Perpetual Trustee Company Limited v Meriton Property Management Pty Limited - [2004] NSWSC 1258

No judgment structure available for this case.

CITATION: Perpetual Trustee Company Limited v Meriton Property Management Pty Limited [2004] NSWSC 1258

HEARING DATE(S): 8, 9, 10 December 2004

JUDGMENT DATE:
5 January 2005

JURISDICTION:
Commercial List

JUDGMENT OF: Bergin J

DECISION: Amended Summons dismissed

CATCHWORDS: Suit for specific performance of sale of land - Whether the defendant's objection under the contract is valid - Whether certain easements arose out of the "requirements" of the Council - Whether easements were "minor" variations to a s. 88B Instrument - Whether defendant's objections valid.

LEGISLATION CITED: Conveyancing Act 1919 (NSW)
Roads Act 1993 (NSW)

CASES CITED: Dougherty Bros Pty Ltd v Garde (1976) 2 BPR 9206
Imamovic v Kalamalka Constructions Pty Ltd (1975) 49 ALJR 244
Wolverhampton & Walsall Railway Company v London & North-Western Railway Company (1873) LR 16 Eq 433

PARTIES :
Perpetual Trustee Company Limited (Plaintiff)
Meriton Property Management Pty Limited (Defendant)

FILE NUMBER(S): SC 50119/04

COUNSEL: M. J. Slattery QC / R. Pepper/D. Robinson (Plaintiff)
R. J. Weber SC / I. Pike (Defendant)

SOLICITORS: Dibbs Barker Gosling (Plaintiff)
Richard de Carvalho (Defendant)

- 1 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

BERGIN J

5 JANUARY 2005

50119/04 PERPETUAL TRUSTEE COMPANY LIMITED V MERITON PROPERTY MANAGEMENT PTY. LTD.

JUDGMENT

1 The plaintiff, Perpetual Trustee Company Limited, seeks specific performance of a contract between it, as vendor, and the defendant, Meriton Property Management Pty Limited, as purchaser, dated 22 July 2003 for the sale of land at the corner of Epsom Road and Rothschild Avenue, Rosebery (the Land) for the price of $22 million (the Contract).

2 The defendant claims that by letter dated 2 June 2004 it raised an objection pursuant to clause 5 of the Contract and that the plaintiff has not removed the obstacles to completion referred to in that letter and thus it is not obliged to complete the Contract. The defendant also claims that the plaintiff is not ready, willing or able to complete the Contract, nor is it able to convey the land with vacant possession.

3 The Land is a generally rectangular block with a northern boundary on Epsom Road; a western boundary on Rothschild Avenue; an eastern boundary that abuts land that is east of Rosebery Avenue; and a southern boundary abutting a parcel of land owned by the plaintiff. There are a number of buildings on the plaintiff’s land to the south of the Land, in particular Building 5C which is closest to the boundary. Adjacent to the northern boundary of building 5C and south of the Land, are car-parking spaces used by Ikea with roller doors on the northern wall of the building.

The Contract

4 Deutsche Asset Management (Australia) Limited (Deutsche) entered into the Contract in its capacity as responsible entity of the Deutsche Industrial Trust (the Trust). Deutsche appointed the plaintiff as its agent to hold the assets of the Trust on its behalf in accordance with a Custody Agreement dated 1 March 2002 between the plaintiff and Deutsche.

5 Clause 5 of the Contract provides:

5. Requisitions

requisition

serving

within

served

within

service

within

6 Clause 6 of the Contract provides that, prior to completion, the defendant can make a claim for compensation for “an error or misdescription” in the Contract “as to the property, the title or anything else and whether substantial or not” unless the defendant knew of the “true position”. Clause 8 of the Contract provides:

8. Vendor’s right to rescind
The vendor can rescind if -
8.1 the vendor is, on reasonable grounds, unable or unwilling to comply with a requisition ;
8.2 the vendor serves a notice of intention to rescind that specifies the requisition and those grounds; and
8.3 the purchaser does not serve a notice waiving the requisition within 14 days after that service.

7 The Contract includes as annexures, a Contract Plan (the Plan), a draft s.88B Instrument (the Instrument) and a copy of the Development Application (DA) for subdivision to be lodged by the plaintiff with the South Sydney Council (now the Council of the City of Sydney) (the Council). A deposit of $1.1 million was paid on exchange leaving the balance of $20,900,000 payable on completion. The Contract defines “Completion Date” as “the date which is 60 days after the date the vendor gives written notice to the purchaser that the Plan has been registered as contemplated by clause 41” (cl.40).

8 Clause 41 of the Contract provides:

41.2 Annexed to this contract is a copy of the development application (“Development Application”) to be lodged by the vendor for the approval referred to in clause 41.1(a). The vendor must lodge the Development Application with the Council by the date 10 days after the date of this contract. If the vendor fails to lodge the Development Application within the time stipulated by this clause, the purchaser may, at the vendor’s cost (such costs to be subtracted from the balance payable at settlement) lodge the Development Application on behalf of the vendor and the vendor must do everything necessary to assist the purchaser with same. Subject to clause 41.7, the vendor must not amend, uplift or withdraw the Development Application which it has lodged with the Council or the Plan approved by the Council and which it has lodged with the LPINSW without the prior consent in writing of the purchaser, which consent must not be unreasonably withheld or delayed. The vendor must act in good faith towards the purchaser.

41.5 If the Council approves the Development Application (whether by the Council or on review or appeal pursuant to clauses 41.10 and 41.11) and the vendor does not rescind or is not entitled to rescind pursuant to clause 41.6, then the vendor must without unreasonable delay but not later than 60 days of Council’s approval or such further time as the parties may agree lodge the Plan approved by Council and Instrument for registration at LPINSW. If the Plan is not registered within 6 months after the date the Development Application is approved (“Registration Date”) either party may rescind this contract by giving written notice to the other whereupon the provisions of clause 19 shall apply provided that if the Plan has not been registered by the Registration Date as a result of the vendor’s default or delay, the vendor cannot rescind under this clause. If the Plan is registered before service of such notice, then neither party is entitled to rescind the contract under this clause. The Vendor must keep the purchaser promptly and regularly informed of the progress of registration of the Plan at LPINSW and promptly provide the purchaser with a copy of all correspondence to and from LPINSW in respect of same. If the vendor fails to lodge the Plan for registration by the time stipulated in this clause, the purchaser may at the vendor’s cost (such costs to be subtracted from the balance payable at settlement), lodge the Plan for registration on behalf of the vendor and the vendor must do everything necessary to assist the purchaser with same.

41.6 The vendor and the purchaser agree that if the Plan is approved (whether by the Council or on review or appeal pursuant to clauses 41.10 and 41.11) on terms and conditions that would require the vendor to carry out “Works to Lot 4” costing more than $1,100,000,000 then:

The purchaser indemnifies the vendor against any loss, damage, claim, action, liability and/or cost suffered or incurred by the vendor arising from the purchaser carrying out the works referred to in clauses 41.6(a) and 41.6(b).

41.7 The purchaser must not make any objection, requisition or claim for compensation or attempt to delay completion or rescind or terminate this contract because of:

and the vendor reserves the right to make any such minor changes and variations provided that the vendor has given prior notice of and details of the proposed minor change or variation to the purchaser.

41.8 For the purposes of this contract, a minor difference, variation, alteration, change or amendment includes a variation, alteration or amendment increasing or reducing the area of the property by not more than 5%.

(b) approves the Development Application subject to conditions; or

(“Council’s Decision”) then the vendor must within 14 days after the Council’s Decision elect whether or not to review and/or appeal the Council’s Decision and notify the purchaser of its election.

41.10 If the vendor elects not to review or appeal under clause 41.9 the purchaser may at its cost, in the case of:

If the review or an appeal under clause 41.10(a) is unsuccessful or the purchaser is not able to obtain approval of the Plan under clause 41.10(b), the purchaser may rescind this contract whereupon the provisions of clause 19 shall apply.

(c) it is acknowledged and agreed that the purchaser shall not be entitled to review or appeal Council’s Decision in the case of 41.9(b) and that the provisions of clause 41.6 shall apply.

41.11 If the vendor elects to review and/or appeal under clause 41.9, then the vendor must use its best endeavours to lodge the review and/or appeal without unreasonable delay and to pursue such appeal diligently provided that at any time after 6 months from the date of the contract, the purchaser may at its cost, elect to manage the review and/or appeal process if at that time such review or appeal is still in progress or being determined and the vendor must provide the purchaser with all reasonable assistance with the same.

41.13 The vendor warrants that it has not lodged any development application to change the zoning of the property as shown in the s.149 certificate annexed to this contract.

41.14 In this contract:

Instrument”

Plan

41.15 The purchaser acknowledges that the vendor has no responsibility for the installation or connection of any services or infrastructure other than that which the vendor may be required to provide as a condition of the approval of the Development Application.

9 Clause 48 of the Contract provides:

Roadway

Roadway”

48.2 Subject to the vendor’s rights under clause 41.6 but notwithstanding any other provision of this contract, neither the vendor nor the purchaser can make any claim or requisition, delay completion, rescind or terminate if the Council requires any change or variation in the dimensions or location of the Roadway or requires the Roadway to be dedicated as a public road or imposes any other conditions affecting the Roadway.

10 “Requisition” is defined in clause 1 of the Contract as “an objection, question or requisition (but the term does not include a claim)”. The plaintiff does not suggest that the defendant’s letter of 2 June 2004 is not an objection and thus a requisition under clause 5 of the Contract. The issue is whether clause 41.7 of the Contract precludes such an objection. The defendant contends that certain new easements imposed after the date of the Contract are not “minor” and that it is not required to complete until the “obstacles” to completion referred to in the letter of 2 June 2004 are removed. The plaintiff contends that the new easements are “minor” within the meaning of that term in clause 41.7 of the Contract.

11 The Plan includes Lot 4, the Land the subject of the Contract, and Lot 3 that includes building 5C. The Instrument attached to the Contract sets out the details of easements and rights of way to be created on registration of the Plan. Those easements are as follows: “V” - proposed right of way variable width (condition of earlier DA consent) to benefit proposed Lot 3; “W” - proposed easement to drain water to benefit Lot 2 DP 566811; “X" -proposed easement over existing line of pipes for drainage of stormwater to benefit Lot 2 DP 566811 & Lot 3; “Y” – proposed right of way 3.6 wide and variable to benefit Lot 3 and Lot 2 DP 566811; and “Z” – proposed right of way 3.6 wide & variable to benefit Lot 4 and Lot 2 DP 566811. Proposed rights of way “Y” and “Z” 3.6 metres into Lot 3 and 3.6 metres into Lot 4 are those referred to in clause 48.1 of the Contract, were to ultimately allow access from Rothschild Avenue to join up with the proposed right of way referred to as “V” leading to Rosebery Avenue.

The Lease to Ikea

12 On 4 May 2003 the plaintiff entered into an Agreement with Aust Scan Pty Ltd (Ikea) to Lease to it for three years land to the south of the Land the subject of the Contract on which Building 5C is located, including land to the north of the building with provision for 16 “exclusive” car-parking spaces adjacent to the building. The defendant was not aware of that Agreement. That is understandable because at the time of the entry into the Contract the land on which the car-parking spaces were situated was to the south of the Land the subject of the Contract and the Agreement did not have any adverse impact upon the defendant.

13 It is common ground that the Lease was entered into in August 2003, about one month after the Contract was entered into, and the defendant was at that time unaware of the terms of the Lease. It was not until November 2003 in circumstances referred to below that the defendant became aware of the terms of the Lease to Ikea.

A change in the boundary

14 On 30 October 2003 the Council wrote to the consultants retained by the plaintiff in respect of the DA for subdivision and advised that it considered that the proposed boundary location shown on the Plan and the related rights of way were “not acceptable” as they did not support the future achievement of the dedicated road required by the Council. That letter continued:

Council is not seeking to achieve the dedication as part of this subdivision application only to have the boundary suitably located so that the road when it is achieved is in the appropriate location.

15 That letter also advised that the Council envisaged imposing conditions that the boundary between the proposed Lots 3 and 4 and between Lot 2 and 4 should be relocated “to abutting or within 1 metre of the northern wall of the existing building on proposed Lot 3”. It also advised that it would impose the following condition:

That until such time as Lot 4 is redeveloped and a public road dedicated along its southern side covenants, rights of way or the like may be placed on the title or leases created which provide for:

16 The Council advised that prior to finalising the DA, detailed plans of the proposed driveway where it crosses the footway, including information regarding gradients, needed to be submitted so it could be established what was the maximum size of vehicles that could be accommodated.

17 On 5 November 2003 the plaintiff’s solicitors forwarded a copy of the Council’s letter of 30 October 2003 to the defendant advising that they had been instructed that there was an “obstacle” to the Council proposal in that part of the land which would be required for the relocated roadway was currently leased to Ikea for car-parking and that the plaintiff was “working through” this issue with the Council to find an acceptable solution.

18 On 7 November 2003 the plaintiff’s solicitors wrote again to the defendant attaching a copy of a plan, referred to in the Council letter of 30 October 2003 showing the location of the then present and proposed boundary between Lot 3 and Lot 4. The defendant responded to the plaintiff’s solicitors on the same day in the following terms:

We note that Council is prepared to approve the proposed subdivision subject to the boundary between the proposed Lot 3 and Lot 4 being moved up to or near the external façade of Building 5C on the Plan of Proposed Subdivision.

We understand that the vendor objects to the Condition because the tenant of Building 5C leases the area being “resumed” as a result of the Condition and that the lease does not expire for another 3 years.

The current boundary between proposed Lot 3 and 4 is situated in the middle of the roadway referred to in Special Condition 48. The Condition would result in the roadway being wholly within the lot being purchased by us.

We consider that given the terms of Special Condition 48.2, the vendor cannot and should not resist Council’s approval of the subdivision, subject to the Condition.

We expect the vendor to resolve this issue and to keep us informed of the progress of all the vendor’s dealing with Council in respect of this matter.

19 On 18 November 2003 the Council published its Notice of Determination of the DA for Subdivision lodged by the plaintiff. That Determination included Condition (3) the relocation of the boundary as proposed in the Council letter of 30 October 2003 and Condition (4) that “until such time as Lot 4 is redeveloped and a public road dedicated along its southern side covenants, rights of way or the like may be placed on the title or leases” in the categories referred to in the Council’s letter of 30 October 2003. It also included the following:

(B) It is advised that Council will not require any dedication of the future public road envisaged on proposed on (sic) Lot 4 to be finalised after the current lease of Units 5B/5C to Ikea has ended on 7 August 2006. If any redevelopment of proposed Lot 4 takes place before such time Council will negotiate with the developer of such proposal a means to ensure that Ikea’s access and parking arrangements remain as provided for in their lease until such date.

20 On 21 November 2003, the plaintiff’s solicitors wrote to the defendant in response to the defendant’s letter of 7 November 2003 in terms that included the following:

Clause 48.2 of the contract refers to any change or variation in the dimensions or location of the roadway or the dedication of the roadway as a public road or the imposition of any other conditions affecting the roadway.

However, the condition which Council is still seeking to impose is a change in the boundary between the proposed Lots 3 and 4 whereby Meriton Property Management Pty Limited will acquire more land than that agreed to be sold under the Contract. The additional land is, as you note, subject to existing leases which are not referred to in the contract as it was not intended that this additional land be sold to the purchaser. I am instructed that my client will continue to keep you informed as to the progress of the Development Application in accordance with Clause 41.4 of the contract.

21 On 26 November 2003 the plaintiff’s solicitors wrote to the defendant confirming that under Clause 41.9(b) of the Contract, the plaintiff had until 2 December 2003 to elect whether or not to review and/or appeal the Council’s decision. The plaintiff requested that the defendant agree to an extension of time under that clause. On 27 November 2003 the defendant advised that it did not agree to extending the period of 14 days referred to in clause 49 of the contract. On 2 December 2003 the plaintiff through its solicitors gave notice pursuant to clause 41.9 of the Contract that it elected to review and/or appeal the consent granted by the Council subject to conditions.

Notice of purported “minor changes or variations”

22 On 23 December 2003 the plaintiff’s solicitors wrote to the defendant in the following terms:

Perpetual Trustee Company limited gives you notice pursuant to clause 41.7 of the contract dated 22 July 2003 (“Contract”) that it proposes to make the following minor changes or variations to the Plan and Instrument (as defined and referred to in the Contract) arising from the requirements of South Sydney City Council:

enclosed

This will result in the area of the proposed Lot 4 being increased by 680² being an increase in the area of the property agreed to be sold of approximately 4.967%.

We will let you have a revised instrument and a further revised plan in this regard in due course.

Subject to the above, the vendor will not be proceeding with any review and/or appeal of the consent granted by South Sydney City Council of Development Application No. U03-00596.

23 On 24 December 2003 the defendant responded in the following terms:

We refer to your letter of 23 December 2003.

In relation to numbered paragraph 1, please confirm that the increase in the area of proposed Lot 4 shall be without increase to the purchase price.

In relation to paragraph 2, please advise as to how the vendor will provide vacant possession on completion if the vendor creates the easements, restrictions on use and covenants referred to in the conditions attached to the Development Consent dated 18 November 2003. Further, in our view, such easements, restrictions on use and covenants are not minor changes or variations to the Plan and Instrument as defined and referred to in the contract.

When these matters are resolved we would also like to discuss the unresolved issue of the payment for the construction of the roadway.

24 On 5 January 2004 the plaintiff’s solicitors responded to the defendant in the following terms:

We refer to your letter dated 24 December 2003 and comment as follows:

3. In your letter to us of 7 November 2003, you noted the effect of the condition attaching to the development consent requiring the relocation of the boundary between the proposed Lots 3 and 4 and stated that “the vendor cannot and should not resist Council’s approval of the subdivision subject to the condition”;

4. There is no requirement in either the contract or the development consent for the subdivision of Lot 1 in DP 626383 requiring the construction of a roadway and accordingly, any issue regarding payment of the construction of a roadway does not arise.

25 On 15 January 2004 the plaintiff’s solicitors wrote to the defendant attaching a Revised Draft Instrument “marked up to show the proposed changes to the draft document” attached to the Contract. The letter requested the defendant to note that the plaintiff had not yet had the opportunity of perusing that draft document and that its final form was subject to the plaintiff’s further instructions.

26 On 25 February 2004 the plaintiff’s solicitors sent to the defendant by email the “latest versions of the revised s88B Instrument and Plan which it is intended to lodge with Council”. That document included new easements (detailed below) that had not been part of the Instrument attached to the Contract.

27 On 5 March 2004 the defendant wrote to the plaintiff’s solicitors in the following terms:

We refer to your email of 25 February 2004.

We note that we have now received a detailed copy of the Plan showing the location and dimensions of the proposed easements and other rights and what appears to be your client’s final draft of the section 88B instrument reflecting the same.

Accordingly, we can now respond to your facsimile of 5 January 2004:

1. Noted

2. The easements, restrictions on use and covenants required to be created by Council and additional easements and other rights included by your client in the proposed section 88B are not “minor variations” or “minor changes” within the meaning of those words in clause 41.7 of the Contract.

3. Our statement that “the vendor cannot and should not resist Council’s approval of the subdivision subject to the condition” has no bearing on our rights including but not limited to, our rights under clause 41.7 of the Contract.

4. It was an implied term of the Contract and/or development consent for the subdivision of Lot 1 in DP 626383 that the vendor would pay for the costs of construction of an internal road within Lot 4.

5. You have not responded how the vendor will provide vacant possession on completion.

28 On 8 March 2004 the plaintiff’s solicitors wrote to the defendant in the following terms:

We refer to your letter dated 5 March 2004 and comment as follows (using the same paragraph numbering as appears therein):

1. Noted;

2. the additional easements and other rights do not affect the land shown as Lot 4 in the plan attached to the contract dated 22 July 2003 being the land agreed to be purchased by your client. The additional easements and rights only affect the additional land to be transferred to your client at no additional price and arise out of the conditions attaching to the development consent dated 18 November 2003. The vendor maintains that the proposed changes and variations are “minor” within the meaning of the contract;

3. our client relied upon the representations contained in your letter of 7 November 2003 in deciding not to appeal the consent granted by South Sydney Council of Development Application No. U03-00596;

4. it was not an implied term of the contract that the vendor would pay for the costs of the construction of an internal road within Lot 4. It was anticipated that the proposed plan of subdivision might be approved on terms and conditions that would require the vendor to carry out works to Lot 4 but there is not condition attaching to Development Consent U03-00596 which requires the construction of an internal road within Lot 4;

5. vacant possession will be provided in relation to the land shown as Lot 4 in the plan attached to the contract dated 22 July 2003.

In your letter of 7 November 2003, you noted that the vendor was concerned as to the condition attaching to the Development Consent requiring the relocation of the boundary between the proposed Lots 3 and 4 “because the tenant of building 5C leases the area being ‘resumed’ as a result of the Condition and that the lease does not expire for another 3 years ... . We consider that given the terms of Special Condition 48.2, the vendor cannot and should not resist Council’s approval of the subdivision subject to the condition”.

The purchaser was aware that the additional land is subject to rights in favour of the existing tenant of the proposed Lot 3 when the purchaser advised that the vendor should not object to the conditions attaching to the Development Consent. As stated in paragraph 3 above, the vendor relied upon the representation set out in your letter of 7 November 2003 in deciding not to proceed with an appeal under clause 41 of the contract.

29 On 12 March 2004 the defendant responded in the following terms:

after

It was not until 23 December 2003 that your client withdrew the proposed appeal and the reasons for that withdrawal are stated in your facsimile of 23 December 2003.

4. Council informed us that there was no condition attaching to Development Consent U03-00596 that required the construction of an internal road within Lot 4 because Council gave your client the option of whether or not this condition should be imposed. Your client chose not to have the condition imposed and thus prevented the full operation of special condition 41.6 which would have seen the internal road constructed at your client’s expense.

30 On 16 March 2004 the defendant wrote to the Council advising that “Meriton will soon be finalising the purchase of the site shown in the plan below”. The letter advised that the defendant had undertaken a preliminary analysis of the parameters for development on the site and that the cost of the development would be approximately $63 million. The letter continued:

As a result of the boundary changes we are uncertain of the process now in place to assess and determine DAs and uncertain of which controls and policies are to be used.

We would like to commence discussions with the relevant staff regarding the preparation of a Masterplan and DA for the subject site.

Could you please advise us as to who we should liaise with from Council, which policies and controls should be used to prepare the DA, who will be assessing the DA and who will determine the DA.

Additionally, could Council please advise:

31 In the meantime the correspondence between the plaintiff’s solicitors and the defendant continued. On 22 March 2004 the plaintiff’s solicitors wrote to the defendant in the following terms:

We refer to your letter of 12 March 2004 and comment as follows (using the same paragraph numbering as appears therein):

2. Our client’s position is as stated in our letter to you of 8 March 2004. The easements for support and repairs arise out of condition (3) to the development consent which requires the boundary between the proposed Lots 3 & 4 to be relocated, so as to be abutting or within one metre of the northern wall of the existing building on Lot 3.

3. Our client maintains that it relied upon the representations contained in your letter of 7 November 2003 in deciding not to appeal the consent granted by South Sydney Council of Development Application No. UO3-00596. We note that at no time have you sought to withdraw your letter of 7 November 2003 or to change the views expressed in it. In our letter to you of 26 November 2003 we requested further time under the contract in which to elect whether or not to review and/or appeal the Council’s decision but this was rejected by you in your fax of 27 November 2003. In order to reserve its rights in this regard, our client elected to review and/or appeal the consent by notice to you dated 2 December 2003, being the last date available under clause 41.9(b) of the contract. Taking into account and based on the views put forward by your client in your letter of 7 November 2003, our client ultimately decided not to proceed with the review and/or the appeal but to proceed as required in your letter of 7 November 2003. Having advised our client not to appeal, it is not now open to you to challenge our client’s decision. Given the conditions attaching to the development consent, this necessitated the revised plan and s.88B Instrument, of which copies have been forwarded to you in accordance with the terms of the contract.

4. Please let us have copies of your correspondence with the Council in relation to the representations, which you say have been made by the Council, in order that we may take our client’s further instructions. Our client is not aware of the matters to which you refer. Our client reiterates its position as set out in our letter to you of 8 March 2004.

We are instructed that the revised plan and s.88B Instrument have now been lodged with Council in the form emailed to you on 25 February 2004.

We will keep you informed as to progress in relation to the registration of the plan.

Subdivision approved – consent to registration requested

32 By letter dated 13 April 2004 the Council advised the plaintiff that it had approved the subdivision of the Land into 2 lots. On 19 April 2004 the plaintiff’s solicitors wrote to the defendant enclosing a copy of that letter from the Council and a copy of the subdivision plan. That letter continued:

Pursuant to clause 41.2 of the Contract for Sale dated 22 July 2003 (“Contract”), the purchaser’s consent to the LPI amendment is requested. We note that pursuant to that clause, this consent cannot be unreasonably withheld or delayed. This consent can be given in a letter or email from you.

Pursuant to clause 44.2 of the Contract, the purchaser’s consent as caveator under caveat 9823791 to the registration of the plan of subdivision, the section 88B instrument and the cancellation of easement is urgently requested. We note that under this clause the purchaser must consent. To assist, we have enclosed a draft letter which can be used to provide the consent.

Conditional consent to registration of Plan

33 On 21 April 2004 the defendant wrote to the plaintiff’s solicitors in terms which included the following:

We do not agree that clause 44.2 of the Contract compels us to consent to the documents proposed by you. Clause 44.2 only requires the purchaser to consent when requested by the vendor to the registration of the “Plan”, the “Instrument” and the “Cancellation of Easement”. Each of these documents is a defined term in clause 41.14 and 47.1 respectively. In each case the document must either be the same as the document of that type annexed to the Contract or be modified under clause 41.7 of the Contract. If neither of these conditions is satisfied the documents will not meet the definition of each of the documents.

As you know from our previous correspondence, it is our contention that some of the additional easements, restrictions on use and other rights that have been included or amended are variations to the Plan and Instrument that are not within the ambit of clause 41.7 and in particular, are more than “minor” and thus not contemplated by the contract.

The documents you have provided to us as purporting to be the Plan and Instrument do not meet the definition of the Plan and Instrument in the Contract. Clearly the Plan and Instrument provided by you are not the same as the Plan and Instrument annexed to the Contract. Moreover, the Plan and Instrument provided by you have not been modified under clause 41.7.

Hence, the Plan and Instrument provided by you and in respect of which you seek consent are not documents that meet the definition in the Contract of the Plan and Instrument. In these circumstances, no proper request under clause 44.2 of the Contract has been made to the purchaser so as to enliven any requirement under clause 44.2 on the purchaser to grant consent to the Plan and Instrument provided.

Nevertheless if the vendor still wishes to register the Plan and Instrument provided to us, we are prepared (subject to the qualification set out above and below) to consent to the lodgement at the LPI for registration of the:

(a) plan of subdivision as approved in Sydney City Council’s Certificate 13/04;

(b) section 88B Instrument as emailed to us on 19 April 2004; and

(c) cancellation of easement in the terms of the Cancellation of Easement attached to the contract.

However, we put you on notice that if you do register the documents in (a) and (b) above, rather than documents properly meeting the description of the Plan and Instrument in the Contract, you will be creating a lot that is otherwise than what we contracted to buy and will give rise to an entitlement to the purchaser to terminate the Contract. If you proceed with the lodgement, we expressly reserve our rights in respect of the same and under the Contract generally.

Accordingly, on the basis set out above, we enclose our consent to the dealings you propose to lodge for registration.

34 On 27 April 2004 the plaintiff’s solicitors responded to the defendant in the following terms:

Without canvassing all of the matters set out in your letter, we are instructed to comment as follows:

1. As specified in previous correspondence, the vendor maintains that the proposed changes and variations are clearly “minor” within the meaning of the contract.

The additional land to be transferred to your client at no additional price is:

· less than 5% of the total area of the property.

· satisfies the definition of “minor” in clause 41.8 of the contract.

The additional easements and rights:

· only affect the additional land to be transferred to your client at no additional price.

· arise out of the conditions attaching to the development consent dated 18 November 2003.

· do not in any way affect or interfere with your intended use of the property.

2. Our client denies that there was no proper request under clause 44.2

3. You have consented to the plans, purportedly subject to reservations. Our client does not accept the validity of your reservations.
4. As to the threat in the second last paragraph of your letter, our client denies that you have any entitlement to terminate the contract.

Written Notice of Registration

35 On 13 May 2004 the plaintiff’s solicitors wrote to the defendant in the following terms:

Objection under clause 5 of the Contract

36 On 2 June 2004 the defendant wrote to the plaintiff in the following terms:

We refer to your facsimile of 13 May 2004.

The Purchaser objects to the Vendor’s proposed transfer to the Purchaser of the above property and title to it on the grounds that the above property and title to it (sic) registered as Folio 4/1065657 (Registered Property) is substantially different from the property and title to it as described in the Contract dated 22 July 2003 (“Contract Property”). The Purchaser makes this objection pursuant to clause 5 of the Contract.

The substantial differences between the Registered Property and the Contract Property objected to by the Purchaser are outlined in the attached Table. Accordingly, the vendor is unable to perform the contract according to its terms and/or there is an obstacle to completion.

The Purchaser is ready, willing and able to complete the Contract within 7 days of being notified that the rights of way, easements and restrictions on title have been removed and that the property will be sold with vacant possession.

37 The Table attached to that letter was in the following terms:

Easement, restriction etc Contract Property Registered Property

Right of Way 3.6 Wide and Variable to burden Lot 4 in DP1065657 and to benefit Lot 3 in DP106567 & Lot 2 in DP566811 Proposed Right of Way 3.6 Wide & Variable Width (Y) Right of Way 7.2 Wide & Variable Width (Y)

Right of Way 3.6 Wide and Variable to burden Lot 3 in DP106567 and to benefit Lot 4 in DP1065657 & Lot 2 in DP56681 Proposed Right of Way 3.6 Wide & Variable Width (Z) Not included

Easement to Park Motor Vehicles 4.5 Wide & Variable burdening Lot 4 in DP1065657 and benefiting Lot 3 in DP1065657 Not Included Easement to Park Motor Vehicles 4.5 Wide & Variable (D)

Restrictions on Use of Land burdening Lot 4 in DP1065657 and benefiting Lot 3 in DP1065657 Not included Restriction on Use of Land (E)

Easement for Repairs 11.7 Wide & Variable burdening Lot 4 in DP1065657 and benefiting Lot 3 in DP1065657 Not Included Easement for Repairs 11.7 Wide & Variable (F)

Easement for Support 4.5 Wide & Variable burdening Lot 4 in DP1065657 and benefiting Lot 3 in DP1065657 Not included Easement for Support 4.5 Wide & Variable (Z)

Vacant Possession No tenancies disclosed Property is subject to an unregistered lease to Aust Scan Pty Limited commencing 8 August 2003 and terminating on 7 August 2006.

Response to Objection

38 On 4 June 2004 the plaintiff’s solicitors responded in the following terms:

We refer to your letter dated 2 June 2004 which we note is the first response we have received to our letter of 13 May 2004 giving you notice of the registration of the Plan and Instrument at Land and Property Information New South Wales.

Our client denies that:

· the purchaser is entitled to object to the transfer of the property to the vendor pursuant to the contract dated 22 July 2003 (“Contract”).

· the property to be transferred is substantially different from the property described in the Contract;

· the purchaser is entitled to object to the transfer of the property to the purchaser pursuant to clause 5 of the Contract;

· the vendor is unable to perform the Contract according to its terms and/or there is an obstacle to completion.

The issues raised in your letter in relation to these matters have been substantially canvassed in previous correspondence. However, we summarise our particular comments in relation to the objections outlined in the Table attached to your letter of 2 June 2004 as follows:

Objection

Right of Way 3.6 wide and variable to burden Lot 4 in DP 1065657

Comments

… (b) vehicular access rights over the proposed driveway on Lot 4”.

2. Objection

Right of Way 3.6 wide and variable to burden Lot 3 in DP 106567.

Comments

3. Objection

Easement to park motor vehicles 4.5 wide and variable

Comments

(a) parking for 16 vehicles perpendicular to the northern wall of the building on the proposed Lot 3”.

4. Objection

Restrictions on use of land burdening Lot 4 in DP 1065657

Comments

5. Objection

Easement for Repairs 11.7 wide

Comments

6. Objection

Easement for Support 4.5 wide

Comments

7. Objection

Vacant Possession

Comments

General Comments

The vendor requires the purchaser to complete the Contract in accordance with clause 40 of the Contract. Please forward form of transfer pursuant to clause 4.1 of the Contract.

Pre Lodgement Submission

39 In July 2004 the defendant lodged with the Council a “Pre-Lodgement Submission” which contained a section on Floor Space Ratio (FSR). That section referred to the potential for a bonus FSR up to 2:1, subject to the appropriate public domain improvements. It included the following:

The Preferred Option includes the provision of Public Domain Improvements Package as described in the table below. It can be seen that the value of the package is in excess of the “value” of the bonus floor area sought in the Preferred option.

40 The table set out the area including the land contained in Lot 4 after the change in the boundary. It also referred to the dedication and construction of roads and the following:

Map 7-Built Form

Map 7, however, indicates that the buildings can be 8 storeys to Epsom Road and 6 storeys around the remainder of the site.

It can be seen that an FSR of 2:1 can be accommodated on the site within the building parameters suggested by the DCP: Indeed it can be provided in buildings that are less than the massing suggested.

41 The Submission also included a section entitled Public Domain which stated:

Public domain works to be undertaken include the construction and dedication of roads across the southern and eastern boundaries of the site, and a contribution towards infrastructure in the Green Square Town Centre.

Proceedings commenced

42 Between 29 June 2004 and 12 July 2004 further correspondence ensued between the parties however completion did not take place on 12 July 2004. These proceedings were commenced by Summons in the Equity Division General List on 22 July 2004. On 13 August 2004 the matter was transferred into the Commercial List and listed for hearing on 8 December 2004 for three days. An Amended Summons was filed on 16 August 2004. The matter was heard on 8, 9 and 10 December 2004, when Mr MJ Slattery QC leading Ms RA Pepper and Ms D Robinson appeared for the plaintiff and Mr RJ Weber SC leading Mr IR Pike appeared for the defendant. Final written submissions were received on 17 December 2004.

43 At trial the plaintiff relied upon the affidavit evidence of: Neil Ingham, a consultant town planner, sworn on 11 November 2004, 3, 6 and 7 December 2004; Peter Blakeley, a valuer, sworn 17 November 2004 and 7 December 2004; Scott Cuyler Armstrong, a Portfolio Manager with Deutsche, sworn 22 July 2004 (2 affidavits of the same date); and Adrian Francis Grew, an Asset Manager with Deutsche, sworn 22 July 2004. Only Mr Ingham and Mr Blakeley were cross-examined. The evidence of Messrs Armstrong and Grew was in the main documentary and uncontroversial.

44 The defendant relied upon the affidavit evidence of: Peter Spira, a director and General Manager of the defendant, sworn 13 October 2004 and 3 December 2004; John Derek Lawrence, a Quantity Surveyor, sworn 21 October 2004; and Colin James Weatherby, a Registered Surveyor and Town Planner, sworn 2 December 2004. Only Mr Spria and Mr Weatherby were cross-examined.

The evidence of Mr Ingham

45 Neil Ingham, a very experienced town planner provided a report dated 11 November 2004 in which he expressed the opinion that the defendant was “no worse off” with the inclusion of the additional 670 square metres within Lot 4 than it was without that land being included. He also expressed the opinion that the defendant was better off because it could utilise the land in the determination of a maximum floor space that applies to the land. He also expressed the opinion that the assumption by the defendant that the Council will require the construction of a public road by the developer of Lot 4 is, at this point in time, pure speculation. He said that in any event he could see no ground upon which the Council could reasonably require the developers of Lot 4 to construct the road because there is no benefit to Lot 4 by its construction.

46 In his affidavit of 3 December 2004 Mr Ingham confirmed his opinion that the defendant is not required either to dedicate land for or construct the public road other than in response to receiving the benefit of bonus floor space. After reviewing documents produced on subpoena by the Council, he confirmed his opinion that it was not a requirement of the proposed development that the defendant had to finance all or any portion of the cost of the construction of the road, other than in response to receiving the benefit of bonus floor space. His evidence was that the defendant is not required to seek bonus floor space and the Council cannot require the dedication and construction of public roads that are not needed for the development. Mr Ingham said that from a review of the documents the indication from the Council is that with the dedication and construction of the roads, the defendant would receive a bonus floor space commensurate with the value of the works to be undertaken but are not to exceed a 0.5:1 bonus floor space ratio. The defendant could either proceed with the bonus floor space provision up to a maximum floor space ratio of 1.5:1 or subject to the works being undertaken up to a maximum floor space of 2.0:1.

47 In a further affidavit sworn on 6 December 2004 Mr Ingham expressed the opinion that even if no bonus floor space was obtained, the additional floor space possible because of the additional 680 square metres of land is 1.5 x 670 square metres which is 1,005 square metres of floor space. When calculated, that additional floor space would provide for 14 one bedroom units or, 10 two bedroom units or 7 three bedroom units. On the assumption that bonus floor space was obtained up to 1,340 square metres he estimated that it would provide a maximum of 19 one bedroom units, 13 two bedroom units, 10 three bedroom units, or a combination of those three. He expressed the opinion that the benefit to the defendant was substantial, regardless of whether bonus floor space was obtained or not.

48 In cross-examination Mr Ingham agreed that the Council had been insistent upon the dedication of an east west public road that had varied in width but was “now 20 metres”. He said that in his experience a Council could not require land to be dedicated or works constructed, unless it is created by a need of the development. He expressed the view that it was fairly clear that there was no such need but accepted that minds would always vary. He was not suggesting that the Council might not ask for the dedication of the road and accepted that it might, but in his opinion he did not believe it was “required” because there was no need created for it. Mr Ingham suggested that the developer could challenge any Council requirement for a dedication of a road in those circumstances but accepted that such litigation for a developer is not a desirable outcome and could delay construction.

49 The defendant submitted that the evidence of Mr Ingham went no further than to suggest that in respect of some of the concerns raised by Mr Spira there may be conceptually possible ways around the concerns. It was submitted that all are sub-optimal and that the defendant does not want those headaches.

The evidence of Mr Blakeley

50 Peter Blakeley, a valuer with Colliers International-Australia expressed the opinion that the appropriate methodology to value the gain or loss incurred by the inclusion of the additional land and the additional encumbrances was a direct comparison method on a before and after approach. That methodology showed the value of the original land as it was and the value of the land approved and highlights the difference in value between them.

51 Mr Blakeley expressed the opinion that the original land, 13,690 square metres at $1,400 per square metre was valued at $19.2 million. He valued the land with the additional land at 14,370 square metres at $1,400 per square metres at $20,118,500. Mr Blakeley applied a discount for the encumbrances at $50,000 although in his evidence he conceded that he was thinking of valuing them at $100,000. Applying the former discount he reached a figure of $900,000.

52 Mr Blakeley expressed the opinion that a prudent purchaser, after studying the planning information, would seriously consider that they would most likely have to contribute to the construction and dedication of roadways if they intended to obtain the maximum floor space with the bonus floor space. In those circumstances it was Mr Blakeley’s opinion that the prudent purchaser would factor those costs into the price they would pay for either the agreed original land or the land including the additional land.

53 In an affidavit of 7 December 2004 Mr Blakeley estimated that an average 2 bedroom unit 90 square metres in size, with good quality fixtures and fittings would sell in the market as at July 2004 for approximately $450,000. On the assumption of an increase of 10 two bedroom units, Mr Blakeley estimated the gross realisation to be approximately $4.5 million from the increase in floor space.

54 In cross-examination Mr Blakeley observed that when the contract was entered into in July 2003 the “market was running very hot”. Indeed he said that it was “out of control”. As to the deduction for the encumbrance of between $50,000 and $100,000 Mr Blakeley said:

I still think that probably someone could get around this and, you know, it could be nil, it could be up to $100,000. I ascribed 50. I could have put 100 on it. I was tossing up. I’ve noted that there was (sic) affectations on the property, there are encumbrances, and I have ascribed that in the valuations, I think it’s reasonable to point out.

55 Mr Blakeley expressed the view that by July 2004 the value of properties in South Sydney had dropped by 20 to 40 per cent. He said the peak of the market was about September 2003 but that it has taken a dramatic turn. He expressed the view that as at the date of trial the site the subject of the Contract would probably be worth $1,000 to $1,100 a metre, somewhere between 20 and 30 per cent less than the Contract price.

56 The defendant submitted that Mr Blakeley’s evidence is only relevant to the so-called balancing exercise between benefits and burdens and is therefore irrelevant. It also submitted that even if it is relevant to determine a value for the extra land, Mr Blakeley’s valuation should be given no weight at all. Firstly it purports to value it as at the date of contract, July 2003. Logically any valuations of the land should be undertaken at the time at which the defendant is required to take the land, in this case 12 July 2004. Secondly it is apparent that Mr Blakeley has not taken into account any of the evidence of Mr Spira as to the impact on the defendant of the new easements. Rather Mr Blakeley sought to determine the impacts of the easements on a reasonable hypothetical purchaser. It was submitted that was not a relevant inquiry in the present case where the defendant has actual intentions for the development of the land, which were known to the plaintiff prior to the entry into the contract.

The evidence of Mr Spira

57 Peter Spira is a qualified architect registered with the Board of Architects. He has worked with the Meriton Group of Companies for over 26 years, firstly as the Chief Architect for 10 years and as General Manager for the last 16 years. He is directly involved in all the defendant’s town planning issues and has been involved in the design and construction of “tens of thousands” of townhouses and apartments in Sydney and the Gold Coast and in excess of 100 different residential developments in many different municipalities. He has been involved in over 20 developments in the relevant Council area.

58 Although the defendant lodged a Masterplan with the Council on 23 September 2004, it has not yet received Council approval. The Masterplan is for a mixed residential and commercial development of 6 to 8 storeys with 2 levels of basement car parking. The “building envelope”, including the car park basement occupies most of the site allowing for a proposed north-south road along the eastern boundary, a proposed road in an east-west direction along the southern boundary, a landscaped setback along Rothschild Avenue and a 2 metre landscaped setback along Epsom Road. A key element of the Council requirements was for the proposed north-south road and the proposed east-west road to be subdivided and dedicated as public roads and for the embellishment of the setbacks along Rothschild Avenue and Epsom Road.

59 In his affidavit of 13 October 2004 Mr Spira analysed the easements that were put in place in the new s88B Instrument. In respect of the right of way 7.2 wide and variable width (“Y”), Mr Spira said that the original plan of subdivision with the original boundary as the centre of the road would have enabled the footprint of the defendant’s development to be 10 metres from the centre of the right of way.

60 At the time the Contract was negotiated it seems tolerably clear that the parties anticipated that Council would require the construction and dedication of a public road. Mr Spira suggested that clause 41.6 may be seen as a protection of the plaintiff from a “cost blow out” due to undertaking works that Council may require. If the plaintiff was required to build the road and no other works, it could have paid up to $1.1 million of the costs on the defendant’s side of the road in addition to the costs for its side of the road. Mr Spira’s evidence was that as a result of the boundary relocation the full cost of the construction of the road, estimated at $920,220 now falls on the defendant. That estimate does not include any cost of any remediation that may be required. A full assessment has not yet been undertaken in respect of whether any remediation may be required but a preliminary assessment by the defendant’s consultants of 23 September 2004 concluded that potential existed for contamination on the site with a recommendation for further assessment.

61 In respect of the easement to park motor vehicles 4.5 wide and variable (“D”), Mr Spira gave evidence that in order to meet a requirement of a dedicated 20 metre public road, part of the east-west road will be built in the area of that easement. That easement will expire at the expiration of the lease to IKEA in August 2006. The Council has indicated that it will not require the east-west road to be dedicated as a public road until after the expiry of the IKEA lease on 7 August 2006. Mr Spira’s evidence was that delaying construction of the east-west public road will have a major impact on the proposed development.

62 In this regard Mr Spira referred to the original easement (“X") over the existing line of pipes for drainage of stormwater that passes through the footprint of the proposed development. No excavation can take place until the stormwater is diverted along the new east-west road to Rothschild Avenue. The diversion of the stormwater would be one of the first activities to be undertaken to allow any construction activity on the site. That work would usually be undertaken when the east-west road was constructed at the beginning of the project. Mr Spira’s evidence was that if the defendant is unable to construct the east-west road until August 2006 a temporary stormwater diversion may need to be constructed until the permanent stormwater diversion can be completed at extra costs estimated at $76,250.

63 Mr Spira also gave evidence that the only entry into the car park of the proposed new residential development is off the east-west road. He said that it was usual for Council to require the car park and car park driveway to be completed before any of the development is occupied. In this regard he once again claimed that if construction of the east-west roadway is unable to be commenced until after August 2006, any occupation of the building is “most likely” to be delayed beyond that time with consequential revenue from the development being delayed and “overall profitability” being affected as holding costs will increase.

64 This general evidence in relation to profitability and holding costs was the subject of cross-examination. Mr Slattery QC asked Mr Spira whether, in order to calculate whether or not it was financially viable to purchase the property at $22 million, he would have done a calculation of some kind. Mr Spira agreed that he would have done a calculation and he would have written it down, probably on a piece of paper. The following cross-examination then occurred:

Q: When, in the last 12 months did Meriton buy properties worth $22m?

(tr. 49)

65 Mr Spira gave evidence that these documents are destroyed because that is “the way we operate” and “we don’t see the need to retain” them (tr 50). The cross-examination continued:

Q: How soon after you write out your figures, on whatever piece of paper, do you destroy them?
A: Basically, as soon as we’ve done it, we just – that evening when the clean-up takes place, it often sits lying around on Mr Triguboff’s table or the table in our boardroom. We don’t think twice about it. The cleaners come in and they throw it out.

Q: The cleaners have access to your desk?
A: Yes.
Q: They throw out any paper?
A: No, on the boardroom desk. Anything left loose on the boardroom table they know we don’t need those and they throw them out.

(tr. 52)

66 Notwithstanding this seemingly peculiar way of operating a large company, there was no evidence called to suggest that this is not the way the company does business or that Mr Spira’s evidence was other than accurate save for the existence of some notes of an unidentified author in relation to the site.

67 In relation to the easement for support 4.5 wide and variable (“Z”) Mr Spira gave evidence that this allows the plaintiff to keep and maintain on the lot burdened (Lot 4) any existing foundations or other structures that are required to support the building on Lot 3. At this stage the location and type of footings are unknown and the extent of any encroachment is unknown. The same position applies to the structural integrity of any footings. Mr Spira claimed that if the defendant damages the foundations during construction of the east-west road it will be required to repair the damage at its cost. He also claimed that the existence of any footings may create difficulties when constructing the road including an inability to use vibrating equipment when compacting the road. He claimed that such inability “could” have cost ramifications. It may be that reinforcement of any footings that do exist or underpinning of them may be required. Those costs have been estimated at $161,050.

68 Mr Spira said that in his experience Council would not accept the dedication of a public road that is burdened by such an easement or into which a building or structure encroaches. He expressed the view that the continuing existence of this easement beyond August 2006, unlike the easement to park motor vehicles that expires in August 2006, will prevent the dedication of the road if it remains on the southern boundary of the site. The defendant will need the agreement of the plaintiff to remove the easement and enable the dedication of the road.

69 On the assumption that the defendant was unable to obtain the plaintiff’s agreement to remove the easement it would have to avoid the area completely when constructing the road. That will mean that the 20 metre wide east-west road would need to be moved 4.5 metres to the north and would force the footprint of the development to be 24.5 metres from the southern boundary. By comparison the Contract had the boundary down the centre of the right of way which meant the defendant’s building could be set back 10 metres to the north of the centre of the right of way. It would now be 16.4 metres north of the centre of the right of way and would reduce the footprint of the development and “may because of height limitations, reduce the floor space of the proposed development”.

70 Mr Spira claimed that this easement “Z” introduces many unknown factors, imposes a requirement to repair damage not previously imposed, creates risks and possibly increases cost during construction, has an indefinite duration, may prevent dedication of the public road and may affect the location of the road and reduce the floor space of the development. He claimed that had the defendant known about these easements and the practical impacts that result from them prior to entering into the Contract, it would not have entered into the Contract.

71 Although the plaintiff complained that the defendant had not called evidence in relation to the cost or real effect of the inconvenience of the changes to the s 88B Instrument, I am of the view that Mr Spira’s evidence and that of the other witnesses called on behalf of the defendant contains such evidence. In any event further evidence of this nature was elicited in cross-examination of Mr Spira. Mr Spira produced a Plan demonstrating the impact of the easements on the defendant’s proposed development, in particular the position of the building line (Ex 1). His evidence in cross-examination included the following:

Q: Can you explain to the Court, with respect to the latter of those easements, what the logic was by which you decided that the building line would have to be moved because of the easement for repairs?
A: If the easement for repairs remains, then the public road could not be built and dedicated to Council with that easement over that road. Council would not accept an easement of that nature on a public road. Therefore, for us to proceed with the development, we would have to move the public road over to that degree to avoid the 11.7 metre wide easement.

Q: What do you mean by “move the public road to avoid the 11.7 metre easement”?
A: The road would have to be constructed further to the north, so it would be clear of the 11.75 metre easement.

Q: Please correct me if my statement back to you is wrong. What you are saying is that effectively, if the 11.7 metre easement for repairs is going to remain, it would occupy a space of 11.7 metres abutting the Ikea building and nothing could be built there, but the whole road and everything would have to be moved north of that space?
A: That’s correct.

Q: Firstly, you haven’t made any enquiries of Council yourself as to whether or not an 11.7 metre easement for repairs is likely to be accepted by the Council or not, after dedication of the public road, have you?
A: I have caused someone else to make that enquiry of Council.

Q: Now what is your understanding of what the easement for repairs is for?
A: As I understand it, it’s to enable the owners of the Ikea building to be able to effect repairs to that building from time to time.

86 The provisions of Part 2 of the s88B Instrument provide that: easement “Y” is to “automatically expire or terminate in relation to any part of the site of this right of way which is dedicated as a public road with effect from the date of such dedication” (3.8) ; easement “D” is to “automatically expire or terminate” on the date that the Ikea lease expires or lawfully terminates (5.2) but then the site of the easement as extinguished “shall form part of the site of the easement” “Y” (5.3); part of easement “E” (6.4 and 6.5) is to “automatically cease to apply” when easement “D” expires or terminates. Easement “D” and part of easement “E” terminate or expire by reference to the expiration of the Ikea lease and thus by reference to something other than the two events mentioned in the condition (the redevelopment of Lot 4 and the dedication of the public road). The fact that the termination or expiry is tied to an event other than those mentioned in the condition has not been the subject of any submissions probably because the provisions of the easements generally have the practical effect of expiration of the easements at the time of the events in the condition. As a condition of the Consent to the Subdivision the Council will not require the dedication of the public road until the expiration of the Ikea lease and the evidence establishes that the defendant would wish to construct the road at the commencement of the development.

87 The provisions of Part 2 of the s88B Instrument in relation to easement “Y” (7.2 metre wide right of way burdening Lot 4 and benefiting Lot 3) are:

3.1 Full and free right for the owner of the lot benefited and any person who has an estate or interest in possession in any part of the lot benefited (“Occupier”) and every person reasonably authorised by the owner of the lot benefited and the Occupier to go, pass and repass at all times and for all purposes with or without vehicles (subject to the restriction referred to in 6.6) over the site of the easement and the site of the easement fifthly referred to following the expiry or termination of that easement as provided in clause 5.3.

3.2 The owners of the lots benefited and burdened are responsible for maintaining any road surfaces erected on the site of the easement in good repair and condition including structural repairs. The costs of any necessary repairs and maintenance must be borne by the owners of the lots burdened and benefited as follows:

(a) whilst the owner of the lots benefited is the same person, 50% by the owner of the lot burdened and 25% by each of the respective owners of each of the lots benefited;

(b) whilst the lots benefited are owned by different owners, by each of the respective owners of each of the lots benefited and burdened in equal shares.

3.3 The owner of the lot benefited may use such part of the lot burdened as is reasonably necessary in the circumstances for the purposes of constructing a roadway at its cost on any part of the site of the easement where no roadway exists and carrying out any necessary repairs and maintenance to any road surfaces from time to time erected on the site of the easement and do anything reasonably necessary for that purpose including entering the lot burdened and taking anything on the lot burdened.

3.4 Nothing in this clause 3 shall impose any obligation upon the owner or Occupier of the lot benefited to construct or contribute to the cost of constructing any new road on the site of this right of way or any part of it.

3.5 The owners of the lots benefited and burdened must ensure all repairs and maintenance to any road surfaces erected on the site of the easement are done properly and carried out as soon as is practicable in the circumstances.

3.7 The owners of the lot burdened and benefited must liaise with each other and act in good faith in relation to determining whether or not any repairs or maintenance need to be carried out to any road surface on the site of the easement and must work together to ensure that any necessary repairs and maintenance are carried out promptly and efficiently.

3.8 This right of way shall automatically expire or terminate in relation to any part of the site of this right of way which is dedicated as a public road with effect from the date of such dedication.

88 The new easements that are included in the new s88B Instrument that do not contain automatic expiry provisions are: “F” – easement for repairs 11.7 wide and variable burdening Lot 4 and benefiting Lot 3; and “Z” – easement for support 4.5 wide and variable burdening Lot 4 and benefiting Lot 3. It is those two easements and easement “E” – restriction on use – to which Mr Spira referred in particular in his cross-examination. There are no provisions in Part 2 of the s88B Instrument relating to easement “F”. The provisions of Part 2 of the s88B Instrument in relation to easement “E” (restriction on the use of land) include the following:

6.1 Not to do or suffer to be done anything which may obstruct access to the lot benefited over the right of way … [easement “Y”] except to the extent and for the period necessary to allow the construction of a road on the lot burdened.

6.2 Notwithstanding subclause 6.1, not to do or suffer to be done anything (including but not limited to the construction of a road) which would at any time prevent clear and unimpeded access over the right of way (7.2 metres wide) … to more than one of the roller doors located in the northern wall of the building constructed on the lot benefited.

6.3 Not to do or suffer to be done anything which may interfere with the access to or the use of the carparking spaces referred to in … [easement “D”] except to the extent and for the period necessary to allow the construction of a road on the lot burdened. The owner of the lot burdened must give at least 14 days prior written notice to the owner of the lot benefited of any such likely interference together with such details as may be required by the owner of the lot benefited (acting reasonably).

6.4 Notwithstanding subclause 6.3, not to do or suffer to be done anything (including but not limited to the construction of a road) which would at any time prevent access to and the unimpeded use of more than ten of the car parking spaces referred to in … [easement “D”].

6.5 The restrictions set out in subclauses 6.3 and 6.4 shall automatically cease to apply when [easement “D”] … expires or terminates.

6.6 Until dedication as a public road, not to use on any roadway constructed on the site of [easement “Y”] … or suffer it to be used by any motor vehicle other than a passenger vehicle, light van, emergency vehicle or vehicle required for the exercise of [easement “F”].

6.7 Not to construct or suffer to be constructed or allow to remain upon the site of [easements “Y” and “D”] … any structure other than a roadway or hard stand area for carparking.

89 The provisions of Part 2 of the Instrument in respect of easement “Z” (easement for support) provides as follows:

4.1 The owner of the lot benefited:

(a) may keep and maintain on the lot burdened, but only within the site of this easement, any existing foundations or other structures (“foundations”) which are reasonably necessary to support the improvements constructed on the lot benefited; and

4.2 The owner of the lot burdened must not:

4.3 If the owner of the lot burdened does or allows anything to be done which damages the foundations or impairs their effectiveness, the owner of the lot benefited may serve not less than 7 days’ notice on the owner of the lot burdened requiring the damage to be repaired or the impairment removed. If the owner of the lot burdened does not comply with the notice, the owner of the lot benefited may enter and repair the damage or remove the impairment and may recover any reasonable costs from the owner of the lot burdened.

4.4 In exercising those powers (whether or not after serving such a notice), the owner of the lot benefited must:

4.5 The owner of the lot burdened may insist that this easement be extinguished if the structure of the land benefited which is supported by the foundations is removed.

90 This easement is outside the permissive condition imposed by the Council and the defendant can only “insist” on its extinguishment if Building 5C is “removed”. As there are no provisions in Part 2 of the s88B Instrument relating to easement “F” there can be no certainty for the defendant that such easement can be removed with ease at any time.

Is the defendant’s objection valid?

91 The change in the boundary certainly had consequences other than the increase in the size of the area in the Plan. The car-parking spaces leased to Ikea until August 2006 are on the land immediately to the north of the new boundary and are thus unable to be used by the defendant during that period. There are also the 11.7 metre easement for repairs, the 4.5 metre easement for support and the restriction on use for construction vehicles.

92 The plaintiff submitted that when properly analysed, these easements relate to the dedication and construction by the defendant of the public road and therefore the defendant is precluded from making any objection by reason of cl 41.7(e) and cl 48 of the Contract. The plaintiff also submitted that the easements are as a result of the requirement by the Council to move the sub-division boundary, and arose because of the likely condition to be imposed by the Council that land had to be dedicated by the defendant to construct a public road. It was submitted that because Council could not compel the road to be built on Lot 3 (the plaintiff’s property) absent resumption, the necessity arose to move the boundary towards the Ikea warehouse. It was submitted that clause 41.7(e) and clause 48 represent a complete answer to the defendant’s position.

93 Clause 41.7(e) precludes the defendant from objecting to “any variation relating to the Roadway referred to in clause 48”. This provision, unlike the others in clause 41.7, makes no mention of “minor” variation. Clause 48.2 precludes any objection “if the Council requires any change or variation in the dimensions or location of the Roadway or requires the Roadway to be dedicated as a public road or imposes any other conditions affecting the Roadway”. The Council required the change in dimension from 7.2 metres to 20 metres and required it be located in the new position just north of the new boundary. It is true that the new boundary could not be the subject of objection by reason of the increase in the area being less than 5%, and it is also true that the new dimension and the new location of the Roadway could not be the subject of objection by reason of the clauses 41.7(e) and 48.2. But that is not a complete answer to the defendant’s objection. The defendant submitted that the new easements created, without its consent or agreement, are not “minor” variations to the Instrument as that term is used in clause 41.7(d) and did not arise from the requirements of Council.

A requirement of Council

94 The Contract provides that the plaintiff may within 14 days after the Council’s Decision elect to appeal or review it. Although Mr Spira agreed in cross-examination that the defendant had a right of appeal if the plaintiff elected not to pursue such appeal, that right is not available in respect of approvals subject to conditions, which is what occurred in this case (clause 41.10(c)). The acceptance or non-acceptance of the “requirement” was therefore in the plaintiff’s hands. Although the plaintiff initially did not accept the imposition of the “requirement” for the movement of the boundary - evidenced by its election to appeal - it subsequently accepted it by its withdrawal of the appeal as notified to the defendant on 23 December 2003.

95 The change in the position of the boundary was in my view a “requirement” of Council within the meaning of that term in clause 41.7(d).

Arising from the requirements of Council

96 The other condition imposed by the Council was permissive in the sense that “until such time as Lot 4 is redeveloped and a public road dedicated along its southern side”, it allowed the placement on title of easements in the categories set out in the condition. The easements imposed pursuant to this condition, are easements “Y”, “D” and “E”. The easements for repairs (“F”) and the easement for support (“Z”) are not within these categories. None of these easements were imposed as a “requirement” of Council but the question is whether they were variations “arising from a requirement” of Council. In final submissions the parties specifically addressed only easements “E” (restriction on use), “F” (repairs) and “Z” (support) having regard to Mr Spira’s evidence that the defendant would be happy to settle if they were removed.

97 The plaintiff submitted that the inclusion of these easements in the new s88B Instrument are variations “arising out of the requirements” of the Council to move the boundary to within one metre of the Ikea building to accommodate the public road.

98 Easement “E” – Restriction on Use: The plaintiff submitted that this restriction “has been imposed by Council” (written submissions 10/12/2004 par 52) and that the “registered restriction merely supplements the existing restriction” (written submissions 10/12/04 par 53). In my view this submission cannot to be accepted. Firstly this easement was not “imposed by Council”. The plaintiff chose to take up the permissive condition of the Consent and it decided that it wished to have the easement on the title. Even the comparative Table of easements in the s88B Instrument attached to the Contract and those in the Registered s88B Instrument attached to the plaintiff’s final written Submissions makes it abundantly clear that there was no restriction on the defendant using construction vehicles over part of the area prior to the new s88B Instrument.

99 It is true that this easement is on the Land between the old boundary and the new boundary (the additional Land), but there is nothing to suggest that it was either a requirement of Council or imposed by Council as claimed in the plaintiff’s written submissions. The Condition was permissive, allowing restriction on the use of the driveway by “vehicles larger than those which it is designed to accommodate”. There was nothing in the Condition indicating whether the driveway could accommodate construction vehicles, and certainly no particularisation of the types of vehicles that it was designed to accommodate. That particularisation – “passenger vehicle, light van, emergency vehicle or vehicle required for the exercise of the easement” – was apparently the drafting of the plaintiff and could hardly be said to be an imposition by the Council. There is no evidence that such an imposition was required by the Council or arose out of any requirement of the Council.

100 In my view, for a variation to the s88B Instrument to qualify as one “arising from a requirement of Council” in the context of this Contract, it would have to be a necessary consequence of the requirement and not merely one that the party benefiting from such variation would prefer to have in place. This easement is not a necessary consequence of the requirement to move the boundary. Indeed the Council condition of consent making it a matter of choice supports such a conclusion. I am not satisfied that this easement arises from a requirement of Council. That finding means that this variation to the s88B Instrument is one in respect of which the defendant is entitled to object. It is not precluded by clause 41.7(d) or any other provision. One does not reach the point of having to consider whether the variation is “minor” because the Contract is quite clear that the defendant is entitled to object to variations other than those precluded by the provisions of clause 41.7. That alone would put an end to the plaintiff’s application for an order for specific performance, however I shall consider the other matters raised by the parties.

101 Easement “F” – Repairs: The plaintiff submitted that this easement is a necessary consequence of the requirement of Council to move the boundary. It is submitted that it is necessary to enable the plaintiff to effect repairs to Building 5C. It may well be necessary to effect repairs to Building 5C from time to time and the space of one metre to the boundary of Lot 3 and Lot 4 would not be enough to erect scaffolding and/or accommodate the presence of workers to effect such repairs. It seems to me that an easement for repairs arose from the requirement of the Council to move the boundary. Whether this particular easement with these particular dimensions arose is another question but the defendant did not take that point. I am therefore satisfied that this easement does arise from the requirement of Council to move the boundary and thus the next question to be considered in relation to the variation to the s88B Instrument to include it, is whether the variation is “minor”. That will be considered below.

102 Easement “Z” – Support: The plaintiff submitted that this easement relates only to the existing foundations or other structures that are reasonably necessary to support Building 5C. The location of the foundations were always in the additional Land and on balance this easement seems to me to be a necessary consequence of the requirement to move the boundary. The next question is whether the variation to the s88B Instrument including this easement is a “minor” variation.

“Minor”

103 The plaintiff submitted that the inclusion of the easements for repairs and support (and also the restriction on use) are, either separately or cumulatively, minor variations to the s88B Instrument. The plaintiff submitted that the term “minor” is to be construed in a “quantitative” and not a “qualitative” manner. It was submitted that this approach is consistent with the inclusive definition of “minor” in clause 41.8 requiring “any variation to be calculated in percentage terms” (written submissions 10/12/2004; par 16). I do not agree that such an approach is supported by the definition in clause 41.8 of the Contract.

104 In clause 41.8 of the Contract the parties agreed that an increase or reduction in the area of the Land of not more than 5% was a “minor” change, but did not otherwise agree on the limit or meaning of “a minor difference, variation, alteration, change or amendment” as such terms applied to matters other than the area of the Land. This Contract is for the sale of a substantial property at a substantial price. The fact that the parties agreed that a variation or change in area of 5% or less was a “minor” change is of little assistance in assessing whether the other changes or variations are “minor”. The common usage of the term “minor” suggests that the parties intended that those changes or variations that were ‘immaterial’, ‘inconsequential’ or ‘insignificant’ were not to be the subject of objection: William C Burton, Legal Thesaurus (1980) Macmillan Publishing Co. Inc. New York. But for the specific provision in relation to the 5% of the area, it may otherwise have been very difficult in the context of this Contract to determine that such a change was a “minor” change. It is understandable that other changes or variations were not the subject of specific definition because of the many possibilities that may or may not eventuate.

105 In its Outline of Submissions served pursuant to the Usual Order for Hearing (Submissions 7/12/2004) in support of its submission that the variations or changes to the s88B Instrument were “minor” the plaintiff relied on Dougherty Bros. Pty Ltd v Garde (1976) 2 BPR 9206 and Imamovic v Kalamalka Constructions Pty Ltd (1975) 49 ALJR 244. In Dougherty Bros. Pty Ltd v Garde Needham J ordered specific performance of a contract for the sale of 2 lots of land in excess of 10 hectares in a non-urban subdivision near Grafton. To obtain approval for the subdivision the vendor agreed to grant to the local council an easement 3 metres wide within one of the lots for the provision of a water supply pipeline. The purchaser served a requisition requiring removal of the easement prior to its willingness to complete. As to whether the change was “substantial” Needham J said at 9210:

Law of Vendor and Purchaser,

I do not think that this defect is of such substance as to lead me to conclude that the vendor is not performing his contractual obligations.

106 In Imamovic v Kalamalka Constructions Pty Ltd the High Court dealt with an appeal from a decision of the Supreme Court of Queensland which had affirmed the trial judge’s order for specific performance of a contract in which the dimensions of lots in the approved plan were “reduced a little”, with one lot extending beyond the boundary shown for it on the tentative plan. The purchaser was willing to accept the lots with the changed dimensions, but the vendor sought to resist specific performance. In affirming the decision of the Court of Appeal Barwick CJ and Gibbs J, with whom McTiernan, Mason and Murphy JJ agreed, said at 246:

But it is, in our opinion, clear that the purchaser intended to buy allotments in an approved plan of subdivision, for the contract could not otherwise have been completed. It therefore seems to us that any disparity between the dimensions and position of the lots on the proposed plan and the dimensions and positions of those on the registered plan will not be material if the purchaser is willing to accept them. Indeed, even if he were not, unless there was such a substantial difference either in dimensions or in location as would warrant the conclusion that the subject matter of the contract was not being fulfilled, the vendor could in our opinion enforce specific performance compelling the purchaser to accept the lots as on the approved plan.

107 It appears that in those two cases there was no clause in the relevant contracts equivalent to clause 41.7 of the Contract. In those circumstances the defendant submitted that these cases were of little or no assistance to the construction of this Contract. That submission has some force. The term “minor” in clause 41.7 is to be construed in the context of this particular contract. Each variation has to be viewed in the context of not only the Contract but also the other changes or variations. I am not suggesting that there should be a cumulative evaluation but rather an individual assessment of each change or variation taking into account the other changes or variations.

108 Consistently with the quantitative approach that it advocates, the plaintiff submitted that the defendant has gained additional floor space to enable it to build up to 19 extra units in the proposed development and that even if the defendant was required to pay for the entirety of the construction of the public road, the profit it would make from the additional units would be likely to far exceed the cost of the construction of the road. It was also submitted that had the boundary remained in the original position the defendant would have probably had to forfeit some of the land it had purchased to develop the site because the existing easement of 3.6 metres would not have been adequate “to service the project” and if this had occurred the overall profit of the development would have been reduced. It was further submitted that absent excavation it is presently impossible to assess “what, if any, underpinning would be required” to Building 5C and thus how much it would cost. It was suggested that Mr Lawrence’s evidence was therefore speculative, albeit that he was not cross-examined. Finally it was submitted that “rather than decreasing the profitability of the proposed development, the changes to the Contract Plan and the s88B Instrument, with the concomitant increase in the land and floor area that will result, are in fact likely to increase the profit” that the defendant will earn from building the units (Submissions 7/12/2004; pars 48-53).

109 In final Submissions (10/12/2004) the plaintiff dealt with the easements “individually” (pars 45-53). However it also made a general submission that the defendant is not being “entirely genuine” in its claim that the easements are burdensome or major. This was said to be clear from the defendant’s failure to inquire of the Council whether it would accept the dedication of the public road subject to the easements for repairs and support. There is a related submission that the real reason the defendant is delaying the completion of this Contract is because there has been a downturn in the property market.

110 I do not accept that the failure to make an inquiry of the Council about the dedication of the public road subject to easements for repairs and support is indicative of a lack of genuine objection. In fact Mr Spira gave evidence, extracted earlier, that he caused a representative of the defendant to make such an inquiry although not “formally”. He also gave evidence that in his experience, which it must be accepted is quite vast, Councils will not accept the dedication of a public road subject to such easements. The evidence of Mr Weatherby supported that conclusion. The evidence called by the defendant in my view establishes that it is more probable than not that a dedication of the public road would not be accepted subject to those easements. The alternative of challenging the Council in the Land and Environment Court if it requires the dedication of the public road, as suggested by Mr Ingham, seems to be a burden with which the defendant does not wish to be troubled. That does not seem to me to be unreasonable.

111 The defendant submitted that the plaintiff’s approach of balancing the advantages and the disadvantages to the defendant is wholly misconceived. It was submitted that if the plaintiff’s approach were correct it would permit the plaintiff, after the date of contract, to impose whatever burdens it likes, provided at the same time that it imposes those burdens, it offers some beneficial matters that could be said to outweigh the burdens. It was submitted that the plaintiff appears to contend that none of the burdens could in those circumstances be raised as “objections” under the Contract. It was also submitted that such an approach appears to group together, effectively as a suite of changes or a “package”, all of the changes introduced post-contract and then to undertake a balancing exercise in respect of the group or package.

112 The defendant submitted that the terms of the Contract do not permit such an approach. Rather, each change after the date of contract must be considered separately. If when separately considered, a change is not “minor”, whether for better or worse, or does not arise out of a “requirement” of Council an objection raised by the defendant with respect to that change is valid and must be dealt with by the plaintiff.

113 It was also submitted that the flaw in the plaintiff’s approach may be exposed by the example of a vendor, for whatever reason, after the date of the Contract, increasing the area of land to be conveyed by say, 20%. Such a change could not be said to be “minor” by reason of the 5% limit in clause 41.8. However, on the plaintiff’s approach, because the purchaser would be better off by the extra land, it could not object. It was submitted that this could not have been the intention of the parties objectively ascertained because the benefits and detriments of any proposed alteration to the land to be conveyed could not definitely be known at the time of making an objection, as the facts of this case demonstrate. It was noted that clause 41.7 does not refer to “benefits” and “detriments” but rather to variations that are “minor”. In other words it is directed to an inquiry as to whether or not the differences between the Contract and the land to be conveyed are minor.

114 The defendant submitted that to understand the impact of the easement for support and the easement for repairs two matters, both of which the defendant contends are not seriously in dispute on the evidence, must be kept firmly in mind. Firstly, in order to approve the defendant’s proposed development, Council will, as a matter of commercial reality, require the proposed east-west road to be dedicated as a public road and will require it to be situated one metre from the boundary of Lot 3. Unless the defendant agrees to dedicate the road, it is submitted that Council will be likely to refuse the grant of Development Consent. Secondly, Council will not accept the dedication of the road as a public road unless the easement for support and the easement for repairs are first extinguished.

115 The plaintiff submitted that I could not be satisfied on the evidence that the Council will probably require from the defendant the dedication of a public road. Mr Ingham’s opinion that such a requirement could not be imposed on the defendant at this stage because it was not created by a need of the development was relied upon in this regard. I do not accept the plaintiff’s submission. I accept Mr Ingham’s wealth of experience but the evidence in this case leads me to conclude otherwise. The evidence establishes that the Council has been intent upon having the public road since the development of the Green Square Plan. The letter from the Council of 30 October 2003 advising of the reasons for the relocation of the boundary makes it abundantly clear that the Council decided that the relocation was necessary to “support future achievement of the dedicated road required by” the Green Park DCP. The conditions of the Determination dated 18 November 2003 noted the Council’s advice that it would not “require any dedication of the future public road envisaged on proposed Lot 4 to be finalised” until after the expiry of the Ikea Lease. Irrespective of whether the entitlement to impose the requirement is presently available, I am satisfied on all the evidence that it is highly probable that the Council will require from the defendant the dedication of a public road.

116 Neither the easement for support nor the easement for repairs are extinguished, either according to their terms or as a matter of law upon dedication as a public road: s146(1)(c) of the Roads Act 1993. It was submitted that the only way that the defendant would be able to potentially achieve the removal of the easements is by negotiating their removal with the plaintiff. If it is unable to negotiate the extinguishment of those two easements it will be in one of two positions. If the development has already been built, the defendant will not be able to obtain an Occupation certificate from the Council, thus having drastic consequences for the defendant. If construction has not yet commenced, one alternative may be for the defendant to build the road further to the north on the property so as to avoid the area of the two easements. That will substantially reduce the area of the land able to be developed by the defendant and is in any event unlikely because Council has made it abundantly clear where it wants the road.

117 It was also submitted that the plaintiff’s approach to the case appears to have been based on the theory that the defendant does not wish to proceed with the contract but rather, having regard to a downturn in the market for apartments/units in this area and in Sydney generally, it wishes to reduce the purchase price of the land. It was submitted that such theory is wholly without foundation and completely inconsistent with the defendant’s objective conduct. The defendant has acted in its dealings with both the Council and the plaintiff on the basis that it wants to develop the land as soon as possible, provided the objections it raises are dealt with. It was submitted that if the defendant was truly wishing to get out of the Contract, in the hope of being able to enter into a further contract at a lower price, then it is most unlikely that the defendant would have continued to devote considerable time and expense to dealing with Council in relation to the further development of the land. If the defendant wanted a price reduction it could have attempted to make a claim under clause 6 of the Contract. I agree with these submissions.

118 I am not satisfied that it is appropriate to approach the question of whether the variations to the s88B Instrument were minor on the basis suggested by the plaintiff. The approach for which the plaintiff advocated may have been appropriate if clause 41.7 was not part of the Contract and if the circumstances had been more akin to those in Dougherty Bros. Pty Ltd v Garde and Imamovic v Kalamalka Constructions Pty Ltd. The Contract is in my view clear in its terms that the defendant is entitled to object to a change or variation to the s88B Instrument if that variation or change is other than a minor change. It may be that some facts and circumstances, including other changes, may impact on the particular change under review so that its significance is reduced but that does not mean that one balances advantages and disadvantages in a general way to decide whether a particular change or variation is “minor”. It is necessary to look at each change in context.

119 These parties agreed to respectively sell and buy a parcel of land subject to certain easements. The defendant agreed to the imposition of those easements with whatever difficulties their existence might cause. The parties also agreed that the defendant would have to accept as part of the agreement “minor” changes or variations to the s88B Instrument. This agreement gave to the plaintiff the entitlement to make those changes subject to giving the defendant notice of and details of them. Such an entitlement, giving as it does to the plaintiff the power to impose changes on the defendant, must in my view be construed strictly and any looseness of approach focussing on whether the defendant is generally “better off” or “worse off” must be resisted. The evidence establishes that the plaintiff proceeded on the basis that the easements did not affect the original Lot 4 and only affected the Additional Land. It appears to me that the plaintiff proceeded upon a misapprehension of the effect of the easements. The easement for support and the easement for repairs are individually not minor – inconsequential or insignificant – when their effect is understood in the light of the evidence in this case.

120 I accept the evidence of Mr Spira and Mr Weatherby in relation to the effect of these easements. I am satisfied that the easement for support (“Z”) does introduce a series of unknown factors into the Contract. Such uncertainty is in my view a significant rather than a minor change. The fact that it is of indefinite duration with probable adverse consequences in relation to the dedication of the public road with consequential expenditure are also matters that I regard as significant changes. The necessity to move the building line, evidence of which I accept, also demonstrates that this variation is significant and not minor. Viewing the Land with the Additional Land in the context of this Contract with this variation to the s88B Instrument I am of the view that the defendant has established that the easement for support (“Z”) is not a “minor” variation within the meaning of that term in clause 41.7.

121 I am also satisfied that the evidence of Mr Spira and Mr Weatherby in relation to the easement for repairs (“F”) is to be accepted. Mr Weatherby’s experience in relation to the Council’s unwillingness to accept dedication of public roads with easements was quite compelling. The defendant would be left in the position of probably having to seek consent from the plaintiff to extinguishment of a number of easements to achieve the dedication of the public road. This is not merely a neighbourly dealing. Subjecting the defendant to a situation in which it has to obtain the consent of the plaintiff to enable the efficient progress of its development was never within the contemplation of the parties to this Contract. Once this problem is identified as a real one – and it has been – the variation cannot be categorised as “minor”. It is of significant and in my view major proportions.

122 The defendant also submitted that the plaintiff was not in a position to convey the land with vacant possession. In reality this submission related to the easement for carparking which will not be extinguished until the expiration of the Ikea Lease in August 2006. Having regard to my findings above and to the way in which the trial was conducted this matter is not necessary to consider further.

123 The plaintiff is not entitled to an order for specific performance of the Contract with the variations to the s88B Instrument.

124 There was further debate, the subject of further written submissions after reservation of my judgment, that suggested that if I were not satisfied that specific performance should be ordered whilst the easements for repairs and support remained, that an order could be crafted for specific performance of the Contract on the condition that those easements be extinguished or that the plaintiff agree to the removal of those easements. The defendant cautioned against such an approach and submitted that if it were adopted the Court would be specifically enforcing a different contractual regime to that which had been agreed by the parties. The “dominant principle” to be kept in mind in determining whether an order for specific performance should be made is that equity will only grant it if in all the circumstances it is just and equitable to do so: RM Stonham, The Law of Vendor and Purchaser, The Law Book Co. 1964. p. 757.

125 I am satisfied that the objection raised by the defendant in its letter of 2 June 2004 to the extent ultimately litigated in this suit is a valid objection and the parties should be left to their contractual bargain complying with their various obligations and exercising their various contractual rights. On reflection I am not satisfied that it just or equitable that I should craft an Order excluding certain easements that may or may not have adverse impacts on the parties, once the Council reviewed their removal.

126 The Amended Summons is dismissed. If the parties are unable to agree on a costs order I will hear argument on a date to be fixed by the parties restoring the matter to the List. Such restoration should occur no later than 11 February 2005.

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Last Modified: 01/10/2005

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Citations

Perpetual Trustee Company Limited v Meriton Property Management Pty Limited [2004] NSWSC 1258

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Perpetual Trustee Company Ltd v Meriton Property Management Pty Ltd [2005] NSWSC 623

Cases Citing This Decision

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Perpetual Trustee Company Ltd v Meriton Property Management Pty Ltd [2006] NSWCA 75

Velik v Steingold [2012] NSWSC 860

Perpetual Trustee Company Ltd v Meriton Property Management Pty Ltd [2005] NSWSC 623

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CITATION:	Perpetual Trustee Company Limited v Meriton Property Management Pty Limited [2004] NSWSC 1258
HEARING DATE(S):	8, 9, 10 December 2004
JUDGMENT DATE:	5 January 2005
JURISDICTION:	Commercial List
JUDGMENT OF:	Bergin J
DECISION:	Amended Summons dismissed
CATCHWORDS:	Suit for specific performance of sale of land - Whether the defendant's objection under the contract is valid - Whether certain easements arose out of the "requirements" of the Council - Whether easements were "minor" variations to a s. 88B Instrument - Whether defendant's objections valid.
LEGISLATION CITED:	Conveyancing Act 1919 (NSW) Roads Act 1993 (NSW)
CASES CITED:	Dougherty Bros Pty Ltd v Garde (1976) 2 BPR 9206 Imamovic v Kalamalka Constructions Pty Ltd (1975) 49 ALJR 244 Wolverhampton & Walsall Railway Company v London & North-Western Railway Company (1873) LR 16 Eq 433
PARTIES :	Perpetual Trustee Company Limited (Plaintiff) Meriton Property Management Pty Limited (Defendant)
FILE NUMBER(S):	SC 50119/04
COUNSEL:	M. J. Slattery QC / R. Pepper/D. Robinson (Plaintiff) R. J. Weber SC / I. Pike (Defendant)
SOLICITORS:	Dibbs Barker Gosling (Plaintiff) Richard de Carvalho (Defendant)

Easement, restriction etc	Contract Property	Registered Property
Right of Way 3.6 Wide and Variable to burden Lot 4 in DP1065657 and to benefit Lot 3 in DP106567 & Lot 2 in DP566811	Proposed Right of Way 3.6 Wide & Variable Width (Y)	Right of Way 7.2 Wide & Variable Width (Y)
Right of Way 3.6 Wide and Variable to burden Lot 3 in DP106567 and to benefit Lot 4 in DP1065657 & Lot 2 in DP56681	Proposed Right of Way 3.6 Wide & Variable Width (Z)	Not included
Easement to Park Motor Vehicles 4.5 Wide & Variable burdening Lot 4 in DP1065657 and benefiting Lot 3 in DP1065657	Not Included	Easement to Park Motor Vehicles 4.5 Wide & Variable (D)
Restrictions on Use of Land burdening Lot 4 in DP1065657 and benefiting Lot 3 in DP1065657	Not included	Restriction on Use of Land (E)
Easement for Repairs 11.7 Wide & Variable burdening Lot 4 in DP1065657 and benefiting Lot 3 in DP1065657	Not Included	Easement for Repairs 11.7 Wide & Variable (F)
Easement for Support 4.5 Wide & Variable burdening Lot 4 in DP1065657 and benefiting Lot 3 in DP1065657	Not included	Easement for Support 4.5 Wide & Variable (Z)
Vacant Possession	No tenancies disclosed	Property is subject to an unregistered lease to Aust Scan Pty Limited commencing 8 August 2003 and terminating on 7 August 2006.