1128 CG Pty Ltd (ACN 662 166 645) as trustee for the 1128 CG Unit Trust v MH Affordable Homes on Kelly Pty Ltd (ACN 619 338 591)

These proceedings concern a claim for specific performance of a contract for the sale of a parcel of land at Austral in the south west of Sydney. The land is more particularly described as X Boyd Street, Austral (formerly X Boyd Street) and is contained in folio X/X/X (Property).

The plaintiff (Castle Group) seeks specific performance of a Contract for Sale of Land of the Property dated 11 October 2024 (Contract). The first defendant (MH Affordable Homes) is the registered proprietor of the Property.

The proceedings have a degree of commercial urgency to them in circumstances where, pursuant to the terms of a Settlement Incentive Deed dated 7 November 2024 (Incentive Deed), Castle Group receives a deduction in the purchase price of approximately $2.6 million if settlement occurs prior to 6 June 2025.

The second to forty-sixth defendant are the purchasers of lots to be created by a subdivision of the Property, under off the plan contracts (pre-sale contracts) entered into with MH Affordable Homes in the period between 2017 to 2020. There is now no dispute that Castle Group was not aware of these pre-sale contracts when it entered into its contract with MH Affordable Homes to purchase the Property.

Attached to these reasons is a schedule identifying the pre-sale contracts.

The second to forty-sixth defendants fall essentially into three groups.

The first (the Rescinding Purchasers) have recently elected to rescind their contracts. The purchasers in this group are the second, third, 13th, 14th, 29th, 30th, 31st, 34th, 35th, 39th, 40th, 41st and 45th defendants. MH Affordable Homes has now refunded to them all of the moneys which they paid under their contracts.

On 27 May 2025, I made orders by consent ordering the Rescinding Purchasers to remove their caveats and otherwise dismissing the claims against them.

The second group constitutes the non-rescinding purchasers. All other defendants, save for the first, ninth, 38th, 27th, 28th and 46th defendants fall into this group (Non-Rescinding Purchasers).

By cross-summons filed 21 May 2025, the Non-Rescinding Purchasers seek a declaration that they each have an equitable interest in the Property in priority to Castle Group’s equitable interest.

The third group is a miscellaneous group. First, the ninth and 38th defendants who have taken no active role, although I am satisfied they have been served. Second, the 27th and 28th defendants who have not yet rescinded but will rescind if Castle Group’s claim for specific performance is granted. Third, the 46th defendant, who is now deceased. The 46th defendant purchased a lot with the 45th defendant, who is one of the Rescinding Purchasers.

The hearing of the proceedings was due to commence on 27 May 2025, but at the commencement of the hearing the parties requested, by consent, that the hearing commence on 28 May 2025 to allow disclosure to be given by Castle Group and MH Affordable Homes on the issue of whether Castle Group had any notice, actual or constructive, of the pre-sale contracts.

The hearing proceeded on 28 May 2025. At the commencement of the hearing, I made orders by consent:

Mr C Bova SC and Mr C Beshara appeared for Castle Group. Mr J Raftery appeared for MH Affordable Homes. Mr A Kaufmann appeared for the Non-Rescinding Purchasers.

Each party relied on affidavit and documentary evidence. There was no cross examination. Each party provided written submissions and made oral submissions. The proceedings were conducted efficiently for which the parties and their legal representatives are to be commended.

For the reasons set out below, Castle Group’s claim for specific performance succeeds. This is primarily for the reason that, as explained below, the Non-Rescinding Purchasers do not presently have any interest in the Property that defeats the interest of Castle Group.

The following overview of the facts is sufficient for determination of the issues in dispute.

On or about 5 June 2017, MH Affordable Homes first entered into a contract to purchase the Property for $12,500,000. The Property was purchased with an intention to develop it.

Between June 2017 and September 2018, $3,875,000 was paid towards the purchase price.

On or about 21 December 2018, the initial contract was terminated by the vendors for non-completion.

Proceedings were then commenced by MH Affordable Homes seeking a refund of the amount paid in excess of the ten percent deposit. Those proceedings were settled on or about 17 June 2021 on the basis that a new contract to buy the Property would be entered into, this time for a purchase price of $16,000,000 with the amounts previously paid credited against this new purchase price.

The new contract completed on 14 July 2021, such that MH Affordable Homes has been the registered proprietor of the Property since this time.

It is convenient at this juncture to set out the details in relation to the pre-sale contracts.

Between about October 2017 and May 2020, MH Affordable Homes entered into contracts to sell, off the plan, 30 of the lots in the proposed development. It appears on the evidence, that the proposed plan of subdivision consists of in the order of 85 lots.

As referred to above, attached to these reasons is a schedule that summarises the relevant details in relation to the pre-sale contracts, including which of the groups they fall into.

To the extent that Castle Group has been able to ascertain – the pre-sale purchasers have paid approximately $7 million by way of deposits and instalments under the pre-sale contracts. The pre-sale contracts were entered into without the intervention of an agent and as such these amounts were paid directly to MH Affordable Homes. The moneys paid by the Rescinding Purchasers have now been refunded.

The pre-sale contracts are in broadly similar terms:

It was also not in dispute that each of the pre-sale contracts are subject to certain provisions in Div 10 of the Conveyancing Act 1919 (NSW) (Conveyancing Act) concerning off the plan purchases. Section 66ZS provides:

Castle Group is a residential land developer in Western Sydney.

On or about 6 September 2024, 1150 CG Pty Ltd (an associated entity of Castle Group) as trustee for the 1150 CG Unit Trust, as purchaser, entered into a contract with MH Affordable Homes, as vendor for 1150 CG to buy the Property. On 6 September 2024, 1150 CG Pty Ltd lodged a caveat on the title to the Property. That contract was rescinded for commercial reasons on 11 October 2024.

On 11 October 2024, Castle Group, as purchaser, entered into the Contract with MH Affordable Homes to buy the Property. The sale price is $29,000,000. On that day, Castle Group lodged a caveat on the title to the Property (Castle Group Caveat). Included as part of the attachments to the Contract is a title search dated 19 August 2024 which, of course, did not disclose any of the pre-sale contracts.

On 7 November 2024, a deed of variation in relation to the Contract was entered into. None of the amendments are relevant for present purposes.

Also on 7 November 2024, the Incentive Deed was entered into between Castle Group and MH Affordable Homes.

Clause 1 of the Incentive Deed provides:

Clause 4 relevantly contained the following defined terms:

There is no suggestion that at the time of these agreements that Castle Group was aware of the pre-sale contracts. Orders were made for each of Castle Group and MH Affordable Homes to give discovery of any documents on the question of notice but each filed an affidavit to the effect that neither had any documents.

Further, no evidence has been led on behalf of MH Affordable Homes as to why the pre-sale contracts were not disclosed.

The first time that Castle Group became aware of the pre-sale contracts was on or about 26 November 2024 in a telephone call between Ruchitha Perera (Mr Perera) (a director of Castle Group) and Mohammed Alamin (Mr Alamin) (a director of MH Affordable Homes). Mr Alamin asked if Castle Group would be happy to agree to cancel the Contract. This was not agreed to.

Thereafter, there was considerable correspondence between the parties’ respective solicitors. The solicitor for MH Affordable Homes provided to Castle Group’s solicitors, copies of the pre-sale contracts and indicated that MH Affordable Homes had been unable to procure the rescission of the pre-sale contracts.

There was then considerable correspondence in which MH Affordable Homes sought removal of the two caveats on title, purportedly to allow MH Affordable Homes to refinance the Property. Castle Group agreed to withdraw the caveat lodged by 1150 CG Pty Ltd as it related to the earlier contract. Ultimately, on 19 December 2024, MH Affordable Homes accepted a caveator’s consent form from Castle Group in lieu of withdrawal of the Castle Group caveat

There was also correspondence in which MH Affordable Homes sought release of the second instalment of the deposit ($1.45 million), the first instalment already having been released. This included a “Notice to Perform” being sent by MH Affordable Homes’ solicitor to Castle Group’s solicitor on 4 February 2025 contending that Castle Group had failed to perform its obligations in relation to the second instalment. MH Affordable Homes subsequently threatened to commence proceedings in this regard.

As I understand it, the second instalment of the deposit remains held by the stakeholder.

On 4 April 2025, the solicitors for MH Affordable Homes sent a letter to the solicitors for Castle Group which stated, relevantly:

On 30 April 2025, a further letter was sent by the solicitors for MH Affordable Homes to Castle Group’s solicitors, stating:

On 1 May 2025 these proceedings were commenced.

On 13 May 2025, Castle Group issued a notice pursuant to cl 1.1 of the Incentive Deed requiring settlement of the Property on 5 June 2025.

Castle Group also put into evidence what appears to be a letter from MH Affordable Homes to purchasers under the pre-sales contracts, undated, but apparently sent on or about 15 May 2025. Given the lack of any proper evidence from MH Affordable Homes explaining its conduct, I am sceptical as to the reliability of the letter in certain respects. The letter states:

Castle Group gives evidence of its readiness, willingness and ability to perform the Contract. This includes already having paid the substantial stamp duty. None of the evidence of readiness, willingness or ability was contradicted, although as appears below, the Non-Rescinding Purchasers contended in closing submissions that specific performance should not be ordered in favour of Castle Group because it had not proved that it was ready, willing and able to complete.

Evidence was also adduced that the expected payout figure for the mortgage currently on title on the basis of a 5 June 2025 settlement is $18,763,361.

The evidence on behalf of MH Affordable Homes consisted of one affidavit of Mr Alamin.

The affidavit provided a brief overview of what has happened on the Property, including the grant of development consent by the Land and Environment Court on 24 April 2024.

Mr Alamin also deposed to the fact that the earliest available sewerage connection is now forecast for mid-2027.

Mr Alamin stated:

Evidence was also provided of the moneys paid by the Rescinding Purchasers being refunded to them.

Importantly, apart from the general statement of intention extracted above, nothing was said as to MH Affordable Homes’ ability to complete the development. Nothing was said as to why MH Affordable Homes entered into the Contract despite the pre-sale contracts and without disclosing them. Also, why did MH Affordable Homes seek to have Castle Group continue to honour its Contract, at least to the extent of authorising the release of the second instalment of the deposit, if MH Affordable Homes’ position was that it wished to continue with the development of the Property.

The Non-Rescinding Purchasers relied on an affidavit of the tenth defendant, who had purchased two lots in the development, apparently intending to live in one of them. The affidavit was short, annexing a Project Newsletter from MH Affordable Homes dated 19 July 2024, extracts from the websites of Castle Group, Bangladesh Circle and the Amin Property Group.

The 19 July 2024 Project Newsletter refers to development approval having been obtained but also to the lack of any sewerage connection. The newsletter continued:

The respective contentions of the parties may be summarised as follows.

Castle Group’s primary contention was that the Non-Rescinding Purchasers do not have any equitable interest in the Property capable of defeating Castle Group’s entitlement to specific performance of the Contract. This was put on two bases.

First, properly analysed, the Non-Rescinding Purchasers do not presently have any interest that could be described as an equitable interest in the Property that competes with Castle Group’s interest. Such rights as the Non-Rescinding Purchasers presently have are in personam rights or mere equities, and not an interest in the Property.

Second, and alternatively, if the Court rejects the first argument above, the Court should hold that, properly construed, the pre-sale contracts are no longer on foot because the Sunset Date has come and passed, and cannot be further extended.

Alternatively to the above two arguments, it was contended that if the Non-Rescinding Purchasers in fact have an equitable interest in the Property, then Castle Group’s equitable interest is the better equity and thus takes priority over the equitable interest of the Non-Rescinding Purchasers. Principal reliance in this regard was placed on the fact that the Non-Rescinding Purchasers failed to lodge a caveat on the Property. This was said to amount to postponing conduct.

Further, Castle Group contended that specific performance should be ordered because damages would not be an adequate remedy. Reliance, in this regard, was placed on the usual authorities concerning specific performance of contracts for the sale of land.

MH Affordable Homes focussed on two issues. First, MH Affordable Homes contended that on the proper construction of the pre-sale contracts, if the Sunset Date passes and neither party rescinds, the purchaser and the vendor remain bound by the pre-sale contract. The vendor (MH Affordable Homes) remains obliged to register the Deposited Plan with the goal of settling the contract. So much is clear by the definition of Completion Date. MH Affordable Homes largely adopted the submissions of the Non-Rescinding Purchasers in this regard.

Second, MH Affordable Homes contended that specific performance should not be ordered in favour of Castle Group because damages would be an adequate remedy. To order specific performance would impose hardship on the third parties to the Contract – being the Non-Rescinding Purchasers.

The Non-Rescinding Purchasers joined with MH Affordable Homes in contending that, in the circumstances that have arisen, the pre-sale contracts may be, but have not in the case of the Non-Rescinding Purchasers, been rescinded. They remain on foot. Clause 34.1 of the pre-sale contracts (clause 35.1 in some pre-sale contracts) does not present any impediment to the Non-Rescinding Purchasers seeking specific performance of the pre-sale contracts.

Further, the Non-Rescinding Purchasers have an equitable interest in the Property, capable of protection by an injunction restraining the vendor from dealing with the land inconsistently with the purchaser’s right to specific performance of the Contract.

It was thus contended that both the Non-Rescinding Purchasers and Castle Group have an equitable interest in the Property as purchasers under exchanged contracts.

In those circumstances, it was contended that the Non-Rescinding Purchasers prior equitable interest has priority over that of Castle Group, and there was no postponing conduct in the mere failure to lodge a caveat, particularly where cl. 45 of the sale contracts expressly prevented the Non-Rescinding Purchasers from doing so.

In circumstances where these proceedings were brought on urgently and a decision is sought prior to the 5 June 2025 deadline for completion imposed by Castle Group, these reasons are necessarily somewhat truncated. I have sought to deal with the essence of the arguments advanced by each of the parties.

Whilst Castle Group and the Non-Rescinding Purchasers were apart on many issues, they were united on one point – namely in their criticism of the conduct of MH Affordable Homes. The Non-Rescinding Purchasers described MH Affordable Homes’ conduct as reprehensible – a description with which, given the lack of any explanation by MH Affordable Homes, I agree.

The absence of any explanation at all by MH Affordable Homes for its conduct is troubling. As set out above, whilst an affidavit was put forward by Mr Alamin, nothing was said about why MH Affordable Homes purported to sell the Property twice and why there was no disclosure to Castle Group of the existence of the pre-sale contracts or any disclosure to the pre-sale purchasers that MH Homes was selling the Property.

Mr Alamin did not even adopt the 15 May 2025 letter in his affidavit.

Whilst MH Affordable Homes’ conduct may be somewhat at the periphery of the legal issues which I need to determine, the absence of any explanation causes me to question its motives and view with scepticism any statements as to its desire or ability to continue to develop the Property.

It was not in dispute that the interest of the Non-Rescinding Purchasers is, properly viewed, a contingent one. Each of the pre-sale contracts makes it clear that what is being bought is a lot in a draft plan of subdivision. The relevant contingency is a condition imposed by law – namely, the subdivision of land necessary to create the separate lot to be transferred under the relevant contracts for sale. The only way that condition can be fulfilled is by the registration of a deposited plan, in the form of a plan of subdivision, in accordance with Div 3 of Pt 23 of the Conveyancing Act.

By contrast, it was not in dispute that Castle Group, as purchaser under the Contract, has an equitable interest in the Property prior to completion: see, for example, Australia Capital Financial Management Pty Ltd v Linfield Developments Pty Ltd (2017) 18 BPR 36,683; [2017] NSWCA 99 (Linfield) at [93] per Ward JA (with whom McColl and Gleeson JJA agreed).

In support of the case they advance and in answer to the primary case advanced by Castle Group, the Non-Rescinding Purchasers place principal reliance on a number of decisions, including Forder v Cemcorp Pty Ltd (2001) 51 NSWLR 486; [2001] NSWSC 281 (Forder), which have held that a purchaser in a like position to the Non-Rescinding Purchasers has a sufficient equitable interest in land to support a caveat.

The essence of the debate between the parties in this regard reduced to whether those decisions should be confined to whether the interest is sufficient to support a caveat, or whether they establish that an interest exists sufficient to be considered in a priority fight with another holder of an equitable interest in land.

I was not referred to any authority that directly considered this point.

In my view, for the reasons set out below, the decisions relied upon by the Non-Rescinding Purchasers in this regard, properly analysed, consider only whether the interest of the purchaser under a contingent contract is sufficient to sustain a caveat. They do not go further and establish that an interest of a purchaser under a contingent contract for the sale of land, prior to the contingency being satisfied, has an equitable interest in the land itself, such that the purchaser is able, prior to satisfaction of the contingency/condition, to compete in a priority fight with the holder of an equitable interest in the property.

It is convenient to first consider the decision of Brownie J in Jessica Holdings Pty Ltd v Anglican Property Trust Diocese of Sydney (1992) 27 NSWLR 140. At 144, Brownie J framed the question for decision as (emphasis added):

At 145-146 Brownie J considered what was said by the High Court in Brown v Heffer (1967) 116 CLR 344; [1967] 116 CLR 344 (Brown v Heffer). His Honour stated (emphasis added):

His Honour then went on to consider a number of Queensland decisions, commencing with Re Bosca Land Pty Ltd’s Caveat [1976] Qd R 119 and Re Premier Freehold Ltd’s Caveat [1981] Qd R 547, and concluding with the decision of Dowsett J in Re CM Group Pty Ltd’s Caveat [1986] 1 Qd R 381, in which Dowsett J felt constrained to follow the earlier Queensland decisions to the effect that there was no caveatable interest. It is apparent from the extracts quoted by Brownie J, that Dowsett J (and each of the earlier Queensland decisions) was considering whether the relevant interest was sufficient to sustain a caveat under the relevant Queensland legislation – s 98 of the Real Property Act 1974 (Qld). They were not considering any broader question. Brownie J expressed his conclusions at 151-152 in the following terms (emphasis added):

It is clear from Brownie J’s judgment that what his Honour was considering was the question of whether the interest was sufficient to sustain a caveat within the meaning of the relevant legislation: for example, s 74F of the Real Property Act 1900 (NSW) (RPA). This is clear from the highlighted text immediately above – “the purchaser in appropriate circumstances should be treated as having an interest within the meaning of s 74F”.

Next, one need turn to Forder itself. It is apparent from the first paragraph of Barrett J’s decision that the question for his Honour was whether the persons by whom the caveats had been lodged are properly regarded as having an estate or interest in the relevant land capable of supporting them in the context of s 74F of the RPA.

The essence of what his Honour was deciding, and the basis for his decision, emerge clearly from [23]-[29] of the judgment which are as follows (emphasis added):

Again, it emerges clearly, in my view, from Barrett J’s decision that his Honour was considering the relatively narrow question of whether an interest in land, sufficient to support a caveat, was established. Central, or at least an important matter in his Honour’s determination was the policy considerations underlying caveats – namely to give the world notice of the interest of the holder. This emerges most clearly from [28]–[29] of the judgment.

Forder was followed by Kunc J in Ghannoum v Papadeas [2018] NSWSC 1883 – again in the context of whether the plaintiff under a alleged contingent contract, had an interest sufficient to sustain a caveat prior to the condition being fulfilled.

Forder was distinguished by Gzell J in Sama Zaraah Pty Ltd v 888 Projects Pty Ltd [2007] NSWSC 1041. Gzell J referred (at [4]) with approval to the following observations of Hely J in Harrison v Lidoform Pty Ltd [1998] FCA 1487 at 10:

These observations of Hely J reflect the traditional view, i.e. divorced from the question considered in the authorities above in relation to whether the interest under a conditional contract is sufficient to sustain a caveat, that until the condition is fulfilled, the purchasers do not have an equitable interest in the land. This view was clearly stated by Windeyer J in Brown v Heffer at 351-352. Windeyer J’s reasoning now appears to be the prevailing view, see: Zhu v Treasurer of the State of New South Wales (2004) 218 CLR 530; [2004] HCA 56 at 587 [158] per Gleeson CJ, Gummow, Kirby, Callinan and Heydon JJ.

The authorities in this regard were analysed by McLure P (with whom Newnes JA and Le Miere J agreed) in Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd (2012) 45 WAR 29 at [166]–[175]. McLure P (at 175) stated that her Honour proposed to follow Windeyer J’s analysis.

Nothing said in any of the cases that have considered whether a caveatable interest exists in relation to a purchaser under a conditional contract before the condition is fulfilled, cast any doubt on the traditional view stated by Windeyer J in Brown v Heffer. Whilst the caveat cases refer to the purchaser having a ‘legal or equitable estate or interest in land’, they do so in circumstances where they are the words used in the statute: see for example s 74F RPA. They are not referring to an equitable estate or interest in land in the general sense discussed in the non-caveat cases. Had it been intended to do so, the cases would have had to deal with the traditional view.

It is instructive to also consider the decision of White J in GPT RE Ltd v Lendlease Real Estate Investments Ltd (2005) 12 BPR 23,217; [2005] NSWSC 964. In that case, the plaintiff succeeded to the rights and obligations of the grantor of a right of pre-emption contained in a joint venture agreement. The defendant was the grantee of the right. The relevant provisions of the agreement provided that the plaintiff would not “deal with” its interest except as agreed and if it wished to deal with its interest, it would serve a notice to that effect. The issue which White J considered was whether the entry into a put and call option by the plaintiff’s predecessor involved the plaintiff dealing with its property. White J held that the plaintiff had not parted with an interest in property and did not alienate its interest and did not, therefore, “deal with” its interest or breach the terms of the joint venture agreement.

At [56]–[57] White J, having earlier referred to the decisions of the High Court which held that a purchaser which has contracted to acquire property, but is not entitled to specific performance of the vendor’s covenant to convey, has an equitable interest in the property, falling short of beneficial ownership, to the extent that it is entitled to equitable relief to protect its interest, stated (emphasis added):

At [60]–[63], White J stated (emphasis added):

White J’s analysis was upheld on appeal: see Lendlease Real Estate Investments Ltd & Anor v GPT RE Limited [2006] NSWCA 207 at [21] – [35] per Spigelman CJ (McColl and Basten JJA agreeing).

To a similar effect, in Chu v Lin, Gold Stone Capital Pty Ltd (Trial Judgment) [2024] FCA 766, Jackman J recently stated (at [197]):

Having regard to the authorities above, I find that the Non-Rescinding Purchasers do not presently have an equitable interest in the Property sufficient to compete in a priority fight with Castle Group’s undisputed equitable interest in the Property. The rights of the Non-Rescinding Purchasers may more accurately be described as in personam rights or “mere equities”. So much emerges from the decision of Einstein J in Westpac Banking Corporation v Ollis [2008] NSWSC 824.

At [33] Einstein J set out the traditional view that “an equity regarding the purchase of a respective lot in a subdivision only becomes a proprietary interest when it attaches to an identifiable lot”. In the present case, this would not occur unless and until the plan of subdivision is registered. More importantly, on the question of priorities, Einstein J stated at [73]–[77] (emphasis added):

I therefore accept Castle Group’s primary contention. This is sufficient to dispose of the proceedings in Castle Group’s favour.

Against the possibility that I am wrong in relation to Castle Group’s primary argument, I turn now to consider the first fallback argument which hinges on the proper construction of the pre-sale contracts.

The essence of Castle Group’s contention in this regard is that the Non-Rescinding Purchasers no longer have a “contingent interest” or “protective injunctive right” against MH Affordable Homes in circumstances where the Sunset Date under the pre-sale contracts has passed and cannot be extended. The lapsing of the Sunset Date and the maximum time by which it could be extended means that it is impossible for the pre-sale contracts to progress to completion.

MH Affordable Homes and the Non-Rescinding Purchasers disputed this analysis and contended that, properly analysed, the pre-sale contracts remain on foot, although each of the parties has a right to rescind, excepting that in the case of MH Affordable Homes (as vendor) it would need to seek Court approval under s 66ZS of the Conveyancing Act.

There was no factual dispute – it was accepted that the date to which the Sunset Date could be extended had passed.

The question is one of construction. The relevant principles were not in dispute.

Three core principles emerge from what French CJ, Hayne, Crennan and Kiefel JJ said in Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at [35]:

Notwithstanding these three core principles, as French CJ, Nettle and Gordon JJ stated in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 at [48], “[o]rdinarily this process of construction is possible by reference to the contract alone”.

As Allsop P observed in Onesteel Manufacturing Pty Ltd v Bluescope Steel (AIS) Pty Ltd (2013) 85 NSWLR 1; [2013] NSWCA 27 at [61], the analysis is an objective one that can produce only one true meaning. The process of construction is not a process necessarily concluded by logical reason or a priori analysis. It involves the weighing of differing considerations partly logical and partly intuitive (though rational) leading to a choice. Analysis of competing arguments assists in that process, but the “correct” answer is not arrived at merely by seeing which side has the greater number of “good” points.

As Leeming JA observed in Zhang v ROC Services (NSW) Pty Ltd (2016) 93 NSWLR 561; [2016] NSWCA 370 (Zhang v ROC) at [53], the starting point is to determine the literal or grammatical meaning or meanings of the clause. Second, one determines the legal meaning of the clause. Whereas here, there are several clauses of the agreement to be construed, it is clear that every provision must be read, together and construed with the others, so as to render, as far as possible, the provisions harmonious with each other: see Herzfeld and Prince, Interpretation (3rd ed, 2024, Thomson Reuters) at [22.30] and the cases cited therein. This is with a view to the legal meaning reflecting a measure of internal coherence: see HP Mercantile Pty Ltd v Hartnett [2016] NSWCA 342 (HP Mercantile) at [134] per Leeming JA.

Where there is more than one available legal meaning, a court looks at the text, context and purpose with a view to determining which potential meaning best accords with those considerations. An iterative process is called for – checking each of the rival meanings against the other provisions of the document and investigating its commercial consequences.

As Leeming JA further observed in HP Mercantile at [134]:

I have set out the relevant terms of the pre-sale contracts above.

I do not accept the contentions advanced by Castle Group in this regard.

Whilst clause 34.1 (35.1 in some contracts) clearly states that completion is subject to and conditional on registration of the deposited plan “by the sunset date”, that clause is not to be read in isolation. Importantly, clause 34.4 (clause 35.4 in some contracts), clearly suggests, in my view, that the contract is not at an end if registration of the deposited plan does not occur by the Sunset Date. This emerges most clearly from the words “at any time prior to registration of the Deposited Plan” in clause 34.4. Those words would be completely otiose if there were no ongoing obligations after the Sunset Date.

The definition of Completion Date is also not tied to the Sunset Date but rather, to the registration of the deposited plan. This reinforces what, in my view, is plain from the ordinary meaning of the words in cl. 34.4.

Having regard to the relevant provisions of the pre-sale contracts, a reasonable person in the position of the parties, would not regard the contractual obligations as at an end if the deposited plan is not registered by the Sunset Date, but rather would regard each party, after the Sunset Date, as having a right to rescind prior to the deposited plan being registered. Once the deposited plan is registered, the right to rescind is lost. The contract should be completed.

I accept that such a construction may result in the pre-sale contracts remaining on foot for a considerable period of time. The present case is a prime example of that. I do not regard such an outcome as absurd so as to commend the alternate construction pressed by Castle Group. Each of the parties to the pre-sale contract is able to bring it to an end, prior to the registration of the deposited plan. True it is in the case of MH Affordable Homes as vendor that this is subject to Court approval under s 66ZS of the Conveyancing Act, but the right still exists.

In light of this conclusion, I do not need to consider the alternate contention advanced by the Non-Rescinding Purchasers in this regard that, assuming the construction advanced by Castle Group to be correct, the parties should nonetheless be taken to have agreed, by their conduct to keep each of the pre-sale contracts on foot. This would involve difficult factual issues, including construing what is in fact conveyed by the 15 May 2025 letter from MH Affordable Homes. I doubt also whether the Court has sufficient evidence before it to enable a conclusion to be reached in relation to each of the Non-Rescinding Purchasers. I only have before me some brief evidence in relation to one of the Non-Rescinding Purchasers.

In light of the conclusion I have reached above to the effect that the Non-Rescinding Purchasers do not have an equitable interest in the Property sufficient to compete with the interest of Castle Group, it is strictly unnecessary for me to consider the priorities question, which obviously proceeds on the Non-Rescinding Purchasers having an equitable interest in the Property.

Against the possibility that I am wrong in relation to my primary conclusion above, I now deal with the priorities question.

At general law in determining priority between competing equitable interests, it is traditional to begin with the maxim “qui prior est tempore potior est jure” – the first in time has the better right: see Brendan Edgeworth, Butt’s Land Law (7th ed, 2017, Thomson Reuters) at [12.1160] 912.

The modern view, however, is not to apply this maxim mechanically, but rather to adopt a more general and flexible approach giving preference to what is a better equity in an examination of relevant circumstances: see Heid v Reliance Finance Corporation Pty Ltd (1983) 154 CLR 326; [1983] HCA 30 at 339 and 341 per Mason and Deane JJ. The authorities were comprehensively analysed by Gleeson JA (with whom Bathurst CJ and Ward JA agreed) in IWC Industrial Pty Ltd v Sergienko (2021) 20 BPR 41,785; [2021] NSWCA 292 at [62]ff.

As Ward JA (with whom McColl and Gleeson JJA agreed) observed in Linfield at [253], the approach of the joint judgment of Mason and Deane JJ confirms the longstanding position of courts of equity that all the circumstances must be taken into account and that strict, technical rules are inappropriate in this context.

At [233] in Lindfield Ward JA stated:

It is also clear that if a later equitable interest-holder has notice of the earlier interest, he or she cannot prevail over the earlier interest. As set out above, this has no application here.

In searching for who has the better equity, the critical feature in the present case is, in my view, the failure of the Non-Rescinding Purchasers to place caveats on the title to the Property. Whilst I accept that the inquiry is to consider all relevant circumstances, this, in my view is the decisive one.

It is no answer in my view, for the Non-Rescinding Purchasers to rely on cl. 45 of the pre-sale contracts – which prohibited them from placing caveats on title – in circumstances where they agreed to such a clause. It is the agreement to the clause in the first place that constitutes the postponing conduct. It does not then lie in the mouth of the purchaser to rely on a clause the purchaser agreed to, as a reason for not lodging a caveat.

It is clear that, as one would expect, title searches were carried out prior to Castle Group entering into the Contract. A copy of a title search, dated in August 2024 is included in the Contract. It is no answer, in my view, for the Non-Rescinding Purchasers to point to the absence of any later title search. Had the Non-Rescinding Purchasers placed caveats on title at the time of their relevant contracts they would have shown up in the August 2024 title search.

In these circumstances, had the case come down to a true priorities fight, I would have held that the Non-Rescinding Purchasers engaged in postponing conduct such that they lost the priority which they had by being first in time.

MH Affordable Homes and the Non-Rescinding Purchasers contended that if, as I have found, Castle Group has otherwise established that it takes priority over any interest of the Non-Rescinding Purchasers, the Court should, nonetheless, in the exercise of its discretion, refuse to order specific performance.

Two bases were advanced in this regard.

First, counsel for the Non-Rescinding Purchasers raised, for the first time in closing submissions, that Castle Group had not satisfied its onus of demonstrating that it was ready, willing and able to complete.

Second, both MH Affordable Homes and the Non-Rescinding Purchasers contended that specific performance should not be ordered because to do so would cause hardship on third parties to the Contract – namely the Non-Rescinding Purchasers, and in any event, damages would be an adequate remedy.

I deal with each of these arguments in turn. Neither is persuasive.

First, it is clear that in order to obtain an order for specific performance, a plaintiff must satisfy the Court that the plaintiff is ready, willing and able to complete. I recently analysed what is required in this regard in Tran v Bakour [2025] NSWSC 101 at [85]–[86] (Tran v Bakour), by reference to the decision of Brereton J in Carydis v Merrag Pty Ltd (2007) 13 BPR 24,773; [2007] NSWSC 1220 (Carydis) at [33]–[38].

What is required is that the Court be persuaded on balance that the purchaser wishes, intends and in substance has the ability to complete.

In the present case, Mr Perera of Castle Group gave uncontradicted evidence of Castle Group’s readiness, willingness and ability to complete. There is also evidence, introduced by the Non-Rescinding Purchasers themselves, of the fact that Castle Group is a significant developer in the Western Sydney region.

I am persuaded, on all of the evidence, that Castle Group wishes, intends and in substance has the ability to complete. Had I not been so satisfied, I would have adopted the course referred to in the cases, including Carydis, of requiring completion by a particular date, with liberty to relist the matter if completion does not occur, so that an order for rescission of the relevant contract could be made.

In relation to the question of hardship, counsel for MH Affordable Homes relied on the decision of the High Court in Gall v Mitchell (1924) 35 CLR 222; [1924] HCA 48, and in particular the passage from the judgment of Isaacs J at 228, quoting from Wedgwood v Adams (1843) 6 Beav. 600 at 605:

Reliance was also placed on the following passage from Isaacs J at 230-231:

As I understood the argument, ordering specific performance would impose hardship on the Non-Rescinding Purchasers in that they would no longer receive the property which they contracted to buy, being, in the case of at least one of them, a property which they intended to live in.

I also recently analysed in Tran v Bakour the hardship principle in relation to specific performance. This was in the context of hardship allegedly suffered by one party to the contract, as opposed to third parties in the present case.

I only have evidence from one of the Non-Rescinding Purchasers. This is perhaps explicable by the fact that the proceedings were commenced and then brought on for hearing on an urgent basis. I would of course infer from the fact that they do not wish to rescind, that each of the Non-Rescinding Purchasers wish to acquire the land they agreed to buy under their contracts. I would not infer, however, that each also had a particular attraction to the land they contracted to buy or a desire to live there.

I am not satisfied in the circumstances that any hardship suffered by any Non-Rescinding Purchasers provides a basis for specific performance to be refused. The evidence in this regard was quite scant. As set out above, all there was is evidence from one of the Non-Rescinding Purchasers to the effect that of the two lots that had been acquired they intended to live in one of them.

The extent of any hardship must also be considered in the context of the present circumstances – including that the Non-Rescinding Purchasers entered into their contracts at least five, and up to eight, years ago. It is presently quite unclear if, and even then, when, any development will in fact occur. Further, each of the Non-Rescinding Purchasers will be entitled to a refund of the moneys paid by them to MH Affordable Homes. It was not in dispute that the surplus proceeds from completion of the Contract after payment out of the first mortgagee, are to be paid into Court so as to enable the Non-Rescinding Purchasers to seek refund of the moneys that they have paid. Given the likely payout figure for the first mortgagee and the fact that the Rescinding Purchasers have already been paid by MH Affordable Homes, it did not appear to be in dispute that the moneys likely to be paid into Court would be sufficient to enable the Non-Rescinding Purchasers to be refunded in full. Those purchasers may also have a damages claim against MH Affordable Homes.

Turning now to the adequacy of damages, it appeared to be common ground between the parties that a contract for the sale of land is ordinarily one that is considered a proper subject of specific performance, because damages at law would generally be an inadequate remedy where no two pieces of land are identical. Of the many authorities, see Dougan v Ley (1946) 71 CLR 142; [1946] HCA 3 at 150 per Dixon J.

Castle Group also placed reliance on the seriously considered dicta of Barwick CJ (with whom Kitto and Windeyer JJ agreed) in Pianta v National Finance & Trustees Ltd (1964) 180 CLR 146; [1964] HCA 61 (Pianta), where Barwick CJ said that the proposition that damages are an adequate remedy for a developer such as Castle Group is “without foundation in law, even if the respondent had had no other business than that of subdividing and selling land and had made a decision to subdivide and sell the subject land”.

Reliance was also placed on the following observation of M Osborne J, by reference to Pianta in Wright v Insert Pty Ltd [2022] VSC 1 at [89]:

Against this, the Non-Rescinding Purchasers and MH Affordable Homes placed reliance on the comment made by Campbell J in Rofiza Pty Ltd v Gangley Pty Ltd [2002] NSWSC 986 where his Honour went no further than saying that there was some “force in the submission” that land bought by a developer as “trading stock might lack the unique associations” that justify an order for specific performance.

I am not satisfied that the fact that Castle Group is a developer, obviously developing the Property with a view to seeking to make a profit, provides a reason for the Court to refuse to order specific performance.

Accordingly, I am satisfied that Castle Group’s claim for specific performance succeeds and orders for specific performance, and the other machinery orders agreed between the parties, should be made.

At the request of the parties, I will not consider the question of costs, but will make directions for the parties to seek to agree costs, failing which I will make directions when the matter is back before me for the issue to be dealt with on the papers. The proceedings otherwise need to be listed for directions in relation to payment out of moneys that will be paid into Court, and for the claims in the cross summons reserved for later determination to be progressed.

The orders of the Court are: