Piety Developments Pty Ltd v Cumberland City Council (No 3)

1. [1]

   In these proceedings it is alleged that a local council (Cumberland City Council, to which I refer as “the Council”) has made a binding and enforceable contract to sell certain land which it owns to the plaintiff company (Piety Developments Pty Limited, to which I will refer as “PD”). This judgment is concerned with PD’s claim for specific performance of that alleged contract. Having heard that claim on 11 December, on 15 December I announced my decision and made orders giving effect to it. What follows are the reasons for those orders.

2. [2]

   The land is located in the Town Centre of the inner-western Sydney suburb of Lidcombe. It was acquired by a predecessor of the Council in 1965 for use as an open-air carpark, and continues to be used by the Council for that purpose.

3. [3]

   Initially, there were only two parties to the proceedings: PD as plaintiff and the Council as defendant. At the hearing, Mr Bilal El-Cheikh was joined as second plaintiff. Mr El-Cheikh is a director of PD and, under the alleged contract, would be required to guarantee PD’s obligations under it. Despite Mr El-Cheikh’s joinder, I will, in what follows, continue to refer to PD as if it was the sole plaintiff, unless specific reference to Mr El-Cheikh’s position is necessary.

4. [4]

   In June 2020, the Council issued a public invitation to tender for the sale and redevelopment of the land. None of the tenders were accepted by the Council, but it resolved to continue to negotiate with the top two tenderers, who included PD.

5. [5]

   After negotiations which lasted about a year, PD and the other tenderer were invited to put their “best and final” offers. PD’s offer involved payment of $2.25 million, and the construction of car parking valued at $9.75 million in the redevelopment which PD was proposing to undertake.

6. [6]

   The matter came before a meeting of the Council on 3 November 2021. At that meeting the Council resolved to “accept” PD’s offer. The resolution also authorised the General Manager of the Council to execute the documents necessary to give effect to the sale.

7. [7]

   The resolution was controversial. It was passed only on the Mayor’s casting vote, after a tied vote by the other Councillors on the floor of the chamber. Only minutes after the meeting ended, notice was given of a rescission motion by some of the dissident councillors.

8. [8]

   Following the notification of the rescission motion, no steps were taken to execute documents giving effect to the sale. Indeed, no formal notification of the passage of the motion was given to PD. But the resolution was public, and PD’s executives swiftly became aware of it.

9. [9]

   In the ordinary course, the Council would have considered the rescission motion at its next meeting, which occurred on 17 November. But this did not occur either. The explanation was that the Council was about to enter a caretaker period, ahead of elections in December. Proceeding with the execution of documents remained on hold, and that is still the case.

Claims for determination

1. [10]

   In its originating Summons, PD sought specific performance of a contract allegedly constituted by the Council’s “acceptance” of PD’s offer. The proceedings were commenced on an urgent basis, on 9 February 2022. This was shortly before the scheduled first meeting of the newly elected Councillors, at which the rescission motion was scheduled for consideration. PD obtained an interlocutory injunction preventing that motion from being considered. That injunction remains in place.

2. [11]

   The Council denied that it had, by its conduct, made any binding or enforceable contract to sell the land to PD. A further defence advanced on the Council’s behalf was that, even if its conduct would otherwise have given rise to a binding and enforceable contract for sale of the land to PD, the Council lacked the legal power to dispose of the land. The land was said to be “community land” rather than “operational land”. A cross-claim was filed on behalf of the Council seeking declarations accordingly.

3. [12]

   The cross-claim was the subject of a separate hearing in April this year. In May, I delivered judgment: Piety Developments Pty Ltd v Cumberland City Council [2023] NSWSC 480 (“J1”). I rejected the Council’s contention and dismissed its claims for declaratory relief in the cross-claim. Later, I delivered a separate judgment on costs: Piety Developments Pty Ltd v Cumberland City Council (No 2) [2023] NSWSC 774 (“J2”).

4. [13]

   As well as maintaining that there is no binding or enforceable contract, the Council contends that it has a statutory entitlement (indeed, an obligation) to proceed with the rescission motion. On this argument, even if a binding contract had come into existence, it would not be open to the Court to prevent the Council from rescinding its resolution; any right that PD might have, in the event that there is a binding contract, would be to damages only.

5. [14]

   The remainder of the proceedings, consisting of PD’s claims for relief, continued in the Expedition List, and were the subject of a hearing, as already noted, on 11 December. The hearing was confined to the urgent aspect of the case, namely PD’s claim for specific performance. PD’s claim to damages for delay, and any claim by it for loss-of-bargain damages (if there was a valid contract but specific performance was not available) were held over for later decision if they arose.

Summary and analysis of the evidence

1. [15]

   The evidence before me at the hearing was largely documentary. Some supplementary and explanatory evidence was given by affidavit by three witnesses. These were Mr El-Cheikh, for PD, and, for the Council, Mr Peter J Fitzgerald, the General Manager, and Mr Charlie Ayoub, who, at the time of the tender, was the Executive Manager Corporate Services.

2. [16]

   None of the witnesses were required for cross-examination and no disputed issues of fact arose for decision.

3. [17]

   It is convenient to begin by referring to provisions of the Local Government Act 1993, the Local Government (General) Regulation 2005, and the Local Government (General) Regulation 2021 which were in force when the tender was originally issued in June 2020. I was not referred to any material amendments over the period in question. For convenience, I will refer to the Act as the LG Act, and the regulations in force at any given time as the LG Act.

4. [18]

   When the tender process was commenced, ss 178 and 179 of the LG Regulation provided:

5. [19]

   Those provisions appeared in Part 7 of the Regulation, headed “Tendering”. Section 163 was headed “Application of Part” and provided:

6. [20]

   Section 164 also defined “tender” as meaning, “a tender submitted or proposed to be submitted to a council in accordance with this Part”.

7. [21]

   Tendering is also dealt with in s 55 of the LG Act (that provision is in the same form today as it was in June 2020). Paragraph (d) of subsection (3) provides that the section does not apply to “a contract for the purchase or sale by a council of land”. But subsection (2A) provides that nothing in the section “prevents a council from tendering for any work, service or facility for which it has invited tenders”. Subsection (2) provides that “tenders are to be invited, and invitations to tender are to be made, by public notice and in accordance with any provisions prescribed by the regulations”.

8. [22]

   For the purposes of its tendering, the Council has at all relevant times used an electronic portal named “eProcure”. Tender documents are accessible to tenderers through the portal via a password login system. Communication between the Council and tenderers also take place through the portal, which logs and records such communications.

9. [23]

   When logging into the portal, users are required to tick a box, by way of agreement to hyperlinked terms and conditions of the Council. I have set out the relevant terms below. The terms contain hyperlinks to further documents, which I have shown in bold:

10. [24]

    Each tender on the portal is given a unique number by the Council. The tender in the present case was numbered RFX034.

11. [25]

    According to Mr Ayoub, the “public invitation to tender was published to the market as Proposed sale and future redevelopment of 13 John Street, Lidcombe” on 23 June, with the invitation closing on 21 July. Mr Ayoub referred to eight documents which were uploaded by the Council for access by tenderers. These relevantly included:

    1. (1)

       A draft contract, with a draft notice on the first page.

    2. (2)

       The RFX034 Specification for 13 John Street.

    3. (3)

       Conditions of RFX.

    4. (4)

       Tender Offer Form.

12. [26]

    It appears that once a tenderer logged into the eProcure portal (having accepted the terms and conditions, set out above), they were able to access a page for RFX034. Such a page appeared to be in evidence, and was headed, “RFX034 Proposed sale and future redevelopment of 13 John Street, Lidcombe – Summary”. The following text appears at the top:

13. [27]

    It seems that on this page, tenderers were able to access documents (1) and (2) referred to above (document (3) was accessible via the terms and conditions; presumably document (4) was accessible somewhere else on the portal).

14. [28]

    Document (2), the specification document, comprised four pages, plus two pages of attachments.

15. [29]

    The introduction to the specification document set out the first three paragraphs of the summary (quoted above) (the third paragraph appeared under the sub-heading, “Lump Sum – Purchase Price”). The document then set out details of the land, including the following aerial photograph:

16. [30]

    The “Scope of Works” section of the document provided:

17. [31]

    Under the heading “Statement of Requirements”, the document made clear that respondents were required to address all of the requirements specified in the “Scope of Works and Returnable Schedules”.

18. [32]

    Next, I describe Document (2) – the draft sale contract and note, which, according to Mr Ayoub, was uploaded in June 2020. The front page of the document was headed “IMPORTANT NOTE”. It read:

19. [33]

    The contract used the 2019 Law Society standard form, consisting of 32 clauses. There were 15 further special conditions, numbered from clauses 33-47.

20. [34]

    Special condition 33 contained the following relevant definitions:

21. [35]

    Community benefit was dealt with in special condition 39.1 That provided:

22. [36]

    Document (3), the RFX conditions, contained the following terms:

23. [37]

    After the time for submissions ended on 21 July, the tenders were analysed by Counsel employees. They produced a report for review by the Council at its meeting on 2 September. The following resolution was passed by the Council at that meeting:

24. [38]

    On 8 September, letters were sent notifying tenderers of the Council’s resolution. The letter to PD relevantly stated:

25. [39]

    The Council then arranged meetings with both tenderers. Mr Ayoub described the purpose of the meetings as being “for Council to provide feedback on the RFX034 submissions, and to invite them to submit their best and final offers in accordance with the 2 September 2020 Resolution via the eProcure portal”.

26. [40]

    The PD meeting appears to have occurred on 3 December 2020. In evidence was a document which Mr Ayoub described as the agenda for that meeting.

27. [41]

    The document is titled, “Piety Development’s Tender Submission – 13 John Street Lidcombe”. Under the heading, “Meeting agenda”, is the following:

28. [42]

    The document then sets out the following “Next Steps”:

29. [43]

    Finally, the document sets out the following “Key issues to address”:

30. [44]

    On the following day, 4 December, Council gave the two tenderers access to a new computerised tender, known as RFX34.1. According to Mr Ayoub, the terms and conditions which needed to be accepted when logging on to the portal were unchanged from RFX34, except for an updated code of conduct. Mr Ayoub also gave evidence that the documents for the phase were accessed and submitted via the portal, as with RFX34. Although he identified the documents submitted by Piety during this phase, he did not identify what materials were uploaded for the tenderers to access.

31. [45]

    There was however, in evidence, a screenshot of the webpage for RFX034.1. It is headed, “Proposed sale and future redevelopment of 13 John Street, Lidcombe – Summary”. It then continued:

32. [46]

    A specification document and draft contract of sale appear to have been uploaded.

33. [47]

    The “closing date” for RFX034.1 appears to have been 8 April 2021. Negotiations took place via the portal up until this date. It is unnecessary to set out in full the terms of PD’s submission and the communications between the parties about it. It is sufficient to note that PD’s proposal included some variations to the terms of the contract which had been provided by the Council for the purposes of the June 2020 tender. These proposed variations were referred to in correspondence between the parties as “non-conformances”.

34. [48]

    Thereafter, the Council internally considered the further submissions. The matter was further considered at a meeting of the Council on 8 September. The following resolution was passed:

35. [49]

    On 23 September formal notice of the resolution was given to the two tenderers. The letter to PD stated:

36. [50]

    It is convenient at this point to refer to the statutory provisions concerning council meetings.

37. [51]

    Section 372 of the LG Act concerns the rescission of resolutions. It provides:

38. [52]

    Section 375 of the LG Act concerns minutes, and provides:

39. [53]

    The General Manager, in his affidavit, also referred to the Council’s Code of Meeting Practice (which needs to adopt, and cannot be inconsistent with, provisions of a prescribed model code, see LG Act, s 360; LG Act, cl 232). Counsel for the Council referred me in particular to the following provisions:

40. [54]

    PD responded to the Council’s letter of 23 September requesting its “best and final offer” by an email sent on 4 October. That email stated:

41. [55]

    Again, the offers were the subject of an internal assessment (but this also included community engagement, in accordance with the 8 September resolution).

42. [56]

    The minutes of the Council meeting on 20 October 2021 record that a resolution was put and failed. They do not record the terms of the resolution. But according to the General Manager’s affidavit, the resolution was in the following terms:

43. [57]

    The next day, a Notice of Motion was lodged by three councillors, proposing that the failed resolution be adopted at the next council meeting on 3 November.

44. [58]

    The resolution came to be considered at the Council’s 3 November meeting. That meeting was declared open by the Mayor at 6:37pm. Fourteen Councillors attended (one arrived 2 minutes late), and of those Councillors, two attended by web conferencing. The minutes also record the presence of eight other Council employees. The minutes also make clear that the meeting was being streamed live on the Council’s website (and that those at the meeting were informed of this).

45. [59]

    The motion was eventually passed 8-7, on the mayor’s casting vote. It is not entirely clear from the minutes how the motion came to be considered. But the minutes suggest the following: that there was a public forum on the motion, with two speakers; that the Council resolved to suspend orders to enter closed session to consider the motion; and that the Council eventually returned from closed session, and then voted on the motion. The meeting was closed at 8:25pm.

46. [60]

    It appears that notice of a motion to rescind the resolution which had been passed at the 3 November meeting was given shortly after the conclusion of that meeting. Mr Ayoub gave the following evidence:

47. [61]

    A photo taken by Mr Ayoub of the handwritten document was in evidence, and was timestamped 8:33pm (8 minutes after the meeting ended). Mr Ayoub gave evidence that he informed the General Manager of the rescission motion later that evening (and the General Manager also gave evidence of this).

48. [62]

    Mr Ayoub also gave evidence, in a later affidavit, of how the unsigned minutes of the 3 November meeting were prepared and published.

49. [63]

    Mr Ayoub first gave the following evidence about the process for minutes “being prepared, published and confirmed”:

50. [64]

    Mr Ayoub then gave evidence specific to the 3 November meeting minutes. According to him, Council staff prepared the minutes. Mr Ayoub then reviewed them, before the minutes were “endorsed” by the Mayor on 4 November. At 1:32pm on 4 November, Mr Ayoub emailed all Councillors, copying the Council’s Executive, with the following:

51. [65]

    Mr El-Cheikh gave the following evidence of how Piety came to learn of the passing of the resolution:

52. [66]

    Mr El-Cheikh appears to have been incorrect in describing the motion as passed by a 7-6 majority (as opposed to 8-7). His reference to Piety learning of the passing of the resolution “on that very day” is strange, given the meeting occurred in the evening. But Mr El-Cheikh was not cross-examined on these discrepancies, and they were not mentioned in the argument.

53. [67]

    The Council’s 17 November meeting commenced at 6:40pm. The minutes record that the General Manager made the following announcement at the commencement of that meeting:

54. [68]

    During that meeting, Council passed a resolution confirming the minutes of the 3 November meeting. It appears that the minutes were then signed by the Mayor (as Chairperson) and the General Manager. Assuming the practice referred to by Mr Ayoub was then followed, the signed and confirmed version of the minutes would have been published on the Council’s website in place of the draft version. I did not understand there to have been any differences between the confirmed form, and the unsigned form which had previously been posted.

Application for specific performance

1. [69]

   PD’s case, as clarified by amendments to the summons at trial, was one of specific performance in the strict sense. PD alleged that the Council’s acceptance of PD’s offer of 4 October 2021, gave rise to a contractual obligation on the Council to execute a contract in the terms offered. PD sought an order compelling the Council to execute a contract in that form and then to carry it into effect.

2. [70]

   The form of the contract which PD contended the Council had obliged itself to execute (to which I will refer as “the Offer Contract”) was based on the contract used in the Council’s tender, described above. The proposed contract specified the consideration on the first page of the contract for sale as $2.25 million with a 10% deposit. PD abandoned the amendments (“non-conformances”) it had earlier been seeking and proposed only two changes to reflect the 4 October email.

3. [71]

   First, the Offer Contract amended the first of the alternative dates for completion (subparagraph (a) in the definition of “date for completion”: see [34] above) to “six months after exchange of contract”. The second change was to insert the following in place of “to be advised” in the definition of “community benefit”:

4. [72]

   In this form, the Offer Contract contains one textual problem. Clause 39.1.1 would still refer back to the community benefit in PD’s tender, rather than the community benefit identified in PD’s email. But no doubt this could be addressed by a suitable amendment.

5. [73]

   Counsel for the Council contended that the Council’s resolution of 3 November had no legal effect. Counsel took three points.

6. [74]

   Counsel’s first point fastened on the reference in [3] of the resolution to clause 178(1)(a) of the LG Regulation. The Council’s previous resolution of 2 September 2020 had terminated the tender process, by declining all tenders in accordance with clause 178(1)(b). Subparagraph 178(1)(a) referred to the acceptance of a tender. It followed in counsel’s submission that the November 2021 resolution could have no legal effect.

7. [75]

   In my view, this submission goes too far. It may be accepted, and was indeed common ground between counsel, that from the point of view of the regulations, the Council was, by 3 November 2021, in the course of negotiations with PD under clause 178(3)(e). But I think it is clear that the reference in the clause to “negotiations” is simply a reference to negotiations of the usual type. That is in no way inconsistent with the acceptance of an offer, giving rise to a contract in accordance with ordinary contractual rules.

8. [76]

   I therefore do not accept the submission, to the extent that it appeared to suggest that the reference to clause 178(1)(a) meant that [3] of the resolution should be treated as some sort of nullity for contractual purposes. Nevertheless, the reference may be of some significance in determining, as a matter of construction, whether it was an effective contractual acceptance of the offer by PD. I return to this question below.

9. [77]

   Counsel’s second point also built on the reference to clause 178(1)(a). This point was that the reference to the subclause created an ambiguity in the resolution. Counsel submitted that, in the ordinary course, reference to the subclause called up a tender offer. Counsel submitted that it was therefore unclear whether the resolution was referring to PD’s email of 4 October 2021, or to the earlier offer made by PD in response to the tender.

10. [78]

    It is convenient to deal with this point at the same time as counsel’s third point. The third point was that the form of the “acceptance” in [3] was not consistent with what the parties had contemplated in their dealings. Counsel referred to the general rule that, in this State, parties are presumed when negotiating for the purchase of land not to be bound until exchange of formal contracts. Counsel submitted that there were numerous references in the tender documents to a formal contract being executed. Counsel characterised the present case as one in the third category of case identified in Masters v Cameron (1954) 91 CLR 353 (at 360), where no legally enforceable contract comes into existence until exchange of formal contractual documents.

11. [79]

    It seems to me that this submission, at least in its broadest form, is outflanked by the way in which PD puts its case at trial. PD seeks to enforce a collateral contract which would require the Council to execute a formal contract for the sale of the land. That is not inconsistent with a mutual understanding that a document containing all of the terms of the bargain would be reduced to writing and made the subject of a formal exchange.

12. [80]

    This still leaves the question whether, on its proper construction, the resolution evinced an intention to accept PD’s offer in its email of 4 October. But in my view, the language is clear. In its context, I think [3] in the resolution clearly refers to the 4 October offer and not the earlier tender offer lodged by PD. And I think it is clear from the terms of the resolution that no further negotiation about the terms was contemplated. The resolution authorised the General Manager to proceed with executing the necessary documents and nothing more. In my view, it is clear that the resolution was intended to commit the Council to an acceptance of the offer in the 4 October email. The question is whether the Council has actually accepted.

13. [81]

    Counsel for the Council submitted that, even if (as I have found), the resolution did not contemplate further negotiation, it still needed to be communicated to PD to become effective. Counsel’s first point was that clause 179 of the LG Regulation expressly requires such communication. Counsel also called in aid the cases on rescission of council resolutions referred to below. Those cases were said to establish that rescission only becomes impermissible once the resolution has been formally communicated to the affected party. Until that happens, rescission is permissible, even if the affected party becomes informally aware of the resolution in the meantime.

14. [82]

    Counsel for PD retorted that clause 179 was not applicable because the parties were engaged in contractual negotiations, not a statutory tender process. The rescission cases were also decided in a statutory rather than a contractual context, the resolutions in question being concerned with the exercise of specific statutory or administrative powers. Counsel submitted that for present purposes there was “no such thing as formality in communicating acceptance”.

15. [83]

    This may be accepted so far as it goes, but, except in an unusual case (of which Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 is probably the most famous example), acceptance must be communicated by the offeree to the offeror for it to become contractually effective. Counsel for PD accepted that an un-communicated decision, on its own, was not sufficient, and that it needed to be shown that the Council had communicated its acceptance to PD.

16. [84]

    I did not understand the applicable principles to be in dispute. Whether conduct of an offeree amounts to acceptance of the offer is a question of the parties’ mutual intention. It is to be determined by the Court by reference to the terms of the offer and the nature of the conduct, within the matrix of relevant circumstances known, or at least available, to the parties.

17. [85]

    It may be accepted that the LG Act and Regulations had no direct effect on the parties’ negotiations in terms of prescribing any particular form of acceptance for PD’s offer. But that does not mean that the Act and Regulations were irrelevant for contractual purposes. PD must be taken to have known, for the purposes of the circumstantial matrix, that it was dealing with a statutory body with express statutory powers to rescind any resolution it might pass, at least until that resolution had been formally communicated to the parties affected by it.

18. [86]

    The extent to which the Court could take the provisions of the Code of Meeting Practice into account came up in the course of the parties’ submissions. But there was some confusion in the submissions between the Code of Conduct, which formed part of the tender documents (see [23] above), and the Code of Meeting Practice, which did not. In the end, it is unnecessary to decide whether the Code of Meeting Practice formed part of the matrix of contractually relevant circumstances. PD must at least be taken to have known that the Council had statutory obligations, and governmental responsibilities, which obliged it to conduct meetings in public, and to publish information about its decisions, as well as to keep formal minutes of the proceedings at its meetings.

19. [87]

    Counsel for PD relied, for communication of the acceptance, on the evidence of Mr El-Cheikh. I understood counsel to rely upon two means of communication: the awareness that Mr El-Cheikh received from another staff member that the resolution had been passed, and the publication of the unsigned version of the minute of the Council’s website on 4 November. I will deal with these in turn.

20. [88]

    There is a preliminary evidentiary difficulty with the first alternative. The evidence does not identify how the unidentified person who passed the news on to Mr El-Cheikh learned of the passage of the resolution. That person would not necessarily have learned of the passage of the resolution from attending, or watching the livestream of, the meeting. The news might have been communicated to that person by someone else who attended the meeting (or had, himself or herself, got the news second-hand from someone who had attended it). The news might even have been communicated directly by a Council officer.

21. [89]

    Because of the evidentiary gap in the case, it is difficult to identify any more specific act of communication by the Council than the act of passing the resolution in public. That was in no way directed to PD. If representatives of PD had participated in the Council meeting, in circumstances which showed that they were there to hear whether an acceptance was forthcoming to their offer, that would be one thing. But in the present case, the Councillors would have had no idea whether a representative of PD was present, or viewing the meeting on livestream, or not.

22. [90]

    Similar observations apply to the publication of the unsigned minutes of the meeting on the council website the following day. Again, the Council did not take any steps to ensure that the contents of the minutes were communicated to PD, and the publication of the minute was not aimed at communicating their content to PD or any other party. Furthermore, the version of the minute published on 4 November was published unsigned, and, in the context, could only reasonably have been understood as a draft. The formal minute had not been adopted, and was not going to be until the next meeting of the Council took place.

23. [91]

    The same points can be made in another way. In making the meeting open to the public, the Council simply complying with what it considered were its statutory and governmental obligations to conduct meetings publicly (LG Act ss 10 and 10A). Even without the statutory provision, it would no doubt have been open to the Council to conduct meetings publicly if it considered that doing so would be appropriate in the discharge of its governmental functions.

24. [92]

    Similarly, the publication of the unsigned minutes of the meeting on the council website the following day was not in any way directed to PD. It represented a further step by the Council in the exercise of its governmental functions.

25. [93]

    I have dealt with the parties’ arguments on the footing that Council’s resolution was an immediate acceptance of PD’s offer. But there may be a more fundamental difficulty for PD. What the Council did was to “resolve” to “accept” the offer. In the ordinary use of language, to resolve to do something is to decide to do it. But from a contractual point of view, to accept PD’s offer required more than a decision; it required a communication of that decision.

26. [94]

    In that context, the resolution, on its true construction, may have been nothing more than an expression of the Council’s will, coupled with an (implicit) grant of authority to the Council’s officers to make the necessary formal communication, presumably via correspondence of the same type as had been sent following the passage of earlier resolutions. On that view, communication of the resolution itself would not have been sufficient. But this way of looking at the case was not the subject of submissions (or at least squarely so) and in view of the conclusions I have already reached, I do not need to take it any further.

27. [95]

    For these reasons, I consider that there was no effective communication of the resolution to PD. This ground of defence by the Council succeeds.

28. [96]

    In their written submissions, counsel for the Council pointed out that the tender version of the contract, even shorn of all its non-conformances, did not define the “community benefit” for the purposes of clause 39.1. Counsel submitted that this left the contract incomplete.

29. [97]

    This particular problem was addressed by the proposed amendments to the form of contract, introducing a definition of community benefit taken from the email of 4 October, which I have described above. But I cannot help feeling that there may have been a deeper problem which was not addressed.

30. [98]

    The scheme of clause 39.1 was that the community benefit was to be enforced by means of a “positive covenant and/or restriction” on the title of the land. Although the clause did not expressly say so, the “positive covenant and/or restriction” was presumably a reference to Division 4 of Part 6 of the Conveyancing Act 1919, which provides for the creation of easements and restrictive and positive covenants on land. Such instruments can impose positive covenants for maintenance and repair (see s 88BA) and may be granted in favour of a prescribed authority (which would include the Council) without the need for a dominant tenement (s 88A).

31. [99]

    Counsel for PD acknowledged that the Offer Contract did not contain any express obligation on PD to give ongoing access to the carpark. But counsel submitted that this did not matter. The Council could simply register the necessary “positive covenant and/or restriction” prior to sale which could thereafter be enforced if that became necessary.

32. [100]

    Despite this explanation, I remain sceptical. An easement for use of land as a carpark is now a recognised form of easement: see the authorities referred to in Stolyar v Towers (2018) 19 BPR 38,287 at [41]-[43]. But I find it hard to see how, as a matter of conveyancing, such an easement can be defined in registrable form when the building in question has not even been designed, let alone constructed. Subparagraph (b) of the definition of “community benefit” in the Proposed Contract particularly underlines this problem. How could an obligation to ensure that public carparking spaces are to be "conveniently located” on the “top levels” of the proposed carpark be defined at this point?

33. [101]

    Indeed, the problem appears to be still more fundamental. It should not be forgotten that the tender originally referred to the “sale and re-development” of the land. The offer email of 4 October described the total price as being $12 million, because of the cost of the 150 carparks that formed part of the offer. But the Offer Contract does not require the construction work to take place. Even if an easement could be imposed, easements generally operate only as restrictions on the use of land. The exceptions for positive covenants would not seem to go anywhere near covering the construction of a building. Even if they did, they could not ensure that such a development would actually be undertaken, if for no other reason than that planning permission could not be guaranteed.

34. [102]

    These potential problems were not the subject of argument before me. In view of the conclusions I have reached elsewhere, I do not need to resolve them.

35. [103]

    The applicable provision is s 54A of the Conveyancing Act, which relevantly provides:

36. [104]

    The decision of Kunc J in Irvine v Dowling [2021] NSWSC 119 stands for the proposition that a collateral contract of the type which is the subject of PD’s application must itself satisfy the requirements of s 54A (see [125]-[129]). Counsel for PD accepted that proposition.

37. [105]

    Counsel identified the “memorandum or note”, for the purposes of s 54A, as the signed minute of the meeting of 3 November. There was some debate before me about the fact that the 4 October email did not itself set out all of the terms of the Offer Contract. Instead, those terms needed to be pieced together by a process of engrafting the email onto the original version of the contract from the June 2020 tender.

38. [106]

    But in the end, nothing appears to turn on this. A memorandum will be sufficient if it sufficiently clearly incorporates another instrument by reference: B Edgeworth, Butt’s Land Law (7th ed, 2017, Lawbook Co) at 152 [4.210], and the authorities there cited. There seems no reason why, in a proper case, it should not be possible for the instrument so incorporated to incorporate, in turn, a further instrument, and so on (as seems to have been the case, for instance, in Performance Capital Mortgage Pty Ltd v Motive Finance & Leasing Pty Ltd (2010) 15 BPR 29,267: see at [27]). In the end, I did not understand that there was any issue about this.

39. [107]

    But s 54A imposes other requirements. One concerns the form of the memorandum. It must be a memorandum “thereof”, i.e. a memorandum of the contract. Another concerns the authority of the person executing the memorandum. The signatory, if not the person to be charged, must be a person “thereunto lawfully authorised”, i.e. authorised by the person to be charged to sign the memorandum.

40. [108]

    The relevant provision of the Statute of Frauds, in one form or another, has existed for centuries, and has been adopted in many jurisdictions. It would be surprising if there were no authorities which presented some analogy with the present case. But neither side referred me to any such authority. I have therefore dealt with the application of the requirements I have mentioned by reference to first principles.

41. [109]

    As to the first requirement, it is true that the signed minute of the 3 November meeting records a resolution to accept PD’s offer. But strictly speaking, only a part of the minute and, indeed, only part of the resolution, records the acceptance and could therefore qualify as the memorandum. Moreover, when the minute was signed on 17 November, a rescission motion had been moved and was pending, and this had been noted at the beginning of the meeting. If that notation had appeared in the minutes of the 3 November meeting as signed, the recording of the original resolution in those minutes could hardly be regarded as a memorandum of a concluded contract between the Council and PD. It would seem artificial if the making of the notation in the minutes of the later meeting produced a different result.

42. [110]

    I think what this underlines is that the minutes were not prepared for the purpose of recording contractual dealings between the Council, on the one hand, and PD, or anyone else, on the other. Rather, they were produced pursuant to a statutory obligation on the Council to record the proceedings of its meetings. In the absence of authority on the question, I do not think that this makes the minutes, or any particular part of them, a memorandum “of” a contract between the Council and PD in the relevant sense.

43. [111]

    There are also problems with the requirement for authorisation. The minutes were signed pursuant to a resolution of the Council at the meeting which followed the meeting of 3 November, on 17 November. They were signed by the Mayor in accordance with the statutory requirement that, when minutes have been confirmed at a subsequent Council meeting, they must be signed by the person presiding at that subsequent meeting (LG Act, s 375(2)).

44. [112]

    When I asked counsel for PD who the authorised signatory was for the purpose of s 54A, counsel replied that it was the Mayor. But there is no evidence that the Mayor was ever authorised by the Council to sign a memorandum of the contract arising from the acceptance of PD’s offer. He certainly was not so authorised by the resolution of 3 November. It is quite fortuitous that he attended the meeting of 3 November and later signed the minute of that meeting on 17 November.

45. [113]

    I did not understand counsel for PD to have argued that the General Manger, rather than the Mayor, was the authorised signatory. The evidence does not seem to reveal why, at the meeting of 17 November, the General Manager signed the minute of the 3 November meeting alongside the Mayor. But it clearly was not as a result of any authorisation given in the resolution of 3 November. I therefore do not think that the requirement that the signatory be “thereunto” authorised by the Council was satisfied either.

46. [114]

    For these reasons, the Council’s statute of frauds defence also succeeds.

47. [115]

    Counsel for the Council presented a further argument, which would have applied even if, contrary to my finding, the Council’s acceptance of the offer on 3 November had given rise to a binding and enforceable contract. The defence was based on s 372 of the LG Act (quoted above at [51]).

48. [116]

    Counsel contended that the Council had a statutory right (indeed, an obligation) to allow the rescission motion, notice of which had been properly given, to proceed. According to this contention, even if a binding and enforceable contract had been entered into, only damages could be recovered. The Court should not, by its power to grant specific performance, override the Council’s statutory rights and obligations.

49. [117]

    By way of background to this submission, counsel referred me to three authorities in particular: Ex parte Renouf (1924) 24 SR (NSW) 463; Shanahan v Strathfield Municipal Council [1973] 2 NSWLR 740; and Sentinel Orange Homemaker Pty Ltd v Davis Investment Group Holdings Pty Ltd [2021] NSWSC 550.

50. [118]

    For their part, counsel for PD sought to distinguish these decisions on the ground that in each case the resolution in question had involved the exercise of a statutory decision-making power. Counsel pointed out that the present case involved contractual negotiations rather than the exercise of such powers. Counsel also submitted that any power of rescission that the Council might have could not be used to override accrued legal rights, including a right to specific performance.

51. [119]

    At the time Renouf was decided, the Local Government Act 1919 contained no express reference to rescission of council resolutions. The Full Court’s decision, including the exception where the affected party had acted upon the resolution or (as later authority has suggested) been formally notified of it, was based on implication. There is now express provision for rescission in s 372, but no reference to exceptions. A question might arise as to whether the same exceptions as formerly are to be implied.

52. [120]

    Ultimately, this is a question of interpretation of the LG Act. Since it was not necessary to decide the question for present purposes, I thought it best to leave it to be dealt with on appeal should that be necessary.

Conclusions and orders

1. [121]

   I therefore concluded that:

   1. (1)

      the alleged contract was not legally effective, because the purported acceptance was not validly communicated to PD as putative offeror;

   2. (2)

      in any event, any such contract would be unenforceable pursuant to the Conveyancing Act 1919, section 54A.

2. [122]

   After announcing my conclusions and giving the parties an opportunity to consider them, I made orders in a form agreed by the parties to reflect my decision. The orders included an interim stay on the discharge of the injunction which prevents the Council from dealing with the rescission motion discharged, in case PD appealed.

3. [123]

   The orders of the Court on 15 December were:

   1. (1)

      The Plaintiffs’ claim is dismissed.

   2. (2)

      The interlocutory injunction granted on 9 February 2022, and as extended on 14 February 2022 until further order, is discharged forthwith.

   3. (3)

      The First Plaintiff is to pay the Defendant’s costs of the proceedings, save as to the order for costs made on 4 August 2023 in favour of the First Plaintiff in respect of the separate determination.

   4. (4)

      Order that order 2 be stayed until the date which is 5 weeks after the delivery of the Court’s reasons for judgment.

   5. (5)

      Liberty to apply on 2 days’ notice.