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

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

PROPERTY LIST

S ECI 2020 04569

DAR-ALAWDA (WENDEL STREET) COMMUNITY CENTRE INC.	Plaintiff
v
MERRI-BEK CITY COUNCIL	Defendant

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JUDGE:	Richards J
WHERE HELD:	Melbourne
DATE OF HEARING:	27–28, 1–2, 11 May 2023
DATE OF JUDGMENT:	27 July 2023
CASE MAY BE CITED AS:	Dar-Alawda (Wendel Street) Community Centre Inc. v Merri-bek City Council
MEDIUM NEUTRAL CITATION:	[2023] VSC 433

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CONTRACTS — Discharge, Breach and Defences to Action for Breach — Contract for sale of land — Where contract for sale of land was subject to special conditions — Where special conditions obliged purchaser to construct, maintain and provide access to a basketball and volleyball court on land — Whether purchaser breached obligations by failing to maintain basketball and volleyball court in good repair — Whether purchaser breached obligations by impeding and preventing access to basketball and volleyball court — Whether notice of default validly issued to purchaser — Whether breaches remedied by purchaser — Where contract for sale of land was subject to a deed of option allowing vendor to purchase land if obligations breached by purchaser — Whether option validly exercised — Whether vendor entitled to specific performance under deed of option.

LOCAL GOVERNMENT — Town planning — Where contract for sale of land subject to an agreement between vendor and purchaser under s 173 of the Planning and Environment Act 1987 (Vic) — Whether s 173 agreement breached — Planning and Environment Act 1987 (Vic), s 173.

REAL PROPERTY — General principles — Relief against forfeiture — Whether exercise of option by vendor was unconscientious — Whether purchaser entitled to relief against forfeiture.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr T Sowden	Zouki Lawyers
For the Defendant	Mr AMJ Meagher and Ms RA Kelly	Gadens Lawyers

TABLE OF CONTENTS

Introduction................................................................................................................................... 1
Summary of conclusions.................................................................................................... 4

The Property.................................................................................................................................. 7
The contract documents............................................................................................................. 10
Issue 1: Did Dar-Alawda breach special condition 16(3)(f) of the contract of sale by failing to maintain the basketball court in good condition and repair?..................................... 18
Issue 2: Did Dar-Alawda breach special conditions 16(3)(e) and 16(5)(a)(iv) of the contract of sale and cl 2.1.5 of the s 173 agreement, by impeding and preventing access to Montfort Park by Moreland residents by failing to process applications for associate membership with due diligence and in accordance with its constitution?....................................................... 20
Open space membership application form.................................................................... 25
Validity of applications made using the new form...................................................... 28
Did Dar-Alawda process the applications in accordance with its constitution?..... 37

Issue 3: Did Dar-Alawda breach special conditions 16(3)(e) and 16(5)(a)(iv) of the contract of sale and cl 2.1.5 of the s 173 agreement by not exhibiting a copy of the Public Access Rules at all times so as to be clearly visible by any person from the outside of Montfort Park? 43
Issue 4: In respect of any breach established pursuant to questions 1 to 3:....................... 48
(a) ... was it a breach within the meaning of cls 3 and 6 of the option deed?........... 48
(b).... did it give rise to a right for the Council to issue a notice of breach pursuant to cl 6(a) of the option deed?.................................................................................................. 48

Issue 5: Was the Council’s letter of default dated 7 February 2020 a valid notice of default pursuant to the contract of sale, the s 173 Agreement and/or the option deed? In particular, did the notice of default set out with sufficient clarity any of the alleged breaches now relied upon by the Council?.................................................................................................................. 50
Issue 6: In relation to any of the breaches now relied upon by the Council, did Dar-Alawda comply or fail to comply with the notice of default either by remedying each breach or satisfying the Council that the breach should be excused?.................................................................. 58
Issue 7: Did the Council lawfully exercise the option to purchase the Property?............. 61
Issue 8: Should Dar-Alawda have relief against forfeiture?................................................. 63
Issue 9: Did Dar-Alawda breach cl 3.3 of the option deed by failing to complete and deliver to the defendant an identical copy of the Contract of Sale within 14 days of the Council exercising its option by its letter dated 2 December 2020?............................................................. 70
Issue 10: In the circumstances, is the Council entitled to orders for specific performance by the plaintiff to complete the defendant's exercise of the option?...................................... 70
Disposition................................................................................................................................... 72

HER HONOUR:

Introduction

Dar-Alawda (Wendel Street) Community Centre Inc. is a not-for-profit community association with objectives that include providing services and support to people from non-English speaking backgrounds, in particular newly arrived migrants. Since about 1988 it has occupied an old Scout Hall at 1 Wendel Street, Brunswick, on land that was owned by the City of Brunswick and subsequently Moreland City Council.[1]
[1]In September 2022, the Council’s name changed from Moreland City Council to Merri-bek City Council.

On the same title as 1 Wendel Street is a second block at 98 Henkel Street, Brunswick, on the corner of Wendel and Henkel Streets. This block is known as ‘Montfort Park’ and was also owned by the Council. By the early 2000s, Montfort Park was an undeveloped grassy block in what was otherwise an industrial and commercial area of Brunswick. The Council identified 1 Wendel Street and Montfort Park as surplus to its needs and commenced the process of offering both blocks for sale.

On 29 July 2004, the Council as vendor and Dar-Alawda as purchaser entered into a contract for the sale of 1 Wendel Street and Montfort Park (together, the Property). The purchase price was $100,000, significantly lower than the market value of the land in 2004. In consideration of the discounted purchase price, Dar-Alawda agreed to improve Montfort Park by constructing a basketball court or similar court, and to provide access to Montfort Park to Moreland residents in accordance with agreed Public Access Rules. These commitments were the subject of special conditions in the contract of sale. They were reinforced by an agreement under s 173 of the Planning and Environment Act 1987 (Vic) (Planning Act) (s 173 agreement), a restrictive covenant on the title, and an option for the Council to buy back the land if Dar-Alawda breached the special conditions.

As agreed, Dar-Alawda built a basketball court on Montfort Park, which was completed in 2012. Dar-Alawda also made a number of other improvements to the Property. The old Scout Hall was renovated and used as a community centre by Dar‑Alawda and many other community groups. In addition, a sturdy, three metre high metal fence was erected along the Henkel Street and Wendel Street boundaries of the Property.

The contract of sale required Dar-Alawda to exhibit a legible copy of the Public Access Rules in a position that was clearly visible by any person from outside Montfort Park. The Public Access Rules provided that Montfort Park would be available for use by Moreland residents who were admitted as associate members. Dar-Alawda was obliged to permit a Moreland resident to apply to become an associate member, and its constitution was amended to include a special membership category for ‘open space’ associate members.[2]
[2]Defined as ‘associate (open space land (MontfordPark))’ members in Dar-Alawda’s constitution, and referred to in this judgment as open space associate members.

In 2015 and 2016, some residents of Henkel Street tried to gain access to Montfort Park, without success. They were not offered open space associate membership, or told how to apply. They began to question whether Dar-Alawda was meeting its obligation to provide community access to Montfort Park, and expressed their concerns to the Council, in correspondence, in an online petition, and in the media. Public access to Montfort Park was an issue in the 2018 council elections.

In late 2018, the Council engaged a facilitator, David Bryson, to mediate between Dar-Alawda and these local residents, with a view to reaching agreement on issues of access and use of Montfort Park. Terms of reference were agreed, and Mr Bryson facilitated a number of meetings between January and June 2019. During this process the Council was represented by its Manager Corporate Governance, Jodie Watson, and Dar-Alawda was represented by its President, Anthony Helou. Mr Helou had been a Moreland councillor between 1996 and 2012, and was the mayor of Moreland in 1998, 2004, and 2005 to 2006.

By June 2019, Ms Watson had prepared a vision concept document for Montfort Park, which had been approved by Mr Helou. The vision concept involved resurfacing the concrete basketball court, beautifying the fence, artwork on the western brick wall, plantings, and public liability insurance. On 24 August 2019, Dar-Alawda held an open day, and invited residents from the surrounding streets to drop in to view and discuss Dar-Alawda’s vision for Montfort Park. There was a pleasant and positive atmosphere at the open day, which was well attended by local families and children. Food was available, and children who lived nearby were able to play on the basketball court.

On 21 November 2019, Ms Watson sent nine applications for open space associate membership to Mr Helou. Dar-Alawda’s response to these applications is considered in detail later in this judgment. Ultimately the applications were not accepted, and none of the applicants became associate members of Dar-Alawda.

The Council formed the view that Dar-Alawda was in breach of its obligations under the contract of sale, the s 173 agreement, and the restrictive covenant. On 7 February 2020, it served Dar-Alawda with a notice of default setting out six breaches relied on by the Council. The notice advised Dar-Alawda that if the breaches were not remedied within 30 days, or if the Council was not satisfied that they should be excused, the Council would be entitled to exercise its option to buy back the Property.

The Council was not satisfied with Dar-Alawda’s response to the notice of default. On 2 December 2020, it gave notice to Dar-Alawda that it exercised the option to repurchase the Property.

Dar-Alawda then commenced this proceeding, in which it seeks declarations that the notice of default was ineffective and that it was not in breach of the contract of sale, as well as an injunction preventing the Council from exercising the option. In the alternative, it seeks relief from forfeiture. Pending the hearing and determination of the proceeding, the Council gave an undertaking not to proceed to take title to the Property.

The Council maintains that Dar-Alawda was in breach of the contract of sale, the s 173 agreement and the restrictive covenant, and that it was entitled to exercise the option. It counterclaimed for an order for specific performance of Dar-Alawda’s obligations under the option deed. By the end of the trial, the Council claimed that Dar-Alawda had breached its obligations in three ways:

(a) failing to maintain the basketball court in good condition and repair;

(b) impeding and preventing access to Montfort Park by Moreland residents by failing to process applications for associate membership with due diligence and in accordance with its constitution; and

(c) not exhibiting a copy of the Public Access Rules at all times so as to be clearly visible by any person from the outside of Montfort Park.

Summary of conclusions

The issues for determination in the proceeding, and my conclusions in relation to each issue, are as follows.

Breach

(1) Did Dar-Alawda breach special condition 16(3)(f) of the contract of sale by failing to maintain the basketball court in good condition and repair?

No. Dar-Alawda was not in breach of special condition 16(3)(f) of the contract of sale as at 7 February 2020. The basketball court was well maintained and in good repair at all relevant times.

(2) Did Dar-Alawda breach special conditions 16(3)(e) and 16(5)(a)(iv) of the contract of sale and cl 2.1.5 of the s 173 agreement, by impeding and preventing access to Montfort Park by Moreland residents by failing to process applications for associate membership with due diligence and in accordance with its constitution?

Yes. Dar-Alawda breached special conditions 16(3)(e) and 16(5)(a)(iv) of the contract of sale and cl 2.1.5 of the s 173 agreement, by failing to process nine applications for associate membership submitted to it in November 2019 with due diligence and in accordance with its constitution, hence impeding and preventing access to Montfort Park by Moreland residents.

(3) Did Dar-Alawda breach special conditions 16(3)(e) and 16(5)(a)(iv) of the contract of sale and cl 2.1.5 of the s 173 agreement by not exhibiting a copy of the Public Access Rules at all times so as to be clearly visible by any person from the outside of Montfort Park?

Yes. Dar-Alawda breached special condition 16(3)(e) of the contract of sale and cl 2.1.5 of the s 173 agreement by not exhibiting a copy of the Public Access Rules at all times so as to be clearly visible by any person from the outside of Montfort Park. Dar-Alawda’s failure to display the Public Access Rules was not in breach of the restrictive covenant in special condition 16(5)(a)(iv) of the contract of sale, which did not expressly require exhibition of the Public Access Rules.

(4) In respect of any breach established pursuant to questions 1 to 3:

(a) was it a breach within the meaning of cls 3 and 6 of the option deed?

(b) did it give rise to a right for the Council to issue a notice of breach pursuant to cl 6(a) of the option deed?

Yes. Two breaches have been established.

(i) First, Dar-Alawda failed to process the nine applications for open space membership with due diligence and in accordance with its constitution, and hence impeding and preventing access to Montfort Park by Moreland residents, in breach of special conditions 16(3)(e) and 16(5)(a)(iv) of the contract of sale and cl 2.1.5 of the s 173 agreement. This breach had occurred by 30 January 2020.

(ii) Second, Dar-Alawda did not exhibit a copy of the Public Access Rules at all times so as to be clearly visible by any person from the outside of Montfort Park. This was a breach of special condition 16(3)(e) of the contract of sale and cl 2.1.5 of the s 173 agreement. This breach was ongoing throughout 2019 and in early 2020.

Both of these matters entitled the Council to give written notice to Dar-Alawda under cl 6(a) of the option deed.

Notice of default and response

(5) Was the Council’s letter of default dated 7 February 2020 a valid notice of default pursuant to the contract of sale, the s 173 Agreement and/or the option deed? In particular, did the notice of default set out with sufficient clarity any of the alleged breaches now relied upon by the Council?

Yes. The Council’s letter of default dated 7 February 2020 was a valid notice of default for the purposes of cl 6(a) of the option deed.

(6) In relation to any of the breaches now relied upon by the Council, did Dar-Alawda comply or fail to comply with the notice of default either by remedying each breach or satisfying the Council that the breach should be excused?

Dar-Alawda did not remedy either of the breaches within 30 days of the Council’s letter of default on 7 February 2020. Nor did it satisfy the Council that it should excuse any breaches that could not be remedied. This amounted to an event specified in cl 6(a) of the option deed, which entitled the Council to exercise the option.

Exercise of option

(7) Did the Council lawfully exercise the option to purchase the Property?

Yes. The Council was entitled to exercise the option within 12 months of 8 March 2020. It exercised that option lawfully, in accordance with the option deed, on 2 December 2020.

Relief against forfeiture

(8) Should Dar-Alawda have relief against forfeiture?

No. It was not 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 Dar-Alawda agreed to but has failed to provide.

Specific performance

(9) Did Dar-Alawda breach cl 3.3 of the option deed by failing to complete and deliver to the defendant an identical copy of the new contract of sale within 14 days of the Council exercising its option by its letter dated 2 December 2020?

Yes. Dar-Alawda has not completed and returned the counterpart copy of the new contract of sale.

(10) In the circumstances, is the Council entitled to orders for specific performance by the plaintiff to complete the defendant's exercise of the option?

Yes, the Council is entitled to an order for specific performance of the option deed.

My reasons for those conclusions follow.

The Property

1 Wendel Street and Montfort Park are on the same title, described at Volume 9534, Folio 468 of the Register of Titles. Montfort Park is the southern block, marked ‘1’ on the plan of subdivision in Figure 1. 1 Wendel Street is the northern block, marked ‘2’ in the plan of subdivision.

Figure 1 - Plan of subdivision PS446728J, from Exhibit D3 – Contract of sale, page 58

The Council’s planning coordinator, Kylie Sullivan, provided the following description of the Property:[3]

The subject site is located on the north-west corner of Wendel and Henkel Streets in Brunswick. The site has a frontage to Wendel Street of 53.83 metres and a frontage to Henkel Street of 30.68 metres equating to a total site area of 1645sqm.
The northern portion of the site contains a single storey building constructed along the northern boundary and a secondary outbuilding abutting the west boundary. This section of the site is occupied by the Dar-Alawda Community Centre.
The southern two thirds of the site is fitted out with a hardstand for use as an outdoor basketball court. Three metre tall security fencing is erected along the south and western boundaries to the basketball court area. Vehicle access is provided to the community centre from Wendel Street and to the basketball court from Henkel Street via a gate.

[3]Witness statement of Kylie Sullivan dated 12 October 2022, [5]–[7] (Sullivan statement).

Figure 2 is an aerial image of the Property dated March 2022, sourced by Ms Sullivan from Moremaps.

Figure 2 – Aerial image of the property dated March 2022, Witness statement of Kylie Sullivan dated 12 October 2022, Exhibit KMS–1.

Ms Sullivan also described the surrounding area:[4]

The land to the northern and western sides of the subject site is developed with single storey warehouse buildings with masonry walls built to the respective boundaries abutting the subject site. To the east on the other side of Wendel Street and to the south on the other of Henkel Street are more single storey warehouse buildings and associated open car parking areas.

Residential properties are located to the east of Wendel Street and further to the north and west. Several parks and reserves are located to the south and west …

[4]Sullivan statement, [9]–[10].

Figure 3 is an aerial image of the area around the Property, also dated March 2022 and sourced from Moremaps. The Property is in the centre of the image, outlined in light blue.

Figure 3 – Aerial image of the property dated March 2022, Witness statement of Kylie Sullivan dated 12 October 2022, Exhibit KMS–2.

The contract documents

The contract documents were dated 29 July 2004 and comprised:

(a) the contract of sale;

(b) the s 173 agreement; and

(c) the option deed.

A number of the special conditions to the contract of sale are relevant.

Special condition 5 was headed ‘Default’ and provided, as follows:

(1)If the Vendor gives to the Purchaser a notice of default under this contract, the default will not be remedied until the last to occur of the following:-
(a) remedy by the Purchaser of the relevant default;
(b) payment by the Purchaser of compensation for any reasonably foreseeable loss incurred by the Vendor as a result of the default in accordance with general condition 7(a) (which includes, without limitation, legal costs on a solicitor client basis and disbursements incurred in drawing and giving the notice and any necessary advice);
(c)the payment of interest in accordance with General Condition 7(b) at the rate of 5% higher than the rate set at that time under the Penalty Interest Rate Act 1983; and

…

Special condition 16 contained a number of acknowledgments, agreements and covenants by Dar-Alawda, relevantly:

(1)The purchaser acknowledges and agrees that the Vendor has entered into this Contract and accepted that Price, which Price the Purchaser acknowledges to be significantly lower than the market value of the Land, in consideration of the Purchaser amongst other things, agreeing to comply with the requirements and conditions set out in this Contract and, in particular, the subsequent Special Conditions.
(2)For the purposes of this Contract of Sale the following terms will have the meanings attributed to them:-
“Constitution” means the constitution of the Purchaser a copy of which is attached to this contract and marked with the letter “I”.
“Deed of Option to Purchase” means the Deed of Option to Purchase in the form of the deed attached to this Contract and marked with the letter “D”;
“Moreland Resident” means a 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;
“Open Space Land” means that part of the Land bounded by a bold black line on the Plan attached to this Contract and marked with the letter “E”;
“Permitted Improvements” means:
(i) in relation to the Land, any improvement which is permitted under the Public Park and Recreation Zone (PPRZ) as described in the Moreland Planning Scheme as at the Day of Sale without a planning permit except improvements for navigational beacons or aids; and
(ii) in relation to the Open Space Land, a basketball court or similar court or fence subject to the Purchaser first having obtained (and subsequently complying with) all necessary municipal and other approvals; and
(iii) in relation to that part of the Land not comprised in the Open Space Land, a community centre or fence.

For the removal of doubt the Purchaser acknowledges and agrees that except as stated in paragraph (ii) of this definition, an improvement to the Land for which approval has been given by the Vendor, in its capacity as municipal authority, will not, by virtue of the granting of that approval by the Vendor in that capacity, be deemed to make that improvement, a Permitted Improvement as described in this definition;
“Permitted Use” means:
(i)in relation to the Land, any use which is permitted under the Public Park and Recreation Zone (PPRZ) as described in the Moreland Planning Scheme as at the Day of Sale without a planning permit; and
(ii) in relation to the Open Space Land use as a basketball court or similar court, subject to the Purchaser first having obtained (and subsequently complied with) all necessary municipal and other approvals; and
(iii) in relation to that part of the Land not comprised in the Open Space Land, a community centre.

For the removal of doubt the Purchaser acknowledges and agrees that except as stated in paragraph (ii) of this definition, the use of the Land for which approval has been given by the Vendor, in its capacity as municipal authority, will not, by virtue of the granting of that approval by the Vendor in that capacity, be deemed to make the use, a Permitted Use as described in this definition.
“Public Access Rules” means the rules adopted by the Vendor and the Purchaser which govern access to the Open Space Land by Moreland Residents, and until replaced or modified by agreement between the Vendor and Purchaser, means those rules dated 8/12/2003 attached to this Contract and marked “G”.
…
“Section 173 Agreement’ means the Section 173 Agreement between the Purchaser and the Vendor to regulate the Purchaser's use and development of the Land in accordance with the obligations set out in this Contract in the form of the agreement attached to this Contract and marked with the letter “F”.
(3)The Purchaser:
(a) must not at any time prior to or after completion of this Contract use the Land for any purpose other than the Permitted Use;
(b) must retain the name of the Open Space Land as “Montfort Park” and must at all times continue to display the existing “Montfort Park” sign or signs, or such other sign or signs as may otherwise be approved by the Vendor (other than its capacity as municipal authority);
(c) must not construct any building, fence or other improvement on the Land, other than the Permitted Improvements;
(d)must as soon as possible after the Day of Sale construct a basketball court or similar court on the Open Space Land;
(e) 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, 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;
(f) must repair and maintain in good repair and condition all improvements on the Land, whether constructed prior to or after the Day of Sale; and
(g) must not subdivide and/or consolidate the Land or any part of the Land, whether on its own or with any other Land or otherwise develop the Land other than as permitted under this Special Condition 16(3).

(4)(a) The Purchaser must enter into the Section 173 Agreement.
(b) Simultaneously with the execution of this Contract the Purchaser must execute all parts of the Section 173 Agreement delivered by the Vendor and return them to the Vendor.
(c)The Purchaser must provide all necessary assistance and co-operation to enable registration of the Section 173 Agreement at the Land Titles, Office whether such registration is required by the Vendor prior to or after the Settlement Date.
(d)The Purchaser will pending registration of the Section 173 Agreement, comply with the terms and conditions of the Section 173 Agreement as if the same were registered on the Certificate of Title to the Land.

Special condition 16(5) contained the following restrictive covenant, which was to be noted as an encumbrance on the certificate of title.

The Transferee with the intent that the benefit of these covenants attach to and run at law and in equity with the properties known as Clifton Park more particularly described in Certificate of Title Volume 10569 Folio 024 and Volume 9968 Folio 515, Brunswick Park more particularly described in Certificate of Title Volume 8132 Folio 310 and Raeburn Reserve more particularly described in Certificate of Title Volume 2698 Folio 570 (the benefited land) and that the burden of these covenants attach to and run at law and in equity with the Land hereby transferred (the burdened land) does for the Transferee and the Transferee’s heirs, executors, administrators and transferees, covenant with the Transferor and its transferees the registered proprietor or proprietors for the time being of the benefited land that the Transferee and the Transferee’s heirs, executors, administrators and transferees will not at any time:
(i)use or allow the burdened land to be used for any purpose other than for the Permitted Use;
(ii) change or cease the use of the name by which the Open Space Land is known, namely “Montfort Park” or change or remove any sign or signs displayed or erected on the Open Space Land without the prior approval of the Transferor (other than its capacity as municipal authority) or its transferees the registered proprietor or proprietors of the benefited land;
(iii) build, construct or erect or cause to be built, constructed or erected on the burdened land any building, fence or other improvement other than the Permitted Improvements;
(iv) except to the extent prescribed by the Public Access Rules impede or prevent access to the Open Space Land by any Moreland Resident;
(v) must not subdivide and/or consolidate the burdened land or any part of the burdened land, whether on its own or with any other land or otherwise develop the burdened land other than as permitted under these covenants.

The covenant went on to adopt the same definitions that were set out in special condition 16(2).

Special condition 16 concluded:

(6)(a) The Purchaser hereby grants to the Vendor an option to purchase the Land on the terms and conditions set out in the Deed of Option to Purchase.
(b) Simultaneously with the execution of this Contract, the Purchaser must execute all parts of the Deed of Option to Purchase delivered by the Vendor and return them to the Vendor.
(c) The Purchaser acknowledges it is the intention of the parties that the grant of the option creates an interest in the Land and that the Vendor may lodge a caveat under Section 89 of the Transfer of Land Act 1958 (Vic) to note its interest under the Deed of Option to Purchase and the Purchaser will not object to, or take any action to require the removal of, the caveat.

(7)This Special Condition 16 does not merge on completion of this Contract.

Special condition 17 contained promises made by Dar-Alawda connected with its status as an incorporated association. It warranted that it was an incorporated association under the Associations Incorporation Act 1981 (Vic),[5] and agreed not to amend its constitution without the Council’s consent.
[5]The predecessor to the Associations Incorporation Reform Act 2012 (Vic) (Associations Act). Dar-Alawda is now taken to be incorporated under the Associations Act: see Sch 4, item 4(1).

As provided in special condition 16(4) of the contract of sale, Dar-Alawda entered into the s 173 agreement with the Council. The s 173 agreement was subsequently registered on the title on 2 September 2004 with registration number AD089654C. The s 173 agreement contains terms that mirror special condition 16 of the contract of sale, except that the obligations are imposed on the ‘Owner’ rather than the ‘Purchaser’. Clause 3.1 of the s 173 agreement provides:

Obligation to run with the Land
An obligation imposed on the Owner takes effect as a covenant which is annexed to and runs at law and equity with the Land and binds the Owner, its successors, assigns and transferees, and the registered proprietor for the time being of the whole or any part of the Land.

As provided in special condition 16(6) of the contract of sale, Dar-Alawda granted the Council an option to purchase the Property, on the terms set out in an option deed dated 29 July 2004. Clause 2 of the option deed provided:

GRANT OF OPTION
In consideration of the Option Fee paid by the Grantee to the Grantor (the receipt of which is hereby acknowledged by the Grantor) and in consideration of the Grantee selling the Land to the Grantor pursuant to the First Contract of Sale for the price set out in the First Contract of Sale, the Grantor HEREBY GRANTS to the Grantee an option to purchase from the Grantor the Land for the Purchase Price and upon the terms and subject to the conditions set out in the Contract of Sale.

The initial option period was 21 years, with provision for four extensions of the option for periods of 21 years each.

The purchase price to be paid upon exercising the option was to be determined by applying the agreed formula PP = (19% x SV) + (CIV – SV) – ERC, where:

(a) PP means the purchase price;

(b) SV means the site value of the Property, based on a valuation obtained by the Council no more than 90 days before exercising the option;

(c) CIV means the capital improved value of the Property, based on a valuation obtained by the Council no more than 90 days before exercising the option;

(d) ERC means the Council’s reasonable estimate of the costs of reinstating the Property to a condition no worse than its pre-sale condition, and remedying any breach by Dar-Alawda of its obligations under the contract of sale, the s 173 agreement and the restrictive covenant.

The way in which the option could be exercised was set out in cl 3 of the option deed:

EXERCISE OF OPTION
3.1 Subject to clause 3.5 the Option may be exercised by the Grantee during the Period of Option at any time following the happening of any one or more of the events specified in clause 6.
3.2 The Option shall be exercised by the Grantee by delivering to the Grantor a notice specifying that the Grantee exercises the Option together with the Contract of Sale duly completed and executed by the Grantee and a cheque payable to the Grantor 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 Grantor.
3.3 Within 14 Business Days of the Grantee exercising the Option, the Grantor must complete and deliver to the Grantee an identical counterpart, copy of the Contract of Sale executed by the Grantor and bearing as its date the same date as the Contract of Sale delivered by the Grantee to the Grantor under clause 3.2.
3.4 Any failure for whatever reason on the part of the Grantor to deliver the Contract of Sale as aforesaid shall not affect the binding nature of the Contract of Sale which in such event shall be deemed to come into full force and effect on the date of delivery by the Grantee of the notice specifying that the Grantee exercises the Option and the Contract of Sale in accordance with clause 3.2.
3.5 If the Grantee does not exercise the Option within 12 months of becoming aware of the occurrence of an event specified in clause 6, the Grantee may not exercise the Option with respect to that particular occurrence of the event. This prohibition does not, however, prevent the Grantee from exercising the Option at any time in the future in reliance upon another occurrence of the same event, or at any time (subject to the 12 month limitation in this clause), in reliance upon the occurrence of any other event specified in clause 6.

Clause 6 of the option deed specified the events that would entitle the Council to exercise the option, relevantly:

CIRCUMSTANCES ENABLING GRANTEE TO EXERCISE OPTION
Subject to clause 3.5 the Grantee may exercise the option during the Period of Option, at any time after the happening of any of the following events:
(a) The Grantor:
(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 Grantee that the breach should be excused, within 30 days of the date of the Grantee's written notice advising the Grantor of the breach;

…

Clause 7 of the option deed provided that Dar-Alawda nominated the Chief Executive Officer of the Council or their nominee to be its attorney, in the following terms:

POWER OF ATTORNEY
7.1 In order to exercise the Option to purchase the Land in accordance with this Deed and to better secure the obligations of the Grantor under this Deed the Grantor hereby nominates and appoints the Chief Executive Officer of the Council or his or her nominee to be its attorney and in the Grantor's name and as its act and deed to do everything required to be done by the Grantor and which the Grantor has failed to do or failed to do properly pursuant to this Deed and in particular to execute the Contract of Sale, transfer of land, statutory declaration and any other document necessary to effect registration of the transfer of the Land back to the Grantee.
7.2 The Grantor hereby ratifies and confirms and agrees to ratify and confirm all acts, deed[s] and things done by its attorney or attorneys hereby appointed.

Issue 1: Did Dar-Alawda breach special condition 16(3)(f) of the contract of sale by failing to maintain the basketball court in good condition and repair?

Special condition 16(3)(f) of the contract of sale obliged Dar-Alawda to ‘repair and maintain in good repair all improvements’ on the Property, whenever constructed. The Council’s case that Dar-Alawda was in breach of this obligation was based on a number of statements made by Mr Helou between 2015 and 2019, to the effect that the basketball court could not be used because it was not safe.

The evidence of those statements relied on by the Council was:

(a) David Bell, a Henkel Street resident, said that in about July 2015 he had a telephone conversation with Mr Helou in which he requested access to the basketball court. Mr Helou advised him that it was not being used because it was unsafe.

(b) Mr Helou was quoted in an article which appeared in the Herald Sun newspaper on 3 December 2016, as saying that ‘centre members rarely used [the court] because it was unsafe and required rubber resurfacing which the centre did not have money to pay for’.

(c) Ms Watson’s evidence was that, during the facilitated negotiation, Dar-Alawda identified the concrete surface as a barrier which was a prohibition to access to the court by residents. Specifically, she recalled Mr Helou saying during a meeting 3 June 2019 that the basketball court was not safe and required resurfacing but Dar-Alawda could not afford to pay for the works and it would need a grant or something similar. Mr Helou explained that the basketball court was made of concrete and playing on concrete is dangerous.

(d) Dar-Alawda’s invitation to its open day on 24 August 2019 included a statement that it was planning to obtain funding for resurfacing the playing area ‘so that it is safe and a place where young people will want to go’.

Mr Helou denied telling Mr Bell that the basketball court was unsafe. He agreed that during the facilitated negotiation in 2019 he had said that it was unsafe, but clarified that he had meant that it was unsafe for competition, because of the concrete surface.

Mr Helou’s evidence was that the court is kept in good repair. Volunteers within the community clean it about once a week, with more thorough cleaning done once a month. Dar-Alawda has a high pressure hose, which is used for cleaning the surface of the court, and regularly replaces the nets on the basketball hoops.

The evidence included photographs of the basketball court taken at various times between 2016 and 2020, and I was able to see it myself during a view conducted on the second day of the trial. The only noticeable changes between then and now was that some trees have been lopped, and there are some new signs.

The court has clearly been maintained in good repair throughout. It is the case that it has a concrete surface, and so may not be suitable for competition basketball. However, it is clean, the surface is unbroken and free of weeds and rubbish, and the backboards and hoops are intact. It could be used for a training session or a social basketball game, if not for competition purposes.

I have no difficulty finding that the basketball court was well maintained and in good repair at all relevant times. Dar-Alawda was not in breach of special condition 16(3)(f) of the contract of sale as at 7 February 2020.

The Council also relied on Mr Helou’s statements that the court was unsafe in support of its contention that Dar-Alawda had impeded and prevented residents having access to Montfort Park, in breach of special conditions 16(3)(e) and 16(5)(a)(iv) of the contract of sale. I consider that alleged breach next.

Issue 2: Did Dar-Alawda breach special conditions 16(3)(e) and 16(5)(a)(iv) of the contract of sale and cl 2.1.5 of the s 173 agreement, by impeding and preventing access to Montfort Park by Moreland residents by failing to process applications for associate membership with due diligence and in accordance with its constitution?

Special condition 16(3)(e) of the contract of sale obliged Dar-Alawda not to impede or prevent access to Montfort Park by a Moreland resident, except to the extent prescribed by the Public Access Rules. This obligation was mirrored in the restrictive covenant and in cl 2.1.5 of the s 173 agreement.

The Public Access Rules were attached to the contract of sale and relevantly provided:

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.
4.Bookings to use the open space are essential. The club will make all reasonable efforts to ensure the bookings are dealt with expeditiously and that access to the land as requested is provided.
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.
…
11.A resident shall have access to the open space only in accordance with these Rules.

Dar-Alawda’s constitution was also attached to the contract of sale. It contained the following definitions:

“a member” means a member of the Association in one of the classes of membership permitted by these Rules;
…
“associate (open space land (MontfordPark)) member” means a member admitted to that class of membership under Rule 4:
…
“open space land” means the land bounded by the bold black line on the plan attached to these rules as Schedule 1 and being part of the land known as 98 Henkel Street and 1 Wendell Street Brunswick and described in Certificate of Title Volume 9534 Folio 468
“public access rules” means the rules adopted by Moreland City Council and the Association which govern access to the public space by an associate (open space land (Montford Park)) member and, until replaced or modified by agreement between the Moreland City Council and the Association, means those attached to these rules as Schedule 2

Clause 4(1) of the constitution gave descriptions of each class of membership — ordinary members, several classes of associate members, and honorary members. The last class listed is:

Associate (open space land (Montford Park)) members: An associate (open space land (Montford Park)) member has no entitlement 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. Any person residing within the boundaries of the City of Moreland is entitled to apply for this class of membership. There is no limit to the number of associate (open space land (Montford Park)) members that can belong to the Association at any one time.

I will refer to this class of membership as ‘open space membership’.

Clause 4 then set out the process by which a person could apply for and become a member of Dar-Alawda.

(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 (Montford 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.

(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.
…

The form set out in Appendix 1 to Dar-Alawda’s constitution is an application for membership as an ordinary member. Appendix 1 does not contain a form for an application for open space membership. However, after the schedule of fees in Appendix 4, there are application forms for the other classes of membership, including an application for open space membership. That form reads:

APPLICATION FOR MEMBERSHIP AS AN ASSOCIATE (OPEN SPACE LAND (MONTFORD PARK)) MEMBER OF DAR-ALAWDA (WENDEL STREET) COMMUNITY CENTRE INC
I,……………………………………………………………………..
(full name)
of……………………………………………………………………
(address)
desire to become an associate (open space land (Montford Park)) member of DAR-ALAWDA (WENDEL STREET) COMMUNITY CENTRE INC (“the Association”)
In the event of my admission as an associate (open space land (Montford 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 Moreland City Council from time to time and 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 Montford Park,

I further confirm that in the event 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.
Dated: / /
…………………………………….
Signature

PLEASE ATTACH DOCUMENTS THAT ENABLE US TO PROVE YOUR IDENTITY, AGE AND RESIDENCY ADDRESS SUCH AS:
ADULT:A PHOTOCOPY OF EITHER YOUR CAR LICENCE (FRONT AND BACK) OR PASSPORT SHOWING YOUR PHOTOGRAPH AND DETAILS PLUS A RATE NOTICE OR GAS BILL .
PERSON UNDER 18: A LETTER FROM YOUR PARENT CONFIRMING YOUR NAME, AGE AND ADDRESS AND YOU PARENT’S CONSENT TO YOU BEING AN ASSOCIATE MEMBER OF THE CENTRE TO HAVE ACCESS TO MONTFORD PARK UNDER THE PUBLIC ACCESS RULES

On the second page of the form there is space for the applicant to fill in their preferred name, telephone, fax, and mobile numbers, email address, date of birth, occupation, the name of their spouse, the names and dates of birth of their children, and their hobbies. There is also space for the names and contact details of two referees who can provide references as to the applicant’s good character. Finally, there is space for the names and signatures of two ordinary members to nominate the applicant for open space membership.

Dar-Alawda’s constitution provides that its affairs are to be managed by the committee of management, which consists of four officers — President, Vice-President, Treasurer and Secretary — and 18 ordinary members.[6] The committee is required to meet at least three times each year, and special meetings of the committee can be convened by the President or any four members of the committee.[7] A quorum of at least four members is required to be present before any business can be conducted.[8] Voting at committee meetings is by show of hands or, if requested by a member, a poll.[9] The Secretary is to keep minutes of the resolutions and proceedings of each committee meeting, together with a record of the names of persons present.[10]
[6]Constitution of Dar-Alawda (Wendel Street) Community Centre Inc (July 2004), cls 20, 21 (Dar-Alawda constitution).
[7]Dar-Alawda constitution, cl 25.
[8]Dar-Alawda constitution, cl 27.
[9]Dar-Alawda constitution, cl 29.
[10]Dar-Alawda constitution, cl 31.

Mr Helou’s evidence was that, until 21 November 2019, no-one had ever applied for open space membership. On that day, Ms Watson emailed Mr Helou nine applications from people seeking to become open space members of Dar-Alawda, all of which used a new application form designed by Ms Watson. None of these applications were approved by the committee.

The Council relied on the failure to process and approve the applications as evidence of breach of special condition 16(3)(e) of the contract of sale. Dar-Alawda contended that it could not accept the applications because they did not use the form prescribed by the constitution. I will consider first the context in which the new form was developed, before making findings about the validity of the applications and whether Dar-Alawda’s committee processed them in accordance with the Public Access Rules.

Open space membership application form

As mentioned, a Council-appointed facilitator, David Bryson, conducted a facilitated negotiation between the Council, Dar-Alawda, and local residents during 2019. Ms Watson was the Council’s representative during this process. She attended a number of meetings with Mr Bryson and Mr Helou during 2019, as well as a larger meeting with local residents and Dar-Alawda committee members on 3 June 2019, and the open day on 24 August 2019.

During this process, Ms Watson reviewed the open space membership application form. She considered that the form was not user friendly, and thought it could be revised to make membership more attractive to the community. Ms Watson raised these concerns in early discussions with Mr Bryson and Mr Helou. Her evidence was that Mr Helou agreed in those discussions that the application form should be amended.

Ms Watson prepared an updated application form that included general information about membership. She said that she showed this document to Mr Helou for his review, at a meeting held on the evening of 8 April 2019. He provided some feedback, which she incorporated, and he later said that he supported the revised form.

Mr Helou had a different recollection. He recalled Ms Watson saying that the residents were not happy with the existing form and that she would draft up her own. He agreed it was possible that she had provided him with a revised application form at one of the meetings. However, Mr Helou denied agreeing to be bound by it, and said that he had told Ms Watson that any new application form would have to be approved by Dar-Alawda at a general meeting.

Mr Bryson’s notes of the meeting on 7 May 2019 recorded Dar-Alawda’s agreement to the revised application form, and also the attached rules and regulations documents. After the meeting with local residents on 3 June 2019 he sent an email listing actions arising from the meeting. These included Ms Watson providing a copy of the membership application and regulations to the residents.

Ms Watson agreed that Mr Helou had said that the new form would have to be approved by Dar-Alawda. Although she did not follow it up with Mr Helou, she assumed he had progressed the approval with the committee. During the facilitated negotiation, Mr Helou had said that he was keeping the committee informed of the discussions, and at no point did he say that the committee objected to what had been agreed. Specifically, he did not say that the new application form had not been approved and should not be used.

On that basis, Ms Watson had copies of the new form available for members of the local community at the open day on 24 August 2019.

I prefer Ms Watson’s evidence of these events to that of Mr Helou. Ms Watson was an impressive witness, who gave her evidence clearly, carefully, and by reference to relevant correspondence and other records of the facilitated negotiation. She was responsive to questions asked of her in cross-examination and made appropriate concessions. By contrast, Mr Helou was a poor witness. His evidence in chief, in the form of his two statements, was vague and incomplete, glossing over the detail of significant events such as the facilitated negotiation and the applications for open space membership. He appeared to have a patchy recall of those events, and was evasive and argumentative throughout his cross-examination. In addition, I consider it completely unsatisfactory that Mr Helou made three affidavits of documents on Dar-Alawda’s behalf that omitted records of critical committee meetings, and then provided no explanation for that omission when his own handwritten notes came to light during the trial.[11] I accept the Council’s submission that Mr Helou’s evidence should not be relied upon, with the exception of admissions contrary to Dar-Alawda’s interest.[12]
[11]See [93] below.
[12]Defendant’s closing submissions dated 9 May 2023, [51]. Dar-Alawda did not really respond to this submission, despite being prompted to do so: see Transcript, 11 May 2023, 512:17–516:12.

In relation to the specific issue of the new form, Ms Watson’s evidence was consistent with the contemporaneous documents, in particular the notes that Mr Bryson circulated after the meetings on 7 May 2019 and 3 June 2019. It is clear from those documents that the new form for open space membership applications and the regulations for open space members were provided to Mr Helou in draft, revised in light of his feedback, and then settled at the meeting of the wider group on 3 June 2019.

However, Dar-Alawda did not change its constitution to adopt the new form. There was plenty of time for this to occur after the meeting with local residents on 3 June 2019. A general meeting could have been convened to consider a special resolution to amend the constitution on 21 days’ notice.[13] There is no evidence that the new form and regulations were ever considered by the committee, or put to a general meeting.
[13]Dar-Alawda constitution, cls 3, 12; Associations Act, s 50.

I find that Mr Helou:

(a) acting as Dar-Alawda’s representative in the facilitated negotiation, agreed to the new form and accompanying regulations for members that had been developed by Ms Watson;

(b) was aware from 3 June 2019 that Ms Watson would provide the new form to local residents who wished to apply for open space membership;

(c) did not seek the committee’s approval of the new form or the regulations for members, and took no steps to have the documents approved at a general meeting; and

(d) did not inform Ms Watson that the new form and regulations had not been approved, or that they should not be used.

Validity of applications made using the new form

On 21 November 2019, Ms Watson emailed to Mr Helou nine applications for open space membership. The applications were from four individual residents of Henkel Street, two families in Henkel Street, two residents of Talbot Street, and Ms Watson, who gave the Council office address of 90 Bell Street, Coburg.

All nine applications used the new form, which read as follows:

APPLICATION FOR MEMBERSHIP AS AN ASSOCIATE (OPEN SPACE - MONTFORT PARK) MEMBER OF DAR-ALAWDA COMMUNITY CENTRE INC.
Member Applicant Statement of Commitment
I ........................................................................................................................
(Full Name)
of .................................................................................................................
(Address)
hereby register my application to become an Associate (Montfort Park) Member of Dar-Alawda (Wendel Street) Community Centre Inc. ("the Association"). I enclose a copy of my photo identification to verify my identity and address, as required by the Association.
Upon approval of my application, I will become an Associate Member (Montfort Park) of Dar-Alawda Community Centre and confirm that I, and any family members listed overleaf, agree to be bound at all times by:
1. The Rules of the Association; and
2. The Regulations for Members.

I hereby confirm that I am responsible for the supervision, care and respectful behaviour of any children under 18 listed under my membership whilst using the premises. I further understand that the Association has a zero tolerance policy for littering and vandalism and understand this behaviour may lead to cancellation of my membership.
I understand that my membership is for personal use, and family where family members are listed. Any visitors or organised group activities require the approval of the Association in advance. In these circumstances I agree to ensure compliance with any legal, statutory or other regulations as directed by the Association (i.e. compliance with Child Safe principles, Police Checks, evidence of insurance ..)
Signature ...................................................... Dated ............./……../……..............

Proposer
I ........................................................... , an ordinary member of the Association, nominate the above applicant as an Associate (Montfort Park) Member of the Association.
Signature .............................................................................

Seconder
I ..........................................................., an ordinary member of the Association, support the nomination of the applicant as an Associate (Montfort Park) Member of the Association.
Signature .............................................................................

On the reverse side was space for the applicant to list their surname, first name, sex, and date of birth, and to provide that information for any family members who were included in the application. There was also space for the applicant to provide their street address, suburb, and postcode, telephone and mobile numbers, and email address, and to indicate which category of membership fee would be paid. A note at the bottom of the page read ‘Adult members can obtain keys to access the court with payment of a $## key deposit. The key is only to be used by the applicant and is not to be shared with other members or non-members’.

The reference in the statement of commitment to the ‘Regulations for Members’ was a reference to a one page document developed by Ms Watson in conjunction with the new form, that read as follows:

MONTFORT PARK
REGULATIONS FOR MEMBERS (2019)
Membership entitles you to enjoy the Montfort Park, an open space owned and managed by the Dar-Alawda Community Centre. It is deemed that you have read these Regulations and that you agree to observe them.
New membership eligibility is restricted to a geographic Catchment Area [See ‘Qualifying Addresses’ for details.]
The Park year runs from January to December and the subscription amount will be confirmed before the end of September each year. Subscription rates are at the discretion of the Dar-Alawda Community Centre Committee and intended to ensure cost recovery.
New member’s subscription payments will be paid in advance prior to commencement of the new Park year or on a pro-rata basis for members joining throughout the year.
GARDENS KEYS
Your numbered security key((s) remain the property of The Dar-Alawda Community Centre. If you decide to end your membership then the key[s] must be returned to:
The Secretary, Dar-Alawda Community Centre Committee.
Cnr Henkel Street & Wendell Street, Brunswick
Keys must not be passed to new property owners or tenants. They can apply for Gardens membership in their own right.
Additional or replacement keys may be obtained at a one-off cost of $25 each - subject to household needs and an overall limit.
FAMILIES, CHILDREN AND ACTIVITIES
•    Families are welcome, however there are some areas that may be hazardous for young children therefore responsible adult supervision is required.
•    Fires, fireworks and barbecues are not allowed.
•    Members must take all other rubbish with them for disposal.
•    Small groups and family games are permitted in the space, provided these do not infringe the enjoyment of other members or cause damage.
•    Cycling is not allowed - except for small children first learning to ride.
•    Parties or social gatherings require prior notification to The Community Centre Committee, and may be subject to additional charge to cover.
DOG OWNERS
The open space and sports court are not by design a park for dog exercise or dog walking.
[Members who do not abide by these Regulation will have their membership withdraw

All applicants had signed and dated the member applicant statement of commitment, and provided their address and other contract details, including a mobile number and email address. None provided photo identification, and none of the applications had a proposer or seconder.

Dar-Alawda’s submissions

Dar-Alawda submitted that the applications were not in accordance with the constitution, and so were not applications at all. They were made using the wrong form and were not accompanied by photo identification. As a result, it argued, it was not obliged to process the applications in accordance with its constitution, and it would not have been open to the committee to accept the applicants as members. It took particular exception to the reference to regulations for members, which were not found in the constitution.

In support of its argument that its constitution required strict compliance with the prescribed membership application form, Dar-Alawda referred me to Moala v Free Wesleyan Church of Tonga in Australia (Vic).[14] In that case, Ginnane J held that the Church’s rule that required a membership application to be made in writing and in a prescribed form was mandatory, and could not be defeated by an estoppel based on implied representations that the plaintiffs had been accepted as members.[15] This conclusion was in part based on the scheme of the Associations Incorporation Reform Act 2012 (Vic) (Associations Act), which requires an incorporated association to submit its rules to the Registrar, creating certainty for members, prospective members, and members of the public who have dealings with the association.
[14][2019] VSC 205 (Moala).
[15]Moala, [427]–[435].

Dar-Alawda further submitted that its constitution should be interpreted using the principles involving the interpretation of commercial contracts although, having regard to their public dimension, caution is required in the use of extrinsic material.[16]

Council’s submissions

[16]Referring to Australian Federation of Islamic Councils Inc v United Muslims of New South Wales Inc [2021] NSWCA 311, [64]–[66] (AFIC).

The Council accepted that Dar-Alawda’s constitution should be interpreted by the same method as any other contract, but emphasised that this included seeking to give the document business efficacy and avoiding a narrow or pedantic interpretation.[17] It said that it was open to Dar-Alawda to accept the membership applications on the basis that substantial compliance with the prescribed form was sufficient.
[17]Referring to Oil Basins Ltd v Bass Strait Oil Co (2012) 297 ALR 261, [32] (Oil Basins); Macqueen v Frackelton (1909) 8 CLR 673, 704–5 (Isaacs J) (Macqueen); Moala, [139]–[142].

The Council submitted that the information provided in the new form was substantially similar to that required by the prescribed open space membership application form. In circumstances where the applicants completed all relevant personal details on the application form, the Council argued that there was no good reason why Dar-Alawda could not process the applications. It also pointed out that the open space membership form was not the form at Appendix 1 of the constitution as prescribed by cl 4(4)(a), so that on a strict approach there was no basis for Dar-Alawda to insist on the use of the open space membership form.

Consideration

Clause 4(4)(a) of Dar-Alawda’s constitution provides that an application for membership must be made in writing in the form set out in Appendix 1. It is not in dispute that the nine applications submitted by Ms Watson in November 2019 were neither in the form set out in Appendix 1, or in the form for open space membership applications behind Appendix 4. However, they were in writing and they provided information that was required by the prescribed forms. In particular:

(a) the name, address, and contact details of the applicant were provided;

(b) the form stated that it was an application for open space membership of Dar-Alawda;

(c) the applicant agreed to be bound by the rules of Dar-Alawda; and

(d) the applicant agreed to ensure compliance with any legal, statutory or other regulations at the direction of Dar-Alawda, including compliance with child safe principles and police checks.

The new application forms also provided for photo identification to be attached, and space for a proposer and seconder to sign the forms. The nine applications that were submitted were not signed by a proposer and seconder, and photo identification was not provided.

Whether a membership application is invalid if it does not strictly comply with cl 4(4)(a) of the constitution is a question of interpretation. The usual rule in statutory interpretation is that strict compliance with prescribed forms is not necessary, unless the contrary intention appears.[18] However, that rule does not apply to the interpretation of a constitution of an incorporated association like Dar-Alawda, which has not adopted the model rules prescribed under the Associations Act.[19]
[18]Acts Interpretation Act 1901 (Cth), s 25C; Interpretation of Legislation Act 1984 (Vic), s 53.
[19]Associations Act, s 49; Associations Incorporation Reform Regulations 2012 (Vic), reg 12, Sch 4.

The constitution of an incorporated association is a contract between the association and its members,[20] and is generally to be interpreted in the same way as other contracts.[21] The meaning of a provision is to be determined objectively, by reference to its text, context, and purpose.[22] Where possible, a provision should be construed so as to avoid it making nonsense or working inconvenience.[23] 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. That question is to answered having regard to the language of the relevant provision and the scope and object of the whole constitution.[24]
[20]Associations Act, s 46.
[21]Macqueen, 704–5 (Isaacs J); Oil Basins, [32]; AFIC, [64]. There is no question in this case about whether and to what extent evidence of surrounding circumstances should be taken into account in interpreting Dar-Alawda’s constitution.
[22]Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104, [46]–[47] (French CJ, Nettle and Gordon JJ) (Mount Bruce).
[23]Mount Bruce, [51] (French CJ, Nettle and Gordon JJ).
[24]Project Blue Sky Incorporated v Australian Broadcasting Authority (1998) 194 CLR 355, [93] (McHugh, Gummow, Kirby and Hayne JJ); Moala, [133].

Beginning with the text, cl 4(4) of Dar-Alawda’s constitution provides that an application for membership ‘must’ be made in writing in the form set out in Appendix 1. The word ‘must’ connotes necessity or obligation.

The form set out in Appendix 1 is not the open space membership application described at [48]–[49] above, but an application for membership as an ordinary member. The ordinary membership application is similar to, but not the same as, the open space membership application. The notable similarities are that an applicant is asked to:

(a) provide their name and address;

(b) agree to be bound by the rules of the association;

(c) provide Dar-Alawda with authority to obtain any police clearance or similar that may be required;

(d) provide photo identification; and

(e) sign and date the application.

It is different in that it does not require a proposer and a seconder, does not refer to the Public Access Rules, and contains express commitments to assist Dar-Alawda to achieve its objectives and to promote it within the community.

Turning to context, behind Appendix 4 in the constitution are five different application forms, each for a different class of membership, including open space membership. This context suggests that these forms may be used to apply for the relevant classes of membership, although they are not referred to in cl 4(4) or elsewhere in the constitution.

More relevant context is found in cls 4(2) and 4(3), both of which contemplate that a person may be granted membership by the committee or the ordinary members without having applied for membership in accordance with the rules. Clause 4(2) states that 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’. Clause 4(3) makes clear that a person may be granted honorary membership, or associate gold sponsor or sponsor membership, without having applied for membership at all.

It is also relevant that cl 4(6) empowers the committee to ‘determine whether to approve or reject the application’. There are no express criteria for or preconditions to the exercise of this power, which indicates that the committee has a discretion whether to approve or reject an application for membership.

A further contextual matter of note is that cl 5(1) requires the 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.

All of this context tends to the conclusion that it is not a purpose of Dar-Alawda’s constitution that a membership application that does not strictly comply with the form in Appendix 1 is invalid. 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. The committee has a broad discretion whether to grant membership, including to a person who has not applied for membership.

As to purpose, the rule requiring an application for membership to be made on a prescribed form serves some obvious purposes. It ensures that applicants establish their eligibility for membership, and agree to be bound by the association’s rules and policies. At the functional level, it provides a means of gathering the information required for the register of members — that is, the member’s name and address — as well as contact details for communicating with the member. These purposes can be achieved without insisting on strict compliance with the prescribed application form.

At the broader level, Dar-Alawda’s statement of purposes sets out the following objectives:

1. Directly provide and/or facilitate the provision of range of services and support to people who primarily come from non-English speaking background (NESB).
2. Assess the needs of clients such as providing a better access to services provided or offered by government agencies at all levels — Federal, State and Local governments and other mainstream organisations.
3.[Providing] professional advice and guidance for prospective employment to newly arrived migrants.
4.Providing a professional advice and guidance for further education and qualifications assessment to newly arrived migrants.
5.Assist newly arrived migrants in improving the level of English language.
6.Providing new arrivals with new information on accommodation, health, legal etc. for smooth and quick settlement.
7.To organise, promote, conduct and develop annual Australian Arabic Festivals.
8. To organise, promote, conduct and develop exhibitions, performances, reading and publications with a view to providing a focus for Australian Arabic speaking artists and other achievers.
9. To strengthen and support the community by building and maintaining a strong cohesive communities services networks that works to improve the quality of life for the families in Victoria particularly in the City of Moreland.
10. To assist Governments and facilitate planning, advocacy and services to the community.
11. To assist young people with opportunities to meet and overcome challenges and help them gain confidence and self-esteem.
12. To operate as non-profit, non-political, non-religious and non sectarian association.

It is notable that these objectives are directed to assisting people from a non-English speaking background, in particular newly arrived migrants, while the prescribed membership application form is in English. It would not be compatible with these objectives to interpret cl 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.

For those reasons, I consider that the nine applications for open space membership were valid. They each provided the applicant’s name, address, and contact details, and agreement to comply with Dar-Alawda’s rules and the agreed regulations about the use of Montfort Park. It was not seriously suggested that photo identification was necessary to enable the committee to determine whether the applicants were eligible for open space membership. Ms Watson was not, in fact, a Moreland resident and expected her membership application to be rejected on that basis. The other applicants lived in the immediate neighbourhood of Montfort Park and some of them were already well known to Mr Helou.

It was open to the committee to consider the applications, and to decide whether to accept or reject them. Had the committee done so, the matters agreed by Mr Helou during the facilitated negotiation would have been a highly relevant consideration. That leads to the next question, whether Dar-Alawda processed the nine applications for open space membership as contemplated by the Public Access Rules.

Did Dar-Alawda process the applications in accordance with its constitution?

There is no dispute that the nine applications were received by Dar-Alawda. On 25 November 2019, Mr Helou confirmed receipt of Ms Watson’s email of 21 November 2019, which attached the application forms. For good measure, Ms Watson also left copies of the applications for membership in the letterbox at 1 Wendel Street on 2 December 2019.

Mr Helou did not respond with enthusiasm to the applications for open space membership. In fact, he barely responded at all. His email of 25 November 2019 was brief. Although he said he was ‘happy to meet next week to discuss further’, he did not contact Ms Watson to arrange a meeting, and did not reply to her email of 30 November 2019. She left several telephone messages for him during December 2019, but heard nothing from him until 23 December 2019, when she received a voice message by text saying he had returned her call and 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 Dar-Alawda, in relation to the membership applications.

Mr Helou did not give a clear account of what he did with the nine applications after receiving them in November 2019. He could not recall who had been the secretary of Dar-Alawda at the time — it may have been him, it may have been another person. He could not recall if he gave the applications to the secretary.

No minutes of committee meetings between November 2019 and February 2020 were discovered, despite orders for specific discovery of those documents.[25] Belatedly, during the trial, Dar-Alawda produced some handwritten notes taken by Mr Helou of committee meetings between September and December 2019. Mr Helou proffered no explanation for the late disclosure of these notes, although he had made three affidavits of documents on behalf of Dar-Alawda.[26] None of those affidavits discovered his own handwritten notes of committee meetings between September and December 2019, which he said were kept in a drawer in the office at the Centre.
[25]Order of Judicial Registrar Keith dated 29 November 2021; Order of Justice McDonald made 3 February 2022.
[26]Dated 9 November 2021, 16 February 2022, and 30 September 2022.

The late-produced notes included notes of a meeting that took place by telephone on 9 December 2019. Translated from Arabic, the notes relevantly read:

The validity of the notice of default is not affected by the fact that the Council was aware from 2015 that the sign on the wall was being obscured by the olive tree. As I have found, the relevant ‘event’ specified in cl 6(a) of the option deed involved both a breach and a failure to remedy the breach within 30 days of Council’s notice.[37]
[37]See [122]–[123] above.

The Council’s letter of default dated 7 February 2020 was a valid notice of default for the purposes of cl 6(a) of the option deed.

Issue 6: In relation to any of the breaches now relied upon by the Council, did Dar-Alawda comply or fail to comply with the notice of default either by remedying each breach or satisfying the Council that the breach should be excused?

Dar-Alawda responded to the Council’s letter of default in a letter from its Acting Secretary dated 29 February 2020. The letter read:

Thank you for your letter to the Centre concerning a number of issues the Moreland City Council (Council) has concerning the contract of sale, the Section 173 agreement and Option deed associated with the sale.
The Centre has in attachment 1 outlined its response to the alleged Centre breaches Council believes it has made concerning the above agreements.
The Centre is disappointed the letter sent by Council was not initially discussed with the Centre. The Centre has been working with Council over the past months to satisfy concerns Council has regarding local resident access to the court provided by the Centre. Please be assured that residents on completing the Centre’s associate application form (already endorsed by Council) will have access to the court.
The Centre would also like to bring to your attention how the Centre came to be in the position of having to buy the land in the first place as the Centre gets the feeling that we have done some-thing wrong.
The Centre has been in operation since 1988, when with the support of the Scouting Association, who had the lease over the land on which the Scout Hall sat, agreed to an Arabic Scout Group commencing in the Hall and to encourage community activities in the Hall. All people were welcome but it was targeted specifically at Arabic youth as they were seen as lacking activities. This was also supported by the then Brunswick City Council.
The Centre worked tirelessly to renovate the old Scout Hall which dated back to before 1945. The Asbestos roof was removed and the grounds were cleaned up and during the 90’s replace the old kitchen. Further works to restump and refloor the Hall was also undertaken.
By then the Scout Group had expanded to include wider youth activities and services to our older community.
It came as surprise to the Centre that the land known as Montford Park, adjacent to the Scout Hall land, was being considered for sale by the Moreland City Council. As per their adopted Open Space and was a short cut across to the factories. It was also made clear to the Centre that the park would not be leased to us.
Montford Park was and is zoned Industrial 3 and not a Public Park and Recreation Zone which made it the easiest to sell as it did not require rezoning. It was at this time we incorporated to form the Community Centre as we were concerned about its long term survival.
The Centre via its membership and supporters responded by objecting to the sale, as you can imagine what would have happened if it was sold and a small factory built next to the Scout Hall (Community Centre), it would have been sandwiched between factories on land just big enough for the hall. It was put to us by the Council administration that if the Centre wanted it to remain open space we would need to buy it.
The Community Centre developed an offer which following negotiations, was accepted by Council in April 2002. The Centre has worked to fulfill the requirements of the contract and continued to provide its services to the community. We are a not for profit Centre trying to provide activities and services to our community.
Clearly it is seen by some we could have worked harder to engage our more immediate resident neighbours and are seeking with Council assistance to do that. But we need to be clear as per the Terms of Reference of the community group that the Centre has been working with, “Montford Park is owned by Dar-Alawda Centre Inc. and any decisions about the Park's future are the Dar-Alawda’s Community Centre’s to make,” clearly being in keeping with the terms of the various agreements with Council.
We invite you to come down and see the work the Community Centre undertakes, you can [then] draw your own conclusions and also enjoy our hospitality.
We will continue to work productively with Council in its desire to see more local residents use the basketball court on Montford Park and will seek Council assistance to develop the court further. But in outlining the above the Centre needs to emphasis as it did in 2002, that it is here to stay and will do every-thing within its powers to continue to service its community.

Attachment 1 to this letter set out Dar-Alawda’s response to the breaches asserted by the Council:

In response to Moreland City Council (Council) belief that Dar-Alawda (the Centre) is in breach of its obligations under the Special Conditions of Contract that were part of the contract of sale the Centre responds as follows to Councils points:
i.The Basketball/Volleyball Court has not been used as a car park at all.
ii.Dar-Alawda has constructed a basketball and volleyball court. This was in accordance with Planning Permit. Please find attached photo.
iii.The court is in good working order and the Centre is not sure what Councils concerns are over its current condition, our own concern is that our preference would be to have a rubberized surface, but for neighborhood basketball/volleyball we hope the current concrete surface would be ok.
iv.Dar-Alawda 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 forms sent by Jodie Watson indicating they are from residents the Centre has not received any applications from residents as per our own application form. (Copy Attached)
This is not surprising given the close proximity to a Council provided synthetic soccer pitch, tennis courts, netball courts, cricket ground, football ground and Brunswick Park.
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 the Centre 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.
PS. Attached a copy of a letter sent to the residents who indicated wish to be members of the open space.

As indicated, the letter also attached a copy of the letter of 1 March 2020 that was later delivered to some of the nine applicants, as well as the open space membership application form behind Appendix 4 in Dar-Alawda’s constitution.

Dar-Alawda did not seek to remedy the fourth alleged breach by processing, let alone approving, the nine applications for open space membership. It did not respond at all to the fifth alleged breach, regarding the failure to display the Public Access Rules as required. It did not immediately place a sign on the outside of the fence, or trim the olive tree so that the existing sign on the wall might be seen from Henkel Street.

Council’s Chief Executive Officer responded in a letter dated 17 April 2020 to Dar-Alawda’s Secretary, which said:

I write with regards to your emails on 3 March 2020 to Jodie Watson, Manager Corporate Governance and Mayor Lambros Tapinos in response to our letter dated 7 February 2020 (Council’s Breach Letter) regarding breaches by Dar-Alawda (Wendel! Street) Community Centre Inc, of its obligations under the Contract of Sale dated 29 July 2004 (Contract).
Unfortunately, your letter of response dated 29 February 2020 (Your Letter) was not attached to the email to Jodie, however the Mayor did provide a copy of Your Letter to me.
I regret to advise that Your Response, did not adequately address the breaches identified in Council’s Breach Letter, nor satisfy Council that the breaches were invalid, and accordingly those breaches have neither been remedied, nor has the Dar-Alawda (Wendel Street) Community Centre Inc satisfied Council that, where those breaches could not be remedied, they should be excused.
Council hereby notify Dar-Alawda (Wendel Street) Community Centre Inc, that Council will therefore commence the process of exercising its option to purchase the Property in accordance with the rights set out in the Contract and the Option Deed, entered into pursuant to the Contract.
Council reserves all of its rights under the Contract and the Option Deed.

The Secretary was invited to direct questions to the Council’s Executive Manager Finance on the telephone number given.

There is no evidence that Dar-Alawda made any further representations, or took any action to remedy the alleged breaches, between receiving the Council’s letter of 17 April 2020 and the Council giving notice that it was exercising the option on 2 December 2020.

Dar-Alawda did not remedy either of the breaches that have been proved within 30 days of the Council’s letter of default on 7 February 2020. Nor did it satisfy the Council that it should excuse any breaches that could not be remedied. This amounted to an event specified in cl 6(a) of the option deed, which entitled the Council to exercise the option within 12 months from 8 March 2020 — that is, the day 30 days after the Council gave Dar-Alawda written notice of the breaches it relied on.

Issue 7: Did the Council lawfully exercise the option to purchase the Property?

On 12 November 2020, the Council’s Chief Executive Officer wrote to the Secretary of Dar-Alawda, giving notice that the Council had resolved to and was exercising the option to purchase the Property. That notice is not relied on by the Council.

On 2 December 2020, Ms Henderson wrote a second letter to the Secretary of Dar-Alawda, which read as follows:

We refer to previous correspondence in relation to the above matter and in particular our letter to Dar-Alawda dated 2 April 2020[38] (last letter) to which we did not receive a reply.
As notified in our last letter, Council commenced the process for exercising the option to purchase the Land pursuant to the option (Option) granted to Council by Dar-Alawda in the Deed of Option to Purchase (Option Deed) entered into by the parties in accordance with the Contract of Sale between the parties dated 29 July 2009.[39]
Council subsequently resolved to exercise the Option.
We refer also to our letter to you dated 12 November 2020 and the Notice of Exercise of Option and Contract of Sale enclosed. It subsequently came to our attention that there were some errors in our letter and the enclosures. Pursuant to this letter we are now re-issuing a new Notice of Exercise of Option and Contract of Sale and will rely on these new documents with respect to the exercise of the Option. In addition we advise that the cheque for the deposit sent with our letter of 12 November 2020 has how been cancelled and a new cheque is enclosed with this letter.
Accordingly, as grantee of the Option, Council hereby exercises the option to purchase the Land.

[38]Presumably a reference to the letter dated 17 April 2020, set out at [151] above.

[39]Presumably a reference to the contract of sale dated 29 July 2004.

There were a number of enclosures with the letter, which were listed as follows:

1. Notice of Exercise of Option pursuant to clause 3.2 of the Option Deed dated the date of this letter.
2. Contract of Sale of Real Estate duly completed and executed by Council (Contract) in accordance with clause 3.2 of the Option Deed. In relation to the Contract, we advise as follows:
a. The Contract bears the date of 4 December 2020 in accordance with clause 3.2 of the Option Deed. This date is the Day of Sale;
b. The Price is $579,500.00. The Price has been determined in accordance with the formula for determining the price payable by Council upon the exercise of the Option, as set out in the First Schedule to the Option Deed.
c. Settlement is due at the expiration of 60 days from the Day of Sale, in accordance with the form of Contract of Sale attached in the Second Schedule to the Option Deed.

3. Cheque payable to Dar-Alawda in the sum of $57,950.00 being the deposit payable in accordance with the Contract.

The letter requested Dar-Alawda to complete and return the counterpart copy of the new contract of sale, pursuant to cl 3.3 of the option deed. It further advised that the sale would take effect in any event, as provided in cl 3.4 of the option deed.

Dar-Alawda did not complete and return the counterpart copy of the new contract of sale. Instead, it commenced this proceeding and sought an interlocutory injunction restraining the Council from taking any further steps to exercise the option, pending the hearing and determination of the proceeding. On 14 December 2020, Kennedy J made orders in which her Honour noted that ‘by letter dated 11 December 2020, the [Council] provided an undertaking not to proceed to take title to the Property at 1 Wendel Street and 98 Henkel Street, Brunswick … until such time as the dispute between the parties is either resolved by agreement or determined by the Court’.

Dar-Alawda took no issue with the form of the notice of exercise of option relied on by the Council, or with the Council’s calculation of the purchase price in accordance with the option deed. I have already determined that the Council was entitled to exercise the option within 12 months of 8 March 2020. It exercised that option lawfully, in accordance with the option deed, on 2 December 2020.

Issue 8: Should Dar-Alawda have relief against forfeiture?

In the alternative to its contentions that the Council was not entitled to exercise the option, Dar-Alawda claimed relief against forfeiture. In support of this claim, Dar-Alawda contended that it would be unconscionable for the Council to rely on the written terms of the contract to require forfeiture of Dar-Alawda’s interest in the Property, having regard to:[40]
[40]Amended statement of claim dated 3 May 2023, paras 21A, 22, 23.

(a) its claim that the Council’s letter of default dated 7 February 2020 did not set out with sufficient clarity what the alleged breaches were;

(b) the triviality of any breaches that might be made out;

(c) Dar-Alawda’s co-operation in facilitating dialogue with the Council and the local community; and

(d) its expressed willingness to comply with the terms of the contract in the future as stated in its letter to the Council dated 29 February 2020.

Dar-Alawda’s submissions

Dar-Alawda submitted that the effect of the exercise of the option was to deprive it of its interest in the Property, and that it was able to seek relief against that forfeiture. It said that, where the right to forfeit is exercised for breaches other than a failure to pay money, the party seeking relief must point to some form of unconscionability on the part of the party seeking to enforce its legal rights.[41]
[41]Referring to Shiloh Spinners Ltd v Harding [1973] AC 691.

Dar-Alawda referred to the factors identified by Mason and Deane JJ in Legione v Hateley,[42] and said that the following factors were relevant in this case:
[42](1983) 152 CLR 406, 449 (Legione).

(a) The breaches, if made out, were trivial and not wilful. The adverse consequences to the Council are negligible. In particular, the Public Access Rules are now displayed on the fence.

(b) Dar-Alawda was a willing participant in the mediation process facilitated by the Council during 2019, and held an open day on 24 August 2019. Many issues raised during the process were not resolved, including issues of safety and insurance. Apart from submitting the applications for open space membership (which Dar-Alawda continued to maintain did not comply with its constitution), the Council did not follow through on the matters discussed during the mediation process.

(c) The Council had contributed to the breaches. It did so by submitting the applications for open space membership in the wrong form, and knowing that Ms Watson was not eligible for membership. Further, the Council had not raised any concerns about the display of the Public Access Rules during the mediation process.

(d) Mr Helou said in his evidence that he was prepared to process compliant applications from local residents.

For those reasons, Dar-Alawda submitted that the Court should grant relief against forfeiture.

Council’s submissions

The Council referred to the Court of Appeal’s summary of the relevant principles in JPA Finance.[43] There are two situations in which relief against forfeiture may be available. The first is where there is a contractual stipulation for forfeiture directed at securing an object of the transaction, where that object can be attained by means other than forfeiture. The second is where it would be unconscientious to insist on the forfeiture due to fraud, mistake, accident, surprise, or other unconscientious conduct such as taking advantage of a special vulnerability in order to derive an unjust enrichment. The Council said that there was no evidence of any of those matters. It accepted that this case was an example of the first situation, and that relief against forfeiture may be an available remedy. However, it argued that relief should not be granted.
[43]JPA Finance, [98]–[101] (McLeish JA, Beach and Niall JJA agreeing).

In relation to the principle that equity will not intervene if forfeiture has resulted from a party’s inadvertence, or wilful default, the Council submitted that Dar-Alawda wilfully defaulted on its obligations under the contract of sale in relation to signage and open space membership. Alternatively, the Council said the default was inadvertent. In either case, there was no basis for equity to intervene.

In relation to the five matters identified by Mason and Deane JJ in Legione, the Council submitted:

(a) There was no evidence that the Council’s conduct had contributed to Dar-Alawda’s breaches.

(b) The breaches were not trivial and went to the core of the purpose of the special conditions of the contract of sale and the reduced purchase price. The Council’s right to exercise the option in the circumstances was expressly agreed between the parties.

(c) The purpose of the special conditions are to provide access for local residents. Dar-Alawda’s breaches caused the Council and the local residents to suffer loss that is not readily compensated by an award of damages.

(d) There is no evidence of the extent of Dar-Alawda’s loss due to the forfeiture. While it will lose its club house, it will receive payment of the purchase price in an amount that will enable it to at least lease other premises.

The Council emphasised that the breaches were not only breaches of the contract of sale, but also of the s 173 agreement, which is a planning control and is enforceable under the Planning Act.[44] It submitted that Dar-Alawda’s breaches of the s 173 agreement meant that it was using Montfort Park unlawfully, contrary to an applicable planning control. It said that it had exercised the option to ensure that the land is used in the way permitted by the s 173 agreement, and that this could not be characterised as unconscionable.
[44]Referring to Kameel Pty Ltd v Casey City Council (2005) 137 LGERA 202, [25]–[26] and TPSC Pty Ltd v Kingston City Council [2018] VSC 313, [53].

For those reasons, the Council submitted that relief against forfeiture should not be granted in the circumstances of this case.

Consideration

In JPA Finance, McLeish JA identified the following principles that emerged from the authorities concerning relief against forfeiture:[45]

First, equitable relief against forfeiture may be available in two kinds of situation. The first situation is where there is a contractual stipulation for forfeiture which is directed at securing an object of the transaction, where that object can be attained by means other than forfeiture, such that insistence on forfeiture would constitute a penalty. The second situation is where a party is entitled at law to terminate a contract and forfeit the relevant interest but it would be unconscientious to do so, whether because of fraud, mistake, accident or surprise or because of other unconscientious conduct such as taking advantage of a special vulnerability in order to derive an unjust enrichment. Both kinds of case may be characterised as ‘unconscientious’, on the basis that it is unconscientious to take advantage of a penal forfeiture, but the two are often treated separately, keeping the label ‘unconscientious’ for the latter situation.
Secondly, 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’s situation more favourable.
Thirdly, equity will not intervene if forfeiture has resulted simply from one party’s inadvertence, or that party’s wilful default.
Fourthly, the question of unconscientious conduct may be addressed by reference to the five ‘subsidiary questions’ identified by Mason and Deane JJ in Legione …

[45]JPA Finance, [98]–[101] (McLeish JA, Beach and Niall JJA agreeing) (citations omitted).

The five questions referred to in the fourth principle are set out in the following passage in Legione v Hateley:[46]

In the ultimate analysis the result in a given case will depend upon the resolution of subsidiary questions which inevitably arise. The more important of these are: (1) Did the conduct of the vendor contribute to the purchaser’s breach? (2) Was the purchaser‘s breach (a) trivial or slight, and (b) inadvertent and not wilful? (3) What damage or other consequences did the vendor suffer by reason of the purchaser’s breach? (4) What is the magnitude of the purchaser’s loss and the vendor’s gain if the forfeiture is to stand? (5) Is specific performance with or without compensation and adequate safeguard for the vendor?

[46]Legione, 449 (Mason and Deane JJ).

As the Council acknowledged, this case is one in which equitable relief against forfeiture may be available. The option deed is directed at securing performance of Dar-Alawda’s ongoing obligations under the contract of sale and the s 173 agreement, relevantly the obligations to display the Public Access Rules and to provide access to Montfort Park for Moreland residents in accordance with the Public Access Rules.

I do not accept that the Council contributed to the breaches. The open space membership applications made in November 2019 were valid, although they were not made using the form prescribed by Dar-Alawda’s constitution. The uncertainty about Ms Watson’s eligibility did not explain the failure to process the other eight applications from nearby residents. It was Dar-Alawda’s responsibility to display the Public Access Rules, and it did not do so in the manner required. The fact that the Council did not point this out before February 2020 did not contribute to the breach, which continued for more than a year after the Council gave notice of default.

The Public Access Rules were not displayed as required at any time before March 2021, when the new sign was placed on the outside of the fence. This was not a trivial or inadvertent breach. For many years after the basketball court was completed in 2012, local residents were not informed in the agreed manner that they could use the court if they became open space members. While the Public Access Rules remained hidden behind a tree, people who lived nearby and who were actively interested in using the court were unaware that it was possible to apply for open space membership, or how they could do so. For example, when Mr Bell made direct inquiries of Mr Helou in 2015 and 2016, he was not provided with information about how to join, let alone a membership form. In those circumstances, it is unsurprising that no-one applied to become an open space member of Dar-Alawda before November 2019.

Similarly, Dar-Alawda’s failure to process the applications for open space membership it received in November 2019 was not a trivial or inadvertent breach. Its reasons for not processing the applications were spurious. Leaving aside Ms Watson, there were eight applications from local residents, including at least two families with children, who were eligible to become open space members and who wanted to use the open space at Montfort Park. They were prevented from doing so by Dar-Alawda’s inaction, and have not been able to use the basketball court for more than three years now. As it happened, those years included the COVID-19 pandemic, and the extended lockdowns in 2020 and 2021, when neighbourhood open space was particularly precious. The applications still have not been processed.

I do not accept Dar-Alawda’s suggestion that these breaches did not really matter because, in practice, anyone who wanted to use the basketball court could simply walk in and do so. The Property is surrounded by a forbidding, three metre high fence, and the gates are locked when the community centre is not in use. Even when the gate to the driveway on Wendel Street was unlocked, local residents did not feel free to make use of the court, and did not in fact do so. The evidence is that the basketball court has hardly been used, and has never been used by local residents. The fact that workers at NSM Food Wholesalers were able on occasion to play volleyball on the court during their lunch break did not fulfil Dar-Alawda’s obligations to provide access to local residents in accordance with the Public Access Rules.

Dar-Alawda’s past breaches of those obligations cannot now be remedied. The local community has not enjoyed the benefit of access to Montfort Park, and that loss is not something that can be remedied by an award of damages to the Council.

However, the object of community access to Montfort Park might be achieved in future by means other than exercising the option. It is the case that the Public Access Rules are now displayed in a position where they are clearly visible from Henkel Street, with a website and an email address provided for membership inquiries. However, I am not satisfied that Dar-Alawda will in future process applications for open space membership diligently and in accordance with its constitution, or otherwise ensure that local residents have access to Montfort Park in accordance with the Public Access Rules. Even after the Council gave notice of exercise of the option in December 2020, Dar-Alawda did not demonstrate a commitment to complying with these obligations in future. Almost as an afterthought, Mr Helou mentioned that Dar-Alawda now has ‘maybe 20’ open space members,[47] but he did not elaborate on that evidence and was not re-examined about it. It was not relied on to show that Dar-Alawda has tried to re-engage with nearby residents, or informed them of how to gain access to the basketball court.
[47]Transcript, 1 May 2023, 247:8–18.

Although Dar-Alawda was a willing participant in the facilitated negotiation during 2019, it did not follow through on the matters that were agreed to by Mr Helou, or the friendly atmosphere of the open day in August 2019. It did not amend its constitution as agreed, did not endorse the vision concept that had been developed, and did not approve the applications for open space membership made to it in November 2019. In short, its willingness to engage with the Council and the community before November 2019 does not mitigate the effect of its breaches as at February 2020.

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 Dar-Alawda agreed to but has failed to provide.

There is no evidence on which I can make findings about the quantum of Dar-Alawda’s loss when the Council repurchases the land. I accept that it has invested time, effort, and funds in restoring and maintaining the community centre, and that it will lose the use of those premises. However, it will not be left empty handed. The purchase price of $579,500 to be paid by the Council is calculated in accordance with the formula agreed to by Dar-Alawda when it purchased the Property for significantly less than market value in 2004.

For those reasons, I decline to grant relief against forfeiture.

Issue 9: Did Dar-Alawda breach cl 3.3 of the option deed by failing to complete and deliver to the defendant an identical copy of the Contract of Sale within 14 days of the Council exercising its option by its letter dated 2 December 2020?

Clause 3.3 of the option deed provides:

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

It is not in dispute that Dar-Alawda has not returned the counterpart copy of the new contract of sale that was enclosed with the 2 December 2020 letter. It is therefore in breach of cl 3.3 of the option deed.

Issue 10: In the circumstances, is the Council entitled to orders for specific performance by the plaintiff to complete the defendant's exercise of the option?

The Council referred to the summary in Rossi Recycling Pty Ltd v Buckland Valley Pty Ltd[48] of the requirements and discretionary factors to be taken into account when considering an order for specific performance. They include:[49]
[48][2022] VSC 467 (Rossi Recycling).
[49]Rossi Recycling, [566].

(a) whether there is an enforceable agreement;
(b) whether there has been a breach of the agreement;
(c) whether any issue of impossibility of performance arises;
(d) whether damages are an adequate remedy;
(e) whether the plaintiff has demonstrated, at least at the time when any order is to be made, it is ready, willing and able to perform all other substantial obligations;
(f) whether there is mutuality in the sense that it is possible to award the remedy against both parties;
(g) the plaintiff’s conduct and whether the plaintiff comes to equity with clean hands;
(h) hardship to the defendant of awarding specific performance;
(i) the involvement or impact from third parties;
(j) laches or delay.

In relation to those matters, the Council submitted:

(a) There is in this case an enforceable agreement in the form of the option deed.

(b) Dar-Alawda has breached cl 3.3 of the option deed by failing to return the completed contract of sale.

(c) There is no issue of impossibility of performance.

(d) Damages are not an adequate remedy, as they cannot compensate the Council for the benefit of the Property to the community.

(e) The Council has done all it needs to do for the purchase of the Property. It remains ready, willing and able to pay the balance of the contract price of $579,500 due at settlement.

(f) Mutuality is not relevant in this case.

(g) The Council comes with clean hands.

(h) There is no evidence of hardship to Dar-Alawda by the award of specific performance.

(i) Nor is there evidence of any adverse impact on third parties that will be caused by the award of specific performance. To the contrary, the award will benefit Merri-bek residents.

(j) Laches and delay are not relevant considerations. Dar-Alawda commenced the proceeding and sought urgent injunctive relief before it was obliged to return the completed contract of sale. The Council was entitled to deal with the dispute by undertaking not to enforce the exercise of the option until the resolution of the proceeding.

In light of those factors, the Council submitted, an order for specific performance should be made in its favour.

Dar-Alawda did not make any submissions on this issue — perhaps accepting that, if I was not inclined to grant relief against forfeiture, the case for specific performance would be irresistible.

I accept the Council’s submissions in relation to specific performance. It was entitled to exercise the option when it did, and it did so in accordance with the option deed. Damages are not an adequate remedy for Dar-Alawda’s breaches of the contract of sale and s 173 agreement, and it has not persuaded me that it should have relief against forfeiture. There is no reason not to require it to perform the option deed, by completing the sale of the Property back to the Council.

Disposition

I will make orders dismissing Dar-Alawda’s claims for relief, and will make an order for specific performance of Dar-Alawda’s obligations under the option deed. I will hear the parties in relation to the form of the final orders, and in relation to the costs of the proceeding.

[2023] VSC 433

27 July 2023