Wardy v Hardy

[2002] NSWCA 215

Reported Decision: (2003) NSW ConvR 56-034

New South Wales

Court of Appeal

CITATION:	WARDY v HARDY & ANOR [2002] NSWCA 215
FILE NUMBER(S):	CA 40044/02
HEARING DATE(S):	5 June 2002
JUDGMENT DATE:	5 July 2002
PARTIES :	Edmond WARDY v Gavin HARDY & Anor
JUDGMENT OF:	Mason P at 1; Giles JA at 86; Ipp AJA at 87

LOWER COURT JURISDICTION :	Supreme Court - Equity Division
LOWER COURT FILE NUMBER(S) :	ED 3936/00
LOWER COURT JUDICIAL OFFICER :	Bryson J

COUNSEL:	Appellant: J Graves SC/ I Khan Respondent: S Rares SC/ R Kaye
SOLICITORS:	Appellant: Hunt & Hunt Respondent: Deacons
CATCHWORDS:	CONTRACT - vendor and purchaser - lease granting option to purchase - subdivision consent - court management of specific performance - parties agreeing to private easement over pipes for facilities - public utility requiring new connections - whether vendor did everything reasonable to have subdivision plan registered within time specified in contract for sale - whether vendor's obligation is complied with by showing that non-compliance arises from some failure of an independent contractor - rescission. (ND)
LEGISLATION CITED:	Conveyancing Act 1919 Environmental Planning and Assessment Act 1979 Local Government Act 1919 Sydney Water Act 1994
CASES CITED:	Butts v O'Dwyer (1952) 87 CLR 2 Hardy & Anor v Hardy [2001] NSWSC 1141 Hawes v Cuzeno Pty Ltd (1999) 10 BPR 18,011 Masters v Belpate Pty Ltd [2001] NSWSC 169 Multicon Engineering Pty Ltd v Federal Airports Corporation (1997) 47 NSWLR 631 Pejovic v Malinic (1960) 60 SR(NSW) 184 Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 254
DECISION:	Appeal dismissed with costs

CA 40044/2022
ED 3936/2000

MASON P
GILES JA
IPP AJA

Friday 5 July 2002

Edmond WARDY v Gavin HARDY & Anor

The appellant owned land in Alexandria, the greater portion of which is occupied by a building subject to a registered lease to the first respondent. The smaller portion is occupied by another building, and both buildings share common connections for water sewerage and drainage. The lease was for a 7 year term commencing in mid-1995, with an option to purchase. Shortly before the expiry of the option, the first respondent purported to exercise the option in favour of the second respondent. The appellant refused to acknowledge or complete the contract for sale and proceedings for specific performance ensued. The respondents gained an order for specific performance subject to the appellant obtaining sub-division consent from the local council, with the Court maintaining supervision and control.

The appellant and second respondent exchanged contracts in April 2001, with a draft unregistered plan annexed to the contract. The plan provided for the creation of traditional private easements inter partes for water supply and for drainage over existing common pipes. Both portions of land had direct access to a road. The contract provided that the vendor “must do everything reasonable to have the plan registered within 6 months after the contract date…” giving the parties power to rescind after the expiration of the 6 month period. In March 2001 the appellant appointed a surveyor to prepare and submit to the council a development application for the subdivision and to consult with and ascertain the requirements of public authorities, including Sydney Water. Each side would have been content with private easements if the public authorities permitted subdivision on such a basis.

The council was prohibited from granting consent unless satisfied that the applicant had obtained a certificate of compliance from Sydney Water. Sydney Water had a long standing policy of normally requiring a subdivision such as this one to have separate water and sewerage connections. The appellant forwarded to Sydney Water the application for s 73 Certificate (under the Sydney Water Act 1994 ) in early July 2001. In late July Sydney Water gave formal notice of requirements and advised in late August 2001 it was unwilling to relax the requirements in this case. The appellant began complying with Sydney Water’s requirements of completing new water and sewerage connections for the other portion of land in mid October.

The plan of subdivision was not registered within 6 months. The second respondent successfully sought declarations from the Court that the appellant had not complied with the contract and was not entitled to rescind. The judge at first instance held that the appellant’s agents took active measures to delay progress of work and registration of the plan. The appellant appealed from those orders. A principal issue at trial related to how long it was reasonable to continue solely down the private easement path.

HELD: per Mason P (Giles JA and Ipp AJA agreeing):

While it was reasonable to request a relaxation of Sydney Water’s requirements in relation to the water and sewerage connections, the appellant through his agents did nothing to anticipate Sydney Water’s requirements until it was apparently too late. In the circumstances the existence and nature of those requirements ought to have been foreseen much earlier.

Approving the trial judge’s findings, according to the contract it is the vendor’s obligation to do everything reasonable to have the plan registered, and if that obligation is not complied with the vendor is not excused by showing that the non-compliance arises from some failure of an independent contractor. The vendor must do it whether he does it himself or by the agency of someone else.
Masters v Belpate Pty Ltd [2001] NSWSC 169 distinguished.

The appellant should not be permitted to invoke a new ground of appeal on a point of law that was not raised at trial. The trial proceeded on the assumption that the appellant’s obligation as vendor to use its best and reasonable endeavours to obtain registration of the plan was not confined to the detail shown on the draft plan annexed to the contract exchanged in April or to a subdivision involving private easements. The respondents could have put additional material before the Court had an alternative point been taken during the trial.
Multicon Engineering Pty Ltd v Federal Airports Corporation (1997) 47 NSWLR 631 referred to.

Decision

Appeal dismissed with costs.

CA 40044/2022
ED 3936/2000

MASON P
GILES JA
IPP AJA

Friday 5 July 2002

Edmond WARDY v Gavin HARDY & Anor

JUDGMENT

1 MASON P: The appellant owns land at the corner of Mitchell Road and Fountain Street, Alexandria. On most of that land stand warehouse and office premises. The greater part of the land is entirely occupied by a two-storey building which is the subject of a registered Lease to the first respondent. The smaller portion (to the north and fronting only Mitchell Road) is partially occupied by a separate building. Both buildings share common arrangements for water sewerage and drainage.

2 The Lease is for a seven year term commencing 12 July 1995. It contains an option to purchase in the following terms:

25. The Lessee or his nominee shall have the right to purchase the subject premises at anytime prior to the expiration of five (5) years from the date of commencement of the lease for the sum of $1,250,000. The terms and conditions of the contract of purchase shall be the standard contract relevant at the time of exercise of the option to purchase.

3 On 10 July 2000 the first respondent purported to exercise the option, nominating the second respondent, Motor Direct Pty Ltd as the purchaser. The appellant refused to acknowledge or complete the contract for sale and proceedings for specific performance ensued.

4 In reasons for judgment given on 21 March 2001 (Hardy & Anor v Wardy [2001] NSWSC 180) Bryson J addressed and rejected the defences raised by the appellant in opposition to performance of the contract formed pursuant to the exercise of the option to purchase. These defences were, in brief: (1) denial of delivery of the notice of exercise of option; (2) the contention that the subject matter of the option was the building only and not the land on which it stood; (3) a defence of illegality; and (4) a claim that the documents delivered departed from the requirements for the due exercise of the option.

5 The illegality defence was rejected in light of s327(3) of the Local Government Act 1919 and Pejovic v Malinic (1960) 60 SR(NSW) 184. The learned judge also cited Butts v O’Dwyer (1952) 87 CLR 267 at 280 as to the vendor’s implied obligation to do all that was reasonable on his part to obtain the requisite subdivision approval.

6 Towards the end of his judgment Bryson J said:

An order for specific performance should not be made in unqualified terms because it is not wholly within the defendant’s control to subdivide the land so as to be able to transfer No 76 Mitchell Road and the land on which it stands. That can only be carried out if he applies to the South Sydney Council and obtains its consent. Although the matter was not proved in detail I do not doubt that the Environmental Planning Instruments applicable to the land require development consent for subdivision. The order for specific performance should require the defendant to apply for consent, and the Court should, if necessary, supervise and control in detail the manner in which the application is made.

7 Formal orders were made on 24 March 2001. These were in the following terms:

The Court by Consent:
1. Makes declarations and orders as in Claims 1, 2 and 4 of the Summons filed on 12 September 2000.
2. Orders that the agreement be specifically performed under the control and direction of the Court.
3. Orders that the defendant submit to the second plaintiff [ie Motor Direct Pty Ltd] within 7 days from the date of these orders the Contract for Sale of Land being the Law Society of New South Wales 2000 edition with unregistered plan of subdivision annexed.
4. Orders that within 7 days of the Contract being submitted to the second plaintiff in accordance with 3 the parties formally exchange executed contracts.
5. Reserves to each party liberty to apply on 24 hours notice for directions:
(a) settling the form of contract;
(b) regulating the subdivision of the land and any necessary plan, works, applications registrations and other matters relating thereto; and
(c) otherwise regulating specific performance of the contract.
6. Orders that the defendant inform the second plaintiff in writing within 24 hours of, and provide copies of all documents relating to:
(i) the lodgement of any applications in relation to the subdivision of the land in Folio Identifier 1/81844 (including, without limitation, the application for development consent, the application for subdivision certificate, the application for construction certificate, if necessary, and the application for registration of the plan of subdivision).
(ii) any requisition, request for information or objection received from or by any regulatory or other authority or entity in relation to the subdivision.
(iii) the grant of development consent, issue of subdivision and/or construction certificate and registration of plan of subdivision.
(iv) any steps taken to satisfy any conditions placed on the issue of development consent or otherwise in relation to the subdivision.
(v) evidence of payment of fees, costs and expenses in relation to any of the above.
7. Orders that the defendant authorise the second plaintiff in writing (and provide letters of authorisation for that purpose within 3 days) to receive any information from any regulatory or other authority or entity (including, without limitation, South Sydney Council) in connection with the subdivision, including all applications relating thereto.
8. Orders that the defendant pay the plaintiffs’ costs of the proceedings as assessed or agreed.

8 In submission to orders 2, 3 and 4 the appellant and the second respondent agreed upon and (on 9 April 2001) exchanged counterparts of a Contract for Sale (hereafter “the Contract”).

9 The Contract is the standard 2000 edition with the appellant as the vendor and the second respondent as the purchaser. The Lease to the first respondent was an annexure, he still being in occupation of that part of the land which was to be sold.

10 The subject matter of the Contract is depicted as lot 101 in an unregistered plan annexed to the Contract. That plan shows the appellant’s land divided into two parcels. The greater portion, being the land subject to the Lease and the duly exercised option, is shown as lot 101. The plan shows the entirety of that lot as being occupied by an existing building. It proclaims boldly that it is “DRAFT ONLY !!”

11 The plan provides for the creation of easements for water supply and for drainage “over existing pipes”. The proposed water supply easement runs along the whole of the eastern extremity of lot 101 and is designed to enable the newly created lot 100 (ie the portion intended to be retained by the vendor) to continue to enjoy an existing system for water supply. Likewise with the proposed easement for drainage of sewerage which runs along the western extremity of lot 101 to the common boundary of lots 101 and 100. The proposed easements for water supply and drainage are thus depicted as traditional private easements inter partes between adjoining parcels of land (cf Conveyancing Act 1919, s88B(2)), as distinct from statutory easements or easements in gross in favour of a prescribed authority (cf s88A). Annexed to the plan is a draft Instrument for the creation of the private easements in accordance with s88B.

12 Lot 100 has direct access to Mitchell Road. This is significant because of the evidence (discussed below) about Sydney Water’s requirement for separate sewer and drainage connections directly onto the mains under the road if such a subdivision is to be created.

13 The Contract contains the following standard clause:

28. Unregistered plan
28.1 This clause applies only if some of the land is described as a lot in an unregistered plan.
28.2 The vendor must do everything reasonable to have the plan registered within 6 months after the contract date, with or without any minor alteration to the plan or any document to be lodged with the plan validly required or made under legislation .
28.3 If the plan is not registered within that time and in that manner -
28.3.1 the purchaser can rescind ; and
28.3.2 the vendor can rescind , but only if the vendor has complied with clause 28.2.
28.4 Either party can serve notice of the registration of the plan and every relevant lot and plan number.
28.5 The completion date becomes the later of the completion date and 21 days after service of the notice.
28.6 Clauses 28.2 and 28.3 apply to a plan that is to be registered before the plan is registered.

14 The plan of subdivision was not registered within the six month period contemplated by cl 28 which expired on 9 October 2001.

15 The appellant’s delay (of which details are set out below) prompted the second respondent to move the Court for orders and directions dealing with the further working out of the extant order for specific performance (Red 1). The relief sought included declarations that the appellant had not complied with cl 28.2 and that it was not entitled to rescind the Contract pursuant to cl 28.3.

16 The proceedings came on for hearing before Bryson J on 8 November 2001.

17 Early in the hearing counsel for the appellant countered the respondent’s notice of motion with an oral application for leave to rescind the Contract pursuant to cl 28. Counsel (properly) told his Honour that leave was required because performance of the Contract remained under the Court’s supervision having regard to the extant order for specific performance (see Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 254 at 260).

18 The matter proceeded on the basis that, as the applicant for leave, the appellant bore the onus of proving his entitlement to rescind, which in turn required proof that he had complied with cl 28.2 (see cl 28.3).

19 Bryson J found against the appellant (see Hardy & Anor v Hardy [2001] NSWSC 1141). In consequential orders made on 14 December 2001 he declared that the appellant had not complied with cl 28.2 and that the appellant was not entitled to rescind the Contract pursuant to cl 28.3. His Honour made detailed consequential orders in aid of specific performance. These include an order requiring the appellant to do all things necessary to obtain a s73 Certificate from Sydney Water and thereafter take the necessary steps to procure subdivision of “the plan of subdivision”.

20 The appellant appeals against these orders.

Material facts

21 It is appropriate to record the unchallenged evidence as to the steps taken by the appellant with a view to obtaining the consent of the South Sydney Council to the proposed subdivision.

22 In what follows I have usually not distinguished between the appellant and his son John Wardy. The son acted as the father's agent in all respects.

23 In 1995 the appellant had sought approval for a substantially identical subdivision. This was his obligation, in light of the term of the Lease (see Local Government Act 1919, s327 and par (b) of the definition of “subdivision” in s4). Sydney Water provided him with a Notice of Requirements showing that the necessary works (undefined) should be designed and carried out to Sydney Water’s specifications (Blue 121). Bryson J concluded (at [3]) that:

This earlier experience meant that subdividing the land into two lots was a task with the practicalities of which the defendant had reason to be familiar, although in the intervening years there had been legislative changes so that a subdivision application made in 2001 was not simply a repetition of the earlier application.

24 On 26 March 2001 the appellant appointed Mr Wild of Max Braid Surveyors to act as his surveyor. The letter of appointment confirmed that the surveyor was to prepare the (unregistered) plan of subdivision and Section 88B instruments (under the Conveyancing Act 1919) “to create all necessary easements to maintain the ongoing use by the occupiers of the two independent buildings on the land after separation into the two proposed lots including common services”. The surveyor was also instructed to prepare and submit to South Sydney Council a development application for the subdivision, and to consult with and ascertain the requirements of public authorities, including Sydney Water (70). (All page references are to the Blue Appeal Book, unless otherwise indicated.) Mr Wild promptly embarked on the task he had been set. He prepared the plan and the Instrument in liaison with the solicitors then acting for each party. In the days leading up to the exchange of contracts on 9 April the solicitors settled the final form of the Instrument. The correspondence passing between them shows clearly that each side would have been content with private easements if the public authorities permitted subdivision on such a basis (237-8, 244-5). This much is also made explicit by the fact that the Contract as exchanged annexed a draft plan and Instrument that provided for private easements.

25 Contracts were exchanged on 9 April 2001. Although it was disputed by the solicitor who acted for the appellant at the time (Mr Ajaka), Bryson J found that the purchaser’s then solicitor, Mr Sullivan, told Mr Ajaka that there was a potential problem with water and sewer connections being provided by private easements. His Honour said that this remark was made before exchange of contracts, but the contemporaneous note made by Mr Sullivan upon which his Honour relied states that this occurred after exchange (266) and Mr Sullivan’s oral evidence was silent as to the time of the conversation. Nothing ultimately turns on this, but the conversation between the solicitors (which I conclude happened after exchange) further confirms that it was the common intention of the parties at Contract that the vendor would endeavour to obtain approval for a subdivision involving private easements. At most, Mr Sullivan was putting the vendor on notice that he doubted whether Sydney Water would play ball.

26 (In these circumstances, it was reasonable for the appellant to commence down the path of seeking approval for a subdivision involving private easements. The principal issue fought at trial related to how long it was reasonable to continue solely down that path. It will be seen that no one suggested at trial that this was the only path to be followed by the vendor in submission to the decree for specific performance and his obligations under the uncompleted contract constituted by the duly exercised option in the Lease.)

27 On 12 April the development application prepared by Mr Wild was lodged by the surveyor at South Sydney Council.

28 On 11 May the Council wrote to the appellant indicating that the subdivision application would not be finalised until the appellant's tenant at 76 Mitchell Road (ie the respondent Mr Hardy) attended to outstanding concerns based on contravention of conditions for off-street parking in an earlier development consent (259). Bryson J correctly remarked (at [18]) that this was not a reason for failing to attend to the subdivision application. I respectfully agree. So too, it would appear did the Council, because it ultimately issued development consent for the subdivision on 19 June. Mr Wild was notified on 22 June. One of the conditions of the consent was as follows:

(3) that a Certificate under Section 73 of the Water Board (Corporatisation) Act 1994 [sic. Since 1998 the correct title has been the Sydney Water Act. ] in respect of the proposed subdivision shall be submitted to Council with the submission for final subdivision approval (linen plans). Sydney Water may require you to construct works and/or pay developer charges. Accordingly, you shall make immediate application to avoid problems in servicing your development.

29 It bears recording that the need to satisfy Sydney Water’s requirements was more than a matter of practice that should or should not have been anticipated. It was a statutory requirement. The Council was prohibited from granting consent to the proposed subdivision unless satisfied that the applicant had obtained a certificate of compliance from Sydney Water with respect to the subdivision (Environmental Planning and Assessment Act 1979, s 109J (1) (e), (4); Sydney Water Act 1994, Part 6, Division 9). A compliance certificate is issued under s 73 of the lastmentioned Act and is generally known as a Section 73 Certificate. The requirement to obtain a compliance certificate is taken not to be complied with until the conditions attached to the certificate have been complied with (Sydney Water Act, s76(2)).

30 There was an ample body of evidence, which Bryson J accepted (at [6]), to the effect that Sydney Water had long-standing policy of normally requiring a subdivision such as the one in question to have separate water and sewerage connections built under the supervision of Sydney Water approved project managers. The policy was however capable of relaxation in exceptional cases, as his Honour recognised ([24]). (See Mr Miller’s evidence at Black 48.) The extent to which a reasonable developer ought to have known of the policy or anticipated it was a hard fought issue at the trial.

31 Both Mr John Wardy (129) and Mr Wild (220) said that they did not know of or anticipate the need to obtain a s73 certificate until they saw the development consent in late June.

32 On 26 June Mr John Wardy phoned Ms Edney of the Council and complained that the Council had given consent while the parking issue affecting Mr Hardy remained unresolved (Black 6). Mr Wardy denied this and other evidence suggesting that the appellant was deliberately dragging his feet. The judge concluded (at [20]) that the conversation with Ms Edney had taken place.

33 On 3 July the appellant forwarded to Sydney Water the appellant's application for a s 73 Certificate (129).

34 On 2 July Mallesons Stephen Jaques, who were then representing the purchaser, wrote to the vendor’s then solicitor inquiring as to progress. The letter asked specifically about the action taken to obtain the s73 Certificate. The letter further stated:

I note that the draft plan of subdivision contemplates the section 88B instrument being entered into to create certain easements in relation to the lots being created under the plan of subdivision. Please advise of the status of execution of the section 88B instrument.

35 This is further evidence that would have made it impossible for the respondents to contend that the vendor’s initial pursuit of an application to subdivide on the basis of private easements was inconsistent with the contract. No such contention was ever raised.

36 The precise basis upon which the vendor had an obligation to pursue an alternative form of subdivision was not explored at trial. It was simply common ground that the appellant’s obligations under the option and the extant decree for specific performance were not confined to the letter of the plan annexed to the Contract. When it became apparent that Sydney Water was unlikely to vary its requirements for separate connections and the deletion of private easements the appellant set about doing the necessary work. The appellant accepts that it did so with the concurrence of the purchaser (CA Tr p9).

37 On 20 July Sydney Water gave formal Notice of Requirements (154). These included:

1) separate connections to Sydney Water water main and sewer;
2) the deletion of the proposal for private easements from the subdivision plan;
3) engagement of a Sydney Water accredited Project Manager ;
4) execution of a Developer Agreement to regulate the building works; and
5) construction of the sewer works at the applicant's expense.

38 That same day Mallesons Stephen Jaques wrote to the appellant's then solicitor (164). The letter put the appellant on notice that the purchaser would hold the vendor responsible for any breach of his obligations under clause 28 to do everything reasonable to have the plan of subdivision registered on or before 9 October 2001. The letter continued:

I am advised by Sydney Water that it has today posted a letter to your client advising of its requirements for the issue of a section 73 certificate. Although I have not seen a copy of Sydney Water’s letter to your client advising of its requirements I understand that Sydney Water will require that a separate sewer and water connection be provided to each of 74 and 76 Mitchell Road, Alexandria as a condition of granting the Section 73 certificate. I have asked Sydney Water to fax a copy of its letter to Mr Wardy to your office.

Please let me have a copy of that letter as contemplated by the Court orders.

39 On 24 July the appellant contacted Sydney Water to obtain a list of current accredited Project Managers (167). On the same day Mr Wardy jnr spoke with a representative of Michael Bell & Partners, an accredited project manager (130). On 27 July the appellant forwarded to Sydney Water a signed copy of the Developer Agreement (183), nominating that firm as the project manager.

40 On 24 July Mr Wardy jnr wrote to Sydney Water protesting about the requirements imposed in the Notice. Mr Wardy pleaded for a relaxation of Sydney Water’s policy, emphasising that the subdivision involved existing buildings with satisfactory internal water and sewer systems. The memorandum also pressed a case based upon the substantial expense that the requirements imposed on the developer. (Mr Wardy later estimated the expense to be approximately $107,000.) It was clearly open to the vendor to press Sydney Water for relaxation of its requirements. The evidence of Mr Miller, who was the Developer Policy and Process Manager of Sydney Water, was to the effect that relaxation was unlikely but not impossible (Black 48). On 24 August Sydney Water responded, pointing out the difficulties with private easements and otherwise justifying its policies (Blue 192). I read the letter as a polite but firm adherence to the previously notified requirements, subject only to one qualification. Mr Wardy’s memorandum of 24 July had concluded with the plea:

8. Why won’t Sydney Water accept and take ownership of the existing private sewer line connecting to the sewer maintenance pit in Fountain Street as an alternative requiring us to construct a new sewer main extension in Fountain Street.

Sydney Water’s response was:

8. Please provide more details of what you are proposing here including the age of the existing private sewer line.

41 The appellant took the matter no further. Instead, between August and November he embarked upon satisfying Sydney Water’s requirements. The project manager was formally retained, at a fee of $4400 (180). The plumbing work was put out to tender. The quotations of E&MT Plumbing Service Pty Ltd dated 3 September 2001 (198) and 10 September 2001 (207) were accepted. Detailed building plans were prepared (109). Other steps were taken. At the time of the hearing before Bryson J in November 2001 work was well underway (Black 44, 85). Mr Wardy jnr said that it had started on about 17 October (Black 85).

Bryson J’s reasons

42 Bryson J’s reasons explain why he rejected the appellant’s application for leave to rescind the Contract under cl 28. The award of positive relief in the second respondent’s favour was treated as purely consequential upon the dismissal of the appellant’s application.

43 The facts were found substantially as I have summarised them.

44 His Honour held (at [4]) that the provision for private easements on the plan annexed to the Contract gave no guarantee or assurance to the appellant that the Council, whose consent to subdivision was necessary, would accept an arrangement in which sewer service to the land depended only upon a private easement across other privately owned land. Bryson J also held (at [6]) that it was a “fair certainty” that Sydney Water would require separate sewer connections, as it had in 1995 and as was its usual approach to such questions.

45 His Honour held that the parties had not purported to arrange between themselves that the existing pipes and the private easement would be the only sewerage service that the retained land would have (at [6]). See also [4] at Red 7X).

46 For reasons to which I shall return in addressing Ground 2 of the Notice of Appeal, Bryson J held (at [7]-[14]) that cl 28.2 was imperative in its effect and that the vendor was not relieved of the obligation to do everything reasonable to have the plan registered by appointing apparently competent subcontractors and agents.

47 Bryson J recounted the appointment and work of the surveyor, Mr Wild. He observed (at [17] and [21]) that Mr John Wardy (and by implication the appellant, his principal) did not do anything to make the subdivision application progress.

48 After reviewing developments down to the notification of consent on 22 June, Bryson J concluded (at [22]):

In my finding the defendant was in breach of cl 28.2 in not taking any action to resolve the delay imposed by the last words of the Council’s letter of 11 May, and in leaving any significant action in that regard to Motor Direct. It is probable that this breach contributed, in some degree which cannot be clearly assessed, to delay in determining the development application; however it is the defendant’s not doing everything reasonable, not the consequent delay, which constitutes failure to comply with cl 28.2.

49 His Honour then addressed (at [23]) the events from July onwards in which the appellant set about obtaining Sydney Water’s s73 Certificate. He observed that work proceeded and was still proceeding during the hearing of the notice of motion on 8 and 9 November.

50 The judgment contains a number of findings critical of the appellant and his agents in not pressing the Council to give approval before 22 June (more than half way into the six month period) and not gearing himself up before that date with a view to a speedy switch to subdivision works required by Sydney Water in its requirements that should have been anticipated in advance (see at [4], [6], [18], [21], [24]-[25]).

51 In the antepenultimate paragraph of the judgment ([27]) there are findings to the effect that, regardless of motive, the appellant’s agents took “active measures” to delay progress of work and registration of the plan (see also [20].). However, the refusal of leave does not appear to rest upon these findings as to deliberate frustration, because the crux of the judgment appears in the preceding paragraph ([26]):

For these reasons it should in my view be concluded that, even by the time the Development Consent determination was made on 19 June, there had been significant failures to comply with cl 28.2. Further, if relevant, those failures plainly had an adverse impact on the prospects of having the plan registered within six months after the contract date. In my view other delays in obtaining the s73 Certificate and in entering into a contract with the plumbing firm are not adequately explained, but the breaches I have found are sufficient to establish unavailability of reliance by the defendant on its right of rescission.

I propose to address the grounds of appeal in reverse order.

Grounds 3-5 (Factual challenges to findings of unreasonable delay that contributed to the plan not being registered within six months)

52 These grounds can be addressed compendiously and briefly. They were not developed in the oral submissions of senior counsel for the appellant. Nevertheless they were not abandoned.

53 The appellant submits that he and his agents did everything reasonable to have the plan of subdivision registered within the six month period. For this purpose the appellant accepts the approach that was common ground at trial, namely that his duty was not confined to a subdivision involving private easements. Nevertheless, the appellant submits that he was entitled to proceed down this path (initially) and that he and his agents acted with due dispatch. He relies on the fact that Mr Wild was instructed promptly and that the development application was lodged on 12 April. When the Council’s conditions of approval became known on 22 June the appellant acted thereafter with reasonable promptitude. The Council condition about bricking up of windows was attended to well before the expiry of the six month period. As regards the s73 certificate, the appellant applied to Sydney Water on 3 July 2001 and thereafter took the necessary steps in submission to Sydney Water’s requirements as quickly as was reasonably possible. In the meantime he sought a review of Sydney Water’s decision, as was his entitlement.

54 It is also submitted that there was no evidence to substantiate a finding that any breach of cl 28 materially caused or contributed to the non-registration of the plan of subdivision in time.

55 Specific findings of Bryson J are also challenged. It is submitted that there was no evidence to the effect that the appellant had discontinued the 1995 subdivision because he had not complied with the conditions then notified by Sydney Water. The 1995 requirements had not in fact stipulated that the two subdivided lots should have separate connections, as his Honour had held (at [3]). These particular criticisms appear justified on the evidence, but the conclusions of unreasonable delay do not rest entirely or even substantially upon them. These minor corrections do not undermine the ultimate findings.

56 Next, the appellant challenges the findings (at [21]) that Mr Wardy jnr had done nothing to facilitate consent to the subdivision, and that the evidence suggested that he had done nothing. In my view these findings were well open on the evidence. The submission that the appellant can take comfort in Mr Wardy’s evidence that he spoke to Ms Edney founders upon the trial judge’s finding that the conversation with Ms Edney amounted in effect to a complaint about the fact that the Council had issued development consent at that time.

57 Finally, the appellant challenges the findings that at the date of the Contract it was a fair certainty that the Council would make it a condition of subdivision approval that a s73 certificate be obtained and that Sydney Water would require separate sewer connections. These findings were properly made in light of the statutory provisions and the expert evidence led at trial. The 1995 experience must at least have brought home to the appellant the fact that Sydney Water was likely to be asserting the right to decide exactly what would be done. Its authority to do so rested on statute, not mere practice or the unexpected whim of the local council.

58 I return to the appellant’s broader attack on Bryson J’s conclusions. That attack fails because the conclusions rest comfortably upon his Honour’s survey of the whole of the evidence as to what was done and what was not done during the six month period. That evidence has been summarised above. Even if the rather tentative findings of deliberate interference and delay are put to one side, the fact remains that the appellant through his agents did nothing to anticipate Sydney Water’s requirements until it was apparently too late. This occurred in circumstances where the existence and nature of those requirements ought to have been foreseen much earlier. Subject to an issue concerning the proper construction of cl 28 which is addressed below, the appellant cannot hide behind the ignorance of his chosen agents.

Ground 2 (Misconstruction of clause 28.2)

59 The appellant submits that Bryson J misconstrued cl 28.2 by holding him responsible for the defaults of his independent contractors.

60 Bryson J (at [9]-[14]) discusses a number of earlier decisions relating to clauses having a similar function to cl 28 of the 2000 addition, but expressed in general or different terms. There are, or have been, some points of disagreement between judges in the Equity Division as to whether and in what circumstances delays in performance attributable to the defaults of contractors retained by the vendor were automatically attributed to the vendor in the context of general principles disentitling a contracting party from taking advantage of his or her own default.

61 Bryson J held that these issues did not arise with the sharply drawn terms of cl 28 in the present case. He said:

It will be seen that under cl 28.2 it is a contractual obligation of the vendor, expressed in imperative terms, to do everything reasonable to have the plan registered within six months. The effect of this is that if some step is reasonable and is necessary for registration within six months the vendor must take that step; the obligation is not that the vendor must do everything reasonable to take the step. The vendor’s personal circumstances, knowledge of or ignorance of what is required, reliance on servants, agents or independent contractors, and the skill, knowledge and assiduity of any such agents are all irrelevant to the vendor’s obligations; if a step is reasonable, the vendor must take it. My view of the meaning of cl 28.2 is produced by the express terms of the clause, and is reinforced by the consideration that if cl 28.2 is complied with, compliance can work adversely to the purchaser, who has no control over or influence on what the vendor does, or on the vendor’s selection of courses to follow or selection of servants agents or contractors, and has no control over the conduct or effectiveness of any such agents, but is bound by the vendor’s decision if the vendor rescinds after compliance. The only protection the purchaser has against rescission is the stringency of the condition which the vendor must fulfil if he is to have a right to rescind. It would be inconsistent not only with the express terms of cl 28.2 but also with the purpose of cl 28 as a whole if inefficient or ineffective measures by the vendor or someone by whom the vendor acted could contribute to the vendor’s gaining a right to rescind.

62 At [14] his Honour pointed to differences between the language of cl 28.3.2 and that used in the contracts discussed in some of the earlier cases. He continued:

14. … The qualification relating to delay attributable to independent contractors was treated by Young J [in Woodcock v Parlby Investments Pty Ltd (1988) 4 BPR 9568] and by McLelland CJ in Eq [in Plumor Pty Ltd v Handley (1996) 41 NSWLR 30] as available where the obligation of the vendor which is qualified rested on general principle: in my opinion there is no room for the general principle or the qualification to operate where the parties’ agreement expressly and explicitly states what the vendor’s obligation is. Clause 28.2 is in very similar terms, although not identical with printed cl A6.1 under consideration in Hawes v Cuzeno Pty Ltd [(1999) 10 BPR 18,011] . In my respectful opinion it is even clearer in relation to cl 28 including cl 28.3.2 than it was in relation to cl A.6 of the earlier standard form that it is the vendor’s obligation to do everything reasonable to have the plan registered, and if that obligation is not complied with the vendor is not excused by showing that the non-compliance arises from some failure of an independent contractor. The principle in Woodcock v Parlby Investments has been regarded as involving an exemption in respect of failure of some person other than the vendor himself. It is not that principle which applies in the present case but the plainly expressed meaning of cl 28, doing everything reasonable to have the plan registered is something which the vendor has expressly promised to do and must do, and he must do it whether he does it himself or by the agency of someone else.

63 I respectfully agree.

64 The appellant submitted that Bryson J’s interpretation of cl 28.2, which effectively imposed a non-delegable obligation on the vendor, was unreasonable. This in my view misconstrues the judge’s approach to cl 28.2. That clause is in the nature of a condition which imposes on the vendor an obligation “to do everything reasonable to have the plan registered” within the time stated. The vendor’s conditional right to rescind is available “only if the vendor has complied with cl 28.3”.

65 It is further submitted that the reasoning of Hodgson CJ in Eq in Masters v Belpate Pty Ltd [2001] NSWSC 169, 10 BPR 18-527 ought to be preferred to that of Bryson J in the present case and in Hawes. Hodgson CJ in Eq was critical of some of Bryson J’s reasoning in Hawes. Bryson J acknowledged the criticism in the judgment under appeal, while firmly adhering to his own views on the general principle.

66 It is unnecessary to resolve these differences of opinion which are to be found in obiter discussion in the three cases. That is because Masters and the discussion in it of the then Chief Judge in Equity did not involve cl 28.2 or any similar provision.

67 It is not helpful to debate whether or not cl 28.2 as construed by Bryson J and myself is unreasonable in its operation. I do not think it is. More to the point, neither did the parties when they adhered to its clearly expressed terms.

Ground 1 (Appellant’s duty confined to plan with private easements and the appellant did everything reasonably within his power to get subdivision approval for same)

68 The main ground pressed in the appeal is starkly simple. The appellant submits that his duty under cl 28 was confined to the plan annexed to the Contract. This provided for private easements between the lots to be created. The Water Board, whose consent was necessary for subdivision, refused consent for such a subdivision, insisting instead that each lot be separately connected to the Board’s sewer and drainage mains. Having (within the six months period) taken every step reasonably available to press the Board to give such consent, the vendor satisfied its obligations under cl 28. The fact that the appellant embarked upon satisfying the Water Board’s requirements within the six month period was therefore ultimately irrelevant to its position under cl 28.

69 The appellant concedes that this argument was not raised below. It is however submitted that it raises a pure question of law, relating to the construction of the Contract.

70 The respondents submit that it is not in the interests of justice for the Court to entertain the point for the first time on appeal (cf Multicon Engineering Pty Ltd v Federal Airports Corporation (1997) 47 NSWLR 631). They do so because evidence and arguments might have been advanced to address issues involved in the new ground had it been raised below.

71 The appellant should not be permitted to invoke this new ground.

72 The hearing at first instance proceeded on the common assumption that the appellant’s obligation as vendor to use its best and reasonable endeavours to obtain registration of the plan was not confined to the detail shown on the “DRAFT ONLY” plan annexed to the Contract for Sale exchanged on 9 April 2001 or to a subdivision involving private easements (if objectionable to Sydney Water).

73 The parties exchanged detailed written submissions at the trial (Black 88ff).

74 The thrust of the present respondents’ case was that the appellant was in breach of cl 28.2 by his failure to ascertain Sydney Water’s requirements expeditiously. The appellant should have made early enquiries of Sydney Water, without waiting until the issue of the Council’s conditional subdivisional approval on 19 June 2001. The draft plan, with its provision for private easements, did not bear on the parties’ obligations because there was nothing inconsistent with the purported creation of a private easement on the one hand, and the quite independent requirements of Sydney Water. [This submission overlooked Sydney Water’s insistence on the deletion of the private easements (see Blue 80), a stance only marginally qualified by its later response to Mr Wardy’s memorandum (see par 40 above).] The respondents pointed to the positive acts designed to delay the subdivision. Reference was also made to the evidence of Messrs Wild and Wardy in which they agreed that they regarded the six month timetable as “tight” but achievable. Notwithstanding those views, they did not set about formulating any schedule or timetable for obtaining necessary approvals and carrying out of the works. The appellant’s delay after 19 June was also relied upon, together with the absence of evidence from the appellant as to the period of time that would be required to complete the works or to obtain registration of the subdivision.

75 In response, the appellant denied deliberate delay. The appellant contended that the form of the plan annexed to the Contract made it obligatory that the appellant proceed to obtain consent for a subdivision involving private easements. Sydney Water’s requirements for separate connection of water and sewerage without easements was not a minor amendment to the plan as allowed by cl 28.2, especially since it involved the appellant in incurring approximately $107,000 in expenses. It was not, however, contended that this meant that the appellant had thereby done all that was required of him. Rather, the ensuing submission was:

These matters were further substantial matters making it difficult for the defendant to comply with the 6 month time period. (Black 114, my emphasis)

76 In this and other parts of his written submissions at trial the appellant proceeded on the basis that Sydney Water’s requirements altered rather than frustrated his obligations under the Contract and the subsisting orders for specific performance (see also Black 115X – 116X).

77 A further exchange of submissions ensued (Black 118-137), although the parties tended to repeat what had been said before.

78 The appellant submitted (132, my emphasis):

The requirement of easements by the contract is an important factor in explaining the conduct of the defendant, that is, he proceeded on the basis that he would be procuring easements for services until he learnt otherwise from Sydney Water.

79 In my view, these submissions show why senior counsel for the appellant properly concedes that the argument addressed in Ground 1 was not advanced at trial. But it also shows why the respondents did not trouble to respond to the submission that the amendment to the plan was not a “minor alteration” with cl 28.2. That issue had become academic in a context where it was common ground that the appellant had a continuing obligation wider than that of pressing for approval of subdivision strictly in accordance with the draft plan. It is understandable why this is so, because the whole application before Bryson J proceeded on the basis that the Contract was but part of the working out of the extant order for specific performance by way of enforcement of rights stemming from the due exercise of the option to purchase as found at the earlier stage of the proceedings. No one dreamed to argue that the Contract stood devoid of context, history or surrounding circumstances. The detailed orders made on 24 March 2001 would have put the lie to such an extreme view had it been advanced. So too did the passage in the earlier judgment that is set out at par 6 above.

80 For present purposes it is not necessary to explore what would have happened if the present point had been taken before Bryson J. One may conjecture about his Honour’s response to an argument that (in what was avowedly an application for leave to rescind in light of the principle in Sunbird Plaza at 260) would have cut the Contract loose from its context as part of the working out of the general decree for specific performance. It is sufficient to conclude that I readily accept the respondents’ present submission that they could have put additional material before Bryson J had the point been taken below.

81 The respondents point to other things that would or might have been done differently had the appellant run the new point below and which might possibly (cf Multicom at 645) have affected the outcome.

82 First, the respondents would have examined the issue whether the difference between a subdivision involving private easements and one that did not was a “minor alteration” within cl 28.2. Although the cost difference was in excess of $100,000, the respondents contend that this may be an inaccurate measure given that the appellant would have been obliged to submit to Sydney Water’s demands in any event because the Lease itself had effected a subdivision and because of the implied duty falling upon the appellant in consequence of the duly exercised option to purchase.

83 Second, the respondents say that they would have raised the argument that it was wrong to concentrate on the Contract exchanged on 9 April 2001 as if it stood independently of its context. The orders made by Bryson J on 26 March 2001 are quite explicit in treating the exchange of formal contracts as a step in the performance of a wider and continuing obligation stemming from the due exercise of the option to purchase. True it is that the parties appear to have agreed as to the form of the contract which they exchanged on the 9 April 2001. But that act cannot be divorced from its context as a step in a wider transaction being managed by the court. It is plain from orders 5(b), (c) and 6 that the Court was treating the performance of obligations under the exchanged contract for sale as a step in the performance of the general orders for specific performance.

84 I accept the respondents’ submissions on these two matters, observing that the Court of Appeal is not required to conclude that a different result would have ensued had the matters been raised below. To allow the appellant to raise this for the first time on appeal is not expedient nor in the interest of justice, as expounded in Multicom.

85 The appeal should be dismissed with costs.

86 GILES JA: I agree with Mason P.

87 IPP AJA: I agree with Mason P.

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