Maloy v Jelacic (No 2)

[2003] NSWSC 412

CITATION:	Maloy v Jelacic (No 2) [2003] NSWSC 412
HEARING DATE(S):	14/04/03, 15/04/03
JUDGMENT DATE:	16 May 2003
JURISDICTION:	Equity Division
JUDGMENT OF:	Barrett J
DECISION:	Specific performance denied
CATCHWORDS:	CONVEYANCING - matters between contract and completion - contract conditional on vendors obtaining building certificate - previous finding that vendors did not take all reasonable steps and that their breach caused non-issue of certificate - further evidence upon re-opening after judgment - judgment shown to have proceeded on factual misapprehensions as to Council's position and requirements - finding of causation no longer justified
CASES CITED:	The City of Gosford v Marim Pty Ltd (1990) 6 BPR 13,871 Mitchell v Pattern Holdings Pty Ltd [2002] NSWCA 212 United Rural Enterprises Pty Ltd v Lopmand Pty Ltd [2003] NSWSC 404
PARTIES :	Patricia Margaret Maloy - Plaintiff John Jelacic and Nigel David Pridham - Defendants
FILE NUMBER(S):	SC 4478/02
COUNSEL:	Mr P B Walsh - Plaintiff Mr S Y Reuben - Defendants
SOLICITORS:	Champion Legal - Plaintiff George Bassil & Associates - Defendants

- 21 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BARRETT J

FRIDAY, 16 MAY 2003

4478/02 – PATRICIA MARGARET MALOY v JOHN JELACIC & ANOR (NO 2)

JUDGMENT

1 I gave judgment in these proceedings on 10 February 2003 and concluded that the plaintiff as purchaser was entitled to specific performance of a contract for the sale of land at Cherrybrook as against the defendants as vendors. I directed that draft short minutes of orders giving effect to my decision be brought in. Before any such short minutes were filed, the defendants gave notice of their intention to seek to re-open and to lead further evidence. On 17 March, the proceedings were listed before me and a notice of motion was filed in court seeking such an order. It was supported by an affidavit of Mr Jelacic, one of the defendants, to which I shall return. I directed that the notice of motion be returnable before me on 14 April 2003. I set aside the whole of that day and the next and made certain directions for the filing of any further affidavits.

2 When the matter came before me on 14 April 2003, I granted leave to re-open and to lead additional evidence. On that day and the next, I received further evidence and submissions from both parties. I considered this to be an appropriate and necessary course in the interests of justice because of a well-developed concern, based on the evidence read on the re-opening application, that my decision had miscarried because of of serious misapprehensions on vital matters of fact. I shall explain what I mean.

3 Central to my original decision were certain findings as to the steps the Hornsby Shire Council required to be taken by the defendants in order to obtain the building certificate that played a pivotal role under special conditions 19 and 20 of the contract for sale which are set out at paragraph 1 of my earlier judgment. My findings were that a letter from Mr Fredericks of the Council to Mr Jelacic dated 27 November 2002 represented what I called a “blueprint” for the defendants. That letter was as follows:

“Dear Mr Jelacic:
Application for Building Certificate – Section 149 (D) of the Environmental Planning & Assessment Act, 1979.
Premises: Lot 7420 DP 736848 (No. 64) Hancock Drive, Cherrybrook
_______________________________________________________
I refer to the above application, the following matter(s) will need to be addressed to Council’s satisfaction, before a building certificate can be issued.
1. Complete the lower ground floor deck.
2. Amend Clause 16 of the 88B Instrument to include the following wording:
‘Decking timbers are to be hardwood and a minimum gap of 8mm is to be allowed between the decking timbers. Any exposed bearers or timbers forming part of any deck are to be fully protected from fire in accordance with relevant sections of AS 3959. The area under the timber deck is to be kept free of all combustible materials.’
3. The 88B Instrument shall be registered with the Land Titles Office, evidence of which shall be submitted to Hornsby Shire Council.
4. Once these matters have been addressed the Applicant shall apply for a final Occupation Certificate for Development Application No.370/99.

Upon issue of the Occupation Certificate the Building Certificate shall be issued under Section 149 (D) of the Environmental Planning & Assessment Act, 197.

Yours faithfully.”

4 Paragraph 2 of this letter was then the subject of the following observation by me (at paragraph 30):

“Item 2 in this letter seems to me to make it clear that, as a practical matter, the Council had abandoned the part of the original clause 25.18 concerned with absence of beams supporting the deck also extending into and being part of the house. That aspect was effectively replaced by the requirement that beams be protected from fire in accordance with AS 3959. This reflected the de facto position reached at the meeting of 9 April 2002.”

5 I also found that what I termed the abandonment of the relevant part of clause 25.18 of the original development consent meant that the requirement for formal variation of the development consent (something which had been the subject of an application lodged by the defendants’ town planners before the contract was made) had been dispensed with by the Council. The abandonment occurred at a site meeting on 9 April 2002 attended by a Council town planner, Ms Van der Zanden: see paragraphs 20 and 21 of my earlier judgment.

6 The new evidence on the basis of which I permitted re-opening was evidence of Mr Jelacic as to what had happened when, after my earlier judgment, he attempted to put the “blueprint” into operation. Following completion of the small amount of remaining work required on the property, Mr Jelacic telephoned Mr Simon Evans at the Council. Evidence given by the author of the Council’s letter of 27 November 2002, Mr Fredericks, had established that Mr Evans was Mr Fredericks’ superior. Mr Jelacic arranged to meet Mr Evans at the property and showed him the further work that had been done.

7 Mr Evans told Mr Jelacic that he should have his solicitor send a formal request for a building certificate. The solicitor, Mr Bassil, sent such a letter on 13 February 2003. Mr Evans replied as follows on 19 February 2003:

“I refer to your letter dated 13 February, 2003 concerning the issuing of unconditional Occupation and Building Certificates.
Prior to Council issuing the Occupation and Building Certificates your client must resolve the outstanding matter pertaining to condition No. 25.18 of Development Consent No. 370/99 which states;
25.18 ‘………… No part of the deck is to form an integral part of the dwelling’s structural integrity (i.e. no cantilever beams are to be used). The area under any timber deck is to be kept free of all combustible materials.’
Should you have any further questions please contact me on No. 9847 6760.”

8 Mr Reuben of counsel, who appeared for the defendants, characterised this letter as a “backflip”: whereas, according to the clear evidence of Mr Fredericks, satisfactory attention to the matters in his letter of 27 November 2002 would cause an occupation certificate and a building certificate to issue, Mr Evans’ letter of 19 February showed that there was an additional requirement, namely, that the defendants “resolve the outstanding matter pertaining to condition No. 25.18 of Development Consent No. 370/99…”.

9 There were (and are) two possible ways of “resolving” the “outstanding matter” referred to in Mr Evans’ letter: virtual demolition and rebuilding of the house, or variation of the development consent to cause its terms to accommodate the house as built. As Mr Evans put it when he gave evidence, the defendants “needed to comply with the requirements of clause 25.18 or modify the clause to reflect what was constructed on the site”. It is the latter course on which the defendants had embarked before exchange of contract but had discontinued after the site meeting on 9 April 2002 attended by the Council town planner, Ms Van der Zanden.

10 What Mr Reuben termed the “backflip” caused the defendants to do three things. First, they sought re-opening of the proceedings. Second, they had their consultant town planner, Mr Willis, lodge on 4 April 2003 another application for variation of the development consent to bring its terms into line with the house as built. Third, they gave on 11 April 2003 another notice purporting to rescind the contract.

11 As I have said, I allowed re-opening so that further evidence might be adduced. Orders had not been made. I was motivated by the fundamental consideration referred to by Campbell J in United Rural Enterprises Pty Ltd v Lopmand Pty Ltd [2003] NSWSC 404:

“It would be a denial of justice in a very fundamental sense to allow a judgment to stand which had been made on a basis which the court came to know was wrong, if that situation could be axvoided.”

12 On 14 and 15 April 2003, evidence was received from Mr Evans, the Council officer who was the author of the so-called “backflip” letter of 19 February 2003; Mr Willis, the defendants’ consultant town planner by whom the subsequent application for variation of the development consent was prepared and lodged; Mr Jelacic, one of the defendants; Mr Fredericks, the Council officer who was the author of the so-called “blueprint” letter of 27 November 2002; and Mr Gunnee of the Rural Fire Service, the Council’s bushfire protection expert. Mr Gunnee had not previously given evidence, although his activities had featured prominently in the evidence of others.

13 It is necessary and appropriate that I describe and review this further evidence.

14 Mr Evans gave evidence in chief about the steps that would be taken within the Council in relation to the application for modification (also known as a “section 96 application”) shown to be required by Mr Evans’ letter of 19 February 2003 and lodged by the defendants through Mr Willis on 4 April 2003:

“Q. If I could just break that up into a number of parts. What steps need to happen within the council before the application for modification, which is now currently lodged, is to be approved? Which sections do we need to go to?
A. It would go to our town planning section, to our town planner. It would then be referred to the Rural Fire Service for comment. I would suggest that an inspection would be made of the property by both the planning officer and also an officer for the Rural Fire Service and a determination made whether to allow the condition to be modified or to refuse the application.

Q. Are you aware that approximately a year earlier, 19 April 2002, that in respect of this property an application for a modification was recommended to be withdrawn; in other words, there was an application on file and then it was recommended by Kelly Van der Zanden that it be withdrawn?
A. Yes, I am aware of documentation on council's file.

Q. Would that affect any of steps that need to apply in relation to this current application?
A. Could you just repeat that question? I'm sorry.

Q. Would that fact that there was a prior application which was withdrawn affect any of the matters relating to the current application?
A. Well, each application is assessed on its merit of the current application. I can't say whether the original application would affect that or not.

Q. When you were referring to the matter being referred to a planning officer or town planning, who would that be?
A. Well, it could be a number of officers, including Kelly Van der Zanden.

Q. As far as the Rural Fire Service approval to the application, who would that go to?
A. The head of the Rural Fire Service for the Hornsby district, which would be Angelo Bolto. I am not quite sure of his surname. I think he has only taken over that role in recent months.

Q. Do you know if Mr Bill Gunnee would have any power to issue such an approval?
A. I couldn't say the workings of the Rural Fire Service, whether they may have been consulted about the application. I couldn't say.

Q. Assuming then that the application for modification was approved, what steps would then need to be undertaken before the council would issue a building certificate.
A. If the application, if the wording of the modification accorded with what is constructed on the site, then we would issue the building certificate readily, together with the occupation certificate.

Q. Would you be the person who would actually issue such a certificate under the delegated authority of the council?
A. I would be one of them.

Q. That relates to the building certificate?
A. That's correct.

Q. Does it also relate to the application for modification or is that dealt with somewhere else?
A. No, that's dealt with somewhere else.

HIS HONOUR: Q. When you say somewhere else, where else?
A. I'm sorry, that would be with the planning section, planning department, town planner, those delegations.

Q. Would any of these decisions have to go to a committee of the council?
A. It could, if they have been, what is called at Hornsby, red stickered, which is to go before the council, over which we have no control.

REUBEN: Q. Are you aware in this case that the fire control team conditions, which have been imposed as a condition of development consent, do not necessarily accord with the Australian Standard 3959?
A. I am aware of that.

REUBEN: I don't strictly need to ask any more questions, but I think I should ask this question of the witness so your Honour has some information about the time frame. But I would be saying I don't need to strictly ask this for the purposes of my case:

Q. Knowing what you now know about this property and the matters relating to the application which have been lodged, that is for the modification of the conditions of development consent and the building certificate, are you able to give the court an estimate as to how long it would take to obtain those two certificates, if all things went well?
A. Well, the section 96 application can take anything up to three months for that process to go through, if it is called before a full - before the councillors. The certificates, once the section 96 has been approved or determined - I would need the correct wording for the 88G, which would be out of council's control - the certificates from then would be readily issued within one or two days on receipt of the determination and section 88G wording.

Q. Your reference to 88G should be in fact 88B?
A. Sorry, 88B.”

15 In the course of cross-examination by Mr Walsh of counsel, who appeared for the plaintiff, Mr Evans referred to certain expectations that might be entertained:

“WALSH: Q. You would expect this to be the case, if the Rural Fire Service said it had no problem with the modification, then you wouldn't expect anyone else in the decision making process to have a problem there, would you?
A. If the Rural Fire Service had no problem with it and the condition was modified, then my section would not have a problem with it.

Q. Do you have any reason to suppose that the town planning section would have a problem?
A. No; the issue being raised is one of a technical nature, which would be the Rural Fire Service.

Q. So, if the Rural Fire Service says it is okay, your professional experience would lead you to the conclusion that the application for modification would be approved and the that the certificate would issue?
A. That's correct.”

16 Mr Evans was then asked questions about his knowledge of attitudes already expressed by the Rural Fire Service:

“Q. And you are aware, aren't you, that Mr Bill Gunnee was the gentleman from the Rural Fire Service who had the carriage of the approval process, so far as they were concerned?
A. That's correct.

Q. And you are aware, aren't you, that quite sometime back into last year Mr Gunnee came to the conclusion that he had no problem with the building, as constructed?
A. That's correct.

Q. So you wouldn't now expect the Rural Fire Service to raise that problem afresh, would you?
A. It may.

Q. But you have no reason to suppose that it will. They haven't told you of any concerns?
A. They haven't told me of any concerns.”

17 Mr Evans’ cross-examination continued:

“Q. Now that the paper work has gone into the council, if everything went as it should in the council's structure, bearing in mind you know the history of everything that has happened in this matter to date, without unforeseen complications when would you expect that a building certificate would issue for this property?
A. I can't determine that a building certificate will be at all issued in its current state. The only thing I can state is, once the application has been determined and if there's no changes required to the building and the wording accords with that, then we can issue a building certificate readily.”

18 Later still:

“Q. In your experience, dealing with these building certificates and bearing in mind your familiarity with this particular aspect of the building at Hancock Drive, can you say whether or not you can form the view as to whether an applicant, acting diligence and vigour, could have, in the ordinary course of things, reasonably been expected to overcome that problem by May of the year 2002, having started in November?
A. The issue before me is whether the section 96 application is approved, but in that time frame one was lodged and wasn't approved, or withdrawn. So during that process it is difficult for me to say in what time frame it could have been all resolved, bearing in mind that there was discussion over the section 96 application which is now before me at council - the building certificate and the section 96 before the planners, again before council. So to say it could have been done in a shorter time all depends on whether he is going to pull down all the decks and put them back, reconstruct them, or put in a section 96 modification, which I believe had happened.”

19 Mr Evans was then asked about the previous modification application, that is, the one that had been submitted by Mr Willis before exchange of contracts and, following the site meeting of 9 April 2002, was withdrawn on the assumption that it was no longer needed:

“Q. The earlier section 96 modification, do you know what it dealt with?
A. It was to do with noncompliance with condition No. 25, which was to modify the deck to allow the decks to be left as is.

Q. If the earlier application for modification had not been withdrawn, but had in fact been dealt with on its merits, can you form a view as to when, in the ordinary course of things, a decision on its merits would have been taken?
A. The timing of it, I can't. I can't state. If the section 96 had been approved in accordance with what was constructed, then we would have readily issued the building certificate subject to other minor changes, which I understand from the health and building surveyor, Nathan Fredericks had pointed out at that time.”

20 Mr Willis gave further evidence. He referred again to the circumstances in which the first modification application lodged by him on behalf of the defendants had been withdrawn after site meeting of 9 April 2002 – basically, that he understood the Council to regard such an application as unnecessary. He said that, when Mr Evans “came on the scene” and said that “the section 88B instrument didn’t comply with the conditions of consent”, he (Mr Willis) accepted that and considered that “it was best to modify the consent”. Cross examination continued:

“Q. Back in 2002, when he put in the application, you thought it was an application for modification that really should proceed because it was required?

A. Yes. Again, as I said, the goodwill was there with the council staff and it seemed that everything was going to be resolved, so therefore why push it when they didn't seem to think it was necessary.

Q. Have you been given any indication, by Mr Evans or anyone else at the council, as to when, in the ordinary course of things, you might expect that your application for modification lodged on 9 April will be dealt with?
A. No, I haven't. Only from my experience, I unfortunately have to put numerous applications to council and they don't - anything, even the simplest ones, seem to take three months. So I agree with the evidence Mr Evans gave earlier, that three months is what you would be expecting, to get a decision on an application.”

21 Mr Willis also deposed in an affidavit to having had a conversation with another Council officer, Mr Beck, concerning the variation application. He reports Mr Beck as having said that the defendants might need to obtain an independent expert in respect of fire control regulations to view the land and building in support of the application for modification.

22 I come now to the further evidence given by Mr Fredericks, the Council officer whose letter of 27 November 2002 played a key role in my decision of 10 February 2003 and was described by me as a “blueprint” for the obtaining by the defendants of a building certificate. When he gave evidence again, Mr Fredericks was referred to that letter and was asked a hypothetical question:

“Q. I ask you this hypothetical question. If immediately after the Court hearing in December last year, Mr Jelacic had telephoned you and said Well, will I have done all of those things. What steps are needed to be taken to satisfy you and the Council that those things had been complied with for a building certificate then to issue?
A. Satisfying those items on that letter?

Q. Yes. How would you have gone about establishing to your satisfaction that each of those requirements had been satisfied?
A. Point 1 would have been a re-inspection. Point 2 and 3 providing evidence that that work had been done.

Q. So if you had done an inspection and otherwise been given evidence these things had been done to comply with the conditions, what was the next step in the issuing of the building certificate?
A. If all those things had done?

Q. Yes.
A. We would issue it.

Q. When you say "we would", you would have issued a building certificate, wouldn't you?
A. Yes.

HIS HONOUR: Q. Can I clarify you meaning, you as an individual member of the staff?
A. On behalf of the Council I would have issued it.

Q. You had the authority to do so?
A. Yes, I do.”

23 In the course of cross-examination, however, Mr Fredericks was asked about the need for the terms of the s.88B instrument to accord with those of the development consent:

“Q. What steps do you understand are required on the part of the Council before the s 88B instrument can be registered?
A. I am not too clear on this, so I don't know exactly the process.

Q. You would admit, wouldn't you, that before the building certificate could be issued, the s 88B instrument needed to, at least, be approved by Council, is that correct?
A. Yes.

Q. I would like to put this suggestion to you that before Council can approve the wording of the covenant required by the s 88B instrument, that Council would have to determine whether or not the s 88B instrument complied with the terms of the development application?
A. Could you just repeat that question?

Q. Yes. In other words, that before Council would approve the s 88B instrument, the wording of the s 88B instrument will to be compliance with the terms of the development consent?
A. I was not aware of that at the time.

Q. There were two cases that this building at 64 Hancock Drive could comply with the conditions of the development consent, I would like to suggest to you, the first being that if the building was modified to remove the cantilever beams to the property, would you agree with that?
A. Is it that one of complying?

Q. Yes.
A. Complying with what, with development consent?

Q. Yes.
A. Or part of the development consent.

Q. The part that said no part of the deck was to form an integral part of the structure. They modified the building?
A. That is one possible way of complying with that condition.

Q. The other way would be to modify the conditions of the development consent so it did not contain those words?
A. Yes, that it would be another way.

Q. I suggest to you that before Council could consent to the 88B instrument, it would have to satisfy itself of those matters that there was compliance in one compliance in one of those two ways?
A. That was not obvious to me at the time.

Q. Is it obvious to you now?
A. Yes.”

24 Mr Gunnee gave evidence on this occasion. He is the officer whose views on fire protection matters or, at least, physical aspects of buildings prone to bushfire risk, are said to hold sway within the Council. A fair summation of his evidence is that the building came to be in a state which he found satisfactory from a fire protection viewpoint but that he was unable to throw useful light on the workings of the Council with respect to variation of development consents. He was, however, able to comment on what might be termed the “novelty” of a variation of the kind sought in the defendants’ application for variation lodged by Mr Willis on 4 April 2003:

“Q. Mr Gunning [scil, Gunnee], what I want to ask you is, are you aware of any case in Hornsby Shire Council, for example, that you have specifically adopted the conditions of AS3959 rather than imposing your own set of conditions?
A. The Australian standard of 3959, particularly at the time of this development application, sets a minimum standard for radiant heat flux and ember attack - sorry, radiant heat flux and direct flame impingement; it does not cover ember attack. That is why people in any job across the state look to the development approval, visit sites, do an assessment based on a whole raft of issues and then, looking at what the development - sorry, what the developer proposed to do, we make recommendations. That may be in strict compliance with Australian standard 3959, or may be more enhanced - enhancing the conditions.

Q. In your area of expertise, the adoption of a modification of the conditions of development consent by reference to AS 3959 operates by way of a precedent in Hornsby Shire Council?
A. I'm sorry, I don't understand the question.

Q. By adopting AS 3959, without more, would that be the first time that Hornsby Council has done that?
A. I would estimate that in the nine odd years I have been doing development applications there, probably the vast majority of the development applications we have requested in addition to what is required in the Australian standard 3959.

Q. So, you can't recall any specific instance where there has been no additional requirement imposed by you?
A. There have been a number of development applications that have come to me where I thought there was no bush fire risk at all and have sent it back to council with no recommendations whatsoever.

Q. In this property, there is a bush fire risk, obviously?
A. There is a bush fire risk, yes.”

25 I proceed now to identify the new matters emerging from the further evidence. First and foremost, it is now obvious that even the most faithful and diligent attention to the matters set out in Mr Fredericks’ “blueprint” letter of 27 November 2002 will not cause a building certificate to issue. Mr Fredericks was not aware when he wrote that letter that there was a need for the development consent provision concerning beams supporting the deck to be modified, assuming that virtual demolition and re-building was not undertaken. The key thing not known by Mr Fredericks was that the terms of the positive covenant to be created under s.88B of the Conveyancing Act 1919 had to conform with the terms of the development consent condition. Mr Fredericks’ letter of 27 November 2002 set out a required form of s.88B wording. In evidence given by him on 11 December 2002, Mr Fredericks said that that wording had been drafted by his superior, Mr Evans. When he gave evidence on 14 April 2003, Mr Fredericks said candidly that the need for the s.88B wording to be consistent with the development consent conditions was not obvious to him when he wrote the 27 November 2002 letter – in other words, he did not then know of that need. So far as the defendants are concerned, awareness of the need emerged only when they received Mr Evans’ letter of 19 February 2002. Mr Evans, it must be accepted, was aware of the requirement all along. It must be inferred that when he gave to Mr Fredericks the s.88B wording that Mr Fredericks included in the letter of 27 November 2002, Mr Evans was working on the unstated assumption that was eventually enunciated in his letter of 19 February 2002, namely, that, if that particular s.88B wording was to be adopted, there would have to be a variation of the development consent conditions to bring them into line with that wording.

26 In short, therefore, Mr Fredericks’ letter of 27 November 2002 has now been shown not to be the “blueprint” it appeared to be and which I accepted it as being in my reasons for judgment of 10 February 2002.

27 It is true that Mr Fredericks’ evidence quoted at paragraph 22 above suggests that, had the defendants dealt with Mr Fredericks alone and proceeded in accordance with the letter of 27 November 2002, a building certificate would have issued. But that must now be taken to be subject to very strong doubt, even assuming that Mr Fredericks had remained the only point of contact within the Council and the only Council officer working on the matter. The flaw in Mr Fredericks’ “blueprint” has been exposed. That, coupled with Mr Fredericks’ own acknowledgment in his evidence on 11 December 2002 that it was not his job to approve the terminology of s.88B instruments and that he was working on the basis of what he had been told by his superior, Mr Evans, suggests a strong likelihood that Mr Fredericks would, at some point, have realised that he was on the wrong track had he set out to implement the “blueprint” on behalf of the Council. His conceded lack of knowledge about s.88B instruments makes it virtually certain, in my view, that he would have consulted or liaised in some way with his superior or some other more knowledgeable officer had the defendants sought to lodge an instrument in accordance with his 27 November 2002 letter, whereupon the need for the variation of the development consent conditions would have been exposed.

28 The second significant point that emerges from the further evidence is that the application for variation of the development consent conditions to cause them to correspond with the physical state of the building cannot be regarded as what one might call a straightforward and routine matter. This emerges from the evidence of Mr Evans. Several important matters were made clear by him. First, the application will have to be favourably viewed by the Council’s town planning department and by the Rural Fire Service. The officer who deals with it in the town planning department may or may not be Ms Van der Zanden who has some familiarity with the matter having been one of the persons present at the meeting on 9 April 2002. Mr Gunnee, the fire protection officer previously intimately involved, has now been replaced by Mr Bolto although, according to Mr Gunnee’s evidence, Mr Bolto might defer to him when the matter comes before the Rural Fire Service. It was put to Mr Evans that, in view of the participation by Mr Gunnee during 2002, he (Mr Evans) should not expect that the Rural Fire Service authorities would raise any new problem, to which he replied, “It may” – although adding that the Rural Fire Service had not told him of any concerns. Mr Evans could not rule out the possibility that the application might have to be considered by a committee of the Council or the Council itself. He said that if the matter was called before a meeting of the Council (something which, it appears, depends on the desires of particular councillors or a particular councillor), it might take up to three months for the application to be dealt with. In answer to the question whether the fact that Ms Van der Zanden had in effect recommended withdrawal of the defendants’ similar previous application might have some bearing on the outcome of the new application, Mr Evans said that each application is assessed on its merits and could not say whether the original application would affect matters.

29 I single out for particular comment two aspects of Mr Evans’ evidence. The first is his statement (see paragraph 16 above):

“I can’t determine that a building certificate will be at all issued in its [scil. the building’s] current state.”

The second is Mr Evans’ inability to say whether an applicant acting with diligence and vigour could, in the ordinary course of things, have reasonably been expected to overcome the problem by May 2002, having started in November 2001 (see paragraph 17 above).

30 The third message conveyed by the further evidence comes from Mr Gunnee, namely, that the application to vary the development consent conditions involves a significant degree of novelty. The effect of the application, if granted, will be to cause the relevant development consent condition to correspond with the requirements of Australian Standard AS 3959. Mr Gunnee was asked whether this would be the first occasion on which Hornsby Council had taken that course, assuming the application was successful. He replied that, in the nine years that he had been dealing with such matters, “probably the vast majority” had been cases in which “we” (which I take to mean the Rural Fire Authority) had requested or recommended something more than was required by AS 3959. The novelty of an application seeking requirements corresponding with those of AS 3959 may therefore be taken to be established. I have the distinct impression that it was this consideration that caused Mr Evans to be essentially non-committal when asked about the prospects of the success of the application for variation and the time it might take. There is also the point that Mr Willis was told by Mr Beck that the defendants might need to retain an expert on fire control regulations. This confirms that the matter was out of the ordinary.

31 The three new matters emerging from the further evidence – being, first, the established unreliability of what was originally accepted as the “blueprint” in Mr Fredericks’ letter of 27 November 2002 (given its failure to recognise the now clear requirement for variation of the development consent conditions), second, the scope and possible timing of the process of obtaining such a variation (if granted at all) and, third, the significant novelty of an application to bring development consent conditions into line with AS 3959 – establish to my satisfaction that my original decision was founded on two fundamental misapprehensions as to the true factual position: first, that a building certificate could be obtained simply by following the steps in Mr Fredericks’ letter of 27 November 2002 and, second, that the Council had effectively abandoned condition 25.18 of the development consent after the meeting of 9 April 2002. My previous findings on those two matters were central to my conclusion that the defendants were at fault when, after 9 April 2002, they did not pursue promptly and diligently the steps that, on the evidence then before me, would have resulted in the issue of the building certificate; and that that fault had such a causal relationship with non-availability of the building certificate that the defendants could not be permitted to rely on that non-availability.

32 The position as it is now shown to be is that if the defendants had acted promptly and diligently after 9 April 2002 to seek a building certificate, the Council, following the correct course outlined by Mr Evans rather than the incorrect course previously described by Mr Fredericks, would have stated that, notwithstanding Ms Van der Zanden’s concurrence in the abandonment of the earlier variation application, it was necessary, in order to justify a s.88B covenant cast in terms of AS 3959 alone, to pursue to successful completion an application for variation of the development consent conditions. More fundamentally, the Council would not have issued the building certificate contemplated by the parties’ contract unless the variation sought had been granted.

33 This reality, as it has now emerged, means that it cannot be regarded as at all certain that, even if the defendants had proceeded with reasonable promptness and diligence, the necessary building certificate would have been issued by the Council, whether within the period contemplated by the contract or at all. The application for variation of the development consent conditions would have been reviewed by the town planning department and by the Rural Fire Service. Ms Van der Zanden and Mr Gunnee may have played a role. It is also quite possible that other persons unfamiliar with what had happened in the past (except by referring to the files) would have become decision makers. The Rural Fire Service may still have raised a problem. The application would have been one attended by a significant degree of novelty. It might well have been seen as raising questions of precedent. The Council or a committee of the Council might have become involved in the decision making process. That process might have taken up to three months to complete and may never have produced an outcome favourable to the defendants.

34 All these factors of doubt and difficulty emerge clearly from the evidence led after re-opening. Because the issue of the building certificate is now seen to have been dependent on success of an application for variation of the consent conditions, all those factors undermine my previous conclusions. As the evidence now stands, I do not consider it possible to say that, had the defendants pursued matters with greater diligence after 9 April 2002 and completion of the physical work identified on that occasion, they could have reached in a relatively short time a point at which it was clear that all they needed to do to obtain the building certificate was to follow the steps that were later laid out for them in Mr Fredericks’ letter of 27 November 2002. On the basis of the new evidence, they would never have reached such a point and would, even if acting with appropriate speed and diligence, have run up against the imponderables concerning variation of consent conditions that have now come to light.

35 In these circumstances, a finding of causal relationship between lack of activity and absence of the building certificate can no longer be justified, this being the essential determinant in a case of this kind: see The City of Gosford v Marim Pty Ltd (1990) 6 BPR 13,871. There are now shown to have existed substantial causal links in the chain beyond the reach of any diligence and effort the defendants could have brought to bear. In a case such as this, the party seeking to challenge rescission as inconsistent with the contract and wrongful faces a twofold task described as follows by Powell JA in Mitchell v Pattern Holdings Pty Ltd [2002] NSWCA 212:

“[I]t would have been incumbent on Mr. Mitchell to establish, first, that Pattern had failed to use all reasonable endeavours to procure the registration of a strata plan substantially in accordance with the draft strata plan, and, second, that it was Pattern’s failure to use all reasonable endeavours so to do which led to the failure to have such a plan registered within 12 months of the date of the contract.”

It is in respect of the second aspect that, in this case, it is not now possible to make a finding adverse to the defendants.

36 Implicit in what I have just said is the view, to which I adhere, that the defendants were in breach of the express term in clause 29.4 and any implied term to take all reasonably necessary steps to obtain the building certificate (see paragraphs 4 and 5 of my previous judgment). The real point is that that breach is not one that activates anything relevant to the relief sought in this case. In other words, it can no longer be said, in words used at paragraph 39 of my earlier judgment, “Non-issue of the certificate resulted from the defendants’ breaches of contract”.

37 Late in the hearing following re-opening, Mr Walsh foreshadowed an application to amend by adding a claim for damages for breach of contract. He did not make such an application, saying that he would be content to return to the possibility at a later stage, depending on factual findings. Mr Reuben, for his part, reserved his position entirely on the matter. I say no more about it.

38 In the result, it can no longer be said that the plaintiff is entitled to the relief by way of specific performance claimed in paragraphs 1 and 2 of the summons. Those claims must accordingly be dismissed. The contract has been validly rescinded by the defendants.

39 Having regard to the unusual course of these proceedings, there should be written submissions on costs and, if necessary, the matter should be re-listed for argument on costs. I direct that submissions by the defendants be served on the plaintiff and forwarded to my Associate within 14 days and that submissions by the plaintiff be served on the defendants and forwarded to my Associate within a further 14 days.

**********

Last Modified: 05/19/2003