Exhibition Marketing Pty Limited ACN 010 519 329 v Richmond Valley Council

[2008] NSWSC 1253

CITATION:	Exhibition Marketing Pty Limited ACN 010 519 329 v Richmond Valley Council [2008] NSWSC 1253
HEARING DATE(S):	6 and 7 November 2008
JUDGMENT DATE :	26 November 2008
JURISDICTION:	Equity Division
JUDGMENT OF:	Ward J at 1
DECISION:	Declaration made for the Plaintiff.
CATCHWORDS:	CONVEYANCING – Contract for sale of land – Whether contract validly terminated – Whether implied or express obligation on part of Purchaser to construct drainage works – Whether Vendor could terminate for failure to register easement within time specified - Whether repudiation of contract – HELD: No express or implied obligation to construct drainage works – Vendor unable to terminate for failure to register easement without first allowing a further reasonable time –Vendor under express or implied obligation to cooperate in relation to satisfaction of condition subsequent - No repudiation – Purported termination ineffective. - EQUITY – Relief – Whether appropriate to order specific performance in the circumstances - Whether declaratory relief of utility – HELD: Not appropriate to order specific performance – Declaratory relief of utility – Declaration made.
LEGISLATION CITED:	Civil Procedure Act 2005 Evidence Act 1995 Local Government Act 1919 Supreme Court Act 1970 Uniform Civil Procedure Rules
CATEGORY:	Principal judgment
CASES CITED:	Aberfoyle Plantations Limited v Khan Bian Cheng [1960] AC 115 Barclay v Messenger (1874) 30 LT 351 Butts v O’Dwyer (1952) 87 CLR 267 Carr v J A Berriman (1953) 89 CLR 327 Chopard v Vamiso (1998) 9 BPR 16,813 Codelfa Constructions Pty Limited v State Rail Authority of NSW (1982) 149 CLR 337 Electronic Industries Limited v David Jones Limited (1954) 91 CLR 288 Franklins Pty Limited v Metcash Trading Limited (No 2) [2007] NSWSC 446 Gilbert v Healey Investment Pty Limited [1975] 1 NSWLR 650 Honner v Ashton (1979) 1 BPR 9478 Integrated Lighting & Ceilings Pty Limited v Philips Electrical Pty Limited (1969) 90 WN (Pt 1) (NSW) 693 Kilmer v British Columbia Orchard Lands Limited [1913] AC 319 Koompahtoo Local Aboriginal Land Council v Sanpine Pty Limited [2007] 233 CLR 115 Lohar Corp Pty Limited v Dibu Pty Limited (1976) 1 BPR 9177 Magill v National Australia Bank Limited [2001] NSWCA 221 Neeta (Epping) Pty Limited v Phillips (1974) 131 CLR 286 Ogle v Comboyuro Investments Pty Limited (1976) 136 CLR 444 One Spencer Pty Limited v Maryland International Pty Limited (2005) 12 BPR 23,113 Patrick Stevedores Operations No 2 Pty Limited v Maritime Union of Australia (1998) 195 CLR 1 Posner v Scott-Lewis [1987] Ch 25 Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359 Shiloh Spenders v Harding [1973] AC 691 Sportsvision Australia Pty Limited v Tallglen (1998) 44 NSWLR 103 Suttor v Gundowda Pty Limited (1950) 81 CLR 418 The Millstream Pty Limited v Shultz [1980] 1 NSWLR 547 Tito v Waddell (No 2) [1977] Ch 16 Trans Realties Pty Limited v Grbac [1975] 1 NSWLR 170 Tropical Traders Limited v Goonan (1963-1964) 111 CLR 41 Waterways Authority of NSW v Coal & Allied Operations Pty Limited [2006] NSWSC 183
TEXTS CITED:	Meagher Gummon and Lehane, Equity Doctrines & Remedies, 4th ed Seddon and Ellinghaus, Cheshire and Fifoot’s Law of Contract 9th Ed
PARTIES:	Exhibition Marketing Pty Limited (Plaintiff) Richmond Valley Council (Defendant)
FILE NUMBER(S):	SC 3416 of 2007
COUNSEL:	M W Young (Plaintiff) J S Drummond (Defendant)
SOLICITORS:	Bolster & Co (Plaintiff) Hannigans (Defendant)

- 40 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WARD J

WEDNESDAY 26 NOVEMBER 2008

3416/07 EXHIBITION MARKETING PTY LTD (ACN 010 519 329) V RICHMOND VALLEY COUNCIL

Hearing dates: 6 and 7 November 2008.

JUDGMENT

1 In these proceedings the plaintiff (“Exhibition Marketing”) has sought declaratory relief and an order for specific performance in relation to a contract for sale of land (“Contract”) it entered into on 1 September 2004 for the purchase of Lot 2 Naughtons Gap Road, Casino (“Lot 2”) from the defendant (“the Council”). Lot 2 is what has been described as an area or strip of “waste” land on which there is a drainage channel for storm water from Casino.

2 The dispute between the parties centres on the condition to which the Contract was subject and on which completion was conditional, namely the creation of an easement for drainage over Lot 2. Special Condition 7 provides as follows:

Easement

The parties agree this sale is subject to and conditional upon the Purchaser:

(1) Creating an easement for drainage over the full length and width of the reshaped channel together with access corridors along the boundaries, acceptable to the Vendor;

(2) the Purchaser paying all costs attached thereto including but not limited to survey fees, legal fees and disbursements, Council charges and Land & Property Information NSW fees;

within three (3) calendar months, and prior to completion.

3 Special Condition 10 of the Contract specifies the completion date as follows:

Completion Date

The parties hereby agree completion shall occur on the latter of:

(a) three (3) calendar months from the date of this agreement

OR

(b) within twenty-one (21) days of

(i) Registration of the easement referred to in Special Condition 7 herein


and

(ii) The approval referred to in special condition 11.

4 Special Condition 11, relevantly, provides:

11 Development application

(a) This Agreement is conditional upon the written approval subject to conditions satisfactory to the purchaser by the Richmond Valley Council (“the Council”) of an Application for the proposed use of the property by the Purchaser (“the Development Application”).

(b) The Purchaser hereby acknowledges that appropriate application for such approval shall be made to the Council within ninety (90) days. [The figure 90 having been amended in hand, by consent of the parties, to extend the time from the initial figure of 21 ]

…

(d) The Purchaser shall with the due diligence and expedition do all things necessary and required by the Council in connection with obtaining approval to the Development Application.

5 Special Condition 12 provides that the time constraints placed upon Exhibition Marketing in Special Conditions 5, 7, 10 and 11 were of the essence in relation to time.

6 In essence, the Council contends that Special Condition 7, properly construed, cast an obligation on Exhibition Marketing prior to completion to carry out the drainage works necessary for the reshaping of the drainage channel; whereas Exhibition Marketing denies that it had an obligation to carry out any drainage works prior to completion.

7 The Council issued a notice on 31 October 2005 requiring the drainage works to be completed by 31 August 2006 and making time of the essence in that regard. The Council subsequently issued a notice of termination of the Contract on 3 October 2006, the works not having been done by then. Exhibition Marketing contends that this notice was ineffective to terminate the Contract and that the Contract remains on foot. Exhibition Marketing has called upon the Council to perform the Contract. The Council denies that it is obliged to do so.

Facts

8 The completion date, as noted above, was determined by reference (inter alia) to the date of approval for the development application to be made in accordance with Special Condition 11. That clause did not specifically refer to drainage works; it simply referred to an application in relation to the “proposed use” of the property. A development application was lodged by Exhibition Marketing for drainage works over Lot 2 and a development approval was issued by the Council in relation to these works on 5 April 2005. That development application ascribed an estimated cost thereto of $60,000 (a sum more than the purchase price payable for Lot 2). Condition 15 of the development approval provided that the “constructed drain” should be covered by an easement for drainage.

9 Following the approval of the Development Application, the Council’s solicitors (by letter dated 11 April 2005) forwarded a copy of the development application approval to Exhibition Marketing’s solicitors and asked that Exhibition Marketing “now make arrangements to settle immediately”.

10 The response to that letter noted that Exhibition Marketing was resolving the location of the easement with the Council and that settlement was not due until registration of the easement (see letter dated 18 April 2005 from Exhibition Marketing’s solicitors to the Council’s solicitors).

11 The Council’s solicitors responded (by letter dated 19 April 2005) that it required the drainage work to be completed and the easement registered prior to completion. That letter stated, “Whilst the reasonable period of time has expired and our client is entitled to make time of the essence in relation to Special Condition 7, our client does require that the drainage work be completed and the easement registered prior to completion.” (Interestingly, this letter appears to acknowledge that something more would have been required at that stage to make time of the essence in relation to Special Condition 7, notwithstanding Special Condition 12).

12 By letter dated 27 May 2005, Exhibition Marketing’s solicitors wrote to the Council’s solicitors stating that there was no requirement in the Contract for Exhibition Marketing to construct the drain and that Exhibition Marketing did not intend to do so within the next 12 months. The Council’s own documents show that prior to that notification the Council was aware that there was an “easement issue”. On 26 April 2005 Paul Radnidge, the Manager of Works at the Council, had forwarded an internal email to a Council colleague referring to a discussion with John Wright, the principal of Exhibition Marketing, on that date stating, “He now anticipates that it could be 5 to 10 years before the site works are carried out to re-align the drain”. (The 5 to 10 year period accords with the time for which, if extended at the end of its initial term, the development approval would subsist).

13 By letter dated 24 June 2005 Exhibition Marketing’s solicitors confirmed that their instructions were to settle the matter as soon as practicable and that Exhibition Marketing was in a position to settle the matter pursuant to the terms and conditions of the Contract.

14 A linen plan and s 88B instrument with respect to the proposed easement were forwarded to the Council’s solicitors on 4 October 2005.

15 The Council responded that the documents were not satisfactory to it because the channel had not yet been reshaped and the s 88B instrument should describe the easement as an easement in gross. By letter dated 31 October 2005, the Council’s solicitors stated “The above documents are not satisfactory to our client for the following reasons:

1. The channel has not yet been reshaped in accordance with:

a) the easement proposed to be registered;

b) the prior understanding between the parties; and

c) Special condition 7 of the Contract, that is the easement has not been reshaped in a way acceptable to the vendor.”

16 There followed further correspondence in which the dispute as to whether drainage work was required to be carried out prior to settlement was ventilated.

17 On 4 November 2005, Exhibition Marketing offered to amend the easement documentation to remedy any matter deemed unacceptable to the defendant.

18 The Council indicated (by letter dated 12 November 2005) that it was prepared to accept an easement over the whole of the land. That, of course, is more than Exhibition Marketing was obliged under the Contract to grant by way of an easement.

19 On 14 November 2005 the Council’s solicitors wrote to Exhibition Marketing’s solicitors allowing until 31 August 2006, with time of the essence, for Exhibition Marketing to complete the drainage works. The Council also offered to accept an easement over the whole of the land with Exhibition Marketing not being required to complete the drainage work.

20 By letter dated 20 February 2006 the Council’s solicitors wrote to Exhibition Marketing’s solicitors setting out a number of requirements of the Council in relation to the easement (some, but not all, of which related to the content of the easement – others seemingly relating to steps necessary for the carrying out of the actual drainage works) and stated that time was of the essence in respect of the construction of the drain by 31 August 2006.

21 Mr Wright, of Exhibition Marketing, acknowledged in his evidence that a number of meetings had taken place throughout the period (both before and after the 20 February 2006 letter) between Mr Greg Alderson (Exhibition Marketing’s engineer) and representatives of the Council in relation to the proposed easement. A number of plans were prepared, on behalf of Exhibition Marketing and after consultation with the Council, for the purpose of Exhibition Marketing seeking to meet the Council’s requirements in relation to the easement (though only one linen plan and one s88B instrument were ever formally proffered to the Council).

22 By letter dated 3 October 2006 the Council’s solicitors served notice of termination of the Contract. The notice of termination in its terms was predicated on there being an obligation (in respect of which time had been made of the essence) for Exhibition Marketing to carry out the drainage work prior to completion. No reference was made in the notice of termination (or in the preceding correspondence which expressly made time as at 31 August 2006 of the essence) to the registration of the easement. It seems (at least since this issue arose in mid 2005) to have been assumed by the Council that carriage of the drainage works was a necessary prerequisite to registration of the easement and/or completion.

23 During the course of the hearing, counsel for Exhibition Marketing put on record an open offer by Exhibition Marketing to grant an easement in terms of an easement which had been proposed in earlier correspondence by the Council. That correspondence by the Council is not in evidence. I rejected its tender by Exhibition Marketing on the basis that (though not headed “without prejudice”) its contents and the context in which it was sent (to which I was taken briefly on the voir dire) led me to find that it was subject to without prejudice privilege. I did not accept that it fell within the exception contained in s 131(2)(i) of the Evidence Act 1995.

Evidence

24 Evidence was given by Mr Wright for Exhibition Marketing. For the Council, affidavits were read from the Director of Works at the Council (Mr Gary Murphy), from Mr Radnidge and from the Council’s Senior Administration Engineer (Mr Brian Eggins).

25 Objection was made to a large portion of the Council’s affidavit and documentary evidence on the basis of relevance (the affidavits deposing largely to the circumstances and events both leading up to entry into the Contract, including evidence as to the Council’s subjective intentions in relation to the drainage channel, and after entry into the sale of Lot 2). I admitted those portions of the affidavits and documentary evidence subject to relevance.

26 For the Council it was contended that this material was relevant as going to the issue (which it perceived was being raised) as to whether or not the Council had acted reasonably in not accepting the easement(s) proffered by Exhibition Marketing.

27 Counsel for Exhibition Marketing, however, made it clear that Exhibition Marketing was not contending that the Council had acted unreasonably in relation to any rejection of the various easements proffered or suggested by Exhibition Marketing to date. Rather, the submission by Exhibition Marketing was that the Council had an implied obligation, and/or an express obligation under standard clause29.4, to co-operate in relation to the process by which an agreed form of easement could be concluded and that the Council could not terminate the Contract for failure to register the easement unless or until the Council had complied with that obligation.

28 The Council also appeared to rely (as a factor to be taken into account when assessing whether or not delay on the part of Exhibition Marketing in creating the easement amounted to repudiation) upon the lack of any contention by Exhibition Marketing that its conduct in rejecting the proffered easement was unreasonable.

29 While pre-contractual conduct is admissible to resolve ambiguity in the words of a contract, as well as to establish the general factual matrix in which the parties entered into a contract, the subjective belief of the parties at the time of entering into a contract is not of relevance in construing its terms (Codelfa Constructions Pty Limited v State Rail Authority of NSW (1982) 149 CLR 337 at 347 per Mason J).

30 Accordingly, insofar as the evidence which I admitted subject to relevance goes to the parties’ subjective intentions or understanding regarding the drainage works, it is inadmissible for the purpose of construing the terms of the Contract and I have not taken it into account. It is only to the extent that the evidence of pre-contractual communications or conduct goes to an objective fact known to both parties at the time of entry into the Contract (such as the consequences, as far as Council’s access to Lot 2 is concerned, if the works were or were not carried out before completion) that I consider such evidence would be admissible.

31 So, for example, the evidence of Mr Eggins as to what he would have reported to Council had he been informed by Mr Wright (or by Mr Alderson, the engineer instructed by Exhibition Marketing) prior to the Contract that Exhibition Marketing was not proposing to do the works necessary to realign the drain in accordance with a drawing provided by Greg Alderson and Associates Pty Limited on 12 January 2004, I regard as inadmissible.

32 As to the subsequent communications between the parties, Exhibition Marketing objected to any use of post contractual conduct as an aid to construction (relying on Sportsvision Australia Pty Limited v Tallglen (1998) 44 NSWLR 103 at 114-116 per Bryson J; Magill v National Australia Bank Limited [2001] NSWCA 221 at [50]-[53] per Ipp AJA Meagher and Heydon JJA agreeing). I do not consider that this evidence was of any assistance to the Council in any event.

33 The evidence was that when Exhibition Marketing’s position in relation to the drainage works was made known, Mr Radnidge asserted that it had always been made clear to Exhibition Marketing that the drainage channel had to be realigned to ensure that the easement provided access by Council to maintain the drain. However, Mr Wright’s response (offering ways in which to resolve that issue) does not amount to any admission by Mr Wright that there had been any agreement (whether or not contained in the Contract) to carry out the works nor is it inconsistent with Mr Wright’s denial that there was any such agreement.

Mr Wright’s evidence

34 Mr Wright accepted that he was aware before entering into the Contract, from his discussions with Mr Radnidge, that the Council had no intention itself of doing the drainage works. He did not accept that he was aware before entry into the agreement that if any works were to be performed to reshape the drainage channel they would be the costs of Exhibition Marketing and he denied that Mr Radnidge had said to him that the costs of drainage works would have to be borne by Exhibition Marketing. He did not recall any conversation with Mr Eggins in which Mr Eggins was said to have told him that all costs would have to be borne by Exhibition Marketing. He did not recall having asked the Council if it would be agreeable to paying the costs for that. Nevertheless, he appeared broadly to accept that the conversations deposed to by Mr Radnidge and Mr Eggins had taken place in which those matters were raised.

35 I think it more likely than not that, whether or not he recalls the Council having told him so expressly, Mr Wright’s experience as a property developer means that he must have understood that a refusal by the Council itself to undertake the works meant that if Exhibition Marketing wanted to realign the drainage channel it would in all likelihood not only have to carry out the works but also meet the costs of so doing.

36 Mr Wright admits that he was informed by Mr Radnidge (in about April-May 2004) that if works to reshape the channel were undertaken there would at all times have to be a channel in place before the reshaping.

37 Mr Wright understood that any realignment of the channel would require a development application and he accepted that the development application lodged by Exhibition Marketing was for the purposes of obtaining consent to perform the works to realign the channel. However, quite reasonably given that this would ordinarily be the case, he did not accept that the approval of the development application required Exhibition Marketing to perform the work the subject of that application. In cross-examination he said that a development application was a development application - not a contract to carry out the works.

38 Mr Wright accepted that he instructed Mr Alderson to prepare the easement plan(s) and that he had examined the plans from time to time. He was aware that Mr Alderson had had a number of meetings with officers of the Council in relation to concerns the Council had and was himself present at least at one of those meetings, probably in May 2004. Mr Wright said that he had not examined the plans in any detail. He said that Mr Alderson had always consulted with Council before drawing plans and had spoken with Council officers each time as to what Council’s requirements were. He expected that those plans represented Mr Alderson’s understanding of what the Council had required him to do. There is no reason to doubt that evidence.

39 The Council seems to rely on the changes from the plans (as between those drawn in January 2004 and those ultimately submitted to Council in the first instance in October 2005) as indicating the reasonableness of the Council’s rejection of the plans and also, perhaps, an unwillingness by Exhibition Marketing to meet the Council’s concerns. However, Mr Wright’s evidence was that Mr Alderson had drawn the plans upon advice from Council officers and to respond to concerns of the Council regarding the plans. It would not appear from Mr Wright’s evidence that Exhibition Marketing was doing other than seeking to meet Council’s concerns from time to time in relation to the plans it had provided.

40 Mr Wright accepted that there were discussions in April 2003 and May 2004 with Mr Radnidge and Mr Eggins in relation to the works for the shaping of the channel which would have to be done if the channel were to be relocated on the site and he said that the Council had also said its preference was to leave things as they were. Relevantly, neither Mr Radnidge nor Mr Eggins gave evidence of any discussion in which they said Mr Wright had promised to carry out the works within any particular time. Nor did Mr Wright say that he had done so.

41 The fact that Mr Wright did not seek any special conditions in relation to the works (and indeed accepted that he had taken no steps to include in the Contract any term that would require Exhibition Marketing to carry out those works within a certain period of time) does not seem to be to be relevant. It was for the Council, if it wished to have the works carried out by completion, to include a term to that effect. Mr Wright, quite reasonably, said he was under the impression that the Contract was drawn up by the Council.

42 Mr Wright accepted that Exhibition Marketing did not presently intend to do the works for up to five to ten years. He agreed that at or about the time at which he offered the Council an irrevocable undertaking supported by a financial bond in relation to the works was the first time he had informed anyone from Council that, despite lodgement of a development application and execution of the Contract, he was not intending to do the works prior to completion. It was put to Mr Wright that he had sat “silently” by and never once told anyone from the Council prior to execution of the Contract that he did not intend to do the works before completion. However, there was no evidence as to when Mr Wright had first formed the intention not immediately to do the work and therefore, on the evidence, I cannot conclude that at the time of entry into the Contract Mr Wright had knowingly induced (or failed to correct) any assumption on the part of the Council that he would do the work at any particular time.

Construction of Special Condition 7.1

43 The first issue before me is whether, as properly construed, the Contract obliged Exhibition Marketing to carry out the drainage works prior to completion.

44 No express obligation to do so is contained in the Contract.

45 It was submitted by Exhibition Marketing that the notion that Exhibition Marketing would be obliged to perform extensive drainage works (exceeding the cost of the land itself) on land prior to the acquisition by it of the land would be unusual; and that had this been the intention or the parties, it would have been expected that the Contract would record a specific regime whereby the purchaser would be entitled to possession of the property for the purpose of carrying out the works and there would be some form of mechanism for approval or supervision of the works including matters such as insurance to cover the carriage of the works and the like.

46 It was accordingly submitted (with considerable force in my opinion), for Exhibition Marketing, that if the parties had intended Exhibition Marketing to be obliged to carry out the proposed drainage works prior to completion an express obligation to do so would have been included in the Contract.

47 Significantly, that is what the parties had done in the past. Under an earlier contract for sale of land, Exhibition Marketing had acquired the adjacent lots on each side of Lot 2 (Lots 1 and 3) and had obtained a first right of refusal in respect of Lot 2. It does not appear that the Contract resulted from that first right of refusal being triggered. Nevertheless, the first contract (for Lots 1 and 3) is of some relevance as part of the surrounding circumstances and matrix of facts at the time of entry into the (second) Contract.

48 Special Condition 18 of the first contract provided that the Contract was conditional upon, and that completion was subject to, the vendor arranging for a 20 metre right of carriageway burdening part of the land being extinguished). Special Condition 19 of the Contract then provided for certain 10 metre rights of carriageway to be created. That provision specifically obliged the vendor to “attend to and be responsible for the initial construction and cost associated with each Right of Carriageway” and obliged the purchaser to bear “all and any construction work and costs associated with roads and connections from the property to [those] Rights of Carriageway”. Accordingly, in at least one previous instance where works were required to be done in relation to land the subject of a contract for sale of land between the parties, express attention had been given in the Contract to which entity (vendor or purchaser) was to carry out construction works and which was to bear the costs associated with various aspects of these works.

49 There are no such express provisions in the Contract in this case. Nor does the obligation on Exhibition Marketing to pay the costs of registration of the easement specifically include costs related to the construction of any drainage works.

50 The “reshaped channel” was not defined in the Contract. It was accepted by both parties that what was meant by way of “the reshaped channel” could in a practical sense be clarified by reference to the objective facts and matters surrounding entry into the Contract.

51 In construing the clause, the Council placed emphasis on the wording of Special Condition 7 – in particular the use of the definite article and past tense in the words “the reshaped channel”, coupled with the words “over the full length and width of” the reshaped channel. The Council contends that those words refer to something as built.

52 Exhibition Marketing contends that this was simply a reference to the area which the parties had discussed prior to entry into the Contract as being the area over which it was proposed that the existing channel be reshaped; ie to read the words, in effect, as the “proposed reshaped channel”.

53 It is not disputed that it was Exhibition Marketing which had sought approval for relocation or realignment of the existing channel. It did so apparently on the basis that this would allow better use of the land comprising Lot 2. As the channel is presently located, it runs along the centre of Lot 2. I understand that realignment of the drainage channel to one side of Lot 2 would be favourable for any development or use by Exhibition Marketing of Lot 2.

54 Mr Wright gave evidence to the effect that Council’s preference was to have no change to the channel. It seems clear that the Council made it known to Exhibition Marketing that the Council would not undertake any works itself to realign the channel and, while Mr Wright’s evidence was somewhat inconsistent in this regard, I think it more likely than not that the Council made known to him that it would not incur any costs in relocating the channel.

55 Prior to entry into the Contract, at the invitation or suggestion of the Council, Exhibition Marketing provided the Council with a plan which outlined the proposed realigned drainage channel. That plan seems to have been acceptable in principle to the Council since it then proceeded with the preparation and execution of the Contract.

56 It would appear from those circumstances that, as at the time of entry into the Contract, what the parties must have understood by the words “reshaped channel” was a drainage channel that either was or was proposed to be realigned along the lines of that provided in the plan provided to the Council in January 2004. There was no other plan in existence at the time of entry into the Contract. The actual location of the channel was presumably a matter to be determined between the parties when approval was sought for the easement, but its indicative location had been the subject of discussion between the parties; and therefore the ambiguity which would otherwise arise from lack of a definition of “the reshaped channel” in the Contract can readily be cured by reference to the January 2004 plan.

57 Matters such as whether any final plan for the reshaped channel was acceptable to the Council (in circumstances where, as shown on the plan provided to me, it would or might be necessary for easements also to be granted over Lots 1 and 3) would go to whether or not Council was acting reasonably in refusing an easement of the kind offered, not to the question whether or not Special Condition 7 required the works actually to be carried out before the easement was registered.

58 I consider that the words “over the full length and width” of the reshaped channel simply direct the reader’s attention to the fact that any easement registered pursuant to Special Condition 7 was to cover the whole of the reshaped channel (wherever that might ultimately, with the approval of the Council, have been located on Lot 2).

59 In terms of other textual references which may aid construction of the clause, it might be thought that if carriage of the drainage works was something which was required as part of satisfaction of the condition specified in Special Condition 7 (at or before the time of registration of the easement) and those drainage works could not be carried out without approval of a development application, (which I understand to be accepted was the case), then it would not have been necessary to refer to both of the events in (i) and (ii) in the definition of completion date in Special Condition 10(b) (because the event provided 10(b)(i) must in those circumstances necessarily fall after the event in 10(b)(ii)).

60 In other words, if it had been intended that Special Condition 7.1 impose a requirement for the works actually to be carried out, it would have been sufficient simply to refer in the definition of completion date to the registration of the easement, as that could not have been possible until after the development application had been approved.

61 The Council seeks to call in aid those provisions of the Contract which relate to the obligation on the part of Exhibition Marketing to lodge a development application. However, those provisions, which require Exhibition Marketing to do so within 90 days, are to my mind inconsistent with Special Condition 7 imposing any obligation on Exhibition Marketing to carry out the drainage works within three calendar months. If the works were required to be effected prior to completion of the Contract then it can hardly have been feasible for the parties to have contemplated the lodgement of a development application might take place at almost the same time.

62 I note that, while the existing drainage channel remains in place, any easement over the area proposed to be the reshaped channel would not permit access by Council to some parts of the land occupied by the existing channel, a fact on which the Council places weight in contending for its construction of Special Condition 7.

63 It is understandable that the Council would be concerned to maintain a right of access to the storm water drainage channel in its existing location if the reshaped channel works had not been completed at the time of completion; and, to the extent that Council’s concern was known to Exhibition Marketing prior to entry into the Contract, this may well be an objective factor to take into account in construing Special Condition 7.1.

64 However, as Exhibition Marketing has pointed out, the Council has statutory rights in relation to drainage works (see Local Government Act 1919, s 59A). (It also appears, though this would not be relevant in construing the Contract, that Exhibition Marketing was prepared to offer and did offer an undertaking in relation to access to the existing channel prior to any reshaping of the drainage channel).

65 I accept that from a practical point of view there may be a difficulty for the Council if the drainage works are not carried out before completion (as the easement to be registered over the area of the reshaped channel will not allow access to the existing channel) and that the Council does not wish to be forced to rely on its statutory rights of access (which may require the provision of notice or the like). However, this would appear to be an unfortunate consequence of the Council not having made provision in the Contract for what was to happen in the period prior to completion of the drainage works. I do not think it is a factor which would lead one to construe the Contract as imposing a substantive (though unstated) obligation on Exhibition Marketing to carry out the works within a three month period and before completion.

66 Neither do I think there is a basis for the court in effect to rewrite the Contract in this regard. I was referred to the decision of White J in One SpencerPty Limited v Maryland International Pty Limited (2005) 12 BPR 23,113. I consider that case to be distinguishable on its facts. It does not seem to me that the reasoning of his Honour in that case would warrant the importation of words into the Contract which would impose a positive obligation to carry out works where none on its face exists. Rather, that case would suggest that, if it were necessary to overcome absurdity or inconsistency in the words of Special Condition 7.1, it would be permissible to add, before the words “reshaped channel”, the word “proposed”.

67 As to the implication of an obligation to the effect contended for by the Council, I cannot see that it is necessary, for the business efficacy of the Contract, that there to be an implied obligation to this effect. Much was made of the fact that without the reshaping of the channel there would be no access point to Lot 2 given the terms of the easement which had been contemplated prior to the Contract (which was to be over the area to be occupied by the reshaped channel). As noted above, evidence was before me (admitted subject to relevance and over objection of counsel for Exhibition Marketing) of discussions which took place between the parties prior to entry into the Contract in relation to the need for the Council to ensure unrestricted access to the channel at all times and as to the Council’s refusal to incur any costs if the drain were to be realigned. However, such difficulties do not deprive the Contract of business efficacy, particularly in light of the Council’s statutory rights to access.

68 As noted above, Mr Wright was asked, and seemed to accept, in cross-examination that he had “silently” sat by as the Council entered into the Contract and had not informed the Council of his intention not to carry out the drainage works. However, it is not clear on the evidence before me that it was actually his (or Exhibition Marketing’s) intention at the time of entry into the Contract not to carry out the works unless and until required within the time period allowed under any development approval. Nor was it suggested that there was any misrepresentation or estoppel claim being raised by the Council. If there had been, that should have been made clear by way of pleadings at a much earlier time.

69 It seems to me more likely than not that the Council simply did not turn its mind to the need for a provision requiring the works to be completed prior to completion or (wrongly) assumed that the drainage works would be carried out prior to completion. There was no evidence to show that this was a mutual assumption or one which was encouraged by Exhibition Marketing so as to give rise to any form of conventional estoppel claim, nor was one raised.

70 I have considered whether or not the words “the reshaped channel”, while not imposing any implied obligation on Exhibition Marketing to carry out the drainage works, might nevertheless be construed as being predicated on the channel having been reshaped, such that (though Exhibition Marketing would have no obligation to carry out the drainage works) the position from a practical point of view would be that unless and until such works were carried out an easement of the kind agreed and required to be created could not be effected.

71 However, again, the time frame provided in the Contract for registration of the easement does not support such a construction. If, as would seem to have been accepted by the parties given the time they allowed in the Contract for lodgement of the development application, the process of obtaining approval in relation of the works and then carrying out the drainage works (which were to cost a not insignificant sum and therefore I might infer would take some time) could not practically have been completed in the three months allowed to Exhibition Marketing; then a construction of Special Condition 7.1 as being predicated on the drainage works having been done by then would make it unworkable.

72 In summary, I consider it significant that the development application contemplated under the Contract (necessary before any drainage works could be carried out) was only required to be lodged within 90 days of the Contract (and presumably would not have been determined for at least another month at the earliest); that the notice the Council finally gave allowed a nine month period (as presumably what it considered to be a reasonable period) for the works; that the costs which Exhibition Marketing was to bear in Special Condition 7 in relation to the creation of the easement did not in their terms encompass construction costs; and that, where the parties had earlier agreed on an obligation to carry out works (over Lots 1 and 3), that term was expressly set out in their contract and hence it would be reasonable to expect that such a term would have been included on this occasion if it had been the parties’ common intention that Exhibition Marketing be obliged to carry out the works before completion.

73 The only factor pointing in my view in the Council’s favour is that the words “the reshaped channel” on their face would tend to suggest something that had been built. However, I consider this linguistic ambiguity insufficient to outweigh the factors pointing to Exhibition Marketing’s construction of the clause. The ambiguity to which use of this language gives rise can be cured by reference to the January 2004 proposed realignment plan.

74 Accordingly, I find that Special Condition 7 does not, impliedly or otherwise, carry with it an obligation on the part of Exhibition Marketing to carry out the drainage works, nor is it otherwise predicated upon the drainage works having been carried out in order that there be a physically “reshaped channel” before completion.

Was the notice of termination nevertheless effective to terminate the Contract?

75 In those circumstances, the Council was not entitled to terminate the Contract by reason of the non-completion of the drainage works. However, the Council contends that its termination was nonetheless valid, on the basis that, whatever the position with the drainage works, there is no doubt that the easement had not been registered as at the date nominated for completion.

76 It was asserted that Exhibition Marketing had, by its conduct, repudiated the Contract (largely by reason of the delay in registration of the easement) and that the notice of termination could be treated as acceptance of that repudiation (or renunciation) of the Contract.

Breach of Special Condition 7.1

77 In considering whether the Council’s termination on 3 October 2005 was effective, even in the absence of any obligation on the part of Exhibition Marketing to carry out the drainage works, I was referred to the proposition found in Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359, and relied upon in Honner v Ashton (1979) 1 BPR 9478, that termination based upon an invalid ground will not necessarily be ineffective, if a valid ground of termination exists.

78 I note that there is some question as to whether or not this extends to a valid ground of termination of which the terminating party was aware, but on which the terminating party chose not to rely (see Seddon and Ellinghaus, Cheshire and Fifoot’s Law of Contract 9th Aust Ed at [21.24]). This issue was not raised before me in argument. Even if I were to take the principle at its most favourable to the Council (and as it is expressly put in the judgment of Dixon J in Shepherd), namely that a terminating party that has purported to terminate upon an invalid ground of termination may nevertheless rely upon a valid ground of termination whether or not it was aware of it, I am not satisfied for the reasons set out below that there was another valid ground for termination as at 6 July 2007.

79 Reliance was placed by the Council on Aberfoyle Plantations Limited v Khan Bian Cheng [1960] AC 115; Suttor v Gundowda Pty Limited (1950) 81 CLR 418 and Gilbert v Healey Investment Pty Limited [1975] 1 NSWLR 650 for the proposition that where, as here, a contract was subject to a condition subsequent (namely registration of the easement) being satisfied within a specified time; that time being of the essence; and that condition was not satisfied within the specific time, then the Contract is voidable at the election of the party who has the benefit of the condition.

80 Special Condition 7 required that the easement be registered “within three months of the Contract, and prior to completion”. Time was clearly of the essence in this regard: (Special Condition 12).

81 The Council contends that the Contract was therefore voidable as at the date three months from entry into the Contract (namely by about early December 2004) and that at all times since then (or at least up to and including 31 October 2005 when the Council notified Exhibition Marketing of a period of nine months to carry out the drainage works) the Council had a right to terminate or rescind the Contract for breach of Special Condition 7 (by reason of the failure of Exhibition Marketing to register an easement in a form acceptable to the Council by then). The Council says there was no contract capable of being completed unless and until that condition had been fulfilled.

82 The Council contends that the giving by it (in October 2005) of an extension of time for performance for a specified period, coupled with a warning that failure to perform within the extended time will lead to termination, involved no election to continue performance unless there was actual performance by Exhibition Marketing – relying on Barclay v Messenger (1874) 30 LT 351; Tropical Traders Limited v Goonan (1963-1964) 111 CLR 41, and therefore that it was entitled, as at 3 October 2006 to terminate the Contract for breach of that Special Condition 7.1 (or to rescind what was, by reason of the failure to satisfy that condition, a voidable contract).

83 In Tropical Traders Limited v Goonan where the grant of an extension of time was said, far from constituting an election to affirm the Contract, to be an announcement of an intention to refrain from electing either way, Kitto J said (at 55):

Any act done by it and consistent only with the continuance of the contract on foot the law would hold to constitute an election against rescinding; and an election once made could not be retracted. But the appellant was not bound to elect at once. It might keep the question open, so long as it did nothing to affirm the contract and so long as the respondents' position was not prejudiced in consequence of the delay.

84 Reference was made to Kilmer v British Columbia Orchard Lands Limited [1913] AC 319 for the proposition that a stipulation making time of the essence may be rendered no longer applicable by the grant of an extension of time in particular circumstances but it was said this is not authority for the more general proposition that every grant of an extension of time deprives such a stipulation of effect for the future. In Barclay v Messenger Jessell MR held that a mere extension of time and nothing more is only a waiver to the extent of substituting the extended time for the original time, and not an utter destruction of the essential character of the time.

85 However, in April 2005 the Council called for immediate settlement of the Contract by Exhibition Marketing. At that point there would seem to have been a clear affirmation of the Contract, by the Council calling for settlement (at a time when there was, on the Council’s case, a clear right of termination).

86 The fact that the Council did not insist on immediate settlement (accepting, it would seem, that settlement was not due until registration of the easement) does not seem to me to detract from that affirmation. Thereafter, the Council and Exhibition Marketing continued on the basis that the Contract was on foot and that each was bound by its obligations thereunder (whatever they may have been). This is not a case where the Council, face with a right of termination for failure of a condition subsequent, simply gave an extension of time for performance of the Contract or did nothing one way or the other by way of election.

87 In my view the relevant affirming conduct was not the extension of time from October 2005 but the conduct of the Council at an earlier point, namely at the expiry of the initial three month period. At that point the Council had an election between two inconsistent rights, to rescind or to affirm the Contract. It did not rescind. Its actions were consistent only with an affirmation of the Contract. The circumstances of any subsequent extension of time go not to the question of waiver of the initial right of termination or rescission but to whether or not, by its conduct, the Council had adequately put Exhibition Marketing on notice that time was again being made of the essence.

88 Accordingly, in my view the Council could not terminate for failure to register the easement without first having again made time of the essence in relation to registration. It would have been necessary for the Council to send a notice allowing Exhibition Marketing a reasonable time to register the easement (during which time the Council would have been obliged to cooperate with Exhibition Marketing to allow it the opportunity to satisfy that condition). This seems to have been what was contemplated when the Council issued its letter of 19 April 2005.

89 What would be reasonable for the purposes would be a time calculated by reference to the tasks which were to be carried out in order to finalise the easement. Moreover, to the extent that registration of an easement would be dependent upon consent from the Council, Council would not be able unreasonably to hinder or obstruct that process.

90 However, when notice was in fact given, in October 2005, it was, instead, a notice expressly requiring Exhibition Marketing to carry out obligations which (under the Contract) Exhibition Marketing did not have. The notice that was given in October 2005 was a notice to require that drainage works be carried out. No reference was made in that notice to the requirement to register the easement. I do not accept that by that notice time was made of the essence in relation to the registration of the easement; nor was Exhibition Marketing on notice of the Council’s intention to terminate if the easement was not registered by then.

91 Even if the 31 October 2005 notice (or the earlier April 2005 letter) might otherwise have been construed as a notice for Exhibition Marketing to do whatever was necessary to satisfy Special Condition 7.1 (including registration of the easement), the fact that over the period from April 2005 onwards the Council continued to place insistence on completion of the drainage works (and thereby might be said to have represented that no easement would be accepted unless and until those drainage works were completed or that it reserved a right still to terminate irrespective of any acceptable easement if by the expiry of nine months the drainage works were not complete) in my view would preclude Council from now seeking to rely solely on the non-registration of the easement as justifying termination.

92 Exhibition Marketing further contends that the Council cannot rely upon the failure to register the easement within the three month period specified (or indeed to date) because it says the Council is in breach of the obligation contained in standard clause 29.4, or an implied obligation to the same or similar effect, to cooperate with Exhibition Marketing in relation to the finalisation of an acceptable easement to the Council.

93 I was taken to standard clause 29 (which applies if the Contract or completion is conditional on an event) which provides, relevantly, that if anything is necessary to make the event happen, each party must do whatever is reasonably necessary to cause the event to happen (cl. 29.4) and that a party can rescind under clause 29 only if the party has substantially complied with clause 29.4 (cl. 29.5).

94 Even if clause 29.4, which on its face seems applicable to the current situation did not apply, the Council would have an implied obligation to cooperate (or at least not to hinder) the attempts of Exhibition Marketing in relation to the preparation and registration of an acceptable easement over the area to be occupied by the reshaped channel. Where something has to be done under the Contract which requires cooperation between the parties, one party may be in breach of a term of the Contract if it does not cooperate accordingly: Electronic Industries Limited v David Jones Limited (1954) 91 CLR 288.

95 Did the Council comply with that obligation?

96 While submissions were made by Exhibition Marketing as to the Council not being able simply to reject everything put to it (reference being made to Chopard v Vamiso (1998) 9 BPR 16,813), it nevertheless did not suggest that the Council had been unreasonable in not accepting what had been put to it to date.

97 There was some suggestion that the Council may have been reluctant to enter into the transaction in the first place, preferring to leave the channel as it was - from which one might speculate that the Council would not have been sorry if it had an opportunity validly to terminate the Contract for failure to construct the drainage works. However, that is not to the point.

98 The evidence before me does not support the contention that the Council, at least from the time it engaged in debate with Exhibition Marketing or its engineers as to what was required by way of easement, was in breach of the obligation of cooperation. (It would, in my view, have been in breach of that obligation if its sole reason for rejecting or refusing to consider an easement proffered to it was that the drainage works had not been carried out; or if it imposed as a condition of any approval of the easement, a requirement that the drainage works first be carried out.)

99 In circumstances where Exhibition Marketing was seeking at the time to finalise easement plans with the Council, what it now says is that the Council was not in a position as at 3 October 2006 to terminate based on failure as at December 2004 to conduct the drainage works (which I accept) and that the Council cannot now terminate relying on breach of Special Condition 7.1 without at least allowing a further reasonable time for registration of the easement and complying with its express or implied obligations in that regard (which I also accept).

Repudiation

100 Was there nevertheless a repudiation by Exhibition Marketing which, irrespective of the essentiality or otherwise of the obligation under Special Condition 7.1, as at 3 October 2006, allowed the Council to terminate at that date?

101 The Council placed reliance on the judgment of McLelland J in The Millstream Pty Limited v Shultz [1980] 1 NSWLR 547 where his Honour referred to Ogle v ComboyuroInvestments Pty Limited (1976) 136 CLR 444 as a case in which Barwick CJ considered that where there was only one actual breach of the contract there might nevertheless be successive repudiations of the contract by failure to make good that breach. McLelland J said (at 555):

It is established that such a breach as is constituted by a failure to deliver goods under a contract of sale (or by a failure to complete a contract for the sale and purchase of land) is a discrete and not a continuing or recurrent breach. In the words of Dixon J in Larking v Great Western (Nepean) Gravel Ltd (In Liq) , (approved by all members of the Court in Carr v J A Berriman Pty Ltd ): “If a covenantor undertakes that he will do a definite act and omits to do it within the time allowed for the purpose, he has broken his covenant finally and his continued failure to do the act is nothing but a failure to remedy his past breach and not the commission of any further breach of his covenant.”
But, as the decision in Carr v J A Berriman Pty Ltd demonstrates, the “once and for all” quality of a breach of this kind is not inconsistent with the existence of a continuing or recurrent repudiation of the Contract following upon that breach, evidenced by a long continued failure to remedy the breach, or by an express or implied disclaimer of intention to do so.

102 In The Millstream, as long as the contract continued unterminated the defendant was at liberty to remedy the relevant breach. However, prior to so doing the plaintiff made an election to terminate the contract. It was held that the plaintiff was entitled to make such an election (notwithstanding an earlier election to affirm the contract) because since that earlier election the defendant’s continuing conduct in denying the existence of a contract as alleged by the plaintiff and the lengthy duration of his failure to perform gave rise to a fresh right of election – there referring to Carr v J A Berriman (1953) 89 CLR 327.

103 In Carr v J A Berriman it was said that a second breach could be taken into account together with an earlier breach, notwithstanding an affirmation of the contract in the interim. It was held that an election not to rescind for failure to deliver on the due date could not deprive that failure of all significance and therefore when a second breach occurred the two combined might have a significance which it might not be legitimate to attached to the first alone.

104 I was referred to Koompahtoo Local Aboriginal Land Council v Sanpine Pty Limited [2007] 233 CLR 115. There, the majority in the High Court said:

The term repudiation is used in different senses. First, it may refer to conduct which evinces an unwillingness or an inability to render substantial performance of the contract. This is sometimes described as conduct of a party which evinces an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with the party's obligations. It may be termed renunciation. The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it. (In this case, we are not concerned with the issues that arise where the alleged repudiation takes the form of asserting an erroneous interpretation of the contract. Nor are we concerned with questions of inability as distinct from unwillingness.) Secondly, it may refer to any breach of contract which justifies termination by the other party. It will be necessary to return to the matter of classifying such breaches. Campbell J said this was the sense in which he would use the word "repudiation" in his reasons. There may be cases where a failure to perform, even if not a breach of an essential term (as to which more will be said), manifests unwillingness or inability to perform in such circumstances that the other party is entitled to conclude that the contract will not be performed substantially according to its requirements. This overlapping between renunciation and failure of performance may appear conceptually untidy, but unwillingness or inability to perform a contract often is manifested most clearly by the conduct of a party when the time for performance arrives. In contractual renunciation, actions may speak louder than words.

105 I am unable to reach the conclusion that Exhibition Marketing’s conduct has been such as to evince an intention no longer to be bound or not to perform its obligations under the Contract (or to perform only in a manner substantially inconsistent therewith).

106 In this regard, it would seem from the evidence before me that there have been a number of meetings and discussions between Exhibition Marketing’s engineers and representatives of the Council in which plans have been drawn up, after consultation with the Council, to reflect what Exhibition Marketing’s engineers believed (wrongly or otherwise) the Council wanted. The fact that Exhibition Marketing submitted plans which were at variance from the plans drawn up in 2004 does not suggest an unwillingness to comply with the Contract. It is, rather, suggestive of further consideration having been given to how the easement might (more favourably perhaps) better be drawn. Once the Council rejected it, Exhibition Marketing sought to ascertain just what was required by the Council. Exhibition Marketing has at all times professed its willingness to comply with the obligation to grant an easement. It has simply refused to perform an obligation which, on the proper construction I have found of the Contract, it does not have.

107 Accordingly, the delay since September 2004 in registration of the easement does not evince an intention by Exhibition Marketing not to be bound by or honour the Contract. (The Council’s wrongful insistence on carriage of the drainage works might itself be seen as a repudiation or renunciation by it of the Contract, but it is open to Exhibition Marketing not to accept that and to call instead for the Contract to be performed, as it has).

Relief

108 The summons seeks an order that the Council specifically perform and carry into execution the Contract; in essence an order directing the Council to perform its obligations under the Contract in accordance with its terms.

109 Specific performance in the traditional sense would be an order requiring execution of the Contract. I apprehend that what is sought in this instance is specific performance in the nature of a mandatory injunction to oblige Council to comply with its obligations under the Contract and to carry the Contract into effect.

110 I do not understand Exhibition Marketing to be asking for an order that Council now complete the Contract in the absence of registration of the easement required under Special Condition 7. What I understand Exhibition Marketing to be seeking is an order which would, in effect, compel Council to comply with its obligations under clause 29.4, or alternatively under the implied obligation arising out of Special Condition 7, to cooperate with Exhibition Marketing in relation to the substance of the easement to be granted.

111 In the circumstances I am concerned that such an order may give the parties insufficient definition as to what must be done in order to comply with the order of the court. In Tito v Waddell (No 2) [1977] Ch 16 at 321-2 it was said that:

In cases of this kind it was at one time said that an order for specific performance of the Contract would not be made if there would be difficulty in the court supervising its execution … the real question is whether there is a sufficient definition of what has to be done in order to comply with the order of the court. That definition may be provided by the Contract itself, or it may be supplied in the term of the order, in which case there is the further question whether the court considers that the terms of the Contract sufficiently support, by implication or otherwise, the terms of the proposed order.

112 In Posner v Scott-Lewis [1987] Ch 25; Lord Hoffmann said, referring to Lord Wilberforce in Shiloh Spenders v Harding [1973] AC 691 at 724:

Lord Wilberforce was in my view drawing attention to the fact the collection of reasons which the courts have in mind when they speak of difficulty of supervision apply with much greater force to orders for specific performance, giving rise to the possibility of a committal for contempt, than they do to conditions for relief against forfeiture. While the paradigm case to which such objections apply is to carry on activity, they could also apply to an order requiring the achievement of a result.

113 In Patrick Stevedores Operations No 2 Pty Limited v Maritime Union of Australia (1998) 195 CLR 1 at 78 the court considered that there was no defect in the orders there sought of the kind “sometimes … expressed as the involvement of the court in ‘constant supervision’ of continued conduct”. There the majority said:

The House of Lords [in Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd ] discharged the order for specific performance which the Court of Appeal had made. The significance of Lord Hoffmann's speech for present purposes is not the rejection of the lessor's submissions. That rejection, with respect, was virtually inevitable. What is significant is the acceptance by the House of Lords that the concept of "constant supervision by the court" by itself is no longer an effective or useful criterion for refusing a decree of specific performance. Rather, Lord Hoffmann placed stress on other propositions. First, a person who is subject to a mandatory order attended by contempt sanction (which "must realistically be seen as criminal in nature") ought to know with precision what is required; and, second, the possibility of "repeated applications for rulings on compliance" with orders requiring a party "to carry on an activity, such as running a business over a more or less extended period of time" should be discouraged.

114 In the present case, there may well be an issue as to what the Council has to do (the Contract remaining on foot) in relation to the consideration of any easement subsequently proffered to it by Exhibition Marketing. I do not consider it appropriate to make orders in effect requiring The Council to “cooperate” in negotiations for an easement nor can I order the Council to agree to a particular form of easement. (It would be a different matter if Council were in due course to reject an easement and there was an issue as to whether it had done so acting reasonably).

115 The Council should not be in a position where it is unclear what conduct might constitute contempt of any order made against it.

116 In those circumstances, therefore, I am not prepared to grant an order that the Council specifically perform and carry into execution the Contract because it is not clear to me that the parties would know precisely what the Council was required to do in order to comply with such an order. Nor do I think such and order is the minimum equity necessary to do justice in this matter.

117 I think it is appropriate in this case to grant declaratory relief namely to declare that the purported notice of termination by Council was not valid and that the Contract remains on foot and the parties remain bound by their obligations under the Contract as properly construed. Those obligations, as I have earlier indicated, do not include an obligation on the part of Exhibition Marketing to carry out the drainage works prior to completion of the Contract.

118 If the Council now wishes to make time of the essence again in relation to the obligation contained in Special Condition 7 it is open to it to serve an appropriate notice to perform. It would need to allow reasonable time for Exhibition Marketing to effect the registration of the easement and during that time the Council would in my view have an obligation to assist and cooperate with Exhibition Marketing in order to enable it to satisfy that condition by way of an agreement on terms of an easement which were reasonably acceptable to the Council.

119 It was submitted by the Council that it was not open to me to grant declaratory relief of the kind because it had not expressly been sought by Exhibition Marketing and that if I were of the view that the notice of termination was invalid and ineffective to terminate the Contract then I should simply dismiss the summons because no other relief had been sought. I do not think it is appropriate for me to follow this course.

120 I note that Exhibition Marketing did seek a declaration that it is entitled to have the Contract specifically performed and to be carried into execution. In those circumstances I think it cannot be said that the making of orders by way of declaratory relief was not something contemplated when the proceedings commenced.

121 Moreover, the court has power under s 63 of the Supreme Court Act 1970 and under r 36.1 of the Uniform Civil Procedure Rules to grant all such relief as a party may be entitled to, whether or not a specific claim for that relief has been made in the originating proceedings.

122 It is within the jurisdiction of the court to grant declaratory relief in appropriate circumstances and I am of the view this is one.

123 In Waterways Authority of NSW v Coal & Allied Operations Pty Limited [2006] NSWSC 183, Barrett J accepted that r 36.1 of the UCPR enabled the making of declarations even when not specifically sought but questioned the utility in so doing in that case in light of s 63 of the Act which places emphasis on all matters in controversy between the parties being completely and finally determined and multiplicity of legal proceedings being avoided, and the principles laid down in Neeta (Epping) Pty Limited v Phillips (1974) 131 CLR 286.

124 In Neeta Barwick CJ and Jacobs J said at 307:

Unless the parties are agreed on the consequences which flow from a declaration that such a contract has not been validly rescinded it is generally undesirable that a court should so declare without any orders for consequential relief. If a party to such a contract claimed the Contract has not been validly rescinded such a judicial declaration is proper if that party continues ready and willing at the conclusion of the declaration to perform the Contract . A consequence of the declaration should be that the parties submit to the performance of the Contract on his part and for an order for specific performance of the Contract if that is appropriate. If such an order is not, or cannot be made, nor an inquiry into damages ordered then a declaration that on a certain day the Contract has not been validly rescinded serves no purpose in litigation.

125 In Meagher, Gummow and Lehane (4th ed) it is said that the fact that a declaration might not finally conclude the dispute between the parties can hardly ever be, of itself, a proper ground for not making a declaration. The authors, citing Hope J in Integrated Lighting & Ceilings Pty Limited v Philips Electrical Pty Limited (1969) 90 WN (Pt 1) (NSW) 693, state that the likelihood of further litigation is something which should affect, but does not determine, the exercise of the court’s discretion.

126 The authors go on to say (at [19-130]):

It will be otherwise if the declaration will leave unsettled issues between the parties consequent upon it; for example it is one step to declare that a contract for the sale of land is on foot, but this will be inconclusive if the parties are then clearly in dispute as to whether specific performance or damages is the consequential remedy, and are agreed only that the declaration still leaves matters at issue between them. And it would be inefficacious to declare that specific performance was available without administering that remedy: Lucas and Tait (Investments) Pty Limited v Victoria Securities Limited [1975] 1 NSWLR 170. In such a case the appropriate course is to administer the final remedies in the same proceedings as those in which the declaration is made. Of course, the plaintiff may have sought a declaration and no other relief. In such a case it appears that the court should refuse to make the declaration unless the plaintiff seeks or submits to the final relief.

127 After citing a number of cases following Neeta (including Trans Realties Pty Limited v Grbac [1975] 1 NSWLR 170), it is further said that:

However, too rigid an application of the principle would destroy the utility of declaratory relief, at least in vendor purchaser cases. If applied literally and uniformly, it would have the result that no relief by way of declaration could be granted unless consequential relief both could have been, and actually was, sought – a retreat to 1880. This obviously could not be correct, and the judges have accordingly contained the principle of Neeta (Epping) Pty Limited v Phillips. They were fortified in their attitude by the consideration that s 63 of the Supreme Court Act 1970 (NSW) did not, on any view, require all questions between the parties to be determined at the same time. Thus, in vendor and purchaser proceedings, Wootten J in Winchcombe Carson Trustee Pty Limited v Ball-Rand Pty Limited [1974] 1 NSWLR 477 made a declaration as to the validity of a notice to complete and stood over generally the balance of the proceedings, a course which also commended itself to Needham J in Wighams Enterprises Pty Limited v Smith [1975] 1 NSWLR 76. The position was put into its proper perspective by the New South Wales Court of Appeal in Lohar Corp Pty Limited v Dibu Pty Limited ….

128 In Lohar Corp Pty Limited v Dibu Pty Limited (1976) 1 BPR 9177 Street CJ defended the utility of declarations in conveyancing cases and stated that:

Where a vendor and a purchaser have come to issue in connection with their contract and its fulfilment, and where the Court can see that real utility will attach to resolving that issue on a summary application for a declaration, a court of first instance need not anticipate that an appellate court will fail to recognise the width of the declaratory jurisdiction as established by Forster v Jododex Aust Pty Limited (1972) 127 CLR 421 or that the discretion to exercise that jurisdiction will be too freely reviewed.

129 In Franklins Pty Limited v Metcash Trading Limited (No 2) [2007] NSWSC 446, Palmer J considered that declaratory relief (not originally sought in that case) would have utility in that case having regard to s 56 of the Civil Procedure Act 2005.

130 It is also instructive in the present case to take into account what was said by Mahoney J in Trans Realties (at 184):

This does not, in my opinion, mean that in all cases where the effect of a purported decision is in issue, specific performance must be one of the claims made in the proceedings; their Honours indicate merely that ‘it is generally undesirable’ that a declaration be made without consequential relief. It may be that the contract in question contemplates the doing of a number of things prior to the point being reached, if it is reached at all, at which there is to be an exchange of a conveyance for the consideration and that as ‘the whole matter is (not) capable of being disposed of’: Daniell’s Chancery Practice (8th Edition) (p 362); in such a case it may be inappropriate for specific performance to be claimed at that stage. However, the observations of their Honours in the Neeta case (37) are a reminder in strong terms that, where the validity of the rescission of a contract for sale of land is in issue, it is ‘generally undesirable’ so to structure a proceeding if the court is not in a position to determine completely and finally all matters in controversy concerning the subject matter of the proceedings.

131 His Honour went on to suggest that to include a claim for relief by way of specific performance need not impede the convenient determination of the issue in respect of which a determination was immediately desired.

Thus, in a proceeding in which a specific performance is claimed, whether it be instituted by summons or statement of claim, the court need not proceed at once to a determination of the question whether the case is, or will be, apt for the ultimate exchange of conveyance for consideration; it may, in such a proceeding deal first the with the more immediate questions, and reserve for further consideration in the proceeding the making of a decree for specific performance.

132 His Honour referred to Butts v O’Dwyer (1952) 87 CLR 267 where the court considered a contract for sale which was subject to the consent of the Minister and where such consent had not yet been obtained. The court varied the decree made by the judge at first instance for specific performance by omitting the declaration that the contract ought to be specifically performed and limiting the decree to be made at that stage to a declaration that the defendants were bound to do all things reasonable and proper to enable the consent to be applied for and obtained.

133 Mahoney JA (at 184-185) said:

The Court contemplated, in my opinion, that if the consent was obtained and it was necessary, to secure performance of the contract, that a decree be made, a decree for specific performance could subsequently be made in the same suit. The court may, therefore, in my opinion, by an appropriate form of order for adjournment and further consideration of the proceedings … retain to itself the power to make the appropriate order for specific performance.

134 Mahoney JA was of the view that had there been a claim for specific performance in the Trans Realties case (which there was not) there would be no objection to the court making a declaration as was there in question and reserving further consideration of the suit to enable the parties to carry out the various obligations in relation to sub-division and the like contained in the Contract.

135 It would seem to me that if I make declarations in relation to the invalidity of the termination of the Contract by Council as at October 2006, these would have utility in circumstances where the Council has steadfastly denied that the Contract remains on foot and has refused to take any further steps in relation to the creation of the easement, as a result.

136 That is not to say that this will necessarily lead to completion of the Contract. It may well be that, acting reasonably, the Council is in a position to reject whatever further form of easement is proffered to it. However, Exhibition Marketing should have the ability to seek to reach such agreement.

137 Accordingly, I propose to make declarations in the terms indicated above and I order costs in favour of Exhibition Marketing on the basis that, in substance, its contention throughout (namely that the Contract has not been validly terminated and that the Council remains obliged to perform its obligations under the Contract) has succeeded. I consider that the appropriate course then would be to stand over the proceedings to some future time by which it will be apparent whether Special Condition 7 has been satisfied and whether any relief in the nature of orders for specific performance remains necessary. I will hear submissions from the parties as to the desirability of that course and I direct the parties to bring in short minutes of order in accordance with these reasons.

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