162 Tucker Road Pty Ltd (ACN 617 498 914) v SPG Tucker Pty Ltd (ACN 510 019 442); SPG Tucker Pty Ltd (ACN 610 019 442) v 162 Tucker Road Pty Ltd (ACN 617 498 914)
[2020] VCC 284
•17 March 2020
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
| GENERAL LIST |
Case No. CI-18-05541
| 162 TUCKER ROAD PTY LTD (ACN 617 498 914) | Plaintiff |
| v | |
| SPG TUCKER PTY LTD (ACN 610 019 442) | Defendant |
| AND | |
| SPG TUCKER PTY LTD (ACN 610 019 442) | First Plaintiff by Counterclaim |
| and | |
| RIC PLATINUM PTY LTD | Second Plaintiff by Counterclaim |
| v | |
| 162 TUCKER ROAD PTY LTD (ACN 617 498 914) | First Defendant by Counterclaim |
| and | |
| KHUYEN TRI NGUYEN | Second Defendant by Counterclaim |
| and | |
| DAT HUU NGUYEN | Third Defendant by Counterclaim |
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JUDGE: | HIS HONOUR JUDGE SMITH | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 26, 27, 28, and 29 November, 2, 3, 4, 5 and 12 December 2019 | |
DATE OF JUDGMENT: | 17 March 2020 | |
CASE MAY BE CITED AS: | 162 Tucker Road Pty Ltd (ACN 617 498 914) v SPG Tucker Pty Ltd (ACN 510 019 442); SPG Tucker Pty Ltd (ACN 610 019 442) & Anor v 162 Tucker Road Pty Ltd (ACN 617 498 914) & Ors | |
| MEDIUM NEUTRAL CITATION: [First revision 3 August 2020] | [2020] VCC 284 | |
REASONS FOR JUDGMENT
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Subject: SALE OF LAND
Catchwords: Contract of Sale – nomination of purchaser – whether contractual relationship existed between nominee and vendor – whether there was a repudiation of contract by purchaser by persistent inability or unwillingness to settle – whether there was a repudiation of contract by vendor – whether vendor’s notices of default were valid – whether vendor’s purported termination of contract vendor was valid – whether the contract was abandoned by one or both parties – where original purchaser went into liquidation after the commencement of the proceeding - whether damages could be recovered by the vendor from nominee or purchaser’s guarantor - measure of damages – whether monies were loaned to the nominee by an associate of the vendor by provision of a bank cheque – whether the recipient of cheque was authorised by the borrower to receive it – whether receipt of the bank cheque by that person was receipt by the proposed borrower
Cases Cited:Commissioner of State Revenue v Politis [2004] VSC 126; 428 Little Bourke Street Pty Ltd v Lonsdale Street Cafe Pty Ltd [2009] VSC 133; Walters v Cooper (1967) VR 583; McDonald & Anor v Dennys Lascelles Limited (1933) 48 CLR 457; Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64; Hadley v Baxendale (1854) 2 CLR 517; Statewide Developments Pty Ltd v Higgins [2010] NSWSC 183; [2011] NSWCA 35; Palmer v Temple (1839) 9 Ad. & E. 508; Laird v Pim & Anor (1841) 7 M & W 474; Jones v Dunkel (1959) 101 CLR 298; O’Donnell v Reichard [1975] VR 916.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff and Second, Third and Fourth Defendants by Counterclaim | Mr T Mitchell | Mills Oakley |
| For the Defendant and Plaintiffs by Counterclaim | Mr J Arthur | Wayne Wong & Associates |
HIS HONOUR:
Introduction
1 All dates referred to in these Reasons relate to the year 2017 unless otherwise stated.
2 On or about 17 January, RIC Homes Heidelberg Pty Ltd (“RHH”) entered into a written contract (“the Contract”) to purchase land situated at and known as 162 Tucker Road, Bentleigh in Victoria (“the Property”).
3 The vendor of the Property was SPG Tucker Pty Ltd (“SPG”).
4 The purchaser as described in the Contract was “Dat Huu Nguyen as Director of RIC Homes Heidelberg Pty Ltd and/or nominee”.[1] Notwithstanding, the parties agreed that RHH should be regarded as the original purchaser.
[1]Court Book page (“CB”) 260
5 The Contract provided, inter alia, that:
·The sale price for the Property was $2,650,000.
·The deposit was 10 per cent of the purchase price - $265,000 - payable by 30 January.
·The balance of the purchase price was payable at settlement on 28 February.
6 Dat Nguyen, a director of RHH, guaranteed the due and punctual payment by the purchaser to SPG of monies payable by the purchaser on any default, repudiation, or otherwise and agreed to keep SPG indemnified against the failure by the purchaser to make due and punctual payment of such monies.[2]
[2]CB 271
7 Special Condition 9 of the Contract provided that the purchaser, if it wished, could nominate an additional or substitute purchaser.[3]
[3]CB 266
8 In circumstances more fully described below, the dates for payment of the deposit and balance of the purchase price were on a number of occasions by agreement between RHH and SPG.
9 On 2 March, RHH nominated 162 Tucker Road Pty Ltd (“162 Tucker”) as the purchaser pursuant to Special Condition 9.[4]
[4]CB 446
10 Although payments were made both by RHH and 162 Tucker by way of deposit or part payment of the purchase price, the full purchase price was never paid, and the Contract never settled.
11 SPG purported to serve two Notices of Default pursuant to the Contract and later treated the non-payment of the purchase price by RHH and 162 Tucker as a repudiation of the Contract which it purported to accept.
12 SPG purported to terminate the Contract on 15 May.
13 It is not disputed by the parties that 162 Tucker had paid to SPG, prior to that termination, sums totalling $740,000 by way of part-payment of the deposit ($240,000) and two part-payments of the balance of the purchase price ($300,000 and $200,000 respectively).
14 On 8 December 2017, SPG sold the Property to unrelated entities for $2,220,000, an amount of $430,000 less than the purchase price pursuant to the Contract.
The claims
15 The proceeding involves a number of claims, counterclaims and cross-claims.
(a)by Writ issued on 11 December 2016, RHH and 162 Tucker claimed against SPG the return of monies paid by them to it by way of deposit, and/or part payment of the purchase price – amounts totalling $740,000.
SPG denies that 162 Tucker is entitled to a return of any of the monies paid by it.
On 26 February 2019, RHH was placed in liquidation. Its claim was discontinued;
(b) SPG counterclaimed:
(i)against RHH and 162 Tucker, seeking to recover damages consequent on RHH’s repudiation of the Contract. Following RHH going into liquidation, SPG’s claim against RHH was abandoned. No application was made to the Supreme Court for leave for RHH to continue its claim, nor for any claim to be continued against RHH.
(ii)against Dat Nguyen, as guarantor of RHH’s obligations, pursuant to the Contract;
(c)RIC Platinum Pty Ltd (“RP”), a company associated with SPG, has brought cross-claims as follows:
(i)against 162 Tucker in respect of a loan of $140,000 made by RP to 162 Tucker pursuant to a loan agreement to assist it to complete the purchase of the Property from SPG (the “Loan Agreement”); and
(ii) against Dat Nguyen and Khuyen Nguyen as guarantors of the obligations of 162 Tucker pursuant to the Loan Agreement.
16 The Writ, Statement of Claim and Counterclaim were amended so as to remove RHH as a plaintiff on the Writ and as a defendant to the Counterclaim. 162 Tucker continued as sole plaintiff. The Counterclaim by SPG is now brought only against Dat Nguyen as guarantor of the obligations of RHH pursuant to the Contract.
The issues
17 The issues to be determined in this matter are:
(a) Was the Contract of Sale validly terminated by SPG in May 2017?
(b) Was the Contract of Sale abandoned by the parties in or after May 2017?
(c)Is SPG entitled to recover damages from Dat Nguyen pursuant to his guarantee? If so, in what sum?
(d)Is 162 Tucker entitled to recover from SPG the $740,000, being part payment of the deposit and purchase price paid by it in respect of the proposed purchase of the Property?
(e)Did RP provide loan monies to 162 Tucker on 28 April 2017 pursuant to the Loan Agreement?
(f) Is 162 Tucker indebted to RP pursuant to the Loan Agreement?
18 Mr Mitchell appeared on behalf of 162 Tucker, Dat Nguyen as guarantor of the obligations of RHH pursuant to the Contract, and both Dat Nguyen and Khuyen Nguyen as guarantors of 162 Tucker’s obligations pursuant to the Loan Agreement.
19 Mr Arthur appeared on behalf of SPG in relation to its claim for damages against 162 Tucker and Dat Nguyen (as guarantor of RHH’s obligations under the Contract), and RP in relation to its claim against 162 Tucker (and its guarantors) pursuant to the Loan Agreement.
20 The parties are in agreement concerning a number of matters including the following:
(a)the nomination by RHH of 162 Tucker as purchaser did not result in 162 Tucker becoming a party to the Contract;
(b)there never was a contractual relationship between 162 Tucker and SPG, nor could either of them have a cause of action against the other based on any breach of the Contract;[5]
(c)because RHH is in liquidation, no claim could be brought or continued by it, and no claim could be brought or continued against it without leave of the Supreme Court;
(d)although the Contract provided for payment of a deposit of $265,000 on 28 January and payment of the balance of the purchase price on 28 February, there were a number of extensions agreed to with regard to payment of the deposit and payment of the balance of the purchase price.
[5]Commissioner of State Revenue v Politis [2004] VSC 126 at paragraphs [15]-[16]; 428 Little Bourke Street Pty Ltd v Lonsdale Street Cafe Pty Ltd [2009] VSC 133
21 The agreements concerning extensions of the settlement date pursuant to the Contract can be summarised as follows:
(a)on 24 February, four days before the scheduled settlement date, RHH requested, and SPG agreed, to extend the settlement date to 14 March on condition that RHH paid penalty interest to that period.[6] This was the first extension;
(b)the parties agreed to a further extension of the settlement date to 20 March on condition that penalty interest be paid for that period (the second extension);[7]
(c)on 27 March RHH/162 Tucker and SPG agreed to settlement on 28 March (the third extension).[8] The purchasers were not in a position to settle on 28 March;
(d)on 29 March, the parties agreed to extend the date for settlement to 7 April on condition that the 10 per cent deposit was immediately released to SPG and a further “deposit” of $300,000 was paid (the fourth extension);[9]
(e)on 6 April, at the request of the purchasers, the parties agreed to further extend the settlement date until 13 April on condition that a further “deposit” of $200,000 was paid to SPG (the fifth extension);
(f)on 13 April RHH/162 Tucker advised SPG that it was not able to settle on that date. The parties agreed that settlement would be extended until 24 April (the sixth extension);[10]
(g)the matter did not settle on 24 April and it was agreed by the parties that settlement would be extended to 28 April subject to various conditions, including penalty interest (the seventh extension);[11]
(h)on 28 April, the purchasers advised that they were not able to settle that day. The parties agreed to extend settlement again until 4 May (the eighth extension);[12]
(i)on 4 May, the purchasers did not attend for settlement;[13]
(j)no further extended settlement dates were requested or agreed upon.
[6]CB 469
[7]CB 477
[8]CB 524
[9]CB 529, 536
[10]CB 603-4
[11]CB 615, 618-619
[12]CB 624-6, 660
[13]CB 663
Was the Contract validly terminated by SPG?
22 It is convenient to commence with the Contract, and consider whether it was validly terminated, and whether SPG is entitled to an award of damages arising out of a breach of the Contract by RHH, and, if so, the quantum of such damages.
23 Special Condition 12 of the Contract provided that:
“DEFAULT
(a)The Purchaser is responsible for all loss incurred or suffered by the Vendor by reason of the Purchaser breaching any warranty in this contract or failing to comply with this contract, where such loss is reasonably foreseeable at the date of the contract, including:
(1)…
(2) Legal fees and disbursements attributed to the breach on a full indemnity basis.
(b)If the Purchaser defaults in payment of any money owed under this Contract, the Purchaser must pay the Vendor interest at the rate of 4% higher than the rate for the time being fixed under Section 2 of the Penalty Interest Rates Act 1963, calculated on the amount owed during the period of default and accruing daily. This Special Condition modifies General Condition 26.”[14]
[14]CB 267
24 Under the heading of “Default Notice”, General Condition 27 of the Contract provided that:
“27.1A party is not entitled to exercise any rights arising from the other party’s default, other than the right to receive interest and the right to sue for money owing, until the other party is given and fails to comply with a written default notice.
27.2 The default notice must:
(a)specify the particulars of the default; and
(b)state that it is the offended party’s intention to exercise the rights arising from the default unless, within 14 days of the notice being given -
(i)the default is remedied; and
(ii)the reasonable costs incurred as a result of the default and any interest payable are paid.”[15]
[15]CB 279
25 On 15 March, notwithstanding the agreements made on and after 24 February to extend the settlement date to 14 March and again to 20 March, SPG (through its solicitors, Wayne Wong & Associates) served on the purchaser’s solicitors (Mills Oakley) a document entitled “Default Notice”[16] (“the first Default Notice”).
[16]CB 487
26 The first Default Notice contained Particulars of the default relied upon by SPG as being:
“FAILURE TO PAY DEPOSIT AND BALANCE OF PURCHASE MONIES DUE.”[17]
[17]CB 487
27 The “DUE DATE” was specified as 28 February.
28 The first Default Notice notified the purchaser that it was required to remedy the default within fourteen days – that is, by 29 March.
29 The agreement to extend the original settlement date from 28 February (the first extension) was reached in the following circumstances:
·On 24 February, Mills Oakley (acting for RHH) emailed Wayne Wong & Associates advising that the purchaser would not be in a position to settle on 28 February as it was still in the process of establishing the purchasing entity. A request was made for an extension of the settlement date to 14 March. Also requested was an extension of time to 7 March by which the purchaser could nominate a substitute purchaser.
·Later, on 24 February, Wayne Wong & Associates responded that an extension of the settlement date to 14 March was agreeable on condition that penalty interest apply per special condition 12.
30 I am satisfied that on 24 February, the parties agreed to vary the Contract so as to provide for a later settlement date. A new settlement time and venue was agreed between solicitors acting for the parties.[18]
[18]CB 412 on or about10 March
31 Further, on or about 10 March, I accept that the parties agreed to further extend the settlement date to 28 March.[19] There were further discussions between the parties and it was agreed by the parties to bring the settlement forward to 20 March.[20]
[19]CB 479
[20]CB 478, 479, 478, 476 and 475
32 I am satisfied, as a consequence of the extension agreements referred to, that as at 15 March (the date of the first Default Notice), RHH was not in breach of the Contract at all, let alone as a consequence of non-payment of the purchase price on 28 February. The Contract had earlier been varied by agreement and a later settlement date had been substituted.
33 SPG submits that Special Condition 13 of the Contract[21] is here relevant. It reads:
“The purchaser’s liability and obligation to pay money and otherwise perform the terms and conditions of this Contract will not be, or be deemed to be, waived or varied by any time indulgence or forbearance allowed or granted by the Vendor to the Purchaser of (sic) by any acceptance by the Vendor of money tendered by the Purchaser not in accordance with this Contract. Time is and remains the essence of this Contract notwithstanding any act of omission on the part of the Vendor.”[22]
[21]CB 267
[22]CB 267
34 While it is the case that time indulgences were granted by SPG in exchange for payment of penalty interest or instalments of the purchase price, I do not consider that SPG was entitled to rely on the original settlement date in its Default Notice. It had entered into agreements, in each case for valuable consideration, to extend that date.
35 I do not consider that it was open for SPG to agree to extend the settlement date and then rely on the original settlement date in a default notice. I consider that SPG would be estopped by its conduct from doing so.
36 I am satisfied that the first Default Notice is invalid and of no effect because it does not identify any valid particulars of default.
37 I am satisfied that there were several further variations of the Contract to which I have referred previously.
38 On or very close to each of the various agreed settlement dates of 7 April, 13 April, 24 April, 28 April and 4 May, the purchaser indicated a clear inability or unwillingness to settle. On the last of the agreed settlement dates – 4 May – the purchaser simply failed to attend at the agreed settlement time and venue.
39 On 1 May, SPG served a further document entitled “Notice of Default” (the “second Default Notice”).[23] The particulars of default specified in that notice were:
“FAILURE TO PAY BALANCE OF PURCHASE MONIES ON DUE DATE
FAILURE TO REMEDY DEFAULT ON DUE DATE PURSUANT TO THE NOTICE OF DEFAULT DATED 15TH OF MARCH 2017.”
[23]CB 646-650
40 The second Default Notice provided that:
“… unless the default is remedied and the reasonable costs and interest are paid by the 15th of May 2017, the Contract will be ended immediately upon expiration of the aforesaid date in accordance with clause 28.2 of the Contract and the vendor shall exercise its rights pursuant to General Condition 28.4 of the Contract.”
41 The particulars of default relied upon in the second Default Notice are the failure to pay monies due on 15 March, pursuant to the first Default Notice; however, as stated previously, it is my view that as at 15 March, the purchaser was not in default, because an extension of time for settlement had been agreed upon.
42 I am satisfied that the second Default Notice is invalid and of no effect, because it also does not identify any valid particulars of default.
43 Nevertheless, I am satisfied that, as at 1 May, 4 May and 15 May, RHH had plainly demonstrated an inability or unwillingness to settle the transaction and that its conduct amounted to a repudiation of the Contract. Where the conduct of a purchaser is sufficient to establish a repudiation of a contract of sale, the vendor may accept such repudiation and terminate the Contract without the service of a default notice.[24]
[24]Walters v Cooper (1967) VR 583 at 584-6
44 The Contract was one where time was of the essence. I do not consider that the various extensions of time granted by SPG altered this.
“If time was originally of the essence, and the extension specified a new time at which the obligation in question was to be performed, time generally will remain of the essence. Accordingly, the party granting the extension will be entitled to terminate the contract immediately should the obligation not be performed by the time specified in the extension.”[25]
[25]Paterson, Robertson and Duke, Principles of Contract Law (2nd ed, Thomson Reuters (Professional) Australia Pty Limited, 2005 ) at [23.80]
45 I am satisfied that SPG validly accepted that repudiation on 15 May when its solicitors emailed RHH’s solicitors advising the Contract was terminated. That letter[26] was clear advice that the Contract has been terminated on that date on the basis that the balance of the purchase price had not been paid. There was no response to that letter from 162 Tucker, or its solicitors, indicating any dispute.
[26]CB 664
46 Although that letter refers to the Contract being “terminated as per the Notice of Default”, in all of the circumstances, I consider that it is clear that the vendor is terminating the Contract on that date on the basis that the balance of the purchase price had not been paid.
47 Following 15 May, I find that none of RHH, 162 Tucker, or SPG took any steps to resurrect or confirm the Contract.
48 Rather, SPG took steps to sell the property to unrelated parties. Further:
(a)it requested RHH’s solicitors to remove a caveat that it had previously placed over the Property. On 20 September, RHH’s solicitors did remove the caveat;[27]
(b)on 8 December, SPG entered into a contract to sell the Property to unrelated parties for $2,220,000 – an amount of $430,000 less than the sale price pursuant to the Contract entered into by RHH.[28]
[27]CB 987
[28]CB 797-801
49 I consider that these actions, by both SPG and RHH, are consistent with the termination of the Contract by SPG.
SPG’s claim for damages
50 I accept that SPG has no cause of action against 162 Tucker pursuant to the Contract in circumstances where the latter was not a party to it.
51 However, I consider that it would have had such a claim for damages against RHH had that company not gone into liquidation. In those circumstances, I consider that SPG can recover such damages from Dat Nguyen, who guaranteed the obligations of RHH under the Contract.
52 SPG is entitled to recover from the guarantor the amount it would have been entitled to recover from RHH had it not gone into liquidation, namely:
“… all loss incurred or suffered by the Vendor by reason of the Purchaser breaching any warranty in this contract or failing to comply with this contract, where such loss is reasonably foreseeable at the date of the contract including:
… Legal Fees and disbursements attributed to the breach on a full indemnity basis.
… .”[29]
[29]Special Condition 12, CB 267
53 I consider that SPG is entitled to retain the deposit of $265,000, paid partly by RHH ($25,000) and partly by 162 Tucker on its behalf ($240,000). The deposit is forfeited by reason of RHH’s repudiation of the Contract.[30]
[30]McDonald & Anor v Dennys Lascelles Limited (1933) 48 CLR 457 at 470, 478
54 The additional two instalments, over and above the deposit, being part payments by 162 Tucker towards the purchase price, must be brought into account by SPG in calculating its damages claim. They were not further payments of “deposits”, but instalments of the purchase price.
55 I consider that, on the basis of the purchaser’s repudiation of the Contract, and the vendor’s acceptance of that repudiation, the Contract was terminated by the vendor, and it is entitled to damages from the purchaser (or, as is the case here, from the purchaser’s guarantor), in respect of losses occasioned by the purchaser’s breach.
56 SPG’s calculation of damages was set out in Schedule A, attached to its Further Amended Counterclaim. An amended version of Schedule A was included in written submissions for SPG dated 12 December 2019. It was this amended version of Schedule A which set out the items claimed by it by way of damages.
57 Dat Nguyen, as guarantor of RHH, submits that the damages claimed by SPG are significantly overstated. It is submitted that SPG has failed to prove on the balance of probabilities any item of its alleged losses.
58 The amounts claimed by SPG by way of damages are as follows:
(a) Loss on the purchase price on the re-sale of the property $430,000.00
(b) Legal Fees $26,900.00
(c) Real Estate Agent’s fees $60,939.95
(d) Entitlement to Penalty Interest $63,328.43
(e) Interest paid to on SPG’s mortgage $157,293.73
(f) Interest under s58 of the Supreme Court Act 1958 $52,660.27
(g) Remuneration on Sale of Lot 2 as per Special
Condition 29(c) of the Contract $27,720.00
__________
$818,842.38
==========
59 In his closing written submissions, counsel for SPG conceded that the $740,000 paid by 162 Tucker to SPG by way of deposit and instalments of the purchase price was to be deducted from or set off against the damages otherwise claimed.
60 Notwithstanding that concession, it is my view that the part deposit of $240,000 paid by 162 Tucker ought not to be set-off. I consider that the deposit was forfeited to the vendor as a consequence of the purchaser’s repudiation. I consider that the amount to be properly brought into account is $500,000, being the total of the two further instalments paid by 162 Tucker, over and above the deposit, as part payment of the purchase price.
61 I accept that the onus is on SPG to establish the value of any loss sustained by it as a consequence of the purchaser’s breach. I now turn to the items of damage claimed by SPG.
A. Loss on the Contract price on resale – $430,000 claimed
62 The parties do not appear to be in dispute that the difference in the price obtained on resale was $430,000 less than the Contract price. In submissions provided by Mr Mitchell, it was stated that:
“A wronged vendor may sue for damages naturally arising from the breach of contract, or which may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract, as the probable result of the breach.”[31]
[31]Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 92; Hadley v Baxendale (1854) 2 CLR 517
63 However, the evidence of Sheng Du (director of SPG) in cross-examination was that if the sale to RHH was completed, SPG would have had to pay a referral fee to RP.[32]
[32]Transcript (“T”) 657-8
64 That fee was not referred to in SPG’s Counsel’s opening, in any of the versions of Schedule A filed, or in Mr Du’s evidence-in-chief.
65 Initially, in cross-examination, Mr Du denied that any referral fee would have been payable by SPG to RP in the event that the sale to RHH had settled.[33]
[33]T657
66 Shortly after, Mr Du was asked:
Q:“Now, Mr Du, the fee that was going to be paid by SPG Tucker to RIC Platinum if the sale went through: how much was that fee?---
A:(Direct) [that is, a direct answer from the witness rather than through the interpreter] - 200,000. (Through interpreter) Two hundred something.
Q:Sorry, was the answer 200 something or 200,000?---
A:(Direct) Two hundred thousand. (Through interpreter) Two hundred thousand.”[34]
[34]T667
67 I consider that the existence of a referral fee of any amount, payable by SPG to anyone if the sale was completed, was a matter of obvious relevance to this item of damage claimed. The fact that the fee only came to light in cross-examination of Mr Du reflects poorly on him. It was not suggested that SPG’s counsel nor its solicitors had knowledge of the fee.
68 Notwithstanding, I did form the opinion that the bulk of Mr Du’s evidence, much of which was either unchallenged or supported by other evidence, was reliable and honest.
69 I consider that SPG is entitled to recover the difference between the Contract purchase price and the price obtained on the resale - $430,000 – less the referral fee payable of $200,000 in the event of completion of the Contract – a net sum of $230,000.
B. Legal fees – $26,900 claimed
70 The fees claimed are made up of three invoices, each from SPG’s solicitors, Wayne Wong & Associates, dated 13 December 2016, 28 April 2017 and 20 November 2017 respectively.
71 I accept the submission made by Mr Mitchell that the three solicitors’ invoices covered work additional to work arising out of default by the purchaser. However, I do not accept his submission that none of the fees claimed are a cost arising from such default.
72 I shall allow parts of this claim, but on a pre-GST basis. I consider that it is likely that such expenses would have been the subject of a GST rebate on the basis of the evidence that SPG was a property developer.
73 The first invoice is for $800.[35]. It relates to the preparation of a Section 32 Vendor Statement and the Contract of Sale. I do not consider those expenses to be expenses arising out of any breach of the Contract by the purchaser. That sum would have been incurred even if the purchaser had completed the Contract. Rather, it is legal expenses incurred by SPG on the resale of the Property that would be recoverable. I shall address this when dealing with the third invoice.
[35]CB 258
74 The second invoice is for $17,500. However, only a lesser sum of $15,000 is claimed by SPG. The first portion of the invoice relates to a claim of $3,750 for “Conveyancing” and includes work relating to “preparing SRO prescribed forms and declarations”, to “prepare Duties Form 1 and Notice of Disposition Documents”, and “other matters not specifically mentioned herein”.[36]
[36]CB 750A
75 The second invoice, like the first, predates the termination of the Contract. It relates in part to legal services provided in relation to the Contract and in part to the sales of Unit 2 and Unit 4 and to the Loan Agreement.
76 I do consider that the charges relating to attendances in connection with the various extensions are costs arising from the breach by the purchaser.
77 I am not satisfied that any other items included in the second invoice is damage incurred as a consequence of such breach.
78 In summary, I shall allow $4,500 in respect of the second invoice.
79 With regard to the third invoice,[37] this is stated to relate to services for the period from 1 May onwards. Counsel for SPG conceded that, of the total of $16,000, the item of $6,500 should be deducted.[38] Further, I am not satisfied that SPG has established that the items relating to Unit 4, dealings with Danny Ting, or dealings with Qihua Ji, are consequent on the breach by the purchaser.
[37]CB 750
[38]T708
80 I consider that the remaining item for conferences and reviewing of documents relating to the dispute with 162 Tucker appear to be reasonable and likely to arise from the purchaser’s breach.
81 I shall allow $4,300 in relation to this third invoice.
82 Counsel for Dat Nguyen submitted that I should not be satisfied that SPG had paid these invoices. Even if that were so, I am satisfied that SPG did incur such legal costs as a consequence of the purchaser’s breach. I am satisfied that SPG either paid, or is liable to pay, for the additional legal work performed as a consequence of that breach. That liability is not altered even if those expenses were paid by another party on behalf of SPG.
83 SPG carries the onus of proving its losses.
84 The evidence as to what legal expenses were incurred as a consequence of the purchaser’s breach was vague to say the least. The same solicitors who charged those fees and who were presumably in the best position to explain precisely to what they related were the solicitors who have acted for SPG throughout the proceeding and trial. Representatives of the firm were in Court on each day of the trial. None of the firm’s solicitors were called to give evidence concerning these invoices, to clarify the nature of the work performed, or how those fees related to the purchaser’s breach.
85 There was no evidence concerning what legal expenses were incurred by SPG in relation to the resale later in 2017, which I consider would have been expenses incurred as a consequence of the purchaser’s breach of the Contract. However, I do not consider that SPG should be permitted to re-open its case at this late stage.
86 I shall allow an amount of $8,800 in relation to Legal Fees.
C. Estate Agent’s fees – $12,100 and $48,839.95 claimed
87 These claims relate to two invoices from Loft Real Estate.
88 The first dated 27 November,[39] for $12,100.00, relates to consulting fees charged in relation to Units 2 and 4 at the Property. I am not satisfied that these fees were incurred as a consequence of the purchaser’s breach.
[39]CB 752
89 The second, dated 28 November, for $48,839.95, relates to the Agent’s commission on the resale of the Property in November.
90 This amount is claimed on the basis that while no real estate agent had been involved in the original sale of the Property to RHH, in order to resell the Property as a consequence of RHH’s breach, a real estate agent was reasonably engaged, and its 2 per cent commission was reasonable. Neither of these propositions was challenged by counsel. I accept that the commission was reasonably incurred and was a consequence of the purchaser’s breach.
91 I shall allow a total of $48,839.95 in respect of real estate agent’s fees.
D. Remuneration on sales of units – $27,720 claimed
92 SPG claims “remuneration on sale of Lot 2 as per special condition 29(c)”.[40]
[40]Further Amended Defence and Amended Counterclaim, page 33
93 Special Condition 29(c) provides that:
“The purchaser agrees:
…
… to pay the vendor a remuneration of 2% plus GST of the purchase price for any lot sold by the vendor.”[41]
[41]CB 270
94 The evidence of Sheng Du was that before the Property was resold in November, SPG had sold Lot 2 for $1,260,000.[42]. Two per cent of that sum is $25,200. Including GST, it would be $27,720.
[42]T549, 553, 636
95 The Contract of Sale relating to the December resale also contained a Special Condition 29(c) in terms identical to the condition in the Contract.[43] It was submitted by Dat Nguyen, and I accept, that the purchaser on the resale was obliged to pay that same “remuneration”. The purchaser on the Contract for resale was “Li Zhang and/or nominee”.
[43]CB 676
96 Sheng Du’s evidence was that he had requested Li Zhang to pay the commission or remuneration, but that Zhang had refused to do so.
97 I am not satisfied that SPG has suffered a loss of remuneration in relation to the sale of Lot 2. While it is correct that RHH did not pay that remuneration, SPG later entered into a contract with Li Zhang for the later sale of the Property which contained the same Special Condition 29(c) which obliged Li Zhang to pay that remuneration. That remuneration was the same – 2 per cent of the sale price of Lot 2 - $25,200.
98 SPG’s contractual right to recover that sum from RHH was replaced by a contractual right to recover the same sum from Li Zhang. I consider that, in those circumstances, there was no loss of that amount established. The fact that SPG did not follow up its legal right to recover that sum is not a consequence of any breach of the Contract.
99 Mr Mitchell further submits that another lot (Lot 4) was later sold and Li Zhang would have been liable for a further remuneration of $27,720. I am not satisfied that such further sum should be deducted from the amount claimed by SPG. That claim has never formed any part of the claim against SPG.
100 I shall not allow the remuneration fee claimed by SPG.
E. Penalty interest
101 Mr Mitchell concedes, and I agree, that penalty interest claimed by SPG and calculated from 2 February to 15 May at $63,328.43, should be allowed.
F. Interest paid to mortgagee
102 Prior to entering into the Contract, SPG had mortgaged the Property to a bank or other financier.
103 SPG claims an amount of $157,293.73, being the amount of interest paid to the mortgagee between 28 February and 8 December.
104 This period is partially covered in the previous penalty interest item and appears to be, at least to that extent, a double count – at least up to 15 May. While there may have been some reasonable delay in marketing the Property until a further buyer was found, there was no evidence of the rate of interest paid to the mortgagee over that period and how the interest rate applicable to the mortgage loan compares with the penalty interest claimed in respect of the period from 28 February to 15 May. No details were provided in submissions.
105 In any event, Mr Mitchell submits that such a claim for interest paid to the existing mortgagee is not recoverable, save in exceptional circumstances. He relies upon principles set out in Statewide Developments Pty Ltd v Higgins.[44]
[44][2011] NSWCA 35 at paragraphs [35]-[40]. See also the decision at first instance - [2010] NSWSC 183 at paragraphs[103] to [118]
106 There was no evidence as to what RHH knew of SPG’s financial affairs, borrowings, mortgages or interest payments as at the date of the Contract. In such circumstances, I consider that the principles contained in the two limbs of Hadley v Baxendale[45] apply. I am not satisfied that SPG has established that the costs of its continuing mortgage expenses are recoverable.
[45](Supra) at 151
107 Further, Mr Mitchell submits that allowance must be made for the opportunity that SPG has had to earn interest on the monies paid by 162 Tucker by way of instalments of the purchase price to the date of Judgment.
108 There was no evidence as to the amount of interest that SPG might have earned on those sums.
109 These claims and set-offs relating to interest were not addressed to any extent in the written submissions of the parties. If the parties consider such issues to be relevant in the light of these Reasons, I direct the parties to provide short written submissions as to their respective claims relating to interest consistent with these Reasons.
G. Interest pursuant to Section 58 of the Supreme Court Act 1958
110 I do not consider that any of the parties are in a position to calculate interest pursuant to s58 of the Supreme Court Act until the quantum of judgments relating to the claims in this proceeding are finalised.
Quantum
111 It follows from the above Reasons that I allow the following items of damages claimed by SPG against Dat Nguyen, as guarantor for RHH:
Loss on resale $230,000.00
Legal Costs $8,800.00
Estate Agent’s Fees $48,839.95
Penalty Interest $63,328.43
__________
$350,968.38
==========
112 In addition, I shall hear the parties as to any further claims regarding interest.
162 Tucker’s claim for return of monies paid by it
113 It is not in dispute that 162 Tucker paid to SPG sums totalling $740,000. This consisted of:
(a)a payment of $240,000, being part of the 10 per cent deposit. The deposit payable under the Contract was 10 per cent of the purchase price or $265,000. $25,000 of this amount was paid by RHH.[46] RHH is no longer a party to this proceeding and no claim is made for the return of that sum;[47]
(b)$300,000 on or about 29 March, being an instalment of the purchase price paid in consideration of the vendor agreeing to extend the settlement date;
(c)$200,000 on or about 6 April, being a further instalment of the purchase price paid in consideration of the vendor agreeing to further extend the settlement date.
[46]The parties agreed that $5,000 was paid by RHH to SPG on 4 December 2016 and that a further $20,000 was paid by RHH to SPG on 3 February, both being part payments of the deposit payable under the Contract of Sale.
[47]The parties agreed that the balance of the deposit, $240,000, was paid by 162 Tucker to SPG on 16 March, shortly after its nomination as substitute purchaser.
114 162 Tucker submits that the Contract was not validly terminated by SPG. I have found otherwise.
115 In any event, 162 Tucker was not a party to the Contract and could not bring any claim against SPG pursuant to the Contract.[48] It does not purport to bring its claim on behalf of RHH. The liquidator could have sought leave to bring a claim in respect of moneys paid by or on behalf of RHH, but did not. SPG did not bring its claim in the name of RHH. It could have sought leave to join RHH as a defendant in the proceeding, but did not.
[48]Commissioner of State Revenue v Politis (supra) at paragraph [15]
116 162 Tucker relies upon the Judgment of the High Court in McDonald v Dennys Lascelles Limited[49] and, in particular, the judgment of Dixon J, who said, at pages 477-8:
“… When a contract stipulates for payment of part of the purchase money in advance, the purchaser relying only on the vendor’s promise to give him a conveyance, the vendor is entitled to enforce payment before the time has arrived for conveying the land; yet his title to retain the money has been considered not to be absolute but conditional upon the subsequent completion of the contract. ‘The very idea of payment falls to the ground when both have treated the bargain as at an end; and from that moment the vendor holds the money advanced to the use of the purchaser.’[50] … In Laird v Pim,[51] … Parke, B., says – ‘It is clear that he cannot have the land and its value too’ … .
… It is now beyond question that instalments already paid may be recovered by a defaulting purchaser when the vendor elects to discharge the contract … .
… A vendor may, of course, counter-claim for damages in the action in which the purchaser seeks to recover the instalments.”
[49]Supra
[50]Palmer v Temple (1839) 9 Ad. & E. 508 at pp520-1, 112 ER 1304 at p1309
[51](1841) 7 M. & W. 474 at p478, 151 ER 852 at p854
117 There are two issues arising from 162 Tucker’s submission.
118 Firstly, here, I do not accept that there has been a total failure of consideration in respect of the payment by 162 Tucker of the instalments the subject of its claim. 162 Tucker, although not a party to the Contract, had an obvious interest in the completion of the Contract. It had an agreement with RHH by which it would receive a conveyance of the Property.
119 I accept that at all relevant times, RHH was, and remained, the purchaser of the Property pursuant to the Contract. RHH remained contractually bound to pay monies due under the Contract. This was not affected by RHH’s nomination of 162 Tucker as substitute purchaser.
120 Any entitlement of 162 Tucker to receive a conveyance of the Property depended on RHH, or someone on its behalf, paying to the vendor all monies due under the Contract.
121 It is agreed by the parties that 162 Tucker paid part of the two instalments to the vendor in consideration for the vendor granting an extension of the settlement date in order to enable RHH and/or 162 Tucker to seek to obtain additional funding. I do not consider that that could amount to a total failure of consideration.
122 By agreeing to the payment of penalty interest and instalments of the purchase price, RHH (and 162 Tucker) obtained precisely what they bargained for – an extension of the settlement date in order to have time to attempt to obtain additional funds so that the Contract could be completed. During those extended periods, the vendor could not have sold the property to other persons. It was obliged to continue with its payments of interest to its mortgagee and, presumably, obliged to maintain the Property. There was an obvious advantage to 162 Tucker in obtaining each of the extensions, assuming that it still intended to purchase the Property. As it turned out, it appears that they were unsuccessful in obtaining the extra funds needed. They were, however, provided with the opportunity to do so.
123 I do not accept that this amounts to a total failure of consideration.
124 Secondly, the facts in Dennys Lascelles are very different to those here.
125 The principal ground of Dixon J’s decision was that a guarantor will not be liable for a debt guaranteed by it where the principal debtor has been discharged from that debt.
126 In McDonald, Dixon J said:
“But when a contract, which is not void or voidable at law, or liable to be set aside in equity, is dissolved at the election of one party because the other has not observed an essential condition, or has committed a breach going to its root, the contract is determined so far as it is executory only and the party in default is liable for damages for his breach.
… .
It does not, however, necessarily follow from these principles that when, under an executory contract for the sale of property, the price or part of it is paid or payable in advance, the seller may both retain what he has received, or recover overdue instalments, and at the same time treat himself as relieved from the obligation of transferring the property to the buyer. When a contract stipulates for payment of part of the purchase money in advance, the purchaser relying only on the vendor’s promise to give him a conveyance, the vendor is entitled to enforce payment before the time has arrived for conveying the land; yet his title to retain the money has been considered not to be absolute but conditional upon the subsequent completion of the contract.”[52]
(Emphasis added.)
[52](Ibid) at 477
127 Here, the instalments were not paid “only” on the vendor’s promise to give a conveyance. As stated above, the instalment was paid in consideration of the vendor extending the settlement date and allowing the purchaser an extended period in which to raise funds necessary for settlement.
128 Dixon J went on to say:
“… It is now beyond question that instalments already paid may be recovered by a defaulting purchaser when the vendor elects to discharge the contract … Although the parties might by express agreement give the vendor an absolute right at law to retain the instalments in the event of the contract going off, yet in equity such a contract is considered to involve a forfeiture from which the purchaser is entitled to be relieved … .
… But, where there is no express agreement excluding the implication made at law, by which the instalments become repayable upon the discharge of the obligation to convey and the purchaser has a legal right to the return of the purchase money already paid which makes it needless to resort to equity and submit to equity as a condition of obtaining relief, the vendor appears to be unable to deduct from the amount of the instalments the amount of his loss occasioned by the purchaser’s abandonment of the contract. A vendor may, of course, counter-claim for damages in the action in which the purchaser seeks to recover the instalments.”[53]
[53](Ibid) at 478-9
129 The fundamental issue here is whether 162 Tucker can recover from SPG moneys paid by it, not pursuant to any contractual obligation, but in circumstances where it paid those sums to it for valuable consideration, on behalf of a contracting party who is not a party to this proceeding.
130 I have concluded that it cannot.
131 Even if there was a total failure of consideration, the claim needed to be brought, in my opinion, in the name of RHH or if RHH was not prepared to be involved with the Claim, by joining RHH as a defendant. Both these options would have required the leave of the Supreme Court. Such leave was neither sought nor granted.
132 It follows that the Claim brought by 162 Tucker should be dismissed.
The loan Agreement between RP and 162 Tucker
133 By late March, the purchaser and vendor had agreed to extend the date of settlement of the Contract to 7 April.
134 In late March, Dat Nguyen and Khuyen Nguyen (directors of both RHH and 162 Tucker), and Lance Truong met with Sheng Du (director of SPG).
135 They advised Sheng Du that the purchaser needed “vendor finance” or a “vendor loan” of $140,000 to complete the Contract.
136 The parties reached an agreement that RP, a company associated with SPG, would loan $140,000 to 162 Tucker, expressly to be used as part of the price for the purchase of the Property from SPG.
137 A loan agreement (“the Loan Agreement”) was signed on 10 April at premises situated at Unit 2, 200 Turner Street, Port Melbourne (“the Port Melbourne premises”).
138 The Loan Agreement[54] and Guarantee were signed by:
[54]CB 563
·Sheng Du, as director of RP (the lender)
·Khuyen Nguyen, as director of RP
·Khuyen Nguyen, also as director of 162 Tucker (the borrower)
·Dat Nguyen, as director for 162 Tucker
·Khuyen Nguyen and Dat Nguyen (as guarantors of 162 Tucker’s obligations under the Loan Agreement)[55]
·Lance Truong (“Lance”), as witness to the signatures of the two guarantors.
[55]CB 563-584
139 It is, I consider, important to understand the number of different companies and individuals involved, one way or the other, with this part of the Claim.
140 As at April 2017:
·SPG was a company, the shares in which were owned by Sheng Du’s father. His father was the sole director and sole shareholder.
·162 Tucker was a company first registered on 20 February 2017. Its registered office was at the Port Melbourne premises. Its directors included Dat Nguyen and Khuyen Nguyen. 81 per cent of its shares were owned by RHH.
·RP was a company owned by RIC Homes Pty Ltd as to approximately one half and RIC Corporation Pty Ltd as to approximately one half. Its registered office was at the Port Melbourne premises. Its directors were Sheng Du and Khuyen Nguyen.[56] It had two secretaries – Quang Hai Dinh (who, I am satisfied is one and the same as Jason Dinh[57]) (“Dinh”), and Oanh Thi Thuy Le (“Le”).
·RHH was a company whose shares were owned as to one half by RIC Homes Pty Ltd and as to one half by Dat Nguyen. Its directors were Dat Nguyen and Khuyen Nguyen.
·RIC Homes Pty Ltd was a company whose shares were owned as to one half by Khuyen Nguyen and as to one half by RIC Consulting Group Pty Ltd. Its directors were Khuyen Nguyen and Dinh.[58]
·RIC Consulting Group Pty Ltd was a company whose shares were owned by Le. Its sole director was Dinh.
·RIC Corporation Pty Ltd was a company whose shares were owned by Lance, Khuyen Nguyen and RIC Consulting Group Pty Ltd.[59] Its registered office was at the Port Melbourne premises. Its directors were Lance and Dinh.
[56]CB 822-824
[57]Quang Hai Dinh is listed with an address of 8 Corporate Drive, Point Cook in various documents including CB 849, 822, 979, 981, 982. He is named as “Jason Quang Hai Dinh” in the document at CB 982.
[58]CB 852-3
[59]CB 856-7
141 It can be observed that Dat Nguyen, Dinh and Khuyen Nguyen are substantially involved (either by directorships or shareholdings or both) with each of those companies, save for SPG.
142 Khuyen Nguyen was a director of each of RHH, 162 Tucker and RP – in other words, a director of both the lender and the borrower of the $140,000, the subject of the Loan Agreement. He was also a guarantor of the obligations of 162 Tucker under the Loan Agreement.
143 Sheng Du was a director of RP, but not a shareholder in any of these companies at the relevant time.
144 As at the date of signing the Loan Agreement, it was anticipated that settlement would occur three days later – on 13 April.[60] Settlement did not occur on that date but was extended, by agreement, until 24 April and then further extended until 28 April.
[60]Paragraph C) of the preamble at CB 564; Item D of Schedule 1 of the Loan agreement – CB 579
The history of the Cheque
145 Shortly before 28 April, Sheng Du arranged for a cheque for $140,000 to be drawn on SPG’s account and deposited into RP’s ANZ bank account (“ANZ”). This, I accept, was in order to put RP in funds so that it could advance that sum to 162 Tucker pursuant to the Loan Agreement.
146 On the morning of 28 April, Sheng Du and Khuyen Nguyen (both directors of RP), attended at the Port Melbourne branch of the ANZ. They obtained a bank cheque in the sum of $140,000 drawn on RP’s account (“the Cheque”). At their request, the Cheque was made payable to SPG.
147 I accept that, at this point it was intended by Sheng Du that the Cheque would be provided on that day to 162 Tucker or, more precisely, to a person or persons representing 162 Tucker and authorised by 162 Tucker to receive it, and that at settlement (scheduled for 3.00pm that day), 162 Tucker would provide the bank cheque to SPG as part of the balance of the purchase price of the Property.
148 I accept that the Cheque was taken by Sheng Du and Khuyen Nguyen to the Port Melbourne premises where Sheng Du gave it to Lance.
149 I accept that settlement did not occur on that, or any later, date. Notwithstanding, the Cheque was never returned to RP or SPG.
150 I am satisfied that on 13 July, the Cheque was credited to the trust account of Starke Westwood, a firm of lawyers in Heidelberg. There was no suggestion or evidence that Starke Westwood ever acted on behalf of 162 Tucker or RHH in relation to the purchase of the Property or at any other time.
151 The Starke Westwood trust account receipt dated 13 July shows that $140,000 was received from “RIC Corp Pty Ltd” of 46 Burgundy Street, Heidelberg.[61]
[61]CB 869
152 A Commonwealth Bank Statement relating to the Starke Westwood trust account shows that on 13 July, an amount of $140,000 was credited to that trust account, with the notation “Chq Dep Branch Heidelberg 5 FEDERATION”.[62]
[62]CB 866-7
153 Earlier, on 11 April, an email had been sent to Dinh by Starke Westwood in relation to a transaction involving property at 5 Federation Walk, Cairnlea (“the Cairnlea Property”).[63]
[63]CB 861-2
154 I am satisfied that I can draw an inference that the Cheque was deposited by RIC Corporation Pty Ltd (or by some person on its behalf) with Starke Westwood in connection with the Cairnlea Property.
155 The reason for that deposit was not explained in the evidence. Nevertheless, it is puzzling how this occurred given that it was a bank cheque made payable to SPG.
156 Neither party called as a witness:
·Dinh
·Any person connected with Starke Westwood
·Any person connected with the Cairnlea property.
157 That deposit of the Cheque was not explained in the evidence. What happened to those funds thereafter was not disclosed in the evidence.
158 ASIC records establish that from 24 August 2016 to 29 August 2018, the sole directors of RIC Corporation Pty Ltd were Lance and Dinh.[64]
[64]CB 856-7
RP’s Claim
159 It is pleaded that, on 28 April, Sheng Du took the Cheque to the Port Melbourne premises and handed it to Lance who, it alleges, was acting in the course of his express, implied or ostensible authority from 162 Tucker, and that Lance accepted the Cheque for and on behalf of 162 Tucker. No particulars of that authority were either pleaded or requested.
160 162 Tucker (as borrower), and Khuyen Nguyen and Dat Nguyen (as guarantors) each deny that RP has established that the Cheque was provided to 162 Tucker, or to any person authorised to receive it on its behalf.
161 The issue as to what role Lance played, and the extent of his authority to receive the Cheque on behalf of 162 Tucker, were in dispute.
162 Sheng Du’s evidence was that:
·He understood that Lance was the project manager for 162 Tucker.[65]
[65]T480
·He had discussed extensions of the settlement date with Lance at his office at the Port Melbourne premises.[66]
[66]T481, T484, T485
·He had discussed the proposed vendor finance with Dat Nguyen, Khuyen Nguyen and Dinh at the end of March.
·When negotiating the Loan Agreement with Lance and Dat Nguyen, “They said ‘Give the cheque to Lance, and Lance would take it to the settlement’”.[67]
[67]T490
·At about 1.00pm on 28 April, he and Khuyen Nguyen went from the bank to the Port Melbourne premises to give the Cheque to Lance.[68] Lance and Dat Nguyen were there. Both Sheng Du and Khuyen Nguyen went into the premises. Du went upstairs and gave the Cheque to Lance. He asked Lance to check the amount was correct. Khuyen remained downstairs.[69]
[68]T493
[69]T490-1
·He agreed that in earlier pleadings of SPG (provided on his instructions),[70] it was stated that he had given the Cheque to Dat Nguyen and that it was then handed to Lance. He conceded that this was incorrect and that it was he who had handed the Cheque to Lance.
[70]CB 44
·He did not think there was anyone else there in the office at the time.[71] He could not remember if Dinh was in the upstairs office when he took the Cheque there.[72]
[71]T492
[72]T493
·Lance was dealing with all the settlement issues with him.[73]
[73]T492
·When he gave the Cheque to Lance, he expected him to hang onto it until the settlement, and then it would be given to SPG.[74]
[74]T651
·About one hour after giving Lance the Cheque, Lance called him and said they did not have enough money to settle.[75]
[75]T493
·Later, Lance told him that Dinh had taken possession of the Cheque.[76]
[76]T494
·After 15 May, he had had further discussions with Dat Nguyen, Khuyen Nguyen, Lance and Dinh at his solicitor’s office. After the meeting with his solicitor, he discussed the Cheque with them when they were standing outside the solicitor’s office:
“They said the lawyer is holding the Cheque. They are not going to return it to you. They said they would use the cheque to buy the property again, so they need the cheque to settle the property.”[77]
·He asked them for the Cheque and said that the Contract had finished, and that if they wanted to repurchase the property they needed to make a new offer.[78]
·He later approached the ANZ bank about the Cheque and was told that the Cheque could only go “to the payable account” (sic) [I assume this is an error or possibly a transcript misprint and that he was told the Cheque could only go into the payee’s account] and that, if it did not go into any account, the cheque would expire in six months and that the money would go back into the original account [that is, into RP’s account].[79]
·He later discovered that the Cheque had been paid into the trust account of a firm of solicitors, Starke Westwood. He had never heard of that firm. He was advised that the Cheque had been used in connection with a transaction concerning the purchase of a property at the Cairnlea property. Neither he nor any company with which he has an association, were involved with that property or with those solicitors.
[77]T497
[78]T496-7
[79]T504
163 Lance’s evidence was that:
·In 2017, he was employed by RIC Build Pty Ltd (“RIC Build”) and worked out of the Port Melbourne premises. He was the general manager of that company.[80]
[80]T341-2
·RIC Build was a construction company. It built houses and buildings. He supported Dinh on certain developments. RHH was a marketing company for which RIC Build built homes.[81]
[81]T349
·He became aware that the property at 162 Tucker Road, Bentleigh had been bought when it was brought to “my table” by Dinh. He was to help out Dinh. He was to help settle the property.[82] [I consider that it is clear that the tasks performed by both Lance and Dinh in connection with the Contract and the Loan Agreement were performed for the benefit of 162 Tucker and on its behalf].
[82]T350-1
·He engaged in correspondence with Mills Oakley (the solicitors acting for RHH and 162 Tucker in relation to the purchase of the Property).[83]
[83]CB 343
·He was aware that 162 Tucker had been nominated as purchaser of the Property.
·He was aware that the settlement date had been extended numerous times.[84]
[84]T354-5
·He did not negotiate any extension of the settlement date with Sheng Du – but Dinh instructed him to do so.[85] Dinh had asked him to liaise with Mills Oakley. Dinh’s English was “not so great”, so he asked for help, for example with liaising with Mills Oakley.
[85]T356-7
·He could not remember telephone conversations with Sheng Du regarding extensions of settlement dates. He did not negotiate personally concerning extensions. He did ring Mills Oakley and talk to them and passed on Dinh’s “wishes” regarding extensions.[86]
[86]T371
·He could not remember telephoning Du and saying to him that they were short $140,000 needed for settlement, although he knew they were short.[87] In an email dated 28 March, he advised:
[87]T369
“We are short $140,000 for settlement. We have spoken to the vendor’s solicitor and agent and have come to an agreement that the agent will used (sic) their referral fee for that shortfall.”[88]
[88]CB 524
·He knew of the Loan Agreement.[89] He was asked by Dinh to help with the loan document.[90]
[89]T371
[90]T370
·He played a role in dealing with Mills Oakley in relation to the purchase and the borrowing of the money.[91] He arranged with Mills Oakley for the borrowing of the money.[92]
[91]T372-3
[92]T373
·Although he received instructions from Dinh, he did not know who Dinh was giving instructions on behalf of. It could only be through 162 Tucker or the vendor.[93]
[93]T375
·He did not negotiate the $140,000 loan with Mr Du personally, but he was present when it was negotiated.[94]
[94]T378
·Sheng Du had come into the office numerous times, generally to see Dinh.
·Dinh and no-one else had authorised Lance to deal with Mills Oakley.[95]
[95]CB 343
·He had dealings with a finance broker to obtain finance so that the purchaser could purchase the Property. He was authorised by Dinh to have those dealings.[96]
[96]T382
·Dinh was handling this matter on behalf of 162 Tucker.[97] Dinh gave him all his instructions – no other person.
[97]T389
·Dinh told him that 162 Tucker was borrowing money from the vendor or some company associated with the vendor. Dinh told him to handle the Loan Agreement with the solicitors.[98]
[98]T390
·Sheng Du had come to his office at the Port Melbourne premises on 28 April.
·Dinh had told him that Sheng Du would be coming in with an envelope with a cheque in it. Du arrived and, in the upstairs part of the office, gave him (that is, Lance) an envelope.[99] He said it was a cheque. Lance knew it was a cheque for the settlement.[100] He understood that settlement was to take place later that day.[101]
[99]T345
[100]T394
[101]T395
·Dinh had told him that he was organising all the cheques for the settlement.
·Present on the occasion when the Cheque was brought in by Sheng Du were:
§A couple of sales consultants downstairs.
§an administration person, whose name was Jessica and who was Lance’s wife, and who was an employee of RIC Build.[102]
[102]T347
·Neither Khuyen Nguyen nor Dinh were present when the Cheque was handed over by Du to Lance.[103]
[103]T348, 393
·Lance had the envelope on his desk. A bit later, Dinh came in and asked for the envelope, so he gave it to him.[104] He had not opened the envelope before giving it to Dinh. He did not see the envelope again.[105]
[104]T348
[105]T348
·He had no role in the banking of the Cheque.
·To his knowledge there was no-one else other than him who was dealing with Mills Oakley in connection with the loan or the purchase of the Property.
·Later, Dinh gave him instructions for the caveat to be removed from the Property.
·Later, he had given instructions to James Partners Lawyers to advise Wayne Wong & Associates (the vendor’s solicitors) that:
§A cheque for $140K was provided by Mr Sheng Du on behalf of the vendor for 162 Tucker Road to Lance Truong at the Turner Street address.
§The Cheque was then passed to Mr Dinh (by Lance Truong), who placed it in one of the drawers of his desk.
§After a fire at the Turner Street address, the Cheque has not been seen since. It is assumed therefore that it was burnt in the fire.[106]
·It was Dinh who had told him that the Cheque must have been burnt.[107]
·There had been a fire at the Port Melbourne premises; the Cheque has not been seen since. He assumed therefore that it was burnt in the fire.
[106]T401; CB 758
[107]T401
164 Lance was, along with Dinh, a director of RIC Corporation Pty Ltd,[108] which company had deposited the Cheque into the trust account of Starke Westwood.
[108]CB 856-7; T402
165 The issue in respect of RP’s claim against 162 Tucker and the guarantors comes down to whether the Cheque was provided by RP to 162 Tucker or a person authorised to accept on behalf of 162 Tucker.
166 I am satisfied that Lance provided information to James Partners concerning the alleged loss of the Cheque by fire, knowing that it was not true.
167 I accept that Dinh was involved in the purchase of the Cairnlea property. Correspondence to and from him was tendered which confirms this.[109]
[109]CB 861-862
168 I accept that Lance handed the Cheque to Dinh on 28 April.
169 I accept that Lance provided Mills Oakley with all instructions concerning the Contract of Sale on behalf of 162 Tucker and RHH.
170 In all the circumstances, I am satisfied that Lance and Dinh at all relevant times were acting for and on behalf of RHH and 162 Tucker in connection with the Contract and Loan Agreement respectively. A perusal of the tendered correspondence to and from the solicitors acting for both RHH and 162 Tucker (Mills Oakley) confirms that Lance was the person who provided that firm with instructions concerning the transactions.
171 Counsel for 162 Tucker and the guarantors (Dat Nguyen and Khuyen Nguyen) submit that there was no evidence that Lance was a servant or agent of 162 Tucker, or that he was authorised to accept the Cheque on its behalf. Accordingly, they submit that the loan was never advanced to or received by 162 Tucker.
172 Lance’s role and position needs to be considered in the light of the broad role played by him in connection with the transaction.
173 I have concluded that Lance did take possession of the Cheque for and on behalf of 162 Tucker for the following reasons:
(a)although Lance was not a director of 162 Tucker, he had played a significant role on behalf of that company in relation to the purchase transaction, negotiations concerning the various extensions of the settlement date, and the Loan Agreement;
(b)162 Tucker was a corporation which could only act through individual persons – its officers, servants or agents. The evidence was that none of the directors of 162 Tucker[110] played any role in the receipt of the Cheque. Further, there was no evidence that 162 Tucker had any employees or other agents, other than Lance or Dinh, who might have played such a role. Curious though it is, Khuyen Nguyen, a director of both the lender and the borrower, was involved in obtaining the Cheque from the ANZ bank in his role as a director of RP, but appears not to have played a direct role in the provision of the Cheque to Lance. Notwithstanding, it is difficult to believe that, having accompanied Sheng Du to obtain the Cheque and returned with Du to the Port Melbourne premises, Khuyen Nguyen would have had no knowledge as to whom the Cheque was to be handed;
(c)Lance was, on the evidence before me, the only person to provide instructions concerning the transactions to 162 Tucker’s solicitors, Mills Oakley;
(d)I accept the evidence of Sheng Du, that on the date on which the Loan Agreement was signed, he was told by Dat Nguyen, a director of 162 Tucker, to give the Cheque to Lance, who would give it to SPG at settlement;
(d)Those negotiations relating to the Contract were not fleeting. They consisted of a number of issues including multiple extensions for settlement, payment of penalty interest, payment of substantial additional instalments of the purchase price and the provision of a loan from a company associated with SPG to assist with payment of the balance of the purchase price. Lance’s role did not relate to insignificant matters. This was, after all, a $2.65 million transaction;
(e)I am satisfied that 162 Tucker and RHH held Lance out to RP and SPG as their agent in connection with the Contract and the Loan Agreement;
(f)I accept Lance’s evidence that all his instructions concerning the Contract and the Loan Agreement came from Dinh. I am satisfied that Dinh had told Lance that Sheng Du would be attending with the Cheque, that the Cheque was handed to Lance, and that Lance then handed the Cheque to Dinh.
[110]CB 808
174 It follows that I am satisfied that the provision of the Cheque by Sheng Du to Lance on 28 April constituted the provision of the Cheque to 162 Tucker in accordance with the Loan Agreement.
175 If Dinh and/or Lance later used the Cheque for some illegitimate purpose, I do not consider that this alters the fact that RP provided the Cheque to 162 Tucker in accordance with the Loan Agreement.
176 It is unnecessary for me to make a finding as to the precise purpose for which the Cheque was later used or for whose benefit it was banked and used. I am satisfied on the balance of probabilities that neither RP nor SPG had any knowledge or involvement in the deposit of the Cheque into the trust account of Starke Westwood or any dealings with respect to the Cairnlea property.
177 I consider that it is clear that both Lance and Dinh had possession of the Cheque on 28 April after its delivery by Sheng Du. On 13 July, RIC Corporation Pty Ltd (of which Lance and Dinh were sole directors) deposited the Cheque into the Starke Westwood trust account. At about that time Starke Westwood were acting for one or more of RIC Corporation Pty Ltd, Dinh and Lance.
178 In all of the circumstances, I am able to conclude that Dinh and persons connected with RIC Corporation, were in the camp of 162 Tucker. I would have expected that Dinh would have been called on behalf of 162 Tucker in relation to the Cheque, its receipt from Sheng Du, and what happened to it. I can infer that his evidence would not have advanced 162 Tucker’s case.[111]
[111]Jones v Dunkel (1959) 101 CLR 298; O’Donnell v Reichard [1975] VR 916
179 While it might be argued that RP might have taken earlier steps to enquire from ANZ and others as to what had happened to the Cheque on and after 28 April, this is not a case where failure to mitigate loss is alleged. In any event, I am not satisfied that earlier enquiries or action would have resulted in the return of the Cheque or its proceeds to RP.
180 It follows that 162 Tucker and each of the guarantors, Khuyen Nguyen and Dat Nguyen, are liable to RP for the amount of the loan, together with interest in accordance with the Loan Agreement.
Conclusion
181 For the reasons set out above, I have concluded that:
(a)The claim by 162 Tucker against SPG should be dismissed;
(b)On the claim by SPG against Dat Nguyen, I was satisfied that SPG had suffered losses totalling $350,968.23 as a consequence of the breach of the Contract by RHH for which Dat Nguyen, as guarantor of RHH’s obligations under the Contract, was responsible. However, the amount of $500,000 paid by the nominee, 162 Tucker, should be deducted or off-set against this amount as described in paragraph 60 above. As a result, the claim should be dismissed;
(c)On the claim by RP in relation to the Loan Agreement, there should be judgment in its favour against 162 Tucker, and against Khuyen Nguyen and Dat Nguyen (as guarantors of the obligations of 162 Tucker under the Loan Agreement) for $140,000, together with interest.
182 On Tuesday, 17 March 2020, I heard further submissions from the parties concerning issues of interest and costs.
Interest
183 Counsel for SPG submitted that, notwithstanding SPG had not recovered any sum by way of damages after making allowance for the sum of $500,000 previously paid by 162 Tucker, it was entitled to interest on the sum of $350,968.23, being the items of damage allowed by me. The fact is that, after allowing for the amount previously paid by 162 Tucker, no damages were payable. Counsel for SPG has conceded this in his earlier written submissions.
184 I am satisfied that no interest is payable in relation to the damages made out because the monies already paid were properly to be deducted or set off against such sum.
Costs – SPG v Dat Nguyen
185 Similarly, counsel for SPG submitted that because SPG had been found to have suffered losses totalling $350,968.23, it should be entitled to its costs in relation to that claim from Dat Nguyen, the guarantor of RHH’s obligations to pay such damages. As with the previous submission concerning interest, this submission overlooks the fact that, after taking the amount of $500,000 into account, SPG failed in its claim to recover any amount of damages.
186 SPG is not entitled to any order for costs.
Costs – 162 Tucker v SPG
187 162 Tucker failed in its claim against SPG principally because it was never a party to the Contract. Dat Nguyen was a director of 162 Tucker.
188 Taking a broad view of these two claims – the claim and counterclaim – I consider it is generally fair and reasonable that costs as between SPG, 162 Tucker and Dat Nguyen, should lie where they fall. There will be no order for costs in relation to the claims brought by SPG and 162 Tucker.
Costs – RP v 162 Tucker, Dat Nguyen and Khuyen Nguyen
189 RP succeeded in its claim to recover $140,000 lent to 162 Tucker. Dat Nguyen and Khuyen Nguyen were guarantors of 162 Tucker under the Loan Agreement.
190 Counsel for RP seeks costs on an indemnity basis from the date on which an offer to settle each of the three claims was made by way of a Calderbank letter dated 25 October 2019 from solicitors Wayne Wong & Associates to Mills Oakley Lawyers.
191 The letter contained what was described as an “offer to settle the whole proceeding” on the following essential terms, that:
(a) The defendant pay the second plaintiff the sum of $180,000 in full and final settlement of the proceeding, inclusive of costs;
(b) The plaintiffs by counterclaim discontinue the counterclaim against the second, third and fourth defendants by counterclaim;
(c) The parties each pay their own costs of and incidental to the claim and counterclaim.
192 The letter contained a statement that:
“In the event that this offer is not accepted by 5pm on 1st November 2019 and this matter proceeds to judgement or a final order made by the Court and further that your client obtained a judgement less favourable than this offer, our client will produce this letter in support of an application for an order for costs against your client on an indemnity basis, in accordance with the principles applied in Calderbank v Calderbank [1975] 3 All ER 333 as considered by the Supreme Court of Victoria in Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) [2005] 13 VR 435.”
193 I consider that the claim by 162 Tucker and counterclaim by SPG were matters directly related to the Contact of Sale. The claim brought by RIC Platinum in relation to the loan was quite separate.
194 There was no statement as to whom the money was to be paid. If it was all to go to 162 Tucker, this left no balance to Dat Nguyen or Khuyen Nguyen who, as at the date of the letter, appeared to have had a possible defence to the loan claim.
195 The letter indicates that an application would be made against “your client” for indemnity costs. The reference to “your client” is presumably a reference to 162 Tucker. There is no mention as to whether Dat Nguyen and/or Khuyen Nguyen would also be asked to pay indemnity costs or any costs.
196 This proceeding involved a number of parties and a number of discrete issues and claims. The claim by RP was, in my opinion, not a true counterclaim but a cross-claim. In all the circumstances, such a letter required real clarity, which I consider is deficient.
197 The offer was made on an “all in” basis. There is no evidence as to what 162 Tucker had incurred by way of standard costs by the date of the offer. The offer may in fact have been an offer which, if accepted, would have resulted in a payment of costs only and nothing more.
198 Further, I accept that late in the proceeding and well after the date of the letter, RP amended particulars of its claim alleging that Du had handed the Cheque to Lance Truong. Previously, the allegation had been that it was handed to Dat Nguyen. This, I accept, from the perspective of the three defendants to that cross-claim, was likely to affect their prospects of successfully defending.
199 The reasonableness of the behaviour of the defendants to the claim in rejecting the offer needs to be assessed as at the date of the offer rather than the date of judgment.
200 A Calderbank offer could have been made in the RP claim. Rather, an attempt was made to make one offer to be relevant to each of the three claims.
201 In all of the circumstances, as a consequence of the matters referred to above, I do not consider that RP is entitled to rely upon the letter as justifying indemnity costs.
202 I consider that it is entitled to an order for standard costs against the defendants to the claim.
203 I shall make the following Orders:
(1)On the claim by 162 Tucker Road Pty Ltd against SPG Tucker Pty Ltd, the claim is dismissed. There shall be no order as to costs.
(2)On the claim by SPG Tucker Pty Ltd against Dat Huu Nguyen, the claim is dismissed. There shall be no order as to costs.
(3)On the claim by RIC Platinum Pty Ltd against 162 Tucker Road Pty Ltd, Khuyen Tri Nguyen, and Dat Huu Nguyen, there is Judgment for RIC Platinum Pty Ltd in the sum of $140,000, together with interest in the sum of $64,781.29, a total of $204,781.29. Further order that 162 Tucker Road Pty Ltd, Khuyen Tri Nguyen and Dat Huu Nguyen pay the costs of RIC Platinum Pty Ltd of and incidental to its claim on a standard basis.
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