Mordue v Kroone

[2007] NSWSC 273

CITATION:	Mordue v Kroone [2007] NSWSC 273
HEARING DATE(S):	8 & 26 March 2007
JUDGMENT DATE :	30 March 2007
JUDGMENT OF:	Hammerschlag J
DECISION:	The plaintiffs are entitled to the declaratory relief sought and to specific performance; the defendant is to pay the costs of the proceedings.
CATCHWORDS:	CONTRACT – Exercise of an option to purchase land – Exchange of dissimilar counterparts involving disconformity of description of land where identical plan of the land attached to both counterparts – Disconformity did not infect the bargain – Form of notice of exercise where additional contract requested but not required – Construction of condition precedent to exercise of option and whether condition fulfilled – Specific performance sought and granted
LEGISLATION CITED:	Environmental Planning and Assessment Act 1979 (NSW)
CASES CITED:	Georgiou v Sindel (1982) 1 NSWLR 435 Tricontinental Corporation Limited v HDFI Limited (1990) 21 NSWLR 689 Cooper Brookes (Wollongong) Pty Limited v Federal Commissioner of Taxation (1981) 147 CLR 297 Hide & Skin Trading Pty Limited v Oceanic Meat Traders Limited (1990) 20 NSWLR 310 Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389
PARTIES:	Richard John Mordue Lynelle June Mordue Chandi Kroone
FILE NUMBER(S):	SC 5636/2004
COUNSEL:	P R Sternberg (Plaintiffs) P Koroknay (Defendant)
SOLICITORS:	Callachor & Helby (Plaintiffs) McIntosh, Emerton & Thomas (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

HAMMERSCHLAG J

FRIDAY 30 MARCH 2007

5636/2004 RICHARD JOHN MORDUE & LYNELLE JUNE MORDUE v CHANDI KROONE

JUDGMENT

Background

1 This is a vendor purchaser suit in which specific performance is sought of a contract for the sale of land alleged to have been effected by the exercise of an option.

2 By Contract for the Sale of Land (“the Contract”) dated 11 December 1996 the plaintiffs, Richard John Mordue and Lynelle June Mordue (“the Mordues”) sold land being Lot 12 in an unregistered plan being part of Lot 1 Plan 586655 to Hendrik Bayly Kroone and Chandi Kroone (“the Kroones”) for $250,000. The land is situated at Back Yamma Road, Parkes, New South Wales.

3 The plan bringing about a subdivision of Lot 1, was registered on 16 January 1997 and the Contract was completed on 24 January 1997.

4 In 2001 Mr Kroone transferred his interest in Lot 12 to Mrs Kroone and she is accordingly the sole defendant.

5 Under Special Condition 24 of the Contract, the purchasers (the Kroones) granted to the vendors (the Mordues) an option to purchase an area of land consisting of approximately six acres on the following conditions:

“(a) the vendors must give to the purchasers written notice of intention to purchase the said land;
(b) this notice must be given a period of five years following completion of this agreement;
(c) such notice may not be given before the Parkes Shire Council alters the zoning of the area to permit subdivision of areas of less than ten acres;
(d) upon receiving the notice the parties will be treated as having entered into a contract for the sale of the property upon the terms of the attached contract for sale;
(e) this provision shall not merge on completion;
(f) if this option is not exercised within the period specified in (b) above, then the vendors rights hereunder will cease to exist.”

6 Attached to the Contract was a further Contract for the Sale of Land under which the Kroones would sell to the Mordues the land outlined in red on a sketch plan annexed. The counterparts signed by the respective parties are slightly different. The Mordue one says, “The land outlined in red on the sketch plan annexed hereto containing an area of not more than 2ha”. The Kroone one says, “The land outlined in red on the sketch plan annexed hereto containing an area of not more than 2.4 hectares”. (Special Condition 24 of the Contract refers to “Approximately six acres” which is approximately 2.4 hectares).

7 The further contract was referred to by both counsel during the course of the hearing as the “Reconveyance Contract”. I shall use the same name.

8 On 10 December 1996 the Kroones’ solicitors on the purchase, Matthew Williams, wrote to the Mordues’ solicitors Callachor & Helby in the following terms:

“Thank you for sending us the plan of proposed subdivision.
The area contained on that plan was the area being retained by our clients in the event of the option being exercised.
We are forwarding herewith a copy of that plan showing in red edging, what we believe to be the land which will be included in the option agreement. Please let us know if you with this [ sic ] so that we can insert it into the contract and arrange for an early exchange.

Would you also please confirm that the contract for the sale of the land will provide for a purchase price of $250,000.00 with a deposit of 5%.

Upon receipt of your advice regarding these matters, we will arrange for the Purchasers to come to Parkes to sign the contracts, etc.”

9 The response from the Mordues’ solicitors was: “We refer to your letter of 10 December 1996. In each case you are correct”.

10 The exchange occurred with each counterpart of the Contract including the Reconveyance Contract having the red outlined plan attached.

11 The plan shows the proposed further subdivision of the land so as to create three lots out of that sold to the Kroones with new lots 1 and 2 of about one hectare each to be the subject of the Reconveyance Contract.

12 The Reconveyance Contract contains its own special conditions two of which are pertinent, namely, Special Conditions 23 and 24. They provide as follows:

“23. The parties agree that this sale is made pursuant to an agreement between them that the land to be transferred to the purchasers forms part of land originally sold by the purchasers to the vendors. At the time of such sale the subdivision of the land into parcels smaller than 4 hectares was not permitted by the Parkes Shire Council. The parties agree that it was always their intention that, if permitted by Council, the vendors in this agreement would transfer to the purchasers the area of land hereby sold, without further consideration.
24. The parties agree that the purchasers shall meet all costs of subdivision, compliance with Council requirements and reasonable conveyancing costs, together with all costs connected with relocating fencing on the new boundaries following the subdivision.”

13 The completion date under the Reconveyance Contract is the date which is six weeks after the date of this contract. Clause 15 of the Reconveyance Contract provides that the parties must complete by the completion date (being a fixed but inessential date) and that if the parties do not complete by the completion date, a party can serve a notice to complete if that party otherwise is entitled to do so.

14 By letter dated 21 March 2000 from Callachor & Helby to Matthews Williams the Mordues exercised the option in the following terms:

“We refer to Contract which was completed in January 1997. Mr and Mrs Mordue now wish to take up the option contained in that Contract and purchase the area of land referred to in the Contract annexed.
For more as a caution, we enclose a Contract for execution by the Kroones as vendors. We have run out of 1992 forms of Contract and have done our best with the 1996 edition. If this is a problem, please us know.

We have asked Mr Arndell to complete the sub-division and ask that your clients co-operate.”

15 There is no issue between the parties that the option, if there is one, was exercised within time.

16 The letter exercising the option ended off with the statement that the Mordues had asked Mr Arndell (a surveyor) to complete the subdivision and asked the Kroones to co-operate.

17 Time went by and Mr Mordue asked his solicitor to chase the matter up. A letter was sent to the Kroones on 22 January 2002 in the following terms:

“We enclose a copy of letter and contract sent to your Solicitors. Our clients have given Notice of Exercise of the option and wish to purchase the land as provided in option. Please respond immediately. Please see your solicitors.”

18 On 22 January 2002 Callachor & Helby sent a letter to Matthews Williams in the following terms:

“We enclose a copy of letter dated 21 March 2000 in respect of this matter. We have heard from you since [ sic ]. Mr and Mrs Mordue now wish to take up the option, give you notice [ sic ]. They require execution of the contract. A further copy of the contract is attached. Please have your client execute same forthwith.

In view of the fact that we have no previous response, we have sent a copy of this letter direct to the Kroone’s.”

19 The five year period for exercise of the option under Special Condition 24(b) of the Contract expired on 23 January 2002.

20 In the meantime the Mordues left to live in England.

21 On 17 December 2002 their solicitors wrote to the Kroones’ current solicitors Messrs McIntosh Emmerton and Thomas seeking an indication when the Kroones would honour their obligations pursuant to the option and stating that should they fail to do so, proceedings would be commenced to enforce it.

22 The Kroones’ response came via a solicitors’ letter dated 18 December 2002 which said, “Our clients do not believe that there is any entitlement to your clients to a transfer of any lands”.

23 The Mordues seek a declaration that the parties have entered into the Reconveyance Contract and consequential relief that Mrs Kroone do all things necessary on her part to enable them to obtain the subdivision of the land to register a separate title in respect of the parcel.

The Issues

24 The claim is defended on the following bases:

a the notice dated 21 March 2000 exercising the option was “flawed” in that it required the execution of a contract that was not required by Special Condition 24 of the Contract and which contract was different in form to the Reconveyance Contract;

b “a discrepancy” between the description of the option land in the counterparts of the Contract signed by the Mordues and Kroones respectively destroys the bargain;

c the requirement in Special Condition 24(c) of the Contract for the Parkes Shire Council to alter the zoning of the area to permit subdivision of areas of less than ten acres is a condition precedent which was not fulfilled within time (or at all); and

d there is no evidence that the Kroones refused to co-operate in the implementation of the Reconveyance Contract; rather, they were not given an opportunity to do so.

25 Contentions that the Reconveyance Contract was void for uncertainty, was incomplete and did not comply with s 52A of the Conveyancing Act 1919 (NSW) were abandoned by counsel for the Kroones. Counsel also abandoned a proposition that the option, if there was one, was extinguished by the fact that Mrs Kroone herself had mortgaged the land to the Commonwealth Bank.

26 I deal with the issues in turn.

The terms of the option exercise letter dated 21 March 2000

27 In my view this point is unsustainable.

28 Special Condition 24(c) of the Contract provides that “upon receiving the notice the parties will be treated as having entered into a contract of the sale of property upon the terms of the attached Contract for Sale”. No execution of any further contract was needed to bring about the Reconveyance Contract upon exercise of the option.

29 Furthermore, the letter dated 21 March 2000 did not require a different contract for execution. A further contract for execution was included as a caution. What was included was a 1996 edition of the standard Contract for the Sale of Land because the solicitors had run out of the 1992 edition. The Kroones’ solicitors were asked to let the Mordues’ solicitors know if this was a problem. There was no response. The Kroones could legitimately have declined to execute a further instrument. The efficacy of the exercise of the option would have remained unaffected.

Disconformity of description

30 This point is, in my view, also unsustainable. Both contracts had attached the same plan with the same red outline. The only difference was as to the statement of the size of the land so circumscribed.

31 There was no disconformity in identification of what it was which was being sold.

32 In any event, the proper conclusion to be drawn from the exchange and the correspondence which preceded it is that the parties had negotiated all the terms of their bargain including by precisely identifying the land by the red outlined plan, and intended to seal it by investing it with the binding force of a contract, which they did by exchange: see Georgiou v Sindel (1982) 1 NSWLR 435 at 449 per Glass JA and at 459 per Samuels JA. The disconformity, insofar as there is one, did not infect the bargain they had made.

Zoning and the condition precedent

33 This point has more substance.

34 As set out above, Special Condition 24(c) of the Contract provides that the option may not be exercised before the Parkes Shire Council (“the council”) alters the zoning of the area to permit subdivision of areas of less than ten acres.

35 It is common ground that the area into which the land in question falls is zoned No 1(c) (Rural (Small Holdings) Zone) under the Parkes Local Environmental Plan 1990 (“the LEP”) made under the Environmental Planning and Assessment Act 1979 (NSW) (“the EPA”).

36 It is also common ground that at no time has that zoning changed.

37 Clause 15 of the LEP contains, and has throughout contained, the following provisions:

“Development on land within Zone No. 1(c)
(1) Subject to this clause, the council shall not consent to the subdivision of land within Zone No 1(c) unless each proposed allotment has an area determined by the council having regard to:
(a) the availability of reticulated water services or, if those services are unavailable, the capacity of the land to provide an adequate domestic water supply without adversely affecting any existing surrounding and down stream water supply,
(b) …
(2) Subject to sub-clause (3), the council shall not consent to the subdivision of land within Zone No 1(c) which creates allotments intended to be used for the erection of dwelling-houses if those allotments have an area of less than:
(a) in the case of an allotment to be connected to a reticulated water supply – 8000 square metres, or
(b) in any other case – 4 hectares.
(3) The council may determine a different minimum allotment size from that specified in sub-clause (2), whether in a development control plan or otherwise, having regard to the matters referred to in sub-clause (1).”

38 Counsel for both parties accepted that the event required by Special Condition 24(c) of the Contract is a condition precedent: see Tricontinental Corporation Limited v HDFI Limited (1990) 21 NSWLR 689 at 705 per Samuels JA.

39 The LEP is an environmental planning instrument under the provisions of the EPA which, under s 70 of the EPA, is made by the Minister. The zoning of an area as that term is used in the LEP is thus determined by the Minister when the LEP is gazetted. It is not something which the council itself could have changed. Moreover the council always had the power, by virtue of cl 15(3) of the LEP, to permit a subdivision of less than four hectares without a re-zoning in that sense, occurring. If Special Condition 24(c) of the Contract is to be construed as requiring re-zoning proper, it is based on a misconception of the law. Such a construction would be absurd and should be avoided: Cooper Brookes (Wollongong) Pty Limited v Federal Commissioner of Taxation (1981) 147 CLR 297; Hide & Skin Trading Pty Limited v Oceanic Meat Traders Limited (1990) 20 NSWLR 310 at 313 and 314. The court is to construe commercial contracts fairly and broadly without being too astute or subtle in finding defects. In construing a provision of a contract, regard is to be had to the whole of the instrument so as to render the words of every clause harmonious with every other: Australian Broadcasting Commission v Australasian Performing Right AssociationLtd (1973) 129 CLR 99 at 109 – 110 per Gibbs J.

40 What then, if anything, did Special Condition 24(c) of the Contract require?

41 Special Condition 24(c) of the Contract refers to areas “of less than ten acres”. Ten acres approximates four hectares. Special Condition 23 of the Reconveyance Contract records the parties’ understanding at the time of the Contract that the subdivision of the land into parcels smaller than four hectares was not permitted by the council. It records that it was always the parties’ intention that, if permitted by council, the vendors would transfer “the land hereby sold, without further consideration”.

42 Both the four hectares reference in Special Condition 23 of the Reconveyance Contract and the ten acres reference in Special Condition 24(c) of the Contract seem clearly to be references to the four hectares minimum in cl 15(2) of the LEP. Counsel for both parties accepted that this was the position.

43 The parties clearly perceived that there was, at the time of the Contract, a council control barrier in the way of a subdivision creating an allotment of less than four hectares. It is removal of that four hectare minimum allotment barrier by some act of council that is contemplated by Special Condition 24(c) of the Contract. It seems to me that what was contemplated was an act by council changing its position, that change being a reduction in the four hectare minimum (being more than the subdivision here contemplated) to one where the minimum is less than the subdivision here contemplated.

44 Did such an act occur?

45 In the circumstances of this case the only candidate for such act on the part of the council is the issue by it in 1998 of an instrument entitled “Parkes Shire Council Rural Small Holdings Development Control Plan, 1998” (“the DCP”).

46 Paragraph 1.2 of the DCP states that its purpose is to provide guidance to persons wishing to develop property which is zoned No 1(c) (Rural (Small Holdings) Zone), to record council’s intentions for rural small holdings development and to form the basis for negotiation in the event that a departure from the provisions of the DCP is necessary.

47 Paragraph 1.7 of the DCP provides that council may consent to an application which departs from the provisions of the DCP, but only where it can be demonstrated that due to special or unusual site conditions, and subject to the relevant objectives being satisfied, the variation will yield a better planning solution for the site.

48 The DCP makes reference to the Parkes Reticulated Water Supply Scheme which apparently came into effect after the date of the Contract and, it seems, by virtue of the DCP.

49 Paragraph 3.1 entitled “Water Supply” provides that land within the catchment of the Parkes Reticulated Water Supply Scheme may be connected to that scheme provided the subdivider meets the full costs of mains extensions, individual water connections and any applicable head works contributions. The DCP has, as appendix B, a map showing the extent of the Parkes Reticulated Water Supply Scheme.

50 The land here is within the area of the Scheme.

51 The term “reticulated water supply” is defined in par 1.6 of the DCP to mean:

“an integrated distribution network of water mains and facilities with minimum 100 millimetre diameter water mains…and caters for development in the locality but does not include those mains which have been constructed to provide the supply of water from a bulk source to a reticulated area .”

52 The critical provision is in chapter 2 of the DCP which is entitled “Subdivisions”. Paragraph no 2.1 headed “Site Area Requirements” provides as follows:

“The minimum lot size (where a dwelling is proposed) shall be 4 hectares. The lot size may be reduced to 1 hectare where reticulated water supply can and will be made available to the subdivision. Reference should be made to appendix B to this DCP to determine the extent of the Parkes Reticulated Water Supply Scheme.”

53 Did council’s act in issuing the DCP come within the description of the act required by Special Condition 24(c) of the Contract? Put another way, did it operate on the four hectare minimum allotment in cl 15(2) of the LEP so as to permit subdivision of areas of less than ten acres?

54 Counsel for the Kroones put, with some force, that:

a Firstly, the notion of “zoning” can extend, in general terminology, to the regulation of lot sizes in a particular area. The DCP changed nothing with respect to the regulation of lot sizes in this area, in fact it raised the threshold. Whereas under cl 15(2) of the LEP there was a minimum allotment size of 8,000 square metres (i.e. less than one hectare) in the case of an allotment to be connected to a reticulated water supply, the DCP minimum is one hectare where reticulated water supply can and will be made available to the subdivision. An associated proposition was put that cl 15(2) of the LEP contained a development standard as defined in s 4 of the EPA which standard is, by virtue of cl 15(3) of the LEP, susceptible to dispensation by the council, and the council did no such thing by way of the DCP here;

b Secondly, Special Condition 24(c) of the Contract required the council to permit the particular subdivision contemplated here. This could occur by means of a development control plan or development consent directed to this particular proposed subdivision; and

c Thirdly, as a fall back position, if the DCP was such an act by council the Mordues would have had to establish before the option was exercised, that reticulated water not only could but would be made available to this subdivision.

55 As to the first submission, as I have said above, in Special Condition 24(c) of the Contract, the parties meant something different from “zoning” in the conventional sense. That part of the submission is uncontroversial. Clause 15(3) of the LEP contemplates a change to the primary position in cl 15(2) by development control plan or otherwise (i.e. ad hoc). The question is whether the DCP operated on the four hectare minimum in cl 15(2) so as to reduce it. In my view it did. Just as the ten acres reference in Special Condition 24(c) of the Contract and the four hectares reference in Special Condition 23 of the Reconveyance Contract are clear references to cl 15(2)(b) of the LEP, so is the four hectare reference in par 2.1 of the DCP a reference to that provision of the LEP. Paragraph 2.1 of the DCP states that that minimum lot size (of four hectares) “may be reduced to 1 hectare where reticulated water can and will be made available to the subdivision”. In its terms it is directed to the four hectare minimum and to a reduction of that minimum. The lot size which may be reduced is that of four hectares. There is no reference in the DCP to the 8,000 square metres provision in cl 15(2)(a) of the LEP.

56 It seems clear that the reduction provided for in the terms it was, came about because of the establishment of the Parkes Reticulated Water Supply Scheme which occurred between the Contract and the date the option was purportedly exercised. Paragraph 2.1 of the DCP states that “[r]eference should be made to appendix B to this DCP to determine the extent of the Parkes Reticulated Water Supply Scheme”.

57 The evidence, unchallenged, of the General Manager of the council for the last 15 years, Mr Alan McCormack, was that he has had responsibility for supervising the assessment of a number of subdivisions in the area in recent years and that developers have provided reticulated water systems to other nearby blocks and whilst it may be expensive to provide it there is no reason why the reticulated water system could not be provided at developer’s expense to this land. He said further that traditionally developers either engage council to provide the water system or engage some contractors of their own to provide the reticulated water system in accordance with council specification.

58 State Environmental Planning Policy No.1 – Development Standards is an environmental planning instrument under the EPA. The policy states its aim to be to provide flexibility in the application of planning controls operating by virtue of development standards, in circumstances where strict compliance with those standards would, in any particular case, be unreasonable or unnecessary or tend to hinder the attainment of the objects specified in subss 5(a)(i) and (ii) of the EPA which are, in broad terms, the proper management of resources including water and the promotion and co-ordination of the orderly and economic use and development of land. “Development standards” is a term defined in s 4(1) of the EPA. They are provisions of an environmental planning instrument under which requirements are specified or standards fixed in respect of a development, which includes (by virtue of the definition of “development” – also in s 4(1)) the subdivision of land. The policy provides that a consent authority (in this case the council) may consent to a development notwithstanding that it may not be in compliance with the relevant development standard. Here, the development standard is cl 15 of the LEP which itself, in cl 15(3) provides for dispensation by the council from compliance by way of a development control plan or otherwise. A development control plan is a plan prepared under Div 6 of Pt 3 of the EPA. Under s 74D(1) of the EPA an environmental planning instrument may permit a development control plan to be prepared before any particular development or kind of development may be carried out and it may outline the development of all the land to which it applies. Cl 15(3) of the LEP clearly enabled a development control plan to be made with respect to an area including the land here and did not require an instrument specific to this land, and this land only. The DCP was effective to modify the development standards in cl 15(2) so far as it applied to this land.

59 The DCP was a mechanism for varying control of the “zone” constituted by the Parkes Reticulated Water Supply Scheme, marking a shift from the prime position under the LEP to one where the four hectare minimum could be reduced to a one hectare minimum where reticulated water “can and will be made available to the subdivision”. Whilst the reduced lot size referred to in par 2.1 under the DCP may be greater than the 8,000 square metres minimum referred to in cl 15(2)(a) of the LEP, the terms of the Contract and the Reconveyance Contract contemplated a change to the four hectare minimum which has, in terms, occurred. This has occurred by development control plan, one of the methods of change expressly contemplated by cl 15(3) of the LEP. This in my view constitutes fulfilment of the condition in Special Condition 24(c) of the Contract and therefore removal of the barrier to the exercise of the option.

60 Finally, it was put by counsel for the Mordues that the correct and sensible approach to the construction of Special Condition 24(c) was that it did not confer any right but provided an impediment because of a perceived planning control limitation and the Court should strain to give the option effect if that impediment is not there. There is force in this submission. On the uncontested facts, the subdivision is permissible.

61 As to the second submission, I do not agree that Special Condition 24(c) of the Contract required the act of council to relate specifically to the land here, that is, by instrument directed to this particular proposed subdivision. Special Condition 24(c) of the Contract refers to the zoning of the area to permit subdivision of “areas” which indicates, in my view, an act with respect to an area of land into which this subdivision would fall, not the subdivision itself. It is sufficient that the DCP applied to this land. It is immaterial that it also applied to other land.

62 The terms of Special Condition 24(c) of the Contract are in contrast to Special Condition 23 of the Reconveyance Contract which refers to this specific land and, with respect to this proposed subdivision, records that “if permitted by Council, the vendors in this agreement would transfer to the purchasers the area of land hereby sold, without further consideration” (emphasis added). Special Condition 23 of the Reconveyance Contract requires specific permission by council for this subdivision which is in any event necessary for the option land to be transferred. Under Special Condition 24 of the Reconveyance Contract, the Mordues would have to meet all costs of the subdivision and compliance with council’s requirements.

63 The DCP had particular reference to only that part of zone No 1(c) (Rural (Small Holdings) Zone) covered by the Parkes Reticulated Water Supply Scheme.

64 As to the third submission, the effect of the fall back position is to give Special Condition 24(c) of the Contract a construction, which in the events that have happened, would mean that the Mordues would have had to procure reticulated water to the potential subdivision without any approval or degree of certainty that the subdivision would occur, rather than do so as a condition which might be imposed by council of an approval for that subdivision. Paragraph 2.1 of the DCP refers to where reticulated water supply can and will be made available. It does not require water supply to have already been made available. The council could be satisfied at the time of determining a development application that water will in due course be supplied.

65 I consider it to be a far more sensible construction that the Mordues would be required to do what council required to effect the subdivision and if that meant putting in water they would have to do it.

66 For the Reconveyance Contract to be implemented council would always have to approve the subdivision in any event.

67 Further, under par 1.7 of the DCP itself there is scope for dispensation by the council similar to the discretionary override provision in cl 15(3) of the LEP.

68 Council can, and on the present evidence is likely, to make it a condition of the subdivision that reticulated water be made available. It could, however, dispose with that requirement.

69 The Mordues will have to meet all costs of the subdivision and compliance with council requirements as required by Special Condition 24 of the Reconveyance Contract which may and probably will in this case include satisfying council that reticulated water will be provided to the site.

70 If they fail to satisfy council or if council does not dispense with the requirement as contemplated by par 1.7 of the DCP, the subdivision will fail and performance of the Reconveyance Contract will become impossible.

71 In my view the barrier erected in Special Condition 24(c) of the Contract was removed by the DCP and the Mordues were entitled to exercise the option upon its publication.

Co-operation

72 It was put by counsel for the Kroones that there was no evidence they had not co-operated or would not co-operate with the Mordues in carrying out the Reconveyance Contract, rather they had been given no opportunity to co-operate. I reject this submission.

73 The Kroones have defended these proceedings including on bases which had no substance and which were appropriately abandoned.

74 They did not respond to demands from the Mordues to co-operate and gave no basis for their position in the letter from their solicitors dated 18 December 2002.

75 In my view it is clear that at no time did they intend to co-operate with respect to the subdivision.

76 In the affidavit of Mrs Kroone sworn 12 August 2005 nothing was said by her which would indicate any willingness at any time on her part to co-operate in implementing the Reconveyance Contract. In addition, an adverse inference in that regard is available against her: Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418 per Handley JA.

Conclusion

77 The plaintiffs are entitled to the declaratory relief sought and to specific performance.

78 The parties should bring in Short Minutes to reflect these orders.

79 The defendant is to pay the costs of the proceedings.

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