LVL Transport Pty Ltd v Fuller Road West Pty Ltd as Trustee for Fuller Road Trust;; Karanfilovski Investments Pty Ltd v Fuller Road West Pty Ltd as Trustee for Fuller Road Trust
[2025] VCC 419
•9 April 2025
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-23-00262
| LVL TRANSPORT PTY LTD (ACN 616 772 573) | Plaintiff |
| v | |
| FULLER ROAD WEST PTY LTD (ACN 634 489 811) AS TRUSTEE FOR FULLER ROAD TRUST | Defendant |
Case No. CI-24-01491
| KARANFILOVSKI INVESTMENTS PTY LTD (ABN 27 619 7747 125) | First Plaintiff |
| and | |
| SMX EQUITIES PTY LTD | Second Plaintiff |
| v | |
| FULLER ROAD WEST PTY LTD (ACN 634 489 811) AS TRUSTEE FOR FULLER ROAD TRUST | Defendant |
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JUDGE: | HIS HONOUR JUDGE MACNAMARA | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 19-21 and 24-27 March 2025 | |
DATE OF JUDGMENT: | 9 April 2025 | |
CASE MAY BE CITED AS: | LVL Transport Pty Ltd v Fuller Road West Pty Ltd as Trustee for Fuller Road Trust; | |
MEDIUM NEUTRAL CITATION: | [2025] VCC 419 | |
REASONS FOR JUDGMENT
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Subject:APPLICATIONS FOR SPECIFIC PERFORMANCE OF SALE OF LAND
Catchwords: Contracts of sale for “off the plan” industrial zoned allotments – Contracts conditional upon registration of plan of subdivision within 24 months of making of contracts – Plan of subdivision not registered within 24-month period – Vendor giving notice of cancellation of contracts prior to lapse of 24-month period – Whether authorised by special conditions of contract – Whether entitlement to specific performance barred by laches – Cancellation not authorised – Defence of laches fails because of lack of proof of prejudice to defendant – Specific performance of contracts decreed
Legislation Cited: Acts Interpretation Act 1958
Planning and Environment Act 1987
Sale of Land Act 1962
Supreme Court Act 1986
Cases Cited:AFC Holdings Pty Ltd v Shiprock Holdings Pty Ltd [2010] NSWSC 985;
Al Dakhili v Al Kheurallah [2023] NSWSC 47;
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266;
Braganza v BP Shipping Ltd [2015] UKSC 17;
British Telecommunications Plc v Telefónica O2 UK Ltd [2014] UKSC 42;
Brogden v Investec Bank Plc [2014] EWHC 2785;
CF Stubbings v Jams 2 Pty Ltd (2022) 276 CLR 1;
David A Harris v AMP Financial Planning [2019] VSC 24;
Dovuro Pty Ltd v Wilkins (2000) 105 FCR 476;
Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd (2014) 251 CLR 640;
Esso Australia Resources Pty Ltd v Southern Pacific Petroleum NL [2005] VSCA 228;
Joseph Street Pty Ltd v Tan [2010] VSC 586;
Key Infrastructure Australia Pty Ltd v Bensons Property Group Pty Ltd [2019] VSC 522;
Kwik Lets Ltd v Khaira [2020] EWHC 616;
Magill v Magill (2006) 226 CLR 551;
Metropolitan Gas Co v Federated Gas Employees’ Industrial Union (1925) 35 CLR 449;
Nocton v Lord Ashburton [1914] AC 932;
Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197;
Orr v Ford (1989) 167 CLR 316;
Primary Flooring Pty Ltd v Australian Comfort Group Pty Ltd [2019] VSC 104;
Property Alliance Group Ltd v Royal Bank of Scotland Plc [2016] EWHC 3342;
Sibner Capital Ltd v Jarvis [2022] EWHC 3273;
Sidle v Queensland Trustees Ltd (1915) 20 CLR 557;
Specialist Diagnostic Services Pty Ltd v Healthscope Ltd (2012) 41 VR 1;
The Product Star (No 2) [1993] 1 Lloyd’s Rep 397;
Votua Pty Ltd v Lineal Developments Pty Ltd [2024] VCC 1699;
Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522;
XL Insurance Co SE v BNY Trust Company of Australia Limited [2019] NSWCA 215;
Judgment: 1. Within 14 days the parties must bring in short minutes to give effect to these reasons.
2.Costs reserved.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr S W Stuckey KC with Mr F C Brimfield | Aitken Partners |
| For the Defendant | Mr S V Palmer | Oakley Thompson & Co |
HIS HONOUR:
Background
1On 1 July 2019, the defendant, Fuller Road West Pty Ltd, entered into a contract to purchase a property known as 31 Fuller Road, Ravenhall (an industrial suburb on the western edge of Metropolitan Melbourne (Joint Chronology Item 1). The parcel had an area of some 28.8 hectares; that is, approximately 50 acres in the old Imperial measurement. (Transcript (“T”) 4, Lines (“L”) 34-40)
2Mr Ross Pelligra is the director of the defendant, Fuller Road West Pty Ltd. He said he holds a building licence and a real estate licence, as well as having completed a plumbing apprenticeship and having a number of other occupational qualifications. (T581, L15–T582, L8) He said that he and his brothers control “a three-generation development/construction business started by [his] grandfather when he migrated to Australia in 1958 from Italy. … The west has always been our corridor of the business.” (T582, L13-16)
3According to Mr Pelligra (presumably referring to himself, his brothers and the corporations they control):
“We hold a lot of industrial land; that’s our biggest portfolio. … we buy the land, and we strategise it, and then we build … Fuller Road is one of our family assets; that’s my personal asset.” (T583, L10-13)
4He said the family group was also engaged in a number of joint ventures. (Ibid L14-15) He said the Pelligra group controlled and was undertaking redevelopment of a number of former automotive sites, including 40 hectares constituted by the major Ford Motor Company plant in Geelong, another 10 hectare sites, being a second former Ford plant near the Port of Geelong, as well as the former General Motors Holden site in Elizabeth, South Australia, consisting of some 123 hectares which he said was “one of the biggest industrial … one-title asset in Australia.” (T583, L34-35) He described numerous other undertakings, developments and enterprises that his family and their companies were engaged in. (T583-4)
5An article dated 7 July 2020 appeared in the online version of The Australian newspaper under the heading “Pelligra plans $100m industrial estate in West Melbourne”. The article written by Larry Schlesinger stated:
“The site at 31 Fuller Road is close to another large site owned by Pelligra as well as sites owned by Dexus and Boral. Nearby is the Mt Atkinson Estate being developed Stockland”. (Court Book (“CB”) 5307)
6The article included an aerial view of the land which was an irregularly shaped allotment in an industrial zoned area.
7According to the article:
“CBRE agents Todd Grima, Tom Hayes and Harry Kalaitzis steered the sale and will work with Pelligra to secure pre-leases or turnkey deals on a total of 45 industrial lots … Pelligra Group chairman Ross Pelligra said the site had been strategically master planned in conjunction with Melton City Council to provide sites ranging from 993sq m to 11,185sq m.” (CB 5308-5309)
8Mr Pelligra was quoted as saying: “We want to help small to medium-sized businesses into their own properties to support intergenerational growth”. (CB 5309) According to the article, the site was zoned “Industrial 3”. (Ibid)
9It was apparently a “super lot” leftover from another subdivision.
10According to Mr Nicholson, who gave expert evidence as a licensed land surveyor, the site was “a large super lot on a previously registered plan of subdivision”. (T434, L30-31) According to Mr Nicholson, this could be described as an infill site, though that phrase does not have a fixed technical meaning. He said “It’s not a mile-by-mile piece of land out in Melton, and it’s got road frontage. … It’s got … industrial properties abutting it.” (Ibid, L27-30)
11Another licensed surveyor giving expert evidence, Mr Degg, said that an infill site was “basically a subdivision in an area that already has an established subdivision framework.” (Ibid, L35-36)
12The experts agreed that the Pelligra proposal for a 45 lot plan of subdivision in an area zoned Industrial 3, whilst an inherently complex process, was otherwise “a pretty plain vanilla one” and “by no means the most complex instance [of subdivision]”. (Ibid, L8-10)
13Pelligra’s National Development Manager, Mr Doyle, said the proposal was for a 45 lot plan of subdivision “breaking up the property” in the sense of selling off the allotments. (T332, L29-36)
14Mr Doyle said that this project being within his portfolio, his estimate in 2020, as to how long it would take to complete the subdivision, achieve registration of the plan and be ready to settle any “off the plan” sales, was 18-24 months. (T334, L40-46)
15Mr Pelligra described his decision to make the purchase completed in the name of Fuller Road West Pty Ltd as follows. He was told by the selling agents, CBRE, that there are a number of groups looking at the property. The advertised price was $30 million. He made an offer of $20 million and “There was a bit of exchange backwards and forwards”. The agent told him “you’re going to have to go unconditional pretty quick, because the owners, if they’re going to take an offer, it’s going to be … it’s got to be unconditional …”, “So we came to a conclusion at $23 million unconditional, 12 months”. (T587, L3-8)
16On 17 July 2019, Fuller Road engaged Millar Merrigan to provide a feature and level survey and a title establishment survey. (CB 1897) This survey was completed by Millar Merrigan on 31 August 2019. (CB 4505, joint chronology items 2 and 3)
17On 12 December 2019, Fuller Road sought a fee proposal from GTA Consultants to undertake transport engineering work. (CB 1919)
18On 20 December 2019, Millar Merrigan provided a fee proposal for “post-planning permit services” including:
(1) External surveys;
(2) Preliminary engineering investigations;
(3) Provision of functional layout plan;
(4) Project coordination;
(5) Survey for the purposes of subdivision
(6) Engineering design;
(7) Landscape architectural;
(8) Engineering (construction). (CB 2824, joint chronology items 4 and 5)
19Fuller Road engaged CTA on 15 January 2020. (CB 1919, joint chronology item 6)
20Millar Merrigan’s appointment made on 5 January 2020 was restricted to external surveys and preliminary engineering investigations. (CB 1923) Millar Merrigan furnished an updated survey to Fuller Road on 24 January 2020. (Joint chronology items 7 and 8)
21In February 2020, Fuller Road sought fee proposals from LS Planning to work as a planning consultant and procured design guidelines from Etched to undertake landscape architectural work and to provide a landscape architectural masterplan for the purposes of the planning permit application. (CB 1993 and 1941, joint chronology items 9-12)
22On 16 March 2020, Fuller Road received the preliminary proposed site layout plan from BB Design Group. (CB 4506, joint chronology item 13). This preliminary layout was fundamentally the same as the one ultimately implemented after the planning and engineering process containing 45 lots set out around Fuller Road, Vanessa Drive and Pelligra Drive. The most material variation which occurred in due course was the deletion of a “retarding basin” in the south-east corner (Lot 16) depicted on the preliminary plan as being kidney shaped. It was eventually replaced by a drainage channel running between two allotments further to the west of that site.
23Later in the month, on 18 March 2020, Fuller Road received a landscape architectural concept from Etched (CB 4508) and a transport impact assessment from GTA Consultants (Supplementary Court Book (“SCB”) 11), as well as building design guidelines from LS Planning on 25 March 2020. On the same day, LS Planning, on Fuller Road’s behalf, lodged an application for a planning permit for the 45 lot plan of subdivision. (SCB 54, joint chronology items 14-17)
24On 21 May 2020, Fuller Road received the preliminary stormwater management report from Millar Merrigan. (CB 2836, joint chronology item 20). Four days later, on 25 May 2020, Melton City Council, as responsible authority, made a request for further information to enable it to assess the planning permit application. The letter, over the signature of council’s acting principal planner, stated the request was made under s54 of the Planning and Environment Act 1987 and that:
“the application will not be further considered until the following information is provided:
·A flora and fauna assessment of the land prepared by a suitably qualified and experienced person to the satisfaction of the responsible authority in accordance with the requirements Clause 52.17.
·A Stormwater Management Strategy (also requested by Melbourne Water, as per their referral response dated 4 May 2020).
·Additional documentation/changes required by the Department of Transport (as per their referral response dated 22 April 2020).
Please provide this information by the 25 July 2020. An applicant may make a request in writing for an extension of time to give the required information.” (SCB 108)
25The letter continued, referring to certain issues of urban design and landscape planning, advising that in this respect the “proposed development in its current form … is unlikely to be supported by council [unless the following matters] are addressed”. (Ibid, 109)
26On 1 July 2020, Fuller Road settled its purchase of the land. (CB 5221, joint chronology item 22) Later that month, on 28 July, Fuller Road received a fee proposal from Hellier McFarland to prepare a plan of subdivision for the land. (CB 1949, joint chronology item 23) Three days later, Fuller Road received a fee proposal from Dalton Consulting Engineers for preliminary civil engineering services. (CB 2870, joint chronology items 23 and 24). On 30 August, Fuller Road engaged Hellier McFarland to prepare the plan of subdivision. (CB 2137, joint chronology item 26). The following day, namely 31 August, it engaged the consultancy “Practical Ecology” to prepare a flora and fauna native vegetation impact assessment report. (CB 1953, joint chronology item 27)
27Meanwhile, the allotments on the proposed plan of subdivision were being marketed. Fergus Pragnell, the manager of estate agents CBRE Industrial and Logistic, sent an email to a Mr Simo Maric, a director of a company known as Nektar Transport (T65), covering a promotional brochure for what was described as “Infinity Industrial Estate, 31 Fuller Road, Ravenhall, Victoria”. (CB 5311-5322) According to the brochure, this estate offered “a flexibility to develop, lease or buy”. It referred to the following options:
“Purchase
Serviced title lots available to purchase and develop
Pre-lease
Opportunity to design your unique business needs and lease back from the vendor
Turn-key
The complete custom built package.” (CB 536)
28It assured purchasers or lessees that they would be “in trusted hands”, stating:
“Pelligra is a third-generation privately owned family company, which has grown in succession, originating as a construction company that has now expanded into a large scale, national and international property development, investment, and property management group.” (CB 5320)
29Mr Maric said that his company had four truck and trailer sets in 2020. (T66, L1-11) These vehicles were parked in a yard in Deer Park. (Ibid, L13-20) His company had been parking vehicles in that yard since 2015. (Ibid, L31-32) Mr Maric said that his company had a workshop in Ravenhall. (T67, L5-6) He said a friend of mine “in the same industry as I am” told him that “there’s some good land coming up in Ravenhall potentially, of interest, if I wanted to have a look into it …” (T67, L38-40)This was apparently the proposed subdivision at 31 Fuller Road. Consequently, Mr Maric spoke to selling agents, CBRE, “Fergus”. (T68, L15-1)
30The allotments at 31 Fuller Road were of interest to Mr Maric because they were handy to his Ravenhall workshop. (T69, L40-43) Following discussions, Mr Maric tentatively chose Lot 19 as satisfactory for his purposes. (T70, L39) He was attracted by this allotment because it was a corner block which allowed “you to put multiple crossovers in, so the access for manoeuvring the trucks around, in terms of parking, in and out”. (T71, L1-3)
31Mr Maric said, “it’s literally about 10 to 15 minutes from where I work”. (Ibid, 6) Mr Maric also considered Lot 27, which did “kind of appeal to me, but being so irregular in shape, it didn’t work”. (Ibid, L13) The “asking price” was, as Mr Maric interpreted, $450 per square metre. (Ibid, L28-31) Mr Maric said he negotiated the price down to $420 “a square” [presumably a square metre]. (Ibid, L40-45)
32In due course, Mr Maric signed a contract of sale to purchase what was described as “proposed Lot 19” at 31 Fuller Road, Ravenhall on 8 December 2020. The purchaser, on whose behalf Mr Maric signed, was SMX Equities Pty Ltd, one of the plaintiffs in CI-24-01491. Mr Maric said that SMX Equities Pty Ltd was “a holding company … for the property”. (T73, L34-39)
33The price was $1,585,400 with a deposit payable in the sum of $158,340, and the balance of $1,425,060 payable at settlement, which was said to be 28 days after the vendor gives notice to the purchaser of registration of the plan of subdivision. (CB 1568-9) The 28 days represented a manuscript amendment to the printed 14 days on the contract form.
34In the Particulars of Sale, the “purchaser’s lawyer” was shown as Lucy Perri, who is a conveyancer rather than a solicitor. The vendor, Fuller Road West Pty Ltd, was shown as having signed the contract on the same day, namely 8 December 2020, via its sole director, Mr Ross Pelligra. (CB 1566)
35Aside from the standard general conditions of sale, the contract included lengthy special conditions. By Special Condition 8, headed “Plan of Subdivision”, the contract was rendered subject to:
“(i)certification of the Plan by the responsible authority or any person or body acting in place of the responsible authority pursuant to the provisions of the Subdivision Act; and
(ii) registration of the Plan of Subdivision by the Registration Date.”
36The phrase “Registration Date” was defined to mean “the date being 24 months after the Day of Sale”. (CB 1594)
37Aside from a lengthy subclause of defined terms for the special conditions, there was also included a Section 1.2 headed “Interpretation”, including most of the standard interpretation provisions to be found in modern contracts and in statutes such as the Acts Interpretation Act 1958. The singular included the plural, and vice versa. One gender includes the other too, etc. Interestingly, and perhaps significantly, the standard “boilerplate” interpretation provision to the effect that headings were for reference only, and did not affect the interpretation of the contract, was not to be found. (CB 1595)
38Special Condition 8, which included seven subclauses (8.1–8.7) provided, inter alia:
“8.2Rescission by Purchaser – time
The Purchaser may, by notice in writing given to the Vendor, end this Contract if Registration of the Plan of Subdivision is not completed by the Registration Date.
8.3 Rescission by Vendor – time
(a)The Vendor may end this Contract on the basis that Registration of the Plan of Subdivision is not completed by the Registration Date.
(b)If the Vendor wishes to end this Contract under Special Condition 8.3(a), the Vendor is required to follow the procedure contained in Part I Division 1 of the SLA.
(c)The Vendor hereby discloses that:
(i)the Vendor is required to give the Purchaser notice of the proposed rescission of the Contract under Special Condition 8.3(a) (Proposed Rescission);
(ii)the Purchaser has the right to consent to the Proposed Rescission of the Contract but is not obliged to consent;
(iii)if the Purchaser does not agree to the Proposed Rescission, the Vendor has the right to apply to the Supreme Court of Victoria for an order permitting the Vendor to rescind the Contract; and
(iv)the Supreme Court of Victoria may make an order, permitting the Proposed Rescission of the Contract, if it is satisfied that making the order is just and equitable in all the circumstances.
(d)To the extent permitted by law, the Purchaser acknowledges and agrees that Special Condition 8.3(c) satisfies the disclosure requirements required by section 10F of the SLA.
8.4 Rescission – Inability to complete
The Purchaser acknowledges and agrees that:
(a)the Vendor will determine, at its sole discretion, when to seek Registration of the Plan of Subdivision having regard to, amongst other things, market demand, its financial position, ability to obtain finance, and planning, commercial, practical and other similar considerations and, given those considerations, the Vendor may end this Contract by giving notice to the Purchaser;
(b)ending the contract under Special Condition 8.4(a) is not a ‘sunset clause’ for the purpose of the SLA.
8.5 Rescission – onerous conditions
(a)If any of the requirement or condition imposed by the Government Agency, the Registrar or any other authority in connection with the approval, certification or registration of the Plan of Subdivision is, in the opinion of the Vendor, too onerous for the Vendor to perform or if registration of the Plan of Subdivision is refused, the Vendor will be entitled to rescind this Contract by giving notice to the Purchaser with immediate effect.
(b)Notwithstanding any other term or condition of this Contract, if the Vendor cannot obtain a Planning Permit under which terms are acceptable to the Vendor, then the Vendor will be entitled to rescind this Contract at any time by giving notice to the Purchaser with immediate effect.
8.6 Consequences of rescission
(a)If this Contract is ended under Special Conditions 8.2, 8.3, 8.4 or 8.5, the Deposit will be refunded in full to the Purchaser and neither party will have any further liability to the other in relation to this Contract.
(b)The Purchaser will have no right or claim for damages or compensation if the Contract is rescinded pursuant to Special Condition 8.2, 8.3, 8.4 or 8.5.
... ” (CB 1605–1607)
39Clause 17.2 provided:
“17.2Onerous Conditions
If the Planning Permit or amended Planning Permit is issued and either:
(a)the conditions of the Planning Permit are not satisfactory to the Vendor (in the Vendor’s absolute discretion); or
(b)the Vendor is required to make changes to the plans submitted with the application for the Planning Permit that are not satisfactory to the Vendor (in its absolute discretion);
then the Vendor may rescind this Contract by written notice to the Purchaser. For the avoidance of doubt, when exercising its discretion for the purposes of this Special Condition, the Vendor may take into account and have regard to, without any limitation whatsoever, the market demand, commerciality, desirability, practicality or any other similar consideration, of the Planning Permit, as determined by the Vendor in its sole discretion.” (CB 1615-1616)
40Clause 17.3 provided for refund of the deposit should the vendor end the contract pursuant to Clause 17.2.
41Some weeks earlier, on 15 October 2020, Fuller Road executed a sale contract in the same terms as the SMX contract already described, with LVL Transport Pty Ltd as purchaser. (Joint chronology item 28, CB 1397) The contract form had been signed as early as 21 September 2020 by LVL, though not signed by Fuller Road until 15 October 2020. (CB 1399-1400) The price under this contract was $885,370 with a deposit of $44,268.50. The standard form contract provided for a deposit of 10 per cent of the purchase price. This was struck out in the case of the LVL contract, and replaced with a manuscript amendment “5%”. (CB 1403)
42Special Condition 11, headed “Restriction on Re-Sales”, was struck out. This special condition as printed would have precluded LVL from selling, transferring or assigning its interest in the allotment without Fuller Road’s prior consent, which might be withheld in Fuller Road’s absolute discretion. This was expressed to be an essential term of the contract.
43The contract was signed on behalf of LVL by Mr Luu. When Mr Luu gave evidence it was via a Vietnamese interpreter. He said that he had been involved in a truck accident in August 2024, requiring him to spend eight days in an intensive care unit. He said that his injuries impaired his memory, and he was now required to take the drugs Sandoz and Pentadol (inter alia) for relief of stress and anxiety. (T234-5)
44Mr Luu says he migrated to Australia in 1992. (T236, L32) According to Mr Luu, LVL owned two trucks and two trailers, and another two trucks. (T237, L3) It had the same number of vehicles, namely four trucks and four trailers, in 2020 at the time it entered into the relevant contract. (Ibid, L32)
45As in the case of Mr Maric’s enterprise, in 2020, according to Mr Luu, his company’s trucks and trailers were stored on land in Deer Park (ibid, L37), though they are now stored in Waigani Avenue, Ravenhall. (Ibid, L42) These parking locations required the payment of rent or other fees. (T238, L18-25)
46Mr Luu said he was acquainted with another operator in the trucking and earthmoving industry, a Mr Kha, and in 2020 the two of them were seeking properties on which they could park their trucks “because we received the notification from the landowner of the place where we used to park our trucks, that they want to take the land back”. (Ibid, L27-44) Mr Luu viewed promotional material. It seems that it was Mr Kha who identified Lot 31 as suitable for their purposes. Mr Luu said, “When Ray [Kha] looked for it and found this lot, we thought, and we come up with a price, and we both agreed.” (T239, L35-36) Mr Luu said he was attracted to this property “because it’s very close to where I live – it’s only 10 minutes to – from my house to the lot, and also, at that time I thought I need a place to park my truck.” (Ibid, L41-43)
47Mr Luu said the purchase was to be made “half-half”. (T240, L5) Asked “Who was going to be the entity which purchased the lot?”, he replied “My company, LVL”. (Ibid, L7-10)
48Mr Kha said that he operated “trucks in the transport industry”, “and I also do finance. ... mortgage brokering”. (T188, L16-24) He said previously he had been a bank manager with National Australia Bank. (Ibid, L39) He said he operated his truck transport business through a company known as Kha Transport Pty Ltd, of which he was both director and shareholder. (T189, L8-24) He said his company owned two trucks and trailers. (Ibid, L29) Once again, in 2020, these vehicles were stored on land in Deer Park. (T190, L43-46) Mr Kha said that he and Mr Luu “work for the same contractors, or the agency that provides work to us” (T193, L16-17), and are both Vietnamese. (Ibid, L23-29) Mr Kha said that before settling upon a purchase from Fuller Road:
“we [viz, he and Mr Luu] had already engaged agents about other lots, but they were either too big, too far from where we live. So that’s why we didn’t proceed. And – but there was also lots that we attended auctions that were too expensive – we couldn’t afford. So that’s when Fuller Road came on. The agent advised me that it was a big developer and it was good, good location, good sizing, which we had faith in, hence why we proceeded with Fuller Road.” (T194, L1-6)
49He and Mr Luu had approached CBRE, Fuller Road’s selling agents. (Ibid, L8-12) Mr Kha said that he and Mr Luu were shown a layout (CB 5326) described as “Proposed master plan of 31 Fuller Road, Ravenhall”. The notation on the plan shows it as having been prepared in July 2019 for Pelligra, the company of which the defendant Fuller Road is a member. The plan was prepared by BB Design Group. Mr Kha said that the terms on which the allotment was offered were satisfactory to him and Mr Luu because it offered a longer settlement time, and the proposal was made by a well-known developer “which we had faith in”. (T196, L19-20) Mr Kha said that the contract was signed in the name of Mr Luu’s company alone because he and Mr Luu contemplated the nomination of a separate company “once we’d received the settlement”. (T197, L13-24) Mr Kha said that if this Court were to make an order requiring completion of the purchase, he and Mr Luu and their company would split the liability to pay the purchase price 50/50. (T200, L30-47)
50Mr Karanfilovski is a director of one of the plaintiffs in proceeding CI-24-01491, Karanfilovski Investments Pty Ltd. He said that company “holds my assets”, and he and his wife are the shareholders. (T140, L36 – T141, L8) Mr Karanfilovski says that his business includes transport and earthmoving. He mentioned other companies including NEK Group Pty Ltd and MK Transport Services Pty Ltd, of which he was director and shareholder. (T140-141) His companies have five trucks and trailers, and two excavators – floats.
51In 2020 he said he had thirteen trucks, which at that time were parked on rented land in Deer Park, the same land used by Mr Maric. Mr Karanfilovski says he still rents land for storage purposes in Deer Park. (T142) In 2020 he approached estate agents (presumably CBRE) seeking to purchase land “nearby” his operation. According to Mr Karanfilovski, “I thought ‘If I buy my own land, I don’t have to pay rent’.” (T143, L10-21) The draft master plan which was shown to Mr Kha was also shown to Mr Karanfilovski. (T143, L43 – T144, L12) He says he was initially interested in Lots 41 or 42, but they were not available, and he was referred to Lot 28. He liked this allotment because “It was just a perfectly cut square.” (T144, L17-27)
52Mr Karanfilovski and his wife signed, on behalf of Karanfilovski Investments Pty Ltd, a contract of sale in the standard form, with Fuller Road as vendor, relative to Lot 28 on the draft master plan. They signed, according to the document, on 15 October 2020, and execution was made by Fuller Road on 30 October 2020. (CB 1733-4) The same standard form as was used by the other purchaser companies was employed. The price was $852,260, with a deposit, according to the printed form, expressed to be $42,613, with a balance payable at settlement of $809,647. The deposit was not 10 per cent, but the printed form was not amended to reflect this.
53Settlement was provided, according to the printed form, 14 days after the vendor gave notice to the purchaser of registration of the plan. The printed form was amended so as to show settlement due 30 days after notice of registration. (CB 1737) The special conditions seem to have been executed as printed, without any amendment.
54In the new year 2021, on 16 February, Fuller Road received a fee proposal from Practical Ecology to prepare a targeted survey for the spiny rice-flower and striped legless lizard. (Joint chronology item 32; SCB 110) This was presumably as a result of Fuller Road’s taking action to meet the request for further information made by council as responsible authority relative to flora and fauna.
55Fuller Road West accepted Practical Ecology’s fee proposal in the sum of $48,020.50 on 13 April 2021. (SCB 122) This was Practical Ecology’s proposal to conduct targeted surveys for spiny rice-flower and striped legless lizard at 31 Fuller Road, Ravenhall.
56Various steps relative to the engagement of consultants to carry out various studies, steps and planning processes relative to the subdivision continued through 2021. In particular, Fuller Road engaged Practical Ecology to carry out a Construction Environmental Management Plan (CEMP). (Joint chronology item 16; CB 2129) On 4 June 2021, Melton City Council as responsible authority issued planning permit PA2020/6965/1 and endorsed the proposed Master Plan for the subdivision. (Joint chronology item 38, CB 2891; 4660; 4516)
57In February 2022, Practical Ecology furnished its targeted survey relative to the spiny rice-flower and the striped legless lizard at 31 Fuller Road. (CB 5093) The following paragraphs were included in the executive summary:
“No SRF were detected during the transect surveys completed within the moderate quality habitat identified within the Study Area. No SLL were detected across the seven tile grids established within the Study Area, and during the six surveys that were completed from October to December 2021. The Tussock Skink, Pseudemoia pagenstecheri – listed as threatened under the Flora and Fauna Guarantee Act 1988 – was however recorded at four of the seven tile grids.
Based on the extent and quality of habitat and connectivity to extant populations, the potential for the site to support a population of SRF or SLL is deemed to be low. A significant impact on either of these species is not expected, though a referral under the EPBC Act, is recommended for SLL as a precautionary approach for legal certainty purposes due to the immediate SLL records and lack of soil disturbance to the west of the Study Area.” (CB 5097, paragraphs 3-4)
58The reference to SRF is to spiny rice-flower, and SLL refers to striped legless lizard.
59The upshot seemed to be that whilst the consultants did not identify either of the targeted flora or fauna on the proposed subdivision site, they advocated a “precautionary approach” entailing a referral under Commonwealth environmental legislation.
60Melton City Council certified the plan of subdivision (a necessary step towards its ultimate registration) on 2 June 2022. (SCB 134) The permit as issued on 4 June 2021 was subject to some 56 conditions, the last of which provided that the permit would expire if either the plan of subdivision was not certified within two years of the permit date, or the registration of the subdivision was not completed within five years from the date of certification. This was subject to Council’s being empowered to extend those time limits. (CB 4672-3) The conditions were grouped under various headings. For instance, environmental conditions were numbered 6-11; engineering conditions numbered 12-19; and so forth. Conditions 6 and 7 provided as follows:
“6.Before works start, the owner must provide an Ecological flora and fauna survey prepared by a suitably qualified ecologist, which must be submitted and to the satisfaction of the Responsible Authority. It is to show the following:
a)2021 winter survey when the Spiny Rice-flower species is flowering; and
b)Provide a tile grid survey base ascertaining if the site contains the Striped Legless Lizard. The tile grid survey must be placed in situ by end of June 2021.
The surveys above must be completed within the time specified and must not be altered without the written consent of the Responsible Authority.
7. Before works start, relevant approvals must be obtained under the Environment Protection and Biodiversity Conservation Act 1999, if Spiny Rice-flower and/or Striped Legless Lizard are found as part of the required surveys in the preceding condition. If relevant approvals cannot be obtained, then the Plan of Subdivision must be amended to exclude the area impacted by the above species. All subdivisions works must be undertaken in accordance with any recommendations provided by the ecologist, and must not be altered without the written consent of the Responsible Authority.” (CB 4661) (Emphasis added)
61The marketing program had succeeded in selling some 21 allotments from the proposed plan of subdivision “off the plan”. These 21 allotments were the only pre-sales which Fuller Road sought to make. (T627, L13-17) The effect, therefore, was to hold 24 back from the market at that stage. (Ibid, L17-19)
62By letters dated 16 August 2022 to all purchasers, Fuller Road terminated or purported to terminate all 21 “off the plan” sales relative to the proposed subdivision. Moray and Agnew, acting for Fuller Road as vendor in these contracts, wrote to Boss Conveyancing, which had been engaged to act for LVL Transport Pty Ltd relative to the purchase of Lot 39 on the proposed plan of subdivision, in the following terms:
“Dear Madam
Fuller Road West Pty Ltd (ACN 634 489 811) ATF Fuller Road Trust to LVL Transport Pty Ltd
Sale of Lot 39, 31 Fuller Road, Ravenhall, Victoria 3023
We act for Fuller Road West Pty Ltd (ACN 634 489 811) ATF Fuller Road Trust.
We understand that you act for LVL Transport Pty Ltd, the purchaser for Lot 39, 31 Fuller Road, Ravenhall, Victoria 3023 pursuant to a contract of sale between our clients dated 15th October 2020 (Contract of Sale).
As you would know, market conditions have changed considerably since the Contract of Sale was signed (including interest rates, construction costs, authority delays etc) and our client has determined to end the Contract of Sale pursuant to special condition 8.4 of the Contract of Sale.
This letter constitutes a notice of termination. As a result, the Contract of Sale is now at an end and all moneys paid by your client will be refunded to your client pursuant to special condition 8.6.
Please provide us with your trust account details so we can arrange for your client’s deposit to be refunded to your client as soon as possible.
Yours faithfully
MORAY & AGNEW” (CB 3372)
63Similar letters were sent to the other purchasers. Whilst 18 of the purchasers appear to have acquiesced in this cancellation, the three plaintiffs in these proceedings denied the validity of the cancellation and declined to accept a refund of their deposits. (SCB 139-142) LVL engaged solicitors Aitken Partners, who now act for LVL in this proceeding, who wrote to Moray and Agnew by letter dated 19 August 2022 demanding that Fuller Road (1) unconditionally withdraws its cancellation letter, (2) states it will proceed to seek registration of the plan of subdivision expeditiously, and (3) honours the contract. (SCB 144-145; see also SCB 149-172) Zervos Lawyers wrote to Moray and Agnew in similar terms relative to the purchases by Karanfilovski Investments Pty Ltd and SMX Equities Pty Ltd. Moray and Agnew wrote letters dated 11 May 2023 seeking to refund deposits, which attempted refunds were not accepted. (SCB 175-181)
64Fuller Road’s first witness was the Pelligra Group’s National Development Manager, Mr Sean Doyle. He said the decision to terminate was made by Mr Ross Pelligra, who was Fuller Road’s director and Mr Doyle’s superior. (T297, L25-28) When he gave evidence, Mr Ross Pelligra was asked the same question. He said that he terminated the contracts because in the circumstances of the time he could not have any confidence when the project might be completed. (T640, L30-34) Mr Pelligra had said that the period 2020 to 2021 was a period of uncertainty in the development industry. First, there was the general “lockdown” of society on account of the COVID-19 pandemic, and in particular a requirement for building and development works to be cut back “by 75 per cent at one stage”, thereby creating a massive backlog. Contractors were more difficult to obtain, prices were higher, and so forth. (T629-30)
65The progress towards registration of the plan of subdivision continued without any interruption. Melton City Council issued a statement of compliance on 3 July 2024. (Joint chronology item 134; CB 4427) A plan of subdivision was lodged for registration on the same day. (Joint chronology paragraph 135; CB 4428) Following a requisition from “Land Use Victoria”, the plan was registered on 26 July 2024. (Joint chronology 138; CB 4434, 4438)
66The Commonwealth Department of Climate Change, Energy, the Environment and Water had advised Fuller Road by email dated 8 July 2024 that no further assessment or approval under the Commonwealth environmental legislation was required. (CB 3324, 3309; 3310)
67Meanwhile, solicitors acting for LVL commenced proceeding No CI-23-00262 in the Supreme Court of Victoria, which proceeding was ordered transferred to this court by Delany J on 6 January 2023. (Joint chronology item 119)
68On 14 February 2024, Karanfilovski Investments Pty Ltd and SMX Equities Pty Ltd commenced proceedings against Fuller Road in the Supreme Court. (Joint chronology item 125, CB 657) On 20 March 2024, Delany J ordered this proceeding to be transferred to the County Court. It is now numbered CI-24-01491. (Joint chronology item 127)
69On 12 April 2024, the LVL proceeding came on for hearing before me. I vacated a trial date listed for 30 April 2024 and refixed the matter for trial on 17 March 2025. The Karanfilovski proceeding also came before me on the same day, 12 April 2024. I ordered the Karanfilovski proceeding to be heard concurrently with the LVL proceeding on 17 March 2025. Both proceedings came on for hearing before me on 19 March 2025 following a minor timetabling adjustment.
These proceedings
Statements of Claim
70By its further amended Statement of Claim filed by leave 17 April 2024, LVL alleged the sale by Fuller Road to it of Lot 39 on the proposed plan of subdivision by written agreement dated 15 October 2020 with a purchase price of $885,370. It said the contract provided for a 5 per cent deposit with the balance due on settlement, which was to occur 14 days after Fuller Road gave notice to LVL of registration of the plan of subdivision by the Registrar of Titles. It noted the definition of Registration Date as being “24 months from the Day of Sale”, viz 16 October 2022, with the sale contract being conditional on certification of the proposed plan of subdivision and its registration by the Registration Date.
71Next, the terms of Special Conditions 8.1 and 8.4 of the relevant contract were alleged, noting that the “purported effect” of Special Condition 8.4 [scil the effect alleged by Fuller Road] was to empower Fuller Road:
“exercising its sole discretion, to:
(a) elect when to submit the Plan to the Registrar for registration; and
(b) terminate the Contract at any time by giving notice to [LVL].”
72Alternatively, according to LVL, the special condition:
“purports to confer an absolute discretion upon [Fuller Road] as to whether it performs its fundamental obligations under the Contract”.
73If that were so, it is said, the special condition was “unenforceable at law” because, so construed, it would “render illusory the entirety of [Fuller Road’s] liability to perform its obligations under the Contract”.
74Alternatively, LVL alleged that there was an implied term of the Contract that Fuller Road “must do all such things as are reasonably necessary to procure certification and registration of the Plan of Subdivision by the registration date” and a further implied term to the effect that Fuller Road “must act in good faith in performing its obligations and exercising its right under Special Condition 8.4 of the Contract”. These terms were said to be implied by law.
75As to the alleged implied duty on Fuller Road’s part to procure certification and registration of the proposed plan of subdivision, a series of specific steps was alleged which LVL was obliged to carry out, numbered (a) to (j).
76Similarly, as to the alleged implied duty of good faith, it was said that Fuller Road was obliged to take all the steps required to procure the registration and certification of the plan as enumerated (a) to (j), together with:
“(a)to do all of the things in paragraph 7A(a)-(i) above;
(b) not to determine, or attempt to determine the Contract until the Defendant had done or attempted to do all of the things in paragraph 7A(a)-(i);
(c) not to determine, or attempt to determine the Contract under clause 8.4(a) for its own convenience”. (Special Condition 7B, CB 82-83)
77LVL then alleged the issue of the planning permit on 4 June 2021, the application for certification of the plan by Melton City Council, followed by the letter of termination on behalf of Fuller Road addressed to LVL on 16 August 2022. It noted that despite the termination letter, Fuller Road had “at all material times continued to pursue registration of the Plan of Subdivision, and [had] offered Lot 39 afresh for sale for a lengthy period thereafter”. (CB 84, paragraph 9B)
78The issue of the termination letter was alleged to be in breach of the two implied terms alleged, identifying a series of matters enumerated (a) to (h) from which the alleged breaches could be inferred. (CB 84-85, paragraph 10A)
79Next, it was alleged that the further prosecution of the process of certification and registration of the proposed plan of subdivision was indicative of a breach of the implied obligation of good faith. (CB 85-86, paragraph 10B) Paragraph 11 said:
“By reason of the facts set out above:
(a) [Fuller Road] was not entitled to terminate the Contract as it purported to do on 16 August 2022; and
(b) the purported termination of the Contract by [Fuller Road] has no effect.”
80Therefore, according to the next paragraph of the statement of claim, the contract remained “on foot” and LVL was entitled to “an order for specific performance”; alternatively, damages, including the difference between the present value of the land and the contract price. (CB 86, paragraphs 11-12)
81LVL sought a declaration that the purported termination of contract was void; specific performance of the contract, alternatively damages, under s38 of the Supreme Court Act 1986; together with interest, costs, and further or alternative relief.
82In their proceeding, Karanfilovski Investments Pty Ltd and SMX Equities Pty Ltd in their statement of claim alleged the contracts for the sale of Lot 28 by Fuller Road to Karanfilovski for $852,260 and the sale by Fuller Road to SMX of Lot 19 on the proposed plan of subdivision for a price of $1,583,400. They alleged a series of express conditions under the contract in writing enumerated (a)-(n), then contended (CB 661, paragraph 9):
“On its true construction, the right of termination contained in special condition 8.4(a) is only exercisable where the vendor has honestly and reasonably determined not to seek the registration of the Plan of Subdivision, and cannot be exercised when the Plan of Subdivision has been registered.”
83Alternatively, it was alleged (paragraph 13) as follows:
“In the alternative, there are implied terms of the Karanfilovski contract and the SMX contract (“Contracts”) that:
(a) the Defendant must act honestly and in good faith in forming any view or exercising any right under Special Condition 8.4 of the Contracts (“the Duty of Good Faith”); and
(b) subject to the express terms of the Contracts, the Defendant must do all such things as are reasonably necessary to procure certification and registration of the Plan of Subdivision by the registration date (“the Duty to Seek Registration”).” (CB 664, paragraph 13)
84Next, it was alleged that registration of the plan of subdivision was still being pursued, and therefore the purported termination of the contracts was invalid. (CB 664-5, paragraphs 14-16)
85Then, it was said that the obligation to act in good faith was breached because Fuller Road:
“did not decide to defer registration of the Plan of Subdivision or to terminate the Contracts because of market demand, its financial position, ability to obtain finance, or planning, commercial, practical or other similar considerations, but because the value of the land the subject of the Plan of Subdivision had risen substantially between the dates of the Contracts and August 2022, and [Fuller Road] could make substantial further profits by terminating the Contracts and selling the land afresh.” (CB 665, paragraph 17)
86Therefore, it was said, the purported termination was “of no effect”. (CB 666, paragraph 18)
87Next, it was said that in breach of its duty to seek registration of the proposed plan of subdivision, Fuller Road failed to take a number of steps necessary to achieve that result. (Ibid, paragraph 19) This breach, it was said, disentitled Fuller Road from exercising a right to terminate. (Ibid, paragraph 20) It was said that the plaintiffs remained ready, willing and able to perform their obligations. They sought specific performance – alternatively, damages – under s38 of the Supreme Court Act 1986, together with interest, costs, and further or other relief.
Defences
88In its Defence to Further Amended Statement of Claim in the LVL proceeding, Fuller Road admitted the formal allegations, including the LVL contract, though it denied being a subsidiary of Pelligra Build Pty Ltd.
89As to the “right of termination contained in clause 8.4(a) of the contract”, it alleged it was “not qualified, restricted or limited in the manner alleged by [LVL]”. (CB 89, paragraph 8) It denied the implied obligations alleged as being not so obvious as to go without saying and, further, being contrary to a series of express terms of the contract. It said there was no implied duty of good faith.
90As to the various steps alleged by LVL to have been incumbent on Fuller Road as part of its obligation to procure registration of the plan of subdivision, it alleged that these were too vague and uncertain and in many cases contrary to express terms of the relevant contract. (CB 90-92, paragraph 12)
91Likewise, the steps alleged to have been incumbent on Fuller Road by reason of the implied duty of good faith. It said the plan of subdivision “has been amended and re-certified on numerous occasions since August 2020”, giving particulars.
92It admitted the letters of termination, but denied that they were invalid by reason of breach of the alleged implied terms of the contract. (CB 93, paragraph 20)
93As to the matters alleged in paragraph 10A of the statement of claim to be indicative of a breach of the duty of good faith, it denied these matters, making its own series of counter-allegations (CB 93, paragraphs (a)-(l)), with lengthy particulars subjoined to paragraph (d). (CB 93-96, paragraph 21) It denied a further set of allegations said to be indicative of a breach of the duty of good faith contained in statement of claim paragraph 10B (CB 96, paragraph 22).
94In any event, it said that paragraph 8.3(a) provided:
“that if the plan of subdivision was not registered by the Registration Date being 15 October 2022 [Fuller Road was] entitled to end the Contract of Sale by giving notice to [LVL].”
95Since the plan of subdivision was not and could not be registered by that date, Fuller Road was entitled to cancel the contracts. (CB 96-7, paragraphs 24-26)
96Lastly, it claimed that LVL had been “guilty of laches by failing to diligently prosecute this proceeding and deliberately delaying the hearing and determination of its claim” (CB 97, paragraph 26), thereby causing prejudice to Fuller Road. (Ibid, paragraph 27) Alternatively, it is said the plaintiff LVL had failed to mitigate its damage. (CB 97-98, paragraphs 26-29)
97In its defence to the proceeding brought by Karanfilovski and SMX dated 19 May 2024, Fuller Road admitted the formal allegations, admitted the terms of the contracts as alleged, but said that:
“... special condition 8.3(b) and 8.3(c) were included [in] the Karanfilovski Contract by mistake and are otiose, void for uncertainty and of no effect because: [the land in question was not residential land]” (CB 671-672, paragraph 8)
98It concluded that the Karanfilovski contract did not:
“on its proper construction, place any restriction on [Fuller Road’s] right to terminate the contract if the plan of subdivision [was] not registered by the Registration Date being 30 October 2022.” (Ibid)
99It said the SMX contract did not contain the alleged qualification, restriction and limitation alleged in the statement of claim. It made similar allegations with respect to conditions 8.3(b) and 8.3(c) of the contract. (CB 672-3, paragraph 11)
100It said that the implied terms alleged in the two contracts did not exist. In particular, there was no implied duty of good faith because it was not so obvious as to go without saying and was too broad and too uncertain and inconsistent with express terms in the contracts. (CB 673-4, paragraph 13)
101It admitted the letters of termination. It denied offering or intending to offer the allotments for sale, saying it “intends to retain the land for itself as it is entitled to do”. (CB 675, paragraph 15)
102It denied that its decision to terminate was other than valid – though it did not decide to defer registration of any plan of subdivision – or that it intends to resell the allotment.
103As to the alleged failure to seek registration, it denied this allegation, providing its own detailed counter-narrative. (CB 675-679, paragraphs 19(a)-(m)) Alternatively, it relied on clause 8.3(a) as authorising the termination in the same manner as in its defence to the LVL claim. (CB 679, paragraphs 20-21) Finally, it made an allegation of laches against the plaintiffs for:
“unreasonably delaying instituting proceedings within a reasonable time in circumstances where the first and second plaintiffs were each aware that [Fuller Road] had asserted that neither the Karanfilovski Contract nor the SMX Contract was not binding upon it and that it had terminated [them]. As a result, [Fuller Road] was led to believe that [Karanfilovski and SMX] had accepted the termination ... and [Fuller Road had] altered its position by pursuing its own plans to construct buildings on the Fuller Road land which it intends to retain for its own use and granting a mortgage to Australian Commercial Mortgage Pty Ltd which has now acquired rights over the whole of the Fuller Road land”. (CB 681, paragraph 29)
Conclusions
Duty of good faith?
104In closing submissions, Mr Palmer on behalf of Fuller Road said (paragraph 39):
“There is no duty of good faith implied by law in the negotiation or performance of general commercial contracts in Victoria. Further the exercise of an absolute power to terminate, as provided in special condition 8.4(a), did not require the vendor to act in good faith.”
105Mr Palmer quoted extensively from recent Victorian authorities: in particular a judgment of Judge Burchell in Votua Pty Ltd v Lineal Developments Pty Ltd [2024] VCC 1699 where, in the context of an “off the plan” contract of sale (as in the present proceedings), her Honour reached this very conclusion after an exhaustive review of authorities, at least as regards non-consumer transactions where there was no manifest inequality of bargaining power. The transactions in these proceedings are of that character. There is no pleaded allegation of inequality of bargaining power, unconscionable conduct, or anything of that sort.
106Mr Palmer then proceeded to refer to the authorities that had weighed with Judge Burchell in her analysis in Votua: namely, Esso Australia Resources Pty Ltd v Southern Pacific Petroleum NL [2005] VSCA 228 per Buchanan JA, with whom Warren CJ and Osborn AJA concurred [25]:
“I am reluctant to conclude that commercial contracts are a class of contracts carrying an implied term of good faith as a legal incident, so that an obligation of good faith applies indiscriminately to all the rights and power conferred by a commercial contract. It may, however, be appropriate in a particular case to import such an obligation to protect a vulnerable party from exploitive conduct which subverts the original purpose for which the contract was made.”
107His Honour referred to the test for “ad hoc” implications formulated by the majority of the Privy Council in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266. According to Mr Palmer, application of this test would not lead to the implication of a “good faith” term in the contract, the transaction being an ordinary commercial one with no evidence or allegation that the plaintiffs were suffering under any disability. Mr Palmer relied on a further passage from the judgment of Buchanan JA in the Esso case, where his Honour at [23] said:
“It is difficult to discern a want of good faith in the exercise of a power which can serve only the interests of the party upon whom the power is conferred. The ostensible purpose of the exercise of such a power will almost invariably be its true purpose.” [2005] VSCA 228, [23]
108And at paragraph [24], where he said:
“If a contractual right or power, which is intended to advance only the interests of the party on whom it is conferred, is fettered by an implied obligation of good faith, resort to the duty may become an obstacle to the promotion of that party’s legitimate interests.” [2005] VSCA 228, [24]
109Mr Palmer also relied on another passage from his Honour’s judgment where he said, at [29]:
“The duty of good faith, unlike the duty imposed upon a fiduciary, is not a duty to prefer the interests of the other contracting party, but rather to have due regard to the interests of both parties and the benefits afforded by the contract.” [2005] VSCA 228, [29]
110He pointed out that Judge Burchell in Votua had said:
“... the High Court is yet to recognise a universal implied duty of good faith in contract performance.” [2024] VCC 1699, [523]
111Mr Palmer referred also to Primary Flooring Pty Ltd v Australian Comfort Group Pty Ltd [2019] VSC 104 per Croft J; David A Harris v AMP Financial Planning [2019] VSC 24 per Digby J; Key Infrastructure Australia Pty Ltd v Bensons Property Group Pty Ltd [2019] VSC 522 per Robson J; and Specialist Diagnostic Services Pty Ltd v Healthscope Ltd (2012) 41 VR 1, 20 [86]-[87], where the Court (Buchanan, Mandie and Osborn JJA) said:
“We do not accept that an obligation of good faith should be implied indiscriminately into all commercial contracts.
In the case of a detailed written lease entered into between commercial entities of equivalent bargaining power, such a condition will ordinarily arise only if it meets the tests laid down in BP Refinery (Westernport) Pty Ltd v President, Councillors and Ratepayers of the Shire of Hastings [(1977) 180 CLR 266].”
112Mr Palmer said (closing submissions, paragraph 54) that in so far as the plaintiffs relied on the decision of the United Kingdom High Court in Braganza v BP Shipping Ltd [2015] UKSC 17 with the proposition:
“that when a contract grants one party [a] discretion, they must exercise it honestly, in good faith, and not arbitrarily or irrationally or capriciously. These cases have not been followed in Australia.”
113He referred to the English decision Sibner Capital Ltd v Jarvis [2022] EWHC 3273, contending it decided that this principle:
“does not apply to the exercise of an absolute power such as a power to terminate and restrictions will not be applied even restrictions preventing the right from being exercised in an arbitrary, capricious or irrational manner.”
114As regards the BP Refinery (Westernport) principle, for implication of terms ad hoc, the alleged implied terms here do not satisfy any of the criteria, much less all of them. (Closing submissions, paragraph 55-56) He said the contracts in question were not contracts of adhesion. There was scope for negotiation, as witness the various manuscript alteration to the contracts. The purchasers were professionally represented by conveyancers. (Closing submissions, paragraph 58)
169In Mehmet v Benson (1965) 113 CLR 295, the High Court, Barwick CJ, McTiernan and Windeyer JJ, heard an appeal from a decision of a Judge of the Supreme Court of New South Wales dismissing a proceeding for specific performance. Their Honours allowed the appeal, and decreed specific performance, despite the plaintiffs having failed to make timely payment of a number of purchase money instalments and having committed an act of bankruptcy. Windeyer J joined the Chief Justice and McTiernan J, despite being:
“not convinced that the appellant [purchaser] is now ready and willing to complete the contract, I think there should be a proviso to meet the situation if he should prove to be unready promptly to complete the contract by payment in full. To that end the respondent should be expressly enabled to apply to the Supreme Court to fix a date for completion. If the appellant is not then ready to complete, the Supreme Court could make a decree for rescission.” ((1965) 113 CLR 295, 315)
170For the reasons given, I am satisfied that the plaintiffs are now ready, willing and able to complete their respective purchases. Lest I be wrong, the orders in these proceedings should include the additional provision facilitating rescission or cancellation in the event of non-performance as proposed by Windeyer J.
171A further complication is that in at least one of the purchases, namely the one by LVL Transport Pty Ltd, the plaintiff contemplated exercising a right of nomination pursuant to the terms of the relevant contract. Any decree for specific performance should cater for this possibility also.
Laches
172The defendant contended that even were the other matters required for a decree of specific performance made out, none should be made because it was said the plaintiffs had been guilty of laches.
173The allegation seems to focus upon the delay in commencement of the 2024 proceeding brought by Karanfilovski Investments Pty Ltd and SMX Equities Pty Ltd and the cooperation (as it was alleged) of all plaintiffs in aborting a trial date fixed in April of 2024, leaving the matter adjourned over almost 12 months until it came on for hearing before me on 17 March this year.
174In Orr v Ford (1989) 167 CLR 316, 338, Deane J, with whom Mason CJ concurred, said:
“the doctrine of laches comprises those rules which define the circumstances in which equity will, without need to resort to the rules governing other more particular defences and in the absence of applicable statutory provisions, refuse relief by reason of standing by or lapse of time before action.” ((1989) 167 CLR 316, 339)
175Mr Palmer cited the judgment of Meek J in Al Dakhili v Al Kheurallah [2023] NSWSC 47. At [934] his Honour said “It is clear that the bare fact of delay is not enough”. At [936], in referring to Dr Spry’s work The Principles of Equitable Remedies (9th ed, Lawbook Co, 2014), for the defence to be successful:
“First, there must be unreasonable delay in the commencement or prosecution of proceedings for specific performance. Secondly, in all the circumstances the consequences of the delay must render the grant of relief unjust”. ([2023] NSWSC 47 [936])
176In the present case, assuming without deciding that in the circumstances the plaintiffs and each of them is to be regarded as having engaged in unreasonable delay, there is an absence of evidence of prejudice or disadvantage to the defendant. The evidence showed that the defendant had moved to develop Lots 1-6 on the plan of subdivision for leasing to prospective tenants. There was no evidence as to any plans which may have been formulated and then thwarted by the pendency of these proceedings as to any other lot, or in particular as to any of the subject allotments. Responding to a query which I raised with him during closing submissions, Mr Palmer, on behalf of the defendant, conceded that:
“check did not directly state that the reason the defendant had not done anything on the lots the subject of the proceeding was because of the proceeding.”
177Mr Doyle did give evidence as to what the defendant had decided to do with the lots ... “to develop the subdivision with built form so build warehouses and lease them and hold on to them”. (Email, 3 April 2025)
178Apart from a general determination to build and hold the allotments from No 7 upwards for lease, there was no indication as to when that might occur; no indication, for instance, that plans had been put in hand for all of those units from No 7 upwards except the subject units. Had the present contracts of sale been completed following registration of the plan, the purchase price would have alleviated and reduced part of the holding costs. All in all, I conclude that no prejudice has been established for the defendant which would render it unjust to grant the decrees of specific performance sought by the plaintiffs.
Section 38 of the Supreme Court Act 1986
179Given that I have determined it is appropriate to grant the decrees of specific performance sought by the plaintiffs, the issue of damages under s38 of the Supreme Court Act 1986 does not arise.
Disposition
180I will direct that within 14 days the parties bring in short minutes to give effect to these reasons.
Costs
181I have heard no submissions on the question of costs and so I will reserve them.
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Certificate
I certify that these 48 pages are a true copy of the judgment of his Honour Judge Macnamara delivered on 9 April 2025.
Dated: 9 April 2025
Jodie Daniel
Associate to His Honour Judge Macnamara
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