Boardman Super Fund Pty Ltd v Home & Land Centre Pty Ltd

WARD P: This matter involves a dispute in relation to 20 lots of land (the Lots) in a subdivision of land in Braemar, New South Wales (the Land). The subdivision was known as Stage 4 Nattai Ponds. It was part of an overall development for residential purposes of land in the area. The plaintiff, Boardman Super Fund Pty Ltd (the Vendor), acquired the Land, the relevant portion of which ultimately comprised 45 lots (lots 4001 to 4044), in December 2018 from a related company, Feldkirchen Pty Ltd (Feldkirchen).

The defendants are members of the Rawson Group of companies (the Rawson Group). The Rawson Group builds and develops residential real estate. The first defendant, Home & Land Centre Pty Ltd (the Purchaser), acquires and holds land on behalf of the Rawson Group while construction is completed. The second defendant, Rawson Group Pty Ltd (the Guarantor), was the guarantor of the Purchaser’s obligations under the deed, the subject of these proceedings (see below).

On 27 May 2022, the parties entered into a Put and Call Option Deed (the Deed), whereby the Purchaser was granted call options (and the Vendor corresponding put options) in respect of a total of 20 lots to be created as part of the then proposed subdivision of the Land. The Deed provided for separate options for both the Nominated Lots (defined as 14 lots forming part of the Property nominated by the Grantee, i.e., the Purchaser) and the Remaining Lots (defined as the Property less the Nominated Lots – i.e., six lots remaining after the deduction from 20 of the 14 Nominated Lots). The circumstance in which there was a differentiation in treatment between the respective Nominated and the Remaining Lots is explained in the chronology set out below.

The Purchaser intended to purchase the Lots for the purpose of construction and on-sale of residential dwellings but did not ultimately exercise the call options it was granted in respect of the Lots.

The dispute between the parties is as to whether, as the Purchaser contends, the Purchaser validly rescinded the Deed by notice dated 14 June 2024 (after the service by the Vendor on 28 May 2024, of a Condition Precedent Notice, following registration of the s 88B instrument in respect of the subdivision), prior to the service by the Vendor of its Notice of Exercise of Put Options on 2 July 2024 or whether, as the Vendor contends, the Purchaser’s rescission was invalid such that two binding contracts for sale arose on the exercise by the Vendor of its put options on 2 July 2024.

The Vendor commenced proceedings by summons filed in this Court on 25 July 2024, seeking declaratory and other relief, including an order for specific performance by the Purchaser of the contracts for sale of the Land that it asserts came into existence on 2 July 2024, and an indemnity from the Guarantor for any amounts recoverable by the Vendor against the Purchaser. Included in the relief sought was an order rectifying cl 7.3 of the Deed in particular respects (see below at [62]).

The defendants, by their Response to Summons filed on 20 September 2024 (Response), have: opposed part (but not all) of the relief claimed by way of rectification (what they oppose is the replacement of the words “Grantee and, if applicable, the Guarantor” in cl 7.3(a) with the word “Grantor” and replacement of the words “Notice of Exercise of Call Option” in cl 7.3(c) with the words “Notice of Exercise of Put Option”); asserted that the Deed was rescinded ab initio by the Rescission Notice served in June 2024; and opposed the entirety of the relief sought by the Vendor (other than as expressly accepted in their Response in respect of the first aspect of the rectification claim).

By cross summons, amended by leave on 7 March 2025, the Purchaser seeks declaratory relief, including a declaration to the effect that the Vendor is estopped from denying that the rescission is valid and a declaration that the Vendor engaged in misleading and deceptive conduct (or conduct likely to mislead and/or deceive) in breach of s 18 of Schedule 2 of the Competition and Consumer Act 2010 (Cth) (ACL) (by reason of representations alleged to have been made by the provision to the Purchaser, allegedly on behalf of the Vendor, of certain plans and drawings “recording the proposed civil works to be completed on the Land”); and the Purchaser seeks recovery of the sum of $600,000.00, being the Security Amount paid pursuant to the Deed.

On 13 March 2013, prior to the acquisition by the Vendor of the Land, development consent was issued by the Land and Environment Court to Feldkirchen, permitting the subdivision of ten lots of land in Braemar as a Staged Development on specified conditions.

As noted above, the Lots the subject of the present dispute were to be created pursuant to Stage 4 of the overall development of the Land as shown in the following plan:

The general development conditions included: condition 45, the submission to the Council, prior to application for the Subdivision Certificate, of a plan detailing the extent of fill on the site (with engineering certification identifying the specification of the filling operation in terms of the level of compaction achieved for each layer of fill placed); and condition 46, the submission to the Principal Certifying Authority, with the Subdivision Certificate Application, of a Geotechnical Engineer’s Report providing a site classification for each lot in the subdivision that will be built upon in accordance with AS 2870 (AS 2870-2011, Residential Slabs and Footings). The site classification for each lot was to be provided to Council for inclusion on the s 149 Planning Certificates (now s 10.7 Planning Certificates under the Environmental Planning and Assessment Act 1979 (NSW)) prior to registration of the Linen Plan of Subdivision.

In January 2018, Feldkirchen obtained plans and drawings (the CDS Plans, which are dated 16 January 2018) prepared by a civil engineer, Civil Development Solutions (CDS), for proposed civil works on the Land, including on the Lots the subject of the present dispute (those works being described on the CDS Plans as the “Nattai Ponds Stage 4 Plan of Internal Subdivision Works”). There was expert evidence at the hearing as to what was disclosed by the CDS Plans as to the proposed civil works and the extent of fill on, or to be placed on, the Lots, to which I refer in due course.

On 3 December 2018, the Vendor became the registered proprietor of the Land. It is relevant at this point to note that a director of both Feldkirchen and the Vendor is Mr Jeff Knox, who gave evidence in the proceedings. Mr Knox explained that “Feldkirchen is the masthead company and everything runs back to that particular company. Feldkirchen is the owner of Boardman Super Fund” (13/11/25; T 39.25).

On 8 November 2021, the Vendor entered into an Exclusive Selling Agency Agreement with Campbell Jones Real Estate Pty Limited, trading as Campbell Jones Property, in respect of Lots 401-444, Stage 4 of the Braemar development.

On the same day, Mr Angus Campbell-Jones, the licensed real estate agent at Campbell Jones Real Estate Pty Limited, had a discussion with Mr David Broadstock of Macquarie Project Marketing (MPM) in relation to the said lots (see the email dated 9 November 2021 from Mr Campbell-Jones to Mr Broadstock). The role of Mr Broadstock is of relevance in the present proceedings since it was he who provided the CDS Plans to the Purchaser. This is addressed in due course. Suffice it for present purposes to note that Mr Broadstock was described in the course of the hearing as a referral agent, which I understand to be someone who identifies and refers potential buyers to real estate agents or sellers (although, as I will explain in due course, the principal of the Vendor, Mr Knox, did not accept that he was a referral agent for the Vendor). Mr Broadstock was also associated with Samaro Homes Pty Ltd, itself a builder (see email dated 10 November 2021 to Mr Campbell-Jones), which acquired four of the lots the subject of the Stage 4 development.

Mr Broadstock gave some recommendations to Mr Campbell-Jones on 10 November 2021 as to how to “spread risk” while “offloading” all the lots as soon as possible, suggesting that there be three buyers and two different methods of sale (see email dated 10 November 2021), to which Mr Campbell-Jones responded with a suggestion that a put and call be entered for the (unsubdivided) lot with terms allowing for on-sale to different builders. Neither course appears ultimately to have been adopted but nothing turns on this.

Relevantly, on 15 November 2021, Mr Broadstock (on his MPM email account) sent an email to Ms Catherine Maude, then the Senior Marketing Manager in the Rawson Group, referring to a sale opportunity in respect of 20 lots in the Stage 4 development in the following terms:

Mr Broadstock noted in that email that he had “previously sold 29 packages in there for other builder” and stated that he was waiting on “engineering plans, acoustic report etc”.

Ms Maude’s response was to ask for “proposed contours”, to which Mr Broadstock responded the following day (16 November 2021) that he was “chasing up engineering and contours and geo teck [sic]”.

On 3 December 2021, Mr Richard Anderson of CDS Solutions sent Mr Broadstock (and Mr Campbell-Jones) by email “[a]s requested” the “preliminary engineering drawings for Stg 4 – subject to final review and council assessment” (emphasis as per original). That email was copied to Mr Knox, who was therefore on notice of the provision of the CDS Plans to Mr Broadstock. The CDS Plans as forwarded to Mr Broadstock included a drawing entitled “Lot Fill & Regrade Plan Sheet 1”, on which lots 4031-4044 were shaded in green, identifying the cut and fill depth on those lots. (This page of the CDS Plans assumes significance in light of the evidence given by the current Chief Executive Officer (CEO) of the defendants, Mr Paul Hendry, as to what he understood was there disclosed as to the scope of the then proposed civil works.) Those lots were along the northern boundary of the site, in a row perpendicular to the Great Southern Railway line on the north-east of the site.

On 10 December 2021, Mr Broadstock sent an email to Ms Maude, referring to previous discussions as to “44 lots located Stage 4 Nattai Ponds Braemar”; again referring to a “Put and Call” in relation to 20 Lots with a 5% deposit and stating, “12 months to registration”. The email identified the lots and price plan for 20 lots: those lots being, lots 401-403, 408-414, 418-422 and 428-432 with the total price of $12 million (and a 5% deposit of $600,000.00).

Ms Maude responded, asking whether there was a “draft 88B?”.

On 5 January 2022, Mr Broadstock forwarded to Ms Maude by email, various documents including a “draft DP plan”, “draft 88B” and “Civil Plans”. I note that this email was not copied to Mr Knox (nor do any of the later emails relating to the CDS Plans appear to have been copied to him).

For ease of reference, the Plan of Proposed Subdivision (Stage 4) is reproduced below. Mr Broadstock in his email noted that the numbers on the draft DP plan – i.e., 4001 – 4044 were different from those in the sales plan – i.e., those in the plan referred to at [21] above, which is reproduced below:

The draft s 88B instrument pursuant to the Conveyancing Act 1919 (NSW) (Conveyancing Act) provided to the Purchaser, included the following as to the terms of restriction on use of lots 4001 to 4044:

The same day (5 January 2022), Ms Maude forwarded the information that had been provided by Mr Broadstock to various persons in the Rawson Group (Mr Doug Phillips, General Manager Sales and Marketing; Mr Chris Trapps, then Group Head of Sales; Mr Peter Leeson, then Regional Sales Manager; and Mr Paul Roddam, Head of Construction).

On 11 January 2021, Mr Trapps sent an email to Ms Maude (copied to a Mr Adam Shipway, who also appears from the text of the email to be within the Rawson Group), asking Ms Maude to confirm to whom the referral fee would be paid and stating, in terms of the next steps (apart from payment of the refundable deposit to secure the 20 lots) that he and Mr Leeson were to “scope up siting and buildability with ops team”; that Mr Leeson and “chris” were to “do exec paper for sign off of anything above $3m”; and that the final allocation was to be confirmed with the developer.

On 18 January 2022, Ms Maude again forwarded to Mr Trapps and others at the Rawson Group, the documents that had been attached to the 5 January 2022 email and confirmed that a referral fee “will be payable” to MPM “who brought me the lots”, noting that she had a “completed referral agreement for them (MPM) to send back to Neala” (Ms Fraser, General Counsel of the Rawson Group). Ms Maude advised that she would ensure that various terms were suitable in the “next few days” including that a draft deposited plan and s 88B instrument for the lot/s concerned must be attached to the contract.

On 20 January 2022, Mr Broadstock sent separate emails to Mr Campbell-Jones and Ms Maude. The former included details of the three builders to enter into put and call options: Samaro Property Pty Ltd (four lots), Rawson Homes (20 lots) and Edgewater Homes (20 lots); the latter attached various documents as previously forwarded, as well as a draft referral agreement and provided details for the proposed put and call agreement.

On 23 January 2022, Mr Trapps (as already noted, then the Group Head of Sales), emailed Ms Maude, Mr Phillips, Mr Leeson and Mr Roddam, noting that he had visited the site twice. Mr Trapps asked Ms Maude to “100% confirm” with the developer the contours and asked Mr Roddam for “thoughts on buildability”, observing that lots 4042 and 4041 “looked higher on cut and fill requirements”.

The following day (24 January 2022), Mr Roddam responded to Mr Trapps, in an email sent also to Ms Maude, Mr Phillips and Mr Leeson, stating that “[m]ost of the site has had significant cut and fill to establish final design levels”. (In his evidence, the geotechnical expert called by the defendants, Mr Patrick Wong, explained that he read this response as referring to the CDS Plans not to a physical inspection of the site – see at 14/11/25; T 95.49. The wording of the email, however, suggests that Mr Roddam (whether or not by reference to a physical site inspection) was referring to historic fill on the site, not to a prospective cut and fill programme of works (by reference to the CDS Plans or otherwise).) Mr Roddam did not give evidence at the hearing.

Mr Roddam went on to state in the email that “it would all have been put in [which here can only be referring to historic fill given the use of the conditional past tense] as level one compaction under supervision from a Geotech and there should be a lot class [i.e., classification] report indicating the site type and slab design”. (The meaning of a Level 1 inspection was explained in the evidence from Mr Richard King, a geotechnical engineer, to which I refer in due course.) Mr Roddam said that if they could get that (a class report) it would help with more accurate pricing of site costs (stating that, “typically, deepening [sic; presumably, depending] on the material type and depth of the level one fill standard pier depths would be fine however there may be exceptions so that’s why the lot class report from the developer would be helpful”). Mr Roddam did not there suggest that a particular soil classification (“M” or otherwise) would be required for “buildability” of the site nor that there was any assumption as to what the soil classification would be (cf Mr Hendry’s evidence at the hearing to which I refer later).

Ms Maude raised the query as to the “class report” with Mr Broadstock the same day. Mr Broadstock responded to Ms Maude, referring to the fill diagram on p 27 of the civil engineering plans and stating that three lots had fill – lots numbered 4111, 4112 and 4113 on the engineering plans. This appears to be a reference to the Lot Fill & Regrade Plan Sheet 1 reproduced at [21] above.

The three lots identified in Mr Broadstock’s email (4111-4113) appear to be those which have an area of dark brown over a portion of the green shading. (As previously noted, the Lots the subject of the Deed are shown in the sales plan as 401-403, 408-414, 418-422 and 428-432, which include those numbered on the CDS proposed plan of subdivision as 4111, 4112 and 4113.) Somewhat confusingly, the sales plan attached to the 20 January 2022 email, shows the lots referred to as having fill as lots 4041, 4042 and 4043 but what is clear is that those are included in the 20 lots which were being proposed as the subject of the Put and Call to Rawson Homes; and that the 20 lots ascribed to Rawson Homes do not comprise all of the green-shaded lots on p 27 of the Lot Fill & Regrade Plan Sheet 1, as evident from the plan below:

On 1 February 2022, Mr Trapps asked Mr Broadstock (under the misnomer subject header “Lochinvar Downs”) to send the “nattai ponds details again” and the expected registration date; to which Mr Broadstock responded, providing the documents (including the CDS Plans) that had already been provided and advising that the anticipated registration was the 4th quarter of 2022.

On 9 February 2022, Mr Trapps again sought to confirm the contours shown on the CDS Plans (whether it was 1.5m each line) and Mr Trapps subsequently advised Mr Roddam and Mr Leeson that “he” (Mr Broadstock, presumably) had confirmed that the dark lines were 1m contours – “[s]o 2m on the steeper lots” but said that he (Mr Broadstock again) was “hunting down the lot class report”.

On 16 February 2022, a draft paper was prepared for the purposes of an Executive Team Resolution by the Rawson Group in relation to the “Nattai Ponds Put and Calls”. This paper sought Executive Team approval to enter into a Put and Call Option Deed for 19 lots in the development totalling $11m (although it actually described 20 lots in the table of lots and prices: 4031-4033; 4038-4044; 4027-4023; and 4017-4013). The paper was signed by Mr Leeson and Mr Trapps. The stated rationale for the recommendation included statements that: the opportunity had been secured through a land referral agent; the lots were within “construction parameters” with building envelopes at 0.5m-2m and suitable for marketing by Rawson Homes and another entity (Thrive Homes); and the estate was “an in-fill development” (which I was informed by Counsel refers to an empty piece of development land between completed developments – see 13/11/25; T 7.28) with no like for like value comparison in the area. Reference was made to the need to add provision for acoustics from the adjacent trainline. There was no express reference in the paper to any “buildability” concerns or to the absence of a lot classification report.

The CEO and Managing Director of the defendants (and of the Rawson Group companies), Mr Hendry (who at the time of entry into the Deed was the Chief Financial Officer (CFO) within the Rawson Group), has deposed (see his first affidavit, sworn 28 November 2024) to his recollection that the 16 February 2022 paper was presented to the Executive Committee, following which a meeting was convened on or around 22 February 2022 to discuss the proposal (see [42] of his first affidavit). His recollection was that concerns were raised in the meeting concerning: one lot which was oddly shaped; the proximity of the development to the trainline; and that the acquisition of 19 lots in one transaction would lead to a significant volume of product being put to market at the same time. (Mr Hendry makes no reference to any concerns being expressed at the meeting as to the “buildability” of the lots proposed to be acquired.)

On 24 February 2022, Mr Trapps, in an email headed “Nattai Ponds Resubmission Paper” emailed various persons within the Rawson Group, thanking them for their feedback on the Tuesday (presumably a reference to 22 February 2022) and advising that he was proposing to proceed with entering the Put and Call Deed but at a reduced quantity of 14, not 20; which he said would remove the “wedge shaped lot and the 5 train line adjacent lots”. A revised paper was accordingly prepared seeking Executive Team approval to enter into a Put and Call Option Deed for 14 of the lots in the Stage 4 development, at a sum totalling $8,815,000. The stated rationale for recommendation repeated the statements referred to above from the previous paper. It was again signed by Mr Leeson and Mr Trapps.

Mr Hendry has deposed to his receipt of the revised February paper ([44]) and to his recollection that the Executive Committee met at the next scheduled meeting (it is unclear when that was) to discuss the “Revised February Paper”, which was ultimately approved by circular resolution (no copy of which was in evidence) in late February 2022 (that approval being for the acquisition of only 14 lots) ([45]).

It is not clear what happened after the approval by circular resolution of the acquisition of 14 lots until 9 April 2022, when Mr Trapps emailed the Executive Team, referring to the presentation by him in February of “a P&C option for 20 lots at Mittagong” (which must be a reference to the 16 February paper). Mr Trapps noted that “[t]here were a couple of concerns re: the proximity of five of the lots to the trainline and their ‘marketability’ as well as one of the lots which was wedge shaped”. Mr Trapps also referred to the resubmission to the Executive Committee and approval to take on the 14 lots that were not adjacent to the trainline. Mr Trapps then advised that:

Mr Trapps sought approval for the above, advising that he felt this gave “a good amount of time to sell the lots ourselves whilst also exploring an outsourced agent selling model (if needed) to de risk the fact that we don’t have a sales team in this location”. Mr Phillips, Executive General Manager for Sales, Marketing and Product Development for the Rawson Group, in response, indicated his support for the proposal. There is no documentary evidence of any formal resolution (circular or otherwise) by the Executive Committee for the acquisition of the six “remaining” lots (i.e., the six lots additional to the 14 for which approval had been given in February 2022).

On 14 April 2022, the sum of $600,000.00 was paid out of the account of Rawson Group Pty Ltd to the Campbell Jones Property Trust account (as the Security Amount or option fee in respect of the acquisition of the 20 Lots).

On 27 May 2022, the parties entered into the Deed in respect of the Lots (described in the draft contract for sale annexed to the Deed, consistently with the draft DP plan, as lots 4013-4017, 4023-4027, 4031-4033 and 4038-4044). The Lots were identified in the definition of “Property” in the Deed as the proposed lots bearing those numbers in an unregistered plan of subdivision of lot 355 in deposited plan 1228384. As noted above, the Deed differentiated between the Nominated Lots (14 lots to be nominated by the Grantee, i.e., the Purchaser) and the Remaining Lots (being the remaining six lots out of the specified 20 lots after taking into account the Nominated Lots).

The Deed annexed (as Annexure A) a Disclosure Statement (headed Disclosure Statement – Off the Plan Contracts) together with a single draft contract for sale and purchase of the lots to be created as a result of the proposed subdivision of the Land (contemplating the identification of the Nominated Lots and the Remaining Lots from the list of 20 lots there specified).

The Deed made reference (cl 16.1) to Divs 8-10 of the Conveyancing Act and provided that documents attached to the contract were deemed to be attached to the Deed on the date of the Deed.

The Disclosure Statement was in the approved form for the purposes of s 66ZM of the Conveyancing Act. The Disclosure Statement indicated that it attached a draft plan and a draft s 88B instrument proposed to be lodged with the draft plan. Those documents were attached to the draft contract (i.e., a draft plan of subdivision and a draft s 88B instrument).

The draft s 88B instrument was relevantly in the form that had been provided to the Purchaser in January 2022, in that it did not provide site classifications for the Lots; rather, in the space for identification of the site classification, there appeared two question marks “??”. The draft s 88B instrument identified the Wingecarribee Shire Council (the Council) as the authority empowered to release vary or modify restriction on the use of the land numbered eight in the plan of subdivision (i.e., the use of lot no.s 4001-4044).

Schedule 4 to the draft contract for sale, headed “Guarantee and Indemnity” (cl 45), relevantly contained the following provisions.

Item 1 provided that the Guarantor must execute the contract for sale. Item 4 contained an unconditional and irrevocable guarantee in favour of the Vendor: (a) that the Purchaser will pay to the Vendor the balance of the price and every other amount that the Purchaser must pay under the contract and (b) the performance of the Purchaser’s obligations. Item 5 contained an indemnity in favour of the Vendor against a Claim relating to the Purchaser’s breach, default or attempted breach or default of its obligations.

Item 6 expressly provided that the guarantee and indemnity: (a) is a principal obligation; (b) is irrevocable and remains in full force and effect until discharged; and (c) binds the estates of each Guarantor (here there was only the Guarantor). Item 8 provided that the Vendor may enforce the guarantee against the Guarantor without first exhausting a remedy that it may have against the Purchaser. Item 9 provided that the Guarantor must pay on demand any money due to the Vendor that relates to the indemnity, including but not limited to the balance of the price, adjustments due to the Vendor on completion and interest that the Purchaser must pay to the Vendor. Item 10 provided that the Guarantor and the Purchaser are jointly and severally liable to the Vendor for, among other things, the Purchaser’s observance and performance of its obligations and damage that the Vendor incurs as a result of the Purchaser’s failure to observe and perform its obligations under the contract.

The total acquisition cost for the Lots was $12,000,000.00. As already noted, a Security Amount of $600,000.00 was paid in advance of the Deed in relation to the proposed acquisition of the Lots. That amount continues to be held by the Vendor’s representative, Campbell Jones Real Estate Pty Ltd. Clause 2 of the Deed provided for the payment and treatment/investment of the Security Amount. It is not necessary to consider these provisions.

Clause 3 of the Deed contained an acknowledgement and agreement by the Grantee (the Purchaser) that the Disclosure Statement (defined as the disclosure statement in accordance with s 66M [sic; s 66ZM] of the Conveyancing Act with the additional words in parentheses “as amended in accordance with this deed”) was provided by the Grantor (the Vendor) as required by the Conveyancing Act and that the Grantee had read and understood the Disclosure Statement and must not make any objection thereto.

Clause 4, headed “Condition Precedent” provided that if the Grantor (i.e., the Vendor) had not satisfied the Condition Precedent by the Sunset Date then the Grantor may rescind the Deed by notice to the Grantee. The Condition Precedent was defined in cl 1.1 as meaning registration of the Documents (defined as the Plan of Subdivision and the Subdivision Instrument (if applicable)). The Sunset Date was defined as 30 June 2023.

Clause 5 of the Deed, headed “Change of Documents”, provided:

Clause 1.1 of the Deed defined “Material Change” to include:

Clause 6 dealt with the Call Options. Pursuant to cl 6.3, “[p]rovided the Plan of Subdivision has been registered, the Grantor must give to the Grantee a Condition Precedent Notice”. Clauses 6.4 and 6.5 then provided for exercise by the Grantee of the Call Options in relation to the Nominated Lots and Remaining Lots, respectively. In summary, as to the Nominated Lots, the Call Option Period was the period commencing on the day 43 days after the date of the Deed and ending 21 days from the Condition Precedent in relation to the Nominated Lots. In relation to the Remaining Lots, the Call Option Period was the period commencing on the day 43 days after the date of the Deed and ending six months from the Condition Precedent in relation to the Remaining Lots.

Condition Precedent Notice was defined as meaning “a written notice or notices from the Grantor stating that the Condition Precedent has been satisfied together with: (a) copies of the registered Documents; and (b) if clause (b) applies in the definition of Conditions Precedent, notification of a Material Change to the Disclosure Statement”.

As the Purchaser did not exercise the Call Options, it is not necessary to consider further the terms of cl 6.

Clause 7 of the Deed dealt with the corresponding Put Option granted by the Grantee (the Purchaser) to the Grantor (the Vendor).

Clause 7.3 in its terms provided:

The italicised portions of cl 7.3 are the subject of the Vendor’s rectification claim. Clauses 7.4 and 7.5 (dealing, respectively, with how to deliver the items listed and the binding nature of the contract if the Grantor exercises a Put Option) contain obvious errors (in the references therein to cl 7.4) but there is no application for rectification of those errors.

Clause 14 contained the Guarantee and Indemnity provision, mirroring the Schedule 4 Guarantee and Indemnity in the draft contract.

On 6 December 2022, the Council issued a Subdivision Works Certificate pursuant to s 6.4 of the Environmental Planning and Assessment Act 1979 (NSW) for the Land which incorporates the Lots (the Subdivision Certificate). The works as identified in the Subdivision Certificate include reference to a document dated 1 December 2022 prepared by CDS entitled “Engineering Plans Drawing No 1201 CCST4 Sheets 1 to 52” (Revision/Version F).

Mr Richard King, a geotechnical engineer and founding director of GeoSmart Solutions Pty Ltd (GeoSmart), and formerly a senior principal engineer and national technical lead for Construction Sciences (CS) between 2017 and 2023, has deposed in his affidavit sworn 6 June 2023, to work undertaken by CS on the Land. Mr King has deposed that CS was engaged (by the Vendor) to assess whether localised existing filling had been placed in such a way that it met the requirements of the Council for “compaction, moisture content and RL [reduced level]” and to provide a site classification of the Land by reference to the proposed lots ([11]) following which civil works were undertaken. Mr King has deposed that, after he left CS in 2023, GeoSmart was engaged to continue providing such advice.

Mr King has deposed that between 16 February 2023 and 21 March 2023, CS carried out preliminary inspections/investigations on the Land “to sanity-check” the results of 142 compaction tests that had been performed by Douglas Partners within the higher western portion and part of the lower central portion of the Land (see [19]; [24] of his affidavit).

Mr King has deposed that, following “impact rolling” on the existing fill on the Land, carried out between about 21 March and 23 March 2023 by LandPac Technologies Pty Ltd (LandPac), CS carried out post-impact rolling investigations on the Land (see [26]-[27] of his affidavit).

Between 30 January 2023 and 29 June 2023, CS carried out Level 1 earthworks testing above the lower lying area of impact rolled fill and adjoining natural ground with localised areas of existing fill along a row of proposed lots as described at [33] of his affidavit (which land incorporates the Lots) and that the testing included (see at [34]) the inspection and approval of stripped services and full-time presence with compaction control testing during fill placement on the Land.

On 9 November 2023, CS issued a Level 1 site fill report. Mr King summarises the results set out in that report at [36] of his affidavit, stating that the results of 143 compaction control tests generally met the residential development Level 1 requirements of section 8.2 of AS 3798-2007 (the Australian Standard) for a minimum of 95% of SOMC (standard optimum moisture content).

Mr King has deposed that between July 2023 to August 2023, Zivil Earthmoving Pty Ltd (Zivil) placed shallow upper fill and regrade fill over validated impact rolled existing fill on part of the Land where then proposed lots 4009-4024 were to be (noting that CS was not contacted to test the fill during placement to see if it met the Level 1 requirements) (see [37] of his affidavit).

On 23 November 2023, CS provided a report concerning works undertaken by LandPac, which had been commissioned by Zivil to carry out impact rolling “across the footprint of uncontrolled fill” in two “super lot areas” (comprising lots 4009 to 4019 and 4020 to 4030, respectively).

On 19 December 2023, CS issued a Lot Classification Report. The report referred to the CS Level 1 Fill Report dated 9 November 2023 and the 23 November 2023 Remediated Fill Assessment Report (see above) and advised that “recent fill material placed to September 2023 over Lots 4020-4024 appears to have not been captured in the CS Site Fill report” and that CS had not yet been provided with sufficient supporting documentation to confirm that the minor remedial works it had recommended to Lots 4009-4024 had been carried out (see at [4.2]). As such, the Lot Classification Report advised that the affected Lots (Lots 4009-4024) were “classified in the interim as Class P (Problem) due to outstanding data”. The report stated that lots given this interim Class P assessment “can be reassessed following receipt of a controlled fill report and/or deemed-to-comply controlled fill assessment to confirm the above works were carried out in a controlled manner in accordance with AS3798-2007 … to give a classification other than P”. Lots 4001-4008 and 4038-4044 were given an H1 classification and Lots 4025-4037 were given an M classification. (I note that in the registered s 88B instrument, based on the classifications in this report, Lot 4025 is erroneously classified as “P”.)

The classifications prescribed by AS 2870-2011 and the Building Code of Australia, relevantly include moderately reactive sites (Class M), highly reactive sites (Class H1/H2) and reactive sites that are subject to abnormal moisture conditions or which cannot be otherwise classified (Class P). One reason that a site would be classified as Class P is if the site contains uncontrolled fill (see cl 2.1.3 of AS 2870-2011).

Meanwhile, on 30 November 2023, the then General Manager of Sales for Rawson Group, Mr Andrew Guesdon, noted in an internal email to, among others, Mr Hendry and Mr Trapps, that the market conditions in Braemar had “softened” since entry into the Deed.

In an internal memorandum dated 30 November 2023 to the Investment Committee, copied to Mr Trapps and another, Mr Guesdon referred to a visit he and Mr Trapps had made to the site of the Lots the previous day, noting that the developer was hopeful of Council sign off on the Subdivision Certificate in late Q1 of 2024. Mr Guesdon said that “[t]his will mean a Put to Rawson, Registration and Settlement of the lots in Q2 of ‘24’”. (Pausing here, logically exercise of the Put Options would only arise if there was no exercise of one or both of the Call Options. Therefore, Mr Guesdon’s statement that this would mean a “Put to Rawson”, must have meant that he anticipated or assumed that the Call Options would not be exercised. Mr Hendry, however, did not accept that any decision had been made at that time in relation to the Call Options – see his evidence below.)

Mr Guesdon said in the email that he had been “trying to get in front of the owner, a “Superfund”, to negotiate a different outcome, but that has been a challenge, so still working on it”. Mr Guesdon said that the perfect position (for Rawson) from the Vendor would be to “swap over to deeds so we never settle on the land and just spec the homes split the profit”.

On 23 January 2024, Mr Broadstock forwarded to Mr Trapps at Rawson an update from CDS to the effect that the Subdivision Certificate had been lodged with the Council; that final inspections by the Council of the site works had been completed and that final sign off of works was hoped to be achieved over the next week or so.

On 6 and 26 March 2024, GeoSmart investigated and assessed shallow compacted fill placed to finished level on lots 4020-4024 (see [44]-[46] of Mr King’s affidavit) and on 23 April 2024, GeoSmart issued a report, assessing the additional fill compaction on the Properties (the Lots) as generally meeting the Level 1 requirements of s 8.2 of the relevant Australia Standard (AS 3798-2007) (see Mr King’s affidavit at [47]). The following day, GeoSmart issued a further report, re-assessing the interim “P” soil classifications prescribed for lots 4009-4024 in the CS Report as instead being final soil classifications of “H1” (affidavit at [48]).

Mr Knox has deposed (in his affidavit at [8]) that, on 5 May 2024, he received a text message from Mr Guesdon, in which Mr Guesdon advised that the Rawson Group had no financial support from Daiwa House (presumably, a reference to Daiwa House Australia Pty Ltd, which is the sole shareholder of the second defendant which in turn is the sole shareholder of the first defendant) (see the ASIC searches in evidence). Mr Hendry explained in cross-examination that the parent entity of Rawson Homes is Daiwa House Australia which in turn is owned by the Japanese Daiwa House entity (see 13/11/25; T 78.29).

In that text message, Mr Guesdon referred to a “sting’” [(sic; string)] of massive losses and said that “[s]o there is no money in CY24 (Japanese FY). My primary goal is to keep Rawson Group going into CY25…”. Mr Guesdon added that “As you said there is a deal here somewhere for both of us to move as much settlement as we can to CY25 I feel we can make it work for both of us”.

Mr Knox has also deposed (at [9]) to a telephone conversation later that day with Mr Guesdon, in which the latter advised him that he was brought in by Rawson in May 2023 to “fix a mess”; that Rawson had encountered a string of massive losses and had recently lost backing from Daiwa House and that Rawson “does not have the money for settling on Stage 4 Nattai Ponds at this time”. According to Mr Knox, Mr Guesdon asked to defer settlement until 2025 (either for the whole of the lots or for half of the lots). Mr Knox rejected that request. (Mr Guesdon did not give evidence in the proceedings as he died shortly after this conversation on 25 May 2024.)

As to the financial position of the Rawson Group in 2022, Mr Hendry gave the following evidence (13/11/25; T 78):

Mr Hendry accepted that there was also a debt to equity conversion that happened in 2022. Mr Hendry did not directly answer a question as to whether he was told that Daiwa House would not be making any further cash injections into the business, saying instead that, by May 2024, there had been discussions with the housing division that “they needed to show that they could perform” (13/11/25; T 79).

On or about 27 May 2024, the final plan of subdivision and the s 88B instrument were registered. The site classification for eight of the Lots, referable to the CS report, was “P” (Lots 4013-4017, 4023-4025). (Pausing here, the “P” classification for Lot 4025 is inconsistent with the “H1” classification it was given in the December 2023 Lot Classification Report.) Another five lots were classified “M” (Lots 4026-4027, 4031-4033) and seven were classified “H1” (Lots 4038-4044).

As I understand it, the presence of fill and its effect on the reactiveness of the soil, particularly to moisture, determines the extent to which a footing system is required to be ‘engineer designed’ for the construction of a residential home to secure its stability and foundation.

On 28 May 2024, the solicitors for Boardman, HWL Ebsworth (HWLE), issued a Condition Precedent Notice pursuant to the Deed, addressed to Rawson Legal Department, advising that the plan of subdivision had been registered and enclosing by way of service, the Deposited Plan and the s 88B instrument for the Deposited Plan. As noted above, the s 88B instrument contained site classifications for the Lots (variously M, H1 and P).

The Condition Precedent Notice advised of the procedure for, and time within which, the Call Options could be exercised (on or before 18 June 2024 for the Nominated Lots; on or before 28 November 2024 for the Remaining Lots).

On 5 June 2024, the solicitors for the defendants, Marsdens Law Group (Marsdens), “urgently” requested a copy of the CS report referred to in the s 88B instrument in relation to the Restriction on Use of the Lots.

In response to that request, on 6 June 2024, HWLE provided Marsdens with: the 19 December 2023 CS report (headed “Nattai Ponds Stage 4, Isedale Road, Braemer, Lot Classification – Proposed Residential Subdivision”) and the 24 April 2024 GeoSmart report (headed “AS870: 2011 Lot Classification Update – Lots 4009 to 4024, Nattai Ponds, Stage 4, Braemar, NSW”).

By letter dated 6 June 2024, Marsdens stated:

On 12 June 2024, HWLE served on Rawson Legal Department a document headed “Notice of Changes – Off the Plan Contracts”, in the standard form document approved for the purposes of s 66ZN of the Conveyancing Act (Notice of Change).

The approved form included an “IMPORTANT NOTICE TO PURCHASER”, in a shaded box at the top of the Notice, which stated that:

As to the details of change(s), the form was completed so as to state that the Vendor had become aware that the Disclosure Statement attached to the contract “Has become inaccurate, in relation to a material particular, after the contract was signed”. The change was identified by reference to Annexure A, which set out the site classifications for the “re-specified” lot numbers; and was identified as a change relating to a material particular in an “easement or covenant”.

The Notice contained a pro forma note, as follows:

On 14 June 2024, Marsdens served a notice of rescission under cl 5.3(b) of the Deed (the Rescission Notice) executed by the first defendant. Marsdens’ letter recorded its instructions that “by virtue of the changes to the Section 88B instrument set out in the Notice of Change (Material Change)”, its client would not have entered into the Deed had “they” been aware of the Material Change and would be materially prejudiced by the Material Change by proceeding with the exercise of the Option. An immediate refund of the Security Amount was requested.

The defendants here assert that, by the Rescission Notice, the Purchaser rescinded the Deed pursuant to cl 5.3(b) of the Deed or Div 10 (including s 66ZO) of the Conveyancing Act or s 243 of the ACL; and by their cross-summons they seek a declaration to that effect.

By letter dated 24 June 2024, HWLE asserted that the purported notice of rescission was invalid and that the Deed remained in effect. HWLE asserted that the Purchaser had conflated the concept of change to the Disclosure Statement and a Material Change, arguing that the Notice of Change notified that the site classification in the draft s 88B instrument “which was incomplete at the date of the Deed” had now been completed and that, for the purposes of cl 5.2(a) [sic] of the Deed, the Purchaser had been notified of a change to the Disclosure Statement. The letter further asserted that if the Notice of Change, was a notice given under cl 5.3(a), the Notice of Change was not a Material Change (as defined in the Deed). The letter stated the Vendor’s position, simply put, as being that a document which was (and was known by the Purchaser to be) incomplete was completed.

Further, or in the alternative, the letter stated that the Notice of Rescission was ineffective in that it failed to particularise what was different or what was relied on as the material prejudice.

HWLE asserted that the purported rescission of the Deed amounted to a repudiation of the Deed but made clear that the Vendor elected to continue with the Deed.

Having referred to the text message sent by Mr Guesdon to Mr Knox (see [80]-[81] above) the letter further asserted that the purported Rescission Notice was not given in good faith but was given for a purpose for which the Deed did not recognise, stating that “Your client’s obligation to comply with the Deed does not depend on how your client now wants to spend its funds”. (Pausing here, the defendants’ motivation for rescinding the Deed is in my view irrelevant – if there was a right to rescind in the circumstances that had transpired, it was open to them to rescind it. There is no allegation that the defendants were obliged to act in good faith when deciding whether to rescind; nor would such an allegation have any obvious merit in the absence of an express obligation of good faith in the Deed.)

By letter dated 2 July 2024, HWLE served on behalf of the Vendor, a Notice of Exercise of Put Option, enclosing two executed contracts for sale (the first for 14 of the 20 Lots and the second for the remaining six Lots). (Pausing here, no issue was taken at the hearing as to the timing of exercise of the Put Option in respect of the Remaining Lots although, as noted earlier, the Call Option Period for those Lots would not have expired until 28 November 2024 – see [88] above. It may be that the answer to this lies in the Rescission Notice being treated as a repudiation of the Deed, albeit one which the Vendor did not accept, and hence in some way as triggering an entitlement to exercise the Put Options for those Lots earlier than the expiry of the Call Option Period for the Remaining Lots. However, as this issue was not raised during the hearing, I do not speculate any further on it – and in light of my conclusion as to the outcome of the proceeding nothing turns on this.)

The Purchaser failed to deliver executed counterparts of the contracts of sale or comply with the requirements of the Deed in relation to payment of the balance of the deposit for the Lots, leading to a letter dated 17 July 2024 from HWLE alleging that the Purchaser was in breach of the Deed. Marsdens disputed the allegation of breach and asserted that the Deed was validly rescinded effective on 14 June 2024 (see letter dated 23 July 2024).

On 25 July 2024, as noted above, the Vendor commenced these proceedings. By its summons the Vendor seeks, relevantly, the following relief.

By prayer 1, rectification of cl 7.3 of the Deed to replace “Nominated Lot Put Option Period” wherever appearing with “Nominated Lots Put Option Period”, to replace “the Grantee and, if applicable the Guarantor” in cl 7.3(a) with “the Grantor”, and to replace “Notice of Exercise of Call Option” in cl 7.3(c) with “Notice of Exercise of Put Option”.

By prayer 2, a declaration that the Notice of Rescission is void and of no effect.

By prayer 3, an order for specific performance by the Purchaser of the “contract” for sale in respect of the Lots by the first defendant paying the balance of the deposit ($1,170,000 together with interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) (Civil Procedure Act) on and from 10 July 2024); delivering a signed counterpart of the contract to the plaintiff; and paying the remainder of the contract sum under the contract. (In the orders finally sought, the Vendor seeks specific performance of the two contracts it contends came into existence on exercise of the Put Option.) The Vendor also seeks costs and interest on costs pursuant to s 101 of the Civil Procedure Act.

By prayer 6, the Vendor seeks an indemnity from the Guarantor for any amounts recoverable from the Purchaser.

I note that in the final proposed orders handed up for the Vendor at the conclusion of the hearing, a declaration is also sought to the effect that binding contracts came into existence on 2 July 2024 between the Vendor, the Purchaser and the Guarantor for the sale of the Lots in the form annexed to the letter dated 2 July 2024 from HWLE to Rawson Legal Department and, to give effect to the order sought for specific performance of that “agreement”, that an order be made providing for the mechanism by which completion of the sale is to occur.

The final proposed orders also provide for a declaration that the Guarantor guarantees the performance of the obligations of the Purchaser under the contracts the subject of the declaration sought by order 2; and an order that, in the event that the Purchaser defaults in compliance with the proposed order, for it to tender the sum certified as payable on completion, then the Guarantor attend at the time and place fixed for completion and tender to the Vendor the sum certified.

In their response to the summons, the defendants do not oppose the rectification of “Nominated Lot Put Option” in cl 7.3 but they do oppose the rectification sought in prayers 1(b) and (c) of the summons (the second and third aspects of the claim for rectification as referred to at [105] above) on the basis that the Vendor has not explained the basis on which rectification is necessary. The defendants oppose order 2 of the summons (the declaration sought as to the invalidity of the Notice of Rescission), contending that, by the issue of the Notice of Change (which was expressed to be pursuant to s 66ZN of the Conveyancing Act), the Vendor irrevocably acknowledged that the change was a Material Change as defined by cl 1.1 of the Deed, and/or alternatively, a change under Div 10 of the Conveyancing Act and the Vendor is estopped from denying that the change was one which gave rise to a right to rescind. The defendants contend that the Purchaser, by the Vendor giving the Notice of Change, was entitled to, and did, validly rescind the Deed pursuant to cl 5.3(b) of the Deed and/or s 66ZO of the Conveyancing Act and/or Div 10 of the Act. The defendants oppose order 3 of the summons (specific performance) for the same reasons and for the reasons set out in the cross-summons. No issue is taken in the response to summons or at the hearing as to the timing of exercise of the Put Option (other than that the defendants’ position is that it occurred after rescission of the Deed).

The defendants oppose order 4 and order 5 (costs and interest on costs).

The defendants oppose order 6 (then on the basis that the Vendor has no claim against the Purchaser; that the Purchaser is not in breach of the Deed and has no obligations under the Deed and that, in the circumstances, the Guarantor is not liable to guarantee the performance of the Purchaser under the Deed or to indemnify the Vendor for any loss suffered). Further, the defendants contend that if the Purchaser is liable to perform any obligation under the Deed, it is not in breach and the Court should permit it a reasonable period of time to perform any obligation under the Deed following determination of this matter, and if those obligations are performed, the Vendor has no claim against the Guarantor.

By its amended cross-summons, the Purchaser claims the relief adverted to in the response to summons, seeking: prayer 1, a declaration that the Notice of Rescission validly rescinded the Deed; prayer 2, further or in the alternative, a declaration that on the proper construction of the Deed and in the events that happened (referring to the Notice of Change), there was a Material Change disclosed in the Notice of Change; that the disclosure was a Material Change and the Vendor irrevocably acknowledged as such by the Notice of Change; that the giving of the Notice of Change entitled the Purchaser to rescind in accordance with cl 5.3(b) of the Deed or s 66ZO of the Conveyancing Act; and that a valid notice of rescission was given in response to the Notice of Change.

By prayer 3, the Purchaser seeks a declaration that the Vendor is estopped from denying that the disclosure identified in the Notice and contained in the registered easement provided is a Material Change giving rise to a right to rescind and that the rescission in response to the Notice is a valid rescission.

By prayer 4, further and alternatively, the Purchaser seeks a declaration that the registered easement provided after entry into the Deed contained terms which: were not disclosed in the Deed and the Purchaser would not have entered into the Deed if it had been aware of the conditions contained in the easement; and materially prejudiced the Purchaser.

By prayer 5, the Purchaser seeks a declaration that by reason of s 66ZU of the Conveyancing Act, to the extent that cll 3, 5 and Schedule 1 of the Deed have the effect of excluding, modifying or restricting the requirements of Div 10 of the Conveyancing Act, they are void and of no effect.

By prayer 6, the Purchaser seeks an order requiring the Vendor to repay the deposit or option fee in the amount of $600,000.00: by way of specific performance of the provisions of the Deed; or in accordance with s 66ZR of the Conveyancing Act; or alternatively, damages in that amount for breach of the Deed. By prayer 7, the Purchaser seeks, alternatively, an order pursuant to s 55 of the Conveyancing Act that the Vendor pay to the Purchaser the sum of $600,000.00, being the option fee paid by the Purchaser under the Deed.

By prayer 7A, the Purchaser seeks a declaration that the Vendor engaged in conduct which was misleading and deceptive, or likely to mislead or deceive, in contravention of s 18 of Schedule 2 of the ACL in that, on the events that happened:

In essence, the complaint as framed seems to be that the CDS Plans showed a different civil engineering “programme” which the defendants say, if altered, would materially change the likely outcomes in respect of the construction required for footings on the Lots and the requirements of the Council. Consistently with this, the current CEO of the defendant, Mr Hendry in his second affidavit deposed to the significance of the limited scope of cut and fill in the proposed civil works (as he read the CDS Plans) to his decision to approve entry into the transaction – see below.

By prayer 7B, the Purchaser seeks an order under s 243 of the ACL that, by reason of the contravention of the Act, the Deed be declared void or voidable; and by prayer 7C, the Purchaser seeks an order that the Purchaser has, by its Rescission Notice avoided the Deed.

By prayer 7D, the Purchaser seeks an order under s 237 of the ACL that the Vendor pay it the sum of $600,000.00, being the sum of the deposit paid under the Deed.

The Purchaser seeks interest pursuant to s 100 of the Civil Procedure Act from 15 June 2004 to the date of the order.

In the Vendor’s amended response to the cross-summons, the Vendor opposes the relief sought. The Vendor contends that the Deed was an option to purchase residential property within the meaning of Div 9 of the Conveyancing Act and that Div 10 of the Act does not apply to the Deed as the Purchaser was never required to purchase off the plan. The Vendor contends that: the Notice of Rescission did not rescind the Deed; the Vendor by its conduct affirmed the Deed and required completion of the contract contemplated by the Deed; there was no Material Change to the matters required to be disclosed by the Deed; and the Purchaser has not been materially prejudiced by the terms of the registered easement. The Vendor also contends that the Notice of Change did not identify a “Material Change” as that term is used in cll 1.1 and 5.3 of the Deed.

In further response to prayer 7A, the Vendor denies engaging in any conduct that was misleading or deceptive, or likely to mislead or deceive, asserting that: (a) the preparation of the CDS Plans was not commissioned by or on its behalf; (b) the CDS Plans were not provided by or on behalf of it (saying that, if the CDS Plans were provided to Mr Broadstock, they were not provided to him or others by representatives of the Vendor but instead were provided on behalf of the former owners of the land that was later subdivided to create the properties the subject of the Deed prior to the Vendor becoming the registered proprietor); (c) Mr Broadstock is not, and was at no material time, a representative of the Vendor; (d) in the circumstances the Vendor did not make the Representations; and, (e) if and to the extent that the Purchaser relied on the Representations in entering into the Deed, the reliance on the Representations was not reasonable.

In reply to that response, the Purchaser: says that, to the extent that the Vendor alleges that Div 10 of the Conveyancing Act does not apply to the Deed, then, on the proper construction of the Conveyancing Act including s 66ZU, the Deed to the extent that it seeks to exclude, modify or restrict the operation of Div 10 is void (1); repeats the allegation as to estoppel made by reference to the Notice of Change (2); and contends that the Vendor is not entitled to specific performance in circumstances where it does not come before the Court with clean hands (3).

That last (unclean hands) contention is made by reference to the following circumstances: that, at the time the s 88B instrument was registered, the Vendor had in its possession a report which purported to classify some, or all, of the lots as H1 and not M and/or P; did not amend or seek to vary the s 88B instrument to reflect the “purported amended lot classifications for all lots as H1”; served the Notice of Change at a time when it had in its possession the said report; and required the Purchaser to make an election to rescind the Deed on the basis of the Notice of Change, which was different to and otherwise inconsistent with reports the Vendor had in its possession at the time.

It is convenient at this stage to set out the relevant provisions of the Conveyancing Act in relation to “off the plan” contracts, since the defendants rely on these provisions for the alternative way in which they contend that the Rescission Notice was valid.

Division 10 of the Conveyancing Act regulates off the plan contracts. Section 66ZL defines “off the plan contract” to mean “a contract for the sale of a residential lot (the subject lot) that has not been created at the time the contract is entered into”.

Section 66ZM of the Conveyancing Act provides:

Regulation 13 of the Conveyancing (Sale of Land) Regulation 2022 (NSW) (Regulations) prescribes those documents included in Schedule 1, Part 2 of the Regulations, including:

Section 66ZN of the Conveyancing Act provides:

Section 66ZO provides:

As can be seen from the above, the language of s 66ZN is that of a notice of change by reference to inaccuracy “in relation to a material particular”; rather than, as provided for under the Deed, a “Material Change”. “Material particular” is defined in s 66ZL, non-exhaustively, as including (relevantly) (c) “an easement or covenant that will, or is likely to, adversely affect the use or enjoyment of the subject lot”.

By reference to the case as framed by the parties in their respective summons/cross-summons and responses thereto, the issues arising for determination can be articulated as follows.

First, whether the Purchaser validly rescinded the Deed pursuant to cl 5.3(b) of the Deed by the Rescission Notice issued in June 2024. The Vendor concedes that, if there was a valid rescission of the Deed, then the Purchaser is entitled to recover the Security Amount though it does not concede that such amount would be recoverable in accordance with s 66ZR of the Conveyancing Act or as damages for breach of the ACL (see the fifth issue below) as the defendants contend.

Whether the Deed was validly rescinded pursuant to the Deed requires consideration of whether the inclusion or specification of the soil classifications in the registered s 88B instrument (in place of the question marks in the draft s 88B instrument which was attached to the Disclosure Statement) is either a Material Change (as defined in cl 1.1 of the Deed) or the Disclosure Statement is deemed inaccurate as a result of a Material Change (again as defined in cl 1.1 of the Deed). This, in turn, requires determination of whether: first, the Purchaser would not have entered into the Deed had it been aware of the change in the Disclosure Statement and, second, whether the Purchaser would be materially prejudiced by the change in the Disclosure Statement.

The defendants, in both the response to summons ([2](c)) and in the Purchaser’s cross-summons ([2](d)), identify the “Material Change” as being notification that (a) a “material particular” in the draft easement [sic; instrument] had become inaccurate (adopting the wording used in Div 10 of the Conveyancing Act) and (b) the new registered easement affecting the land the subject of the Deed was subject to site classifications not previously contained or disclosed in the Deed and the effect of the registered easement was that the registered proprietor must ensure that no structure constructed on any such lot is designed and constructed unless it utilises a suitable footing system taking into account the relevant site classification.

Second, whether the Deed is an “off the plan contract” to which Div 10 of the Conveyancing Act applies and, if so, for the purposes of s 66ZO of that Act, whether the change notified in the Vendor’s Notice of Change, is a change that rendered the Disclosure Statement inaccurate in relation to a material particular such that the Purchaser (a) would not have entered the contract had it been aware of the change and (b) would be materially prejudiced by the change (requiring the giving of notice pursuant to s 66ZN of the Conveyancing Act). Related to this, is the issue raised by the declaration sought in prayer 5 of the cross-summons as to whether cll 3, 5 and Schedule 1 of the Deed have the effect of excluding, modifying or restricting the requirements of Div 10 of the Conveyancing Act and are to that extent void and of no effect.

Third, and related to one or both of the above, whether the Vendor, by the Notice of Change, irrevocably acknowledged that there was a Material Change as defined by cl 1.1 of the Deed and/or a change under Div 10 of the Conveyancing Act and is estopped from denying that the disclosure identified in the Notice of Change is a Material Change giving rise to a right to rescind (and hence from denying the validity of the consequent rescission by the first defendant).

Fourth, whether there should be an order for rectification of the Deed (other than as conceded by the defendants in relation to the first aspect sought in respect of cl 7.3(a)).

Fifth, whether the Vendor engaged in conduct which was misleading and deceptive, or likely to mislead and/or deceive, in contravention of s 18 of the ACL and, if so, the relief to be granted as a result of that contravention (the defendants seeking that the Deed be declared void or voidable and claiming damages by way of recovery of the $600,000.00 Security Amount). Whether there was a contravention as contended requires consideration of the position of Mr Broadstock as well as what was represented by the CDS Plans and whether it was reasonable for the Purchaser (to the extent that it did) to rely on those representations when entering into the Deed.

Sixth, whether, if the Rescission Notice was not valid to rescind the Deed, the Vendor is not entitled to specific performance on the basis that it has unclean hands.

I note that in submissions at the hearing a further issue was raised by the defendants as to the ability of the Vendor to obtain specific performance against the Guarantor (relying on my decision in Toma v Taylor Square TT Pty Ltd [2024] NSWCA 304 at [118]-[119] (Toma)). Although not raised in the defendants’ response to the summons, that issue can be readily disposed of as I address in due course.

The Vendor adduced lay evidence from Mr Knox (his affidavit sworn 3 June 2025) and from Mr King (his affidavit sworn 6 June 2025); and expert evidence from Garry Mostyn, a Geotechnical Engineer (his Geotechnical Expert Opinion Report dated 5 June 2025) (Ex A).

Mr Knox deposed to his receipt of the communication from Mr Guesdon on about 5 May 2024 and to his telephone conversation with him later on about 5 May 2024. Those portions of his affidavit were read subject to relevance.

In the witness box, Mr Knox was forthright and matter of fact. He did not shy away from conceding that his recollection of certain events might be poor, nor (more importantly, insofar as this might be perceived to be contrary to his case) from accepting that he authorised the real estate agent to make the CDS Plans available to potential purchasers. I accept he was a witness of truth.

Mr Knox accepted (13/11/25; T 39.46) that CDS “was the company that [he] on behalf of Feldkirchen and then on behalf of Boardman instructed to do the engineering work in relation to the development of the Nattai Ponds stage four”.

As to the role of Mr Broadstock, Mr Knox said:

Further, at 13/11/25; T 41.27, there was the following exchange:

As to the fact that the email from Mr Anderson to Mr Broadstock, sending a copy of the CDS Plans, was copied to him, Mr Knox said: (13/11/25; T 42)

As to the telephone conversation with Mr Guesdon, to which he had deposed, Mr Knox accepted that there had been two telephone calls but in his affidavit he had referred to only one and that there was no reference to him saying (as Mr Guesdon’s email suggested) that there was “a deal here somewhere” for both of them (13/11/25; T 43). Mr Knox also accepted (as adverted to above) that his recollection of the conversation could be poor (13/11/25; T 3). Mr Knox described Mr Guesdon as “a very polite, gentlemanly sort of fellow” and said he (Mr Guesdon) was trying to do his best for his employer or contractor for whom he was working.

Mr Knox said that the s 88B instruments were handled by the superintendent on the site (Mr Anderson of CDS) (13/11/25; T 45). He said that as far as he knew the s 88B instruments used in relation to the sites for the overall development were “standard”.

Mr King, as noted above, deposed to the work in which CS and then GeoSmart were engaged in assessing the localised existing fill on the Land and the provision of a site classification for the Land by reference to the proposed lots. Mr King extracted the relevant part of AS 2870 for the nomenclature for site classification and stated that in his experience s 2 of the Australian Standard allows for sites with controlled fill that is not classified as one of the six soil classifications (A, S, M, III, II2 and E) to be given a “P” (problem) classification and then given an alternative classification in accordance with Table 2.1 of the Standard, if subsequently assessed in accordance with engineering principles such as estimated movement of fill and underlying soil from time of construction to long term equilibrium moisture conditions. Mr King also deposed to the matters referred to earlier in the chronology of events as to the reports issued by GeoSmart.

In cross-examination, Mr King explained that normally a technician (rather than a geotechnical person) would be present during “Level 1” inspection and testing (13/11/25; T 48.47). He said that there were some records relating to the placement of fill (by Zivil) that were able to be reviewed but that what could not be assessed at that stage (i.e., at the stage of the CS Report) was what was required for a Level 1 inspection (13/11/25; T 49). Mr King explained that the “Class Ps” were interim in the absence of “some final data that Zivil had forgotten to arrange in terms of test results” and said that “with some additional work, GeoSmart was able to assess the fill that was missed by Zivil and CS” (13/11/25; T 50). Mr King accepted that the reclassification of the site was significant or worth doing because it affected the appropriate way to build on those particular lots (13/11/25; T 50).

As to the reference in his affidavit to there being an assessment that was “deemed to comply”, Mr King explained (13/11/25; T 52) that:

Mr King confirmed that:

Mr King gave evidence that GeoSmart was asked to submit a proposal to carry out the work to finalise the classifications, that he thought one or two other companies provided a proposal and that GeoSmart’s proposal was accepted and it carried out the work.

In re-examination, Mr King said, as to the reference in the report to “recent fill material”:

Mr King confirmed his understanding that one of the bases on which soil can be given a “class P” is if it is not possible, at the point of time, to give it a different classification; and said that he had reviewed the (CS) report and accepted that he understood it to be conveying that the lots that had been given a “class P” classification in this instance was because there was insufficient information to give them a different classification.

I have no reason to doubt Mr King’s evidence. Mr King readily conceded that the “deemed to comply” language was his own (based, it is evident, on his understanding of the relevant Australian Standard).

The defendants adduced lay evidence from Mr Neil Smart, the General Manager – Construction of the second defendant, by his affidavit sworn on 21 November 2024; from Mr Hendry (who as noted already was the CFO at the time of entry into the Deed but by the time of the hearing, its Chief Executive Officer), by affidavits sworn 28 November 2024 and 3 April 2025; and from their solicitor, Mr Bharath Balasubramanian (by affidavit affirmed 2 April 2025); and expert evidence from Mr Wong (tendering an Expert Report dated 12 December 2024, Ex 1 and an Expert Report in Reply dated 16 October 2025, Ex 2).

Mr Smart, who was not required for cross-examination, deposed to having some 44 years’ experience in the construction industry. Mr Smart explained the site classifications which are associated with the reactivity of the site (at [15]), noting that the worst is a “P” class site, as follows:

Mr Smart deposed (at [16]) that in his experience the practical effect of building on a more reactive site is that a builder can reasonably expect that there will be increases in: the amount of work required to construct the dwelling; the level of consultation required with third parties; and the level of design required for key construction elements; the costs of the works overall; and the management of future risks. Mr Smart gave an explanation of this at [17]-[22] and opined at [23] that the cost “to pier” a site will be higher when the subject lot has a higher soil reactivity classification such as a “H” or “P” classification. Mr Smart also deposed (which was only read as a submission) to matters relating to warranties given by Rawson Homes (“the building entity”) to customers under the Home Building Act 1989 (NSW) and to the requirements of the Design and Building Practitioners Act 2020 (NSW) (see [24]-[31]). I accept his evidence.

Mr Hendry, in his first affidavit, explained his various roles within the Rawson Group and the construction work undertaken by the Rawson Companies (see [9]-[18]). He also deposed that the late Mr Guesdon, who died on 25 May 2024, reported to him in the performance of his role as General Manager Sales ([19]-[21]).

Mr Hendry also explained the process for presentation of papers to the Executive Committee for approval ([25]-[30]). At [31], Mr Hendry deposed that from his experience within the residential building industry and from his role in overseeing the acquisition of land for residential construction for the Rawson Companies, it was standard industry practice and understanding that the building conditions of the land (when delivered) will suit a standard residential build process “which includes an M class soil classification, unless expressly notified otherwise by a vendor” and that it is on that basis that all financial calculations are made in terms of the cost base, which is then assessed against housing market prices for the location to determine the feasibility of the project. Mr Hendry deposed that it was not uncommon that little information is known about the land and not uncommon for land to be acquired in the absence of expensive geotechnical assessments.

Mr Hendry deposed to the position of those employees involved in the transaction who were not called to give evidence, explaining (at [36]) that Ms Maude left the employ of the Rawson Group around 29 January 2022, Mr Trapps around 24 February 2024 and Mr Leeson (who he said had recently taken a job in Switzerland) around 26 January 2023. Mr Hendry identified those as the employees who were primarily involved in the purchase of the Lots. Mr Hendry did not refer to the current position of Mr Roddam.

Mr Hendry deposed that he was not aware of any lot classification report being provided to the defendants prior to entry into the Deed. From his review of the defendants’ records, he deposed that the only document that he was aware had been provided to the defendants concerning cut and fill to the Lots was the “Nattai Ponds Stage 4 Plan of Internal Civil Works” document, referring to the two sheets which he said were in relation to “limited cut and fill” ([40]). He deposed at [48] that the defendants were aware that some cut and fill would be completed but only to a portion of the lots in question and not across the whole site, referring to those sheets of the Plan (see as reproduced at [21] above for the first of those pages).

Mr Hendry recalled in around November 2023 discussing with members of the Rawson Companies, including Mr Guesdon, the current position of the housing market including in the location of the Lots ([53]); and to having directed Mr Guesdon to consider the Deed and proposed acquisition terms and to explore the options available to the Rawson companies ([55]).

Mr Hendry deposed at [70] that:

Mr Hendry further deposed that at the time the Deed was rescinded, the Purchaser “could have completed on the Deed and would have issued a call option following receipt of the Condition Precedent Notice” but for the service by the Vendor of the Notice of Changes and the Deed being rescinded ([84]). Mr Hendry gave evidence that, since the rescission, the Rawson Group had acquired other properties and reallocated the funds allocated for the acquisition of the Lots to other projects (see [85]-[87]).

In his second affidavit, Mr Hendry referred to various email communications and deposed at [20]-[21] that:

Pausing here, it is evident from the above that Mr Hendry ultimately posited two circumstances of which, had he had knowledge at the time, would have caused him to oppose entry into the transaction: first, the Lot Classifications and, second, the scope of the cut and fill works as disclosed (more accurately, I would say, as he understood them to be disclosed) in the CDS Plans. In cross-examination (see below) Mr Hendry explained that it was a combination of those matters that (had he had knowledge of them) would have caused him to oppose the transaction.

In cross-examination, Mr Hendry said that Ms Maude was working for Mr Trapps and that Mr Trapps was working for Mr Phillips. He said that the responsibility for sourcing and procuring land for these types of transactions was the responsibility of the “sales function” and that the responsibility to bring these types of projects to the Executive Committee was the responsibility of Mr Phillips (13/11/25; T 59). Mr Hendry accepted that, in considering the significance of the information the company had been given about the cut and fill to be done, he was relying on Mr Roddam and others to tell him if there was a problem or not (13/11/25; T 61).

Mr Hendry’s recollection was that the CDS Plans were included in the proposal paper presented at the executive leadership team meeting. He said that there were no minutes of the team meetings nor did he have any notes but he was adamant that he had reviewed all the papers distributed to the executive leadership team and that the report was included in those papers (13/11/25; T 61). Mr Hendry accepted that there were people in the team with particular responsibility for (and greater expertise than him with) geotechnical issues and that, if there was a problem, he would expect them to bring it to his attention (13/11/25; T 61-62).

Questioned as to whether he had paid particular attention to the geotechnical report, Mr Hendry first answered (in a circular way) that “I wouldn’t say I didn’t pay particular attention. I paid the same amount of attention to those documents as I do in the normal course of those executive leadership team meetings”, and then clarified that by saying:

Later, he said:

Questioned about the statement that the standard M classification was “our standard construction parameters”, Mr Hendry said that this was on the company’s website but he was not sure if in 2022, as part of the executive team constitution or instructions, or as part of any guidelines for employees, there was an assumption about the M standard written down somewhere and did not recall if the M classification was part of Rawson’s construction guidelines in 2022.

Taken to the email from Mr Roddam (see above at [32]) referring to the significant cut and fill all over the site (which email was not copied to Mr Hendry at the time), there was the following exchange:

Mr Hendry was taken to his affidavit at [20] where he deposed (in the context of the decision to enter into a put and call deed for 14 lots) that he had voted in favour of the transaction “having considered the scope of works disclosed in the CDS drawings and the limited cut & fill which would impact only some, and not all, of the lots”. (He made no mention there of any assumption as to the soil classifications influencing his decision.) There was the following exchange (13/11/25; T 65-66):

Mr Hendry maintained his reliance on [20] of his affidavit and there was the following exchange:

It was then clarified with Mr Hendry that, at the first executive leadership meeting to consider the proposal, the executive paper referred to a recommendation for 19 [sic; in fact, 20] lots and there was the following exchange:

Mr Hendry’s belief was that there was then a circular resolution in relation to the proposal to acquire 14 lots (after the six railway line lots were removed), though no such resolution was in evidence. Mr Hendry gave the following evidence:

As to the email communication between Mr Knox and Mr Guesdon and the conversation to which Mr Knox had deposed in which there was reference to the market softening, Mr Hendry said:

As adverted to earlier, Mr Hendry resisted the proposition that there had been a decision taken by the time of Mr Guesdon’s email that Rawsons would not activate its Call Option(s). Mr Hendry was adamant that the trigger for requesting the Material Change notice was the updating of the s 88B instrument and the classification of the Lots. Mr Hendry denied that he saw the s 88B instrument as an opportunity to get out of the Deed.

Mr Hendry could not recall any discussion within the Rawson Group as to the “pros and cons” of the “P” classification and confirmed that there was no Executive Committee minute referring to a decision to rescind the Deed. Mr Hendry did not recall any discussion about the possibility of reclassifying the “P” classifications to “H1”.

Mr Hendry said that, in the general course of the Rawson Group’s business, it is known that a “P” classification is a significant issue and adds significant costs to the construction process. There was then the following exchange: (13/11/25; T 78.19-26)

I consider in due course, Mr Hendry’s credibility as a witness.

Mr Balasubramanian’s affidavit dealt with his communication with Mr Broadstock, who he said was unable to assist in providing any emails relating to the subject of the proceeding and who Mr Balasubramanian says told him he did not have any contractual relationships with the defendants or the Vendor ([5]).

As noted above, expert evidence was given by two Geotechnical Engineers, Mr Mostyn and Mr Wong.

Mr Wong in his report in reply, identified the following areas of disagreement with Mr Mostyn:

The experts participated in a conclave on 13 November 2025 and produced a short joint report (Ex C), identifying the areas of agreement and disagreement between them. Broadly speaking, among other things they agreed on the technical matters pertaining to site classification according to the relevant Australian Standard; that there was existing (historic) fill on the site; that the site classification was to be assessed following completion of the earthworks; and that, post the CDS earthworks, where the combined thickness of the historic fill and new fill is less than or equal to 0.4m, the area may be reclassified in accordance with AS 2870-2011, provided that all footings are founded on natural soil through the filling but elsewhere the site classification would be Class P. They also agreed that experienced developers and builders understand that “a Class P site classification is a problem”.

The experts in the joint report identified two areas of disagreement:

The experts gave their oral evidence concurrently.

As to the difference in views as to whether a lay person would be able to discern the presence of historical fill over the site, Mr Wong said that a person would not necessarily want to know about the presence of historical fill over the site (because that would probably receive a P classification) saying that if a person is aware that earthworks are going to be carried out in accordance with a particular specification that would enable a reactive site classification and would not necessarily be a P classification.

Significantly, Mr Wong made clear (in evidence that clearly came as a surprise to Senior Counsel for the Vendor and surely also came as a surprise to Counsel for the defendants since it squarely contradicts their case on misleading and deceptive conduct) that the CDS Plans indicated earthworks other than those shaded green on the page of the plan to which Mr Hendry had referred (14/11/25; T 89-90) (see [21] above). Mr Mostyn agreed.

Mr Wong explained that the particular shaded green area (to which Mr Hendry had referred) on the CDS Plans showed the depth of cut and fill (in that area), saying that “I suppose it’s because there is a major amount of cut and fill to be placed there and so it’s shown - the colours give the different thicknesses”.

Mr Wong also explained that when he referred to a lay person he meant “a person without any geotechnical training”, saying:

As to what the CDS Plans indicated about the scope of the civil works to be done on the site, Mr Wong gave the following evidence:

As to the P classification, Mr Wong said:

As to the position of the Council if there was a reclassification by a geotechnical expert, there was the following exchange:

I address the issues identified above in turn.

The Vendor emphasised in opening oral submissions that the basis on which the defendants asserted a right to rescind was that the Disclosure Statement had been deemed inaccurate as a result of a material change, saying that the part (of cl 5.3 of the Deed) that is invoked in the defendants’ response to summons comprises the words “or the disclosure statement” is deemed inaccurate as a result of a material change (13/11/25; T 17.5-10). Counsel for the Vendor thus argued that the entitlement to rescind pursuant to cl 5.3 of the Deed requires a removal or replacement of a document which “hasn’t been invoked in the response to summons and would have its own difficulties” (13/11/25; T 17.5). The Vendor’s response to this was that the filling in of a blank document does not render the disclosure statement inaccurate.

The Vendor submitted that the original Disclosure Statement, with the draft s 88B instrument, was not inaccurate; rather, it accurately conveyed that the Vendor did not know what the site classifications were (see 13/11/25; T 17.12; see also from T 17.23). The Vendor submitted that it was plain from the draft instrument that the land was yet to be classified (because there were question marks in lieu of classifications), and that the instrument would be completed when that occurred. The Vendor argued that, when the classifications were subsequently inserted, the instrument was not “deemed inaccurate as a result of a material change”, rather, it was completed in the way that had been anticipated.

The defendants, on the other hand argued (see their response at 13/11/25; T 25.49) that the question marks (which they described as interrogative symbols not at the conclusion of a sentence) in the original Disclosure Statement are meaningless and convey (and should be treated as) “nothing”. They argued that the “Material Change” is that in the draft Disclosure Statement, as “no foundation is prescribed and no enforceable covenant is identified” whereas now one is identified (and they contend that the change is materially adverse). In other words, the defendants argued that the change is one from no footing system having been identified to having a registered s 88B instrument with a series of site classifications, something enforceable by the Council as a foundation system.

I do not accept the defendants’ submission that the insertion of question marks in the space provided for site classification in the original Disclosure Statement should be treated as meaningless or as conveying (or being) nothing. The natural and common sense meaning conveyed by the question marks is that the information which would complete that section of the original (or draft) Disclosure Statement was unknown. That is reinforced by the question marks in the introduction to that part of the original Disclosure Statement (i.e., “[p]ursuant to the Report of ??? dated and held by Wingecarribee Shire Council”).

What was clearly there being indicated was that it was anticipated that a report would be provided to the Council containing site classifications but that had not yet occurred. That is consistent with the draft s 88B instrument contained in the original Disclosure Statement following a standard form, with unknown matters left to be completed in due course.

There is nothing in the evidence to suggest that the site classifications being unknown at the time of the Deed was not an accurate representation of the position as to the site classifications at the time. As evident from the chronology above, the site classifications did not become known to the Vendor until the CS Report issued on 19 December 2023.

There have been cases in which issues of misleading and deceptive conduct arise where an incomplete document is provided (or where a true statement is made but without disclosure of a relevant qualification) (see for example, as to the former, Argy v Blunts and Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112, where the vendor’s solicitors prepared a contract for the sale of land but omitted to include a page of the planning certificate which would have revealed that a portion of the land was zoned so as to prohibit building within it; and, as to the latter, Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357; [2010] HCA 31) but that is not the position here. Rather, the original Disclosure Statement on its face made it clear that the site classifications for the Lots the subject of the Deed were unknown (as was the report on which those classifications were to be based).

The language of cl 5.3(a), see as extracted above at [56], uses the expression “deemed inaccurate”. Thus, the semantic debate between the parties in effect was whether rendering complete an incomplete document (i.e., providing the soil classifications to replace the question marks in the original document) is something that ‘deems’ the original Disclosure Statement inaccurate.

There was obviously a change in the position in relation to site classifications for the Lots when the s 88B instrument was registered – the Lots that were hitherto unclassified had now been classified. However, I do not accept that, as a result of that change, the Disclosure Statement is “deemed inaccurate” (which is the way that the defendants framed their case – see prayer 2(b) of the cross-summons).

The debate in oral submissions was largely as to whether the notified change in the soil classification triggered cl 5.3(b) because a material particular in the draft easement previously provided had become inaccurate. The defendants did not initially demur from the proposition that they had invoked only that part of cl 5.3(a) of the Deed that related to a deemed inaccuracy in the Disclosure Statement as a result of a Material Change. Nor did they appear, at least initially, to frame their argument as one based on the first part of cl 5.3(a) (relating to Replacement New Documents being a Material Change) having been triggered. It seemed implicit in the defendant’s argument that, in the circumstances of the present case, cl 5.3 of the Deed would only be triggered if the Disclosure Statement was deemed inaccurate as a result of a Material Change. The reference at 2(b) of the cross-summons to the new registered easement was in substance addressing the materiality of the prejudice said to arise from the deemed inaccuracy of the Disclosure Statement.

However, in closing submissions, Counsel for the defendants appeared to cavil with the suggestion that the focus of their argument was on the inaccuracy of the Disclosure Statement, saying that “what the inaccuracy with which we are dealing with is - in relation to the 88B instrument, which is going to be registered with the draft plan. So it is the document itself which is going to be changed or replaced. We say that when we get a condition precedent notice, we say that the 88B instrument has changed because what is going to be registered is different” (14/11/25; T 132.48-133.2). Counsel for the defendants went on to say “As a result, we get a notice of change at 1151. It is a document that is - they use a document that is provided for off the plan contracts. It is clearly a document that is responsive to the existence of a material change. Which means, in my submission, it’s a communication that they have, in fact, formed the view and have provided the document because there has been a material change” (14/11/25; T 133.4-9).

Ultimately, therefore, at least by closing submissions, the defendants’ position appeared to encompass reliance on the first part of cl 5.3(a) of the Deed (“Material Change”) referring to the change to the easement, without being tied to any inaccuracy thereby occasioned to the Disclosure Statement. The Vendor’s submissions addressed that by reference to whether the two limbs of the definition of “Material Change” in cl 5.3(b) were established (14/11/25; T 148). There was no complaint that this was an argument that caused the Vendor any surprise or that could not be met on the evidence and in submissions.

Hence, by the close of the case, the defendants’ contention that the rescission was valid, encompassed an argument based solely on the existence of a “Material Change” in relation to a document (identified as the easement or s 88B instrument) attached to the contract.

As will be seen, this is of no little importance because parties (here, relevantly, the defendants) should ordinarily be held to their case as pleaded (or in this case, where there was no formal pleading, as framed and argued). However, the evidence and the oral closing submissions encapsulated a case based on the validity of the rescission simply by reference to whether there was a Material Change.

As to what is meant by a “Material Change”, the defendants say that the genesis of the expression “Material Change” is the decision of Flight v Booth [1834] Eng R 1087; (1834) 131 ER 1160 (Flight v Booth). They note that the test of materiality has been held to be an objective one; and that the consideration extends past the immediate desires and intentions of the Purchaser, referring to the observation by Sugarman J in Hamilton v Munro (1951) 51 SR (NSW) 250 that:

The first question in that regard is whether the Purchaser would not have entered into the Deed had it been aware of the change in the Disclosure Statement; the second is, whether the Purchaser would be materially prejudiced by the change.

As to the question of what the Purchaser would have done, had it been aware at the time of entry into the Deed of the ultimate site classifications, in the registered s 88B instrument, the defendants rely on the evidence of Mr Hendry. The Vendor points out that, on his own evidence, Mr Hendry was not involved in the day-to-day discussions concerning the acquisition of the Lots but was a member of the Rawson Group’s Executive Leadership Committee. The Leadership Committee comprised the heads of each of the Group’s departments as well as senior management (CFO, CEO, Managing Director). The Executive Committee’s responsibilities included approving significant capital expenditure. Mr Smart, who is the current General Manager – Construction of the Guarantor, did not start working for the Guarantor until around April 2024 and did not give evidence on this issue.

Mr Hendry has deposed that, had he been aware of the site classifications (in combination it seems also with the scope of the cut and fill works to be carried out on the Lots), he would not have approved entry into the Deed (see at [70] of his first affidavit).

I have extracted above the relevant positions of Mr Hendry’s evidence in cross-examination on this issue ([176]-[185]).

In the witness box, Mr Hendry was at times defensive (for example, as to the question put to him as to the level of attention he had paid to the CBS Plans which he first answered in a circular and hence non-responsive fashion) and occasionally prone to arguing the defendants’ case (see at 13/11/25; T 64 extracted at [176] above; and the extract at [177] above). I accept that he was endeavouring to give truthful evidence and I emphasise that I do not make any adverse credit finding. However, I do consider that Mr Hendry’s evidence as to what he would have done had he been aware of the matters which he now emphasises (the site classifications and the extent of the cut and fill proposed to be undertaken) is likely to have been infected, consciously or otherwise, by hindsight reasoning (of the kind against which caution is warranted – see Watson v Foxman (1995) 49 NSWLR 315), having regard to the Rawson Group’s position by the time the respective options fell due to be exercised. For example, Mr Hendry was adamant that he had read the CDS Plans at the time of the relevant executive leadership meeting. I accept that a diligent company executive would no doubt have read the materials distributed before such a meeting. However, I have difficulty in accepting that Mr Hendry understood from these plans that the extent of cut and fill to take place over the Lots was limited to the green shaded lots on p 27 of the CDS Plans (and if he did, then that was shown to have been a misunderstanding of the CDS Plans). That is because I find it difficult to accept that a lay person would have been able reasonably to form an opinion solely by reference to the CDS Plans as to the scope of cut and fill disclosed by the CDS Plans (and Mr Wong’s evidence reinforces that conclusion).

No one else from the leadership team gave evidence as to the decision-making process (a number had left the Rawson Group by the time of the hearing); nor (surprisingly from a corporate government perspective) were there any minutes or notes of the relevant meetings.

The documentary evidence does not support Mr Hendry’s contention that an “M” classification was part of Rawson’s “standard construction parameters” at the time. Nowhere is there reference to an “M” classification being necessary for an acquisition of this kind. Further, while Mr Roddam certainly requested a soil classification, he was clearly aware that there had been significant historic cut and fill on the site and yet there is nothing to suggest that this (or the absence of a soil classification) caused him concern, or at least sufficient concern to raise this with others within the Rawson Group. Mr Hendry accepted that he would have expected that if Mr Roddam considered there was a problem he would have raised it with him. That there may have been an “assumption” within the Rawson Group that a developer would carry out work to achieve an “M” classification goes nowhere in circumstances where there is nothing to suggest that that assumption was in any way induced or encouraged by the Vendor.

Therefore, on the evidence, I have concluded that the decision within the Rawson Group to proceed to enter into the Deed was made knowing that the Lots the subject of the Deed were not then classified and, in that sense, taking the commercial risk as to what the ultimate soil classification might be. (In oral submissions, counsel for the defendants resisted that proposition, arguing that it was the Vendor who had taken the risk of entering in the Deed without knowing the soil classification. That may be the case, but if so, it does not alter the conclusion that, so too, did the Purchaser in the sense that I have explained.)

However, the conclusion that the defendants entered the transaction knowing that the soil classifications had not been determined (and presumably, at least through their construction arm, understanding that there was a risk that an “M” classification might not eventuate – even assuming that to be one of the Rawson Group’s standard construction parameters as Mr Hendry insisted it was) does not answer the question as to what the Purchaser would have done had there been a known classification (of “P” on a number of the lots) at the time. In other words, it is one thing to enter into a transaction where the soil classification is unknown (and take a risk on what the soil classifications might be, in the sense that there may not necessarily have been an entitlement to rescind the Deed at that time). I see it as quite a different thing to conclude that the defendants would have entered into the Deed had the ultimate soil classifications actually been known at the time.

On the balance of probabilities, I am satisfied that the defendants would not have done so. I have reached that conclusion based on the fact that a “P” classification is regarded by the geotechnical experts (and by Mr King) as a “problem” classification and one which is likely (or at least possibly likely) to give rise to increased building costs. Had the “P” classifications been known at the time, it is reasonable to infer that the defendants would have given consideration to that (and that advice from at least their construction teams, if not geotechnical experts, would have been sought). It seems inherently unlikely that, had the “P” classifications been known at the time, the defendants would nonetheless have entered into the Deed (at least without seeking to address the issue in some way), given the evidence as to the practical problems and commercial risks that would have attended such a classification for proposed residential building sites.

For completeness, I note that the Vendor emphasised the issue of financial concerns within the Rawson Group in 2024 as providing the motivation for the decision to rescind the Deed. That goes nowhere in terms of the question whether the defendants would have entered the Deed at the time, had they known of the soil classifications. Nor is it relevant that the fact that the soil classifications had become known, may have provided an opportunity for the Purchaser to rescind the Deed where it may have financially been in its interests to do so. It is open to the parties (in the absence of good faith obligations which might preclude them from so doing) to act in their own commercial interests.

The second question which arises when determining whether there was a Material Change is whether the Purchaser would be materially prejudiced by the change in the Disclosure Statement.

The defendants submitted that a change to the soil classification is a matter which would undoubtedly concern a builder acquiring residential building property. It was submitted that the very presence of it in the s 88B instrument underscores its significance to issues of safety and building methodology, and as a result, construction costs.

The Vendor on the other hand argued that, by making the contract, the defendants agreed to assume the risks associated with the development works and site classifications. In this regard, the Vendor submitted that, in entering the Deed, the defendants committed to buying the 20 Lots for $12m knowing that: the Lots had yet to be, but would in due course be, classified; and the Vendor was entitled to carry out “Development Activities” on the Land both before and after completion of the sale contract (the extent of which was not precisely defined but which included excavation and landscaping works). The Vendor noted that the terms of the contract provided that the Purchaser was not entitled to make any objection to the Development Activities. I have already explained why I consider that the defendants assumed a level of commercial risk in this regard.

As to what is meant by “materially prejudiced”, the Vendor referred to Mirvac Queensland Pty Ltd v Wilson [2010] QCA 322, where Jones J (with whom McMurdo P and Fraser JA agreed) stated (at [59]), when considering the use of the phrase in s 214 of the Body Corporate and Community Management Act 1997 (Qld), that “a person would be “materially prejudiced” if disadvantaged “substantially” or “to an important extent’”, there noting that this requires a consideration of the personal circumstances of the person in what is otherwise a determination to be made objectively.

Reference was also made by the Vendor to the observations by Barrett J (as his Honour then was) in Higgins v Statewide Developments Pty Ltd [2010] NSWSC 183; (2010) 14 BPR 27,293 at [51]-[52] of the common law principle arising from Flight v Booth, the Vendor submitting that identifying “material prejudice” is an objective exercise that involves comparing the contractual benchmark with the revealed reality. The Vendor argued that in the present case, in the absence of a contractual benchmark, it is impossible to identify a disappointed contractual expectation and hence impossible to identify “prejudice”.

The defendants pointed to the experts’ agreement that there appears to have been a history of fill at the site and to the statement that (Ex C):

This supports the conclusion that the “P” classification would materially prejudice the defendants.

There seems little dispute that the existence of a “P” classification (even if additional works could be done subsequently to achieve a reclassification or “reactive” classification of the lots) poses real risks of increased building costs (and thus commercial risks to a developer). In those circumstances, I have no difficulty accepting that, viewed objectively, the change in the soil classification was adverse to the Purchaser and one which was likely materially to prejudice it.

I do not accept the submission that there is no contractual benchmark from which objectively to ascertain whether there is a material prejudice by the change. The benchmark must be the position of uncertainty of the site classification which is now to be measured against the certainty of a “P” classification (albeit one which could potentially be reclassified) for a number of the lots.

Accordingly, I accept that, comparing the position as to lot classification after registration of the s 88B instrument with the unknown situation before, there was a “Material Change” with the definition in cl 1.1 of the Deed (though, for the reasons above, I do not accept that the Disclosure Statement is “deemed” inaccurate as a result of that change for the purposes of cl 5.3(a) of the Deed).

Thus, the defendants’ contention as to the validity of the rescission would fail if limited to the second part of cl 5.3(a) of the Deed. However, I have concluded that the first part of cl 5.3(a) of the Deed (a “Material Change” in relation to the s 88B instrument) does apply. It follows, by reference to my conclusions as to the two limbs of the definition of “Material Change” in cl 5.3(b) of the Deed, that there was a right to rescind and the Rescission Notice was valid.

The second issue raises the alternative contention by the defendants that the Deed was validly rescinded pursuant to s 66ZM of the Conveyancing Act. Nothing turns on this in light of the conclusion I have reached above but, for completeness, I deal with this (and other issues that similarly do not now arise) briefly.

At the outset, I note that the defendants said that whether s 66ZN (which requires notice of a material change to be given) and s 66ZO (which gives a right to rescind) apply may not make a difference in the circumstances of the present litigation, given the terms of the Deed and the service of the relevant notice, but they nevertheless maintained that those provisions do apply. Noting that the Deed makes reference to many of the sections of the Conveyancing Act, the defendants submitted that the parties were conscious of the obligations created by the Act and sought to implement those obligations where they considered the Act to apply.

The defendants pointed out that Divs 8 to 10 of the Conveyancing Act are beneficial legislation enacted to protect residential property buyers. It was noted that the provisions are expressed to apply to residential property and confer rights for the benefit of purchasers including prospective purchasers and to apply to vendors including prospective vendors; and they noted that those expressions include, respectively, the grantees and grantors of options (referring to the definition section of Div 9). (The Vendor accepted that Div 9 applies but disputed that Div 10 applies in this case.)

The defendants contend that, in respect of a contract for the sale of residential land, s 66ZM of the Conveyancing Act required, under both the then relevant regulation and the present regulation, that a prospective contract include, as a part of a Disclosure Statement, any instrument under s 88B of the Conveyancing Act that is proposed to be lodged with the draft plan, and noted that the Deed provides for an acknowledgement of the provision of a Disclosure Statement in accordance with the Conveyancing Act (cl 3.1 of the Deed).

The defendants argued that the Deed at cl 5, either gives effect to, or reproduces, ss 66ZL, 66ZM, 66ZN and 66ZO of the Conveyancing Act in that it provides for rights arising from a material change (rather than a material particular).

The defendants submitted that the s 66ZN Notice was an express representation that the Vendor, through its solicitors, considered that there had been the requisite change giving rise to a right to rescind. They pointed out that no evidence was called by the Vendor to suggest that view was mistaken or inaccurate.

The Vendor noted that, pursuant to cll 6.8(a) and 7.5(a) of the Deed, a contract for the sale of land only comes into existence once either the Call or Put Options are exercised. The Vendor pointed out that there is no suggestion that either party tried to exercise those options prior to the plan (including the 20 Lots the subject of the Deed) being registered on or about 27 May 2024 (although it accepts that the defendants would have been entitled to exercise the Call Option in that period, in which case Div 10 would have applied). The Vendor submitted that any contract created after that date would be in relation to an existing lot, such that Div 10 has no relevant application.

Division 10 concerns “off the plan contracts”. That term is defined (as noted above) by s 66ZL(1) to mean “a contract for the sale of a residential lot that has not been created at the time the contract is entered into”. Section 66ZL(2) provides that, for the purposes of that definition, “a lot is created when the plan creating the lot becomes a registered plan”.

I accept the submission by the Vendor that the Deed is not an “off the plan contract” to which Div 10 of the Conveyancing Act applies. (Were I to be incorrect in that conclusion, then I would, for the above reasons, have found that the change notified in the Vendor’s Notice of Change is not a change that rendered the Disclosure Statement inaccurate in relation to a material particular.)

This is because the contract for the sale of the subject Lots is one that comes into existence on the exercise of the Put Options. The Deed is not a contract for the sale of the Lots. It is a contract granting Put and Call Options in respect of lots yet to be created at the time of entry into the Deed. It may well be that it was for this reason that cl 5.3 was considered necessary (since, had Div 10 applied, there would have been a mechanism for rescission).

The fact that the Disclosure Statement appears to contemplate that the legislation in relation to “off the plan contracts” is (or may be) applicable does not alter that conclusion.

Hence it is unnecessary to consider the issue raised by the declaration sought in prayer 5 of the cross-summons as to whether cll 3, 5 and Schedule 1 of the Deed have the effect of excluding, modifying or restricting the requirements of Div 10 of the Conveyancing Act and are to that extent void and of no effect.

The Vendor further argued that, even if it were to be found that there was a change of a “material particular” under s 66ZL of the Conveyancing Act, it did not follow that there was a “Material Change” under the Deed; and said that in those circumstances, the service of the Rescission Notice on 12 June 2024 did not enliven the right to rescind in cl 5.3(b). It is not necessary to consider that submission any further, given the conclusions I have reached on issues two and three.

The defendants submitted that the Notice of Change identified that there had been a “Material Change” by acknowledging that the Disclosure Statement attached to the contract had become inaccurate in relation to a “material particular” such that the change is likely adversely to affect the use or enjoyment of the land the Purchaser was to acquire; and that the Vendor is estopped from doing this. Again, this issue does not now arise but I address it as follows.

The Vendor submitted that the circumstances do not support an estoppel as contended for by the defendants. The Vendor argued that s 66ZN of the Conveyancing Act had no operation (with which I agree) and that the Notice of Change had no statutory effect. Further, the Vendor submitted that the Notice of Change did not amount to a binding concession that the Purchaser’s rights under cl 5.3 of the Deed were activated. The Vendor said that the Notice of Change was not, in terms, a notice under cl 5.3 of the Deed; rather, it stated that it had been made under s 66ZN of the Conveyancing Act; it did not refer to cl 5.3; and did not use the wording required by cl 5.3 (including because it did not refer to a “Material Change” but used the term “material particular”, adopting its statutory definition, which the Vendor submitted conveys a very different meaning).

Thus, the Vendor submitted that, by serving the Notice of Change, it made no representation as to the existence of a contractual right to rescind the Deed, which would be an essential part of any estoppel. Further, the Vendor said that the defendants cannot point to detrimental reliance. Accordingly, the Vendor submitted that no estoppel arises.

I do not accept that the Notice of Change amounted to an “irrevocable” acknowledgement that there was a material change for the purposes of cl 5.3 of the Deed. Nothing textual in the Notice of Change supports such a contention.

The circumstances in which the Notice of Change was issued are relevant in this regard. The defendants’ solicitors demanded that such a notice be served. The fact that the vendor’s solicitors complied with that demand cannot be seen as an “irrevocable” acknowledgement that the defendants’ assertion was correct. It might equally have been compliance with the demand so as to preclude argument as to the issue in circumstances where it has not been suggested that there was not a change (at least insofar as there was now specification of the soil classifications) (as opposed to a Material Change).

Further, whether the defendants can be said reasonably to have relied on a Notice of Change which they had demanded be issued, so as to give rise to an estoppel is also in my opinion problematic. There was certainly evidence from Mr Hendry that the Notice of Change triggered the rescission but it was a notice predicated on the defendants’ assertion that the notice was required.

As to detrimental reliance, there was evidence from Mr Hendry (on which he was not challenged) that the funding allocated to the acquisition had been reallocated to other prospects or acquisitions which would in my view have sufficed for detrimental reliance.

However, for the above reasons I do not find that an estoppel has been established.

As to the rectification claim, relevantly, what the defendants dispute is the claim for rectification in respect of only two aspects of cl 7.3 of the Deed, which contains the requirements for the valid exercise of the Put Option. The two aspects of the rectification claim that are disputed by the defendants are: first, the reference to service of a notice of exercise of Put Option that has been executed by the “Grantee and, if applicable, the Guarantor” (which the Vendor submitted is an error and must be read as being the “Grantor”) and, second, the reference to “Notice of Exercise of Call Option” in cl 7.3(c) (which the Vendor seeks be rectified to read “Notice of Exercise of Put Option”).

There are other infelicities of wording in cll 7.4 and 7.5, though these are not the subject of a claim for rectification. Clause 7.5(a) of the Deed provides that if the Vendor exercises a Put Option, then a contract is binding on the Vendor, Purchaser and Guarantor from the time that the Purchaser received the things required by “clause 7.4”. The Vendor says that that reference is also obviously wrong and should be read as a reference to cl 7.3. Similarly, the reference in cl 7.4 to the “items listed in clause 7.4” must sensibly be read as a reference to cl 7.3. However, as noted, there is no claim for rectification of these obvious errors.

In support of the claim for rectification, the Vendor invokes what was said in James Adam Pty Ltd v Fobeza Pty Ltd (2020) 103 NSWLR 850; [2020] NSWCA 311 at [33]-[34], [57]-[58] per Leeming JA (with whom Bell P and Macfarlan JA agreed save as to the use of the terminology “rectification by construction”); HDI Global Specialty SE v Wonkana No 3 Pty Ltd (2020) 104 NSWLR 634; [2020] NSWCA 296 at [50] per Meagher JA and Ball J; Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liq) (2019) 99 NSWLR 317; [2019] NSWCA 11 (Seymour Whyte Constructions) at [8] per Leeming JA.

The defendants’ response to this claim seems to be based simply on a lack of explanation for the claimed rectification, as adverted to above.

As a starting proposition, for rectification in equity there must be clear and convincing proof of the parties’ common intention. In Simic v New South Wales Land and Housing Corporation (2016) 260 CLR 85; [2016] HCA 47 at [103]-[104], the majority explained that for relief by rectification it must be demonstrated that there was an “agreement” between the parties in the sense of a “common intention” to which the written instrument was to conform and that the written instrument did not reflect the agreement because of a common mistake. The onus borne by the party seeking rectification has been described as a heavy one (see Property Investors Alliance Pty Ltd v C88 Project Pty Ltd (in liq) [2023] NSWCA 291; (2023) 21 BPR 44,483 at [154] (per Griffiths AJA)).

However, there is also the concept at common law of “rectification” by way of construction of the contract in question. The relevant principles as to contractual construction are well known (see Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at [35] (French CJ, Hayne, Crennan and Kiefel JJ)). They include that a commercial contract is to be construed so as to avoid it “making commercial nonsense or working commercial inconvenience”. That proposition has particular application in the present case, since the idea that the Put Options (exercisable by the Vendor, i.e., the “Grantor” under the Deed) would be exercised by sending a contract of sale executed by the “Grantee and, if applicable, the Guarantor” (who on the hypothesis of exercise of the Put Options would by then already have chosen not to exercise its Call Options) makes no commercial sense whatsoever.

In Seymour Whyte Constructions, Leeming JA said (at [6]) that “[a]t common law, if the error is clear, and it is also clear what a reasonable person would have understood the parties to have meant, then the mistake may be corrected as a matter of construction” (sometimes referred to as “rectification by construction”). His Honour there said (at [8]):

The Court must be satisfied of those two matters to a high level of conviction (Leeming JA at [10]).

Here, I am satisfied that both of those conditions are met in relation to the rectification sought by the Vendor. The reference to “Grantee and, if applicable, the Guarantor” in cl 7.3 is an obvious error and a commercial absurdity. Similarly, the reference to the “Notice of Exercise of Call Option” in cl 7.3(c) (as opposed to “Notice of Exercise of Put Option”), on its face, is an obvious error.

The provisions sought to be rectified contain obvious errors. Rectification is the appropriate remedy. I have considered whether it might be argued that there is no utility in rectification of the Deed in circumstances where I have concluded that it has been validly rescinded ab initio. However, lest my conclusion as to the first issue be found to be incorrect, and the issue of rectification was disputed, I consider it appropriate to make a formal order for rectification of the Deed as the Vendor has sought.

As noted above, whether there was a contravention of the ACL as contended, requires consideration of the position of Mr Broadstock as well as what was represented by the CDS Plans and whether it was reasonable for the Purchaser (to the extent that it did) to rely on those representations when entering into the Deed.

The defendants alleged that the CDS Plans were sent “on behalf of the Vendor” and that they made misleading representations as to the extent of civil works to be completed for or on behalf of the Vendor. The Purchaser particularised its allegation by reference to an email dated 5 January 2022 from Mr Broadstock to the defendants.

The defendants pointed to evidence of Mr Knox, which they say makes clear that: the CDS Plans were prepared at his direction for the benefit of the vendor; that Mr Anderson of CDS had been authorised to provide the CDS Plans to any potential purchasers; and that Mr Knox was aware that the CDS Plans were being provided for the purpose of giving information to prospective purchasers. The defendants confirmed that, despite his denials in cross examination, Mr Knox was aware that Mr Broadstock was acting as a representative of the defendants (see CB2/828).

The defendants argued that the CDS Plans described substantially less fill to be placed on the subdivision than in fact apparently occurred. The defendants emphasised that the CDS Plans also set out the requirements for such fill and compliance with the relevant standard (AS 2870) as well as indicating the presence of an appropriately qualified Geotechnical Engineer. They noted that no further information about the proposed fill of the Lots was provided to them. They also noted that existing undocumented historical fill and eventually substantial fill was placed across the majority of Lots (including unsupervised fill). The defendants maintained that the reasonable expectations of a person reviewing the CDS Plans as well as entering into a contract for the prospective purchase of residential building lots would be that that there would be compliance with the relevant standard, being AS 2870.

The defendants referred to Phillip & Anton Homes Pty Ltd v Commonwealth [1988] ASC 55-635; (1988) ATPR 40-838, which they say is factually similar to the present case. There, the Full Court of the Federal Court (per Fox and Pincus JJ) found that plans which were provided to a purchaser prior to an auction showing only some areas of fill, when in fact there was substantially more fill across the property, conveyed a misleading representation that only limited fill had occurred. Fox J noted (at (1988) ATPR 49,044-45):

The defendants argued that the CDS Plans provided prior to entry into the Deed showed only limited cut and fill was to occur (referring to the Lot Fill and Regrade Plan Sheets 1 and 2). The defendants said that, in circumstances where no other documents were provided in response to Mr Broadstock’s request for engineering drawings, the clear representation from the Vendor through the documents it provided was that it was only those areas highlighted in green on the CDS Plans that would be the subject of cut and fill.

The defendants argued that any reliance by the Vendor on Mr Roddam’s email of 24 January 2022 (referring to the existence of significant cut and fill on the site) is misconceived. First, because his email was clearly referring to the whole site not the specific Lots. The defendants pointed out his email is part of a chain of emails, the preceding part of which they said shows that the focus of Mr Roddam’s email was to consider the conformity with the design parameters of the defendants when the Lots were acquired following the completion of the civil work to be done. They said that it was not a report of a site inspection (the defendants noting that Mr Roddam had the CDS Plans and the draft s 88B instrument containing the original classifications, and that Mr Trapps’ email (at CB 1/510) indicates that Mr Trapps, not Mr Roddam, attended the site). Second, they argued the statement in the email that there was cut and fill over “most of the site”, must be read in the context that Mr Roddam considered that it was significant “to establish final design levels”. Third, the defendants said that Mr Roddam’s observations about cut and fill on the site which had already occurred is irrelevant to the misleading representation about the extent of the substantial cut and fill which occurs after entry into the Deed (referring to the revisions from CDS to the CDS Plans) (CB2/804-805).

The Vendor argued that, however misleading that conduct might have been, it was not conduct of, or attributable to it. It noted that the plans were commissioned by a previous owner of the land (Feldkirchen) and that they came into existence before the Vendor purchased the development. The Vendor submitted that Mr Broadstock was not its representative. Therefore, the Vendor said that, to the extent that representations were made by the provision of plans to the Purchaser on 5 May 2022, they were made by others.

As to the role of Mr Broadstock, whether the representations are attributable to the Vendor depends, relevantly, on matters such as the Vendor’s knowledge of and control over the making or substance of the representations and the context in which they were provided, not the mere permission (implicitly given through Mr Campbell-Jones for them to be sent). Mere authorisation to send information does not necessarily amount to adoption of the representations (see Yorke v Lucas (1985) 158 CLR 661; [1985] HCA 65; Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60).

In a different context (involving the question of liability of Google as the publisher of a communication), (see Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435; [2013] HCA 1), French CJ, Crennan and Kiefel JJ made clear (at 461) that the question of endorsement or adoption of the representation is relevant.

Here, Mr Knox candidly accepted that he authorised Mr Campbell-Jones to provide documents (including engineering plans) to potential purchasers. However, that alone is not sufficient to establish that the Vendor engaged in misleading and deceptive conduct.

I do not accept that Mr Broadstock’s conduct or actions can be imputed to the Vendor. Mr Broadstock became involved in the matter when approached by the Vendor’s selling agent (Mr Campbell-Jones). It is clear that he acted in effect as an intermediary for a referral fee. He did not deal directly with Mr Knox.

In any event, the difficulty for the defendants’ misleading and deceptive conduct claim arises from the experts’ evidence (as adverted to above). The defendants’ complaint is that the CDS Plans were misleading in that they identified a “programme” of civil earthworks that was different in scope to the earthworks carried out on the site. Mr Hendry’s emphasis was on the plans showing “limited cut and fill” only on the sites shaded green in the CDS Plans (at CB 448).

The evidence of the experts (extracted above) makes clear that the CDS Plans disclosed earthworks over the whole site. That is fatal to this claim.

Moreover, there is a real issue as to the reasonableness of any reliance by a non-Geotechnical Engineer on the CDS Plans (having regard to the evidence of Mr Wong).

The misleading and deceptive conduct claim is not made good.

As to the claim for specific performance, the Vendor invoked the principles summarised in Cruise v Cornish [2023] NSWSC 1126 (McGrath J); Klein v McMahon [2017] NSWSC 1531; Parkes v Mamo [2016] NSWSC 1129; (2016) 18 BPR 36,16 and DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 at 434; [1978] HCA 12, and argued that damages would be an adequate remedy (citing Ryan v UPG 322 Pty Ltd [2023] NSWSC 1293, per Parker J at [25] (Ryan v UPG 322)). In response, as noted above, the defendants raised a defence of unclean hands.

By this, the defendants invoked the equitable maxim that those who come to equity seeking equitable relief must do so “with clean hands” (see Dering v Earl of Winchelsea (1787) 1 Cox 318; 29 ER 1184 at 1185 (Lord Chief Baron) (Dering)). The essence of this maxim, as Isaacs J explained in Meyers v Casey (1913) 17 CLR 90 at 124; [1913] HCA 50 (Meyers), is that “[n]o Court of equity will aid a [person] to derive advantage from [their] own wrong”, the focus being on the past conduct of the Vendor (see Black Uhlans Incorporated v New South Wales Crime Commission [2002] NSWCA 1060; (2002) 12 BPR 22,421 at 22,428 [159] (Campbell J) (Black Uhlans)).

The operation of the unclean hands defence requires wrongful conduct that has “an immediate and necessary relation to the equity sued for; it must be a depravity in a legal as well as in a moral sense” (see Dering at 1185 (Lord Chief Baron), quoted in Meyers at 124 (Isaacs J)). If the connection between the purported impropriety and the equity sought to be enforced is merely incidental or collateral, this will be insufficient to establish an unclean hands defence (see REW08 Projects Pty Ltd v PNC Lifestyle Investments Pty Ltd (2017) 95 NSWLR 458 at 466 [37]; [2017] NSWCA 269 (Macfarlan JA, Beazley P, as Her Excellency then was, and Gleeson JA agreeing)).

The principles governing the unclean hands defence were summarised by Hamilton J in Lewis v Nortex Pty Ltd (in liq) (2004) 214 ALR 634; [2004] NSWCA 1143 at [137]-[150] (Lewis), drawing from Campbell J’s decision in Black Uhlans at [157]-[185]. Relevantly, the conduct must have an immediate and necessary relation to the equity sued for and there is no general rule in equity that where there has been any impropriety, equity will allow the loss to lie where it falls (see Black Uhlans at [163], Lewis at [138]).

In the present case, there is no impropriety in connection with the relief for which the Vendor sues. The Vendor had no duty to effect a re-classification of the subject Lots once the GeoSmart report was received; nor was it established that it was unconscionable for it not to do so.

The unclean hands defence would thus have failed.

I note that in oral submissions at the hearing a further issue was raised by the defendants as to the ability of the Vendor to obtain specific performance against the Guarantor (relying on my decision in Toma). Although not raised in their response to summons, that issue can be readily disposed of as follows.

In Toma, the issue was as to the attempt to obtain orders for the guarantor specifically to perform the contract – i.e., to pay the purchase sum on completion. Here, the relief sought against the Guarantor is not for specific performance of the contracts; rather, it is for indemnification. The Vendor seeks indemnity from the Guarantor (pursuant to cl 14(e) of the Deed and cl 9 of Schedule 4 of the Contract, which oblige the Guarantor to pay on demand any money due to the Vendor under the terms of each indemnity) for any amounts recoverable by it from the Purchaser, including the balance of the purchase price of $12m. The Vendor says that the commencement of proceedings against the Guarantor amounted to a demand (see footnote 20 to its submissions) for the balance of the $12m purchase price with applicable adjustments and interest.

In Toma, the question was whether the guarantor was liable to step into the shoes of the purchaser and to pay the purchase price on settlement, as opposed to having a potential liability in damages if the purchaser (which had been the subject of an order for specific performance) failed to complete its obligation. There, I noted the distinction sometimes drawn between a “see to it” obligation (i.e., “an undertaking by the guarantor that the principal obligor will perform its contract with the obligee”) and an “answer for” obligation – as discussed by Mason CJ in Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245; [1988] HCA 11 (Sunbird), at 256. As I explained at [50], the significance of the former, a “see to it” obligation, is that breach of such an obligation “ordinarily sounds in damages”.

I considered in Toma that the clause in question imposed a distinct and separate obligation on the guarantor to perform the obligation to pay the balance of the purchase price and moneys due on completion if the purchaser did not; i.e., in effect to assume an obligation as principal to pay the moneys due on completion (as opposed to having a liability in damages for breach of the guarantee to ensure that the purchasers performed their obligation to pay the money on completion).

I construed the relevant clause of the contract in Toma (consistently with Sunbird) as a guarantee of the prompt performance (by the purchasers) of their obligations under the sale contracts; not as imposing an obligation on the guarantor as principal to step in and perform the purchasers’ obligations itself. The guarantee was not there described as a “principal” obligation (compared with the indemnity clause, which expressly recorded that it was a principal obligation). I distinguished Ryan v UPG 322 and Baeg v Wink Singh Pty Limited [2024] NSWSC 589 on the basis that in both cases the guarantor expressly assumed obligations as principal.

A difficulty for the appellants’ argument in Toma was that the obligation to pay moneys under a contract for the sale of land is one that arises only at the point of, and simultaneously with, conveyance of the properties (McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457; [1933] HCA 25). Hence, the purchasers’ obligation to make the payments in question in Toma, was interdependent on the vendors’ simultaneous obligation to convey the property. The promise to ensure prompt performance by the purchasers was not the assumption of a distinct obligation by the guarantor to step into the purchasers’ shoes and pay the purchase price if they did not.

Here, the guarantee and indemnity provided for under the contract annexed to the Deed is expressed to be a principal obligation. The indemnity clearly obliges the Guarantor to pay on demand any money due to the Vendor (including the balance of the purchase price). Assuming the Deed had not been validly rescinded, and money fell due to the Vendor on completion but was not paid, the indemnity would be triggered.

Relevantly, the Vendor here does not seek an order for specific performance against the Guarantor; it simply seeks to enforce the indemnity from the Guarantor for any amounts recoverable from the Purchaser (see prayer 3 of the Summons). That is sufficient to dispose of the defendants’ complaint as to the relief sought. But for the conclusion I have reached as to the first issue, I would have made a declaration that the Guarantor is obliged to indemnify the Vendor for breach of the Purchaser’s obligations (relevantly, in the event of a failure to complete the contracts by payment of the balance of the purchase price).

For the above reasons I make the following orders