In the recent decision of Nergl Developments v Vella [2021] NSWCA 131 the Court of Appeal had to consider the nature of an agreement reached between landowners and developers.

In 2008 and then 2010, a developer, N, entered into agreements with adjoining landowners including V to develop some land.

N commenced development and lodged caveats over land including V’s. The caveats secured obligations purportedly pursuant to the 2010 agreement.

By 2018 the initially lodged caveats were replaced by new caveat. V applied to the Court to have them removed.

In December 2018 the parties attended a mediation and negotiated a Heads of Agreement settling all disputes arising out of the agreements.

Things again stalled, however. Each party sought specific performance of the Heads of Agreement by executing certain documents, but they disagreed on what precisely was to be done.

The Court at first instance made various orders for the performance of the Heads of Agreement.

N appealed. The Court at first instance found the Heads of Agreement to be a Class 2 Masters v Cameron (1951) 91 CLR 353 document i.e. a complete record of an agreement conditional on the execution of a later formal document.

The parties agreed he execution of further documents were consideration for, not replacement of, the Heads of Agreement.

The Court of Appeal considered the practical impact of N’s challenge on this point (i.e. that there should be some new document replacing the Heads of Agreement) was obscure: even if N was correct and a new document replacing the Heads of Agreement was required, little would change practically except for the very technical issue of the form of the specific performance orders the Court would make.

There was extensive argument about whether the width of the easement was to be 16M or 21.6M, with the material such as the DA being unambiguously 16M.

N referred to possible use of buses on the road to be built, and suggested that 21.6M was required. Noting that the 16m width of road could deal with garbage trucks and the like, and that only up to 19 lots were proposed in the development, 21.6M was not found to be necessary. None of the further evidence founded an inference for departing from the 16M requirement implied in the Heads of Agreement.

N argued it was an implied term of the Heads of Agreement that a construction easement be granted.

The main purpose of the Heads of Agreement was to terminate the tripartite agreement and it was not necessary that a construction easement be implied

N’s argument for an easement for a roundabout was rejected

The costs order from the earlier proceedings was clarified to make clear it did not relate to “pre-mediation” legal costs, only costs after the Heads of Agreement was entered into.

N’s appeal was dismissed.

N’s failed appeal stands as a salutary lesson in recording any agreement reached between commercial parties as clearly and precisely as possible.