r 4(1)(f)), which we will refer to in these reasons as ‘Open Space members’ and ‘Open Space membership’.

4. Under r 4(1)(f), an Open Space member is not entitled to vote but is ‘entitled to have access to the Open Space Land (being part of the assets and facilities of the Association) in accordance with the public access rules’, which were defined to mean the Rules. Further, any person residing within the boundaries of the Council is entitled to apply to be an Open Space member.

5. Rule 4 of the Constitution sets out the process by which a person can apply to become a member. Relevantly, it provides:

   (2)A person who applies for and is approved for membership or is otherwise granted membership by the ordinary members or committee of any of the classes of membership as provided in these Rules is eligible to be a member of the Association in that class on payment of the entrance fee and annual subscription payable under these Rules save that no annual fee for membership shall be payable by either an honorary member or an associate (open space land (Montfort Park)) member.

   (3)A person or entity who is not a member of the Association at the time of the incorporation of the Association (or who was a member at that time but has ceased to be a member) must not be admitted to membership unless-

   (a)he or she applies for membership in accordance with these Rules); and

   (b)the admission as a member is approved by the committee or

   (c) the person or entity has been granted membership under Rule 4(1)(c), (d) or (e) by the committee or ordinary members.

   (4)Any application of a person or entity for membership of the Association must-

   (a)be made in writing in the form set out in Appendix 1; and

   (b)be lodged with the Secretary of the Association.

6. Appendix 1 to the Constitution is the application for membership as an ordinary member. The application forms for the five other types of membership are contained in Appendix 4, including Open Space membership.

7. The application form to become an Open Space member in Appendix 4 contains:

   (a)a space for the full name and address and signature of the proposed member;

   (b)a request for documents to be attached to prove the identity, age and residential address of the proposed member, such as a copy of a car licence or passport of the proposed member, along with a rate notice or gas bill; or if he or she is under 18, a letter from a parent confirming the proposed member’s name, age and address, together with parental consent;

   (c)a space for the proposed member to provide their personal details including their preferred name, telephone number, email address, date of birth, occupation, the name of their spouse, the names and dates of birth of their children, and their hobbies;

   (d)a space for the names and contact details of two referees to provide references as to the proposed member’s good character; and

   (e)a space for the names and signatures of two ordinary members to nominate the proposed member for Open Space membership.

8. The application form to become an Open Space member also contains the following covenants:

   In the event of my admission as an associate (open space land (Montfort Park)) member, I agree to be bound at all times by:

   1.The Rules of the Association,

   2. The Public Access Rules agreed to with the Moreland City Council from time to time in the policies and conditions set by the Committee of Management under those Rules for the proper, safe and orderly exercise of access to and use of Montfort Park,

   I further confirm that in the event that I am involved at any time in the care or supervision of children or other activities that require a police clearance or its equivalent or for which such a clearance is in the opinion of the Committee of Management desirable I will provide upon request an authority for the Association to obtain that clearance or its equivalent to comply with any law, statutory or other regulation or any policy or direction of the Committee of Management of the Association.

1. Rule 4 then sets out the way in which an application for membership is processed. Relevantly, it provides:

   (5)As soon as practicable after the receipt of an application, the Secretary must refer the application to the committee.

   (6)The committee must determine whether to approve or reject the application.

   (7)If the committee approves an application for membership, the Secretary must, as soon as practicable-

   (a)notify the applicant in writing of the approval for membership; and

   (b)request payment within 28 days after receipt of the notification of the sum payable under these Rules as the entrance fee and the first year’s annual subscription.

   (8)The Secretary must, within 28 days after receipt of the amounts referred to in sub-rule (7), enter the applicant’s name in the register of members of the relevant class of membership.

   (9)An applicant for membership becomes a member of the relevant class of membership and is entitled to exercise the rights of membership of that class of membership when his, her or its name is entered in the register of members of that class.

   (10)If the committee rejects an application, the committee must, as soon as practicable, notify the applicant in writing that the application has been rejected.

2. Rule 5(1) provides that the Secretary must keep and maintain a register of members each class of membership containing the name and address of each member and the date on which each member’s name was entered in the register.

The facts

1. Consistent with the Contract, in 2012 the applicant constructed a basketball court on the Open Space Land (ie Montfort Park). The applicant also constructed a three-metre-high fence along the Henkel Street and Wendell Street boundaries of Montfort Park. Nonetheless, pursuant to the Contract:[13]

   (a)the applicant was prohibited from impeding or preventing a Moreland resident from accessing Montfort Park except to the extent prescribed by the Rules; and

   (b)a legible copy of the Rules was required to be exhibited in a position that is clearly visible by any person from outside Montfort Park.

   [13]SC 16(3)(e).

2. In 2015 and 2016, local residents attempted to access Montfort Park. They were unsuccessful, notwithstanding SC 16(3)(e), which is set out in [‎17] above.

3. As a result, complaints were raised with the respondent, in correspondence, in an online petition and through the media.[14]

   [14]Reasons, [6].

4. In late 2018, the respondent engaged a facilitator, Mr Bryson, to mediate between the local residents and the applicant, with a view to reaching agreement on issues of access and use of Montfort Park (‘facilitation process’). Between January and June 2019, several meetings were held as part of the facilitation process, involving Ms Jodie Watson on behalf of the respondent, Mr Anthony Helou (the President of the applicant) and local residents. On 24 August 2019, the applicant held an open day at Montfort Park, which was well attended by local families.[15]

   [15]Reasons, [8].

5. On 21 November 2019, Ms Watson submitted by email nine applications for Open Space membership to Mr Helou (‘November applications’). In addition, Ms Watson left copies of the November applications in the letterbox at the property on 2 December 2019.[16] The November applications were from four individual residents, two families in Henkel Street, two families in Talbot Street and from Ms Watson (‘November applicants’).[17] This is the first time that anyone ever applied for Open Space membership.

   [16]Reasons, [90].

   [17]Reasons, [64].

6. The November applications were not in the form required by either Appendix 1 or Appendix 4 to the Constitution.[18] Instead, they were in a form devised by Ms Watson as part of the facilitation process. Ms Watson gave evidence that Mr Helou was provided with an early draft of a new application form on 8 April 2019, on which Mr Helou provided some feedback which she incorporated into a revised application form. Ms Watson also gave evidence that Mr Helou supported that revised version at a meeting on or about 3 June 2019 (‘revised application form’).[19] However, Mr Helou denied being bound by the revised application form and gave evidence that he told Ms Watson it would have to be approved by the applicant at a general meeting.[20]

   [18]Reasons, [61]–[62].

   [19]Reasons, [54]–[55], [61].

   [20]Reasons, [56].

7. Ms Watson agreed that Mr Helou said that the revised application form would have to be approved by the applicant. Although she did not follow up with Mr Helou, she assumed he progressed the approval of the revised application form with the Committee and had copies of the revised application form at the open day on 24 August 2019.[21] However, there is no evidence that the applicant considered the revised application form, either by the Committee or at a general meeting.

   [21]Reasons, [58]–[59].

8. We pause the narrative to observe that the judge preferred the evidence of Ms Watson (which was generally supported by the evidence of Mr Bryson) over that of Mr Helou.[22] Indeed, the judge concluded that Mr Helou’s evidence should not be relied upon unless it consisted of admissions contrary to the applicant’s interests.[23]

   [22]Reasons, [57]–[60].

   [23]Reasons, [60].

9. The revised application form contains:[24]

   (a)a space for the full name and address of the proposed member;

   (b)a space for the names and signatures of two ordinary members to nominate the proposed member for Open Space membership;

   (c)a statement to the effect that the proposed member agrees to be ‘bound at all time by the ‘Rules of the Association’ and the ‘Regulations for Members’;

   (d)confirmation that the proposed member will be ‘responsible for the supervision, care and respectful behaviour of children under 18 listed under [the proposed member’s] membership whilst using the premises’;

   (e)a statement that the proposed member ‘understand[s] that Association has a zero tolerance policy for littering and vandalism and understand[s] this behaviour may lead to cancellation of [the proposed member’s] membership’; and

   (f)a statement that the proposed member agrees ‘to ensure compliance with any legal, statutory or other regulations as directed by the Association (ie compliance with Child Safe principles, Police Checks, evidence of insurance)’.

   [24]Reasons, [65].

10. On the reverse side of the revised application form, there is space for details of the proposed member (name, address, email, gender, and date of birth) and of any other family members who were included in the application (name and date of birth).

11. The revised application form does not contain:

    (a)a space for the names and contact details of two referees to provide references as to the proposed member’s good character; and

    (c)a request for the provision of documents to prove the identity, age or residency of the proposed member.

12. The reference in the revised application form to the ‘Regulations for Members’ was a reference to a one-page document developed by Ms Watson in conjunction with the revised application form that set out the basis upon which Open Space Land members would be allowed to use Montfort Park.[25] It stated, among other things, that:

    (a)new member subscriptions will be paid in advance prior to the commencement of the ‘new Park year’ commencing from January or on a pro rata basis for members joining throughout the year;

    (b)numbered security keys (provided to members for a fee to access the basketball court) must not be passed on;

    (c)while families were welcome, there are some areas that may be hazardous for young children, with the result that responsible adult supervision is required;

    (d)members must take all rubbish with them for disposal and fires, fireworks and barbecues are not allowed; and

    (e)the open space and sports court are not designed as a park for dog exercise or dog walking.

    [25]Reasons, [67].

13. The November applications used the revised application form: all of the relevant signatures and details were provided, save that there was no signature by a proposer or seconder. Given that the November applications were made using the revised application form, no photo identification was provided and none of the applicants nominated a referee or referees.[26]

    [26]Reasons, [68].

14. On 25 November 2019, Mr Helou confirmed receipt of the November applications and advised that he was ‘happy to meet next week to discuss further’.[27] No such meeting took place. The judge recorded that Ms Watson left several telephone messages for Mr Helou in December 2019 but heard nothing from him until 23 December 2019, when she received a voice message saying that Mr Helou had returned her call and that he would try again. He did try again on 31 December 2019, leaving another voice message to the effect that he would catch up with her the following week. After that, Ms Watson did not hear further from Mr Helou or anyone else from the applicant in relation to the November applications.[28]

    [27]Reasons, [90]–[91].

    [28]Reasons, [91].

15. There was a meeting of the applicant on 9 December 2019, at which the November applications were considered. The applicant belatedly produced minutes of the 9 December 2019 meeting without explanation. The judge concluded that, although Mr Helou did not give direct evidence of what transpired at the 9 December 2019 meeting, the notes reflected the discussion that took place. The minutes were translated from Arabic and are, at times, difficult to understand, but include that:

    (a)the applicant was frustrated by Ms Watson’s action and particularly ‘because the membership requests did not come through the Centre then to be approved by the Council ... [rather than] approval from the Centre’s Board of Management, then to be presented to the Council for approval or through a general meeting to be specifically held for approving or dismissing the requests, then to be presented to the Council for final approval’;

    (b)the applicant was hesitant to accept the November applications, which it considered to be in ‘breach of the agreement that states: no requests can be changed unless through the Council’;

    (c)it was decided that the matter would be discussed again after the Christmas holidays with a suggestion to ‘check the legality of the matter and how [Ms Watson] had breached the agreement as she acted beyond her role that was limited to attending the meeting but not to take any action or to stand with any party against another party’;

    (d)while the applicant pursued its legal rights, it would ‘communicate with the families that [Ms Watson] had made membership requests on their behalf’; and

    (e)the next meeting was scheduled for 10 February 2020.

16. As the judge noted, on 9 December 2019, the applicant did not determine whether to approve or reject the November applications for Open Space membership. However, the judge stated that the notes of the 9 December 2019 meeting do not record any concern about the absence of photo identification or any query about whether the applicants were eligible for Open Space membership. Rather, the judge concluded that the discussion was deferred until after the holiday period, perhaps with the benefit of legal advice.[29]

    [29]Reasons, [96].

17. There is no evidence that the applicant gave further consideration to the November applications or that it ever made a decision to approve or reject them as required by r 4(6) of the Constitution.[30]

    [30]Reasons, [97].

18. On 7 February 2020, the respondent served a notice of default setting out six purported breaches of the applicant’s obligations under the Contract, the s 173 Agreement and the restrictive covenant (‘default notice’). These breaches included using Montfort Park other than for a ‘Permitted Use’ and for failing to construct the basketball court (or similar court) and to maintain it in good repair and condition. It relevantly provided:

    Moreland is of the view that Dar-Alawda has breached and is in breach of its obligations under the Contract, the Section 173 Agreement and the Restrictive Covenant in, amongst other things, the following respects:

    …

    iv.Dar-Alawda has breached its obligations under Special Conditions 16(3)(e) and 16(5)(a)(iv) of the Contract and clause 2.1.5 of the Section 173 Agreement, in that it has effectively impeded and prevented access to the Open Space Land to Moreland Residents, by failing, amongst other things, to diligently process and approve their applications for associate membership of Dar-Alawda in accordance with the provisions of its Constitution and the intention of the parties at the time that the Contract was entered into. Such failure to approve the applications have impeded and prevented access to those Moreland Residents pursuant to the Public Access Rules as currently drafted. It is noted that since Dar-Alawda has owned or leased the Property no application for associate membership has been processed or approved;

    v.its obligations under Special Conditions 16(3)(e) and 16(5)(a)(iv) of the Contract and clause 2.1.5 of the Section 173 Agreement in that it has removed existing signage from the Property without Moreland’s consent and that it has removed and is now not exhibiting a copy of the Public Access Rules on the Open Space Land as required;

    …

19. The default notice continued that, if within 30 days of the date of the letter the applicant failed to remedy the breaches or where the breaches cannot be remedied, failed to satisfy the respondent as to why the breaches should be excused, the respondent would be entitled to exercise the option to repurchase the property under the Option Deed. All the respondent’s rights were reserved.

20. On 29 February 2020, the applicant responded to the default notice (‘29 February letter’). It disputed all the alleged breaches, relevantly stating that:

    [The applicant] has provided application forms to residents who have approached the Centre to become associate members to use the court in the past, but until the recent Council derived application form sent by Jodie Watson indicating they are from residents. [sic] The centre has not received any applications from residents as per our own application form. (Copy Attached)

    …

    This is not the Centre trying to avoid the issue, but rather to get it in perspective. The Centre has sent to the persons noted on the Council application forms and when they have been returned subject to them being complete the residents will become associate members. As associate members they will have a key and via booking with the Centre have access to the court. …

21. The 29 February letter concluded that the applicant ‘will continue to work productively with Council in its desire to see more local residents use the basketball court on Montford [sic] Park and will seek Council assistance to develop the court further’.

22. As claimed in the 29 February letter, on 1 March 2020, the applicant wrote a letter signed by Mr Helou to each of the nine applicants who signed the November application forms (‘1 March letter’):[31]

    [31]Reasons, [99].

    (a)noting receipt of the November applications from Ms Watson on behalf of each applicant;

    (b)requesting confirmation that each applicant wished to become an associate member ‘as it is a little outside [the applicant’s] normal processes to accept a block of memberships from Council’; and

    (c)advising that ‘the Centre did not want to be seen as delaying access to the basketball court and would welcome each applicant:

    subject to completing the following administrative issues

    1.Complete the Centre’s application form for new associate membership

    2. Provide some form of identification that links you to a local property, this can be copied and sent back with the application form or can be shown on the open day we will be running to welcome new associate members

    3.Pay the joining fee and prorata annual associate member fee.

23. The 1 March letter attached the application form for Open Space membership in accordance with Appendix 4 to the Constitution and the Rules. Mr Helou and Mr Ibrahim, the applicant’s sports coordinator, gave evidence that they hand delivered this letter to the home addresses of the applicants for Open Space membership. The letter was not sent to Ms Watson and at least one of the applicants, David Reeder, did not receive it.[32] The judge found that another of the applicants reacted with ‘disbelief’ when she found the letter in her mailbox on 3 March 2020 given the seven-month facilitation process and did not bother to submit another membership application.[33]

    [32]Reasons, [101].

    [33]Reasons, [102].

24. The respondent was not satisfied with the applicant’s response to the default notice and on 2 December 2020, it gave notice that it exercised the option to buy back the property.[34]

    [34]Reasons, [11].

25. On 10 December 2020, the applicant commenced proceedings in the Trial Division, seeking orders restraining the respondent from exercising the option. The respondent gave an undertaking not to proceed with the option to purchase pending the determination of the current appeal.

Summary of reasons

1. As noted above, the judge found that the applicant had prevented or impeded access to Montfort Park:

   (a)by failing to process nine applications for membership with due diligence in breach of the access term in SC 16(3)(e) and 16(5)(a)(iv) of the Contract and cl 2.1.5 of the s 173 Agreement (ie the process term);[35] and

   (b)by failing to display the Rules in breach of the display term in SC 16(3)(e) and 16(5)(a)(iv) of the Contract and cl 2.1.5 of the s 173 Agreement (ie the display term).[36]

   [35]Reasons, [106].

   [36]Reasons, [118].

2. As mentioned, in summary, the judge concluded that:

   (a)the applicant breached the process term and the display term contained in SC 16(3)(e) and 16(5)(a)(iv) of the Contract and cl 2.1.5 of the s 173 Agreement; and

   (b)the respondent served a valid notice of breach, with the result that the respondent validly exercised its option to repurchase the property.[37]

   [37]Reasons, [14(5)] and [14(6)].

3. Further, the judge concluded that the default notice was a valid notice in respect of the breaches of the process term and the display term. As a result, the judge made orders for specific performance of the applicant’s obligation to retransfer the property to the respondent.[38] In doing so, the judge refused the applicant’s claim for relief against forfeiture.

   [38]Reasons, [190].

4. The applicant now seeks leave to appeal from these findings and the consequential orders that were made. An applicant may only be granted leave to appeal if this Court is satisfied that the appeal has a real (as opposed to fanciful) prospect of success.[39] Even if the Court is so satisfied, there remains a residual discretion to refuse leave.[40]

   [39]Supreme Court Act 1986, s 14C.

   [40]Commissioner of Australian Federal Police v Opal Storm Pty Ltd [2018] VSCA 301, [27]; Molonglo Group (Australia) Pty Ltd v Cahill [2018] VSCA 147, [96].

Proposed grounds (a) and (b)

1. Proposed grounds (a) and (b) are inter-related, and are as follows:

   (a)The learned judge erred in law in determining that the applicant breached a SC of the Contract and the s 173 Agreement between the applicant and respondent requiring the applicant to process applications for membership to the association with due diligence so as not to impede access to a basketball court to members of the local community when the applications in question did not comply with the Constitution;

   (b)The learned judge erred in determining that the applicant failed to process the impugned applications with due diligence in accordance with its obligations under the s 173 Agreement and the Contract when the applications were incomplete.

The reasons

1. The judge first addressed the question of whether the applicant breached the process term. The judge set out the relevant submissions, recording the applicant’s submission that, as the November applications were not in accordance with the Constitution, they were not valid applications and thus did not require processing.[41]

   [41]Relying on Molala v Free Wesleyan Church of Tonga in Australia (Vic) [2019] VSC 205 (‘Moala’).

2. The judge then set out the contents of the November applications, noting they contained much of the same information as would be provided in an application under the Constitution, save that the November applications were not signed by a proposer and a seconder, and photo identification was not provided.[42]

   [42]Reasons, [74]–[75].

3. The judge considered that whether a membership application was invalid if it did not strictly comply with r 4(4)(a) of the Constitution was a question of interpretation. The judge referred to the rule of statutory interpretation that strict compliance with a prescribed form is not necessary, unless the contrary intention appears in the statute. However, the judge concluded that this did not apply to the interpretation of the Constitution, which is a contract between the applicant and its members and is to be interpreted in the same way as other contracts, objectively by reference to its text, context and purpose.[43] The judge continued:

   The test for determining the validity of an act done in breach of a provision is whether it was a purpose of the constitution that a breach would result in invalidity. The question is answered having regard to the language of the relevant provision and the scope of the object of the whole constitution.[44]

   [43]Reasons, [77], relying upon Mount Bruce Mining Pty Ltd v Wright Prospecting (2015) 256 CLR 104, 116 [46]–[47] (French CJ, Nettle and Gordon JJ) (‘Mount Bruce’); [2015] HCA 37.

   [44]Reasons, [77].

4. As to the text of the Constitution, the judge noted:

   (a)the obligation in r 4(4) of the Constitution that an application for membership ‘must’ be in the form set out in Appendix 1, which connotes necessity or obligation;[45] and

   (b)the form in Appendix 1 is not for Open Space membership but for membership as an ordinary member and Appendix 4 contains five different application forms for all other types of membership, including for Open Space membership.[46]

   [45]Reasons, [78].

   [46]Reasons, [79]–[80].

5. As to the context of the Constitution, the judge noted that:

   (a)rules 4(2) and 4(3) each contemplate that ‘a person may be granted membership … without having applied for membership in accordance with the rules’;[47]

   (b)rule 4(6) empowers the Committee to ‘determine whether to approve or reject the application’, with no express criteria or preconditions, ie the Committee has unfettered discretion;[48] and

   (c)rule 5(1) requires the applicant’s Secretary to maintain a register of members for each class of membership, containing the name and address of each member, and the date on which the member’s name was entered in the register.[49]

   [47]Reasons, [81].

   [48]Reasons, [82].

   [49]Reasons, [83].

6. The judge considered that this context ‘tend[ed] to the conclusion that it is not a purpose of the … [C]onstitution that a membership application that does not strictly comply with the form in Appendix 1 is invalid’.[50] The judge continued:

   If that were so, there would be no reason to include the application forms for different classes of membership behind Appendix 4, because any applications made using those forms would be invalid.[51]

   [50]Reasons, [84].

   [51]Reasons, [84].

7. As to the purpose of the Constitution, the judge noted that a rule requiring an application for membership to be made ‘on a prescribed form serves some obvious purposes’.[52] It relevantly establishes eligibility for membership and records the membership applicant’s agreement to be bound by the association’s rules and policies.[53] The judge concluded that these purposes could be achieved without insisting on strict compliance with the prescribed application form.[54]

   [52]Reasons, [85].

   [53]Reasons, [85].

   [54]Reasons, [85].

8. The judge then set out the applicant’s statement of purposes, noting that the objectives were directed to assisting people from a non-English speaking background, in particular newly arrived immigrants. The judge then noted that the prescribed membership application form is in English, before concluding that:[55]

   It would not be compatible with these objectives to interpret [r] 4(4) to require strict compliance with the prescribed form. Support and inclusion of those whose first language is not English would be better promoted by an interpretation that allows the committee to consider and accept the membership application of a person who has used the wrong form, or has completed the prescribed form incorrectly.

   [55]Reasons, [87].

9. The judge concluded that the November applications were valid. They provided the applicant’s name, address and contact details, and an agreement to comply with the applicant’s rules and regulations about the use of Montfort Park. The judge observed that ‘[i]t was not seriously suggested that photo identification was necessary to enable the [C]ommittee to determine whether the applicants were eligible for Open Space membership’.[56]

   [56]Reasons, [88].

10. The judge then considered whether the applicant had processed the November applications with due diligence and in accordance with its Constitution. Her Honour concluded that the applicant had not.[57] This is in circumstances where the judge:

    (a)found that Mr Helou did not give a clear account of what happened to the November applications from when the applicant received them;[58]

    (b)noted the belated production of the notes of the 9 December 2019 meeting and the absence of any direct evidence about this meeting;[59]

    (c)found that it was clear that the Committee did not determine whether to approve the November applications at the 9 December 2019 meeting;[60]

    (d)found that there was no evidence that the applicant gave further consideration to the November applications after 9 December 2019 or that the applicant ever made a decision to accept or reject them under r 4(6) of the Constitution;[61]

    (e)noted that on 30 January 2020, some residents, including some of the November applicants, wrote to the Council stating there had been no communication from the applicant about the November applications and asked the Council to exercise its option to repurchase the property;[62] and

    (f)referred to the 1 March letter.[63]

    [57]Reasons, [90]–[106].

    [58]Reasons, [92].

    [59]Reasons, [93]–[95].

    [60]Reasons, [96].

    [61]Reasons, [97].

    [62]Reasons, [98].

    [63]Reasons, [99].

11. As a result, the judge concluded:

    I find that [the applicant] did not process the nine applications for open space membership with due diligence and in accordance with its [C]onstitution. They were valid applications, and it was open to the committee to consider them and determine whether to accept or reject them. Mr Helou received the applications on about 21 November 2019, and drew them to the committee’s attention at the meeting on 9 December 2019. However, the committee did not make any decision at that meeting, deferring them to a later meeting. There is no evidence that the committee gave any further consideration to the applications, or made a decision about them. The March 2020 letter to the applicants suggest that it did not.[64]

    [64]Reasons, [85].

12. The judge noted that, on its own, a delay of a month or two in processing the November applications might not have impeded or prevented access to Montfort Park by the Moreland residents. However, she concluded that the applicant’s delay in processing the November applications did impede or prevent residents’ access to Montfort Park as at February 2020 having regard to the following:[65]

    (a)the facilitation process took place during 2019 in response to community concern about the lack of access to Montfort Park;

    (b)Mr Helou’s ‘agreement’ to the revised application and accompanying regulations;

    (c)Mr Helou’s failure to engage with Ms Watson after she sent him the November applications;

    (d)the fact that the November applications were the first applications for Open Space membership that the applicant received; and

    (e)the applicant’s failure to display the Rules as required by SC 16(3)(e) of the Contract.

    [65]Reasons, [104].

13. As a result, the judge concluded that the applicant should have determined to approve or reject the membership applications on or before 30 January 2020, with the result that the applicant breached SCs 16(3) and 16(5)(a)(iv) of the Contract and cl 2.1.5 of the s 173 Agreement.[66]

Contentions

[66]Reasons, [105].

1. The applicant raised three principal issues in relation to these grounds. First, the applicant submitted that substantial compliance is not the test for contractual non-compliance. Rather, membership applications should comply strictly with the requirements of the Constitution.[67] Secondly, the applicant submitted that the November applications did not substantially comply with the requirements of the Constitution as they did not provide for or include photo identification, proof of residency or referees. Further, the November applications referred to ‘Regulations for Members’ drafted by Ms Watson that were never adopted by the applicant. Thirdly, and for substantially the same reasons, the November applications were incomplete. In these circumstances, the applicant submitted that it was reasonable for it to have sought more information from the membership applicants, which they did by the 29 February letter.

   [67]Relying upon Moala at [428], a case which involved the validity of membership of an unincorporated association and which involved only the consideration of the constitution of that association.

2. In making these submissions, the applicant contended that the judge erred in her conclusion as to the context and purpose of the provisions in the Constitution relating to applications for membership.

3. As to the relevant context, the applicant contended that the judge erred in concluding at [81] of the Reasons[68] that under the Constitution, a person could be granted membership of the applicant by the Committee or ordinary members without having applied for membership in accordance with the rules. The applicant noted that there are six different types of membership under r 4 of the Constitution,[69] most relevantly associate gold sponsor members (r 4(1)(c)), associate sponsor members (r 4(1)(d)) and honorary members (r 4(1)(e)). The applicant then referred to r 4(3), which provides that:

   A person or entity who is not a member of the [applicant] at the time of the incorporation of the Association … must not be admitted to membership unless-

   (a)he or she applies for membership in accordance with these Rules; and

   (b)the admission as a member is approved by the committee or

   (c)the person or entity has been granted membership under Rule 4(1)(c), (d) or (e) by the committee or ordinary members.[70]

   [68]Set out at [‎69] above.

   [69]Set out at [‎27] above.

   [70]Emphasis added.

4. Thus, the applicant submitted that under r 4, a person who sought membership after the incorporation of the applicant had to apply for membership in accordance with the Constitution unless that person fell within those special categories of membership, each of which involved the person having made a significant contribution to the applicant. Further, in the case of an honorary member, the person would never be required to apply for honorary membership. The applicant contended that the judge failed to take into account the significance of this distinction, which meant that there was no general provision or intention under the Constitution that a person might be admitted to membership otherwise than by applying in accordance with the rules of Constitution.

5. The applicant further contended that the judge erred at [84] of the Reasons (set out in [‎70] above) by concluding in effect that an application for Open Space membership in the form in Appendix 4, rather than Appendix 1, would be ‘invalid’. The applicant contended that properly construed, the reference in r 4(4)(a) of the Constitution to ‘the form set out in Appendix 1’ ought properly be read as ‘the form set out in Appendix 1 or Appendix 4’. The applicant contended that, by failing to construe r 4(4)(a) in this way, the judge erred in concluding only substantial compliance with the rules of the Constitution was required.[71]

   [71]Reasons, [85]–[88].

6. The applicant also contended that the judge erred in assessing the seriousness and nature of the non-compliance in that the judge failed to accept the legitimate reasons for controlling and managing applications for membership in the manner required by the Appendix 4 form, namely, the provision of photo identification and the nomination of referees. The applicant referred to security concerns associated with giving access to the basketball court to members of the public. This is in circumstances where Appendix 4 of the Constitution was an annexure to the Contract and where SC 17(2) provided that the Constitution could not be changed without the consent of the Council.

7. Thus, the applicant contended that neither the context nor the terms of the Constitution suggested anything other than the need for strict compliance with the relevant rules relating to application for membership. It also contended that there was no such compliance in this case given that the November applications were based on the revised application forms that had not been approved by the applicant. Mr Helou did not have authority to agree to the revised application forms on behalf of the applicant.

8. For the most part, the respondent relied upon the reasoning of the judge. It contended that the judge correctly identified the relevant question and the relevant legal principles and that there was no error in the judge’s analysis of the context and purpose of the rules relating to application for membership in the Constitution.[72] As a consequence, the judge was correct to conclude that strict compliance with the membership application form was not necessary, with the result that the November applications were not invalid.

   [72]Reasons, [76]–[77].

9. Further, in oral argument, the respondent highlighted the importance of SC 16(3)(e) of the Contract and cl 2.1.5 of the s 173 Agreement. The respondent submitted that, by reason of these clauses, any discretion that the applicant had in relation to Open Space membership applications under the Constitution had to be exercised having regard to and in accordance with the Rules. Most relevantly, the respondent referred to r 7 of the Rules, which provides that the application for associate membership by residents ‘shall be processed by the [applicant] with due diligence and in accordance with its Constitution.’ As a result, the respondent submitted that the applicant agreed, as part of its obligation not to impede or prevent access to Montfort Park, that it would process, with due diligence, any application for Open Space membership.

10. The respondent contended that the judge did not err in applying these principles to the facts of this case, relying upon the judge’s findings set out above. Further, the respondent submitted that each form is in writing and contained the key information required by Appendix 4. Namely, the name and address and contact details of the membership applicant, the kind of membership applied for, an agreement to be bound by the rules of the applicant and an agreement to ensure compliance with all legal, statutory and other regular regulations at the direction of the applicant. It noted that security concerns of the kind raised in oral argument had not been raised before the judge.

Consideration

1. As is evident, the judge considered the question of breach of the process term through the prism of whether the November applications were valid applications under the Constitution by asking whether, based on the text, context and purpose of the Constitution, a failure to file an application strictly in accordance with the Constitution would result in the application being invalid. It is understandable why the judge did so in light of the arguments of the parties relating to the law that applies to the rules of incorporated associations.

2. Nevertheless, in our view, this was not a usual case where questions of validity of membership applications under the rules of incorporated associations are determined solely by reference to those rules.[73] This is because, in this case, the obligations imposed on the applicant in relation to processing Open Space members arose by reason of the Contract and the s 173 Agreement. These contractual documents (and the Rules incorporated by reference to each of them) gave rise to the need for, and consideration by the applicant of, Open Space memberships. Proper regard must be had to these documents when determining the obligations owed by the applicant in processing Open Space memberships. Consistent with Mount Bruce Mining Pty Ltd v Wright Prospecting (‘Mount Bruce’),[74] they form an important part of the context and shed light on the purpose of the Contract and the s 173 Agreement.

   [73]See, eg, Moala.

   [74](2015) 256 CLR 104; [2015] HCA 37.

3. While the principal document that governs the relationship between the applicant and the respondent in relation to Montfort Park and Open Space memberships was the Contract, as noted above, many of the annexures to the Contract are also significant given that they were negotiated between the applicant and the respondent before entering into the Contract.

4. Turning first to the Contact. As set out above in [‎10] to [‎14] above:

   (a)SC 16(3)(a) provides that the applicant ‘must not impede or prevent access to the Open Space Land by a Moreland resident except to the extent prescribed by the Public Access Rules …’; and

   (b)SC 16(2) relevantly defines the Rules as the rules dated 8 December 2003 governing access to the Open Space Land by Moreland residents in Annexure G ‘adopted by the applicant and the respondent’ on 8 December 2003 and which apply ‘until replaced or modified by agreement’ between them.

5. Secondly, as set out at [‎20] above, cl 2.1.5 of the s 173 Agreement mirrors SC 16(3)(e) of the Contract providing that the applicant ‘must not impede or prevent access to the open space land by a Moreland resident except to the extent prescribed by the Public Access Rules’ with ‘Public Access Rules’ being defined in the same way as in the Contract.

6. Thirdly, the Rules were specifically drafted as relating to access of the Open Space Land and were agreed between the applicant and the respondent. As set out at [‎24] above, they relevantly provide that:

   (a)the applicant shall permit a resident to apply to become an associate member of the applicant free of charge to enable the applicant to apply to use the Open Space Land (r 6); and

   (b)any such application ‘shall be processed by the [applicant] with due diligence in accordance with its constitution’ (r 7).

7. Fourthly, r 4 of the Constitution contained the process by which a person could apply to become a member of the applicant (rr 4(2)–(4)) (as set out in [‎29] above) and the way in which the any such application was to be processed (rr 4(5)–(10)) (as set out in [‎33] above).

8. In these circumstances, the Rules (agreed between the applicant and the respondent in December 2003) were important in setting out the agreed basis upon which Moreland residents were to have access to the Open Space Land before the other terms of the Contract were agreed. As a result, they formed an integral part of the contractual matrix between the parties and were incorporated by reference into SC 16(3)(e) of the Contract and cl 2.15 of the s 173 Agreement. As a consequence, proper regard must be had to them in determining the rights and obligations of the parties under these contractual documents.

1. In our view, by reason of r 7 of the Rules, on the proper construction of SC 16(3)(e) of the Contract and cl 2.1.5 of the s 173 Agreement, the applicant’s obligation ‘not impede or prevent access to the Open Space Land by a Moreland resident except to the extent prescribed by the Public Access Rules …’ carried with it an obligation to process any application for Open Space membership with due diligence. Properly construed, SC 16(3)(e) and cl 2.1.5, by reason of r 7, imposed an obligation on the applicant to process any such application with due diligence in order to ensure that access by Moreland residents to the Open Space Land was not impeded or prevented.

2. It is clear that the applicant failed to process, with due diligence, the November applications that were received on 21 November 2019. On the evidence, the applicant did not process or respond to the November applications in any meaningful way until 1 March 2020 and then, only to advise the applicants that they needed to complete yet another application form in order to be considered for Open Space membership.

3. As set out in [‎74] above, the judge found that there was no evidence of any steps taken to consider or process the November applications during this period save for the 9 December meeting, the substance of which remains unclear. This finding was not challenged. In our view, this delay in processing the November applications had the effect of preventing or impeding the November applicants, who were Moreland residents, from accessing Montfort Park (at least) up to the end of February 2020. As the judge found, this was during the summer months and school holiday period when adults and families within the Council area wished to use the basketball court. The delay in processing the November applications was a clear breach of the process term. We agree with the judge that this delay must also be viewed in light of the history of the dispute between Moreland residents and the applicant referred to at [‎76] above. Even without that recent history, given the basis upon which the applicant was able to acquire the land at below market price, the applicant was obliged to process any application by a Moreland resident for access to the Open Space promptly. Its obligation to give prompt attention to any application for access became all the more acute given the protracted dispute over this very issue.

4. As a result of the conclusion we have reached, it is not necessary to determine whether the November applications were valid or invalid for the purposes of the Constitution. This is because, on the proper construction of the process term, the applicant was obliged to raise with the November applicants in a timely manner any concerns it had about the validity of the November applications so as not to impede or prevent access to Montfort Park. At the very least, it required the applicant to do what it did by the 1 March letter. In failing to do so (well) before 1 March, the applicant breached the process term.

5. Having regard to the context and purpose of SC 16(3)(e), cl 2.1.5 of the s 173 Agreement and r 7 of the Rules, we do not consider that filing an Open Space membership application that did not comply with the Constitution meant that that application was ‘invalid’ such that it could effectively be ignored by the applicant. Rather, as already mentioned, the applicant was obliged to process any such application for Open Space membership with due diligence to ensure that access by Moreland residents to the Open Space Land was not impeded or prevented.

6. For completeness, we consider that the reference in r 4(4)(a) of the Rules to an application being in ‘the form set out in Appendix 1’ should be read as ‘the form set out in Appendix 1 or Appendix 4’. The reference to Appendix 1 is clearly a mistake: it only provides a form for ordinary membership and the forms of each of the other types of membership are contained in Appendix 4. It is only if one reads r 4.4(a) in this way that all the different kinds of membership under r 4(1) can be applied for ‘in accordance with these Rules’ pursuant to r 4(3)(a). The Court has the power and the obligation to correct such obvious mistakes as part of the task of construing the relevant document.[75]

   [75]Perpetual Ltd v Myer Pty Ltd [2019] VCSA 98.

7. Finally, although it has no bearing on our conclusions, we record our disagreement with the judge’s finding that, under the Constitution, a resident could be granted membership of the applicant by the Committee or the ordinary members without having first applied for membership. As rr 4(2) and (3) make plain, the power to grant membership without an application only applies to certain categories of members and relevantly does not apply to Open Space members.

8. As a result, we would grant leave to appeal but dismiss the appeal on grounds (a) and (b).

Proposed ground (c)

1. Proposed ground (c) is as follows:

   (c)The learned judged erred in determining that a notice of default served under an Option to Purchase in relation to the special conditions was valid when the breach notice complained of;

   (i)the removal of a sign (when on the evidence no sign had been removed); and/or

   (ii)a failure to process nine applications forms for membership of the Applicant association when none of those applications complied with the Applicant’s constitution.

2. The relevant terms of the default notice are set out at [‎52] above.

3. In light of our conclusion in relation to grounds (a) and (b), it is unnecessary to address in detail proposed ground (c)(ii). This is because we have concluded that the fact that the November applications did not comply with the Constitution is not relevant to whether there was a breach of the process term. Rather, by the time of the default notice, the applicant was in breach of the process term to process any such application for Open Space membership with due diligence to ensure that access by Moreland residents to the Open Space Land was not impeded or prevented.

4. To the extent that the applicant submitted that the default notice was invalid because it failed to set out what the applicant was required to do to remedy the breach, we reject that submission. This is because the breach of the process term could not be remedied, especially as the delay took place in the summer months and school holiday period when adults and families within the Council area wished to use the basketball court. This is quite apart from history of the dispute between Council residents and the applicant. We refer to our comments in [‎98] above. We note the judge also concluded in the context of relief against forfeiture that this past breach of the process term could not be remedied and that her Honour’s conclusion was not challenged on appeal.[76]

   [76]Reasons, [177].

5. Further, as noted in [‎52] above, the default notice expressly provided that, where the breach could not be remedied, the respondent would be entitled to exercise the option if the applicant failed within 30 days of the date of the notice to satisfy the respondent as to why the breaches should be excused. So far as we are aware, the applicant made no attempt to have the breaches excused.

6. As a result, we would grant leave in relation to proposed ground (c)(ii) but dismiss the appeal relating to that ground.

7. We now turn to proposed ground (c)(i) relating to the display of the Rules.

The reasons

1. As noted above, the judge found that the applicant had prevented or impeded access to the Montfort Park by failing to display the Rules, in breach of the display term in SC 16(3)(e) and 16(5)(a)(iv) in the Contract and cl 2.1.5 of the s 173 Agreement.[77]

   [77]Reasons, [118].

2. As to the factual basis for the breach of the display term, the judge concluded that while there were varying accounts whether the sign was legible and clearly visible before or as at 20 February 2020, the ‘overwhelming weight of evidence as at 20 February 2020 and for many years previously was that the applicant did not exhibit the Rules so that they were clearly visible and could be read by member of the public from outside Montford Park’. This is because, although the sign was fixed the wall on the south-west of the basketball court, the sign was obscured by an olive tree.[78]

   [78]Reasons, [117].

3. The judge also considered the position since the service of the default notice concluding that:

   (a)before March 2021 (more than one year after the default notice), there was no sign displaying the Rules outside of the fence; rather, since about 2021, a sign displaying the Rules was attached to a brick wall on the western boundary of Montfort Park about 2 metres in from the fence along Henkel Street;[79] and

   (b)when the judge visited the property on 27 April 2023, while the sign was visible from the street, it could not be easily read by a person passing by Henkel Street and it was not legible from Wendell Street.

   [79]Reasons, [108]–[109].

4. There is no challenge to these findings.

5. The judge then considered whether the default notice was a valid notice of default pursuant to the Option Deed. The judge concluded that the default notice set out with sufficient clarity the breaches relied upon.[80] In doing so, the judge had regard to the submissions of the applicant that (a) it was by no means certain what, if anything, could have been done to remedy the process breach;[81] and (b) that the default notice was defective because it suggested that the sign had been removed but it was always in place (albeit obscured by an olive tree).[82] The judge also noted that the respondent relied upon Mr Helou’s understanding of the default notice.[83]

   [80]Reasons, [126]–[146].

   [81]Reasons, [133].

   [82]Reasons, [134].

   [83]Reasons, [137(a)], [141].

6. The judge relevantly held that that default notice, construed fairly and in context, conveyed with reasonable certainty what matters the respondent said amounted to the display breach. She concluded that:

   (a)the default notice alleged two distinct breaches or defaults: the first alleged default was removing signs displaying the Rules that had been there and the second alleged default was (quoting from the default notice) ‘now not exhibiting a copy of the Public Access Rules on the Open Space Land as required’;[84] and

   (b)the fact the sign on the wall had not in fact been removed (the first alleged default) did not answer the second alleged default.

   [84]Reasons, [144].

7. Further, the judge concluded that the display term required the applicant ‘to display the Public Access Rules in a position which is clearly visible by a person from the outside of the open space land’ and that ‘[i]t could have done this by placing the sign on the outside of the fence or at least by trimming back the olive tree so that the sign on the wall could be read from Henkel Street’.[85]

   [85]Reasons, [144].

8. As a result, the judge concluded that the notice of default was valid for the purpose of clause 6(a) of the Option Deed.[86]

The contentions

[86]Reasons, [145]–[146].

1. The applicant relied upon the terms of the default notice relating to the display term, which stated that the applicant had breached the display term ‘in that it has removed existing signage from the Property without Moreland’s consent and that it has removed and is now not exhibiting a copy of the [Rules] on the Open Space Land as required’.

2. The applicant contended the word ‘and’ in the default notice suggested that the sign had been removed and that the sign that had been removed was not being exhibited. It submitted that this part of the default notice was invalid as it was premised on the breach being the removal of the sign, which had not in fact occurred. As the judge found, the relevant sign was affixed to brick wall on the western boundary of Montfort Park, but it was obscured from view by an olive tree. However, the applicant accepted that as the sign was obscured by the olive tree, it was not visible to a person outside the Open Space Land as required by the display term.

Consideration

1. It was not in dispute that the test as to whether a default notice adequately identifies the breach or default is what would be understood by an objective person in the position of the contracting party.[87]

   [87]See, eg, MLW Technology Pty Ltd v May [2005] VSCA 29, [78]–[82] (Gillard AJA, Winneke P and Buchanan JA agreeing).

2. In our view, the applicant’s contention as to the meaning of the default notice relating to the display term is artificial and must be rejected. It does not accord with the plain meaning of this part of the default notice. As the judge correctly concluded, the default notice relies on two defaults: the first was removing signs displaying the Rules that had been there, and the second was ‘now not exhibiting a copy of the Rules on the Open Space Land as required’. In our view, the use of the word ‘and’ does not convey that there was in substance only one breach of the display term relating to the removal of the sign. We consider that a reasonable person in the shoes of the applicant would understand that the default notice asserted two separate breaches of the display term. As the judge concluded,[88] that was the way in which Mr Helou of the applicant understood it.

   [88]Reasons, [137(a)], [141].

3. As a result, proposed ground (c)(i) has no real prospects of success and we would refuse leave to appeal in relation to it.

Proposed ground (d)

1. Proposed ground (d) is that:

   The learned judge erred in determining that the Applicant was not entitled in any event to relief against forfeiture.

The reasons

1. At trial, in the alternative to its contentions that the Council was not entitled to exercise the option, the applicant claimed relief against forfeiture. The judge refused this claim.[89]

   [89]Reasons, [182].

2. First, the judge recorded the factual basis upon which the applicant contended that relief against forfeiture should be ordered. In summary, the applicant contended that it would be unconscionable for the Council to require forfeiture of the applicant’s interest in a property, having regard to the following:

   (a)the breaches, if made out, were trivial and not wilful, with the adverse consequence to the Council being negligible given that the Rules are now displayed on the fence;

   (b)the applicant’s co-operation in facilitating dialogue with the Council and the local community through the facilitation process;

   (c)the Council had contributed to the breaches by submitting the applications for Open Space membership in the wrong form and knowing Ms Watson was not eligible for membership. Further, the default notice did not set out with sufficient clarity what the alleged breaches were; and

   (d)the express willingness of the applicant to comply with the terms of the Contract in the 29 February letter together with Mr Helou’s evidence that he was prepared to process applications from local residents in accordance with the Constitution.[90]

   [90]Reasons, [161]–[163].

3. Relying upon the relevant principles identified in the judgment of McLeish JA in JPA Finance v Gordon Nominees Pty Ltd (‘JPA Finance’)[91] and by Mason and Deane JJ in Legione v Hateley,[92] the judge rejected each of the applicant’s submissions.[93]

   [91](2019) 58 VR 393; [2019] VSCA 159.

   [92](1983) 152 CLR 406, 499; [1983] HCA 11.

   [93]Reasons, [170]–[171].

4. First, the judge rejected the contention that the Council had contributed to the breaches (including because it had not given prior notice of them): rather, she concluded that the applicant had been responsible for them.[94]

   [94]Reasons, [173].

5. Secondly, the judge rejected the submission that the breaches of each of the process term and the display term were trivial or inadvertent. Further, as to the process term, the judge concluded that the reasons given for not processing the November applications were ‘spurious’. This was in a context where all but one of the November applications were signed by Moreland residents, including families who wanted to use the open space at Montfort Park but were prevented from doing so by the applicant’s inaction.[95]

   [95]Reasons, [175].

6. As to the display term, the judge found that the Rules were not displayed as required until March 2021, when a new sign was placed outside the fence. The judge concluded that this breach was not trivial or inadvertent, as for many years after the basketball court was completed, local residents were not informed in the agreed manner that they could use the court if they became Open Space members. While the Rules remained hidden behind a tree, people who lived nearby and who were actively interested in using the court were unaware it was possible to apply for Open Space membership or how they could do so.[96]

   [96]Reasons, [174].

7. The judge rejected the applicant’s contention that the breaches did not really matter in practice because anyone who wanted to use the basketball court could simply walk in and do so. The property is surrounded by a three-metre-high fence and the gate is locked when the community centre is not in use.[97]

   [97]Reasons, [176].

8. The judge also concluded that the past breaches could not be remedied, as the community has not enjoyed the benefit of Montfort Park.[98]

   [98]Reasons, [177].

9. Nevertheless, the judge considered that the object of community access to Montfort Park might be achieved in the future by means other than forfeiture. While the judge noted that the Rules are now displayed, she was not satisfied that the applicant would, in the future, process applications for Open Space membership diligently and in accordance with its Constitution or otherwise to ensure that local residents have access to Montfort Park in accordance with the Rules.[99]

   [99]Reasons, [178].

10. In this context, the judge held that, while the applicant was a willing participant in the facilitation process in 2019, the applicant ‘did not follow through on matters that were agreed to by Mr Helou, or the friendly atmosphere of the open day in August 2019’, namely, to amend its Constitution, to endorse a vision concept that had been developed or to approve the applications for Open Space membership made to it in November 2019.[100]

    [100]Reasons, [179].

11. The judge concluded:

    In those circumstances, I do not consider it was unconscientious for the Council to exercise the option in December 2020. Nor is it unconscientious for the Council to seek specific performance of the option deed now, in order to achieve the object of public access to Montfort Park that [the applicant] agreed to but has failed to provide.[101]

Contentions

[101]Reasons, [180].

1. The applicant contended that even if grounds (a) to (c) were rejected, the judge erred in refusing relief against forfeiture. In its written case, the applicant sought to reargue the case it made before the judge, contending that the breaches found by the judge were trivial and were not wilful, that the respondent had contributed to the breaches, and that as the adverse consequences of the breaches to the respondent were negligible, those breaches were not sufficiently serious to justify forfeiture.

2. In oral submissions, the applicant raised for the first time that some of the factual findings of the judge were in error. Most relevantly, the applicant referred to the finding that the reasons given by the applicant for not processing the November applicant were ‘spurious’. The applicant submitted that, even though the applicant’s concerns about the form of the application might be wrong, it did not necessarily follow that they were spurious. However, the judge ‘didn’t brook any alternative’.

3. Further, the applicant referred to the judge’s conclusion that she was not satisfied that the applicant would, in the future, process applications for Open Space membership with due diligence. The applicant contended that this finding ignored the applicant’s willingness to work with the respondent (evidenced in the 29 February letter) and the fact that none of the November applicants resubmitted an Open Space membership form after the 1 March letter.

1. Given the decision to refuse to grant relief against forfeiture, the applicant submitted that, consistent with the forms of error identified in House v The King (‘House’),[102] the judge erred in taking into account irrelevant considerations or failing to take into relevant considerations.

   [102](1936) 55 CLR 499; [1936] HCA 40.

2. The respondent submitted, in summary, that the applicant had not identified any House error in the Reasons.

Consideration

1. In our view, the judge made no House error in addressing why the applicant was not entitled to relief against forfeiture.

2. First, there is no dispute that the judge had regard to the relevant principles, namely those summarised by McLeish JA (with whom Beach and Niall JJA agreed) in JPA Finance. We would only emphasise that:

   (a)the second situation in which relief against forfeiture may be available is where it would be ‘unconscientious’ to allow a party to terminate the contract and forfeit the other party’s interest ‘whether because of fraud, mistake, accident or surprise because all because of other unconscious pitches conduct such as taking advantage of a special vulnerability in order to derive an unjust enrichment’;[103] and

   (b)‘the court should not intervene so as to interfere with the contractual rights of the parties merely because it thinks it would be fair or reasonable to do so because subsequent events have rendered one party situation more favourable’.[104]

   [103]JPA Finance, 422 [98].

   [104]Ibid 422 [99].

3. Secondly, there was no error in the judge’s application of the principles to the facts of this case. As is evident from the judge’s reasons, her Honour considered all relevant factors in concluding that the applicant was not entitled to relief against forfeiture relief, including, most relevantly, the nature of the breaches, whether trivial wilful and/or inadvertent, whether the respondent contributed to the breaches and the effect of the breaches on the respondent (including the Council residents who were to benefit from access to the Open Space Land), and the applicant.

4. As a result, there is no error of the kind identified in House, in respect of the breach of either the process term or the display term. In any event, breach of the display term in isolation was a more than sufficient basis to refuse relief against forfeiture. For many years before March 2021, the applicant failed exhibit the Rules as required.

5. As to the particular matters relied upon by the applicant in oral argument, the judge did not err in concluding that the reasons for not processing the November application were ‘spurious’. As the judge’s reasons make plain, this finding was made in a context where the Council residents, who made up eight of the November applicants, wished to use the basketball court and were prevented from doing so by the applicant’s inaction — and were not able to access the court for more than three years.

6. The applicant submitted that this finding could not be maintained in light of the applicant’s concern that an invalid application form was used. We do not accept this submission, notwithstanding that our reasoning in relation to the breach of SC 16(3)(e) differs to that of the trial judge. As set above, the proper response to any concern of the applicant relating to the validity of the November applications was to raise that concern ‘with due diligence’ with the November applicants so as not to prevent or impede their access to the Open Space area. In these circumstances, the applicant’s justification of its failure to respond to these residents before 1 March (based as they were on very limited and incomplete evidence) can properly be described as ‘spurious’.

7. Further, the applicant contended in substance that the judge erred in not being satisfied that the applicant would not, in the future, process applications for Open Space membership with due diligence in light of the willingness of the applicant to work with the respondent. While the judge referred to the fact that Mr Helou gave evidence that the applicant has now ‘maybe 20 Open Space members’, she noted Mr Helou did not elaborate on this evidence.[105] We would add that no written evidence of these memberships was included in the Court book.

   [105]Reasons, [178].

8. In our view, in light of the applicant’s previous failure to comply with SC 16(3)(3) of the Contract and cl 2.1.5 of the s 173 Agreement, the weight of the evidence supports the judge’s conclusion that the applicant would not, in the future, process applications for Open Space membership with due diligence. We refer by way of example to the judge’s conclusion (which was not challenged) that while the applicant was a willing participant in the facilitation process in 2019, the applicant ‘did not follow through on matters that were agreed to by Mr Helou’. This includes the unexplained failure of Mr Helou to seek the approval of the Committee to the revised application form. Further, as set out above, the Rules were not displayed as required until March 2021, which was more than 12 months after the default notice and more than more than three months after the option was exercised.

9. In all these circumstances, we would refuse leave on proposed ground (d).

Conclusion

1. As a result, leave to appeal will be refused in relation to proposed grounds (c)(i) and (d). Leave to appeal will be granted in respect of the proposed grounds (a), (b) and (c)(ii) but the appeal will be dismissed.

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