Mulkearns v Chandos Developments Pty Ltd (No 4)

[2005] NSWSC 511

CITATION:	Mulkearns v Chandos Developments Pty Ltd (No 4) [2005] NSWSC 511
HEARING DATE(S):	09/03/05
JUDGMENT DATE :	1 June 2005
JURISDICTION:	Equity Division
JUDGMENT OF:	Young CJ in Eq
DECISION:	Defendant to pay second plaintiff $297,209.

CATCHWORDS:	CONVEYANCING [74][95]- Breach- Vendor paid licence fees for occupation of purchaser- Fees to be deducted from balance of purchase monies- Breach by purchaser- Whether recovery allowed to purchaser- Whether purchaser to be compensated for increase in value of property because of improvements made whilst in possession- Whether deposit should be forfeited. ESTOPPEL [41]- Election- Forensic election- Plaintiff chose not to pursue claim for deposit at original hearing- No evidence that plaintiff needed to choose between two inconsistent courses. EVIDENCE [96]- Without prejudice offer of settlement- Admissible for purpose of contradicting evidence that may mislead Court- Evidence Act 1995, s 131(2)(g). PROCEDURE [107]- Notice of motion- Return of deposit- Capacity of Court to hear motion for return of deposit where claim not made in original specific performance suit- Preferable for deposit claim to be heard simultaneously with specific performance suit but not imperative.
LEGISLATION CITED:	Conveyancing Act 1919, s 55(2A) Evidence Act 1995, s 131 Law of Property Act 1925 (Eng), s 49(2) Supreme Court Act 1970, s 63 Trade Practices Act 1974 (Cth)
CASES CITED:	Bennett v Stuart (1927) 27 SR (NSW) 317 Benyon v Wongala Holdings Pty Ltd (1999) 9 BPR 16,781 Bernard v Weingarth (1997) 8 BPR 15,651 Berry v Mahony [1933] VLR 314 Brown v Federal Commissioner of Taxation (2001) 187 ALR 714 Carringville Pty Ltd v The Gatto Group Pty Ltd (2003) 11 BPR 21,069 Clancy v Salienta Pty Ltd (2000) 11 BPR 20,425 Clarke v Dilberovic (1982) NSW Conv R 55-083 Clurstock Pty Ltd v Timanu Pty Ltd (1988) NSW Conv R 55-419 Eighth SRJ Pty Ltd v Merity (1997) 7 BPR 15,189 Forgeard v Shanahan (1994) 35 NSWLR 206 Harkins v Butcher (2002) 55 NSWLR 558 Hasanovic v Polistena (1982) NSW Conv R 55-078 Heyman v Darwins Ltd [1942] AC 356 Howe v Smith (1884) 27 Ch D 89 Huber v Conroy [1982] 2 NSWLR 143 Hythe Corp v East (1866) LR 1 Eq 620 Inmer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26 James Macara Ltd v Barclay [1944] 2 All ER 31 James Macara Ltd v Barclay [1945] KB 148 Laird v Pim (1841) 7 M & W 474; 151 ER 852 Lexane Pty Ltd v Highfern Pty Ltd [1985] 1 Qd R 446 Lucantonio v Ciofuli (2003) 11 BPR 21,181 Lucas & Tait (Investments) Pty Ltd v Victoria Securities Ltd [1973] 2 NSWLR 268 McDonald v Dennys Lascelles Ltd (1993) 48 CLR 457 One Spencer St Pty Ltd v Maryland International Pty Ltd [2005] NSWSC 275 PC Developments Pty Ltd v Revell (1991) 22 NSWLR 615 Poort v Development Underwriting (Victoria) Pty Ltd [1976] VR 779 Poort v Development Underwriting (Victoria) Pty Ltd (No 2) [1977] VR 454 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 Pratt v Hawkins (1991) 32 NSWLR 319 Ramsden v Dyson (1866) LR 1 HL 129 Romanos v Pentagold Investments Pty Ltd (2003) 77 ALJR 1882 Schindler v Pigault (1975) 30 P & CR 328 Shevill v Builders Licensing Board (1980) 2 BPR 9662 Shevill v Builders Licensing Board (1982) 149 CLR 620 Southcomb v Exeter (Bishop) (1847) 6 Hare 213; 67 ER 1145 Sunstar Fruit Pty Ltd v Cosmo [1995] 2 Qd R 214 Tanwar Enterprises Pty Ltd v Cauchi (2002) NSW Conv R 55-994 Tanwar Enterprises Pty Ltd v Cauchi (2003) 77 ALJR 1853 Terry v Permanent Trustee Australia Ltd (1995) 6 BPR 14,091 Timanu Pty Ltd v Clurstock (1988) 15 NSWLR 338 Todd v Gee (1810) 17 Ves 273; 34 ER 106 Universal Corp v Five Ways Properties Ltd [1978] 3 All ER 1131 Universal Corp v Five Ways Properties Ltd [1979] 1 All ER 552 Webster v Havyn Pty Ltd [2004] NSWSC 227 Westmacott v Robins (1862) 4 De GF & J 390; 45 ER 1234 Wight v Foran (1987) 11 NSWLR 470
PARTIES:	Anthony Michael Mulkearns and High Forest Estate Pty Ltd (P) Chandos Developments Pty Limited (D)
FILE NUMBER(S):	SC 4016/03
COUNSEL:	V R Gray (P) C A Sweeney QC (D)
SOLICITORS:	Leverage Australia (P) Stephen Noss & Associates (D)

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

YOUNG CJ in EQ

Wednesday 1 June 2005

4016/03 – MULKEARNS v CHANDOS DEVELOPMENTS PTY LTD (NO 4)

JUDGMENT

1 HIS HONOUR: I gave reasons for judgment on 3 December 2003 dismissing the plaintiffs' suit for specific performance. These are coded [2003] NSWSC 1132. I will refer to them as "Reasons - Set 1".

2 I should note that the first plaintiff was only a party to the suit to provide some sort of security for costs and has no real part to play in the case otherwise. I will, however, generally refer to "the plaintiffs".

3 The basal facts are that the second plaintiff, as purchaser, had sought to enforce a contract to buy 925-937 Old Northern Road Dural for $2,500,000.00. The contract which was in the 2000 edition of the standard form provided for the second plaintiff to go into possession, paying an occupation fee. The date for completion in the events which happened was 4 July 2003.

4 Whilst in possession, the plaintiffs expended monies on renovation to buildings and development work.

5 The plaintiffs failed to complete, the vendor terminated the contract and as I have said, the plaintiffs failed in their suit for specific performance.

6 In paragraphs 75 and 76 of my reasons, I noted that I did not consider the case was an exceptional one for which I should give relief against forfeiture. However I said:

" … had the purchaser asked for relief against penalty rather than for relief against forfeiture, the probabilities may well be that it would have got relief as to say $274,000. … again it may be that there was some restitutionary remedy available to the plaintiffs, and indeed, that may possibly still be open."

7 I directed that my order not be taken out for 14 days with liberty to either party to file a notice of motion to take up any of these issues before I became functus.

8 On 17 December 2003 the plaintiffs issued a notice of motion seeking relief against forfeiture of the deposit and equitable compensation.

9 From time to time over the last eleven months there have been many attempts to refine what the plaintiffs were really claiming. There was also an indication from the defendant that it would move to strike out the additional claims on the basis that the whole of the matter had been considered in my earlier judgment and it was now too late for the plaintiffs to raise additional matters. In the end, no such motion was filed but the defendant made that argument on the hearing of the motion.

10 In simple terms, the plaintiffs' present claims are:

(a) For return of the deposit;
(b) For compensation:
(i) with respect to money paid by the plaintiffs for licence or occupation fees; and
(ii) with respect to the increase in value attributable to work done by the plaintiffs on the property which has resulted in a net increase in the value of the property.

11 The hearing of the motion came on before me on 15 October 2004. On that occasion Mr V R W Gray of counsel appeared for the plaintiffs and Mr C A Sweeney QC and Mr W Hodgekiss appeared for the defendant.

12 I gave reasons for judgment on 30 November 2004 which were coded [2004] NSWSC 1147. I will refer to these as "Reasons - Set 2".

13 The matter was listed on 7 December 2004 for the purpose of settling the short minutes of order. On that occasion, counsel pointed out a serious mathematical error in the reasons. As this error might well have affected the part of the reasons dealing with the exercise of discretion as to return of the deposit, I felt that I had no option but to withdraw the reasons. No-one objected to this course and I did so.

14 The matter was then fixed for further argument on 9 March 2005. On that occasion, counsel again addressed on the evidence and the law. Indeed, contrary to my expectation, the argument was not confined to the matters that had concerned me in December. Perhaps this was because I had not clearly voiced those concerns. I then reserved judgment.

15 Indeed, the argument in March went beyond what I considered was legitimate for reconsideration of the matters dealt with in my November reasons. Both leading counsel kept reminding me that I should not allow matters already decided to be reopened nor to permit cases to expand beyond the points to be reconsidered. I agree with this general approach and thus will, accordingly, make no mention in these reasons to matters such as whether the plaintiffs breached the Trade Practices Act 1974 (Cth) and the like. I will confine myself to re-evaluating the matters referred to in my November reasons in light of the facts now exposed before me.

16 I had prepared my final draft of these reasons in late March. However, I was alerted to the fact that the defendant wished to file a motion to reopen its case. I thus stopped work on the reasons.

17 In April 2005, a motion was filed by the defendant to reopen and adduce further evidence. I heard submissions on that motion on 28 April 2005.

18 On 30 May 2005, I dismissed the motion for the reasons I then gave, which were coded [2005] NSWSC 504. I will refer to these as "Reasons - Set 3".

19 These present reasons ("Reasons - Set 4") are thus a revised and corrected version of Reasons - Set 2 and, in addition, they deal with the matters argued more fully in March this year.

20 Reasons-Set 4 are in respect of the plaintiffs’ motion filed 17 December 2003, referred to earlier.

21 The parties provided points of claim and points of defence. The former set out the three claims being made. The latter essentially claimed that the plaintiffs were estopped from pursuing or alternatively had elected not to pursue these claims and, if those points were found against the defendant, submitted that no orders should be made on the motion.

22 I will not repeat the facts I found in Reasons - Set 1. In addition to those facts, some further facts need to be found. These are uncontroversial and either have come from the original evidence, but did not appear to be of great significance when I wrote my earlier reasons, or alternatively, have appeared in the further evidence that has been given on the motion.

(i) The plaintiffs are experienced in land development.
(ii) There is nothing that the plaintiffs did in and about the property which was in any way induced by the defendant.
(iii) The second plaintiff had no contractual right to carry out any development work or renovations on the property.
(iv) The defendant knew that the plaintiffs were in fact carrying out at least renovation works on the property.
(v) The value of the property increased as a result of the works that were done by the plaintiffs. The extent to which the value increased was a matter of disputed evidence between the valuers, but there is no doubt that there was some increase in value.
(vi) The cost of the works exceeded the increase in value.

23 There was one disputed matter of fact. The plaintiffs alleged that they had paid occupation fees of $300,000 up to 4 July 2003 and a further $75,000 for the period 5 July to 18 December 2003.

24 The defendant did not admit this. It says that the plaintiffs paid a total of $85,000 in respect of the instalments of $105,000 due up to mid-2003 and then a further $215,000 on 22 September 2003 to comply with Windeyer J’s order together with some interest. This totals $300,000.

25 The defendant’s version is verified by an affidavit of Mr Hill and appears to me to be correct. The difference appears to be because, as mentioned in Reasons - Set 1, there was tender of an additional occupation fee after that time which was refused, because the vendor took the view that the fee was capped at $300,000.

26 The way in which I must approach the matter is to deal with the matters seriatim under the following heads:

(1) Is it open to the Court to deal with this motion?

(2) Are the plaintiffs barred by any election?

(3) Whether DXO5 should be rejected as evidence on the ground that it is a communication made for the purpose of settling litigation;

(4) Should the plaintiffs have relief in respect of the occupation fee that they have paid?

(5) Should the plaintiffs receive equitable compensation for the increase in value attributable to their work on the property?

(6) Should the plaintiffs have relief against forfeiture of the deposit?

(7) The construction of special condition 45 of the contract;

(8) How must the costs of the motion be borne?

(9) What further orders, if any, should be made?

27 (1) As I have said, there were some months of indecision as to whether the Court was functus and thus lacked capacity to deal with the matters raised in the motion. I strongly suggested to the defendant that if it wished to pursue this line it should file a motion to strike out the claims of the notice of motion or for some sort of summary dismissal. In the end it elected not to do so but to raise the matter at the hearing.

28 Section 63 of the Supreme Court Act 1970 requires the Court to deal with all matters in dispute in the one set of proceedings if at all possible. It seemed to me at the end of the previous hearing that there were, what I might call "loose ends", and that it was far more efficient to tie up those loose ends now rather than to trouble the Court of Appeal or to have a separate new suit. There was no consent by the defendant to this course, but there was, I believe, in not taking up my suggestion to move to strike out, a grudging acquiescence, though I place no significance on this.

29 I had made no final orders in the proceedings at the time the motion was filed. It is within the competence of the Court when dealing with 90% of the issues to point out that there are some minor issues which should be dealt with and I have no doubt at all that the matter was within my competence to deal with in the way in which I have dealt with it.

30 I understood from the argument in 2004 that the resistance to me dealing with the matters relating to s 55(2A) of the Conveyancing Act 1919 and related matters was not strongly pressed and indeed, I felt that very little was put to me other than formal submissions to support the view that the plaintiffs should not be permitted to raise these matters after my first set of reasons had been delivered.

31 However, in the 2005 submissions, I was informed by Mr Sweeney that submissions had been strongly made and that I had not considered them satisfactorily in my November 2004 reasons.

32 I will not debate this proposition. All I will say is that the defendant’s argument was far better presented in March than it was last year or else, I understood it better. Whatever be the case, I will now consider the argument as clearly presented to me in March 2005.

33 Before I do so, however, I note that both sides submitted from time to time that the other side should not be permitted to reargue what had already been decided. I agree with this submission as a matter of principle. However, from time to time cases go off the rails, mostly through circumstances rather than fault, and, when that occurs, the Court has to do its best to rerail it, even though that may mean that parties have "two bites at the cherry".

34 Allowing reargument is not a course that I would normally take, but when situations like this arise I believe it is my duty, despite the difficulties, to ensure as much as I can that each side has had a fair hearing.

35 Mr Sweeney says that a purchaser thinking of seeking relief under section 55(2A) of the Conveyancing Act or of seeking relief by way of return of the deposit, must make those claims in its originating process or not at all. He says that this has always been the rule and that to adopt any other course opens the door to a purchaser to abuse.

36 He says that the purchaser must put itself in the position of making alternate claims, (a) for specific performance and (b) if that is unsuccessful, for return of the deposit. This puts the purchaser at a forensic disadvantage as it has to blow hot and cold. The purchaser should not be able to avoid this dilemma by first testing the water in the specific performance suit and then afterwards seeking the alternate relief.

37 He then added a bit of fire to those submissions by painting the picture of Mr Mulkearns as a gambler specializing in brinkmanship who lost his primary gamble of delaying the settlement as long as he thought he could and then took the gamble of mounting a specific performance suit without a back up application for return of the deposit. Appreciating this, Mr Sweeney says, assists the Court in seeing that there was a deliberate original decision not to seek return of the deposit and that it would be unjust to allow the purchaser now to do so.

38 Mr Sweeney put that although this was not an actual Anshun situation (Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589) it was closely analogous to it.

39 In order to evaluate this submission, I need to delve into the history of proceedings in equity to recover deposits.

40 As Fry on Specific Performance 6th ed (1921) notes in para 1492, prior to Lord Eldon’s decision in Todd v Gee (1810) 17 Ves 273; 34 ER 106, there was some uncertainty as to whether a purchaser could in a suit for specific performance seek in the alternative an enquiry as to damages. Part of the problem, of course, was that prior to 1852, equity may have had limited jurisdiction to award common law damages. In that case, Lord Eldon ruled that a purchaser could seek alternative equitable relief either for equitable compensation or for a declaration that he had an equitable lien on the subject property for the deposit.

41 However, the purchaser was not bound to seek relief in the primary bill, but might seek relief by way of supplemental bill: Westmacott v Robins (1862) 4 De GF & J 390; 45 ER 1234.

42 It must be noted that, before the Chancery Reforms of 1852, a purchaser could fail to gain the equitable remedy of specific performance because of delay or a successful equitable defence. The purchaser would then have to commence fresh proceedings at law for damages. It thus followed, that the vendor could not forfeit the deposit merely because the purchaser failed to gain specific performance, but only if the purchaser had repudiated the contract at law; see Fry op cit para 1487.

43 Even after these reforms, equity would not allow claims to be made after it had made a final decree for specific performance where the defendant had fled the country rather than obey it, as an order for damages may involve facts occurring after the decree; Hythe Corp v East (1866) LR 1 Eq 620. There did not seem to be any other prohibition on supplemental orders.

44 In Benyon v Wongala Holdings Pty Ltd (1999) 9 BPR 16,781 at 16,785, Powell JA said that, before 1920, equity could order the return of a deposit if (a) the purchaser was entitled to and did in fact rescind the contract; or (b) the vendor could not make title, but not where the contract went off by the purchaser’s own default: Howe v Smith (1884) 27 Ch D 89.

45 It would seem that, in practice, equity might in its discretion order return of the deposit in a wider class of case such as where a vendor’s suit failed for laches and the purchaser could show that the Court’s decree effectively deprived the vendor of a remedy at law; see Southcomb v Exeter (Bishop) (1847) 6 Hare 213; 67 ER 1145. However, the exact ambit of the jurisdiction is not material to the present decision.

46 Section 55 of the Conveyancing Act was introduced in 1920. Commissioner Sir John Harvey noted (see Butterworths Conveyancing Service NSW, Vol 2 p 3508), “55 corrects … an anomaly of the law, that a vendor of land should be entitled to retain the deposit paid on a contract which the Court of Equity holds ought not to be enforced against the purchaser by reason of a defect in the vendor’s title. If the defect is of such a nature that the Court of Equity thinks the contract should not be enforced, in my judgment the court ought to be able to go further and order the deposit to be refunded.”

47 It was soon perceived that s 55(2), as enacted in 1919 was inadequate to deal with cases where the problem did not involve a defect of title; see Bennett v Stuart (1927) 27 SR (NSW) 317. In 1930, NSW adopted a supplementary provision which became s 55(2A) from the English Law of Property Act 1925 s 49(2).

48 Section 55(2A) of the Conveyancing Act 1919, so far as is relevant, provides as follows:

"In every case where the court refuses to grant specific performance of a contract … the court may, if it thinks fit, order the repayment of any deposit with or without interest thereon."

49 Modern procedure is that all issues between the parties over the subject matter of the dispute should be dealt with by the Court in the same proceedings, see Supreme Court Act 1970, s 63. Thus, in vendor and purchaser disputes one usually sees somewhere in the pleadings an application for return of the deposit at common law or under s 55(2A).

50 In Huber v Conroy [1982] 1 NSWLR 143 at 149, Holland J reacted to an application under the subsection being made orally in closing submissions and said that there must be due warning of such an application. He noted that it was not satisfactory to say that, as the evidence had closed, the opponent was not prejudiced as the evidence of the opponent might have taken a different course had the application been foreshadowed. However, on the facts, his honour held the application hopeless, so that he did not expand on the problem.

51 It is instructive to look at the encyclopaedias of court forms setting out precedents showing how the experts in pleadings suggest a claim under section 55(2A) should be made. None of the standard precedent books in NSW or England appear to contain a form of claim for specific performance by a purchaser in which there is an alternative claim for relief against forfeiture of the deposit.

52 After considering the cases and materials referred to above, I conclude that, whilst it is preferable for claims under s 55(2A) of the Conveyancing Act to be litigated along with the claim for specific performance, it is not imperative for that to occur.

53 It may be, as in Huber v Conroy, that it is unfair to consider a late claim under the sub-section without allowing the opponent the opportunity to reconsider the evidence it would wish to call or whether it would wish to recall a witness for further cross-examination. That problem does not occur in the present case as opportunity was given for further facts to be considered.

54 It follows that Mr Sweeney’s challenge to the competence of the motion on this ground must be rejected.

55 (2) Election. Mr Sweeney also submitted that the motion should be dismissed because of the elections made by the plaintiffs at the original hearing.

56 He made two discrete submissions about election. The first was that there had been a forensic election by the plaintiffs not to pursue their claim for the return of the deposit. The second was that the plaintiffs had made a forensic election at the time this matter came before Windeyer J at an interlocutory hearing from which they should not be permitted to depart.

57 As to the first, Mr Sweeney put that the plaintiffs were represented by competent counsel and solicitors who knew how trials had to be conducted. In all lawsuits parties have to choose whether to run all possible lines or be selective. The forensic tactic adopted by the plaintiffs was an all-or-nothing approach. They wanted specific performance: nothing else would suffice. It is forensically awkward to insist on specific performance, but then say, "Well, if the court will not give me that, how about returning the deposit?" The plaintiffs chose only to pursue the former. They thus elected against endeavouring to recover the deposit.

58 The function of the law of election at common law is that if A makes an unequivocal choice between two courses of action and communicates that choice to B, B is entitled to rely on A’s deliberate choice with confidence (see Spencer Bower, Estoppel by Representation, 4th ed (LexisNexis, London, 2004) p359).

59 I am not satisfied on the facts that by the way the case was conducted, what the plaintiffs did comes anywhere near this class of conduct. I cannot see that the material demonstrates any deliberate choice as required, or communication of that choice. The conduct of the plaintiffs is really all that is relied on to establish election, and that does not demonstrate a clear choice. Thus I do not find that any such forensic election was made.

60 The second limb of the submission is based on the fact that when the parties were before Windeyer J for interlocutory relief, the plaintiffs were virtually given the option of either paying to the vendor all that was then owing or else giving up the claim for interlocutory relief. They chose the former. Mr Sweeney says that that amounted to an election not to pursue the remedies for return of those moneys if the case went against the plaintiffs.

61 Again, I cannot see the material here to find election. This was not a case where the plaintiffs were required to decide which of two inconsistent courses to adopt; Inmer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26.

62 Accordingly I reject the claim that the Court should not hear the motion.

63 (3) The next question that arises is the admissibility of DX05. This is a statement of a without prejudice offer made for the previous hearing which was rejected, that the plaintiffs could have $350,000 in full settlement of the proceedings. Mr Gray objects to its tender on the basis that it is clearly a without prejudice document, the offer was not accepted and accordingly it is privileged.

64 Mr Sweeney puts that here the plaintiffs are saying that the defendant behaved unconscionably. It is most relevant that the Court have before it a "generous" offer by the defendant to pay $350,000 to show that the defendant's conduct, viewed as a whole, was not unconscionable, or alternatively, that in the circumstances there should be no relief given under s 55(2A) of the Conveyancing Act with respect to the deposit.

65 Section 131 of the Evidence Act 1995 provides that evidence is not to be adduced of settlement negotiations. That rule is subject to a number of exceptions in s 131(2) of that Act. One of those exceptions is:

"(g) evidence that has been adduced in the proceeding, or an inference from evidence that has been adduced in the proceeding, is likely to mislead the court unless evidence of the communication or document is adduced to contradict or qualify that evidence … ."

66 There has not been much discussion of this exception in the cases or textbooks; see eg Odgers Uniform Evidence Law 6th ed (Law Book Co, Sydney, 2004) pp 543-4, although in Brown v Federal Commissioner of Taxation (2001) 187 ALR 714 at 754 [185], Emmett J gave a brief exposition.

67 In the instant case, so far as the application for refund of the deposit is concerned, the plaintiffs have virtually said that all the relevant circumstances are such that the Court should consider it just and equitable to reverse forfeiture of the deposit. DX05 seeks to put in an additional fact, namely that the defendant did in fact offer to settle the case for $350,000. In my view, unless this additional fact is permitted into evidence, the plaintiffs may mislead the Court into thinking their case is one against a greedy defendant who would not give an inch and this would be a factor to go to the Court's discretion.

68 In my view, the document is admissible though its only relevance is on the issue of return of the deposit for the significance I have set out in the last sentence of the preceding paragraph.

69 (4) In para 12 of Reasons - Set 1, I set out the text of special condition 43 which provided for a licence fee to occupy the cottage and curtilage of $300,000 to be paid monthly at the rate of $37,500 for a period of eight months during which it was thought completion would be postponed.

70 The plaintiffs were dilatory in paying these instalments. Indeed, $215,000 of this fee was not paid until the proceedings came on before Windeyer J in September 2003 when his Honour made it clear that unless the default was remedied he was not interested in granting interlocutory relief. The balance of the occupation fee was then paid.

71 There is a broad generalised proposition in the textbooks that if a contract for the sale of land goes off then, unless the vendor is solely at fault, the vendor is entitled to keep the deposit, at least up to 10%, but that other monies paid under the contract may not be forfeited to the vendor as ordinarily equity will consider that to be a penalty. However, this does not apply where the purchaser has gone into occupation and has paid an occupation fee.

72 I have deliberately put the proposition in the last paragraph in very vague terms. I considered the matter in detail in Reasons - Set 3.

73 As I said in Reasons - Set 3, the questions as to whether an occupation fee is to be refunded are to be considered as part of the jurisdiction of the Court to relieve against penalties. As the money is already in the defendant’s hands, and thus it does not have to sue at law to recover it, equity will aid the purchaser to recover in much the same way as if the vendor had to sue for the money and the purchaser put on a defence of penalty.

74 I will not repeat what I said in Reasons - Set 3 as to the basis for this claim except to note, so that these present reasons may be better understood, that the essential reason is expressed in the aphorism of Parke B in Laird v Pim (1841) 7 M & W 474, 478; 151 ER 852, 854, "He cannot have the land and its value too". More detailed reasoning is provided in McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 and by McPherson J in Lexane Pty Ltd v Highfern Pty Ltd [1985] 1 Qd R 446 at 454-6.

75 Even though the plaintiffs are making a claim in equity, they must comply with the obligation succinctly expressed by Cussen J (according to Mann ACJ in Berry v Mahony [1933] VLR 314, 322) that "he who seeks equity must do common law". This means that they must compensate the vendor for its actual loss.

76 Thus, the question of whether there is a penalty, and, if so, its quantum is to be decided on the basis of what was the vendor’s actual loss.

77 In this case, as the property has appreciated, the vendor’s only substantial loss is the fair occupation fee for the time the purchaser was in possession.

78 The purchaser was in possession from 6 November 2002 until 18 December 2003, a period of 59 weeks. The parties do not dispute that the appropriate damages for mesne profits would be $2,600 per month at the relevant time. 59 weeks at $2,600 per month would mean that a reasonable occupation fee is 14 x $2,600, that is $36,400. If the purchaser is entitled to a refund then it is entitled to a refund of $300,000 less $36,400 that is $263,600 plus interest.

79 It does not appear to me that the settlement offer discussed in section (3) is at all relevant to the question of relief against forfeiture of instalments or occupation fee as unconscionability is not a material concern.

80 The question of interest then has to be considered. The authorities would indicate that the plaintiffs are entitled to interest at the Court rate. I would consider it appropriate in this case that interest run on the refund of occupation fee from the date of vacation, 19 December 2003.

81 This means that other factors being excluded, one should allow interest for one year and 5 months at 9%. This, on my calculations, totals $33,609.

82 Accordingly the plaintiffs are entitled to an order for the payment of $297,209.

83 (5) I have already reviewed most of the relevant authorities governing this aspect of the case in Reasons - Set 3. Essentially, this is a matter of the plaintiffs demonstrating that in all the circumstances of the case it is unconscionable for the vendor to retain the windfall that will come to it in now having land of increased value as a result of the purchaser’s efforts.

84 I should note here Mr Sweeney’s submission that one must be very careful before reaching the view that a vendor has gained a windfall. There may be cases where the vendor has resold at a much higher price and has cash in hand. There may be other cases where cash by way of income has flowed through to the vendor under the contract. However, it is quite a different matter where the vendor retains the property, as any increase in value is on paper only and if the innocent vendor is to compensate for improvements, it may have to go into debt.

85 This submission is valid. However, the plain fact is that the land now has a higher value because of the activities of the plaintiffs done with the defendant’s knowledge.

86 However, as I said after considering the authorities, particularly Clancy v Salienta Pty Ltd (2000) 11 BPR 20,425 in Reasons - Set 3, there is no automatic right to equitable compensation merely because the land now has an increased value. The question is whether it would be unconscionable for the vendor to retain the land without paying compensation.

87 Whilst not that much is to be gained by considering other cases, it is instructive to examine a couple of them.

88 In Sunstar Fruit Pty Ltd v Cosmo [1995] 2 Qd R 214, the plaintiff contracted to buy the defendant's orchard and went into possession pending completion. While in possession it made improvements. The plaintiff terminated because of the defendant's failure to comply with a notice to complete and sought restitution. Derrington J refused to make any award. The fault of the vendor in not complying with a notice to complete had no relation at all to the loss suffered by the plaintiff.

89 In Carringville Pty Ltd v The Gatto Group Pty Ltd (2003) 11 BPR 21,069, there was a contract where development consent was necessary. The purchaser obtained that consent at its expense and then failed to comply with a notice to complete issued by the vendor. The development consent had enhanced the value of the property. The purchaser claimed compensation for the value by which the property was increased by the development consent. I declined to give such relief partly on the basis that there was no unconscionable conduct on the part of the vendor.

90 Ramsden v Dyson (1866) LR 1 HL 129 is properly classified as a proprietary estoppel case. As Giles JA pointed out in Clancy v Salienta Pty Ltd (2000) 11 BPR 20,425 at 20,474, there is a real distinction between such cases and the present though there is much common ground. I consider that it is helpful to note that in Ramsden v Dyson at 170-1, Lord Kingsdown contrasted two different classes of case.

91 The first is where a person, under an expectation , created or encouraged by a landlord that he shall have a certain interest, takes possession of land, with the consent of the landlord, and upon the faith of such expectation with the knowledge of the landlord, and without objection, lays out money upon the land. In such a case, equity may give relief.

92 The second is where a tenant being in possession of land, and knowing the nature and extent of his interest lays out money upon it in the hope or expectation of an extended term or allowance for expenditure. Such a situation does not give rise to a claim which equity may enforce.

93 In cases of the present type, one has to look closely to see into which category the matter falls. Clearly, factually, it falls into the second class. The plaintiffs were in possession, they had an expectation, but, through their own conduct, they failed to complete.

94 Mr Sweeney says that in this case we have a contract between two persons who were fully able to look after themselves. Furthermore, there was no conduct (apart from the mere retention of a property of increased value) on behalf of the vendor which could in any way be constituted as unconscionable.

95 I would agree with these submissions. It would seem to me, putting it succinctly, that the purchaser was a developer who practised brinkmanship and lost.

96 I accept that the proper measure of compensation would be the lesser of the cost of the improvements and the increase in value as a result of the improvements; see Forgeard v Shanahan (1994) 35 NSWLR 206.

97 It is thus unnecessary for me, in view of my conclusion on "liability" to come to a decision as to which valuer I prefer, or to work out what part of the increase in value was a result of market forces and what a result of the purchaser's work.

98 The valuation evidence is conflicting. However, as noted in Reason-Set 1, I do not accept that the plaintiffs paid $500,000 for improvements to the land. The true figure is between $78,100 and $250,000.

99 If I had to make a finding as to the exact amount, the evidence is rather flimsy, I could do little else other than take a midway point of $170,000.

100 Thus, is it unconscionable in all the circumstances for the defendant to retain the value of improvements of $170,000?

101 In the light of the fact that the contract went off through the purchaser’s default and that there is nothing in the vendor’s conduct which contributed to the plaintiffs’ expenditure which was for their own purposes, the answer is “No”. The vendor’s acquiescence in what the purchaser did is of itself insufficient: Clancy v Salienta Pty Ltd (2000) 11 BPR 20,425 at 20,474.

102 (6) I now must consider whether the plaintiffs should have relief against forfeiture of the deposit under s 55(2A) of the Conveyancing Act 1919 the text of which I have already set out.

103 As I have said, the present sub-section derives from s 49(2) of the English Law of Property Act 1925. The English provision was thoroughly considered by Megarry J in Schindler v Pigault (1975) 30 P & CR 328 at 336-7. His Lordship noted that the provision had been seldom used in England (the NSW experience is quite different).

104 I have read the cases referred to by Megarry J in Schindler and cases decided in NSW on the sub-section. Many of these are cases where both parties acknowledged that the contract was at an end. However, of those cases where specific performance was claimed, only Pratt v Hawkins (1991) 32 NSWLR 319 raises the matter. In that case, a decree for specific performance had been made by consent on the vendor’s suit. The decree was later rescinded by consent. At that point the vendor said, “I rescind” and so I ordered that the deposit be forfeited subject to the purchaser making an application under the sub-section within a limited time.

105 This case is clearly one where I have refused specific performance, and accordingly, the statutory jurisdiction exists. However, consistent with the line of cases which have been decided under this sub-section is the principle that whilst the Court has an unfettered discretion, it must pay strong attention to the fact that the purpose of giving a deposit is to give security to the vendor and that for the purchaser to get an order under this section, there must be circumstances where it would be unjust or inequitable for the vendor to retain the deposit; see particularly Lucas & Tait (Investments) Pty Ltd v Victoria Securities Ltd [1973] 2 NSWLR 268.

106 The cases show that despite this general inclination it would be improper to lay down any guidelines which limited the statutory unfettered discretion, but that the matter depends on the assessment of the justice of the case.

107 In Eighth SRJ Pty Ltd v Merity (1997) 7 BPR 15,189 at 15,202, I made the point that the discretion to be exercised is that of a collegiate court and not one at the whim of an individual judge. I then said that, looking at the cases up to the date of that decision, the matters which seem to affect the Court when considering the exercise of the discretion included as the strongest factors: (a) has the vendor received a windfall; (b) was non-completion a fault of the purchaser personally or a matter over which it had little control; (c) was the purchaser's use of the property thwarted by some factor outside the purchaser's control; (d) was there any misstatement in the vendor's camp which affected the purchaser's decision?

108 Mr Sweeney has no quarrel with these guidelines, pointing out that if they were the sole criteria, his client must succeed as, apart from it appearing (falsely) at first blush that the vendor has received a windfall, his client is favoured by the obvious answers to the other three questions.

109 Professor Butt in his Standard Contract for Sale of Land in NSW 2nd ed (LBC, Sydney, 1998) para 9.124 says that there are four classes of case of special interest and covers much the same ground as did Eighth SRJ. He deals with windfalls at 9.130 and following. At 9.131 he says:

"It is clear that the mere fact that the vendor will reap the windfall of a forfeited deposit is not, of itself, a sufficient ground for ordering the deposit to be repaid under s 55(2A). This is so even where the market is rising, allowing the vendor not only to retain the deposit but also to resell it at an increased price. To justify a refund of the deposit, there must be additional circumstances: for example, where the vendor takes advantage of the purchaser's inadvertent breach, the purchaser being in fact ready to complete."

110 Mr Sweeney submits that the whole sanctity of the deposit system, a system which provides an incentive for purchasers to keep to their contract, would be defeated if courts took too liberal a view as to when the deposit should be returned.

111 He further said that there was a regrettable division of opinion in this Division of the Court as to the standard to be applied when assessing applications under the subsection. He put, respectfully, that Palmer J and myself applied too low a test and that the judgments of Windeyer J more appropriately carried out the legislature’s intention.

112 Mr Sweeney illustrated his submission by pointing to the decision of Windeyer J in Tanwar Enterprises Pty Ltd v Cauchi (2002) NSW Conv R 55-994 upheld in the High Court (2003) 77 ALJR 1853, that in a contract with time of the essence between people in commerce, despite the purchaser being only one day late tendering settlement principally because of a failure of a proposed mortgagee, no case had been made out for return of the deposit.

113 Mr Sweeney relied on some remarks of McHugh J in the special leave application in Tanwar, heard on 13 September 2003 but, with respect, I do not find anything in that transcript to assist in the instant case.

114 Mr Sweeney contrasts this approach with some of my decisions and that of Palmer J in Webster v Havyn Pty Ltd [2004] NSWSC 227.

115 It is very difficult to compare cases because the facts and circumstances are so different. This is especially so when hardship needs to be taken into account. I agree that consistency of approach is to be sought after. I deny that this has not been the case in the past, though whether this is so or not is of no real benefit to anybody in the instant case.

116 I would agree that a substantial factor in these cases is the purpose of the deposit. In Terry v Permanent Trustee Australia Ltd (1995) 6 BPR 14,091, Santow J pointed out that if courts were to restore deposits to purchasers just because there was a rising market, the basic purpose of the deposit would be lost in all such cases. I said much the same thing in Clurstock Pty Ltd v Timanu Pty Ltd (1988) NSW Conv R 55-419. This case went on appeal, see Timanu Pty Ltd v Clurstock (1988) 15 NSWLR 338, but the Court was not of one mind as to s 55(2A), a matter which in any case was virtually abandoned on the appeal. Kirby P and Hope JA reaffirmed what Kirby P had said in Wight v Foran (1987) 11 NSWLR 470 (see p 343), McHugh JA noting he was unconvinced by this. See also on this point One Spencer St Pty Ltd v Maryland International Pty Ltd [2005] NSWSC 275.

117 In Romanos v Pentagold Investments Pty Ltd (2003) 77 ALJR 1882, a case heard at the same time as Tanwar, the High Court reiterated the importance of a deposit as security for the due performance of a contract and reversed Windeyer J’s decision that the deposit ought to be refunded to a purchaser under the sub-section. Again, the purchasers were developers and the contract failed through no fault of the vendors.

118 The cases nearest factually to the present that I have been able to find are Hasanovic v Polistena (1982) NSW Conv R 55-078 and P C Developments Pty Ltd v Revell (1991) 22 NSWLR 615.

119 In Hasanovic, the purchasers contracted to buy a market garden and pursuant to the contract took possession and grew crops. They were unable to complete the transaction owing to a lack of finance, the proposed mortgagee having withdrawn an offer of finance close to the expiry of the notice to complete. The vendor terminated and the purchasers left on 17 October 1980. Needham J said that the purchasers' work on the property had increased its value and it would be unjust to allow the vendor not only to retain the benefits of the plaintiffs' expenditure and labour and to obtain an occupation fee and payment of rates but also to retain the deposit as well. It should be noted in that case, that the situation was such that the whole blame for non-completion could not be laid at the feet of the purchasers personally.

120 In PC Developments Pty Ltd v Revell (1991) 22 NSWLR 615 a large block of industrial land with a factory on it was sold, and, after contract but before completion, the purchaser, with the vendor’s approval, did considerable demolition work. The contract was later terminated for the purchaser’s default and the vendor purported to forfeit the deposit.

121 The Court of Appeal consisted of Mahoney, Clarke and Meagher JJA. Mahoney JA at 636, with whom, Meagher JA agreed held that it was appropriate in those circumstances to order a refund of the deposit. Clarke JA dissented. Of course, I am not saying that just because the Court of Appeal took that approach in Revell's case that I should make a similar order in the present case. However, it is a benchmark against which one can test one’s decision.

122 The most recent relevant decision of the Court of Appeal on the sub-section is Harkins v Butcher (2002) 55 NSWLR 558, where Handley JA considered and analysed most of the relevant authorities at 572-4.

123 Mr Gray for the plaintiffs says that the cases indicate that one must look at the whole of the circumstances and all aspects of the transaction. This is certainly the correct mode of approach. He then says that if the contract had been performed, the vendor would have received $2.5 million. However, as things worked out, in September 2003 the vendor still retained the property now worth, he says, $3.42 million plus the deposit plus $300,000 occupation fee.

124 Mr Sweeney accepts the proposition that the Court must look at the total picture when considering whether or not to make an order for the return of a deposit. However, he analyses that total picture in quite a different way. He says that it is dominated by a man who gambled on keeping the vendor at bay for as long as it suited him, who commenced an unsuccessful suit for specific performance, who was held to be in breach of contract and who then delayed in making his claim for return of deposit. Such a man cannot realistically claim that it is just and equitable that he regain his deposit.

125 Very little is to be gained by discussing other cases. The discretion is unfettered. One must not say that something is unjust just because one subjectively feels that that might be the case, yet on the other hand Needham J in Hasanovic did not spell out why he considered that particular situation to be unjust.

126 The cases say that one must focus on the position of the purchaser, yet on the other hand one must remember the purpose of a deposit and must remember too that the present case is not one where there was any real fault in non-completion on any person's part other than the purchaser. As appears from my 2003 judgment, the purchaser took a technical point against the vendor, it gambled that that would buy time or perhaps win the case, it lost that gamble and lost a large amount of money. Equity courts have to be very careful not to encourage purchasers to take unmeritorious technical points thinking that they can still recover their deposit.

127 Another matter that it is relevant to take into account is the fact that there was an offer of settlement for $350,000. However, it does not seem to me that that matter is of great weight. The primary focus is on the contractual rights, particularly the legal rights vested in the vendor. The Court must ask whether reliance on those legal rights would be unjust or unconscionable. The fact that an offer to settle may have been made which might have given the purchaser a sum equivalent to the deposit or thereabouts is of peripheral value on this analysis. Alternatively, if the focus is on the purchaser, again one asks in view of the degree of fault and other circumstances connected with the contract, whether it is just and equitable that the purchaser get back the deposit.

128 To my mind, the offer is of marginal significance. If it has any significance at all it tends toward allowing the return of the deposit in addition to the refund of the instalments because the $250,000 deposit in itself was less than the offer. In any event, this is not a matter of great weight.

129 What is of greater importance is that the vendor may have suffered damage through the purchaser’s breach of the contract. The authorities seem clear that an order for return of deposit under s 55(2A) does not affect the right of a vendor to sue at law for damages for breach of contract; see eg Harkins v Butcher (2002) 55 NSWLR 558 at 574.

130 However, although the property has appreciated in value, the vendor would have suffered some damage by the purchaser’s breach, such as wasted legal fees or the like which would not ordinarily be recoverable in an action for damages at law where the property had increased in value since the contract was made.

131 In Reasons - Set 2, I directed my mind to whether in view of my decision that a considerable sum was due to the purchaser by way of refund of the occupation fee, it is still appropriate to order return of the deposit. As I noted earlier in these reasons, one motive for withdrawing those reasons was that I considered that this matter would have to be reassessed in light of the mathematical error.

132 The matter to be considered is whether, looking at all relevant circumstances, it is just and equitable for the purchasers to receive back $263,600 being part of the occupation fee and also the deposit of $250,000.

133 Mr Gray puts that there is no jurisdiction under s 55(2A) of the Conveyancing Act to order part of the deposit to be returned: it is all or nothing.

134 There is little authority on the point. Vaisey J in James Macara Ltd v Barclay [1944] 2 All ER 31 at 32 made this point. His decision went on appeal [1945] KB 148, but the Court of Appeal at 156 expressly did not consider the point. The same point was made by Walton J in Universal Corp v Five Ways Properties Ltd [1978] 3 All ER 1131 at 1137, but although this decision was reversed on appeal [1979] 1 All ER 552, the point was not considered.

135 In Clarke v Dilberovic (1982) NSW Conv R 55-083, Rath J actually ordered return of part only of the deposit under the section.

136 Furthermore, judges have made orders under the section returning the deposit only if the purchaser has undertaken to recompense the vendor for its damage suffered by the purchaser’s breach of contract and to have those damages set off against the deposit; Poort v Development Underwriting (Victoria) Pty Ltd [1976] VR 779 at 785 (affirmed without comment on this point [1977] VR 454).

137 In Bernard v Weingarth (1997) 8 BPR 15,651 at 15,656, MH McLelland CJ in Eq said that whilst the sub-section does not in terms authorise the return of part of a deposit, the approach in Poort may bring about that practical result in some cases.

138 The same view was taken by Bryson J in Lucantonio v Ciofuli (2003) 11 BPR 21,181 at 21,183.

139 Accordingly, I accept that, apart from taking undertakings as to damages from the plaintiffs, I must proceed on the basis of return of the entire deposit or none at all. Indeed, Mr Sweeney would be content to accept that position.

140 I have to make an all or nothing choice on the return of the deposit. I approach that decision on the basis that the return of the deposit is the exception rather than the rule. I accept that the mere fact that the vendor now has a property worth much more than when the contract was terminated is not of itself sufficient reason to return the deposit. I also accept that one must give great weight to the basal purpose of deposits under contracts for the sale of land. I take into account the point that Mr Sweeney put that the vendor may have to borrow to make a refund of the deposit, though I give it little weight.

141 In Reasons - Set 2 I considered that the balance of the relevant factors favoured return of the deposit. I have re-evaluated the factors and indeed have been greatly assisted by the way in which Mr Sweeney in his March 2005 submissions more clearly directed my mind to the string of authorities which say that ordinarily where the vendor has not been guilty of unconscionable conduct and the purchaser is a developer or a person in commerce well aware of his obligations under a contract, the purchaser is not entitled to return of the deposit, even if the property has had a marked increase in value.

142 In my view, even taking into account the contrary factors, the plaintiffs have not made out their case for return of the deposit.

143 I might note that, had I been of the contrary view I would have put conditions on the refund namely that the vendor have a charge on the deposit for $10,000 to compensate it for its legal costs and commission and trouble it has been caused by the purchaser’s conduct. Secondly that the plaintiffs pay the costs of the second hearing.

144 (7) Paragraphs 14A to 14D of the final version of the points of claim make an alternate claim in respect of the part of the licence fee paid on or about 22 September 2003. The points of claim say that it was made for a consideration which had wholly failed because the contract had already terminated on 1 September 2003 and therefore the money was received by the defendant to the use of one of the plaintiffs.

145 The point is of little significance in the light of my conclusions as to the repayment of part of the occupation fee, but as an appeal has already been filed, I should briefly deal with it.

146 Special conditions 44 and 45 of the contract are as follows:

"44. The Vendor shall accept on completion such licence fees as paid referred to in the previous clause (but not interest) in reduction of the sale price.
45. In the event this contract is terminated by the Vendor as authorised by this contract then the whole of the deposit monies together with the licence fees as paid and received by the Vendor shall vest upon the Vendor absolutely and such money the parties agree shall be forfeited to the Vendor as security for the Purchasers default under the contract."

147 The scheme of the contract is that there would be completion 240 days after contract, that there would be a one off license fee for occupation although payable by monthly instalments and that the licence fee would count as part of the purchase price on completion or be security for damages if there was no completion.

148 I have reproduced in the previous paragraph what I wrote in my Reasons - Set 2. Mr Sweeney says it is erroneous and that, on its true construction, the security was for the purchaser’s performance of the contract. He puts that this is the traditional language to refer to the function of a deposit. I will return to this point.

149 Mr Gray argued that one could not classify the part of the licence fee paid on 22 September 2003 as an instalment of purchase monies to which special condition 45 of the contract applied.

150 Mr Gray says that the contract terminated on 2 September 2003. The further monies were paid on 22 September 2003: they could not have been paid in a way to be caught by special condition 45 of the contract because the contract at that stage was at an end.

151 Mr Gray looks to the words of special condition 45 and says that as a matter of construction the only licence fees that are forfeited to the vendor are monies which are paid under special conditions 43 and 44. As at the time the bulk of the monies were paid the contract had already been terminated, the monies paid after termination do not vest. One effect of this argument is to ensure that no order for their return could be made in the present proceedings because any claim for their return would simply be a matter of a common law indebitatus count for money had and received.

152 I do not consider that this is correct for the following reasons.

153 First, whilst the primary obligations under the contract may have been at an end in the sense that there was no longer any obligation to convey on one side or pay the balance of the purchase money on the other, secondary obligations under the contract such as the potential for the vendor to sue under the contract for any loss remained; see eg Shevill v Builders Licensing Board (1980) 2 BPR 9662, 9669 (the reversal of this decision in the High Court, at 149 CLR 620 did not affect this point). Mr Gray acknowledges that this is so, but submits it is quite irrelevant.

154 Even if Mr Gray were correct, the right of the vendor to receive payment of the occupation fee was an accrued right which accrued before the termination for which the vendor could have sued. The contract would remain alive at least to this extent : Heyman v Darwins Ltd [1942] AC 356 at 379. Had the vendor sued under the contract, it might have been met by a defence of penalty. This became irrelevant when, doubtless influenced by what Windeyer J had said, the purchaser decided to pay.

155 In any event, Windeyer J made it clear that unless the deposit and occupation fee were paid, then he would consider that the purchaser had not done equity and may well have refused interlocutory relief. His Honour does not appear to have actually said this in so many words, but that was the impression that the parties gained and, having gained that impression, the purchaser paid the monies. The monies were expressly paid as the balance of the occupation fee and deposit under the contract. The vendor accepted them on this basis, the purchaser obtained its temporary relief, and that all having happened, it is now too late for the purchaser to claim that the monies were not paid for the purpose which they were especially paid in September 2003.

156 An additional matter is that the amended points of claim filed on 15 October 2004 actually pleads that $150,000 paid about 25 September 2003 was part of the deposit.

157 Mr Gray also puts the point in an alternative way. He submits that monies paid under special condition 45 are not to be absolutely forfeited to the vendor but only as security for the purchaser's default. As apart from the legal costs of the conveyance thrown away, there is no damage; therefore the monies have to be returned.

158 I have already noted Mr Sweeney’s argument that "security" in special condition 45 means security for the purchaser’s performance of the contract. I accept now that this is the proper construction of the special condition. However, it makes no difference as the vendor did not in fact suffer damage.

159 There is some validity in Mr Gray's alternative submission. The special condition expressly says that the forfeiture is not for any purpose other than to provide security for the purchaser's default. The vendor is entitled to recover damages for the purchaser's breach. However, the evidence shows that the property is now worth far more than it was before so that the only damage apparently suffered was the loss of the conveyancing costs of the aborted sale and perhaps estate agent's commission.

160 One must read special condition 45 as a whole. It is significant to note that in a previous line of special condition 45 there is the inconsistent statement that the monies shall vest in the vendor absolutely.

161 It does not seem to me to be a matter of great concern because the plaintiffs have come here seeking equitable relief and offering to do equity, and accordingly, as the points of claim set out, they are offering to pay a reasonable occupation fee for the period they were in occupation.

162 It follows then that, whether one looks at it as a matter of common law under the true construction of special condition 45 or as a matter of equity for relief, one would get the same result as I have reached in section (4) of these reasons.

163 (8) I now come to the question of costs.

164 The order for costs already made in favour of the defendant should stand.

165 As to the costs of the motion, Mr Gray puts that his clients were successful and so should get costs. Mr Sweeney puts that the present motion is one which should have been considered along with the main proceedings and, had that ordinary course been followed, the costs of this issue would have been paid by the plaintiffs. Alternatively, as the plaintiffs were seeking a privilege, they should pay the costs of obtaining it.

166 As matters have turned out, the plaintiffs have only been partially successful.

167 Costs are in the discretion of the Court. Although the plaintiffs have succeeded on the claim for relief against forfeiture of the occupation fee, they have failed in their claims for compensation for improvements and for the return of the deposit. Furthermore, the claims were made late, which increased the costs and the plaintiffs were seeking a privilege in a borderline case.

168 I consider that the claim for return of the occupation fee should have been made in the original proceedings and that the plaintiffs should pay the costs of the motion generally.

169 However, the further day's argument in March was caused by the Court’s error and the result of the argument on that day was that the defendant’s case was put far more clearly and with more authority to support it than had previously been the case with the result that the defendant succeeded on the s 55(2A) point where it otherwise would have lost the point.

170 I consider that each party should bear its or his own costs of the argument on 9 March 2005

171 (9) What then is the result of these supplemental proceedings?

172 It follows from head (4) of these reasons that the defendant must pay the second plaintiff the sum of $297,209 and that the plaintiffs must pay the costs of the proceedings to date (unless there has been some prior order to the contrary) save that each party is to bear its or his own costs of 9 March 2005.

173 As I understand an appeal has been lodged with respect to the 2003 judgment, the exhibits are to be forwarded to the Registrar of the Court of Appeal.

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