A and C Reavin Pty Ltd v Plenty Australia Pty Ltd
[2021] VCC 552
•15 June 2021
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-19-06012
| A & C REAVIN PTY LTD | Plaintiff |
| v | |
| PLENTY AUSTRALIA PTY LTD | Defendant |
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JUDGE: | HIS HONOUR JUDGE MACNAMARA | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 27 and 28 April 2021 | |
DATE OF JUDGMENT: | 15 June 2021 | |
CASE MAY BE CITED AS: | A & C Reavin Pty Ltd v Plenty Australia Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2021] VCC 552 | |
REASONS FOR JUDGMENT
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Subject:Breach of contract; misleading or deceptive conduct
Catchwords: Contract for sale of business; special additional handwritten condition; proper construction of handwritten condition; whether imposing condition precedent or merely aspirational; contract terminated on basis of handwritten clause; recoverability of partial deposit paid and liability for balance; relief available under Australian Consumer Law for plaintiff if its contractual case is rejected.
Legislation Cited: Retail Leases Act 2003; Transfer of Land Act 1958; Real Property Act 1900 (NSW);
Cases Cited:Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; Amcor Limited v Barnes [2021] VSCA 6; Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537; Rudi’s Enterprises Pty Ltd v Jay (1987) 10 NSWLR 568; BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266; DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423; Summers v The Commonwealth (1918) 25 CLR 144; Euromark Limited v Smash Enterprises Pty Ltd [2021] VSC 97; Walters v Cooper [1967] VR 583; Marks v GIO Holdings Australia Limited (1998) 196 CLR 494; Sharjade Pty Ltd v Commonwealth of Australia [2009] NSWCA 373; Foran v Wight (1989) 168 CLR 385; Bot v Ristevski [1981] VR 120; Shevill v Builders Registration Board (1982) 149 CLR 620; Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17; Gumland Property Holdings Pty Ltd v Duffy Bros Fruit Market (Campbelltown) Pty Ltd (2008) 234 CLR 237; Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; Henville v Walker [2001] 206 CLR 459; Kizbeau Pty Ltd v WG & B Pty Ltd (1995) 184 CLR 281;
Judgment: (1) Within 14 days of this day the parties must bring in short Minutes to give effect to these reasons.
(2)Costs reserved.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr K Raghavan | North Star Law |
| For the Defendant | Mr A Berger | Hiways Lawyers |
HIS HONOUR:
Background
1This proceeding concerns an abortive sale agreement between the plaintiff and defendant companies relative to a bottle-shop business in North Balwyn known as “Belmore Fine Wines”.
2The plaintiff, A & C Reavin Pty Ltd, was incorporated in 2010. Its sole director and secretary is Qing Zhang, who was born in Shandong, China, and is now a resident of metropolitan Melbourne. I will refer to her without intending any disrespect by the name she is known in English-speaking circles “Gina”. I will do likewise the other ladies involved in the proceeding. (Court Book (“CB”) 26)
3According to Gina, A & C’s main business is operating a liquor store called “Dryandra Cellars” at 318A Station Street, Box Hill. She said the bottle shop is operated by her, her husband Ang Li, and casual staff. (Ibid)
4According to Gina, around September 2015 she was introduced to the husband of Tianqing Li by the previous owner of Belmore Fine Wines (CB 27, paragraph 4) Tianqing Li is one of the directors and a shareholder of the defendant, Plenty Australia Pty Ltd. (CB 40, paragraph 1) Tianqing Li is known in English-speaking circles as “Amanda”. For convenience, and without intending any disrespect, I will refer to her by that name. Amanda and her niece, Weihong (known in the English-speaking community as “Grace”), had incorporated the defendant, Plenty Australia Pty Ltd (“Plenty”), in May 2015 to purchase the business Belmore Fine Wines, which the defendant company Plenty did in August 2015, the vendor being Mr Tao Zhang (not apparently a relation of Gina). (CB 41, paragraphs 4−6)
5According to Amanda, she knew Gina and her husband Ang Li via an introduction by Mr Tao in August 2015. (Ibid, paragraph 7) Mr Tao and Ang were from the same hometown in China. In late 2017 or early 2018, according to Amanda, at the invitation of Ang, she and her niece, Grace, attended a wine-tasting organised by the Chinese Bottle Shop Group. She met Ang at this function. (Ibid, paragraph 8)
6Around April 2019, according to Gina, Amanda asked Ang “to help her sell Belmore. In the following weeks and months, [Ang] helped [Amanda] to try to find potential buyers.” According to Gina, no potential buyers were identified. (CB 27, paragraph 8)
7According to Amanda, the initiative to sell Belmore came from Ang. She said:
“He asked me whether I had plans to sell the Business once I obtained permanent residency in Australia. He said he could assist me in selling the Business and he could introduce his friends to me if any of them were interested in purchasing the business. At the time, I had no intention of selling the Business.” (CB 41−42, paragraph 9)
8Gina said that in July 2019 she and her husband examined the possibility of A & C purchasing the Belmore business, because with their children reaching adulthood they had more time to spend. Gina said she investigated purchasing a Bubble Tea store, but she said such a purchase “was expensive and also more risky for us because we had not run a Bubble Tea store before”. She concluded that purchasing Belmore “was a cheaper and potentially lower risk option for us because we were already experienced in running a liquor store.” (CB 27, paragraph 9) Gina said she told her husband to speak to Amanda advising her “we were interested in buying the store.” (CB 28, paragraph 10)
9Gina said Ang met Amanda at the bottle shop and was told by Amanda that “she was interested in selling Belmore to us but that she would need to discuss the matter with her niece (and co‑owner)”. (CB 28, paragraph 11) Gina said that Amanda telephoned her husband Ang, advising that she and her niece were agreeable to selling Belmore for $260,000. Gina said the price was too high, and asked her husband Ang to relay an offer of $240,000. In a further telephone call, Ang made this as a counter-offer. (Ibid, paragraphs 12 and 13) Amanda said that when she consulted her niece, Grace, “she did not want to sell the business to Ang.” Matters were complicated by the fact that Amanda had an agreement to sell the shares in Plenty to a “close friend”. (CB 44, paragraphs 19 and 23)
10According to Amanda, Ang pressed her for a decision on the sale. (CB 44, paragraph 20) She said that she needed to discuss these matters with Grace, who was not enthusiastic. (Ibid, paragraphs 21−23) However, if the sale were to go through, the contract should be signed promptly because she (Grace) was departing for China the following Sunday.
11On the morning of 27 July 2019, Amanda asked Grace to speak to her solicitor, Mr Wu of Hiways Lawyers, requesting him to prepare a contract of sale, which Grace told Amanda Mr Wu had agreed to do.
12At 1.58pm, Ang provided detail to Amanda for inclusion in the sale contract. The purchaser was to be the plaintiff, A & C Reavin Pty Ltd. Qing Zhang (Gina) was the director. The sale price was $240,000. The maximum stock value was to be $100,000, and the deposit was to be $80,000. (CB 46, paragraph 29; Supplementary Statement of Agreed Facts, page 9)
13After a number of further steps, Mr Wu of Hiways Lawyers provided the form of contract to Grace, and Amanda transmitted it to Ang via WeChat at 4.56pm. (CB 46) Grace and Amanda printed out two copies of the contract, bringing them to Ang’s shop. Ang asked Amanda to send the previous lease agreements directly to Gina, which Amanda did at 7.53pm via WeChat. According to Amanda, she “sighted [Gina] carefully reviewing the entire lease agreements through her phone”. Gina told Amanda “that there was five years left”. Amanda replied, according to her statement, “yes, we have another 5 years upon renewal of lease”. Gina replied that five years was not satisfactory, and asked if “we would extend the lease for another ten years”. According to Amanda’s statement, she said “that if they wish to extend, the landlord should agree”. (CB 47)
14According to Gina, she told Amanda “Five years is not enough. We won’t buy it if there is only five years left. We need a long-term lease of at least 15 years.” She said Amanda replied, “Don’t worry. I know the landlord. The landlord’s wife can speak Mandarin. They are very nice. There is definitely no problem getting a lease of at least 15 years.” Gina said “Based on [Amanda’s] statement that there would definitely be no problem getting a lease of at least 15 years, I decided that I would enter into the contract [scil the purchase]”. (CB 31, paragraphs 28−30)
15According to Gina, she told Amanda and Grace “that we better write the parties’ understandings as to the lease of at least 15 years, to which they agreed”. She then added in handwriting and in English:
“Additional conditions,
Vendor will help purchaser to have 15 years lease. If only 5 years lease left, this contract will be invalid”
16She said she realised that she should have added the words “at least” before “15”, presumably after the contract had been signed. She said, however, that “Everyone was still in the office together and watched me as I did this. As best as I can remember, [Amanda] and [Grace] did not raise any concern when I added the word ‘at least’.” The amendment was made on the copy of the contract held by the vendor Plenty, and not on the one retained for the purchaser Reavin. According to Gina, “As a result, the copy of the contract that I have does not include the words ‘at least’, but the copy of the contract that [Amanda] took with her did have the words ‘at least’.” (CB 31−32, paragraphs 29−34)
17The sale contract was in a standard form published by the Law Institute of Victoria and styled “Contract of Sale of Business”. (CB 158ff.) The contract was signed on behalf of the vendor Plenty by Grace and Amanda, and on behalf of the purchaser Reavin by Gina. (CB 161) The business sold was designated “Belmore Fine Wine” and described as a “bottle shop”, its address being 243 Belmore Road, Balwyn. The price was shown as $240,000 with a deposit of $80,000 and a balance payable of $160,000 plus the value of the stock up to a maximum of $100,000. (CB 163) There were two typed special conditions. The first was in the following terms:
“This Contract contains the entire understanding and the whole agreement between the parties with reference to the subject matter of this Contract. All previous negotiations, representations, warranties, arrangements and statements, including but not limited to the signed Offer to Purchase, whether express or implied with reference to the subject matter hereof are merged herein and otherwise are hereby excluded and uncalled.”
18The second dealt with the liquor licence, consisting of some six subclauses, the first of which stated:
“This Contract is conditional upon the Responsible Authority by the Date of Settlement giving its written consent to the transfer to the Purchaser of the liquor licence.” (CB 165)
19Paragraph 7 was headed “Lease” and stated inter alia:
“7.2The vendor must obtain for the purchaser by the due date for settlement, a lease of the business premises either:
(a)by transfer of the current lease with the landlord’s written consent; or
(b)by a new lease as described in item 3 of schedule 4.”
20Clause 7.3 provided inter alia:
“7.3(a) Both parties must take all reasonable steps to obtain the transfer and the landlord’s consent or the new lease of the business premises. In particular, the purchaser must promptly provide the vendor with the following to assist the vendor to obtain the landlord’s consent:
...
(iii) a statement that the purchaser has been provided with the business records of the Business for the previous 3 years or such shorter period as the vendor has carried on business at the business premises.
...”
21Clause 7.5 provided:
“7.5The purchaser may end this contract by service of an unsatisfied 5 business day notice which specifies one of the following:
(a)the landlord has not consented in writing to the transfer;
(b)the landlord has not granted a new lease; or
(c)any mortgagee or chargee has not consented to the transfer or grant of the new lease (as the case may be),
by the due date for settlement in which case the vendor must repay any monies paid by the purchaser.” (CB 168−169)
22Clause 15 was headed “Default”. Clause 15.1 stated that time was of the essence of the contract, but subclauses 15.4 and 15.5 stated:
“15.4A 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 served and fails to comply with a written default notice.
15.5 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 default unless, within 5 Business days of service of the notice:
(i)the default is remedied;
(ii)the reasonable costs incurred as a result of the default and any interest payable, are paid; and
(iii)states the rights which the party serving the notice intends to exercise if the default is not remedied in time.” (CB 171)
23Clause 20 was headed “Interpretation”, and included a definition of the word “Business” extending to some 11 paragraphs, the third of which stated:
“(iii)the right to possession, occupancy or use of the business premises under any present or future lease, licence or other agreement described in schedule 4”. (CB 173)
24Schedule 3 referred to “Other material contracts” and was, in the printed version of the contract, left blank. The “additional conditions” referred to by Gina was added in the blank area of that schedule. (CB 176)
25Schedule 4 was headed “Terms of current or new lease” but was left blank, with the particulars of the existing or proposed new lease provided for in tabular form uncompleted. (CB 177−178)
26Once the parties had signed the contract, according to Amanda, Gina “proposed to pay us $30,000 deposit first and the remaining later because she had insufficient cash on hand.” Amanda and Grace were dissatisfied with this proposal. She said Ang assured them that the further $50,000 would be paid the following day, 28 July 2019, which was a Sunday. (CB 47−48, paragraph 31)
27Amanda and Grace left, with Amanda taking one of the copies of the contract and leaving the other with Gina. (CB 33, paragraph 42) The following day, 28 July, Gina said she met Amanda “at the library in Box Hill”, paying $35,000 in cash and transferring tranches of $5,000 and $10,000 to Plenty’s bank account. (CB 33, paragraph 44)
28Gina attempted to “open” the electronic version of the lease of the premises forwarded to her by WeChat on 27 July 2019. Early the following month she asked her husband, Ang, to follow this up with Amanda. (CB 33, paragraph 45) According to Gina she remained concerned as to whether Reavin would enjoy the 15 years security of tenure which she was insisting upon. Ang told her that Amanda had arranged a meeting with the landlord on 5 August 2019. The landlord is known in English speaking circles as “Andy”. As it was, the landlord did not attend himself but was represented by his agent, Marc Walton. (CB 34, paragraphs 44‑49)
29The lease of the premises current at the time of the sale agreement dated from 4 August 2009 when an initial five year term was granted. An option to renew the lease for a further five years was exercised with the result that this lease expired on 3 or 4 August 2019. (CB 50, paragraphs 42-43)
30The meeting was held at the offices of real estate agent Ray White. As well as Mr Walton, Ang, Gina and Amanda attended. Since the landlord’s spokesman was the English speaking Mr Walton, the meeting was conducted in English. This meant that Amanda could not follow the discussions between Mr Walton on behalf of the landlord, Andy, with Ang and Gina on behalf of the proposed new tenant, the purchaser Reavin. She was, however, able to follow discussions in Mandarin between Ang and Gina. According to Amanda, Gina and Ang agreed that their company did not require use of the basement area which could be deleted from the new lease but the floor needed to be refurbished and an improvement needed to be made the toilet and kitchen. More particularly, Ang and Amanda discussed obtaining a 15 year lease “being a five-year lease with two options of five years”. (CB 51, paragraph 45) According to Gina, she raised with Mr Walton her company’s need for a 15 year lease. She said Mr Walton replied, “I will need to speak with the landlord. However, any new lease would be conditional on the landlord taking back the room downstairs.” (CB 34, paragraphs 50 and 51) It would seem, therefore, that whilst Gina and her husband were agreeable to the deletion of the basement from the proposed new lease, it was Mr Walton on behalf of the landlord who first broached that proposal as a condition for the grant of a lease for 15 years or whether of that term or by way of a series of options. The downstairs or basement area was part of the lease which had just expired and included a bathroom, kitchen and sleeping area. (ibid paragraph 52) According to Gina, Mr Walton said to Amanda, “As I told you before, the landlord will only grant a new lease if the landlord takes the room downstairs back but you refused.” (ibid paragraph 53) If this remark were in fact made, it would seem that Amanda would not have understood it at least without its being translated. Gina said that Amanda “had not told me that the landlord had previously told her that he would only grant a new lease if he could take the downstairs room back.” (CB 35, paragraph 54)
31Gina said she told Mr Walton that she sought a 15 year lease as “a pre-condition to me purchasing the business and is most important.” If that lease were granted she said she would agree to removing the downstairs room from the lease and would agree to install new fridges and a solar panel at her expense subject to a reduction in rent and the installation of a small kitchen and conversion of the toilet area. Gina took a photograph of Mr Walton’s notes of the meeting. (CB 200) Gina observed that Amanda did not dissent from her description of a 15 year lease as being a pre-condition to the purchase of the business (ibid paragraph 58) yet since this discussion took place in English and Amanda therefore could not follow it, it is difficult to attach much significance to this.
32The meeting concluded with the parties awaiting Mr Walton’s response on behalf of the landlord which came by email on 8 August 2019 stating:
“Good Morning Grace and Tina,
I have spoken to the Landlords about the possible transfer of Lease as well as all the other things we discussed on Monday morning. The Landlords response is as follows;
Happy to offer a 5 by 5 year Lease
Landlord to install toilet in back left corner
Landlord to install new Kitchenette in same area as current one is
Landlord to reduce rent to $42,000 plus GST per annum
Landlord to take room downstairs
The Landlord has also offered, if the new tenants were do build and install the indoors toilet and new kitchenette (Plumbing certificates required) then he would further reduce the annual rent to $39,000 plus GST and offer 2 months rent free.
The Landlord is also happy for you to install new fridges and solar panels on the roof.
Please let me know your thoughts on this so we can continue to move forward.”
33At some time within the next week or two, Gina said she telephoned Mr Walton reiterating her requirement for a 15 year lease to which Mr Walton replied that the landlord would not grant such a lease. (CB 36, paragraphs 61-62)
34At the meeting on 5 August, Mr Walton had provided a document for the renewal of the lease in favour of the vendor Plenty which was at some point executed on Plenty’s behalf by Amanda and her niece, Grace, as director. (CB 51) Gina said that at the time of signing the sale contract, her husband, Ang, asked for “financial information about the business” and on a number of occasions repeated that request. (CB 36-37, paragraphs 63-64) By emails 2 August, to Amanda, Ang requested, “Tax assessment notices for the last two years and financial statements for the last two years …” (Supplementary Statement of Agreed Facts, page 19). He reiterated that request later the same day asking for additionally, “eight business activity statements for the last two years.” Later the same day he said, “We require this documents, under the rule. It is not something difficult. Please provide as quickly as possible.” (ibid) In a lengthy text the following evening, 3 August 21:07, he reiterated the request. (Supplementary Statement of Agreed Facts, paragraph 20. Again on 4 August and 10 August, page 21) On the afternoon of 10 August, Amanda replied:
“We have spoken to our solicitor and accountant in regards to financial statements. They will do everything step by step. The documents which should be provided by the solicitor and the accountant will all be provided when the settlement is done. I believe that the settlement should be done in the way the normal procedure goes. …” (Supplementary Statement of Agreed Facts, page 22)
35Gina sent an email herself on 20 August which stated:
“Hi Plenty Australia Pty Ltd
Since we signed the business sale contract on 27 July I haven’t received your lease agreement, disclosure statement, profit and loss statement of last three years which you promised to send me.
Please send me ASAP.
Regards
Quing Zhang.” (CB 37, paragraph 66)
36While Gina received lease documents, she never received the financial records and tax assessments. (ibid paragraphs 67-68)
37Gina sent an email to Amanda and Grace on 21 August 2019 in the following terms:
“Good Evening Tianquing Li & Weiong Li
Because the landlord has refused 15 years lease, I want to end this deal, please give us $50,000 deposit back asap.
Regards
Qing Zhang”
(CB 37-38)
38The following day on behalf of Reavin, Gina received a default notice on behalf of the vendor Plenty. (CB 38, paragraph 70; 262) The default alleged was failure to pay the balance of the deposit in the sum of $30,000 and also a failure “promptly” to “prepare and file the application for transfer of liquor licence in accordance with Special Condition 2”. The notice required the defaults to be remedied within five business days of service of the notice and unless remedied and legal costs and interest were paid the contract would be ended pursuant to General Condition 15. The notice concluded by saying that upon recission Plenty as vendor would “retain and keep as property of the vendor the full deposit amount.” Solicitors acting for Reavin (Sharrock Pitman Legal) by letter dated 29 August 2019 addressed to Plenty’s solicitors (Hiways Lawyers), stated inter alia: (CB 264-5)
“1.On 27 July 2019, our client entered into a Contract of Sale of Business for the purchase of Belmore Fine Wine from Plenty Australia Pty Ltd (“the Contract”).
2. Correspondence regarding the Contract took place primarily between Ms Qing Zhang, a director of A & C Reavin, and Ms Tianqing Li, director of Plenty Australia.
3. Ms Li provided our client with the Contract on Saturday 27 July 2019. She informed Ms Zhang that she had to sign the Contract before the end of the day and pay a $50,000.00 deposit directly to Ms Li before the end of the weekend, if she wished to proceed with the sale.
4. Ms Li further informed Ms Zhang that there was another purchaser of the business who had already signed a contract and with whom the sale would be finalised on Tuesday 30 July 2019. Ms Li used this information to pressure Ms Zhang into signing the contract without obtaining legal advice and to pay the requested deposit directly to Ms Li, otherwise than in accordance with the Contract.
5. Prior to signing the Contract, Ms Zhang informed your client that A & C Reavin required a 15 year lease on the property at 243 Belmore Road, Balwyn 3103 (“the business premises”). Ms Zhang was assured that the Contract would be invalid if a 15 year lease could not be obtained.
6. Accordingly, the Contract contains a handwritten clause on page 19 that states: ‘Vendor will help purchaser to have 15 years lease. If only 5 years lease left, this contract will be invalid.’
7. On 8 August, Ms Zhang was advised that the landlord had offered to renew the lease for 5 years, and offer a further 56 year option on different terms than the original lease. Under this option, the premises of the lease would be varied so as not to include the storage room.
8. On 21 August, Ms Zhang was informed that the lease had now been renewed for five (5) years only and was provided with a copy of the lease.
9. On the basis of this information, Ms Zhang informed Plenty Australia that A & C Reavin considered the Contract at an end and requested that the $50,000.00 deposit be repaid to them.”
39The letter continued stating that since the landlord was unwilling to provide a lease for a term of more than five years, “the contract is now void ab initio pursuant to page 19 of the Contract.” The letter denied Plenty’s entitlement to terminate the contract by the default notice. It demanded repayment of the $50,000 part-deposit paid by Reavin. There was also an allegation that Plenty had represented that its business “had an annual turnover of approximately $750,000.00 and that they would provide our client with the financial records of the business”, which had not been done. The representations as to turnover were said to be misleading and deceptive conduct under s18 of the Australian Consumer Law. Further, there was an allegation of unconscionable conduct contrary to s20 of the Law. The letter concluded demanding repayment of the $50,000 within seven days. (CB 264-5)
40Gina sent an email to Mr Walton on 1 October 2019 seeking clarification as to the total lease term including options which were being offered by the landlord. Mr Walton replied saying there was never a period of 15 years in total offered, rather, a total of 10 years, only. (CB 74-75). Mr Walton added that the offer of the new lease with two options of five years each, being a total of 10 years, had in any event been withdrawn. Meanwhile, Grace and Amanda had signed a lease renewal on behalf of Plenty in late August 2019. (CB 53, paragraph 59)
Plaintiff’s claim
41On 12 December 2019, solicitors acting for A & C Reavin Pty Ltd commenced the present proceeding against Plenty Australia Pty Ltd. In its second Further Amended Statement of Claim (hereinafter referred to as “the Statement of Claim”), having alleged the making of the sale agreement, Reavin alleged that the sale agreement was conditional upon Plenty obtaining for it “a new lease, or an extension to the existing lease, over the Business Premises for a term of at least 15 years ending in 2034”.
42Further, it was said there was a term that the parties “would take all reasonable steps to procure the New Lease”. Next, it was said to be a term of the agreement that Plenty “would promptly provide [Reavin] with the business records of the Business, including tax returns and accounting statements, for the previous 3 years …”. Reference was made to GC 7.3(a)(iii) of the sale agreement. Further, it was said that the term was to be implied to give business efficacy to the sale agreement. It was said that if the lease condition were not satisfied or were not satisfied within a reasonable time, the sale agreement “would be void and would terminate automatically”.
43Alternatively, Reavin would be entitled to terminate the agreement by notice or Reavin would be entitled to terminate the agreement pursuant to GC 7.5 “by service of an unsatisfied five business day notice”. If the agreement were terminated, Plenty was obliged to repay any monies paid to it by Reavin. It was said that a deposit in the sum of $50,000 was paid but no settlement of the sale agreement occurred. Reavin was said to have “taken all reasonable steps to procure a New Lease”, but the landlord had refused to grant such a lease and Plenty had therefore failed to obtain the New Lease with the result that the “lease condition” was not satisfied within a reasonable time or at all.
44Further, it was said that Reavin had asked for copies of the business records of the Business “including tax returns, accounting statements and profit and loss statements”, which Plenty had failed to provide in breach of the sale agreement. In those circumstances, it was said that the sale agreement was automatically terminated or else terminated by notice on behalf of Reavin on 21 August 2019 by email of that date, or such email could be regarded as service of an unsatisfied five business day notice terminating the agreement pursuant to GC 7.5.
45Therefore, $50,000 was said to be due and payable by Plenty to Reavin. Alternatively, there was a total failure of consideration for the payment of that amount, and Reavin was entitled to restitution of the $50,000. Demands for payment of the $50,000 had proved ineffective.
46Finally, there was a claim for misleading or deceptive conduct. Plenty was alleged expressly or impliedly to have represented that the landlord would grant to Reavin a new lease or an extension of any existing lease of the Business Premises for a term of at least 15 years ending in 2034. Alternatively, that the landlord would be likely to grant Reavin a new lease or extension over the Business Premises for a term of at least 15 years. Further, Plenty was said to have represented that it was not aware of any matters to suggest the landlord would not, or would likely not, grant Reavin a new lease for an extension for a term of at least 15 years. Plenty was said to have expressly or impliedly represented that it had reasonable grounds for believing the landlord would likely agree to grant Reavin a new lease or an extension of an existing lease for a term of at least 15 years.
47These representations were said to be conduct in trade and commerce for the purposes of s18 of the Australian Consumer Law. They were representations as to future matters for which Plenty had no reasonable ground. The representations were therefore to be taken as misleading or deceptive by reason of s4 of the Australian Consumer Law.
48Further or alternatively, according to Reavin the representations were misleading or deceptive because the landlord was not likely to, and did not agree to, grant the new lease for at least 15 years, and was only willing to offer one further term of five years such that any lease would expire in 2029 at the latest. This agreement was conditional on an increase in rent and the landlords taking “possession of the downstairs room which formed part of a Business Premises under the then existing lease”. Therefore, it was said, s18 of the Australian Consumer Law had been contravened by Plenty, and Reavin had suffered loss as a result of the contraventions. The loss was said to be the loss of the deposit plus interest.
49Reavin claimed $50,000 damages pursuant to s236 of the Australian Consumer Law. Further or alternatively, orders pursuant to ss237 and 243 “declaring the Sale Agreement to be void ab initio and directing [Plenty] to refund $50,000 to [Reavin]”. The prayer for relief also included a request for interest, costs and further or other relief.
Defence and Counterclaim
50By its Defence and Counterclaim, Plenty generally admitted the preliminary allegations made by Reavin, and Plenty’s entry into the sale agreement with respect to Belmore Fine Wines.
51As to the alleged precondition relative to the lease, Plenty said that the additional handwritten clause in the agreement did not require a lease or leases totalling 15 years, but rather “required the duration of the lease including options … to be a minimum of five years”. As to the provision of financial documents, it was said that those documents were required by the sale agreement to be provided only “to the extent required to obtain the landlord’s consent or transfer or new lease”. No default notice under GC 7.5 could, according to Plenty, be issued based on “the non-fulfilment of the Lease Condition”.
52As to this New Lease condition, it said the landlord offered a new lease of five years with a five-year option.
53As to Reavin’s alleged termination of the sale agreement, Plenty said that this was invalid because it was not in accordance with the sale agreement and was groundless. This was because the new lease offered by the landlord exceeded five years. Accordingly, the email on behalf of Reavin of 21 August 2019 was “ineffective so as to terminate the Sale Agreement as it does not comply with the requirements of GC 7.5”.
54As to the allegations of misleading or deceptive conduct, they were said to be “insufficiently particularised, and liable to be struck out”. In any event, according to the Defence, “no such representation was made either expressly or impliedly”. In any event, it was said that the alleged “Lease Representation” could not have been relied on “reasonably or actually [by Reavin] in entering into the Sale Agreement” because an additional condition had been inserted in the Sale Agreement prior to its signing. In any event, it would be unreasonable to have relied on the statement because it was a statement of opinion about what a third party, viz the landlord might do. Therefore, the alleged loss or damage was not caused by reliance on the “Lease Representation”.
55Finally, special condition 1 of the sale agreement meant that it contained “the entire understanding and the whole agreement between the parties, and that representations, such as the Lease Representations, are excluded from the Sale Agreement”.
56In general response to the plaintiff’s claim it was said that on 8 August 2019 the landlord offered a new lease of five years with a five-year option with settlement due on 15 August 2019 and that Plenty “was ready, willing, and able to do what was required of it to give effect to settlement by and on the settlement date”. By that date Reavin “had not done what was required of it to give effect to the settlement” by not paying $30,000, being part of the deposit, or the $160,000 balance, nor paying the value of the stock or preparing and filing an application in respect of the liquor licence.
57Plenty had served a default notice under the relevant clause of the sale agreement on 22 August 2019, and Reavin failed to comply with it. Therefore, Plenty was entitled to retain the $50,000 pursuant to GC 15.8 of the sale agreement.
58By way of counterclaim $30,000, being the balance of the deposit, was said to be due and owing to Plenty by Reavin.
Reply and Defence to Counterclaim
59Reavin joined issue with Plenty on its Defence and denied that $30,000 was owing, as alleged in the Counterclaim.
Plaintiff’s claim conclusions
60Mr Raghavan, counsel for the plaintiff, advanced a number of bases upon which he contended the plaintiff’s claim should succeed.
“Invalidity clause”
61Mr Raghavan relied first upon the special condition handwritten by Gina on the blank page under the heading “Third Schedule”.
62According to Mr Raghavan, “properly construed, the Sale Agreement entitled the plaintiff to rescind the agreement if the landlord did not approve a new lease over the “premises of at least 15 years’ duration”. (Plaintiff’s Opening Submissions, paragraph 48) He said settlement was due seven days after the landlord’s approval, and such approval was to be understood as approval of the lease which the plaintiff was obliged to obtain pursuant to GC 7.2. The handwritten clause needed to be read together with GC 7.2. The obligation to provide a lease pursuant to GC 7.2 and the handwritten clause pertained to the whole of the premises and a duration of at lease 15 years. If such a lease were not available, then the sale agreement was voidable at the option of the vendor. (Ibid)
63This construction of the handwritten clause, he said, enabled a harmonious operation between the settlement provisions of GC 7.2 and the handwritten provision. This construction answered the question, what would happen if no landlord’s approval as required by GC 7.2 and the handwritten clause were obtained, viz that the agreement would be “invalid”. He said the phrase in the second sentence of the handwritten clause “if only five years left” was:
“explicable on the basis that it describes the circumstance that would prevail in the event that [Reavin] did not obtain a lease of the kind referred to in the first sentence (i.e. a lease of at least 15 years)”. (Ibid, paragraph 51)
64The word “invalid” he said should be regarded as meaning “without legal force” or “void”. He referred to the Macquarie Dictionary. (Ibid, paragraph 52)
65According to Mr Raghavan, to construe the second sentence otherwise would lead to an uncommercial outcome such that a lease for a further five years would be inadequate and leave it open to Reavin to withdraw, but Reavin would be compelled if a lease for five years and one day was granted. The reference to Plenty’s “helping”, he said, simply reflected “the reality that, at a practical level, the process of obtaining the lease would necessarily involve the vendor facilitating the transaction between the vendor and the purchaser”. The reference to “help” should not render the clause simply aspirational. (Ibid, paragraph 54) He said the natural meaning of the references in the sale agreement to a lease and to the premises was that they referred to the whole of the premises or, one might think, at least to the whole of the premises comprised in the existing lease and from which the business was conducted. (Ibid, paragraphs 55 and 56)
66In contrast, Mr Berger, counsel for Plenty Australia, said that on its true construction the handwritten clause meant “a lease of 15 years was an aspiration, desirable but not conditional and a lease of five years would permit recission”. (Defendant’s Opening Submissions, paragraph 7) He noted that the handwritten clause consisted of two sentences whose meaning was “readily discernible”. As to the first sentence, introduction to the landlord’s agent – which Plenty did effect – discharged its obligation to help. (Ibid, paragraphs 8 and 9) He said that to regard the first sentence as creating an obligation to obtain a 15-year lease would render the second sentence meaningless. Since the duration of lease offered by the landlord was beyond the control of either Plenty or Reavin, they “accounted for this in the second sentence”. (Ibid, paragraph 10) The evidence showed that a 10-year lease was on offer. Since what was offered exceeded five years, there was no “invalidity” triggered. (Ibid, paragraph 11)
67Further, he said that the terms of any proposed new lease were to be set out in Schedule 4. This schedule was blank. Therefore, he said, the parties could be regarded as agreeing that no new lease was “mandatory”. (Ibid, paragraph 12) He said the second sentence of the handwritten clause meant that if all that was available was the existing five-year option then the contract was “invalid”. Likewise, if a new lease of only five years were available, that might lead to invalidity.
68He said: “all that can reasonably be gleaned from the Contract is that it is not clear whether a new or transferred lease was specifically contemplated”. He conceded, however, that a transfer of the existing five years running from 4 August 2019 without added options was unacceptable”. (Ibid, paragraph 13)
69Mr Berger asked, rhetorically, what if the landlord offered two further options on top of the existing lease with the first five-year option commencing 4 August 2019 and settlement taking place on 4 September 2019? The total term would therefore be 14 years and 11 months. Would it be any more absurd to regard the agreement as being “invalid” in those circumstances than that it would not be invalid if five years and one day of a further lease term were available?
70Mr Berger noted that retail leases in Victoria tended to be in multiples of five years. This was because s21 of the Retail Leases Act 2003 provided tenants with security of tenure for five years, whether in one single term or by way of options. The effect would then be that to provide the necessary 15 years with the relevant term commencing 4 August would require a further five-year option, making a total period of 19 years and 11 months, so as to meet the “at least 15 years” standard. For all these reasons, he said the 15-year term was said to be merely “aspirational”. (Ibid, paragraphs 15 and 16)
71Next, Mr Berger referred to and relied upon the celebrated passage from the judgment of Mason J (as he then was) in Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337, 352 where his Honour stated what later High Court judgments had described as “the true rule” as to the construction of written agreements, which would exclude evidence of the actual intentions and expectations of the parties. (Ibid, paragraph 17) Therefore, discussions about the importance attached by Reavin to a 15-year term were not admissible on the point of construction of the handwritten clause.
72As to the issue that the premises’ lease on offer did not include the whole area previously part of the lease, Mr Berger noted that the handwritten clause made stipulations only as to duration, not the scope of the premises. Therefore, there was no question of invalidity being triggered. (Ibid, paragraph 19)
73The evidence, he said, showed that the discussions as to the lower level or basement indicated that the parties agreed on a “quid pro quo” that Reavin was agreeable to the exclusion of the basement for a reduction in rent and what was offered by the landlord accorded with that “quid pro quo” arrangement. (Ibid, paragraph 21) Therefore, having agreed to the quid pro quo, there was no basis on which Reavin could complain: “by its own actions, it had shifted the goalposts”. (Ibid, paragraph 22) Having continued negotiations with the basement excluded, Reavin had lost any entitlement it might have had to terminate the agreement on that basis. (Ibid, paragraph 24)
74In closing submissions, Mr Berger once again referred to “shifting the goalposts” but did not say that Reavin’s agreement to dispense with the basement, in itself, constituted such a moving of the goalposts. Rather, he said that the entire list of things that were raised in negotiation and were to be found recorded in Mr Walton’s notes of the lease meeting on 5 August (at CB 200) constituted the “moving of the goalposts”. These items were, he said, referred to in paragraph 56 of Gina’s affidavit which I have quoted above. The submission then, as I understood it, was that these matters in their totality had the effect of relieving Plenty of its obligations under clause 7.2 to obtain a lease renewal or a new lease, such that by the “moving of the goalposts” the liability was transferred to Reavin.
75Clause 7.3 of the sale contract (see [20] above) obliged the parties to cooperate in the process of obtaining a transfer of lease or a new lease. Even in the absence of such a provision, the law would imply an obligation on contracting parties to cooperate with one another. In my view, the actions of those representing Reavin at the 5 August 2019 meeting should be regarded as in fulfilment of Reavin’s obligations under clause 7.3.
76Mr Berger did not precisely characterise the legal process whereby Plenty was relieved of its obligations under clause 7.2. It is possible to imagine a scenario in which a purchaser and incoming tenant might, for instance, adopt a position entirely contrary to what the sale agreement supposed was to be achieved on the lease in front. Such action might relieve a vendor of obligations, such as those contained in clause 7.2. In my view, however, what happened here was not of that character, and what transpired on 5 August 2019 should not be regarded as relieving Plenty of its obligations under clause 7.2.
77Nevertheless, I accept Mr Berger’s contention that having negotiated and agreed to dispense with the basement area of the previously demised premises, it would not lie in the mouth of Reavin to regard this as a breach by Plenty and as repudiatory conduct, in itself, without more. Nevertheless, I also accept the contention of Mr Raghavan made in reply, that Reavin’s agreement to dispense with the basement was part of a “package”. The basement could be dispensed with as long as a 15-year term was available. There would only be a breach by Plenty of its obligations under clause 7.2 and the handwritten clause on the facts before us on the basis:
(a) that Plenty’s original obligation was to procure a lease of a particular duration of the entire premises;
(b) it was by negotiation entitled to be regarded as having satisfied the contractual requirements and avoided any “invalidity”, despite the deletion of the basement if the lease was for the stipulated term.
78The outcome on these matters, therefore, turned crucially upon the proper construction of the handwritten clause.
79More recently than the famous passage from Codelfa, French CJ, Nettle and Gordon JJ restated the principles guiding the proper construction of written contracts in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104, 116. Their Honours there said:
“46.The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose.
47.In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That enquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract.
48.Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning.
49.However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding ‘of the genesis of the transaction, the background, the context [and] the market in which the parties are operating’. It may be necessary in determining the proper construction where there is a constructional choice. The question whether events, circumstances and things external to the contract may be resorted to, in order to identify the existence of a constructional choice, does not arise in these appeals.
50.Each of the events, circumstances and things external to the contract to which recourse may be had is objective. What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating. What is inadmissible is evidence of the parties' statements and actions reflecting their actual intentions and expectations.” (2015) 256 CLR 104, 116-7
80As to the word “help”, Mr Raghavan referred to a passage from the Court of Appeal’s judgment in Amcor Limited v Barnes [2021] VSCA 6 [648], where Ferguson CJ, Beach and Whelan JJA said:
“The judge was not invited to undertake a process sometimes described as ‘rectification by construction’. However, as the High Court has explained, a court is entitled to approach the task of construction on the basis that the parties intended to produce a commercial result, and a commercial contract is to be construed so as to avoid it making commercial nonsense or working commercial inconvenience. This does not constitute a licence to alter the meaning of a term to achieve a result the court may think to be reasonable, but where there is poor drafting, a court will be more ready to depart from the natural and ordinary meaning of the words so as to avoid attributing to the parties an improbable and unbusinesslike intention.”
81Mr Berger submitted that, in construing this clause, the contra proferentem should be applied against the plaintiff because its director, Gina, was the author of the provision. He did so on the broad basis that, as the author of the provision, Gina should be regarded as the “proferens”. He did not refer to any particular authority, save for a general reference to a text on Interpretation.
82Plainly, the rule can be of very significant effect where one is dealing, for instance, with standard form exemption clauses. In the context of an agreement negotiated between non-lawyers of apparently equal bargaining power, in my view, it has a much lesser role to play.
83In the present instance, the evidence establishes that the words of the handwritten clause were chosen by a non-lawyer whose mother tongue is not English. I agree that the authorities favour a construction which achieves a “businesslike” outcome. In the mouth of someone such as Gina, the word “help” could be regarded as synonymous with “obtain” or “procure”. Mere aspirations are, in my experience, rarely to be found expressed in business contracts. It is against all the probabilities that the first sentence of the clause was merely aspirational. Once one attaches a non-aspirational meaning to the first sentence of the handwritten clause, the second sentence can be regarded as “making assurance doubly sure” and dealing specifically with the presumed fact situation, namely, that the then existing status quo was to be regarded as inadequate and inappropriate.
84Reading the two sentences together, and having a harmonious effect, leads to the first sentence being regarded as the primary obligation requiring a 15-year lease with the points being reinforced by the second sentence. It is unnecessary, on the present facts, to consider particular instances such as a lease for five years and one day for lease terms totalling, say, 14 years and 11 months. On the construction I favour, both such scenarios could be regarded as “triggering” the handwritten clause. It becomes necessary, therefore, to consider what the effect of that “triggering” might be.
85A provision such as the handwritten clause could potentially be a condition precedent to contract, a condition precedent to performance, or a condition subsequent. In Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537, a special condition of a real estate sale contract provided:
“This Contract is entered into subject to Purchasers completing a sale of their property No. 9 Korokan Road, Lilli Pilli."
86Gibbs CJ said:
“In my opinion special condition 6 made the completion of the sale of the property at Lilli Pilli a condition precedent to the performance of certain of the obligations of the parties under the contract, including the obligation of the respondent to complete the sale. It has sometimes proved difficult to decide whether a particular condition of a contract should be classified as a condition precedent or a condition subsequent … However, provided the effect of a condition is clearly understood, its classification may be merely a matter of words. The condition in the present case was not a condition precedent to the formation of a binding contract. It is clear that a binding contract came into existence immediately upon signature, and that the parties to it were from that moment subject to certain obligations. For example, the appellants became liable to pay a deposit. Further, there was implied a promise by the appellants that they would do all that was reasonable to find a buyer for the Lilli Pilli property and to complete a sale to him.” (1982) 149 CLR 537, 541
87The handwritten term in the present contract is of the same character.
88On the proper construction of the handwritten term, the agent’s advice by email of 9 August 2019 that no more than 10 years further lease time would be available, means that the condition was not satisfied and that Reavin was not obliged to settle the contract.
89In Rudi’s Enterprises Pty Ltd v Jay (1987) 10 NSWLR 568, the New South Wales Court of Appeal (Samuels AP, Priestley and McHugh JJA) considered whether a particular unfilled condition contained in a deed of sale rendered the sale void or voidable. Samuels AP, with whom the other two judges agreed, rejected the proposition that a rule of law existed precluding parties from agreeing to an automatic termination where a condition precedent to performance was unfilled, except upon the occurrence of an event which lay beyond their control. In his Honour’s view, the question was ultimately the intention of the parties to the relevant contract to be derived from its terms. [(1987) 10 NSWLR 568, 579-80]
90In that case, as in the present, the condition depended upon the consent of a third party. The court concluded that the language of the deed made it clear that automatic termination was intended. In the present case, the words “this contract will be invalid” linguistically indicate automatic termination rather than termination at the option of a party. Given that the clause was not the product of expert legal draftsmanship, however, it may be wrong to place too much emphasis upon the choice of language.
91If I were wrong in the view that, in the events that have occurred, the sale agreement terminated automatically, Gina’s email of 21 August 2019 would seem to be an appropriate exercise of a power to avoid conferred by the printed clause.
92Mr Berger contended that such a power was exercisable only in accordance with the general default notice served in accordance with clause 15.5. Such a notice might be thought to be rendered mandatory in appropriate circumstances by the previous clause 16.4, which says:
“a party is not entitled to exercise any rights arising from the other party’s default … until the other party is served and fails to comply with a written default notice.”
93In my view, clause 15 is not applicable to the present circumstances for two reasons. First, as I have construed it, the handwritten clause appears to establish a self-contained “code” on the issue of the duration of lease or leases available to the purchaser. The consequence of invalidity where a 15-year period of lease or leases is not available is stipulated in the handwritten clause itself, in contrast to the structure of the printed terms. Secondly, given that the clause is dependent upon the actions of a third party, namely the landlord, it is not entirely clear that the refusal by the landlord of a 15-year term or terms of lease constituted a “default” on the part of the vendor, Plenty, although it is arguable that rejecting an “aspirational” construction of the word “help”, there might be such a default involved.
Repudiation
94Next, I consider the contention by Mr Raghavan, on behalf of Reavin, that Plenty’s admitted failure or refusal to provide tax and business records to settlement of the sale constituted a repudiation. Clause 7.3(c) obliged Plenty as vendor to provide Reavin “with the business records of the Business … at settlement”. This was the position taken by Amanda in the face of demand for delivery of the financial statements, tax assessments and so forth.
95Mr Raghavan submitted there was an implied obligation to provide the requested financial material because, as part of the co-operational obligations under clause 7.3 associated with obtaining a transfer of lease or new lease, Reavin was required to provide Plenty with the following, “to obtain the landlord’s consent” -
“(iii) a statement that the purchaser has been provided with the business records of the Business for the previous 3 years or such shorter period as the vendor has carried on business at the business premises.” (Plaintiff’s Opening Submissions, paragraph 39)
96Mr Raghavan said (Closing Submissions, paragraph 37):
“GC 7.3 should be construed as imposing an obligation on the vendor to provide to the purchaser, prior to settlement, the business records of the business for the previous 3 years”.
97He said that such an obligation was “implicit” based on the passage from sub-paragraph (iii), which I have just quoted. He said that despite what was said on behalf of Plenty in various emails, there was no obligation for such records to be communicated only via solicitors or accountants. He said that the documents referred to in GC 7.3(a)(iii) were a narrower set than were required to be delivered at settlement under paragraph (c).
98He continued:
“The importance of the obligation is reinforced by the fact that the failure of the purchaser to obtain such records is a basis upon which a landlord can refuse approval under s60 of the Retail Leases Act 2003”. (Closing Submissions, paragraph 39)
99Section 60 of the Retail Leases Act provides:
“(1)A landlord is only entitled to withhold consent to the assignment of a retail premises lease if one or more of the following applies—
(a)the proposed assignee proposes to use the retail premises in a way that is not permitted under the lease;
(b)the landlord considers that the proposed assignee does not have sufficient financial resources or business experience to meet the obligations under the lease;
(c)the proposed assignor has not complied with reasonable assignment provisions of the lease;
(d)the assignment is in connection with a lease of retail premises that will continue to be used for the carrying on of an ongoing business and the proposed assignor has not provided the proposed assignee with business records for the previous 3 years or such shorter period as the proposed assignor has carried on business at the retail premises.
(2)Section 144 of the Property Law Act 1958 does not apply to or with respect to a retail premises lease to which this Act applies.”
100It will be seen that paragraph (d) of the section renders failure of the assignor to provide three years of financial records to the proposed assignee, a ground upon which the landlord might refuse consent to an assignment.
101In the present instance, the argument on behalf of Reavin, as I understand it, is that since a statement acknowledging receipt of those financials is required, the source providing them must necessarily be Plenty, as proposed assignor. It, as the person conducting the business, must necessarily be the source of the business records. In the absence of an express obligation on Plenty to provide this material prior to settlement, an obligation to do so, if it exists, must derive from an implied term.
102The test for implying terms into an agreement which is wholly in writing was authoritatively stated by the Judicial Committee of the Privy Council in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266, where the majority of their Lordships, Lord Simon of Glaisdale, Viscount Dilhorne and Lord Keith of Kinkel said:
“Their Lordships do not think it necessary to review exhaustively the authorities on the implication of a term in a contract which the
parties have not thought fit to express. In their view, for a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that "it goes without saying"; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.” (1977) 180 CLR 266, 282-3
103These requirements are rigorous, no doubt deliberately so. It is only in strictly confined circumstances that one can add to an agreement which was expressed to be contained exclusively in a written document. With some hesitation, I conclude that the requirements of their Lordships’ test have been met in the present circumstances. The principles for implication of terms as a matter of fact are invoked by sub-paragraph (c) of clause 7 and the particulars thereto.
104Mr Berger contended that even if there was an obligation to provide business records prior to settlement in connection with the leasing issue, Plenty’s failure or refusal to comply could not be regarded as repudiatory. He said, “(t)he repudiation alleged is not by insisting on an incorrect interpretation, and being corrected upon it so as to create a repudiation”. (Opening Submissions paragraph 37) He referred to DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423.
105Mr Raghavan, however, said that reliance on DTR Nominees was “misplaced”. He said “the repudiation arises not simply from the assertion of an incorrect interpretation of the contract, but by conduct which was inconsistent with continuance of the contract”. Further, he said that the evidence showed that the non-provision of the records was not based on a bona fide difference in the meaning of the contract but because the balance of deposit had not been paid. The two obligations, he said, did not depend upon one another. (Closing Submissions, paragraph 43)
106In DTR Nominees, a contract for the sale of land identified the subject land by reference to a plan of subdivision which was said to be attached to the contract. A different plan was lodged for registration under the Real Property Act 1900 (NSW) and the vendor adopted the position that the registration of that different plan obliged the purchaser to settle the purchase within 14 days. The High Court was of the view that since the plan registered was not the one attached to the contract, no obligation to settle arose. The majority of the Court also concluded that the vendor’s assertion that settlement was required 14 days after the registration of a different plan did not constitute a repudiation of contract.
107Their Honours proceeded on the basis that a repudiation would be established if the conduct of the vendor evinced an intention not to be bound by the contract or not to perform it in accordance with its tenure. The vendors were the appellants. The purchasers were the respondents. Stephen, Mason and Jacobs JJ said:
“21.For the respondents it was submitted that such an intention should be inferred from the appellant's continued adherence to an incorrect interpretation of the contract. It was urged that the appellant, because it was acting on an erroneous view, was not willing to perform the contract according to its terms. No doubt there are cases in which a party, by insisting on an incorrect interpretation of a contract, evinces an intention that he will not perform the contract according to its terms. But there are other cases in which a party, though asserting a wrong view of a contract because he believes it to be correct, is willing to perform the contract according to its tenor. He may be willing to recognize his heresy once the true doctrine is enunciated or he may be willing to accept an authoritative exposition of the correct interpretation. In either event an intention to repudiate the contract could not be attributed to him. As Pearson L.J. observed in Sweet &Maxwell Ltd. v. Universal News Services Ltd. (1964) 2 QB 699, at p 734 :
‘In the last resort, if the parties cannot agree, the true construction will have to be determined by the court. A party should not too readily be found to have refused to perform the agreement by contentious observations in the course of discussions or arguments...’ (at p432)
22.In this case the appellant acted on its view of the contract without realizing that the respondents were insisting upon a different view until such time as they purported to rescind. It was not a case in which any attempt was made to persuade the appellant of the error of its ways or indeed to give it any opportunity to reconsider its position in the light of an assertion of the correct interpretation. There is therefore no basis on which one can infer that the appellant was persisting in its interpretation willy nilly in the face of a clear enunciation of the true agreement.” (1978) 138 CLR 423, 431-2
108This case may be contrasted with a decision of Isaacs J in the Court’s original jurisdiction in Summers v The Commonwealth (1918) 25 CLR 144, where his Honour found that a contract for the supply of marble was repudiated by the supplier as a result of the supplier’s adherence to an untenable construction of the contract.
109Mr Raghavan referred to a recent decision of Lyons J in Euromark Limited v Smash Enterprises Pty Ltd [2021] VSC 97 [922], where his Honour said, in commenting upon the passage which I have just quoted from DTR Nominees:
“Thus, if a party’s conduct involves a serious breach which is inconsistent with the continuance of the contract, such as to give rise to a right of the other party to terminate the contract, that party’s actions may be found to be repudiatory even if the party was acting on a bona fide but incorrect belief.” [2021] VSC 97 [922]
110It is appropriate, however, to note his Honour’s remarks in the following paragraph [923], where he said:
“I note in passing that in Sopov v Kane Constructions Pty Ltd (‘Sopov’), the Victorian Court of Appeal considered that:
(1)the objective test for repudiation did not require consideration of the alleged repudiator’s subjective intentions;
(2)in a case of disputed contractual interpretation, what matters is the character of the conduct, not the bona fide belief of the alleged repudiator;
(3)for a party to assert a wrong interpretation will not usually be enough to draw an inference of repudiation; and
(4)an inference of repudiation should not be readily drawn where a party’s conduct amounts to engaging in a bona fide dispute as to the true construction of a contract expressed in terms that are by no means clear.”
111The effect of these passages seems to be that it is difficult to draw “a bright line” between a bona fide dispute and therefore a non-repudiation on the one hand, and a clear indication of refusal to perform a contract according to its proper construction. The High Court in DTR Nominees referred to the potential willingness of a party alleged to be in repudiatory breach “to recognise his heresy once the true doctrine is enunciated” or being “willing to accept an authoritative exposition of the correct interpretation”.
112In the present instance, the interpretation of the contract requiring provision of the relevant records prior to settlement depends upon finding an implied obligation outside the four corners of the written contract. Whilst assertion was met with counter-assertion, the evidence, as I recollect it, did not indicate that there was any exposition of the circumstances in which a further term might be implied into the written contract to give it business efficacy, as now alleged by Reavin. In those circumstances, there was no repudiation on Plenty’s part in its declining to produce business records prior to settlement.
113For completeness, I should note that had I concluded that there had been a repudiation of contract by Plenty, acceptance of that repudiation and termination of the contract would not have been dependent upon service of a default notice in accordance with clauses 15.4 and 15.5 of the contract. For many years in Victoria, the standard conditions of contracts for the sale of freehold land were to be found in Table A of the 7th Schedule to the Transfer of Land Act 1958 and its predecessor, Torrens System Statutes. Condition 6 of Table A was strikingly similar to clause 15 of the present contract. Indeed, one may think that the clause in Table A provided the model for clause 15 of the present contract.
114In Walters v Cooper [1967] VR 583, the Full Court of the Supreme Court determined that condition 6 of Table A, in the same terms and substance as clause 15 of the present contract, despite its restriction on the exercise of default powers by an innocent party did not preclude a party accepting a repudiation from terminating the contract forthwith without the need for service of any default notice.
Return of deposit
115Mr Raghavan contended that despite Reavin being in default by failing to pay the balance of the deposit, it was nevertheless at liberty to terminate the contract or treat it as terminated, despite itself being in breach. He relied upon a decision of the New South Wales Court of Appeal in Sharjade Pty Ltd v Commonwealth of Australia [2009] NSWCA 373, referring to the judgments of Hodgson and Young JJA. It may be that the issue does not arise in light of the findings which I have made already, viz that the contract terminated automatically by the operation of the handwritten clause. Its termination was not dependent upon the exercise of a power by Reavin. Lest that view be wrong, I should, however, consider the situation if the termination of the contract is to be regarded as by reason of the exercise of a power in that regard by Reavin.
116In Sharjade, Hodgson JA said at [56]:
“it seems clear that a party cannot rely on an event as a ground for terminating a contract if that event has been caused by that party’s own breach of contract.”
117He referred to a number of authorities. That situation does not arise in the present case.
118His Honour continued at [57]:
“In the absence of such interdependence or a proved causal link, the circumstance that a party is itself in breach does not generally disentitle it to rely on the other party’s breach of contract, if that breach would otherwise entitle the former to terminate.”
119He referred to a number of other authorities and to conflicting dicta in the High Court of Australia in the case of Foran v Wight (1989) 168 CLR 385, with Mason CJ and Dawson J expressing one view, and Deane J expressing the opposite view, which Hodgson JA preferred. (1989) 168 CLR 385, 437-8. At [62], Hodgson JA said:
“In my opinion all these views are obiter dicta; and in my respectful opinion the view expressed by Deane J is correct.”
120Young JA and Sackville AJA adopted an analysis to similar effect, though it would seem they would also make an exception to the right of a party to terminate if that party had repudiated or was in fundamental breach. They was no proven causal connection between the non-satisfaction of the lease requirements in the handwritten clause and the non-payment of the deposit, in the sense that the non-payment of the $30,000 played no part in the landlord’s determination not to approve a total lease period inclusive of options of 15 years.
121The defendant’s Defence referred to the default notice served 22 August 2019, which demanded, inter alia, payment of the balance of the deposit in the sum of $30,000. It noted the failure to pay that amount. The counterclaim sought to recover the $30,000, once again referring to the default notice and Reavin’s non-compliance with it. This non-payment of $30,000, however, was not pleaded to constitute either repudiation or a fundamental breach. For those reasons, if the recovery of the $50,000 is otherwise appropriate, Reavin’s non-payment of the balance of $30,000 does not stand as an obstacle.
122The power to forfeit the deposit arises only if the contract comes to an end by the exercise of a power under clauses 15.5 or 15.7 of the sale contract by an exercise of power by the vendor. The premise being that the contract ends by reason of the purchaser’s default. Here, I have held that the contract has come to an end because of non-satisfaction of the requirements of the handwritten clause. There is therefore no occasion for the forfeiture of the deposit. On the other hand, since the deposit was paid upon the assumption that the sale contract would be completed or as an earnest of good faith against the contract’s ending by the purchaser’s default, the contention by Reavin that there has been a total failure of consideration with respect to the $50,000 part-deposit appears to be made out, and that sum should be recoverable.
123As to the unpaid $30,000, Brooking J (as he then was) held in Bot v Ristevski [1981] VR 120 that where a vendor discharged a contract for the sale of land by accepting the purchaser’s repudiation, he may recover the deposit which should have been paid by the purchaser. That principle does not appear to be engaged here because the contract has not been terminated by the vendor based on the purchaser’s repudiation or upon the purchaser’s default at all. The counterclaim for $30,000 must therefore fail.
Misleading or deceptive conduct
124I turn, finally, to the plaintiff’s claim for relief based upon alleged, misleading or deceptive conduct. First, it is unnecessary to refer to the relevant provisions of the Australian Consumer Law, namely s18 which establishes the general prohibition against the persons engaging in misleading or deceptive conduct in trade or commerce, and s4 which makes special provision for representations as to future matters.
125Mr Berger helpfully and correctly conceded that the representations said to have been made on Plenty’s behalf relative to the leasing arrangements should be regarded as misleading or deceptive conduct. He said:
“On misleading or deceptive conduct, I’m not proposing to make any submissions about s.18 and s.4. The conduct was a representation as to a future matter. It’s inescapable. The evidence doesn’t bear out any reasonable grounds for making it done. It is deemed therefore to have been misleading or deceptive conduct.” (T134, L17-22)
126The second preliminary point to make is that the plaintiff’s claim on this basis would seem to become relevant if, and only if, its claim based on contract or restitution is unsuccessful. The damage alleged to have been suffered was the loss of the $50,000 being a part payment of the deposit. If a legal entitlement exists to recover the $50,000, it would not appear that a loss had in fact been suffered. If the recovery proved impossible because of credit issues, viz an inability to collect from the defendant, Plenty, the same issues would attend any judgment against Plenty recovered relative to misleading or deceptive conduct. The claim for relief relative to misleading or deceptive conduct is therefore, in the truest sense, a “fallback” position.
127Given that I have sustained Reavin’s claim based on contract and restitution, it would seem strictly unnecessary to deal with the claim based on misleading or deceptive conduct. Since, however, the matter was extensively argued, I should add some remarks relative to the claim for completeness.
128The entitlement to damages for someone aggrieved by misleading or deceptive conduct is granted by s236 of the Australian Consumer Law, which entitles a person who suffers loss and damage because of conduct of another person in contravention of Chapter 2 of the Australian Consumer Law to “recover the amount of the loss or damage by action”. What is required, therefore, is the establishment of a causal link between the contravening conduct – in this case, misleading or deceptive conduct – on the one hand, and the loss or damage complained of on the other. In circumstances such as the present, the causal link will typically be established by reliance on the part of the aggrieved person, or plaintiff, upon the misleading or deceptive conduct to that person’s detriment.
129Mr Berger’s principal contention was that Reavin did not rely on the representations constituting Plenty’s misleading or deceptive conduct. As to these matters, Mr Berger referred to the decision of the High Court of Australia in Marks v GIO Holdings Australia Limited (1998) 196 CLR 494. Mr Berger said that Plenty’s “retention of $50,000 (or $80,000) was not caused by entry by [Reavin] into the contract in reliance on the Lease representation”. (Opening Submissions, paragraph 44) He continued:
“…the cause of the retention of the $50,000 (or $80,000) is the operation of the terms of the Contract in light of [Reavin’s] decision not to remedy the defaults as particularised in the default notice. This intervenes. The forfeiture of the deposit does not relate to the plaintiff’s reliance on the Lease representation in entering into the Contract.”
130I referred to the decision of the High Court of Australia in Shevill v Builders Registration Board (1982) 149 CLR 620 as being a possible illustration of the analysis Mr Berger was relying upon. He was happy to embrace the analogy. (T184, L21 – T185, L13)
131In Shevill’s case, the plaintiff, a lessor of commercial premises, let those premises for a term of years to a lessee with the obligations of the lessee under the lease guarantee by Mr Shevill and others. According to Gibbs CJ, who delivered the principal judgment:
“During the whole time when the [plaintiff] was the owner of the land, the lessee was constantly late with its payments of the rent. The [plaintiff] pressed for prompt payment but accepted late and sometimes partial payments. ... It is enough to say that the only possible inference is that the lessee was experiencing financial difficulty which made it unable to make the payments of rent at the times required by the lease. It is however impossible to conclude that the lessee was unwilling to comply with its obligations. Finally, on 3 August 1977, two months' rent (amounting to $5,442.50) remained unpaid.” (1982) 149 CLR 620, 624
132The plaintiff then commenced proceedings seeking possession of the land and damages upon the basis that the lease had been forfeited in pursuance of a proviso for re-entry in the lease, allowing such forfeiture and re-entry upon a number of events, including a situation where:
“the rent hereby reserved or any part thereof shall be unpaid for the space of fourteen (14) days after any of the days on which the same ought to have been paid …” (Ibid)
133The exercise of the power of re-entry was said by the relevant covenant to be:
“without prejudice to any action or other remedy which the [plaintiff] has or might or otherwise could have for arrears of rent or breach of covenants or for damages. …” (Ibid)
134According to Gibbs CJ, it was:
“It is not now disputed that the appellants [the guarantors] are liable under the guarantee for whatever damages are payable by the lessee to the [plaintiff]. The question for decision is whether the lessee is in the circumstances liable for damages.” (Ibid)
135His Honour’s conclusion that the rental arrears were not of such magnitude or duration that it was “impossible to conclude that the lessee was unwilling to comply with its obligations”, necessarily excluded any finding of repudiation.
136The plaintiff recovered what might be described as loss of bargain damages against the guarantors in the Supreme Court of New South Wales. That is, the difference between what the plaintiff might have derived from a lessee paying all the rent provided for in the relevant lease, until its expiry by a fluxion of time, minus what the plaintiff had and might recover following the forfeiture and re-entry.
137His Honour also found that there had been “no fundamental breach” of the lease by the tenant. The decision to terminate the lease early therefore was an action taken by the plaintiff. As to the reservation of the plaintiff’s right to bring a damages claim contained in the re-entry proviso, he said:
“ cl.9(a) does no more than preserve any right to recover damages resulting from such non payment [of rent]. The clause does not confer a right to recover damages which result from the fact that the lessee will pay no further rent during the remainder of the term. It does not refer to damages for the loss of the benefits conferred by the lease as a whole. Although cl. 9(a) deals with the situation in which the lessor may bring the lease to an end, there is nothing in its provisions to indicate any intention to give to a lessor who exercises the right to re-enter the same rights as would have been available to him if he had accepted a repudiation of the contract or had rescinded it on the ground that the lessee had committed a breach of an essential term. … the rights of the lessor are limited to the recovery of arrears of rent and damages for breaches and other events that occurred before re-entry.” (1982) 149 CLR 620, 629
138Subsequent High Court authority has determined that a more extensive delinquency in non-payment of rent may constitute repudiation so as to entitle an aggrieved and forfeiting lessor to recover loss of bargain damages (Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17).
139In Shevill’s case Gibbs CJ, with whom Murphy and Brennan JJ concurred, was of the view that a re-drafted lease could effectively entitle a lessor to loss of bargain damage in the circumstances which occurred in Shevill’s case.
140Over a quarter of a century after Shevill’s case, the High Court affirmed the effectiveness of such redrafting which had become common in the commercial leasing market after Shevill’s case (Gumland Property Holdings Pty Ltd v Duffy Bros Fruit Market (Campbelltown) Pty Ltd (2008) 234 CLR 237).
141Does the present case provide an analogy with the approach adopted by the High Court in Shevill’s case?
142Assuming, without deciding at this stage, that the payment of the $50,000 part-deposit was made by Gina, on behalf of the plaintiff, in reliance upon the assurances given by Amanda relative to the leasing, when it became evident on 9 August that the assurances, as to 15 years security of tenure, would not be made good, Reavin had a decision to make. This was either to proceed with the transaction which it had signed up to, or seek to escape.
143Since the claim for misleading or deceptive conduct becomes relevant if, and only if, there is no contractual restitutionary remedy for Reavin, this question must be analysed upon the assumption that the Australian Consumer Law provided the sole means of escape, and Reavin would otherwise be bound to the agreement. Upon this premise the loss of the $50,000 and, perhaps, liability for the balance of the $30,000, was a consequence of Reavin entering into the agreement. Upon the findings assumed, Reavin entered into the agreement in reliance on, and induced by, the misleading or deceptive conduct of Plenty. So analysed, it is therefore clear that the loss of the $50,000 was the causal result of the misleading or deceptive conduct, not, as in Shevill’s case, an independent decision made by Reavin after having paid over the $50,000.
144Mr Berger rightly observed that, upon the assumptions made in this analysis, Reavin had no out-of-court entitlement to escape the contract. Nevertheless, the cost of escaping from a contract into which Reavin had been misled or deceived was exposure to liability for breach of contract; that and the liability to pay the balance of the deposit may be seen as damage suffered by Reavin as a result of Plenty’s misleading or deceptive conduct.
145In her second affidavit, Gina said that as a result of what Amanda had told her:
“5.… at the time of signing the sale contract I believed that the landlord would likely agree to grant a lease of at least 15 years.
6.If [Amanda] had not caused me to form that belief, then I would not have entered into the contract and I would not have paid [Amanda] the $50,000 deposit.” (CB 61)
146Mr Berger mounted a further challenge to the alleged causal link between the admitted misleading or deceptive conduct and the alleged loss. In cross-examining Gina he put to her that, having received assurances by word of mouth, and otherwise, from Amanda relative to the leasing situation, she “couldn’t believe” those assurances because they related to decisions to be made by a third person, namely the landlord. This was why he suggested to Gina that she had introduced the handwritten clause to the contract, because she did believe, and therefore did not rely upon, assurances that she had received from Amanda outside the scope of the contract. (T23, L25 – T25, L15)
147In her second affidavit reiterating her reliance on the assurances given to her by Amanda in deciding to enter into the contract, Gina said: “this is true even though I wrote the additional condition into the contract before signing it”.
148The assumption underlying this line of cross-examination and the submissions flowing to it, seem to be that reliance was either on the contract or on the conduct. In Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304, French CJ said:
“it is not an answer to a plea of misleading or deceptive conduct based on misrepresentation to assert that the misrepresentation is contained in a contractual document.” (2009) 238 CLR 304, 324-5 [42]
149His Honour meant that, in appropriate circumstances, a contractual warranty can, in addition to creating a contractual obligation, also constitute misleading or deceptive conduct. In those circumstances, I do not accept that, in the present situation, Reavin must necessarily have relied either on the misleading or deceptive conduct or the contractual provision constituted by the handwritten clause to the exclusion of the others.
150When challenged on this in cross-examination in the passage already referred to, Gina did not distinctly admit that she relied on the contract and not on the conduct. She had some facility with the English language, but gave her evidence with the assistance of an interpreter. It seemed to me that she and Mr Berger were, to some extent, at cross purposes and she was perplexed and not fully understanding of his proposition that she could not “believe” the conduct. (T31–4) The evidence of reliance was quite clear in the passages from her second affidavit, which I have quoted above.
151Mr Raghavan contended, correctly as it seems to me, that the causal link required by s236 of the Australian Consumer Law did not need to be the sole causation. It was sufficient, he said, if the conduct was one of the causes. He referred to the judgment of McHugh J in Henville v Walker [2001] 206 CLR 459:
“The common law concept of causation recognises that conduct that infringes a legal norm may be causally connected with the sustaining of loss or damage even though other factors may have contributed to the loss or damage.” [2001] 206 CLR 459, 490 [97]
152Following further analysis, his Honour said:
“Similarly, in respect of claims under s 82 [the predecessor of s236], courts have accepted that loss or damage is causally connected to a contravention of the Act if a misrepresentation was one of the causes of the loss or damage sustained by the claimant.” [2001] 206 CLR 459, 494 [109]
153The evidence establishes that reliance on Plenty’s misleading or deceptive conduct was a cause of Reavin entering into the contract and therefore suffering the loss of $50,000.
154I should also note a related point relied on by Mr Berger, namely Special Condition 1 to the contract, which is quoted at [17] above. According to its literal terms it would negate any reliance on the part of Reavin on matters outside the terms of the contract. If reliance were negated, the causal link between the misleading or deceptive conduct and the damage, or alleged damage, would be severed.
155Mr Berger referred me to a passage from the judgment of French CJ in Campbell v Backoffice Pty Ltd where, speaking of such clauses, his Honour said:
“Where the impugned conduct comprises allegedly misleading pre‑contractual representations, a contractual disclaimer of reliance will ordinarily be considered in relation to the question of causation. For if a person expressly declares in a contractual document that he or she did not rely upon pre-contractual representations, that declaration may, according to the circumstances, be evidence of non-reliance and of the want of a causal link between the impugned conduct and the loss or damage flowing from entry into the contract In many cases, such a provision will not be taken to evidence a break in the causal link between misleading or deceptive conduct and loss. The person making the declaration may nevertheless be found to have been actuated by the misrepresentations into entering the contract. The question is not one of law, but of fact.” (209) 238 CLR 304, 321 [31]
156In that passage his Honour concluded by saying: “The question is not one of law, but of fact”. This means, as I understand it, that merely signing a contract with a disclaimer in it does not, as a matter of law, preclude proof of factual reliance upon other matters.
157In the present case, Mr Berger conceded that there was no evidence that the disclaimer in Special Condition 1 was even read by anyone on behalf of Reavin, much less assented to. (T171, L5-13) I can put the disclaimer to one side.
158As to the quantum of damages which might be awarded under s236, Mr Berger said that the proper measure of damages in circumstances such as this, was guided by the analogy with the measure of damages for the tort of deceit, being the difference between the real value of the thing acquired as at the date of acquisition, and the price paid for it (Kizbeau Pty Ltd v WG & B Pty Ltd (1995) 184 CLR 281, 291). (Defendant’s Opening Submissions, paragraph 46)
159Mr Raghavan said that this analysis was doubtless correct in assessing damages where a contract has been induced by fraud or misleading or deceptive conduct and carried through to completion. He said it did not apply where the contract had not been completed and the asset had not been acquired.
160In the present instance, there was no evidence as to the differential, if any, between the value of the business, Belmore Fine Wines, with a 10-year leasing entitlement, as distinct from its value with a 15-year leasing entitlement. No doubt the length of a lease to be entered into can potentially cut both ways. An obligation to pay rent for 15 years may be thought to be onerous and burdensome rather than advantageous. On the other hand, since what seems to have been in contemplation here was not a straight 15-year lease, but rather a series of five-year terms linked by option, a further five-year term which a tenant was entitled to avail of but not obliged to take up might be thought to be a matter of pure advantage rather than potential burden.
161In my view, the lack of evidence as to these matters does not preclude success by the plaintiff. I accept Mr Raghavan’s proposition that the measure of damage referred to in Kizbeau is appropriate where acquisitions had been completed, not where they prove abortive.
Disposition
162It follows that Reavin’s claim for repayment of the $50,000 should succeed based upon the principles of contract and restitution. If I were wrong in that, a $50,000 award of damages for misleading or deceptive conduct should be made in its favour and $30,000, being the balance of the deposit.
163I will hear the parties upon whether, based on my findings, it may be appropriate to make a declaration that the contract was void ab initio. Given that I characterise the handwritten clause which, in the event, has turned out, at least for contractual purposes, to be the key to the outcome as a condition precedent to performance, a declaration of voidness ab initio would seem, on the face of it, inappropriate.
164I have heard no submissions on the question of costs and so I will reserve them.
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