Supreme Court New South Wales Medium Neutral Citation: In the matter of Italian Forum Limited (subject to a deed of company arrangement) [2015] NSWSC 1386 Hearing dates: 31 July 2015 Date of orders: 14 August 2015 Decision date: 14 August 2015 Jurisdiction: Equity - Corporations List Before: Rein J Decision: See [44] Catchwords: EQUITY - Corporations - Application for Directions - Contract to Sell Land - Conditions Precedent to the Sale Contract - Unpaid Vendor Contributions - Debt has not Accrued - The Difference between a Debt Accruing and an Obligation being Incurred Legislation Cited: Strata Schemes (Freehold Development) Act 1973 (NSW) Cases Cited: Austral Masonry (NSW) Pty Ltd v Cementech Pty Ltd [2014] FCAFC 72 FPM Constructions Pty Ltd v Council of the City of Blue Mountains [2005] NSWCA 340 Idya Pty Ltd v Anastasiou [2008] NSWCA 102 Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268 McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 R & R Fazzolari Pty Ltd v Parramatta City Council; Mac's Pty Ltd v Parramatta City Council [2009] HCA 12; (2009) 237 CLR 603 R v Young [1999] NSWCCA 166; (1999) 46 NSWLR 681 Roberts v Investwell Pty Ltd (in liq) [2012] NSWCA 134 Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (in liq) (1936) 54 CLR 361; [1936] HCA 6 Texts Cited: Nil Category: Principal judgment Parties: Stephen Wesley Hathway (First Plaintiff) Italian Forum Limited (subject to a deed of company arrangement) (Second Plaintiff) The Owners Strata Plan No 60919 (First Defendant) The Owners Strata Plan No 60918 (Second Defendant) Perpetual Trustee Company Limited (Third Defendant) CoAslt Italian Association of Assistance (Fourth Defendant) Representation: Counsel: E. Finnane (Plaintiffs) H. Collins (First Defendant) (Solicitor) P. Bard (Third Defendant) (Solicitor) R.J Carruthers (Fourth Defendant) Solicitors: Slater & Gordon Ltd (First and Second Plaintiff) Colin Biggers & Paisley (First Defendant) Baron + Associates (Second Defendant) Paul Bard Lawyers (Third Defendant) King Wood Mallesons (Fourth Defendant) File Number(s): 2015/82225 Publication restriction: nil JUDGMENT 1. Mr Stephen Wesley Hathway was appointed on 19 August 2013 as administrator of Italian Forum Limited ("IFL")- the second plaintiff. These proceedings commenced as an application by him for directions pursuant to s 447D of the Corporations Law. 2. IFL is the owner of a portion of a property in Leichardt known as the Italian Forum. The Forum is made up of commercial, residential and community sectors and also contains a car park. The owners corporation of the commercial sector is the first defendant. The owners corporation of the residential sector is the second defendant. The owner of the car park is the third defendant. Mr E. Finnane of Counsel appears for Mr Hathway and IFL, the plaintiffs in these proceedings. 3. The Forum is managed by a building management committee ("the BMC") established pursuant to a Strata Management Scheme ("SMS") and there have been difficulties in IFL meeting its obligations by way of levies raised by the BMC. Unpaid contributions are currently in the order of $590,000. The SMS also made provision for payments of what was described as a promotional levy of $60,000 to be paid on an annual basis by the first defendant to IFL and which, as at September 2009, had not been paid. In 2009, following litigation between IFL and the first and second defendants an agreement was reached between IFL and those defendants whereby amendments to the SMS were made by this Court by consent. 4. The amended clause authorised by Court order (made by consent) on 9 September 2009 provided for staggered payment of the then outstanding $291,000 due from IFL and the promotional levy instalments due to IFL and by clause 15.13.4 the obligations were made interdependent which meant that the obligation of IFL to pay instalments of the $291,000 and interest thereon was dependant on the payment of the first instalment of $60,000 by the first defendant to IFL. The clause referred to IFL "or its successor in title". 5. As at the present date the first defendant has not paid any amount to IFL and IFL has not paid any amount due from it for the period from 9 September 2009 up to 30 June 2011. 6. IFL has obligations to the Leichardt Municipal Council ("the Council") including debts in relation to council rates which it has not paid. The Council holds a mortgage over the property of IFL. 7. On 28 November 2014 IFL entered into a contract to sell the land owned by it to the fourth defendant ("the Purchaser") ("the Sale Contract"). That sale is one entered into with the consent of the Council. 8. The Sale Contract clause 86 is in the following terms: "86. Notwithstanding Clause 23, noting that: a. as at the date of this Contract the Vendor and Owners of Strata plan SP60919 are parties to the Strata Management Statement filed with Strata Plans SP 60918 and SP60919 as amended by orders made by the Supreme Court of New South Wales on 11 September 2009 (Strata Management Statement); b. under the Strata Management Statement: (i) the Vendor is required to pay contributions to the Building Management Committee, including any arrears, interest, penalty or costs associated with any such contributions which might otherwise be recoverable, (Vendor BMC Contributions); and, (ii) the Owners of Strata Plan SP60919 are required to pay promotional levies including arrears (Promotional Levies) to the Vendor; but, (iii) the obligations of the Vendor and of the Owners of Strata Plan SP60919 to pay the monies referred to above are, pursuant to clause 15.13.4 of the Strata Management Statement are interdependent; and, c. it is the intention of the parties hereto that: (i) on Completion the Purchaser is to take the Land without assuming anyliability for Vendor BMC Contributions that were, pursuant to the StrataManagement Statement, to be paid by the Vendor on dates prior to theCompletion date; (ii) the Vendor will retain the entitlement to all amounts including Promotional Levies that were, pursuant to the Strata Management Statement, to be paid to the Vendor prior to the Completion date; and (iii) the parties will make necessary adjustments on Completion to give effect to this intention; the parties hereby agree that: d. those Vendor BMC contributions that relate the period from the appointment 19 August 2013 until Completion, apportioned as necessary by reference to both the beginning and end of the said period, shall be paid by the Vendor on Completion and if not paid shall be adjustable in accordance with clause 14; e. save as provided above, all unpaid Vendor BMC Contributions shall remainunpaid by the Vendor on Completion and shall not be adjustable, to the intentthat, as between the Vendor and the Purchaser, the Vendor is under noobligation under this Contract to pay Vendor BMC Contributions or any interest, penalty or costs associated with any Vendor BMC Contributions which might otherwise be recoverable; f. it is a condition precedent to Completion that, either: i. a final order, declaration or direction is made, by a court of competent jurisdiction, to the effect that the unpaid Vendor BMC Contributions relating to any period prior to Completion, and any interest thereon, are not recoverable against the Purchaser or the Land; or ii. an agreement in writing is entered into between the Vendor and BMC to the same effect as paragraph i of this subclause f, or iii. the amounts referred to in paragraph i of this subclause f are paid to or at the direction of BMC on or before Completion; or iv. such amount or amounts as may be determined by a court of competent jurisdiction to be the amount or amounts that are recoverable against the Purchaser or the Land is or are paid on or before Completion; or v. such amount or amounts as may be agreed between the Vendor andBMC as being the amount or amounts that are recoverable against the Purchaser or the Land is or are paid on or before Completion; or vi. the agreement in writing of the Purchaser prior to Completion without any of the alternatives within paragraphs i to v of this subclause f being satisfied, and if such agreement is subject to a condition, the satisfaction of that condition. g. For the purposes of subclause f: i. an order, declaration or direction is final if: 1. the period for commencing an appeal therefrom has expired without an appeal being lodged; or 2. there is no appeal avenue available in respect of the order, declaration or direction; or 3. the order, declaration or direction is made by consent; and ii. BMC means the building management committee constituted under the Strata Management Statement. h. prior to the Completion date, the Vendor will do all things necessary to ensure that the Purchaser is not held liable for contributions (including arrears) that were, pursuant to the Strata Management Statement, to be paid by the Vendor on dates prior to the Completion date; i. for the avoidance of doubt, on and from Completion the Purchaser shall be liable to the BMC for all BMC Contributions levied in relation to the Land including any interest, penalty or costs associated with any such BMC Contributions which might otherwise be recoverable; j. the parties will do all things necessary to ensure that, on Completion the Vendor, to the exclusion of the Purchaser, retains all entitlement, right, title and interest in the Promotional Levies pursuant to the Strata Management Statement that are or were due for payment pursuant to the Strata Management Statement prior to the Completion date; k. by way of further assurance, the Purchaser does hereby assign to the Vendor any right, title and interest which the Purchaser would acquire in the Promotional Levies that are or were due for payment pursuant to the Strata Management Statement prior to the Completion date; I. the Promotional Levies will be adjusted to the Completion date, to the intent that if, for example, under sub-clause i and/or j above, the Vendor is entitled to promotional levies relating to a period that goes beyond the Completion date, an adjustment shall be allowed in favour of the Purchaser for the period from the Completion date; m. for the purpose of calculating the date when payments are due for payment, or are to be adjusted, the parties shall disregard the terms and effect of clause 15.13.4 of the Strata Management Statement. For example, and without limitation, the amounts referred to in each of subparagraphs (a) to (m) are for these purposes regarded as due for payment on the dates by which those payments are to be made as, specified in each of those subparagraphs, notwithstanding that the obligation to pay such amounts may be suspended under subparagraph 15.13.4; and n. the Vendor and the Purchaser agree to co-operate and to do all things reasonably required to give effect to the intentions stated in this clause 86." (Emphasis added) 1. Clause 74 of the Sale Contract provides that either IFL or the Purchaser can rescind the Sale Contract if the parties are unable to satisfy the conditions precedent to the Sale Contract by 17 May 2015. This has been extended by agreement to 17 September 2015. 2. Mr Hathway wishes to proceed with the sale but there are issues in relation to the unpaid monies claimed by the BMC which are of concern particularly having regard to clauses 74 and 86 of the Sale Contract. I have referred to the further complication which is the non payment by the first defendant of the promotional levy. 3. Although the proceedings commenced as an application for directions, they were expanded to include declarations and an order for payment by the first defendant of the outstanding promotional levies (but only after payment by the plaintiffs of the amounts due by IFL to the BMC). 4. All four defendants have filed submitting appearances. None of them have on this hearing put forward any evidence or contentions to suggest that the relief sought by the plaintiffs in their Amended Process, should not be granted. 5. The plaintiffs have obtained a written Joint Memorandum of Advice dated 22 May 2015 from Mr E Finnane and Mr D.W Elliott of counsel. The joint advice is very comprehensive and explains why, on the plaintiffs' case, the orders sought should be made. The advice is found at Exhibit A1 pp 12- 33. 6. The plaintiffs are concerned to ensure that the sale to the Purchaser proceeds. They are concerned to ensure that the preconditions in clause 86(e) are met so that the sale is not impeded or terminated. Mr Hathway is also concerned to avoid any complaint by the creditors of IFL that he has, on behalf of the IFL, paid out too much to the BMC. 7. The focus of concern is what amount or amounts must be paid by the plaintiffs to the BMC on or prior to settlement and this entails consideration of the matters found in the joint advice. 8. The sale of the IFL property is, I infer, in the interest of the creditors of IFL. No creditor has sought to challenge the sale. The Council opposed the sale of the property to any entity that did not meet the criteria which had been imposed on IFL by an agreement previously entered into by IFL and the Council and proceedings brought by the Council to compel acceptance of that requirement were resolved on the basis that the plaintiffs would sell to the Purchaser. 9. The joint advice analyses the obligations of IFL vis a vis the BMC and the rights of IFL vis a vis the first defendant, and addresses the following questions: 1. are any of the "unpaid Vendor BMC Contributions" as defined in clause 86(c) of the Sale Contract recoverable by the BMC against 1. the Purchaser 2. the land 1. are the Vendor BMC contributions secured debts 2. what is the status of the Vendor BMC Contributions that IFL is not required to pay on settlement 1. The joint advice identifies the unpaid Vendor BMC Contributions as spanning four periods: 1. up to 11 September 2009 ("the first period") 2. 11 September 2009 to 30 June 2011 ("the second period") 3. 30 June 2011 to 19 August 2013 ("the third period") 4. 19 August 2013 to date of settlement of the Sale Contract ("the fourth period") 1. Based on the joint advice the plaintiffs contend that the SMS does not in terms or impliedly seek to impose or create a charge on the land of IFL by reason of non payment of the BMC levies. To create an equitable mortgage or charge there must be an intention to create an immediate proprietary interest or immediate right of recourse to identifiable present or future property: see Roberts v Investwell Pty Ltd (in liq) [2012] NSWCA 134 at [26]- [29] per Bathurst CJ (with whom Beazley JA and Tobias AJA agreed). There is no legislative provision to the contrary. The debts of IFL are not therefore secured over the IFL property. I accept this contention. 2. In relation to the first and second period attention is drawn to the terms of clause 15.3 of the SMS (as amended) (see pp 1185- 1188 Exh A4), and the interdependent nature of the obligations, other than the first instalment levy. Thus the first instalment of $60,000 was to be paid by the first defendant on 30 September 2009 but if it was not paid IFL had no obligation to pay the amounts due from it. The first defendant did not pay the first instalment on 30 September 2009 and has never paid it. IFL did not pay any amount due by it under clause 15.13.2 and it is not presently required to pay any such amount, because of clause 15.13.4. 3. Thus, it is contended that the amounts covered by the clause which IFL would be required to pay if the first defendant had paid the first levy have not crystalised into a debt. This extends not only to the $291,000 which had been due as at 9 September 2009 but the instalments which fell due between that date and 30 June 2011. They are still not due and owing. 4. The joint advice grapples with the question of whether the Purchaser would be liable to the BMC by virtue of s 28W of the Strata Schemes (Freehold Development) Act 1973 (NSW) ("SSFDA") which is in the following terms: "(1) A registered strata management statement, as in force for the time being, relating to the management of a building has effect as an agreement under seal containing the covenants referred to in subsection (2) entered into by each person who for the time being is: (a) a body corporate of a strata scheme for part of the building, or (b) a proprietor, mortgagee in possession or lessee for the time being of any of the lots in such a strata scheme, and (c) any other person in whom the fee simple of any part of that building or its site (being a part affected by the statement) is vested for the time being, or the mortgagee in possession or lessee of any such part. (2) The covenants referred to in this section are: (a) a covenant by which those persons jointly and severally agree to carry out their obligations under the registered strata management statement as from time to time in force, and (b) a covenant by which those persons jointly and severally agree to permit the carrying out of those obligations. (3) The agreement ceases to have effect under this Division: (a) in relation to a person who is described in subsection (1) (b) or (c), on that person ceasing to be a person so described, and (b) in relation to all of the persons described in subsection (1), on termination of all strata schemes to which the strata management statement relates. (4) Subsection (3) does not prejudice or affect any obligation that was incurred by a person, or any right that accrued to a person, under the agreement while the agreement was in force. (5) A strata management statement has no effect to any extent to which it is inconsistent with any condition imposed on a development consent relating to the site of the building to which the statement relates, with an order under Chapter 5 of the Strata Schemes Management Act 1996 or with any other Act or other law. (6) Except as may be provided otherwise by this Act or the regulations, a provision in any instrument under which the agreement is excluded, modified or restricted is void." 1. The joint advice accepts that the effect of the section is to overcome problems of priority by imposing a contractual relationship in circumstances where they otherwise would not exist: Idya Pty Ltd v Anastasiou [2008] NSWCA 102 per Beazley JA (with whom Mason P agreed). 2. The joint advice proceeds on the basis that as for the period from which the Purchaser becomes the registered owner it will, by virtue of s 28W, be liable for the BMC levies. What it will not be liable for are obligations "incurred" by IFL before settlement. 3. The consequence is, it was submitted, that IFL has not at any time to date been liable to pay any of the amounts due by it for the first and second periods. Therefore it has not incurred an amount for which it is liable. 4. A question addressed is whether the BMC contributions for the first and second period have been incurred by IFL. Counsel drew attention to the fact that there is substantial authority for the proposition that the termination of an agreement does not terminate obligations from one contracting party to the other that have already accrued: see McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 (cited in Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268 and Austral Masonry (NSW) Pty Ltd v Cementech Pty Ltd [2014] FCAFC 72) and Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (in liq) (1936) 54 CLR 361; [1936] HCA 6 ("Westralian Farmers"). Thus such obligations as the IFL had at the time of settlement will not cease to exist but the obligations which had not been incurred at the time of transfer of the property to the Purchaser will not be obligations of IFL after settlement. 5. The joint advice then proceeds in respect of the first and second periods to note that because the debt has not accrued yet and will not accrue prior to settlement if the first defendant does not pay the first levy that was required to be paid under the amended clause it may well accrue when the Purchaser becomes the registered owner. The risk of that occurring is a risk that the Purchaser does not wish to take and it is relevant that the plaintiffs have agreed that the Purchaser is not to be burdened with any obligation to pay money that was imposed on IFL. The plaintiffs have agreed that the purchaser is "to take the Land without assuming any liability for the Vendor BMC Contributions that were, pursuant to the Strata Management Statement to be paid to the Vendor prior to the Completion date" (see clause 86 c(i)). The plaintiffs therefore accept that they are contingently liable to pay the unpaid BMC amounts whilst the precondition of payment by the first defendant is not met and currently liable to pay the BMC amounts for the first and second periods, not contractually as between IFL and the BMC, but contractually as between IFL and the Purchaser. The Purchaser embraces this conclusion (unsurprisingly). 6. It follows then that in relation to the first and second periods, the plaintiffs accept that they are obliged to pay the BMC the amounts that are the subject of the intended payments regime. 7. In relation to the third period the advice notes that by the commencement of this period the interdependent obligations regime had ended. By virtue of s 28W of the SSFD the obligations to pay levies for the period it was registered owner were imposed on it as registered owner and that it continues to owe that money by virtue of s 28W(4) even after it has ceased to be registered owner. It follows that the debt has crystalised and will not be terminated by sale. It follows that it is a debt covered by the Deed of Company Arrangement making the BMC debts for that period an ordinary debt in the administration. 8. In relation to the fourth period, the joint advice proceeds on the basis that the obligations imposed on the administrator and IFL are obligations not caught by the Deed of Company Arrangement and these amounts must be paid on or before settlement. 9. Based on the joint advice the plaintiffs contend that the effect of s 28W is not to impose on the Purchaser an obligation to pay levies incurred by IFL whilst it was the registered owner. 10. I accept as correct the analysis proffered in the joint advice save in one respect with which I deal in [36] below. In relation to the interpretation of s 28W: 1. the section does not expressly impose on a purchaser an obligation to pay levies levied for the period prior to it becoming registered purchaser. In fact it imposes a regime that focuses on registration as owner 2. the phrase 'those persons' in s 28W(2) and the imposition of obligations on them must be the persons referred in s 28W(1) ie the persons who are for the time being the proprietors 3. the only way in which the Act could be read as impliedly imposing an obligation to pay an amount for which the purchaser would not otherwise be liable is if the legislative provisions were amenable to such an interpretation and the clear policy of the Act would be met by preferring such an interpretation: see R v Young [1999] NSWCCA 166; (1999) 46 NSWLR 681 per Spigelman CJ at [5]- [6] and [12]- [15] and see R & R Fazzolari Pty Ltd v Parramatta City Council; Mac's Pty Ltd v Parramatta City Council [2009] HCA 12; (2009) 237 CLR 603 at 619- 620 per French CJ 4. the express reservation in s 28W of accrued obligations of the outgoing registered owner and the absence of any provision dealing with joint and several liability (see for example in contrast s 78(3) of the Strata Scheme Management Act 1996 (NSW)) or the provision of a right of recovery by the incoming registered owner from the outgoing owner, tends to support that analysis and I therefore agree that the Purchaser will not be liable for debts or obligations incurred by the vendor when it was registered owner. 1. I agree that the words "or its successor in title" in the amended SMS are not intended to impose on a purchaser an obligation in respect of obligations already incurred by the vendor- rather it is to make it clear that a purchaser will be liable for contributions relevant from the time that the purchaser becomes registered on title. 2. I draw additional comfort from the fact that the parties with a real interest in maintaining the contrary (the first and second defendants) have chosen not to do so. 3. I note too that the first defendant did apparently seek to propound the proposition that the promotional levies were not due from it to IFL but that such a position was abandoned when the first defendant sought (and was granted) leave to withdraw its appearance as filed and substitute a submitting appearance. 4. The qualification to which I have referred in [32] is based on the difference between a debt accruing and an obligation being incurred. I accept that IFL was not under a liability to pay the BMC amounts for the first and second periods whilst the first defendant had not paid the promotional levies. That is to say IFL's obligation was subject to a condition precedent which until met did not permit a claim to be made against IFL for any of the BMC contributions covered by clause 15.13 of the SMS. 5. That does not mean, however, that the obligation imposed on IFL to pay the BMC payments when the promotional levies were paid was not incurred whilst IFL was the registered owner. Neither the existence of the condition precedent nor its non-fulfilment whilst the contract is on foot (or in this case whilst the SMS is binding on IFL) means that the obligation has not been incurred whilst IFL was the registered owner. 6. In Westralian Farmers a tractor dealer's obligation to pay a commission to an Australian importer of such goods ordered from a US manufacturer was dependant on arrival of the goods in Australia (the actual price of the goods having been paid by the dealer at the time of collection of the goods in the US). The contract between the importer and the dealer ("the subsidiary contract") was, by its terms, to end when the contract between the importer and the US manufacturer ("the main contract") terminated. The main contract terminated bringing an end to the subsidiary contract, and the dealer claimed that it was not liable to pay the commission due to the termination of the subsidiary contract. The majority of the Court held that the obligation had been imposed prior to termination even though the obligation was subject to a condition precedent (arrival of the goods in Australia) which condition was not fulfilled until after the date of termination. 7. Starke J said that the critical question was whether the obligation to pay the commission arose before termination of the contract and his Honour said of the clause dealing with payment of the commission "This clause, however, merely delays or postpones payment of the percentage until arrival of the goods at Fremantle, but otherwise leaves untouched the obligations of the contract. It does not affect the liability to pay the percentage arising out of an obligation which had arisen before the termination of the contract." (p 377) Dixon and Evatt JJ state: "In general the termination of an executory agreement out of the performance of which pecuniary demands may arise imports that, just as on the one side no further acts of performance can be required, so, on the other side, no liability can be brought into existence if it depends upon a further act of performance. If the title to rights consists of vestitive facts which would result from the further execution of the contract but which have not been brought about before the agreement terminates, the rights cannot arise. But if all the facts have occurred which entitle one party to such a right as a debt, a distinct chose in action which for many purposes is conceived as possessing proprietary characteristics, the fact that the right to payment is future or is contingent upon some event, not involving further performance of the contract, does not prevent it maturing into an immediately enforceable obligation." (p 380) McTiernan J took a similar view at p 386. 1. In FPM Constructions Pty Ltd v Council of the City of Blue Mountains [2005] NSWCA 340 the Court had terminated a building contract, following receipt of what was found to be a false statutory declaration that there were no outstanding subcontractor debts. Beazley JA and Basten JA, held that FPM did not have an unconditional right to payment of a claim lodged for work done prior to termination. Giles JA held that FPM did have an accrued right to assessment by the Superintendent and payment in accordance with a payment certificate. Basten JA (with whom Beazley JA agreed) held that as a matter of construction the clause dealing with the Superintendent did not survive the termination. His honour saying: "[192] Finally, it is necessary to refer to the common law principles invoked by cl 44.10. In a well known passage in McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 476–477, Dixon J held: When a party to a simple contract, upon a breach by the other contracting party of a condition of the contract, elects to treat the contract as no longer binding upon him, the contract is not rescinded as from the beginning. Both parties are discharged from the further performance of the contract, but rights are not divested or discharged which have already been unconditionally acquired. The passage relied upon by Giles JA at [37] from the joint judgment of Dixon and Evatt JJ in Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (1936) 54 CLR 361 at 378–380 does not qualify this principle, although it provides some further context for its application. It makes clear a distinction between a right to payment in the future which is contingent upon an event which does not involve further performance of a contract and one which does. It is only in the former case that an accrued right can be said to have arisen. That distinction returns one to the terms of the contract in order to determine whether a future contingency depends upon the further performance of the contract. To the extent that the contingency in the present case requires the continued exercise of power by the superintendent, pursuant to clause 23, it requires the further performance of the contract by the principal whose obligation it is to see that there is a superintendent and that the superintendent discharges its functions in the prescribed manner. Where the relevant period has not expired, it is not possible to identify an "unconditional" right to a payment vested in the contractor, as at the date of termination in the sense identified in Dennys Lascelles. That right will only crystallize where the principal continues to ensure that the superintendent exercises its power. Not only does that power not outlive termination, but if it did, it would require continued performance by the principal." 1. The arrival of the goods in Australia in Westralian Farmers was not an act of performance under the contract. In this case the right to claim the BMC amounts was dependant on the payment of the promotional levies. It is true that those payments were payments called for by the SMS but the act of payment was quite different to, for example, the carrying out of promotional work or building work under a building contract. 2. Although literally the payment of the promotional levies was a condition precedent requiring performance under the SMS it was only payment that was required not performance of work under the SMS and I am inclined to think that the obligation was one which would be carried forward as an obligation of IFL after the termination of its registered ownership (by reason of the sale of the property by IFL) and not one which fell by the wayside. Strictly it is however not necessary to determine this question, or whether, because s 28W speaks of obligations which have been incurred not debts which have crystalised, that section would not impose an obligation on the purchaser, a view of s 28W reinforced by the fact that s 28W does not make the purchaser liable for BMC contributions for periods that it was not the registered proprietor. This is because clause 86(m) of the Sale Contract makes it clear that IFL's obligation is to pay BMC amounts that were to be paid by IFL pursuant to the SMS prior to the completion date and that for the purpose of calculating the date when payments are due for payment "the parties shall disregard the terms and effect of clause 15.13.4" notwithstanding that "the obligation to pay such amounts may be suspended under subparagraph 15.3.4". The BMC amounts for the first and second period were to be paid prior to completion if regard is not had to the effect of clause 15.13.4. 3. It follows that even were I to hold that the Purchaser would not be held liable for any BMC amounts due under the first and second periods even if the first defendant were to fulfil the condition precedent after settlement, the result is nevertheless that the plaintiffs are required by the terms of the Sale Contract to make the BMC payments for the first and second periods (as well as the fourth period) contractually as between themselves and the Purchaser. 4. I therefore conclude that the plaintiffs are justified in taking the steps which they propose to take and entitled to the relief sought in the draft orders handed up in Court on 31 July 2015, reflecting in the main the relief specified in the Amended Originating Process. Note 1. These reasons need to be read in conjunction with my reasons in In the matter of Italian Forum Limited (subject to a deed of company arrangement) (No 2) [2015] NSWSC 1382. 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: 21 September 2015