Shree Shirdi Sai Sansthan Sydney Limited v Nirmal Taluja - [2014] NSWSC 1825

Supreme Court

New South Wales

Medium Neutral Citation: Shree Shirdi Sai Sansthan Sydney Limited v Nirmal Taluja [2014] NSWSC 1825
Hearing dates: 8, 9, 10 December 2014
Decision date: 19 December 2014
Jurisdiction: Equity Division - Expedition List
Before: Sackar J
Decision:
See paragraphs [140] and [159]

Catchwords:
CONTRACT - RELIEF - specific performance - where option to purchase in lease document - where provision in contract for preparation of plan - whether option validly exercised - whether agreement void for uncertainty - whether agreement unenforceable for illegality - whether lease validly terminated - utility of declaration of valid termination where declaration of exercise of option to purchase also valid
CONTRACT - RELIEF - specific performance - whether damages in lieu of specific performance appropriate - where damages claimed for reduction in income, being donations to religious temple, if specific performance unavailable and plaintiff forced to relocate - whether damages to be assessed at time of breach or date of judgment
Legislation Cited: Environmental Planning and Assessment Act 1979
Cases Cited: Adderley v Dixon (1824) 1 Sim & St 607
ASA Constructions Pty Ltd v Iwanov [1975] 1 NSWLR 512
Australian International Academy of Education Limited v Taluja [2011] NSWSC 647
Axelsen v O'Brien (1949) 80 CLR 219
Biotechnology Australia v Pace (1988) 15 NSWLR 130
Butts v O'Dwyer (1952) 87 CLR 267
Castle Constructions Pty Ltd v Fekala Pty Ltd (2006) 65 NSWLR 648; [2006] NSWCA 133
Godecke v Kirwan (1973) 129 CLR 629
Hadley v Baxendale (1854) 9 Exch 341; 156 ER 145
Hardy v Wardy [2001] NSWSC 180
Helmos Enterprises Pty Ltd v Jaylor Pty Ltd [2005] NSWCA 235
Madden v Kevereski [1983] 1 NSWLR 305
Mamidoil - Jetoil Greek Petroleum Co SA v Okta Crude Oil Refinery AD [2001] 2 Lloyd's Rep 76
McCrohon v Harith [2010] NSWCA 67
Meehan v Jones (1982) 149 CLR 571
Mills v Ruthol Pty Limited (2004) 61 NSWLR 1
Paino v Paino (2008) 40 Fam LR 96
Palasty v Parlby [2007] NSWCA 345
Pianta v National Finance & Trustees Ltd (1964) 180 CLR 146
Powell v Jones [1968] S.A.S.R. 394
Prudential Assurance Co Ltd v Health Minders Pty Ltd (1987) 9 NSWLR 673
Quadrant Visual Communications Ltd v Hutchison Telephone (UK) Ltd [1993] BCLC 442
Streatfield v Winchecombe Carson Trustee Co (Canberra) Ltd [1981] 1 NSWLR 519
Sudbrook Trading Estate v Eggleton [1983] 1 AC 444
Sydney Attractions Group Pty Ltd v Frederick Schulman (No 2) [2013] NSWSC 1153
Taluja v Australian International Academy of Education Ltd [2011] NSWCA 416
Thorby v Goldberg (1964) 112 CLR 597
Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429
Wilson v Northampton & Banbury Junction Railway Company (1874) LR 9 Ch App 279
Zorbas v Titan Properties (Aust) Pty Ltd [2005] NSWSC 440
Texts Cited: Lewison and Hughes, The Interpretation of Contracts in Australia (Thomson Reuters, 2012)
Meagher Gummow and Lehane, Equity: Doctrines and Remedies (4th edition, LexisNexis Butterworths, 2002)
Seddon and Ellinghaus, Chesire and Fifoot's Law of Contract (9th Australian edition, LexisNexis Butterworths, 2008)
Category: Principal judgment
Parties: Shree Shirdi Sai Sansthan Sydney - plaintiff
Nirmal Taluja - defendant
Representation: Counsel:
D H Murr SC, L S Einstein - plaintiff
I Khan, A Kumar - defendant
Solicitors:
Rickards Legal - plaintiff
WMD Law - defendant

File Number(s): 2010/375468

Judgment

Proceedings

By its amended statement of claim filed 23 March 2012, the plaintiff Shree Shirdi Sai Sansthan Sydney Limited (Shree) seeks relief against the defendant Dr Nirmal Taluja in relation to a property located at Strathfield. The plaintiff seeks a declaration that a termination notice in relation to a lease is invalid, and a declaration that it has validly exercised an option to purchase the land pursuant to clause 12 of that lease. Consequent to those declarations, the plaintiff seeks an order for specific performance that the defendant carry out all necessary steps to effect the transfer in accordance with clause 12, including the preparation and registration of a subdivision plan and the provision of certain rights of use. In the alternative, the plaintiff seeks the return of a security deposit and damages for breach of contract.

In her defence, the defendant asserts the lease was void for uncertainty or had been frustrated. No argument was advanced on the ground of frustration but it was contended in the defence that the agreement was void because it provided for an illegal subdivision.

By her cross-claim filed 14 February 2012, the defendant claimed rectification of the lease, damages for breach of contract, the taking of accounts in respect of a purported joint venture and mesne profits. However, on the first day of the hearing counsel for the defendant made it clear that the claim for rectification was not being pressed. However, by cross-summons filed in Court on the first day of the hearing, the defendant seeks a declaration that the termination of the lease dated 5 August 2003 was valid, and an order that the plaintiff vacate the demised premises within 14 days.

Background facts

The plaintiff is a religious organisation, devoted to the worship of an individual named Shirdee Sai Baba (1838-1918) whom it regards as a saint.

The defendant is and was at all material times the registered proprietor of a property at 416-420 Liverpool Road, Strathfield (comprising two lots and being the land described in Folio Identifiers 4/7735323 and 100/774567). Within that property is situated a building known as Memorial Chapel (the Chapel).

The plaintiff asserts that on or about 5 August 2003, the defendant as lessor entered into a written lease with the plaintiff as lessee in respect of the land upon which the Chapel is situated and 800 square metres of land surrounding the Chapel (the lease document).

The lease document sets out the property leased as being "PART 4/7735323 AND PART 100/774567 being 420 Liverpool Road, Strathfield NSW as shown as the hatched area in the plan annexed and marked Annexure "B" and being the Memorial Chapel and surrounding 800 square metres of land". The plaintiff is described as the lessor and the defendant as lessee for a term of 30 years commencing 5 August 2003 and terminating on 4 August 2033.

There is an option to renew for a period of thirty years as set out in clause 2 of Annexure A, which is incorporated into the lease and set out below. There is an option to purchase set out in clause 12 and the rent is set out in clause 3. The plaintiff has executed the document, witnessed by Mr John Orford. Mr Tolani and Mr Hemchander have executed the lease as directors of the plaintiff.

Annexure A is in the following terms:

ANNEXURE "A"

YOU AGREE WITH US AS FOLLOWS:

1. INTERPRETATION

1.1 The following words have these meanings unless the contrary intention appears. Item numbers refer to those in the Reference Schedule. Other definitions are on the cover sheet.

"Common Areas" means the Kitchen, toilets, parking areas in front and back of the Land, the garden, the area of the Whole Property in front of the Land, Brundah Dining Hall.

"Land" means the land including the building/chapel, described as such on this Lease.

"Our Property" means the Property at 420 Liverpool Road, South Strathfield NSW 2135 as comprised in the Whole Property.

"Permitted Use" means use as a chapel/temple, as a place of worship of Sai Baba and Durga Mataa and other Hindu Deities and school building, library and a place to carry on public activities as provided in your constitution or the Deed Setting Up SHRI SHIRDI SANSTHAN SYDNEY CHARITABLE FOUNDATION.

"Whole Property" means Lot 4 in Deposited Plan 7735323 and Lot 100 in Deposited Plan 774567.

"Term" means Thirty (30) years from the Commencement Date.

"We", "Us", "Our" and "Ourselves" refers to DR NIRMAL TALUJA; and

"You", "Your" and "Yourselves" refers to Shree Shirdi Sai Sansthan Sydney Limited in its own capacity and as Trustee of SHRI SHIRDI SAI SANSTHAN SYDNEY CHARITABLE FOUNDATION.

"Your Business" means the business carried on from the Premises.

"Your Employees and Agents" means each of Your employees, officers, agents, contractors and invitees.

"Your Property" means Chapel including the 800 square metres Land which is situated within our Whole Property.

2. LEASE PERIOD

2.1 This Lease is for the Term.

2.2 You can renew this Lease for another thirty (30) years.

2.3 You can exercise the Option only if you serve on us a notice of exercise of Option not less than three (3) months and not more than twelve (12) months prior to the expiration of the Term;

2.4 A new lease will be the same as this Lease except for the Commencement Date and the Expiry Date and there will be no further Option.

3. YOUR DUTY TO PAY RENT, ETC.

3.1 You must pay Australian Dollars Two Hundred and Fifty ($250.00) per week (including Goods and Services Tax) as Rent within 7 days from the last day of the week. This Rent shall be subject to 3% increase per annum.

3.2 You shall not be responsible to pay any outgoings in respect of the Land excepting electricity charges on separation of the meter.

4. PAYMENT UNDER THE LEASE

You must also pay, on demand to Us or as We direct:-

a) registration fee for registration of this Lease at Land and Property Information (payable on delivery to Our Solicitor of the executed Lease);

b) stamp duty on this Lease (payable on delivery to Our Solicitor of the executed Lease) if not previously paid by You to the Office of State Revenue;

c) all statutory charges in connection with works You carry out.

5. PAYMENT OBLIGATIONS

5.1 You must make payments under this Lease to Us (or to a person nominated by Us in a notice to You) by the method we reasonably require.

6. INSURANCES

6.1 You must:

a) in connection with the Premises, maintain with insurers Public Liability and Building Insurance for a reasonable amount;

b) give Us evidence that You have complied with this clause; and

c) notify Us immediately if an insurance policy required by this clause is cancelled or an event occurs which may allow a claim or affect rights under an insurance policy in connection with the Premises the Building or property in them.

6.2 In the event You do not take out Public Liability and Building Insurance, We will take such insurance and You shall be responsible for payment of the cost of such insurance to Us.

7. WHAT HAPPENS IF THE PROPERTY IS DAMAGED?

7.1 If the Building is damaged (a term which includes destroyed) so that the Premises can not be used or are inaccessible;

a) You are liable to pay Rent; and

b) if You receive any Insurance towards Your Property that amount will be utilised to restore Your Property.

8. SECURITY DEPOSIT

Upon Your executing this Lease, You will pay to us Australian Dollars Two Hundred Thousand ($200,000.00) and on or before 31 March 2004, an additional amount of Australian Dollars Fifty Thousand ($50,000.00) totalling Australian Dollars Two Hundred and Fifty thousand ($250,000.00) ('Security Deposit') as a Security Deposit in earnest of performance of Your obligations. Unless the Security Deposit is applied towards payment of the first instalment of the purchase price in terms of clause 12 of this Lease, the Security Deposit shall be refunded to You upon the expiry or early termination of this Lease or of the new Lease.

9. PLAN

We and You agree that the total area of the Land shall be eight hundred (800) square metres. The Plan is only an approximate plan and the area shall be surveyed and a final plan shall be prepared by Us at Your expense within a reasonable time. We agree to provide necessary assistance and facilities in this respect.

10. DISPUTE RESOLUTION

10.1 If any disagreement arises in connection with the Plan either We or You may refer the disagreement to expert determination by an Expert appointed by the President of the Institute of Surveyors to the intent that the final plan shall consist of eight hundred (800) square metres.

10.2 The Expert's decision will be final, conclusive and binding on the parties and the costs of the expert determination must be borne by the party or parties who the expert determines is or are to bear the costs.

11. EXPIRY OR TERMINATION

11.1 You may terminate this Lease at any time after two (2) years from the date hereof by giving Us twelve (12) months notice in writing. Notwithstanding the giving of such notice, You may exercise the Option to Purchase within that twelve (12) months period.

11.2 The Lease shall become terminated upon Your purchasing the Land in terms of the Option to Purchase granted hereunder.

11.3 We may terminate this Lease by giving twelve (12) months notice after five (5) years from the date hereof. Notwithstanding the giving of such notice, You may exercise the option to purchase within twelve (12) months period.

12. OPTION TO PURCHASE

12.1 If You are desirous of purchasing the Land (including the reversion in fee simple in the Land) ('the Demised Premises') and if You give, at any time, one month notice before twelve (12) months prior to the expiry date of the Lease of such desire, We will, upon the expiration of such notice, transfer to You in fee simple. We will carry out all steps necessary for transfer including registration of the transfer and where necessary Contract for Sale on the usual terms and conditions.

You shall pay Australian Dollars Seven Hundred Thousand ($700,000.00) for such transfer. The price shall be paid in six instalments:

i) First instalment of Australian Dollars Two Hundred and Fifty Thousand ($250,000.00) - upon transfer as stated in clause 8 herein;

ii) Second instalment of Australian Dollars Ninety Thousand ($90,000.00) - upon first anniversary of the date of the transfer;

iii) Third instalment of Australian Dollars Ninety Thousand ($90,000.00) - upon the second anniversary of the date of the transfer;

iv) Fourth instalment of Australian Dollars Ninety Thousand ($90,000.00) - upon the third anniversary of the date of the transfer;

v) Fifth instalment of Australian Dollars Ninety Thousand ($90,000.00) - upon the fourth anniversary of the date of the transfer; and

vi) Sixth instalment of Australian Dollars Ninety Thousand ($90,000.00) - upon the fifth anniversary of the date of the transfer.

The deposit of Australian Dollars Two Hundred and Fifty Thousand ($250,000.00) shall be treated by Us and Yourselves as payment of the first instalment on the date of the transfer.

12.2 Prior to the transfer, We will cause subdivision of the Whole Property and cause the Land which is to be transferred to You as a separate lot of the Whole Property.

12.3 We will provide right of use over the Common Areas and Right of Way to the Land prior to the Transfer other than the Brundah Dining Hall.

13. LICENCE

13.1 We grant to You, Your Agents and Employees a non-exclusive licence to use the Common Areas subject to the terms and conditions hereof.

13.2 You shall be entitled to receive keys to the Common Areas and shall have the right to enter upon the Common Areas from time to time and use them and allow others to use them.

13.3 You, Your Agents and Employees shall be entitled to access through the Whole Property to the Land.

14. DEVELOPMENT

Subject to Council approvals, You shall be entitled to build construct or develop buildings for purposes of any of the Permitted Use for any related activities at the Land.

15. The Lease is being executed by Shree Shirdi Sai Sansthan Sydney Limited both in its own capacity as trustee for the foundation.

On the subsequent page, there is a separate paragraph entitled Dispute Resolution. It also appears to have been initialled by the parties, although it is not clear how it is incorporated into the lease document. It reads:

Parties will negotiate bona fide to resolve any dispute. If unsuccessful they will appoint a mediator. If they cannot agree on a mediator, then by the President of the Law Society of NSW.

Parties will mediate bona fide. Except for urgent interlocutory relief parties will not litigate until mediation exhausted.

Annexure B sets out a plan of the property. I will return to the importance of this plan, and its perceived faults, in due course.

At this point (although not in chronological order) I should note that on 21 December 2011, the Court of Appeal delivered its decision in Taluja v Australian International Academy of Education Ltd [2011] NSWCA 416. The defendant asserts that the effect of this judgment appears to be that the leased property in the present case had already been leased to a third party. I shall also return to this in due course.

The plaintiff paid the security deposit by cheques, namely in the sum of $200,000 on or about 5 August 2003, totalling $40,000 on or about 23 November 2003 and in the sum of $10,000 in late 2003. The defendant does not dispute that such sums were paid.

The plaintiff asserts that it exercised the option under the lease by written notice dated 13 September 2006 (the first exercise of option). It asserts it was served before 12 months prior to the expiration of the lease upon the defendant's then solicitors on or about 21 September 2006 and upon the defendant personally in or about mid October 2006. The defendant denies the option was exercised in the manner alleged or at all. However she accepts she receives the notice which was "placed under the door of my medical practice" (CB1/148).

On the other hand, by a document entitled Notice to Terminate dated 6 November 2009, the defendant purported to terminate the lease and required the plaintiff to vacate the leased property on or before 15 November 2010.

The plaintiff asserts that it again exercised the option by written notice dated 9 November 2010 (the second exercise of option). Again, the plaintiff asserts this was served before 12 months prior to the expiration of the lease upon the defendant by email and by facsimile to her then solicitors. Again, the defendant denies the option was exercised in the manner alleged or at all.

The plaintiff also asserts that the defendant has refused to comply with either the first or second exercise of option, notwithstanding their requests to do so.

On or about 13 April 2012, Strathfield Council rejected an application proposing to subdivide a 97.7 square metre parcel of land within the site containing the Chapel. That application does not appear to have been made by the defendant. In the notice of determination issued under section 81(1)(a) of the Environmental Planning and Assessment Act 1979, and addressed to the Australian International Academy of Education Pty Ltd, Strathfield Council indicated that the reasons for refusal of the application included a negative impact on the heritage significance of two buildings (being Leigh Hall and the Chapel), insufficient parking and other traffic management issues, failure to provide details of compliance with building codes and stormwater management codes, the potential impact on public safety and an assertion that the proposed subdivision was contrary to the public interest. I shall return to the significance, if any, of this application in due course.

Legal principles

Before turning to a consideration of the issues in this case, it is convenient to set out the relevant legal principles. Those principles relate to whether a provision or provisions of a contract are rendered void for uncertainty or for illegality.

Void for uncertainty

As a general statement, a Court will endeavour to avoid finding a contract is void for uncertainty.

In Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429, the relevant contract concerned the supply of bulk electricity which allowed the supplier to vary the maximum demand charge and energy charge. Barwick CJ said at 436-437:

But a contract of which there can be more than one possible meaning or which when construed can produce in its application more than one result is not therefore void for uncertainty. As long as it is capable of a meaning, it will ultimately bear that meaning which the courts, or in an appropriate case, an arbitrator, decides is its proper construction: and the court or arbitrator will decide its application. The question becomes one of construction, of ascertaining the intention of the parties, and of applying it. Lord Tomlin's words in this connexion in Hillas & Co. Ltd v Arcos Ltd ought to be kept in mind. So long as the language employed by the parties, to use Lord Wright's words in Scammell (G.) & Nephew Ltd. V. Ouston is not "so obscure and so incapable of any definite or precise meaning that the court is unable to attribute to the parties any particular contractual intention", the contract cannot be held to be void or uncertain or meaningless. In the search for that intention, no narrow or pedantic approach is warranted, particularly in the case of commercial arrangements. Thus will uncertainty of meaning, as distinct from absence of meaning or of intention, be resolved.

The general principle was also stated in Meehan v Jones (1982) 149 CLR 571 in the context of a clause that provided the agreement was subject to finance. There Mason J noted at 589:

To say that clauses of this kind are void for uncertainty is to ignore the traditional doctrine that courts should be astute to adopt a construction which will preserve the validity of the contract. Moreover, it is a draconian solution...

And furthermore in Thorby v Goldberg (1964) 112 CLR 597 Kitto J noted at 604-5:

...but an agreement is not void for uncertainty because it leaves one party or group of parties a latitude of choice as to the manner in which agreed stipulations shall be carried into effect, nor does it for that reason fall short of being a concluded contract.

As noted by Lewison and Hughes in The Interpretation of Contracts in Australia (2012) at [8.13], 'The court's reluctance to hold a provision in a contract void for uncertainty is greater in a case where the agreement is no longer executory but has been partly performed.' Lewison contains a plethora of authority that demonstrates a court will increase the struggle to overcome uncertainty when a contract has either been executed or partially executed. As noted by Templeman LJ in Sudbrook Trading Estate v Eggleton [1983] 1 AC 444 at 460 (approved on appeal):

Where an agreement which would otherwise be unenforceable for want of certainty or finality in an essential stipulation has been partly performed so that the intervention of the court is necessary in aid of a grant that has already taken effect, the court will strain to the utmost to supply the want of certainty even to the extent of providing a substitute machinery.

In Helmos Enterprises Pty Ltd v Jaylor Pty Ltd [2005] NSWCA 235 there was a partly performed contract for the purchase of two restaurants. The appeal concerned whether a number of matters left outstanding meant the contract failed for uncertainty or incompleteness. Young CJ in Eq (with whom Stein AJA and Hodgson JA agreed) noted numerous authorities that evidence the extent to which a court will go to give effect to a contract. His Honour cited the decision of Mamidoil - Jetoil Greek Petroleum Co SA v Okta Crude Oil Refinery AD [2001] 2 Lloyd's Rep 76, in which Rix LJ stated at 89:

...particularly in commercial dealings between parties who are familiar with the trade in question and particularly where the parties have acted in the belief that they had a binding contract, the Courts are willing to imply terms, where that is possible, to enable the contract to be carried out.

And at [107] Young CJ in Eq said:

There is another principle which exists both in equity and at law that where a contract is partly executed, a plea of uncertainty will rarely succeed.

As Walsh J (with whom Mason J agreed) had earlier pointed out in Godecke v Kirwan (1973) 129 CLR 629 at 639, an agreement which obliges a subsequent agreement to be entered into may contain covenants for example in the new agreement not included in the original contract. In expressing his agreement with the South Australian decision of Bray CJ in Powell v Jones [1968] S.A.S.R. 394, Walsh J accepted that there was no reason in principle for holding that there cannot be a binding contract even if some matter is left to be determined by one of the contracting parties. His Honour took the view that because he was there looking at a clause which permitted the insertion of covenants and conditions (not inconsistent with those contained in the offer), he thought any new terms should also be limited by reference to the reasonableness of requiring the inclusion of those covenants and conditions. He thought that the clause meant that what was required must be reasonable in an objective sense and in the event that there was a dispute it was always a matter for a court to decide.

The relevant clause the court was concerned with in Godecke was in the following terms:

6. If required by the Vendor/s, I/we shall execute a further agreement to be prepared at my costs by his appointed Solicitors containing the foregoing and such other covenants and conditions as they may reasonably require.

Gibbs J in Godecke was also of the view the parties may leave terms, even essential terms, to be determined by a third person. In such a case His Honour was of the view that a contract would not be bad for uncertainty because if the third person settled the terms of the contract it would be rendered certain. His Honour said (at page 645):

It is no objection that the power to determine the terms and conditions to be incorporated in the contract is left to the solicitors for one of the parties.

Gibbs J also referred to the decision of the High Court in Axelsen v O'Brien (1949) 80 CLR 219 in which Latham CJ had found that there had been a concluded contract notwithstanding further terms of the bill of mortgage remained to be arranged or determined by a solicitor. Indeed in that case Latham CJ was of the view that if the solicitor failed to settle the terms not only was that no bar to specific performance but the court in granting specific performance was well able to settle the terms if the solicitor had not done so. Gibbs J did however draw a distinction between an agreement which left further terms to be settled by "one of the parties rather than by his solicitors" (at 646). Gibbs J thought that if one of the parties to a contract was left a discretion as to whether or not he or she would carry the contract out as allegedly agreed then it could not be said that there was a concluded bargain. To delegate however to third parties especially solicitors to implement the agreement is an entirely different matter.

Similar views were expressed by Kirby P in Biotechnology Australia v Pace (1988) 15 NSWLR 130 at 136D, in which His Honour observed:

The provision in question, although an essential term, may be left in adequately clear terms to be settled by an identified third party who is given power to settle ambiguities and uncertainties: see, eg, Foster v Wheeler (1888) 38 Ch D 130 and Axelsen v O'Brien (1949) 80 CLR 219.

The defendant points to Streatfield v Winchecombe Carson Trustee Co (Canberra) Ltd [1981] 1 NSWLR 519, without further illumination, and Chesire and Fifoot's Law of Contract at [6.1]. The latter reference merely reinforces what has been said above, and subsequent paragraphs reiterate the propositions that courts will try to uphold contracts (see [6.6]) and that parties can provide in their contract for a machinery provision or formula to resolve disputes and therefore avoid uncertainty (see [6.9]).

Void for illegality

The defendant submits that the contract is void on the ground of an illegal subdivision.

The defendant refers to section 4B of the Environmental Planning and Assessment Act 1979 (EP&A Act), which provides:

4B Subdivision of land

(1) For the purposes of this Act,

"subdivision of land" means the division of land into two or more parts that, after the division, would be obviously adapted for separate occupation, use or disposition. The division may (but need not) be effected:

(a) by conveyance, transfer or partition, or

(b) by any agreement, dealing, plan or instrument rendering different parts of the land available for separate occupation, use or disposition.

(2) Without limiting subsection (1), "subdivision of land" includes the procuring of the registration in the office of the Registrar-General of:

(a) a plan of subdivision within the meaning of section 195 of the Conveyancing Act 1919 , or

(b) a strata plan or a strata plan of subdivision within the meaning of the Strata Schemes (Freehold Development) Act 1973 or the Strata Schemes (Leasehold Development) Act 1986.

Note: The definition of "plan of subdivision" in section 195 of the Conveyancing Act 1919 extends to plans of subdivision for lease purposes (within the meaning of section 23H of that Act) and to various kinds of plan under the Community Land Development Act 1989.

(3) However, "subdivision of land" does not include:

(a) a lease (of any duration) of a building or part of a building, or

(b) the opening of a public road, or the dedication of land as a public road, by the Crown, a statutory body representing the Crown or a council, or

(c) the acquisition of land, by agreement or compulsory process, under a provision of an Act (including a Commonwealth Act) that authorises the acquisition of land by compulsory process, or

(d) a division of land effected by means of a transaction referred to in section 23G of the Conveyancing Act 1919 , or

(e) the procuring of the registration in the office of the Registrar-General of:

(i) a plan of consolidation, a plan of identification or a miscellaneous plan within the meaning of section 195 of the Conveyancing Act 1919 , or

(ii) a strata plan of consolidation or a building alteration plan within the meaning of the Strata Schemes (Freehold Development) Act 1973 or the Strata Schemes (Leasehold Development) Act 1986.

The defendant also relies upon section 76A, which provides:

76A Development that needs consent

(1) General If an environmental planning instrument provides that specified development may not be carried out except with development consent, a person must not carry the development out on land to which the provision applies unless:

(a) such a consent has been obtained and is in force, and

(b) the development is carried out in accordance with the consent and the instrument.

(2) For the purposes of subsection (1), development consent may be obtained:

(a) by the making of a determination by a consent authority to grant development consent, or

(b) in the case of complying development, by the issue of a complying development certificate.

(5) Complying development An environmental planning instrument may provide that development, or a class of development, that can be addressed by specified predetermined development standards is complying development.

Note: Division 4.1 makes provision with respect to State significant development.

It is not entirely clear to me precisely how the defendant puts its case on illegality. The thrust of her case as best I can understand it is that the contract somehow compels her to perform a contract which is contrary to the EP&A Act.

However, in almost identical circumstances in Taluja v Australian International Academy of Education Ltd [2011] NSWCA 416, the Court of Appeal (Young JA; Beazley and Macfarlan JJA agreeing) dismissed an appeal from Ball J's decision in Australian International Academy of Education Limited v Taluja [2011] NSWSC 647. That case related to the same premises in the present case, and involved Dr Taluja as the plaintiff and Shree as the third defendant (although Shree took no active role in the proceedings: see the first instance decision at [6]).

Ball J at first instance made the following observations at first instance. I will extract a number of the paragraphs of relevance because of the similar nature of the arguments put before me and because of the comprehensive way His Honour dealt with the matter. His Honour observed at [61]-[72]:

[61] [Counsel for the plaintiff] makes three submissions in this context. First, he says that no plan was attached to the lease. Second, he says that the lease is void for uncertainty because it describes the land to be leased as "part" of the two lots to be leased. Third, he says that the lease was illegal and so unenforceable because it involves a subdivision of land and therefore a development without Council consent...

[62] Mr Murr, who appeared for AIAE, makes two submissions in answer to Mr Raphael's third point. First, he submits that the lease did not involve a subdivision of land because the lease does not render different parts of the land available for separate occupation. It simply renders a different building or parts of a building available for separate occupation. Mr Murr accepts that it is still necessary for a plan to be registered to satisfy the requirements of s 23F of the Conveyancing Act . However, the court can make an order requiring that to be done. Secondly, Mr Murr submits that, if development consent is required, the court should imply a term in the lease requiring Dr Taluja to do all things reasonable on her part to be done to obtain that consent and the court can order specific performance of that term.

[63] I do not accept Mr Murr's first submission...

[65] I do, however, accept Mr Murr's second submission. That submission raises two issues. The first is whether the lease is unenforceable because it breaches s 76A(1) of the EPA Act. The second is whether, if not, there should be implied in the lease a term requiring Dr Taluja to do all things reasonable on her part to be done to have the lease registered (including applying for planning approval for the subdivision).

[66] As to the first issue, the EPA Act does not expressly address the enforceability of agreements that involve a breach of the Act. Whether the Act has that effect depends, then, on its proper construction. As Mason J explained in Yango Pastoral Co Pty Ltd V First Chicago Australia Ltd (1978) 139 CLR 410 at 423:

The principle that a contract the making of which is expressly or impliedly prohibited by statute is illegal and void is one of long standing but it has always been recognized that the principle is necessarily subject to any contrary intention manifested by the statute. It is perhaps more accurate to say that the question whether a contract prohibited by statute is void is, like the associated question whether the statute prohibits the contract, a question of statutory construction and that the principle to which I have referred does no more than enunciate the ordinary rule which will be applied when the statute itself is silent upon the question.

Where the statute is silent, the court will, in determining whether on its proper construction the statute renders the relevant contract void, take into account matters such as the purpose of the legislation, whether the legislation expressly prohibits the conduct in question, whether the legislation provides for the consequences of breach and the consequences for the parties if the legislation does have the effect of rendering the contract void.

[67] There are several decisions which have considered the validity of agreements apparently entered into in breach of the EPA Act or similar legislation. The one that most closely resembles the current one is Hardy v Wardy [2001] NSWSC 180. In that case, the defendant owned land on which was situated a large two-storey warehouse and office and a separate one-storey building used to operate a smash repair business. Both buildings were on the same title. The defendant leased the warehouse and offices to the plaintiff. The lease contained an option to purchase. The plaintiff purported to exercise that option. Between the time the option was granted and the time it was exercised, the Local Government Act was replaced by the EPA Act. One question in the case was whether the agreement resulting from the exercise of the option was void because it effected a subdivision of land. Bryson J held that it was not:

[48] ... If subdivision is altogether forbidden an agreement to subdivide may be affected by illegality, but if the relevant Environmental Planning Instrument allows the subdivision to be consented to there would in my opinion be no reason why an agreement to carry out the subdivision would be illegal.

[49] Entering into a contract carrying of which [sic] requires a subdivision, or a contract to carry out any other development, cannot itself be seen as development and in my opinion is not affected by any question of illegality. Counsel were unable to refer me to any statutory provision which could be thought to prohibit or make illegal any such agreement, and in my understanding there is none.

[68] These paragraphs appear to contain two separate reasons. One is that an agreement to carry out a subdivision to which consent can be given is not illegal. The other is that an agreement to carry out a development was not itself a development. Neither of these reasons strikes me as being entirely satisfactory. The prohibition in s 76A(1) is against carrying out the development unless "such a consent has been obtained and is in force". The tense and the requirement that the consent be in force clearly suggest that a development contravenes the section if, at the time the development occurs, consent has not been obtained. In the case of a subdivision, the relevant development is the division of the land. That division may be effected by, among other things, an agreement. Consequently, it is the agreement itself which is the development.

[69] There are other cases in which courts have held that an agreement to engage in conduct which is prohibited by the EPA Act is not void. For example, in Australian National Car Parks Pty Ltd v State Rail Authority of NSW [2005] NSWSC 120 the lease provided that the leased premises were not to be used otherwise than for car parking purposes. That use was prohibited by the relevant Local Environmental Plan. The lessee argued that, for that reason, the lease was void. That argument was rejected by Malpass M:

[21] ... The relevant provisions of the statute and of the Plan do not expressly prohibit the making of such a tenancy agreement or make it void. They do not expressly address the question of enforceability of contracts. The Plan itself is concerned with development. ... What the Environmental Planning and Assessment Act 1979 and the Environmental Planning and Assessment Regulation 2000 do is inter alia provide remedies, create offences and impose penalties.

See also Perman v Wenholt-Dwyer [2004] NSWSC 48.

[70] In my opinion, the approach taken by Malpass M should be applied in this case. Although earlier authorities suggest that a lease involving use of premises contrary to planning laws is unenforceable, as Giles J pointed out in Bawofi Pty Ltd v Comrealty Ltd (1992) NSW ConvR 55-646, those decisions were handed down before the decision of the High Court in Yango Pastoral Co ; and that were taken in relation to legislation that has been superseded by the EPA Act.

[71] The EPA Act treats subdivision as a form of development. It is not generally concerned with agreements. It is concerned with the way in which land is used. It provides a comprehensive structure for regulating that use. As part of that structure it permits local authorities to specify particular uses which may be the subject of consent. If land is used in a way that is inconsistent with the consent that is given or in the absence of consent, the Act gives local authorities and others broad powers to ensure that the objectives of the Act and relevant subordinate legislation are met. In exercising those powers, the local authorities and the Land and Environment Court can consider the nature of the conduct that is engaged in breach of the Act and the objectives sought to be achieved by the relevant prohibition in fashioning an appropriate order. One possibility is that the local authority or the court will decide consent should be given to the relevant activity or development, as happened when consent was sought to Noor Al Houda and Holdings continuing to operate a school at the premises. In those circumstances, I do not think that s 76A(1) of the EPA Act should be read as intending to render void all agreements made in breach of its provisions.

[72] Once it is accepted that the lease is not void because it involves a breach of s 76A(1) of the EPA Act, in my opinion a term is to be implied that Dr Taluja will do all things reasonable on her part to be done to have the lease registered, including obtaining the Council's consent to the subdivision effected by the lease. That implied obligation arises from the fact that Dr Taluja agreed to grant a lease of the premises the subject of the lease to Noor Al Houda for 25 years. That lease can only take effect if the lease is registered. In order to register the lease, the land to which the transaction relates must be shown on a current plan. Relevantly, the current plan must be a registered plan which is a plan of subdivision. However, a plan of subdivision cannot be registered unless the subdivision has been approved. The agreement to grant the lease carries with it an agreement to do all things reasonable to give effect to that agreement: Butts v O'Dwyer (1952) 87 CLR 267. Consequently, it carries with it an agreement to do all things reasonable on Dr Taluja's part to be done to obtain approval to the subdivision and registration of the plan of subdivision.

On appeal, Young JA (with whom Beazley and Macfarlan JJA agreed) considered the question of whether the grant of the lease was illegal or void because of provisions of the Environmental Planning and Assessment Act or the Conveyancing Act. His Honour made his view abundantly clear in observing that "I am quite sure that the way in which the learned primary judge dealt with the matter is correct": see [77].

The defendant purported to distinguish both the Court of Appeal in Taluja and in particular the decision of Bryson J in Hardy v Wardy. It seems to me such a distinction as is sought to be made does not exist.

Should specific performance be granted?

Generally the first step in deciding whether to grant specific performance will be to establish whether or not damages are an adequate remedy, as there can be no order for specific performance where damages are an adequate remedy: see, for example Adderley v Dixon (1824) 1 Sim & St 607 and Pianta v National Finance & Trustees Ltd (1964) 180 CLR 146 at 151 per Barwick CJ. Indeed in some cases it may be necessary to award specific performance instead of damages because, as outlined by Lord Selborne in Wilson v Northampton & Banbury Junction Railway Company (1874) LR 9 Ch App 279 at 284:

The principle which is material to be considered in the present case is that the Court gives specific performance instead of damages, only when it can by that means do more perfect and complete justice.

Specific performance is of course a discretionary remedy and discretion cannot be fettered by the contract: see, for example, Quadrant Visual CommunicationsLtd v Hutchison Telephone (UK) Ltd [1993] BCLC 442 at 451. Courts have generally lent in favour of granting specific performance especially where vendors have repudiated agreements for the sale of land. In Meagher Gummow and Lehane's Equity: Doctrines and Remedies (4th edition, 2002) at [20-035], the learned authors state:

Contracts for the disposition of interests in land are, far more commonly than contracts of any other description, the subject of orders for specific performance. Damages are not an adequate remedy for failure by a vendor to complete a contract for the sale of land (Adderley v Dixon (1824) 1 Sim & St 607 at 610; 57 ER 239 at 240; Dougan v Ley (1946) 71 CLR 142 at 150 per Dixon J), even if the purchaser is acquiring the lands as, in effect, part of his stock-in-trade... Similarly, in the case of an agreement to lease land damages are not an adequate remedy, although in some cases specific performance may be refused on the ground of futility: see [20-145]...

Although there is some suggestion that an order for specific performance would be futile (to which I shall return), there is no suggestion that performance is actually impossible. I note that the latter is a separate defence from futility: see Equity: Doctrines and Remedies at [20-140]-[20-145].

Assessment of damages

In the event that specific performance might be regarded as inappropriate, damages may be awarded in the alternative.

In ASA Constructions Pty Ltd v Iwanov [1975] 1 NSWLR 512, it was held that there is no general rule that equitable damages, given in lieu of specific performance, should be assessed at the date of judgment. Furthermore, in Madden v Kevereski [1983] 1 NSWLR 305, the Court held that it may fix the date for assessment of damages as at any date that may be appropriate in the circumstances; see also Mills v Ruthol Pty Limited (2004) 61 NSWLR 1 at [67] in which Palmer J observed:

[67] There is no doubt that, as far as the present state of case law in Australia determines the question, damages under s.68 SCA [Supreme Court Act] in respect of a contract for the sale of land which has gone off are assessed on a different basis from damages at common law: see the discussion of the authorities by Young J (as his Honour then was) in Rosser v Maritime Services Board (unrep. NSWSC 17 September 1996). The current view in Australia is that damages under s.68 are a substitute for an order for specific performance, i.e., they are to put the plaintiff in the same position as if he or she had obtained the order and a consequential conveyance of the land upon judgment. Accordingly, the monetary substitute for the order reflects the value of the land at the time it would have been conveyed pursuant to the order for specific performance, which is taken to be the date of the judgment: Wroth v Tyler [1974] Ch 30, at 60 per Megarry J; ASA Constructions at 518; Rosser ibid. But this general rule is subject always to the broader considerations of justice which underlie Equity's discretionary remedies.

In Sydney Attractions Group Pty Ltd v Frederick Schulman (No 2) [2013] NSWSC 1153, I considered the principles relevant to whether the Court should "do the best it can" on the available evidence to assess damages. It was contended in that case that I should follow the approach taken by the Court of Appeal in Paino v Paino (2008) 40 Fam LR 96 and McCrohon v Harith [2010] NSWCA 67, namely a Court doing the best it can even if there is a need to "guess" to assess damages, rather than reaching a grossly unfair zero result. That was clearly an appropriate contention and I propose to do so again in the present case.

The comments made in McCrohon v Harith [2010] NSWCA 67 by McColl JA (Campbell JA and Handley AJA agreeing) are particularly relevant (at [118]-[124], some citations omitted):

[118] There are cases in which courts will estimate damages despite a dearth of evidence. The basic principle was explained in Commonwealth v Amann by Mason and Dawson JJ as follows:

[M]ere difficulty in estimating damages does not relieve a court from the responsibility of estimating them as best it can ... Where precise evidence is not available the court must do the best it can: Biggin & Co Ltd v Permanite Ltd [1951] 1 KB 422, per Devlin J at 438.

[119] Devlin J's complete statement was: "[W]here precise evidence is obtainable, the court naturally expects to have it. Where it is not, the court must do the best it can." After referring to this statement with apparent approval in New South Wales v Moss (2000) 54 NSWLR 536 (at [72]) Heydon JA added:

As McPherson J said in Nilon v Bezzina [1988] 2 Qd R 420 at 424: "The degree of precision with which damages are to be proved is proportionate to the proof reasonably available". The courts on occasion cite in related contexts Bowen LJ's related but stricter observation in Ratcliffe v Evans [1892] 2 QB 524 at 532-3, an injurious falsehood case:

'... As much certainty and particularity must be insisted on ... in ... proof of damage, as is reasonable, having regard to the circumstances and the nature of the acts themselves by which the damage is done.'

...

[120] In JLW (Vic) Pty Ltd v Tsiloglou [1994] 1 VR 237 (a claim for damages for alleged misleading representation inducing entry into a lease) Brooking J reviewed the principles concerning the circumstances in which a court may assess damages notwithstanding a lack of evidence. His Honour [accepted] "the amount of the damage must be proved with certainty, but this only means as much "certainty" as is reasonable in the circumstances". His Honour distinguished cases ... where "[t]he nature of the damage may be such that the assessment of damages will really be a matter of [permissible] guesswork" from cases where "precise evidence is obtainable", where guesswork is not permissible...

[122] In Troulis v Vamvoukakis [1998] NSWCA 237 Gleeson CJ (Mason P and Stein JA agreeing) referred to Tsiloglou with approval as setting out the principles governing the approach a court should take when there had been a failure by a party carrying the onus to establish the extent of damage suffered as a result of a breach of contract or tort... Gleeson CJ held that in such circumstances there were "limits to the lengths to which a court may properly go in 'doing the best it can' to assess damages". His Honour observed that the case did not involve damages which were "inherently difficult to quantify, or which involve[d] estimating a risk, or measuring a chance, or predicting future uncertain events." ...

[123] Gleeson CJ concluded in substance, that where the damages were susceptible of evidentiary proof, and there was "an absence of the raw material to which good sense may be applied ... [j]ustice does not dictate that ... a figure should be plucked out of the air."

[124] In Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd [2003] HCA 10 ... Hayne J (Gleeson CJ, McHugh, and Kirby JJ agreeing) postulated that there may be a distinction between cases where a plaintiff cannot adduce precise evidence of what has been lost (in which "estimation, if not guesswork, may be necessary in assessing the damages to be allowed") and cases where, although apparently able to do so, the plaintiff has not adduced such evidence. His Honour suggested that references to "mere difficulty in estimating damages not relieving a court from the responsibility of estimating them as best it can" might be more apt in the former rather than the latter class of case.

Evidence

As a result of the defendant withdrawing her claim for rectification both the evidence and the extent of any cross examination was significantly reduced. The most important consequence of that withdrawal was that Dr Taluja herself was not required for cross-examination.

Only one of the plaintiff's lay witnesses was required for cross examination and I will deal his evidence below. None of the defendant's witnesses were required.

The plaintiff read four expert reports. I will come to each of these in turn. Three of the four experts were required for cross examination. No questions were put to Mr Kaplan, chartered accountant. Again I will return to his report in due course.

I should also note that the defendant chose not to put forward any alternative experts. Although I am not obliged to accept in part or in whole the evidence of any witness, the lack of alternative and or countervailing expert opinion and the limited extent of cross-examination had a significant impact on my decision to largely if not entirely accept the lay and expert evidence put forward by the plaintiff.

Evidence of Mr Tolani

Mr Tolani is a director of the plaintiff which is a non profit company limited by guarantee and which was incorporated on 9 March 1999.

He explained that the plaintiff is the trustee of the Shree Shirdi Sai Sansthan Sydney Charitable Foundation formed on or about 1 May 1999.

He also explained that the primary object of the plaintiff is to promote the teachings of Shirdi Sai Baba who lived between 1838 and 1918 and is regarded as a saint.

Mr Tolani affirmed a number of affidavits (11 November 2010, 7 April 2014, 3 December 2014 and an earlier affidavit in reply, 14 August 2012).

In his principal affidavit (11 November 2010), Mr Tolani states that from about May 1998 he, together with other devotees of Shirdi Sai Baba, started prayer meetings at the premises at 416-420 Liverpool Road Strathfield South. At all relevant times, the land of course was owned by the defendant. Initially there were only about 20 devotees and the defendant was paid a modest amount of approximately $70 per week to enable devotees to have access to the "temple" each Sunday until 8pm.

He stated that from about the year 2000 the number of devotees increased to approximately 100 and continued increasing. By June 2001 devotees installed a marble statue of Shree Shirdi Baba on the premises and by this stage the temple was open every day between 10-11am and in the evening between 6.30-8.30pm. He estimated that from about June 2001 the number of devotees grew to about 1,800. As at 2010, he estimated that there were about 2,000 devotees visiting the temple each week.

From about 1999 and onward the weekly rent gradually increased, and by arrangement with the defendant the devotees were also able to use the hall and attached kitchen (known as Brundah Hall) serving food offerings to devotees each Sunday evening together with the use of some toilet facilities. The grounds were also used by devotees for parking of vehicles and from time to time marques were erected for Indian festivals.

From about 2003 certain of the properties were leased to an Islamic primary and secondary school.

In or around 2003 Mr Tolani had discussions with Dr Taluja in which they negotiated what was ultimately described as the lease document signed by the respective parties on or about 5 August 2003.

On or about 21 September 2006 Mr Tolani along with others instructed the solicitor Mr Rickards to serve a notice to exercise the option upon the solicitors for Dr Taluja. However despite the fact that the plaintiff has remained in possession of the relevant property the parties have more or less been in dispute since about 2006.

Mr Tolani accepted that in about November 2009 the plaintiff's accountant received a notice of termination of the lease. Mr Tolani gave evidence in his principal affidavit of the prejudice to the plaintiff if the lease is terminated. He estimates that the plaintiff has spent a sum exceeding $50,000 in the improvement, renovation, repair of the temple and the installation of audio visual equipment, heaters, fans, lighting both inside and outside. In addition, devotees over approximately 12 years have devoted their time and their efforts to maintaining the temple. There are also currently 25 active volunteers who keep the temple open twice daily seven days a week. Currently he estimates that approximately 1,200 devotees attend each Thursday and 800 devotees attend on Sunday. Food is brought by devotees and shared amongst all those present.

Mr Tolani indicated that he and his co directors and fellow devotees had planned to retain the Strathfield temple and to develop another institution elsewhere. To that end a related trust has purchased approximately 2,000 square metres of vacant land in an industrial part of Regents Park in order to construct a multi purpose facility including benevolent and education purposes and a mandir (a temple). It is expected that this work will be completed at some time in 2015. He also stated that he was concerned about the removal of the Shirdi Baba Statue if the devotees are forced to move out of the Strathfield premises.

Mr Tolani was cross examined. He accepted that he was one of five or six directors of the plaintiff. He also indicated that any person is welcome at the temple. He would not agree that Shirdi Sai Sansthan was a Hindu sect, but rather he asserted that his group was merely a group of persons devoted to a saint.

He said members were not obliged to make donations. If they choose to do so they could and I infer make the donations as large or small as they wish.

According to Mr Tolani attendances at the temple last year (2013) were between 2,500 and 3,000 people coming every week. In 2014 he said the numbers have been approximately the same.

Mr Tolani was asked his view as to what would happen to the devotees in Strathfield once the temple and other facilities were completed in Regents Park. He stated in answer to a number of questions that many devotees had moved their home to Strathfield and they were attached to the temple there. He had been told this by at least approximately 25 families. Unsurprisingly he was unable to speculate about what some of the devotees may or may not do once the facilities at Regents Park had been completed.

I found it a little difficult to see precisely what some of the questions in cross examination in fact went to. However I found Mr Tolani both truthful and forthright and I have no hesitation in accepting his evidence. In particular I accept his evidence that certain of the devotees have moved into the Strathfield area for the purpose of attending the temple at the relevant premises. I am also persuaded that over the years there has been a significant increase in the number of devotees attending the temple, and it is both popular and well known among devotees.

Other lay witnesses

The plaintiff also relied upon a number of other lay witnesses both in chief and in reply. The plaintiff read affidavits from Mr Rickards, solicitor, a Mr V J Kumar, the former consul general of India to Australia and who is currently the ambassador Emeritus for India. Affidavits were also read in reply from Mr Hemchander Rao (also a director of the plaintiff) and a Ms Janki Bhandary, solicitor. None of these persons were required for cross examination.

Mr Rickards' evidence dealt essentially with correspondence, including the exercise of the option to purchase, and other communications passing between himself and representatives of Dr Taluja from time to time. There is nothing controversial it seems to me in his evidence and I accept it.

Mr Kumar stated that he had been a devotee of Shree Shirdi Sai Baba for approximately 40 years and has worshipped at the temple from at the very beginning in 1998. Since about 2006 it has been the custom of his wife and himself to attend the temple twice a week on Thursday and Sunday. He corroborates Mr Tolani's assessment of the number of devotees attending currently. Again there is nothing controversial about Mr Kumar's evidence and I accept it.

Ms Bhandary again gives again what is uncontroverted evidence about the circumstances in which the lease was executed by the parties more relevant that Dr Taluja. She was not cross examined and again I regard what she has to say about those events insofar as they are relevant as an accurate account of what occurred in relation to the execution of the lease.

Expert evidence

The plaintiff was the only party to call any expert evidence, indeed four in total. There was no attempt made by the defendant apart from cross examination to counter any of the expert opinions advanced by the plaintiff's witnesses. I should add no objections were taken to their qualifications or the opinions expressed by them.

Mr Mantei

Mr Michael Mantei prepared a report dated 28 February 2014. Mr Mantei has a degree in town planning from the University of New South Wales and a degree in law from the University of Wollongong. He has had extensive experience both as a town planner and a planning lawyer and has had significant interaction with a number of local councils (Liverpool, Fairfield and Wollongong) in relation to planning issues.

An important question which arises in this case is the likelihood of the Strathfield City Council, or the Land and Environment Court on appeal, approving a development application for subdivision facilitating the transfer by the defendant of the relevant portion of the property to the plaintiff as allegedly agreed. He was asked about the likelihood of approval and whether such approval would, or might have, conditions imposed.

Mr Mantei considered a good deal of documentation including a plan of the proposed strata subdivision, the relevant lease document and other material concerning the heritage listing of buildings which are on the site.

He made an inspection of the property in December 2010 and again in early February 2014. He attended the Strathfield Council's office and discussed the proposed development with a Ms Julia Hunt, the Duty Town Planner at the Council.

Mr Mantei explained in his report (paragraphs 32 and following) that the proposed strata subdivision plan provided that the subject land was to be divided into three lots. The first comprising a total are of 5,149 sq metres which contains the Leigh College Hall and the existing open space playground with two banks of car parking spaces. Lot 2 comprised a 690 sq metre area which contains the temple and a small curtilage. Lot 3 comprises an area of 970 sq metres and contains Brundah House, an associated ancillary building, together with its curtilage. The remainder of the subject land would be contained within what would be the common property. Mr Mantei assumed that a strata management scheme required by the relevant legislation was yet to be prepared but he assumed that it would outline the rights and obligations of each of the unitholders in relation to car parking, driveways, outside play areas and matters of that sort. He also assumed that lots 1 and 3 would be burdened by easements allowing visitors to the temple to access the toilets and kitchen facilities behind Brundah House.

He then set out in some little detail his understanding and various assumptions concerning the current use and ongoing activities on a weekly basis in relation to the devotees use of the temple. None of this was challenged. Indeed it accords with the evidence given to a large extent by Mr Tolani.

Mr Mantei observed that the development application would have to be made in the appropriate form and contained materials including a site plan, statement of environmental effects and a list of fire safety provisions. He would also expect that the development authority would require the applicant to submit a report from an appropriately qualified expert on traffic and heritage impact. He observed that the proposed development did not propose any subdivision building works nor preliminary engineering drawings.

Mr Mantei then set out the various provisions of the EP&A Act which in his view need to be satisfied in relation to such an application. He observed that the primary environmental instrument which applied to the land was the Strathfield Local Environmental Plan 2012. A further instrument of some relevance is also the State Environmental Planning Policy (Infrastructure 2007). He also observed there was a Development Control Plan 2005 which also applied to the property but only insofar as it dealt with off street parking. Mr Mantei also expressed the view that the whole of the subject land was within zone R3 medium density residential. Within that zoning, development for the purposes of "places of public worship" can be approved to the extent that the development application would involve the continued use of the temple. His view was that it would fall within the 2012 instrument. He was clearly of the view that the land was capable of being subdivided. He qualified that view by indicating that the Council had a discretion, fettered by section 80(2) of the EP&A Act, as to whether to approve the application would involve a contravention of the EP&A Act or an environmental planning instrument.

Mr Mantei however expressed the view, and he was not challenged on this, that he did not consider that the proposed subdivision would indeed result in a contravention of the EP&A Act or an environmental planning instrument or any regulation made under the EP&A Act (paragraph 62). He had reviewed a number of previous development consents granted with respect to the site. For example in August 1992 there was development consent for the use of the site for an educational establishment and ancillary purposes. In 1994 consent was obtained for the use of rooms 15-17 in Leigh Hall for professional consulting purposes. In February 1998 there was consent given to the continued use of the premises as an educational centre and in February 2007 approval was given for the use of the site for an educational establishment for 450 students. That particular consent imposed no conditions which would directly prohibit any future subdivision of the land in his opinion. He also expressed the view that that consent did not prohibit or otherwise deal with the use of the temple.

He acknowledged that the Council may be concerned that if the subdivision were to occur by the creation of strata lots the school as approved would be partly on proposed lot 1 and partly on proposed lot 3. He expressed the view that this may lead to a breach of consent in the future if the lots are in separate ownership. However on balance he did not believe that such a situation would trigger a breach of the EP&A Act.

In his view the proposed subdivision would not result in a change of characterisation for any of the approved uses from a permissible use to a prohibited use so as to cause any further contravention of the EP&A Act. He expressed the view that the Council's duty town planner agreed with his interpretation of the 2012 instrument and the applicability of the various components of the instrument when he met with her on 11 February 2014.

Mr Mantei then considered other relevant provisions of the 2012 instrument and ultimately formed the view that the Council would be persuaded that none of the various objectives therein set out were inconsistent with the proposed development.

He acknowledged that the development had to be supported by a heritage management document as all three buildings located on the subject land are listed as heritage items for the purpose of the 2012 instrument. He also accepted that there was an inference in a study undertaken by Strathfield Council that the open space and landscape gardens within the front and back of the buildings to the Liverpool Road side were items of heritage significance. Mr Mantei indicated in his report that in 2010 when he was first retained he had sought a preliminary opinion on heritage issues with the proposed subdivision from a Mr Greg Patch, a heritage architect. He attached to his report an email exchange between himself and Mr Patch. It was Mr Patch who suggested that strata subdivision was the more "digestible form of subdivision" which may appeal to the Council. The practical ramifications Mr Patch points of course relate to the levies, maintenance costs and matters of that sort.

Mr Mantei however, having consulted with Mr Patch and having given it seems independent consideration to the relevant requirement, expressed the view that he did not anticipate that the impact of the proposed development on the heritage significance of the buildings would be such as to cause the relevant authority to refuse the proposed development on those grounds (paragraph 77).

In addition Mr Mantei expressed the view that the current operations of the school and the temple in terms of vehicular access appear to him to be adequate and satisfactory and in accordance with the various regulations and requirements.

He then independently considered the infrastructure regulations and, although he expressed a view that the proposed development is not the type of development that is sensitive to traffic noise, he acknowledged that a traffic engineer would need to be consulted as a precaution.

He then considered the Development Control Plan 2005 and in particular its requirements for off street parking. It provides relevantly that car parking for a place of public worship is to be provided at the rate of either 1 space per 6 seats or one sixth of the capacity of the attendees, whichever is the greater. In this instance, by reason of the manner in which the devotees pray and otherwise conduct themselves within the temple, he was of the view that the one sixth capacity criterion was the relevant one. Given the number of devotees he was asked to assume would attend the minimum number of offstreet car parking spaces required was 34 (based on a maximum of 200 devotees) but in his view there were a total of 61 off street car parking spaces on the subject land.

Some of those car spaces would clearly need to be used for the school but all of the spaces would be available outside the approved hours of the operation of the school. Mr Mantei expressed the view however (paragraph 90) that he expected the Council would impose a condition on any approval by setting the maximum number of people who may worship at any one time to about 200. This would ensure that the number of devotees does not increase incrementally beyond the capacity of the offstreet carpark without a proper reassessment of demand.

Based on his experience and his discussions with the Council's duty planner he acknowledged that traffic impacts on the local road network and noise would be factors that the Council would need to be satisfied about. To that end again he accepted that a suitably qualified traffic engineer would need to be retained. He expressed the view (paragraph 99) that the use of the existing temple as a place of worship was in his view an appropriate adaptive reuse of an existing heritage item. Again he indicated that the Council, or indeed the Land and Environment Court, may be concerned that the approved school will be partly located on proposed Lot 1 and partly on proposed Lot 3.

Mr Mantei suggested that this might be a reason for the Council or the Court to refuse the subdivision. However, he expected both Council and Court would afford the plaintiff an opportunity to amend the subdivision layout to overcome the difficulty by simply reducing the number of lots from three to two while maintaining the proposed lot boundaries. Even with that qualification, he was of the opinion that the subject land was suitable for the proposed subdivision because in his view it would comply with all the relevant regulations and other criteria (paras 102 to 104).

In conclusion Mr Mantei was of the view that subject to an assessment of traffic impact the Council or the Court was likely to approve the public worship component of the proposed development at the scale at which it is presently operating (paragraph 111). He was of the view however that Council was likely to impose conditions in relation to the maximum number of devotees, car spaces, operating hours and other matters including generation of noise and impose a heritage conservation management plan (paragraph 113).

He again reiterated that the Council may require two lots rather than three maintaining the proposed lot boundaries. He was also of the view that the Council may impose a condition that the strata management plan provide the right of access for the operator of the school to a specified number of spaces within the car park and to the driveway and a right of access for the operator of the professional consulting rooms in Leigh College Hall to a number of specified car park and to the internal driveway.

Mr Mantei was cross examined on his report. Mr Mantei accepted that his conclusion about the likelihood of the Council giving consent was qualified in the sense that it was subject to the assessment being made by an appropriately qualified traffic expert and a heritage expert. He was asked to consider an affidavit filed late in the proceedings from a Ms Annika Fleet. Her affidavit dated 4 December 2014 indicated that she had conducted an internet search of the property and discovered a reference to a development application proposing to subdivide a 97.7 metre square parcel of land within the site containing a chapel. This had been refused by the Council. Ms Fleet indicated that she was instructed by Dr Taluja that she had never made such an application. Upon request the Council provided the notice of determination made on 13 April 2012. That determination made reference in very general terms to the proposed subdivision having immediate impact on the heritage significance of Leigh Hall and Vickery Chapel.

Mr Mantei affirmed his own affidavit of 8 December 2014 dealing with this issue. He said, in my view with some justification, that he was unable to say anything meaningful about the determination because of the lack of information concerning the content of application. I accept his evidence in that regard. The determination says little if anything about the likelihood of the proposed subdivision application so as to put the determination into context. He in effect suggested that it was of no real relevance. I agree.

He accepted that Council may be reluctant to approve a development application which might impinge on one of the buildings or the land and detract from its heritage nature. That of course does not really answer the question of whether such an application would be considered by Council, nor does it rule out the possibility of amending such an application to accommodate such concerns (if any).

Mr Mantei accepted that he did rely upon Mr Patch and the view expressed in his email of 9 December 2010. He accepted that Mr Patch did not express a view that the subdivision would be approved, but he did suggest that creating strata lots would be more digestible to the Council. Mr Mantei unsurprisingly accepted that heritage impact would be a relevant consideration for the Council.

I am of the view that having made appropriate qualifications both in relation to a traffic expert and a heritage expert, Mr Mantei remained of the view that an application for a subdivision could not only be lawfully made but would be likely to succeed, subject to certain conditions.

Mr Berry

Mr Berry is a valuer who was appointed a fellow of the Australian Property Institute in 2001. He has won numerous awards and specialises in the valuation of unusual buildings. He has had extensive experience with government, both state and local and private clients. He has given expert evidence, and/or been engaged as an expert. He has also been concerned with the valuation of heritage properties.

He was asked to provide an opinion as to the valuation of the property being a heritage chapel operating as the temple as if subdivided by way of a strata lot together with 800 square metres of land.

His view was that as at 1 April 2007 the property was worth $1,050,000; on 1 July 2007, $1,092,000; and on 1 November 2010, $1,070,000. Although he was unable to prepare an updated report, he did provide in a letter dated 8 December 2014 his view as to the current market value of the property. He estimated that a value range of $1.4 to $1.5 million was an appropriate figure for the current market value of the property.

Mr Berry was cross examined. He was asked some questions about the methodology that he used. He indicated that he initially looked at 50 properties and then reduced them to a smaller number of the most comparable. He accepted that in the comparable sales that he was able to locate none were directly heritage. One building, which had been used in connection with a convent dated from 1880s, was the closest analogy he found. He did however confine his search unsurprisingly to properties used for religious purposes. He explained in his evidence that generally speaking properties which were heritage listed were less valuable because it was more difficult to get approval to make alterations and there are a range of issues that lead to certain restrictions on their use.

Mr Berry was not really challenged on his valuations, and I accept his evidence.

Associate Professor Bilimoria

Associate Professor Bilimoria is a scholar of Indian religions and philosophy. He has taught in that field and published widely as well. He is currently working at the University of California as a visiting scholar at the Institute of International Studies. He is teaching a religious studies program.

In substance he was asked to express a view on the question as to whether if devotees are forced to relocate from the temple to alternative premises what is likely to happen in relation to cash donations. Further he was asked to indicate a view as to the "attitude or mindset" of devotees of a relocation of the site.

Associate Professor Bilimoria expressed the view that although the structural makeup of a temple was significant the Hindu faith relies not on the bricks and mortar but rather in the physical space that a temple occupies. He expressed the view that the sanctity comes into being and is "energised" as a direct result of the ritualistic practices carried out within the place.

He explained that from earliest times the Hindu temple has functioned as a place of transcendence where the worshipper may progress from this world to a virtual universe of knowledge and truth. Significantly he said the temple was not merely a place of worship but was itself an object of worship. The longer a temple is used the greater the sanctity is attached to the temple. Thus he expressed the view the temple becomes more than a symbol for divinity - it is really, over time, a structural embodiment of the divine presence in a material form.

Associate Professor Bilimoria in his opinion gave a number of historic examples where attempts had been made to interfere with temples or where interference had in fact occurred. I should say that in my view none of those examples were of any particular relevance.

In his view however, given the many years in which the Strathfield premises had been used as a temple, the site would have become a site of considerable religious significance to the devotees. If forced to relocate his view would be offerings would cease or be significantly reduced. This is because the ongoing maintenance and accessibility for purposes of worship at a particular location is part of a deeply entrenched tradition in the Hindu faith. Furthermore an interference of the kind which would require relocation would be regarded as an act of defilement and desecration. The relocation would have a significant and profound effect on the devotees because amongst other things the face of sanctity would not be seen to be maintained in their eyes.

Associate Professor Bilimoria was cross examined via videolink from California. He reiterated the view he had expressed in his written report that a Hindu place of worship is a sanctified place, and that takes some time to develop. He went on to say the location, the accessibility and maintenance of the temple is as of much significance as is maintaining the worship of the deity through rituals and through process. He also thought that within a decade of association, a location would become of spiritual significance.

He was specifically asked what facts supported his opinion that if forced to leave there would be a drop in the number of devotees at any new location. Again he stated that a Shirdi temple has a spiritual face or a sanctity which has grown over a period of time. Although he got the date wrong (1987 not 1998) the number of devotees had grown in his view "exponentially" and it has become a major temple. Indeed he said in his forthcoming book he has included part of a chapter on the particular location because of its significance in terms of the volume of people and its importance for the Hindu community in Australia and especially Sydney. Relocation in his view would seriously disrupt the devotees' activities and that would lead to a compromise in the number of offerings.

He was asked if he adhered to his view that there could be a 50-60% loss of devotees (and hence, presumably, the amount of donations) and he said he did. He however agreed that he had not spoken to any particular devotee about their attitude to relocation, nor had he visited the Strathfield temple himself.

Again I accept Associate Professor Bilimoria's views and, although somewhat speculative, in particular his conclusions as to the likely percentage reduction in devotees and therefore donations.

Mr Kaplan

Mr Kaplan provided an expert report on damages whereby he was asked to calculate the present day value of loss to the plaintiff over a number of years up to five with a 50% and/or 60% reduction in donations. He undertook those calculations and provided a table of his calculations. He was neither required for cross examination nor was he any challenge made to his methodology or calculations. Over a period of five years 50% drop in donations he expressed the view that the present day current value of that would be $921,349 and at 60% reduction in donations was $1,104,858. His views were not challenged.

Discussion

Uncertainty

The defendant submits that the lease document between the parties is void for uncertainty.

In essence, the uncertainty is said to arise from a failure to properly identify the 800 square metres (including the Chapel) which is purported to be the subject of the lease document and of the option to purchase. The plan attached as Annexure B to the lease document is supposed to show the location of the Chapel and the 800 square metres by means of hatching, but it does not do so. The defendant suggests that without such a plan, the 800 square metre area could be to the front, back or sides of the Chapel and or maybe in a smaller width surrounding the Chapel. In addition, the defendant suggests that since the Chapel is contained within Lot 100 but close to the border of Lot 4, it is not only conceivable that the 800 square metre area would cross such a border but "it is bound to encroach on Lot 4 which will cause subdivision problems if ownership falls into different hands" (defendant's final written submissions at [8]). Finally, the defendant suggests that there is nothing in the lease which could be used by the Court for guidance in the proper construction of the leased property.

In my view, the submission that the lease document is void for uncertainty must be rejected.

It is clear that the general location of the Chapel is marked on the plan and is clearly discernible. However the area of 800 square metres surrounding the Chapel is not hatched on the plan attached as Annexure B. The plaintiff fairly concedes that the general location of the Chapel would not be enough to identify the land for the purposes of either a lease or a contract of sale.

However, the plaintiff correctly points to the mechanism within the lease document by which the precise boundaries of the land are to be fixed. Clause 9 of the lease document requires the defendant to prepare a final plan following a survey, admittedly at the plaintiff's expense, within a reasonable time. Such a plan was never prepared by the defendant.

Furthermore, if a disagreement arose between the parties as to the plan prepared as a result of a survey, the determination of such a dispute was to be made pursuant to clause 10 "by an expert appointed by the President of the Institute of Surveyors to the intent that the final plan shall consist of eight hundred (800) square metres" (clause 10.1). Such determination was to be "final, conclusive and binding" (clause 10.2).

As the authorities make clear, a Court will endeavour to avoid finding a contract void for uncertainty, particularly when the contract has been at least partly performed. It is no answer for the defendant to say that it suited her to have the defendant as a tenant and accept rent from them, and that if the lease document is void for uncertainty she is entitled to retain that money as mesne profits. What is more, in the present case it is the defendant herself who has not complied with her obligation under clause 9 to prepare a final plan. She cannot fail to fulfil her contractual obligations in such a manner and then seek at a later point to have the contract declared void for uncertainty on the basis of that failure.

The authorities such as Godecke and Axelsen v O'Brien are clear that parties may leave terms, even essential terms, to be determined by a third person. In this case, I am satisfied that the contract clearly provided for any uncertainty as to the precise area that was the subject of the lease document to be resolved, both by the preparation of a plan by the defendant in reasonable time and by the provision of a mechanism for resolving any dispute arising from a proposed final plan.

Further uncertainty is said to arise from the grant by the defendant of her land to a third party for 25 years in July 2003, prior to the execution of the lease document on 5 August 2003. Again, it is not clear how such an arrangement could be said to render the lease agreement void for uncertainty, but rather simply mean that the defendant has entered into multiple contractual arrangements which may not be at all capable of being satisfied. In that case, it is a breach of contract potentially sounding in damages rather than any suggestion that the lease document should be regarded as void for uncertainty.

Illegality

The defendant submits that the lease document is unenforceable, although not void, on the basis that it gives rise to an illegal subdivision.

The argument, although somewhat inelegantly expressed in the defendant's written submissions, appears to be as best I can understand it that since section 76A requires consent for a development which includes subdivision and that the decision of the Court of Appeal in Taluja v Australian International Academy [2011] NSWCA 416 should not apply.

The plaintiff asserts that insofar as the lease document operates as an agreement to lease, the lease document is covered by Bryson J's decision in Hardy v Wardy [2001] NSWSC 180. In that case, the lease of a building that comprised part of a lot contained an option to purchase, which the lessee purported to exercise. The lessor resisted specific performance on the ground that the agreement effected an illegal subdivision. In particular, His Honour observed at [47]-[48]:

[48] Subdivision will be unlawful if it is not carried out in accordance with control of development under an Environmental Planning Instrument. Whether or not it is unlawful depends upon proof that a relevant Environmental Planning Instrument contain some provision which renders it unlawful. If subdivision is altogether forbidden an agreement to subdivide may be affected by illegality, but if the relevant Environmental Planning Instrument allows the subdivision to be consented to there would in my opinion be no reason why an agreement to carry out the subdivision would be illegal.

[49] Entering into a contract carrying of which requires a subdivision, or a contract to carry out any other development, cannot itself be seen as development and in my opinion is not affected by any question of illegality. Counsel were unable to refer me to any statutory provision which could be thought to prohibit or make illegal any such agreement, and in my understanding there is none.

I have already set out the consideration given by Ball J at first instance and the Court of Appeal to the issue of whether a lease is unenforceable because of an illegal subdivision.

Counsel for the defendant put forward the following submission in closing (T62/15):

KHAN: Yes, I would submit that it is unenforceable because the lease creates an illegal subdivision. As my friend took your Honour to s 4B of the Environmental Planning and Assessment Act, which says, it talks about subdivision, meaning land being divided into two separate - two or more separate lots, and then there is s 76A of the Environmental Planning Act which says that "Any development requires consent" and your Honour heard the evidence of Mr Mantei saying that any subdivision in respect of this land would require consent.

We would argue that the lease created illegal subdivision. I understand your conversation with my friend and what Mr Bryson J held in Hardy v Wardy. I understand that the illegality arises from the fact of subdivision not the agreement. I understand that argument but I would say that in this case there is a situation where the agreement and the fact of subdivision are really one if you like, if I may put it in those terms. That's as far as I can take it.

In my view, the defendant has not put forward any rational basis for suggesting that the views expressed in those cases (and indeed by Bryson J in Hardy v Wardy) should not be adopted by me. Indeed they make perfect sense. Therefore I would not find the lease document unenforceable by reason of illegality as urged by the defendant.

The agreement carries with it an implied term to do all things reasonable and lawful to give effect to that agreement: Butts v O'Dwyer (1952) 87 CLR 267. Consequently, it carries with it an agreement to do all things reasonable on the defendant's part to be done to obtain approval to the subdivision and registration of the plan of subdivision, and the transfer of the appropriate subdivided portion to the plaintiff.

Should specific performance be granted?

Having rejected the claims of the defendant in relation to uncertainty and illegality, I now turn to the question of whether specific performance should be granted.

The first issue to be determined is whether the plaintiff exercised the option to purchase in the proper manner. The plaintiff's first notice of exercise was dated 13 September 2006 and served on the solicitors for the defendant on or about 21 September 2006. The notice stated:

We now give notice in accordance with clause 12 of the Lease that we exercise the option given by clause 12 to purchase the Land.

As required by authorities such as Prudential Assurance Co Ltd v Health Minders Pty Ltd (1987) 9 NSWLR 673 (at 677B per Kirby P), the primary rule is that the purported exercise of the option must express clearly and unequivocally the fact that this is what is intended.

No challenge is made by the defendant to the form of the notice provided. For instance, the defendant does not assert that the notice was not a clear and unequivocal exercise of the option.

In my view, the notice clearly and unequivocally expressed the fact that the plaintiff wished to exercise their option under clause 12 and this was properly communicated to the defendant on or about 21 September 2006. It was therefore a proper exercise of the option and it is not necessary to consider the second exercise of the option in 2010 (which I also accept was properly communicated to the defendant).

The second issue is whether specific performance should be granted if it would be in vain or futile. The defendant suggests that the evidence of Mr Mantei in relation to whether consent to a subdivision is likely or not is subject to other requirements such as traffic and heritage, and since an earlier application for subdivision was rejected, "on the balance of probabilities, a further application is also likely to be rejected" (final submissions at [26]-[28]). However I reject such a submission and I am not persuaded that it would be futile to make an order for specific performance. It may well be that the relevant authority might impose certain conditions, or that an appeal to the Land and Environment Court may be necessary if an adverse decision is reached by that authority. But the evidence of Mr Mantei, and the failure to dissuade him from his views in cross-examination, makes it clear that it would not be futile to order specific performance in this case.

The third issue is what the appropriate orders are. In Zorbas v Titan Properties (Aust) Pty Ltd [2005] NSWSC 440, Campbell J (as His Honour then was) observed at [12]:

It is a general principle concerning orders for specific performance that once an order for specific performance has been made the contractual rights of the parties are not superseded but the future exercise of rights and performance of obligations under the contract is under the control of the Court - or, looking at it from the other side of the coin, the working out of the order for specific performance is under the control of the Court.

Keeping that observation in mind, I am satisfied that the form of orders as set out by the plaintiff in their written submissions at [6.3] are indeed appropriate. Those orders are in the following form and I would be disposed to make them in the terms suggested (although I do interpolate that preparation of the subdivision plan may require her to comply with clause 9 of the lease document, and possibly clause 10, and it may be this should be accommodated for in some way in the orders to be made):

(a) A declaration that the plaintiff has validly exercised its option to purchase pursuant to clause 12 of the lease document entered into between the parties in August 2003.

(b) An order that the agreement arising from the plaintiff's performance of the option be specifically performed and carried into execution under the control and direction of the court.

(c) To give effect to order (b), order that the defendant do all things and sign all documents reasonably necessary to transfer the land to the plaintiff including and without limitation the following:

(i) Prepare a subdivision plan in registrable form creating a separate lot in respect of the land;

(ii) Provide a right of use over the common areas and right of way to the land;

(iii) Apply for and do all within her power to obtain the consent of the Strathfield Council and of any other authority, corporation or person whose consent is required to the subdivision;

(iv) Secure a discharge of any mortgage over the land;

(v) Effect registration of the plan with the Land and Property Management Authority;

(vi) Execute and deliver to The Sansthan a transfer in registrable form (subject to the payment of stamp duty) of the Land as created on registration of the Plan;

(vii) Delivering to the plaintiff the certificate of title for the land;

(viii) Effect with the plaintiff in the customary fashion adjustments of the statutory outgoings on the Land.

(d) An order that should the defendant default in complying with the order in paragraph (c), a registrar of the Court be empowered to do all things and sign all documents for the purposes set forth in paragraph (3).

The final issue is to note that I raised with the parties the consequences of making an order for specific performance which, for whatever reason, cannot be complied with by Dr Taluja (for example, if consent to a subdivision is unable to be obtained either from the relevant authority or through appropriate appeals processes). In that case I should make it clear that I would reserve further consideration of any entitlement to damages arising from a breach of the contractual obligation to obtain such consent.

Damages in lieu of specific performance

In the event that I am wrong on the question of whether to grant specific performance, I will also consider the damages that are sought by the plaintiff in the alternative and in lieu of specific performance.

The plaintiff seeks damages on a number of bases, namely the difference between the option price and the market value at the time subdivision and transfer would have occurred and loss of income if the plaintiff is forced to relocate to alternative premises.

The plaintiff also seeks the return of a security deposit. At the outset, I should note that clause 8 of the lease document provides that unless the security deposit is applied towards payment of the first instalment of the purchase price in terms of clause 12, it is to be refunded to the defendant upon the expiry or early termination of the lease. Such return of the deposit has never been offered by the defendant despite her purported termination notice in 2009 (T60/28). I also note that no claim is made by the defendant in these proceedings for unpaid rent or damage to the property that would provide any basis (assuming it to be relevant) for the retention of the security deposit by the defendant. I would order that the security deposit be returned.

The first head of damages is the difference between the option price of $700,000 and the market value at the time subdivision and transfer would have occurred.

The plaintiff points to two authorities in support of its claim for damages of this type. In Castle Constructions Pty Ltd v Fekala Pty Ltd (2006) 65 NSWLR 648; [2006] NSWCA 133, Mason P observed at [11] that "the purchaser was entitled to loss of bargain damages based upon the difference between market value and the contract price, market value being determined at the date when completion should have occurred". Likewise, in Palasty v Parlby [2007] NSWCA 345 Mason P (Tobias JA and Handley AJA agreeing) observed at [7] that "under the head of damages generally referred to as the first limb in Hadley v Baxendale (1854) 9 Exch 341; 156 ER 145, the vendor's loss was to be assessed by reference to the difference in value (if any) of the subject property at the date of breach, compared to the contract price that the vendor would have received on that date".

Having accepted the evidence of Mr Berry as to the market value of the land as at 1 April 2007 ($1,050,000) and as at 1 July 2007 ($1,092,000), and accepting that $1,071,000 constitutes the midpoint between these two estimates, I am satisfied that the plaintiff's damages under this head amount to $371,000 (constituting the difference between the figure of $1,071,000 and the option price of $700,000).

I should note that on the third day of the hearing, I questioned counsel for the plaintiff on the remedy sought in the event that specific performance was rejected (T58/29 and following):

MURR: Our contention would be that the appropriate order, and I must say this is something which we had overlooked in the preparation of the evidence; hence, the late and somewhat makeshift addition of Mr Berry's evidence. It depends basically upon whether it's common law damages or damages in lieu of specific performance. If it's damages in lieu of specific performance, then the authorities favour the view that damages are assessed at the date of judgment because it's at the date of judgment that the contract is lost; so, it's the value at that time which is relevant. If it's damages for breach of contract, it's at the date of breach, and that date is a date in April 07 which is the earliest of Mr Berry's dates.

HIS HONOUR: Which do you contend for?

MURR: It would depend what the finding was.

HIS HONOUR: Well, assuming specific performance is rejected.

MURR: If it's rejected on discretionary grounds, on the basis that, for example, damages should be given in lieu of specific performance, then the appropriate order would be as at today's date, whereas at the date of judgment. If it is rejected on other grounds but there is held to be a breach of contract, then the appropriate date is April 07, I think.

This would seem to be a slightly different position to that put forward in the written submissions by the plaintiff.

In any event, I have already made reference to the evidence of Mr Berry as to the valuations in 2007. I should indicate that I am significantly more comfortable with using those calculations rather than the merely indicative valuation provided in the form of a letter dated 8 December 2014 (Exhibit P1) which estimated "a value range of $1.4 to $1.5 million as at December 2014, under the same criteria as the valuation report dated 18 September 2012". Although using the same criteria as the earlier report, Mr Berry made it clear that he had not had the opportunity to undertake any specific research of current sales evidence and his indicative valuation did not constitute a formal valuation which would require such extensive research.

In my view therefore, the particular circumstances of the case require an assessment of the damages in lieu of specific performance as at the time when completion should have occurred, rather than at the time of judgement.

The second head of damages is the loss of income if the plaintiff is forced to relocate to alternative premises. The foundation for such a claim is the expert report of Associate Professor Bilimoria to which I have already referred, which suggests that a reduction in the level of devotees and therefore donations would be in the order of 50 to 60%.

Counsel for the defendant made the point that those figures were based on intuition, rather than objective facts. That may be true, and Associate Professor Bilimoria himself sets out in his report his view that "of course this type of estimate is not something which is susceptible to mathematical analysis". However, he bases his views on his learning in the area and his association with the Hindu religion for over 30 years and he believes that the percentage range indicated is "realistic".

Of course, no expert evidence was provided by the defendant to suggest that a lower figure might be more appropriate, or that such a range is not "realistic". As I have set out above, I intend to follow the approach taken by the Court of Appeal in Paino v Paino (2008) 40 Fam LR 96 and McCrohon v Harith [2010] NSWCA 67, namely that a Court should do the best it can even if there is a need to "guess" to assess damages, rather than reaching a grossly unfair zero result. This is not a case in which precise evidence is obtainable by the plaintiff but it has chosen not to do so. However having accepted Associate Professor Bilimoria's evidence about the significance of the physical location of a temple and the significance to devotees I have no difficulty in accepting his percentages as realistic. This is corroborated by the ever increasing popularity of the temple over the years leading to such an increase in devotees attending the temple.

I am satisfied that, on the evidence of Associate Professor Bilimoria and Mr Kaplan, the recoverable level of loss lies at $1,013,100 (the approximate midpoint between $921,349 being the present day value of the loss from the time of relocation for five years assuming a 50% reduction in donations and $1,104,858 being the same calculation but assuming a 60% reduction).

The cross claim

The defendant submits that the defendant terminated the lease pursuant to clause 11.3, which allowed her to do so after five years.

I accept that the defendant served a notice of termination on the plaintiff on or about 6 November 2009. However, I have also accepted that the plaintiff had properly exercised their option to purchase in October 2006. I accept the submission of the plaintiff that if Dr Taluja had complied with her contractual obligations once the option had been properly exercised, the sale of the land would have been completed within a short period of time. While the estimate of April 2007 is of course somewhat speculative, I accept that on any view the notice of termination came significantly later after any point when the plaintiff was entitled to be in possession of the land.

Furthermore, even if the notice was valid and effective to terminate the lease, it would not terminate the contract for sale arising from the exercise of the option. Given the nature of the proceedings, and my findings above in relation to specific performance, it would be inappropriate in that event to grant a declaration that the notice of termination was valid and that the defendant was entitled to possession in circumstances where an order for specific performance is to be made to compel the defendant to comply with her contractual obligations under clause 12. Such a declaration would have the absurd result of the defendant being forced to vacate the property only to return (of course pending the result of any appeal process) once the plaintiff had complied with her obligations.

I would therefore dismiss the cross-claim.

Conclusion

I invite the parties to provide short minutes so as to give effect to these reasons. As indicated at the hearing, I will hear the parties on the question of costs if they are unable to reach agreement.

**********

Decision last updated: 19 December 2014

Medium Neutral Citation:	Shree Shirdi Sai Sansthan Sydney Limited v Nirmal Taluja [2014] NSWSC 1825
Hearing dates:	8, 9, 10 December 2014
Decision date:	19 December 2014
Jurisdiction:	Equity Division - Expedition List
Before:	Sackar J
Decision:	See paragraphs [140] and [159]
Catchwords:	CONTRACT - RELIEF - specific performance - where option to purchase in lease document - where provision in contract for preparation of plan - whether option validly exercised - whether agreement void for uncertainty - whether agreement unenforceable for illegality - whether lease validly terminated - utility of declaration of valid termination where declaration of exercise of option to purchase also valid CONTRACT - RELIEF - specific performance - whether damages in lieu of specific performance appropriate - where damages claimed for reduction in income, being donations to religious temple, if specific performance unavailable and plaintiff forced to relocate - whether damages to be assessed at time of breach or date of judgment
Legislation Cited:	Environmental Planning and Assessment Act 1979
Cases Cited:	Adderley v Dixon (1824) 1 Sim & St 607 ASA Constructions Pty Ltd v Iwanov [1975] 1 NSWLR 512 Australian International Academy of Education Limited v Taluja [2011] NSWSC 647 Axelsen v O'Brien (1949) 80 CLR 219 Biotechnology Australia v Pace (1988) 15 NSWLR 130 Butts v O'Dwyer (1952) 87 CLR 267 Castle Constructions Pty Ltd v Fekala Pty Ltd (2006) 65 NSWLR 648; [2006] NSWCA 133 Godecke v Kirwan (1973) 129 CLR 629 Hadley v Baxendale (1854) 9 Exch 341; 156 ER 145 Hardy v Wardy [2001] NSWSC 180 Helmos Enterprises Pty Ltd v Jaylor Pty Ltd [2005] NSWCA 235 Madden v Kevereski [1983] 1 NSWLR 305 Mamidoil - Jetoil Greek Petroleum Co SA v Okta Crude Oil Refinery AD [2001] 2 Lloyd's Rep 76 McCrohon v Harith [2010] NSWCA 67 Meehan v Jones (1982) 149 CLR 571 Mills v Ruthol Pty Limited (2004) 61 NSWLR 1 Paino v Paino (2008) 40 Fam LR 96 Palasty v Parlby [2007] NSWCA 345 Pianta v National Finance & Trustees Ltd (1964) 180 CLR 146 Powell v Jones [1968] S.A.S.R. 394 Prudential Assurance Co Ltd v Health Minders Pty Ltd (1987) 9 NSWLR 673 Quadrant Visual Communications Ltd v Hutchison Telephone (UK) Ltd [1993] BCLC 442 Streatfield v Winchecombe Carson Trustee Co (Canberra) Ltd [1981] 1 NSWLR 519 Sudbrook Trading Estate v Eggleton [1983] 1 AC 444 Sydney Attractions Group Pty Ltd v Frederick Schulman (No 2) [2013] NSWSC 1153 Taluja v Australian International Academy of Education Ltd [2011] NSWCA 416 Thorby v Goldberg (1964) 112 CLR 597 Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429 Wilson v Northampton & Banbury Junction Railway Company (1874) LR 9 Ch App 279 Zorbas v Titan Properties (Aust) Pty Ltd [2005] NSWSC 440
Texts Cited:	Lewison and Hughes, The Interpretation of Contracts in Australia (Thomson Reuters, 2012) Meagher Gummow and Lehane, Equity: Doctrines and Remedies (4th edition, LexisNexis Butterworths, 2002) Seddon and Ellinghaus, Chesire and Fifoot's Law of Contract (9th Australian edition, LexisNexis Butterworths, 2008)
Category:	Principal judgment
Parties:	Shree Shirdi Sai Sansthan Sydney - plaintiff Nirmal Taluja - defendant
Representation:	Counsel: D H Murr SC, L S Einstein - plaintiff I Khan, A Kumar - defendant Solicitors: Rickards Legal - plaintiff WMD Law - defendant
File Number(s):	2010/375468