Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Nergl Developments Pty Ltd v Vella [2021] NSWCA 131 Hearing dates: 17 June 2021 Date of orders: 1 July 2021 Decision date: 01 July 2021 Before: Basten JA at [1]; Meagher JA at [74]; Leeming JA at [75] Decision: (1) Direct that Kindelon Pty Ltd be identified as the second appellant. (2) Grant leave to the appellants to file the amended notice of appeal within 7 days. (3) Grant leave to the appellants to appeal from orders (1) and (2) made on 9 June 2021 with respect to the costs of the trial. (4) Set aside orders (1) and (2) made on 9 June 2021 and in their place order that: (a) Nergl and Kindelon are jointly and severally liable to pay to the plaintiff 80% of her costs of and relating to the proceedings in the Equity Division from 12 December 2018, up to and including 30 October 2019; and (b) Nergl is to pay 80% of the plaintiff's costs of the proceedings in the Equity Division after 30 October 2019. (5) Otherwise dismiss the appeal. (6) Order Nergl to pay Ms Vella's costs in this Court. Catchwords: CONTRACTS – construction – agreement resulting from mediation of dispute – heads of agreement – Masters v Cameron class 2 contract – proposed deed of release – parties to enter into deed to terminate earlier agreement – whether deed to include all terms of settlement CONTRACTS – construction – agreement to grant easement – whether ambiguity – whether specified width included kerb, gutter and footpath CONTRACTS – construction – implied terms – term to be necessary to give business efficacy – whether temporary easement for construction to be implied – whether expansion of easement to permit construction of roundabout to be implied Legislation Cited: Conveyancing Act 1919 (NSW), s 88B Environmental Planning and Assessment Act, ss 80, 95 Uniform Civil Procedure Rules 2005 (NSW), r 36.17 Cases Cited: BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266; [1977] HCA ? (PC) Byrne v Australian Airlines Ltd (1995) 185 CLR 410; [1995] HCA 24 Masters v Cameron (1954) 91 CLR 353; [1954] HCA 72 Category: Principal judgment Parties: Nergl Developments Pty Ltd (First Appellant) Kindelon Pty Ltd (Second Appellant) Vicky Vella (First Respondent) Michael Vella (Second Respondent) Peter Vella (Third Respondent) Representation: Counsel: J R J Lockhart SC / P Gaffney (Appellants) J Sexton SC / D Neggo (First Respondent) Submitting Appearances (Second and Third Respondents) Solicitors: MinterEllison (Appellants) Macpherson Kelley Lawyers (First Respondent) Joseph Grassi & Associates (Second and Third Respondents) File Number(s): 2021/8185 Decision under appeal Court or tribunal: Supreme Court Jurisdiction: Equity Division Citation: [2020] NSWSC 1405; [2021] NSWSC 648 Date of Decision: 13 October 2020 Before: Slattery J File Number(s): 2018/312416 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Judgment 1. BASTEN JA: This appeal concerns the effect of an agreement entered following a successful mediation in relation to proceedings in the Equity Division brought by the first respondent, Ms Vella. Ms Vella had sought orders that the appellant withdraw caveats it had lodged over her land, upon the grant of an easement. Identification of the issues requires some explanation of the prior dealings between the parties, details of the land ownership and the topography. Background 1. On 25 March 2008, the appellant, Nergl Developments Pty Ltd (Nergl) entered into a tripartite agreement with three landowners to develop adjoining rural properties at Glenmore Park in western Sydney. The project involved a residential-rural development, pursuant to a development consent obtained in October 2006. The properties, then owned by Lucy Vella (one lot), Emanuel and Vicky Vella (two lots) and Kindelon Pty Ltd (six lots) covered an area of open space between the expanding residential area of Glenmore Park and The Northern Road to the north of Bradley Street. On 17 August 2010 the 2008 agreement was replaced by a further agreement between the same parties ("2010 tripartite agreement"). 2. It is necessary to explain the ownership of the nine lots affected by the tripartite agreements. In 2008 and 2010, the two southern-most lots which abutted Bradley Street were owned by Emanuel and Vicky Vella. Six lots to the north of the Vellas' land were owned by Kindelon Pty Ltd, a company associated with the appellant. Kindelon was named as a respondent to the appeal but, by consent, became the second appellant at the hearing of the appeal. Curiously, it was not a party to the 2010 tripartite agreement. The most northerly lot was owned by Lucy Vella, the sister of Emanuel Vella. Both Emanuel and Lucy Vella are now deceased. Vicky Vella, the first respondent, is the sole owner of the Bradley Street lots; Lucy Vella's sons Peter and Michael Vella, who are the second and third respondents to the appeal, but filed a submitting appearance in this Court and played no active role in the hearing below, own the northern-most lot. Finally, two of six lots owned by Kindelon have been transferred to a third party, Vinegar Hill Pty Ltd, pursuant to a sale by Kindelon's mortgagee in possession. Vinegar Hill was not a party to the 2010 tripartite agreement and is not involved in the proceedings. The current land ownership is depicted on the following plan: 1. The Northern Road has become a major arterial road which is being upgraded in anticipation of increased traffic to and from the new airport at Badgerys Creek on the eastern side of The Northern Road. There is no access to The Northern Road from any of the properties. Those owned by Kindelon, Vinegar Hill and Peter and Michael Vella are effectively land-locked. Ms Vicky Vella's land has access to Bradley Street. At some time prior to 2006 the various landowners prepared a development application which envisaged that the site, having an area a little over 24ha, be subdivided into 19 lots for the purpose of a rural-residential development. The application was ultimately approved by the Land and Environment Court on 10 October 2006. 2. The 2010 agreement related to the rural residential subdivision the subject of the 2006 development consent, and a possible new subdivision which was intended to provide for Seniors Living residential accommodation. The 2006 development is depicted on the following plan: 1. The development application provided for a roadway running north from Bradley Street and roughly parallel to The Northern Road through the land. It was identified as "Jilondalee Way". On 8 April 2009 a construction certificate was issued for the construction of the roadway. Work done on the roadway constituted physical commencement for the purposes of s 95(4) of the Environmental Planning and Assessment Act 1979 (NSW), as then in force, so that the consent did not lapse. Further, the grant of the construction certificate meant that the certificate and the approved plans and specifications for the roadway were taken to form part of the development consent: Environmental Planning and Assessment Act, s 80(12). It will be necessary to return to the terms of the plans shortly. 2. Pursuant to the 2010 tripartite agreement Nergl was to undertake the major part of the works to give effect to the proposed development. The "Co-Landowners", identified as the Vellas, consented to Nergl lodging a caveat over their respective lots to secure performance of their payment obligations under the agreement. Only one of two lots (lot 3) owned by Mr and Ms Vella formed part of the development site. However, Nergl lodged a caveat over both lot 3 and lot 2, purportedly pursuant to the 2010 tripartite agreement. 3. For some years little happened; the development did not progress, but the Vellas' land was frozen by the caveats lodged by Nergl. A number of incidental events took place. First, in June 2015, following her death, Lucy Vella's lot was transferred to Peter and Michael Vella. Secondly, following the death of her husband, Vicky Vella became the sole owner of the southern-most lots. Thirdly, in March 2018 Roads and Maritime Services (RMS) sought to compulsorily acquire part of the land then owned by Vicky Vella, as part of a project to upgrade The Northern Road. That land is identified as a sliver taken from lots 2 and 3 along Bradley Street, presumably to allow for the broadening of Bradley Street where it met The Northern Road, possibly with a slipway to be constructed for traffic travelling north. The effect was that RMS acquired a small portion of the proposed road under the subdivision, where it joined Bradley Street. 4. On 26 September 2018 the caveats lodged in 2008 over Ms Vella's land were replaced by two new caveats, again in reliance on the charge created under the 2010 tripartite agreement. Attempts to have the caveats lifted were unsuccessful and on 12 October 2018 Ms Vella commenced proceedings in the Supreme Court to have the caveats withdrawn. Shortly thereafter, Nergl agreed to the transfer of the land acquired by RMS and new deposited plans were created, subject to the 2018 caveats. 5. On 12 December 2018 there was a mediation between the parties, which resulted in a document entitled "Heads of Agreement". The heads of agreement were intended to settle all outstanding disputes between the parties arising out of the 2010 tripartite agreement and to terminate that agreement. 6. The heads of agreement required that a number of steps be taken to effect those purposes; unfortunately, the parties could not agree on the steps required. On 29 October 2019 Ms Vella filed an amended summons. The following day, 30 October 2019, Nergl filed a cross-summons. Each party sought specific performance of the heads of agreement by the execution of various documents, including a deed of release, and an easement with respect to the roadway over Ms Vella's land, but each party proposed documents with different content. The dispute was heard by Slattery J who delivered judgment on 13 October 2020 finding, in substance, in favour of Ms Vella: Vella v Nergl Developments Pty Ltd ("Vella"). [1] Orders were entered the following day (14 October 2020). 7. Order (1) required that the defendants specifically perform and carry into effect the agreement. There were three declarations resolving issues as to the content of the easement over Ms Vella's lot 3: orders (2), (3) and (4). Order (5) directed that the parties arrange for two experts to consult with a view to preparing a plan complying with the judge's findings that there should be a "splay" on both sides of the easement where it met the RMS land at Bradley Street. Order (6) provided for the withdrawal of the caveats 14 days after registration of the easement; order (7) provided liberty to apply to give further effect to the judgment. 8. Further orders were made on 24 November 2020, including a variation of declaration (3), pursuant to Uniform Civil Procedure Rules 2005 (NSW), r 36.17. A timetable was fixed for the preparation of draft transactional documents. 9. The conclusion of the proceedings was interrupted by the filing on 11 January 2021 of a notice of appeal by Nergl. On 19 February 2021 the judge agreed that further steps to resolve the outstanding issues should not proceed pending the determination of this appeal which was heard on 17 June 2021. Issues on appeal 1. The primary judge identified the four issues before him in the following terms: [2] "(1) upon the proper construction of the Heads [heads of agreement] what further documents are required to be executed in order for the [heads of agreement] to be performed; (2) do the Heads require the right of carriageway that is to be granted to be 16 metres wide or to be 21.6 metres wide; (3) do the Heads require Mrs Vella to accept the imposition of temporary construction easements over Lots 2 and 3, beyond the boundaries of the right of carriageway over Lot 3 (be that 16 metres or 21.6 metres); and (4) what is the proper configuration of the easement at the southern end of Jilondalee Way, where it joins Bradley Street, in order to accommodate a roundabout at that point[?]" 1. Issue (1) was stated too broadly; when the judge came to discuss it, he reformulated it as, "(1) Must the easement be given effect in a 'Deed of Settlement and Release'." [3] In fact, the issue was again redefined in the course of the proceedings as whether the various obligations set out in the heads of agreement should be incorporated in the deed, or whether the deed should be limited to the termination of the 2010 tripartite agreement and the release from claims arising in relation to that agreement. The other three issues, as the trial judge noted, related to the scope and content of the easement for the roadway (and services). 2. The answers given by the primary judge in resolving each issue were challenged by the appellant on the appeal. A better understanding of the issues requires consideration of the terms of the heads of agreement, within the relevant contextual framework. Issue (1): scope of deed of release 1. It is convenient to deal with issue (1) first because it requires consideration of the heads of agreement as a whole. That document was in two parts, namely "definitions" and "terms of agreement". It is convenient to set out the latter in full: "Terms of Agreement Following a confidential mediation today before Mr John West, QC the parties have agreed to settle the Litigation on the following terms, each of which is dependent on the other: 1. The parties will enter into a Deed of Settlement and Release pursuant to which the parties to the TPA [the 2010 tripartite agreement] agree to terminate that agreement in consideration of the other matters set out herein. 2. By the Deed, each party will release each other party from all claims existing as at the date of the Deed, including any claim arising in relation to the TPA. 3. Nergl will withdraw the Caveat and will not lodge any further caveats over the Vella Land upon registration of the Easement. 4. Vella will discontinue the Litigation, and each other party will consent to the discontinuance, on the basis that all parties are to bear all of their own costs, as soon as practicable after registration of the Easement. 5. In consideration of the payment to Vella of $100,000 at the time of delivery by Vella to Nergl of the Easement in registrable form, Vella will grant the Easement in favour of the owner of Lot 103. The terms of the Easement shall entitle the owner of Lot 103 to grant and register easements over the same lands extending the benefits of the Easement to such or all of the other properties to the north of Lot 103 which are benefitted by the Planning Consent, as the owner of the dominant tenement elects. Nergl will pay Vella's reasonable legal costs relating to any subsequent grant as contemplated in the previous sentence. The owner of Lot 103 agrees to lodge for registration the Easement within 7 days of receiving the Easement in registrable form from Vella. 6. The holder of that dominant tenement shall have the right to dedicate the land within the Easement to the Council so as to become a public road. 7. Until such dedication or any subdivision of Lot 3 in DP1240377, the holder of the dominant tenement accepts all risks and liabilities associated with the Easement and indemnifies Vella in relation to that risk and liability, except to the extent that the liability arises or is caused by the actions of Vella, and will assume the obligation to repair and maintain it in good condition. Such a provision to this effect is to be included in the s88B Instrument referred to in clause 8 below. 8. The Easement will be documented in a s88B Instrument prepared and lodged at the cost of Nergl. Nergl will pay Vella's reasonable legal costs and reasonable consultants' costs in relation to the s88B Instrument. 9. Vella will consent in writing to any or all applications as Nergl shall elect to give effect to the Adjustments either or both by means of a new development application or an application to modify the Planning Consent, provided such applications are lodged within 6 months of the date that the owner of Lot 103 lodges for registration the Easement in registrable form. PMV [Peter and Michael Vella] will also consent to any and all applications referred to in this paragraph. 10. In respect of any contracts entered into within six (6) months of the date that the owner of Lot 103 lodges for registration the Easement in registrable form, Vella will apply the Special Condition in any contract for the sale of the Vella Land (or any part thereof) and will procure that any subsequent purchasers also agree to apply the Special Condition to any future contracts for sale (again being contracts entered into within six (6) months of the date that the owner of Lot 103 lodges for registration the Easement in registrable form. 11. PMV will provide a first right of refusal to KindeIon, or its nominee, in respect of the sale of all or part of the PMV Land, which right must be exercised within 30 days of notification. The parties further agree that documents necessary to give effect to this settlement will be prepared by Nergl's lawyers and distributed to the legal representatives of Vella and PMV on or before 22 January 2019. The parties will diligently and in good faith negotiate the terms of the documents distributed by Nergl's lawyers with a view to achieving registration of the Easement before 29 March 2019 and the discontinuation of the Litigation as soon as practicable thereafter." 1. The respondent submitted that there were a number of documents to be prepared to give effect to the agreement, one being a deed of settlement and release which was expressly referred to in clauses 1 and 2 set out above. It was the 2010 tripartite agreement which was to be terminated pursuant to the deed "in consideration of" the other matters set out in the heads of agreement. The parties each accepted that the consideration for the termination of the 2010 tripartite agreement was not the promise on each side to take further steps, but the fulfillment of the promise. Thus the 2010 tripartite agreement would not terminate until the easement had been prepared and registered and Nergl's caveat had been withdrawn; the accompanying mutual releases would not be effective until all other requirements had been completed. Three possible steps could be taken to give effect to clauses 1 and 2: first, a simple deed could be prepared providing for termination and release to be executed contemporaneously with the completion of the other steps; secondly, a deed could be prepared and executed with its effect being conditional upon completion of the other steps, or, thirdly, there could be a deed which set out in detail the obligations otherwise contained in clauses 1-11. 2. The respondent proposed a deed which, with non-contentious terms relating to acts to give efficacy to the deed and the execution of counterparts, reflected the language of clauses 1 and 2 of the heads of agreement. The appellant proposed a deed which reflected clauses 1 and 2, but also dealt separately with the grant of an easement and the withdrawal of caveats, the grant of a further easement, the approval of amendments to the planning consent, the grant of a right of first refusal by Ms Vella to Kindelon and the grant of further authority to construct the roundabout at the intersection of Jilondalee Way and Bradley Street. 3. As the trial judge noted, the parties were in agreement that the heads of agreement constituted a "class two type contract" within the classification adopted by the High Court in Masters v Cameron. [4] Such a document is one "in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless had made performance of one or more of the terms conditional upon the execution of a formal document." [5] 4. There is a danger in treating such descriptive language in a judgment as if it were the provision of a statute. An agreement into which terms may be implied without "addition" draws no bright-line boundary. In effect, the respondent demurred to the proposition that the parties intended that all the terms be reflected in a single further document; rather she submitted that the heads of agreement required the execution of a number of documents to give effect to their various undertakings. The judge accepted that submission stating: "[92] But the Deed of Settlement and Release in clauses 1 and 2 does not operate immediately, as at the date of the Heads. Clause 2 makes clear that when this deed is executed it will operate as a release of each other party 'from all claims existing as at the date of the Deed'. The parties are not agreeing upon a release of claims against one another as at the date of the Heads. At some indeterminate time of the future, they will enter the deed, when all the other interdependent obligations under the Heads have been fulfilled, because the deed is made 'in consideration of the other matters set out herein'. The deed is the final contractual act required between the parties. Execution of this document offers the valuable incentive of releasing all potential claims up to the date of its execution." 1. The appellant challenged this conclusion, contending on the basis of four "textual indicators" that the parties intended all aspects of the heads of agreement to be set out in a formal document. However, neither taken individually nor cumulatively are these "indicators" persuasive. 2. The first indicator was the title of the document, "Heads of Agreement". That was said to imply that a more exhaustive document would be prepared to implement the agreement, and that the exhaustive implementation was not limited to clauses 1 and 2. 3. The parties agreed that they were immediately bound by the heads of agreement; it was not to be replaced by another agreement, but itself required the preparation of a number of documents. The title reflects that fact; it is an insufficient basis for inferring that it contemplated its own replacement by a single comprehensive document. What did not happen immediately following the mediation was the preparation of the suite of documents which would be required to give effect to the agreement. 4. The second (composite) indicator raised by the appellant was that "the precise scope of the easement" was not identified and that the final paragraphs of the agreement suggested that it might take months to identify and record the necessary terms. 5. The remaining three issues in the case sought to determine, as a matter of construction, the precise scope of the easement. As will be discussed below, that exercise can be undertaken. Further, noting that the mediation occurred on 12 December 2018, the expectation that all of the documents necessary to give effect to the settlement could be prepared and provided to the other parties on or before 22 January 2019 suggests a relatively mechanical and straightforward exercise, given the time of year over which it was to be undertaken. The second indicator does not warrant the proposed inference. 6. The third and fourth indicators can be considered together, although their intent is not easy to discern. They started with the proposition that the termination of the 2010 tripartite agreement and the relevant releases were not effected by the heads of agreement. (That was of course true of the easement as well.) The submission then noted that "the promises in cll 1 & 2 of the Heads [of Agreement] were interdependent with the other clauses". That was accurate and has been explained above. It was then said that "the more natural inference would be that the promises that were consideration for that termination would be part of that Deed as well." The alternative was said to be that the parties were expected to have "bifurcated their agreement", noting there was no reason to split the promises up. 7. The interdependence of the obligations was created by the heads of agreement. To state that they were interdependent says nothing as to why they should be repeated in a different document. The respondent's proposal did not "bifurcate" the promises, or "split them up". It merely recognised that a number of documents were to be prepared to give effect to the heads of agreement and that that was all that needed to be done. 8. Although it follows that the appellant's challenge to the judge's finding with respect to issue (1) must be dismissed, the practical significance of the challenge is obscure. As was pointed out in the course of oral argument, the relief sought by the respondent was specific performance of an agreement reached following a mediation completed more than 18 months ago. The specific transactions needed to give effect to the settlement were sufficiently described in the heads of agreement. The requirement to produce another document to the same effect could be accommodated by a minor variation in the orders for specific performance, with no practical consequence. Issue (2): width of easement 1. A significant part of the appellant's submissions focused on the width of the easement for the roadway. It submitted that the width of the easement was 21.6m. The respondent contended that, in accordance with the heads of agreement, the width was specified and was 16m. 2. The provision for the easement was set out in clause 5 of the terms of the agreement. The easement itself was defined as follows: "Easement means: a right of carriageway set out in a registered s88B instrument providing vehicular and pedestrian access to and from Lot 103 and including the right to construct and provide such services as Nergl elects (including but not limited to electricity, gas, water, sewer and the like). The easement is to apply to the area depicted as Road Reserve in the Planning Consent (as shown in pink in the attached plan) with an allowance for kerb, gutter and footpath to the precise width required by the Council, as well as an additional area adjoining Bradley Street sufficient to permit the construction and dedication of a roundabout." 1. It is difficult to perceive any element of ambiguity or uncertainty within the definition. The plan forming part of the 2006 development consent was, as the definition of easement noted, "attached" to the heads of agreement. The term "planning consent" was itself defined to refer to the consent issued by the Land and Environment Court in 2006. The plan clearly marked a roadway with the words "Jilondalee Way 16m wide". The description was consistent with clause 27 of the development consent which provided as follows: "27. An Engineering Construction Certificate for the provision of engineering works (roads and drainage) is to be approved by the certifying authority. Engineering design drawings are to be prepared strictly In accordance with Penrith City Council's Engineering Works Development Control Plan and the Guidelines for Engineering Works for Subdivisions and Developments Part 1-Design. a) The Proposed Road is to be designed and constructed in accordance with the following table: Road No. Road Reserve Width (m) Carriageway Width (m) Shoulder (m) Verge (m) Footpath ESA Proposed Road 16 6.6 1.0 3.7 Nil 5x104 Cul-de-sac 14m radius 8.5 kerb radius 1.0 3.7 Nil 5x104 Proposed Road 1 is to be sealed with a minimum 50mm Asphaltic Seal in two layers of 25mm AC 10. Road shoulders shall be bitumen sealed a minimum of 0.5m Subsoil drainage shall be provided on both sides of the proposed road. Street lighting in the proposed road shall be in accordance with AS1158." The 1m shoulder would occur on both sides of the carriageway, as would the 3.7m verge, thus giving a carriageway of 6.6m together with two shoulders (2m) and two verges (7.4m) totalling 16m. The sixth column indicated that there was no further width for a footpath. (The seventh column identified the expected vehicle usage.) 1. In accordance with cl 27, an engineering construction certificate was issued on 8 April 2009. It also contained a plan with a notation reflecting that in the development consent, namely "Jilondalee Way road 16 wide." As noted by counsel for Nergl at the trial, the plans accompanying the construction certificate become part of the development consent, pursuant to s 80(12) of the Environmental Planning and Assessment Act, as then in force. 2. The heads of agreement referred to "Adjustments", defined as "any or all of the following adjustments to the planning consent". Those adjustments included the relocation of a northern boundary in a manner identified on the attached plan so as to accord with the current boundaries between the lot owned by Kindelon to the north of the Vella land and the Vella land; to excise part of the land which had been previously sold by Vella, to permit Kindelon to make other boundary adjustments to proposed lots within the confines of its lands, to fill dams located within the Kindelon land and "to excise the land sold by Vella to the RMS." As a party to the development application, clause 9 of the terms of the agreement required Vella to consent in writing to any application by Nergl to give effect to the adjustments. A new development application or an application to modify the planning consent were identified as methods of giving effect to the adjustments. 3. Two inferences flow from these provisions in the heads of agreement. First, careful attention had been paid by the parties to the terms of the existing planning consent and variations which might be required. Secondly, being a matter which has relevance to the claims by the appellant as to running buses along Jilondalee Way (a matter addressed below), there was no suggestion of an amendment which might extend the proposed development project to include Seniors Living accommodation. 4. This material demonstrated an unambiguous intention that the width of the easement by way of the proposed carriageway (Jilondalee Way) was 16m. Nevertheless, the appellant sought to challenge that conclusion by reliance on three propositions, only two of which were put to the trial judge. 5. First, the appellant focused on two phrases in the definition of the easement in the heads of agreement which were said to indicate a different conclusion. The first was the phrase following the area depicted in pink on the attached plan, "with an allowance for kerb, gutter and footpath". The word "allowance" was said to imply an extension of the easement to cover the identified purposes. The second phrase immediately followed, namely "to the precise width required by the Council". These words were said to be otiose if they merely referred to the requirement of the planning consent and the marking on the attached plan; accordingly, they should be understood to refer to some future requirement. The words were said to envisage a further condition which would be imposed by the Council involving compliance with the Penrith Development Control Plan 2014 (DCP), promulgated some eight years after the planning consent was given, and five years after the construction certificate was issued and acted upon. 6. The DCP provided for different "street/road types", of which the lowest levels, were "local" and "collector". According to the road hierarchy, Jilondalee Way was clearly a local road; it had only one outlet (onto Bradley Street) and no roads opened onto it. As a local road, a road reserve of 15.6m was required. However, for a collector road, a road reserve of 21.6m was required. The appellant submitted that Jilondalee Way would be a collector road according to the DCP because the provisions with respect to residential subdivisions in section 11.3 spoke of "[t]he road network" which was required to provide "for access to bus routes within acceptable walking distance from all dwellings", which unless otherwise prescribed, was said to mean "no more than 10% of allotments shall be more than 250m straight line or 400m walking distance from a proposed bus route." 7. On the assumption that the proposed development required access for buses along Jilondalee Way, according to Mr Coburn, a town planner, one turned to the description of a collector road in section 10.4B(3)(a)(iii) of the DCP which stated that "[c]ollector roads are to achieve the following performance objectives … provide for local bus services within the road lane widths". Mr Coburn stated: "23 The key determinant as to the acceptance of the Proposed road (and its relevant width) to council as a 'public road', will be its compliance with the current development consent, the subsequent engineering construction certificates and the Engineering guidelines and Engineering specifications for the construction of roads/ development." 1. Mr Coburn noted that the relevant development consent identified a "total road reserve of 16 metres". He did not refer to the construction certificate. After noting the requirements of the 2014 DCP and the engineering guidelines, he expressed an opinion in the following somewhat guarded terms: "37 Ultimately it is a matter for Council to determine the classification of the Proposed road prior to accepting it as a public road. In my opinion greater weight should be given to the provisions of the DCP, over that of the Development consent, given the length of time that has elapsed since the Development consent was issued (see paragraph 29). 38 Should Council give greater weight to the DCP, and accept that a through road is not necessary for a bus route, then the Proposed road would be classified as a 'Collector Road', with a width no less than 21.6m in total road reserve. … 40 The increase in the width of the Proposed road from that approved in the development consent, being 16m in width, to a Collector Road (21.6m as per the DCP) (or other type of road), would necessitate a modification to the Development consent." 1. While it is true that clause 6 in the terms of agreement envisaged that the owner of lot 103 (Kindelon) might wish to dedicate the land within the easement to the Council to become a public road, there was nothing in the heads of agreement to suggest that Ms Vella was required to take any steps to allow for the construction of a road which might be satisfactory to Council as a public road. Nor is there anything to suggest that she or her lawyers (if they were present at the mediation, which is not known) would have turned their minds to the factors which might possibly have led Council to decline the dedication despite the fact that the road complied with the requirements of the development consent under which it was already partly constructed. 2. The evidence as to the closest current "bus route" was sparse; it suggested that the whole of the development was beyond the 400m line, because no bus traversed Bradley Street. If one measured from Bradley Street, there may have been seven rural-residential lots beyond the 400m line. The appellant's claim that the proper construction of the definition of "easement" in the heads of agreement extended to a future requirement of Council as to suitability for a bus route must be rejected. The development consent did not "require" that the road be constructed in a manner which would permit it to become a public road, let alone identify relevant standards for that purpose. The suggestion that there could have been any common appreciation of the need to go beyond the specified width in the attached plan based on these hypothetical and speculative considerations is beyond the realm of practical reality. 3. It is then necessary to return to the appellant's first argument, namely that additional width was permitted to allow for kerb, gutter and footpath. The proper construction of the contract requires the reading of the sentence as a whole. The easement, as the respondent noted, is for "a right of carriageway" as set out in an instrument under s 88B of the Conveyancing Act 1919 (NSW). It is a right to pass and repass and does not envisage the construction of kerbing, guttering or footpaths. The appellant responded that because a right of carriageway also does not permit the construction of a roadway, the allowance for kerb, gutter and footpath cannot be explained on the basis of a need to expand the defined right of carriageway. 4. Neither of these propositions take the matter much further: the correct approach is to read the area as defined by reference to the attached plan "with an allowance for kerb, gutter and footpath to the precise width required by the Council". So read, the phrase "with an allowance for" is equally capable of acting as an inclusion and not as constituting a permitted extension. In other words, if the precise width required by Council is 16m, then to the extent that there is to be kerbing, guttering or footpaths, they must be allowed for within that width. That is indeed consistent with the Penrith City Council Guidelines for Engineering Works for Subdivisions and Developments which commenced on 20 May 1997 and appear to have been the guidelines under which the development application was approved. They relevantly stated: "2.2.4 Kerb and Gutter All streets are to be provided with an approved sealed pavement with kerb and gutter to adequately and safely provide both vehicular and pedestrian access to each allotment." 1. Standard road widths were then provided in par 2.2.8 which for "Access Street – likely bus route" involved a road reserve of 16m with two footways of 3.5m, and two traffic lanes of 4.5m. In other words, there was allowance within the prescribed width of 16m for kerbing, guttering and footpaths. If, as submitted by the appellant, regard were to be had to the 2014 DCP, it may be noted that the configuration for a local road set out in figure C10.2 involved two parking lanes of 2.5m each and a travel lane (total of 8m pavement), showing a kerb and gutter with a "verge" on either side of 3.8m, giving a total road reserve of 15.6m. The verge includes a 1.5m footpath on both sides. Accordingly under the 2014 DCP, the road reserves for all roads make allowance for kerbing and guttering within the width allowed for the pavement and for a footpath within the verge. (The diagram in the DCP suggests that the roadside vertical edge of the kerbing is within the width provided for a pavement, whereas the rest of the vertical arm of the kerbing forms part of the verge.) 2. There is no basis for understanding this language, as used in the definition of easement, as envisaging any extension beyond the 16m prescribed in the development consent and the plan accompanying the construction certificate. 3. The construction adopted above is not consistent with that of the primary judge who concluded that the phrase "with an allowance" implied something beyond the 16m road reserve. [6] However, by its notice of contention filed belatedly on 28 May 2021 (but without opposition from the appellant), the respondent proposed the construction adopted above, namely that any kerbing, guttering and footpaths must be "within the 16m road reserve depicted in pink on the plan attached to the heads of agreement." 4. The second basis upon which the appellant contended at trial that the parties had in mind a more extensive area relied on an exchange of emails between three persons, namely the contractor engaged to construct the roadway, Mr Satara on behalf of Nergl and Mr Grech, who was said to be Ms Vella's son-in-law. [7] The exchange indicated that approval had been given by the engineer supervising the roadworks to the contractor to adopt a pavement design which could accommodate buses. In passing on the decision to Mr Grech, Mr Satara stated that it is "a sensible decision to make as we now understand either buses or construction traffic from the Seniors development will impact on the original pavement design." [8] The exchange involved no expansion of the road width. 5. The reference to the Seniors Living proposal, which formed part of the 2010 tripartite agreement, was not expressly relied upon before the primary judge. However, that formed the third basis relied upon on this Court in support of the proposition that Ms Vella (or perhaps those representing her) must have known that the roadway was proposed for use by buses. 6. The 2010 tripartite agreement referred to the "Seniors Living Subdivision Project", which was defined to mean "the construction of a seniors housing development consisting of farmlets, villas, townhouses and houses and associated development (community facilities) on the site." Nergl was required to make application to obtain necessary approvals for the rural subdivision project and/or the seniors living subdivision project. It was not suggested that the 2010 tripartite agreement made reference to buses, but rather that Ms Vella (or her agents) must have known that such a project would involve facilities requiring the use of buses. 7. None of these submissions carried weight. The fact that it was proposed to build a road capable of carrying a bus bore no direct relationship to the width of the pavement as opposed to the method of construction. Even local roads are, presumably, expected to carry garbage trucks and construction vehicles. The evidence provides no proper basis for an inference which departs from the clear meaning of the heads of agreement set out above. The respondent's contention should be accepted. Issues (3): temporary construction easement 1. The easement proposed by the appellant included an "easement for construction" of variable width which appeared to be some 80m wide where the roadway crossed into lot 103. The judge identified the third question as whether the heads of agreement required a temporary construction easement, encroaching on lot 2 as well as lot 3, and beyond the boundaries of the agreed right of carriageway over lot 3. [9] 2. There was no issue that the heads of agreement provided for no such interest to be granted to the appellant. Rather, it was said that the claimed easement was "necessary" for the completion of the road and therefore should constitute an implied term. 3. There was a debate before the primary judge, and in this Court, as to whether the proposed implication had to satisfy the conditions referred to in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council: [10] "[Their Lordships] view, for a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying'; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract." 1. The alternative approach, proposed by the appellant, turned on the statement in Byrne v Australian Airlines Ltd [11] that: "a rigid approach should be avoided in cases, such as the present, where there is no formal contract. In those cases the actual terms of the contract must first be inferred before any question of implication arises. That is to say, it is necessary to arrive at some conclusion as to the actual intention of the parties before considering any presumed or imputed intention." 1. The primary purpose of the heads of agreement was to terminate the 2010 tripartite agreement which was a form of joint venture involving the Vellas and Nergl. The development consent and the possible expansion of the project involved part of Ms Vella's land, land owned by Kindelon (which was not a party to the tripartite agreement) and the land owned by Lucy Vella and then her sons after her death. Clause 11 of the heads of agreement contemplated that Peter and Michael Vella might wish to sell their land and they agreed to provide a first right of refusal to Kindelon. Ms Vicky Vella agreed to consent to the adjustments to the planning consent if made within six months of the owner of lot 103 (Kindelon) lodging the easement for registration. If Ms Vella sold any part of her land within six months of the lodgement of the easement for registration, she agreed to include in the contract for sale a condition obliging the purchaser to consent to any application to effect the adjustments. Ms Vella had no interest in the construction of the road to the north of her boundary with lot 103. Nor would she have had any continuing involvement in the development of the Kindelon land. The easement was the only current means of access to the Kindelon land. If the easement were to be expanded for any purpose, she had a financial interest in extracting a fee for such an expansion. 2. The proposed implied easement for construction was clearly outside the intentions of the parties to the heads of agreement and failed to satisfy any of the five conditions, however flexibly applied, set out in BP Refinery. Professor David Carmichael, an expert in civil engineering who gave evidence on behalf of Ms Vella, stated that the roadwork could be carried out beyond the boundary of Ms Vella's land without the need to use her land. To the extent that there was further work to be done on her land, Professor Carmichael considered it could be done in one or two days. 3. One might infer that the true reason for seeking the temporary easement for construction was to allow the expansion of the road which had been built over Ms Vella's land to allow for a road width of 21.6m, rather than the current 16m. That indeed was the thrust of the evidence given by Mr Walsh, a civil project engineer called on behalf of Nergl. 4. The construction work he proposed also involved an expansion at the southern end of the road where it met Bradley Street, which was thought necessary to allow for the construction of a roundabout on RMS land. There was no evidence as to whether RMS wanted a roundabout on the intersection with Bradley Street. [12] If it did, no doubt it would undertake the construction according to its own specifications. There was no basis to require Ms Vella to grant a temporary easement for construction to Nergl to undertake that work. 5. The primary judge was correct to reject the appellant's claims with respect to issue (3). Issue (4): accommodating a roundabout at Bradley Street in the easement 1. In considering the appellant's proposal for the easement to include a broad area at the intersection of Jilondalee Way and Bradley Street, the judge noted that the definition of easement in the heads of agreement referred to "an additional area adjoining Bradley Street sufficient to permit the construction and dedication of a roundabout." However, he observed that cl 6 of the heads of agreement imposed no express obligations on Ms Vella, while cl 7 conferred an immunity on her. [13] The judge also stated: "[185] … The final configuration of any future roundabout where Bradley Street meets Jilondalee Way is uncertain. Both Professor Carmichael and Mr Walsh agree that the Council or the RMS will finally determine the roundabout's design. It seems unlikely that Nergl will be constructing this roundabout, unless it is with the consent and supervision of the Council or the RMS, as well over 95% of the roundabout will be on the RMS land not on Lots 2 or 3." 1. At trial, the appellant relied upon a report prepared by GTA Consultants which included a "preliminary concept layout." It was clearly unacceptable in its terms. It anticipated an intersection with four entrances, rather than the T-intersection currently planned by RMS. Further, the plan appears to involve an anticipated 21.6m wide Jilondalee Way. It may also be noted that the only planning approval envisages either 17 or 19 residences being served by Jilondalee Way, which would not have given rise to a significant volume of traffic. 2. There would have been much to say for the view that no further expansion of the easement was required beyond the land which has been transferred to RMS. If RMS is to require further land to accommodate the intersection with Bradley Street, it has power to do so. However, Ms Vella agreed to an increase in the "splay" on the eastern corner of the intersection and her counsel did not resile from that concession in this Court. The concession, made by Professor Carmichael, was accepted by the trial judge. No further concession is required. The appellant's challenge with respect to issue (4) must be rejected. Costs of the trial 1. On 9 June 2021 the primary judge handed down a second judgment dealing with the question of costs. [14] Relevantly for present purposes, the following costs orders were made: (1) Order that the first and fourth defendants jointly and severally pay 80% of the plaintiff's costs of these proceedings up to 30 October 2019; (2) Order that the first defendant pay 80% of the plaintiff's costs of these proceedings after 30 October 2019 …. 1. Ms Vella did not take issue with these orders, but Nergl and Kindelon did. For that purpose, it was necessary for Kindelon to be joined as a second appellant. A fresh set of grounds was added to an amended notice of appeal. Ms Vella took no issue with a grant of leave to file the amended notice of appeal, with Kindelon being identified as the second appellant, or leave being granted to appeal from the costs orders. The issue in dispute being quite limited, that was an appropriate course to take. 2. The substance of the appellant's complaint, identified in written submissions, was that the orders referred to the "plaintiff's costs of the proceedings", without identifying a date from which the costs flowed. The original proceedings preceded, and gave rise to, the mediation; accordingly, Nergl contended that the order should have been expressly limited to the post-mediation costs. The relevant costs were those incurred in the period commencing on 10 May 2019, when Ms Vella filed her amended summons or, alternatively, from 12 December 2018 when the heads of agreement were signed. (No oral submissions were directed to the costs of the trial.) 3. To read the orders as encompassing pre-mediation costs was not a realistic interpretation of the judge's orders: it was reasonably clear that the orders applied to the costs of the proceeding which had been heard and determined by him. That interpretation is confirmed by the reasons given by the judge, which were as follows: "[17] The parties also disputed from when any costs order would operate. Mrs Vella contended that it should date back to the date of the Heads on 12 December 2018, so she could recover all costs incurred by her since then. In contrast, Nergl submits that any cost order should only operate from 10 May 2019, the date that the plaintiff's Amended Summons was filed. [18] The Court does not accept either of these submissions. Some of Mrs Vella's costs since 12 December 2018 may not relate to the preparation of these proceedings. And it was necessary for Mrs Vella to commence proceedings in order to achieve the relief on which she has been successful. She should not be limited to recovery of costs after the filing of her Amended Summons. [19] The appropriate order for cost in Mrs Vella's favour should be framed as an order for the 'costs of these proceedings'. These reasons make clear, in accordance with accepted authority, that this will include costs incurred in the preparation for the litigation as well as in the litigation, provided that the pre-litigation expenses to be recovered are expenses that were necessary or proper for the attainment of justice or for defending the rights of any party: …." 1. This reasoning at [17] did not accurately reflect the submission put by Ms Vella, which was for payment of "the plaintiff's costs of and relating to the proceedings from 12 December 2018". That language was intended to achieve precisely that which the judge sought to achieve without reference to a date, namely to exclude costs which were not related to the proceedings, either by way of preparation in advance of the filing of the amended summons or, indeed, thereafter. Accordingly, the order made by the judge was intended to give effect to the order proposed by Ms Vella, but using different language. It did not involve a rejection of her intentions in proposing the order. 2. To remove the possible ambiguity, it is appropriate to use language which, if there is further disputation, can readily be resolved by a costs assessor. The orders made on 9 June 2021 should be varied as follows, as Ms Vella acknowledged: Set aside orders (1) and (2) and in their place order that: (a) Nergl and Kindelon are jointly and severally liable to pay to the plaintiff 80% of her costs of and relating to the proceedings in the Equity Division from 12 December 2018, up to and including 30 October 2019; and (b) Nergl is to pay 80% of the plaintiff's costs of the proceedings in the Equity Division after 30 October 2019. Costs of appeal 1. Neither party made oral or written submissions with respect to the costs of the appeal. It should be assumed that the parties accepted that costs would follow the event. The appropriate order is that the appellant pay the costs of the first respondent in this Court. Conclusions 1. It follows that the appeal must be dismissed. The consequential directions given by the trial judge were placed on hold pending the hearing and determination of this appeal. It is unfortunate that an application for specific performance of an agreement has taken so long to be resolved. Nevertheless, the only step required of this Court is to dismiss the appeal and allow the matter to proceed to a conclusion in the Equity Division. 2. The Court should make the following orders: 1. Direct that Kindelon Pty Ltd be identified as the second appellant. 2. Grant leave to the appellants to file the amended notice of appeal within 7 days. 3. Grant leave to the appellants to appeal from orders (1) and (2) made on 9 June 2021 with respect to the costs of the trial. 4. Set aside orders (1) and (2) made on 9 June 2021 and in their place order that: 1. Nergl and Kindelon are jointly and severally liable to pay to the plaintiff 80% of her costs of and relating to the proceedings in the Equity Division from 12 December 2018, up to an including 30 October 2019; and 2. Nergl is to pay 80% of the plaintiff's costs of the proceedings in the Equity Division after 30 October 2019. 1. Otherwise dismiss the appeal. 2. Order Nergl to pay Ms Vella's costs in this Court. 1. MEAGHER JA: I agree with Basten JA. 2. LEEMING JA: I agree with Basten JA. ********** Endnotes 1. [2020] NSWSC 1405. 2. Vella at [18]. 3. Vella heading at [82]. 4. (1954) 91 CLR 353; [1954] HCA 72. 5. Masters v Cameron at 360 (Dixon CJ, McTiernan and Kitto JJ). 6. Vella at [126]. 7. Tcpt, 20/11/19 p 211(20). 8. Email, Nergl to G Grech, 22 August 2011. 9. Vella at [130]. 10. (1977) 180 CLR 266 at 283 (PC). 11. (1995) 185 CLR 410 at 422 (Brennan CJ, Dawson and Toohey JJ); [1995] HCA 24. 12. Vella at [160]-[161]. 13. Vella at [134]-[143]. 14. Vella v Nergl Developments Pty Ltd (No 2) [2021] NSWSC 648. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 01 July 2021