Lendlease Communities (Figtree Hill) Pty Ltd v Mount Gilead Pty Ltd (No 3)

1. [1]

   The plaintiffs are members of the Lendlease group (“Lendlease”).

2. [2]

   The defendants (the “Landowners”) own land (the “Balance Land”) at Campbelltown.

3. [3]

   The proceedings concern an agreement made on 17 April 2015 between Lendlease and the Landowners concerning development of the Balance Land. That agreement was entitled “Irrevocable Offers Deed Balance Land, Mt Gilead” (the “Deed”).

4. [4]

   The Balance Land is presently farmland. It is located south of Campbelltown, on the eastern side of the Hume Motorway. It was once part of a larger property, also owned by the Landowners, part of which Lendlease has developed into a subdivision known as “Figtree Hill”. That earlier subdivision comprised lots numbered 1 to 5. The parties referred to it as the “MDP Land”. The Balance Land is the “balance” of the original holding.

5. [5]

   A draft plan dated 20 March 2015 known as the “Annexure 2 Plan” is annexed to the Deed. The Annexure 2 Plan shows the Balance Land as being subdivided into 5 lots numbered 6 to 10. I shall refer to these as Properties 6, 7, 8, 9 and 10.

6. [6]

   A copy of the Annexure 2 Plan is annexed to these reasons. Annexure 2 Plan

7. [7]

   The Balance Land is bounded on its western side by the Nepean River. Part of its northern boundary is constituted by Menangle Creek. The remainder of the northern border adjoins what the parties referred to as the “Homestead Lot”, which is controlled and is to be retained by the Landowners. There are also wooded areas of the Balance Land, particularly along the Nepean River. The Balance Land is bisected by a canal owned by Sydney Water, which does not form part of the Balance Land.

8. [8]

   These matters are shown in this diagram:

The Deed

1. [9]

   The Deed is a lengthy and complicated document. It is replete with defined terms. In order to simplify matters as far as is practicable, I will use those defined terms without descending into the words of the definitions, except where necessary.

2. [10]

   At its heart, the Deed provides for call and put options between Lendlease and the Landowners. In substance, Lendlease is entitled on the terms of the Deed to compel the Landowners to sell to it the Balance Land, failing which the Landowners are entitled to compel Lendlease to purchase the Balance Land.

3. [11]

   This is achieved by cl 8, which contains a “Sale Offer” by the Landowners to sell to Lendlease the “Property” on the terms of the Deed and a “Purchase Offer” by Lendlease to purchase same; the latter exercisable only after the Sale Offer Period in respect of the Sale Offer has expired. I return to cl 8 below. [1]

4. [12]

   “Property” is defined as each part of the “Balance Land” as notified by Lendlease under cl 7.1(b) of the Deed and described in the “Key Items Schedule”. I will return to these.

5. [13]

   The notification under cl 7.1(b) is required to be accompanied by the provision by Lendlease to the Landowners of a form of a “Plan of Subdivision (Balance Land)”. That expression is defined. I will return to it below. [2]

6. [14]

   There were conditions precedent to Lendlease giving such a notification. Lendlease was entitled to, and has now waived, those conditions precedent. This assumes a significance that I discuss below. [3]

7. [15]

   Lendlease accepts that, in the events that have happened, it can no longer purchase Property 6. One of the two central matters in dispute in these proceedings is whether it follows from this that Lendlease has lost its rights under the Deed to purchase the remaining properties: Properties 7, 8, 9 and 10.

The events immediately preceding commencement of the proceedings

1. [16]

   On 10 July 2024, Lendlease notified the Landowners that it intended to proceed with registration of a plan of subdivision in relation to Properties 7, 8, 9 and 10, but not Property 6.

2. [17]

   On 12 July 2024, Lendlease served on the Landowners a plan of subdivision (the “12 July Plan”). Lendlease contends that the 12 July Plan satisfied the requirements in the Deed for a Plan of Subdivision (Balance Land) and triggered the Landowners’ obligation under cl 5.1 of the Deed to use their best endeavours to obtain the approval of Campbelltown City Council (the “Council”) for that plan. [4] That is the other central matter in dispute. The Landowners contend that it was necessary that the 12 July Plan be “based upon” the Annexure 2 Plan, that it is not, and that their obligations under cl 5.1 have not been, and now cannot be, enlivened.

3. [18]

   On 31 July 2024, the Landowners, by their solicitor, wrote to the Council stating that the Landowners had not agreed to make, and did not consent to any development application in respect of the Balance Land.

4. [19]

   On 17 September 2024, Lendlease exercised what it contended to be its entitlement under cl 5.2(b) of the Deed to lodge a subdivision application with the Council, also based on the 12 July Plan.

5. [20]

   On 30 September 2024, the Council informed Lendlease that it could not accept that subdivision application.

6. [21]

   It is common ground that if the 12 July Plan was not a Plan of Subdivision (Balance Land), the Landowners had no obligation to, and Lendlease was not itself entitled to, lodge the 12 July Plan with the Council for approval; with the result that, because of the time constraints in the Deed, it is now too late for Lendlease to proffer to the Landowners a Plan of Subdivision (Balance Land).

The issues

1. [22]

   In its Amended Summons, [5] Lendlease seeks:

   1. (1)

      a series of declarations, including as to the proper construction of the Deed, and as to the Landowners’ alleged breach of their obligations under cl 5.2(a) of the Deed to lodge the 12 July Plan with the Council;

   2. (2)

      an order that the Landowners lodge the 12 July Plan with the Council, and withdraw their letter of objection of 31 July 2024; [6] and

   3. (3)

      damages.

2. [23]

   As developed in closing written submissions, the issues that now arise for determination are:

   1. (1)

      whether:

   2. (2)

      whether the Landowners breached their obligations under cl 5.2(a) of the Deed by not lodging the 12 July Plan with the Council for approval.

3. [24]

   For the reasons that follow, the answers to each of these questions is “no”.

4. [25]

   It had been agreed that the question of damages be deferred. I will invite submissions as to what is now to be done about that.

5. [26]

   I turn now to the three questions.

The Clause 7.1 Question: did Lendlease comply with its obligation under cl 7.1 of the Deed to provide the Landowners with a Plan of Subdivision (Balance Land)?

1. [27]

   This question raises a number of further questions.

2. [28]

   Those further questions are:

   1. (1)

      whether, as Lendlease contends and the Landowners dispute, as a further matter of construction of the definition of Plan of Subdivision (Balance Land), the references to “clause 7.2” should be seen as a matter of construction to be a reference to clause 7.3 (the “Clause 7.2 Point”); [7]

   2. (2)

      whether, as a matter of construction of the Deed, and of the definition of Plan of Subdivision (Balance Land) in particular, it was necessary that the 12 July Plan be “based upon” the Annexure 2 Plan “as varied” (the “Based Upon Point”); and

   3. (3)

      if “yes” to (1) and (2), whether as a matter of fact the 12 July Plan was “based upon” the Annexure 2 Plan (the “Factual Question”).

3. [29]

   For the reasons that follow, my answer to these questions is:

   1. (1)

      “yes”, in relation to the Clause 7.2 Point;

   2. (2)

      “yes”, in relation to the Based Upon Point; and

   3. (3)

      “no”, in relation to the Factual Question.

4. [30]

   There was no dispute as to the relevant principles.

5. [31]

   A court, in interpreting a provision of a document, has regard to its words, its context, and the purpose of the document as a whole. The leading modern statement on the importance of context and purpose is found in the reasons of French CJ, Nettle and Gordon JJ in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd: [8]

6. [32]

   The question is what a reasonable business person in the position of the parties would have understood the relevant terms to mean; an objective task involving identification of the imputed intention of the parties by reference to the contractual text, construed in the light of its context and purpose. [12]

7. [33]

   Further, as has also been correctly stated: [13]

8. [34]

   Further, the usual approach is that the words of a definition are to be read into the substantive enactment and the substantive enactment then construed. [14] I return to this below. [15]

9. [35]

   Plan of Subdivision (Balance Land) is defined to mean, relevantly:

10. [36]

    The words I have emphasised within this definition, “based upon”, assume central significance here and provide the basis for the Landowners’ contention that the 12 July Plan is not a Plan of Subdivision (Balance Land) for the purposes of cl 7.1 of the Deed.

11. [37]

    Clause 7.1 of the Deed provides, relevantly:

12. [38]

    It was initially common ground that the two references in the definition of the Plan of Subdivision (Balance Land) to “clause 7.2” are an error and should be read as references to “clause 7.3”.

13. [39]

    However, during the course of the hearing, Mr Coles KC, who appeared with Ms Castle and Mr Haines for the Landowners, [16] submitted that “on further reflection” the Landowners did not agree that the references are incorrect.

14. [40]

    In my opinion, it is obvious that the references are incorrect.

15. [41]

    Clause 7.2 of the Deed provides:

16. [42]

    On the other hand, cl 7.3, to which I will refer in more detail below, [17] provides:

17. [43]

    The first point to note is that the definition of Plan of Subdivision (Balance Land) refers to Annexure 2 “as varied”.

18. [44]

    Clause 7.2 confers on the Landowners a power of “amendment”, not variation. It is cl 7.3 that confers on Lendlease a power of “variation”, being the power earlier referred to in the chaussure [18] of cl 7.1, set out at [37] above.

19. [45]

    Not only that, the power of variation in cl 7.3 is expressed to be in relation to a variation to the Plan of Subdivision (Balance Land), suggesting the parties’ intention is that this is the same power of variation referred to in the definition of Plan of Subdivision (Balance Land) itself.

20. [46]

    Further, the definition of Plan of Subdivision (Balance Land) refers to a variation including “any easements or affectations required to be created”.

21. [47]

    The creation of any easement or other affectations is referred to only in cl 7.3, where the words used correspond almost exactly to those in the definition.

22. [48]

    The references in the definition to “clause 7.2” are obvious mistakes, to be corrected as a matter of construction applying the familiar principles referred to in Fitzgerald v Masters. [19]

23. [49]

    To repeat, Plan of Subdivision (Balance Land) is defined to mean, relevantly:

24. [50]

    The question of the requisite link, if any, between the plan provided by Lendlease to the Landowners under cl 7.1 and the Annexure 2 Plan is central to the dispute between the parties.

25. [51]

    The provenance of the Annexure 2 Plan is recorded in a letter that Lendlease wrote to the Landowners on 18 December 2014, some four months before the date of the Deed, setting out a proposal to develop the MDP Land [20] and the Balance Land (the “Proposal”). The Landowners signed an “Acceptance of [the] Proposal” the same day.

26. [52]

    The Proposal was that:

27. [53]

    The Proposal continued:

28. [54]

    And:

29. [55]

    Thus, the Proposal contemplated the disposal by the Landowners to Lendlease of the entirety of the MDP Land and the Balance Land by staged interdependent contracts.

30. [56]

    The prices specified in the Proposal for Contracts 6, 7, 8, 9 and 10 in relation to the Balance Land correspond with the prices specified in the Deed for the corresponding Properties in the Key Items Schedule to the Deed, to which I will return, save that the purchase price specified in the Deed for Property 6 was $7.4 million, rather than $10 million as set out in the Proposal. The purchase prices specified in the Proposal for Contracts 7 to 10 are the prices specified for Properties 7 to 10 in the Deed: $10 million, $20 million, $40 million and $40 million, respectively.

31. [57]

    The Proposal led to the execution of the Deed.

32. [58]

    As the passage I have emphasised at [54] above shows, the Proposal contemplated that the parties would reach an agreement concerning a “draft plan of subdivision for each parcel”.

33. [59]

    In their Second Further Amended Commercial List Response, [21] the Landowners contended:

34. [60]

    There is no direct evidence that this was so, but the close temporal and textual relationship between the Proposal and the Deed suggests that such an inference should be drawn.

35. [61]

    The only direct evidence about the provenance of the Annexure 2 Plan was from Mr Mark Anderson, a senior development manager at Lendlease. Mr Anderson deposed that the Annexure 2 Plan was “prepared by Lendlease and represented Lendlease’s then best projection as to how in future it might stage the purchase and development of the Balance Land”.

36. [62]

    I do not see this evidence as being inconsistent with the drawing of such an inference.

37. [63]

    My conclusion is that, although there is no direct evidence that the Annexure 2 Plan was the plan contemplated in the Proposal, in the circumstances I have set out, it is reasonable to infer that it was.

38. [64]

    The first question of construction is whether the words “based upon” should be seen as words of description, or of constraint.

39. [65]

    Mr Giles SC, who appeared with Mr Hughes and Ms Carr for Lendlease, [23] submitted that the words “based upon” are merely descriptive, meaning within or in exercise of Lendlease’s “limited power conferred by clauses 7.1 and 7.3”.

40. [66]

    However, as placed within the definition, the object of the words “based upon” is the Annexure 2 Plan itself, albeit “as varied pursuant to clause [7.3]”, and not the power of variation in clause 7.3.

41. [67]

    The more natural reading of the words, as placed within the definition, is that they are words of constraint, the constraint being as to the nature of the “plan of subdivision of the Balance Land” that could qualify to be a “Plan of Subdivision (Balance Land)”. To so qualify, the posited plan must be “based upon” the Annexure 2 Plan.

42. [68]

    Such a conclusion follows from the words the parties have used.

43. [69]

    It is also consistent with the mutually known fact, as I have found, that the provenance of the Annexure 2 Plan was the Proposal.

44. [70]

    The question then is as to the work done within the definition by the words “as varied”.

45. [71]

    Those words appear immediately after the words “Annexure 2”, and are prefaced with a comma, suggesting that they are intended to qualify the reference to the Annexure 2 Plan as annexed to the Deed. The effect of the qualification is that the reference to the Annexure 2 Plan in the definition is to its varied state at the time when its consideration is called for. That varied state must be one for which the Deed provides: in effect, the permissibly varied state of the Annexure 2 Plan following the exercise by Lendlease of its power of variation, which is found in cl 7.3 of the Deed, as qualified by the chaussure to cl 7.1.

46. [72]

    So read, the words “as varied” define what the “plan of subdivision of the Balance Land” must be “based upon” in order for it to be a “Plan of Subdivision (Balance Land)”: namely, a permissible variation of the Annexure 2 Plan.

47. [73]

    But the result must still be “based upon” the Annexure 2 Plan; the provenance of which, as set out above, shows it to be central to the parties’ intentions.

48. [74]

    The words the parties have used bespeak their intention that a Plan of Subdivision (Balance Land) cannot be a plan that can no longer be said to be “based upon” the Annexure 2 Plan. I will return to Lendlease’s power of variation in cl 7.3, [24] but the words the parties have used in the definition of Plan of Subdivision (Balance Land) show that cl 7.3 cannot be seen as a licence for Lendlease to create a plan that has so little resemblance to the Annexure 2 Plan that it can no longer be seen as being “based upon” it.

49. [75]

    Mr Giles submitted that, so construed, the definition of Plan of Subdivision (Balance Land) would impose a “surprisingly and improbable vague” constraint on Lendlease and would invite “some ill-defined comparison” between the plan provided by Lendlease to the Landowners and the Annexure 2 Plan.

50. [76]

    No doubt it is necessary to compare the plan provided by Lendlease to the Landowners under cl 7.1 with the Annexure 2 Plan in order to determine whether the former is “based upon” the latter “as varied”. And it may be that, potentially, nice matters of judgment are involved.

51. [77]

    But not here, as I will show.

52. [78]

    I have set out the terms of cl 7.1 of the Deed above. [25]

53. [79]

    Following the usual approach to which I have referred, [26] it is necessary to read the definition of Plan of Subdivision (Balance Land) into cl 7.1, where the definition appears, and then construe the clause. [27]

54. [80]

    However, it is necessary to be aware of the possibility that a definition may not comfortably be imported into a particular provision and that caution is sometimes required in applying the approach inflexibly. [28]

55. [81]

    In this case, it is not possible mechanistically to import the words of the definition of Plan of Subdivision (Balance Land) into each of the two places in cl 7.1 where that expression appears. That is because the part of cl 7.1 where the defined term first appears is directed to the time when Lendlease provides the Plan of Subdivision (Balance Land) to the Landowners, and describes what then is to be provided. The expression second appears in the chaussure to cl 7.1 which is directed generally to the power of variation in cl 7.3, [29] and is thus speaking at the date of the Deed.

56. [82]

    Reading the words in the definition of Plan of Subdivision (Balance Land) into cl 7.1, denoted “[ ]”, and adding words necessarily implied to cause those imported words to work effectively, denoted “{ }”, cl 7.1 should be construed as if it stated, relevantly:

57. [83]

    I do not see that reading the definition of Plan of Subdivision (Balance Land) into cl 7.1 in this way affects my conclusions as to the proper construction of the definition itself, nor of cl.7.1 so read.

58. [84]

    As set out above, [30] the chaussure to cl 7.1 provides that Lendlease may vary the form of the Plan of Subdivision (Balance Land) in the manner provided in cl 7.3 “in order to facilitate [its] development and staging of the Balance Land”.

59. [85]

    I have set out the terms of cl 7.3 above. [31] Relevantly, and to repeat, cl 7.3 provides:

60. [86]

    Taking into account my conclusion that on the proper construction of “Plan of Subdivision (Balance Land)” that expression means a plan that is “based upon” a permissible variation of the Annexure 2 Plan by Lendlease under cl .7.3, read literally, the power under cl 7.3 is further to vary that plan by varying the “boundaries and dimensions of any proposed lot”. [32]

61. [87]

    But as the definition of Plan of Subdivision (Balance Land) already contemplates a variation under cl 7.3 of the Annexure 2 Plan and, as I have found, requires that it be “based upon” such a variation, it is hard to understand why the parties would have intended that under cl 7.3 Lendlease would have a further power to vary that plan, especially to achieve the result posited by Lendlease.

62. [88]

    Mr Giles submitted that all that was required was that the plan submitted by Lendlease to the Landowners under cl 7.1 be produced “within or in exercise of the limited power conferred by clauses 7.1 and 7.3”, and that the “constraints on the variation are limited to two constraints expressly prescribed in clause 7.3”.

63. [89]

    In closing oral submissions Mr Giles submitted that the Annexure 2 Plan “retains consequence” and still imposed a limit on “what [Lendlease] can do”; that is on Lendlease’s power to vary the Plan of Subdivision (Balance Land). Mr Giles submitted that this was by reason of the chaussure to cl 7.3, which prohibits variations adversely affecting the ability of the parties to obtain subdivision approval. I cannot see how the latter provision provides any such limitation.

64. [90]

    The effect of Lendlease’s submission is that the plan provided by Lendlease to the Landowners under cl 7.1, here, the 12 July Plan, need not in any way be tethered to the Annexure 2 Plan.

65. [91]

    Such a construction would subsume within cll 7.1 and 7.3 the definition of Plan of Subdivision (Balance Land) without giving any effect to the words “based upon” in the definition and the parties’ obvious intention, in using those words, that there be some relationship between the plan ultimately submitted by Lendlease to the Landowners under cl 7.1 and the Annexure 2 Plan.

66. [92]

    I do not accept, looking at the words the parties have used, and taking into account the provenance of the Annexure 2 Plan, that a reasonable business person in the position of the parties should understand the Deed to have this effect.

67. [93]

    The required relationship is that the plan provided by Lendlease to the Landowners under cl 7.1 must be seen to have been “based upon” a permissible variation under cl 7.3 of the Annexure 2 Plan, and not be a variation on that variation having no relationship to the Annexure 2 Plan.

68. [94]

    It is true, as Mr Giles emphasised, that the Landowners acknowledged in the chaussure to cl 7.1 that Lendlease could exercise its power under cl 7.3 to facilitate its development and staging of the Balance Land. But not so that it could no longer be said in any way to be “based upon” the Annexure 2 Plan.

69. [95]

    There were good reasons why the parties would intend that the plan ultimately submitted for development approval have some relationship with the Annexure 2 Plan.

70. [96]

    One is that the Key Items Schedule to the Deed, to which I will return below, [33] specified the price at which Lendlease was to acquire Properties 6 to 10: $7.4 million, $10 million, $20 million, $40 million and $40 million respectively; figures closely resembling those in the Proposal. That was the bargain that was struck, and it seems unlikely that the parties contemplated that Lendlease could require submission by the Landowners to the approval authority of a plan that was no longer “based upon” the plan against the background of which those prices were agreed.

71. [97]

    Another is the mutually known fact that the Annexure 2 Plan had its provenance in the Proposal.

72. [98]

    Those considerations also suggest that the parties intended that Properties 6 to 10 remain contiguous.

73. [99]

    Consistently with that conclusion, Lendlease’s power of variation in cl 7.3 is confined to variation of the boundaries and dimensions of proposed lots.

74. [100]

    Further, cl 7.6 of the Deed provides, relevantly:

75. [101]

    That clause, cl 7.6(a)(ii) in particular, bespeaks the parties’ intention that Lendlease’s power to vary the boundaries could not result in “more than 5 lots”, and that those lots are required to correspond to the “5 Properties”, being Properties 6 to 10. This suggests that the parties intended that Properties 6 to 10 remain contiguous.

76. [102]

    However, as I discuss below, I do not find this to be a dispositive conclusion.

77. [103]

    As I have said, Lendlease accepts that, in the events that have happened, it cannot now acquire Property 6. To explain why that is so, and to understand its relevance to the question of whether the 12 July Plan is “based upon” a permissible variation of the Annexure 2 Plan, and thus a Plan of Subdivision (Balance Land), it is necessary to look at the events that led to Lendlease no longer having the right to acquire Property 6. As those events are also relevant to the Property 6 Question, it is convenient to deal with them at this point in these reasons.

78. [104]

    On 18 December 2014, the parties executed the Proposal. [34]

79. [105]

    On 17 April 2015, the parties executed the Deed. [35]

80. [106]

    The Deed provides for a “Sunset Date” after which either party could terminate the Deed unless the conditions precedent specified in cl 3.1 of the Deed were satisfied or waived. [36]

81. [107]

    On 9 December 2020, the parties executed a Deed of Variation which had the effect of extending the Sunset Date to 21 May 2024.

82. [108]

    In the meantime, in October 2019, Lendlease retained a firm of civil engineers, Enspire Solutions Pty Ltd, to provide strategic engineering and civil utilities advice to support a planning proposal lodgement for the Balance Land. The engineer involved was Mr Cameron Vella.

83. [109]

    On 7 March 2023, Mr Anderson, to whom I have referred, [37] wrote to Mr Vella concerning a possible “contract phasing plan” for the Balance Land. He attached the Annexure 2 Plan, together with a map which appears to mimic the order of the Annexure 2 Plan but has divided the land into “zones”. The map also shows conservation zones. A copy of that map is annexed to these reasons. 7 March 2023 Plan

84. [110]

    At around this time, Lendlease retained a surveyor, Mr Matthew Hermes-Smith, from LTS Surveyors.

85. [111]

    On 28 April 2023, Mr Will Laurantus, another development manager from Lendlease, wrote to Mr Hermes-Smith attaching a copy of the Annexure 2 Plan as well as “our current draft which is undergoing revision by Enspire at the moment”.

86. [112]

    A copy of the “current draft” is annexed to these reasons. 28 April 2023 Plan

87. [113]

    Mr Laurantus wrote:

88. [114]

    On 8 May 2023, Mr Anderson wrote to Mr Vella, with a copy to Mr Hermes-Smith, enclosing a further plan, evidently prepared by Enspire, in the form annexed to these reasons. 8 May 2023 Plan

89. [115]

    Mr Anderson stated in his email, “This would be what I am expecting the plan to look like”.

90. [116]

    Mr Hermes-Smith deposed that:

91. [117]

    The document that Mr Hermes-Smith then produced is annexed to these reasons. 19 June 2023 plan

92. [118]

    Mr Hermes-Smith issued that plan to Lendlease on 19 June 2023.

93. [119]

    Mr Coles accepted that “the type of plan then under discussion appears generally to have adhered to the Annexure 2 Plan” and that “this plan left largely intact the original draft plan depicting Property 6”. [39]

94. [120]

    There, matters appear to have rested until April 2024.

95. [121]

    On 29 April 2024, Mr Anderson wrote to Mr Hermes-Smith:

96. [122]

    The attached “revised plan” was in the form annexed to these reasons. 29 April 2024 plan

97. [123]

    This plan retains Property 6 from the Annexure 2 Plan, as “Part 1”, but adds a separate Part 1 described as “Proposed Zone Substation”. This was the preferred location of Endeavour Energy, due to its proximity to existing overhead power lines.

98. [124]

    On 30 April 2024, Lendlease asked the Landowners to agree to a three year extension of the Sunset Date, due to expire on 21 May 2024.

99. [125]

    Also on 30 April 2024, Mr Anderson wrote a further letter to Mr Hermes-Smith:

100. [126]

     That further plan was in the form annexed to these reasons. 30 April 2024 plan

101. [127]

     It was similar to the plan sent the day before.

102. [128]

     On 1 May 2024, Mr Vella wrote to Mr Anderson and Mr Hermes-Smith:

103. [129]

     That plan was in the form annexed to these reasons. Again, this plan was to the same effect as those sent on the previous days. 1 May 2024 plan

104. [130]

     On 9 May 2024, the Landowners refused to grant an extension of the Sunset Date.

105. [131]

     Thus, the Sunset Date remained as 21 May 2024.

106. [132]

     To repeat, either party could terminate the Deed if the conditions precedent in cl 3.1 of the Deed were not satisfied or waived by that date.

107. [133]

     Three critical conditions precedent specified in cl 3.1 of the Deed were not then satisfied, namely:

108. [134]

     By this time, Lendlease evidently apprehended that it would not be able to procure that these conditions precedent be satisfied by the Sunset Date of 21 May 2024.

109. [135]

     Thus, on 14 May 2024, Lendlease notified the Landowners that it proposed to waive “any outstanding conditions precedent” under the Deed. In closing submissions, Mr Giles accepted that this was to avoid giving the Landowners an opportunity to terminate the Deed. Lendlease also said that it proposed to “exercise the options to acquire the Balance Land”.

110. [136]

     Also on 14 May 2024, Mr Anderson wrote a further email to Mr Hermes-Smith:

111. [137]

     The further plan attached to Mr Anderson’s email was in the form annexed to these reasons. 14 May 2024 plan

112. [138]

     That plan indicated that the lot denoted “PT 1”, being a lot corresponding to Property 6, was to “Consolidate into Lot 5” and that the 1.41 ha lot previously denoted “Proposed Zone Substation” was described as “New Lot 1”.

113. [139]

     By now, it was also evidently apparent to Lendlease that it would not be able to exercise a Sale Offer under the Deed in respect of Property 6.

114. [140]

     That is because, under the Key Items Schedule to the Deed, the Sale Offer Period for Property 6 commenced, in the events that were to happen, on 25 May 2024, [44] and expired, again in the events that were to happen, 15 days later, on 9 June 2024. [45]

115. [141]

     Lendlease could not make a Sale Offer for Property 6 until the Balance Land Rezoning came into effect. This did not occur until 14 June 2024. It appears that, as at 14 May 2024, Lendlease did not anticipate this would occur before the Sunset Date on 21 May 2024, nor before the expiry of the Sale Offer Period for Property 6 on 9 June 2024.

116. [142]

     Indeed, Mr Anderson agreed in cross-examination that the reason he thought that Lendlease needed to make an “urgent amendment” to the plan was because there were “some thoughts that we may not be able to complete [C]ontract 6”, and because of a realisation that Contract 6 might “potentially drop out”.

117. [143]

     On 20 May 2024, Lendlease, through its solicitor, formally notified the Landowners, through their solicitor, that it waived the benefit of the unsatisfied conditions precedent.

118. [144]

     At around this time, Mr Hermes-Smith again became involved. He deposed that:

119. [145]

     A copy of the 23 May 2024 plan is annexed to these reasons. 23 May 2024 plan

120. [146]

     It can be seen that, as instructed, Mr Hermes-Smith “allocated” much of what was “PT 1”, the equivalent of Property 6 on the Annexure 2 Plan, to what has become “PT 4”, and identified simply as “1” the 1.41 ha area that Mr Anderson’s 14 May 2024 “urgent amendment” to the plan described as “New Lot 1”. It also reallocated the numbering of the lots so that, first, there were to be only four lots other than the diminutive “1”, being “2”, “PT3”, “PT4” and “PT5”.

121. [147]

     This change seems to have been made because Lendlease now accepted that its preferred “development and staging” of the Balance Land could not be one “based upon” the Annexure 2 Plan. [46]

122. [148]

     Thus, Mr Vella deposed:

123. [149]

     On 23 May 2024, Lendlease, by its solicitor, forwarded Mr Hermes-Smith’s 23 May 2024 plan to the Landowners’ solicitor:

124. [150]

     The “Lot 1”, said in this letter to “correspond to” Property 6 in the Deed and the Annexure 2 Plan, was the 1.4 ha area numbered “1” on Mr Hermes-Smith’s plan.

125. [151]

     Lendlease then purported to exercise its Sale Offer in relation to each of Properties 6, 7, 8, 9 and 10. Lendlease indicated its intention to do this by its solicitor’s letter to the Landowners’ solicitor of 27 May 2024 and purported to do so on 6 June 2024.

126. [152]

     Lendlease now accepts that this purported exercise of Sale Offers over each of those properties was not effective. There is no direct evidence as to why Lendlease purported to take this step. It seems reasonable to infer that its motivation was an apprehension that it would no longer be able to acquire Property 6 and its apprehension as to what the consequences of that may be.

127. [153]

     On 14 June 2024, the Balance Land Rezoning became effective for the purposes of cl 3.1(e) of the Deed. Lendlease, by its solicitor, notified the Landowners of this on 27 June 2024.

128. [154]

     By then, Lendlease’s Sale Offer Period in relation to Property 6, that is the period during which it could call for Property 6, had expired. The Landowners’ corresponding Purchase Offer Period, that is, the period during which it could put Property 6 to Lendlease, commenced the day after the end of the Sale Offer Period and expired 20 days later, on 30 June 2024.

129. [155]

     Thus, by 30 June 2024, Lendlease could not call for Property 6 and the Landowners could not put Property 6 to Lendlease.

130. [156]

     The result was that Property 6 necessarily thereafter remained owned by the Landowners. Although the “shrunk” [47] Property 6 might still form part of any subdivision of the Balance Land, it would remain owned by the Landowners.

131. [157]

     And Lendlease would no longer be obliged to pay the Landowners the $7.4 million price specified in the Key Items Schedule for Property 6. [48]

132. [158]

     This was a fundamental change to the bargain contemplated by the Deed.

133. [159]

     That led to the Landowners’ solicitor writing to Lendlease’s solicitor on 3 July 2024:

134. [160]

     Lendlease’s solicitor replied on 10 July 2024 disputing that proposition and stating that Lendlease intended to acquire Properties 7, 8, 9 and 10 in accordance with the Deed.

135. [161]

     That month, Mr Anderson had instructed Mr Hermes-Smith to prepare a further iteration of his 23 May 2024 plan.

136. [162]

     The result was the 12 July Plan.

137. [163]

     On 12 July 2024, Lendlease’s solicitor wrote to the Landowners’ solicitor:

138. [164]

     The 12 July Plan is in the form annexed to these reasons. 12 July Plan

139. [165]

     There are striking differences between the 12 July Plan and the Annexure 2 Plan:

     1. (1)

        As Lendlease’s solicitor said in their letter of 12 July 2024, Property 6 corresponded to the orange shaded Lot 1 in the 12 July Plan; in the Annexure 2 Plan, Property 6 is 35.6 ha, whereas in the 12 July Plan Lot 1 is only 1.41 ha; no doubt reflecting the fact that Lendlease by now accepted that it could not purchase Property 6;

     2. (2)

        Property 7 corresponded to the blue shaded Lot 2 that had been significantly reshaped and relocated;

     3. (3)

        Property 8 corresponded to the purple shaded Lot 3 that had also been significantly reshaped;

     4. (4)

        Property 9 corresponded to the three separate yellow shaded Lots 4 in the 12 July Plan; and

     5. (5)

        Property 10 corresponded to the multiple separate green shaded Lots 5.

140. [166]

     Unlike the configuration of the lots in the Annexure 2 Plan, the lots in the 12 July Plan were no longer contiguous.

141. [167]

     More importantly, and decisively in my opinion, the 12 July Plan in substance provided for a subdivision of the Balance Land only into four “Lots”, being Lots 2, 3, 4 and 5, said to correspond to Properties 7, 8, 9 and 10: rather than the five lots contemplated by the Annexure 2 Plan.

142. [168]

     Although “as a matter of counting” [50] it might be seen that the proposed subdivision had five lots, Lot 1, the landlocked 1.41 ha rump said to correspond to Property 6, could not now be called for by Lendlease, nor put by the Landowners to Lendlease, and necessarily was to remain owned by the Landowners.

143. [169]

     I have set out the provision in the chaussure to cl 7.1 of the Deed permitting Lendlease to vary the Annexure 2 Plan “to facilitate [its] development and staging of the Balance Land”. [51]

144. [170]

     In that context, Mr Anderson gave this evidence in response to a question from Mr Coles:

145. [171]

     Thus, the subdivision of the Balance Land proposed in the 12 July Plan is fundamentally different to that contemplated in the Annexure 2 Plan. It bears no resemblance to the Annexure 2 Plan and can in no sense be seen to be “based upon” it.

146. [172]

     It may very well be that Lendlease’s preferred proposal for the development and staging of the Balance Land required that it ignore completely the Annexure 2 Plan and seek to use its powers of variation to produce a plan for submission to the Landowners that bore no resemblance to the Annexure 2 Plan and could no longer be seen in any way as being “based upon” that plan.

147. [173]

     Mr Vella agreed that this was so. I have set out above Mr Vella’s conclusion that it would not be “cost effective” and would be “prohibitive” to adopt the “sequencing and staging of the Balance Land provided for in the Annexure 2 Plan”. [52]

148. [174]

     Thus, at the conclusion of his cross-examination, this exchange occurred with Mr Coles:

149. [175]

     The 12 July Plan was not a plan that was “based upon” the Annexure 2 Plan, whether as varied by Lendlease under cl 7.3 or at all.

150. [176]

     It follows that Lendlease did not timeously comply with its obligation under cl 7.1 of the Deed to provide the Landowners with a Plan of Subdivision (Balance Land) with the result that the Landowners came under no obligation to lodge any Plan of Subdivision.

The Property 6 Question: has Lendlease lost the right to acquire Properties 7 to 10 without acquiring Property 6?

1. [177]

   I have set out the circumstances that led to Lendlease being unable to purchase Property 6.

2. [178]

   The further question that arises is whether, as the Landowners contend, it follows that Lendlease has lost the right to acquire Properties 7, 8, 9 and 10.

3. [179]

   The Landowners put their case this way in the final iteration of their List Response: [53]

4. [180]

   The Landowners have eschewed, in terms, any suggestion that, in the events that have happened, the Deed has been frustrated or has been discharged by frustration.

5. [181]

   Mr Coles submitted that this consequence followed as a matter of construction of the Deed.

6. [182]

   As Mr Coles put it, in the events that have happened, the Deed, in effect, “could not be performed … according to its terms”, such that the Landowners’ obligations are not engaged.

7. [183]

   Property 6 has, for all intents and purposes, been removed from the 12 July Plan. As Lendlease cannot purchase Property 6, it must remain owned by the Landowners.

8. [184]

   In the Proposal, the parties agreed that the “Property”, being the MDP Land and the Balance Land, be “subdivided and purchased [by Lendlease] in 10 tranches under …. Five [5] Interdependent Contracts with respect to the Balance Land”.

9. [185]

   That notion of “interdependent” contracts, leading to Lendlease’s acquisition of each of Properties 6 , 7, 8, 9 and 10, and in that order, is reflected in the Deed.

10. [186]

    As I have said, [54] cl 8 of the Deed created, in effect, call and put options in favour of Lendlease and the Owners, the latter only to be exercised if the former was not.

11. [187]

    Clause 8.1 deals with the “Sale Offer” and provides, relevantly:

12. [188]

    Clause 8.6 provides for a corresponding Purchase Offer from Lendlease to the Landowners as follows:

13. [189]

    Clauses 8.4 and 8.8 provide that “each Sale offer” and “each Purchase offer” were “irrevocable unless this deed is validly terminated”.

14. [190]

    The importance of Property 6 as a part of a sequential disposal by the Landowners of Properties 6, 7, 8, 9 and 10 as depicted in the Annexure 2 Plan is reflected in the Key Items Schedule to the Deed.

15. [191]

    The Key Items Schedule is annexed to these reasons. Key Items Schedule

16. [192]

    The Key Items Schedule sets out, for each of Properties 6, 7, 8, 9 and 10, relevantly:

17. [193]

    The critical, and dispositive, question is the meaning to be given to the word “each” in cll 8.1 and 8.6.

18. [194]

    Mr Giles submitted that “each” meant “any one of” or “any one or more of” the Properties, with the consequence that Lendlease could, in circumstances where it could no longer acquire Property 6, “pick and choose” [56] which of the remaining lots, Properties 7, 8, 9 and 10, it would acquire.

19. [195]

    However, when cll 8.1 and 8.6 are read with the Key Items Schedule, I think it clear that, as Mr Coles submitted, the reference in those clauses to “each” Property means “every one of”, not “any one of”, the Properties referred to in the Key Items Schedule.

20. [196]

    At the heart of the Deed was the entitlement of Lendlease to make a Sale Offer for each, that is all, of Properties 6 to 10 and thus, in effect, to call for them; with a corresponding right of the Landowners to put each of those Properties to Lendlease by making Purchase Offers.

21. [197]

    It was not open to Lendlease to “pick and choose” which of Properties 6 to 10 might be the subject of a Sale Offer.

22. [198]

    Clauses 8.4 and 8.8 provide that “each” of, that is “every one of”, the Sale and Purchase Offers were irrevocable. [57] I do not see those provisions as being inconsistent with this conclusion.

23. [199]

    The Key Items Schedule set out the order in which events were to happen:

    1. (1)

       a Sale Offer was to be made by Lendlease for Property 6 within the relevant Sale Offer Period, failing which a Purchase Offer could be made within the Purchase Offer Period;

    2. (2)

       Contract 6 was then to be completed within 30 days of Contract 6; and, thereafter,

    3. (3)

       corresponding Sale Offer Periods for Properties 6, 7, 8, 9 and 10 were to commence on the same date as the Property 6 Sale Offer Period, [58] being, in the events that happened, 21 May 2024, but ending:

24. [200]

    This precise sequencing of the completion dates bespeaks the parties’ intention, consistently with the Proposal, that there would be sale of each, that is every one of, Properties 6 to 10; and in that order. That is, as Mr Coles submitted, a “staged, orderly disposal of all of the Balance Land, in accordance with the scheme of ‘interdependent contracts’” specified in the Key Items Schedule.

25. [201]

    But “completion of Contract 6” now cannot happen.

26. [202]

    Thus, although the Sale Offer Periods for Properties 7, 8, 9 and 10 commenced on 21 May 2024, according to the words in the Key Items Schedule, they cannot now end.

27. [203]

    Nor can the Landowners’ Purchase Offer periods for those properties commence. The Landowners have lost their put option in relation to Properties 7, 8, 9 and 10.

28. [204]

    Mr Giles accepted that this cannot have been the parties’ intention.

29. [205]

    Mr Giles submitted that resolution of this conundrum could be achieved by reading the Key Items Schedule so that, to take Property 7 as an example, item 7(b) be read as stating that the Sale Offer Period ended:

30. [206]

    Mr Giles submitted that the earliest date on which completion of Contract 6 could have occurred was 30 July 2024 and that accordingly, the Sale Offer Period for Property 7 expires on 30 June 2025.

31. [207]

    Mr Giles submitted, perhaps ambitiously, that this “construction requires the least harm to the language and contractual concept to give the options [59] a workable construction consistent with the other terms in [the Deed]”.

32. [208]

    I do not accept this submission. Adding the words necessary to give effect to Mr Giles’s submission would amount to a rewriting of the Deed, [60] and would involve attributing to the parties an intention that is not only not manifest from the words the parties have used in the Deed, but is inconsistent with the intention of the parties as manifested by the language they have used.

33. [209]

    There is a further problem.

34. [210]

    The “Completion Date” for each of Properties 7, 8, 9 and 10 is specified in the Key Items Schedule as the “date which is the earlier of” 30 days after the relevant contract and 12, 36, 60 or 84 “months after the date of completion of Contract 6”.

35. [211]

    This again points to the parties’ intention that there be a sale of each of Properties 6 to 10, in that order.

36. [212]

    But there can now be no “date of completion of Contract 6”.

37. [213]

    It is now not possible to ascertain what other “date” might be “earlier” than the “date of” the relevant contract because there will now not be any other date to stand as a comparator.

38. [214]

    Further, there are a number of significant provisions in the Deed, the operation of which is conditional on the completion of the contract in relation to Property 6.

39. [215]

    For example, cl 11 of the Deed provides that:

40. [216]

    The “Utility Land” is defined to mean “one lot with an area not greater than 2.5 ha identified as such in the Plan of Subdivision (Balance Land)”, [61] and is intended to be land upon which provision of the supply of electricity to the development be facilitated.

41. [217]

    Now that there can be no completion of Contract 6, this clause cannot be enlivened. That is, the Landowners are no longer obliged to transfer the Utility Land to the Council so that, as Mr Giles accepted on an earlier occasion, Lendlease will now have to “give up some of [its] land” for that purpose. [62] It seems unlikely that this was the parties’ intention, pointing to the pivotal role that the parties appear to have attributed to Property 6.

42. [218]

    There are other examples.

43. [219]

    Clause 18.1(d)(iii) envisioned that the Landowners may be compelled to transfer Biodiversity Credits to Lendlease “on and from the date of completion of Contract 6”.

44. [220]

    Clause 20.2 provided for the grant by the Landowners, and acceptance by Lendlease, of an occupation licence to commence, other than for testing and biobanking activities, “on the date of completion of Contract 6”.

45. [221]

    Mr Giles submitted that these clauses were for the benefit of Lendlease and that Lendlease could, accordingly, waive compliance with them. That may be so, but it is not the point. The point is that the fact that performance of these clauses was conditional upon completion of Contract 6 bespeaks the parties’ common understanding as to the centrality of the completion of Contract 6 to their ongoing performance of the Deed.

46. [222]

    In any event, there was a further clause, performance of which is conditional on completion of Contract 6, which is for the benefit of the Landowners, not Lendlease.

47. [223]

    Thus, cl 27 imposes an obligation on Lendlease to deliver to the Landowners bank guarantees in respect of each of the contracts for Properties 7, 8, 9 and 10. That provision is the only security contemplated by the Deed to secure to the Landowners the future performance by Lendlease of its obligations under the Deed.

48. [224]

    Clause 27.1 provides that Lendlease must deliver these guarantees to the Landowners “on or before the date of completion of Contract 6”.

49. [225]

    Mr Giles submitted that, in the events that have happened, the latter expression should be read as if it said, “on or before the last date on which Contract 6 could have been completed”.

50. [226]

    Again, I do not see how this result could be achieved as a matter of construction as it would involve rewriting the clause.

The result

1. [227]

   What is to be made of all of this?

2. [228]

   As I have set out above, Property 6 played a central role in the sale scheme described in the Key Items Schedule. It commenced and set off Lendlease’s rights to exercise its call options and the Landowners’ rights to exercise their put options.

3. [229]

   The completion of the sale of Property 6 was also used by the parties as a placeholder by reference to which many of their obligations were premised.

4. [230]

   Under the Deed, Lendlease had what Mr Giles accepted was an option to call for, and purchase, Properties 6 to 10.

5. [231]

   I have found that this option was to purchase “each”, that is each and every one, not any one, of those properties.

6. [232]

   By reason of the conditions precedent set out at [133] above, Lendlease’s entitlement to exercise that option was subject to satisfaction of those conditions precedent, including registration of a plan of subdivision.

7. [233]

   To avoid giving the Owners an opportunity to terminate the Deed under cl 3.4(b), Lendlease waived the benefit of the conditions precedent on 21 May 2024. [63]

8. [234]

   However, as Mr Giles accepted, such waiver did not remove the requirement that the conditions precedent be satisfied.

9. [235]

   The critical conditions precedent were not satisfied by the expiry of the Sale Offer Period for Property 6.

10. [236]

    The result is that it is now impossible for Lendlease to exercise its option in accordance with the prescribed means set out in the Key Items Schedule.

11. [237]

    The “effectual exercise of an option requires strict adherence to the method prescribed in the instrument creating the option”. [64]

12. [238]

    This is because, as Bryson AJ explained in Comdox v Robins: [65]

13. [239]

    The Deed set out a carefully prescribed framework for the sequential and interdependent acquisition by Lendlease, through call and put options, of each of Properties 6, 7, 8, 9 and 10, in that order. As a matter of construction, Lendlease’s entitlement was to make a Sale Offer for each, that is each and every one, of the Properties, and not for any one or more of the Properties. It follows that also, as a matter of construction, temporal and sequential compliance with the means for exercising the options set out in the Key Items Schedule was essential for effective exercise of the options.

14. [240]

    Now that Lendlease cannot acquire Property 6, it can no longer acquire “each”, that is each and every one, of the Properties; and it is no longer possible for it effectively to exercise the options in adherence to the prescripts of the Key Items Schedule.

15. [241]

    That is because, according to the terms of the Deed, Lendlease’s ability to exercise its option to call for Property 6, and thus the remaining properties, was subject to the conditions precedent in cl 3.1, particularly registration of the Plan of Subdivision (Balance Land), being satisfied within the time available to Lendlease to exercise the option: the Sale Offer Period

16. [242]

    That did not occur. The option was not exercised. The contractual consequences were as I have set out. The matter cannot proceed further.

17. [243]

    As Mr Coles submitted, Lendlease’s failure to be able to exercise its option in relation to Property 6 has “brought the scheme to an end” or, more colourfully, “destroyed the scheme”.

18. [244]

    As I have said, the Landowners have eschewed any suggestion that the Deed was thereby frustrated. [66]

19. [245]

    However, as Lendlease cannot now acquire Property 6, there has been a fundamental change of the circumstances facing the parties that means the bargain to which they agreed in the Deed cannot now be performed.

20. [246]

    In particular, Lendlease can no longer acquire Properties 7 to 10.

21. [247]

    I have not received comprehensive submissions as to the implications of these findings so far as concerns the current status of the Deed. Mr Coles submitted that “although not free from doubt, the better view is that either party has a right to terminate, but not for breach”, having earlier submitted that “to go further than [reaching conclusions as to the Sale Offers and Purchase Offers] would be to enter unpleaded territory which sits outside the claims for relief in these proceedings”. Mr Giles addressed no submissions on this question for the understandable reason that, on his case, the question did not arise.

22. [248]

    I will now invite submissions from the parties as to whether it is necessary for me to determine that question and, if so, how it should be determined.

Conclusion

1. [249]

   The 12 July Plan is not a Plan of Subdivision (Balance Land).

2. [250]

   In the events that have happened, Lendlease is not entitled acquire Properties 6 to 10.

3. [251]

   Lendlease is not entitled to the declaratory and other relief sought in its Amended Summons.

4. [252]

   I will stand the matter over to a date convenient to Counsel to discuss the next steps.