Bull v Cooldawinda Pty Ltd

Case •

[2024] NSWSC 1011

•

14 August 2024

No judgment structure available for this case.

Supreme Court


New South Wales

  • Amendment notes
Medium Neutral Citation: Bull v Cooldawinda Pty Ltd [2024] NSWSC 1011
Hearing dates: 29 July, 1 August 2024
Date of orders: 14 August 2024
Decision date: 14 August 2024
Jurisdiction:Equity - Expedition List
Before: Rees J
Decision:

Declarations made as sought by the plaintiff; cross claim dismissed with costs.

Catchwords:

CONTRACT FOR SALE OF LAND – contracts signed but not exchanged – guarantor proffered by purchaser unacceptable – vendor receives higher offer from third party – whether binding contract – whether oral contract – principles at [81]-[86] – parties did not contemplate binding contract prior to exchange – Masters v Cameron inapplicable where parties had not reached finality on all terms, being acceptable guarantor, at [94].

PART PERFORMANCE – principles at [97]-[98] –incorporating special purpose vehicles to buy property not unequivocally referable to alleged agreement – paying deposit without more, insufficient at [99].

PROPRIETARY ESTOPPEL – principles at [103]-[107] – executor selling the family farm – son keen to buy farm and given opportunity to do so – son sells own farm and cattle in effort to do so – unable to raise remaining finance – farm placed on market – executor remains amenable to selling farm to son if can match highest offer – son unable to get loan – son enlists investor, who proposes to buy farm through corporation as trustee for unit trust – son has no role in corporation – son and investor have half-share in units – executor unaware of this arrangement – whether assurances made by executor to son – whether corporation can or did rely on assurances to son – whether detriment – elements not established.

Legislation Cited:

Conveyancing Act 1919 (NSW) ss 23C(1), 54A

Real Property Act 1900 (NSW) s 74J

Trustee Act 1925 (NSW) s 71

Cases Cited:

Allen v Carbone [1975] HCA 14; (1975) 132 CLR 528

Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622

Bicknell v Bell (1897) 3 ALR 162

Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61

Bruen v Smith (1908) 30 ALT 149

Ciavarellav Polimeni [2008] NSWSC 234

Cramaso LLP v Ogilvie-Grant [2014] 2 All ER 270

Delaforce v Simpson-Cook [2010] NSWCA 84

Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217

Gillettv Holt [2001] Ch 210

GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631

Jennings v Rice [2002] EWCA Civ 159

Kazacos v Shuangling International Development Pty Ltd (2016) 18 BPR 36,353; [2016] NSWSC 1504

Khan v Khan (2004) 62 NSWLR 229

Lezabar Pty Ltd v Hogan (1984) 4 BPR 9498

Luong Dinh Luu v Sovereign Developments Pty Ltd (2006) 12 BPR 23,629; [2006] NSWCA 40

Masters v Cameron (1954) 91 CLR 353

Pavlovic v Universal Music Australia Pty Ltd [2015] NSWCA 313

Phung v Phung [2019] NSWSC 117

Pipikos v Trayans (2018) 265 CLR 522

Regent v Millett (1976) 133 CLR 679

RT & YE Falls Investments Pty Ltd v New South Wales [2001] NSWSC 1027

Sidhu v Van Dyke (2014) 251 CLR 505

Sindel v Georgiou (1984) 154 CLR 661

Ta Lee Investment Pty Ltd v Antonios (2019) 19 BPR 39153; [2019] NSWCA 24

Wantagong Farms Pty Ltd as Trustee for the Bulle Family Trust v Bulle [2015] NSWSC 1603

Category:Principal judgment
Parties: Steven Bull as executor for the Estate of Barry Robb (Plaintiff)
Cooldawinda Pty Ltd as Trustee for the Cooldawinda Unit Trust (Cooldawinda) (Defendant)
Representation:

Counsel:
L Sewell (Plaintiff)
T Messer / T Maybury (Defendant)

Solicitors:
SP Garrett Lawyers (Plaintiff)
Velocity Legal (Defendant)
File Number(s): 2024/229241

JUDGMENT

  1. HER HONOUR: The plaintiff, Steven Bull, is the executor of the Estate of the late Barry Robb (the father). The only asset of substance in the Estate is a farm near Byron Bay called “Cooldawinda”. One of the father’s children, George (Eddie) Robb, was keen to buy the farm but was unable to raise the finance to do so. The executor put the farm on the market under an ‘expressions of interest’ sales regime. The executor (and other beneficiaries) remained amenable to selling the farm to Mr Robb if he could raise the funds to match the highest offer made.

  2. Mr Robb remained unable to get a loan but did engage the interest of Melbourne businessman, Robert Rio, in investing in the farm. Mr Rio set up a company, the defendant Cooldawinda Pty Ltd, to buy the farm as trustee for the Cooldawinda Unit Trust. Mr Rio paid a $450,000 deposit to match the then highest offer of $4.5 million. Contracts were signed by the vendor and purchaser but not exchanged, where a problem emerged before exchange: Mr Rio was not prepared to give a guarantee for the defendant’s performance of the contract for sale. This was not the first problem that the executor had encountered in his dealings with Mr Robb in respect of the sale of the farm. The executor decided to pursue other offers from interested purchasers, and received an offer of $4.6 million from third parties. The defendant declined to match or beat that offer, on the basis that it had an existing contract.

  3. On giving the usual undertaking as to damages, and Mr Rio giving a written undertaking to the Court acknowledging that he is bound to pay any compensation order made by the Court in these proceedings, the executor was injuncted from exchanging contracts for sale with the third parties. The issue is whether the executor is at liberty to sell the farm to the third parties. He is.

Witnesses

  1. Mr Bull, a solicitor, gave evidence and was cross-examined. He gave evidence in a clear, careful, firm and fair manner. The executor also relied on affidavits by his solicitors, Fiona Lomax and David Balzer, neither of whom were required for cross-examination. I accept their evidence.

  2. The defendant relied on the evidence of director Mr Rio, solicitor Bryan Yeo and Mr Robb. All were cross-examined. No issues of credit arose in respect of Mr Rio; I accept his evidence. Mr Yeo was a young solicitor who had no conveyancing experience in New South Wales, “with contracts I’ve got some experience.” Mr Yeo was not entirely forthcoming in cross-examination although, to be fair to him, he gave evidence having just arrived on an overnight flight from Singapore. Nonetheless, I have approached his evidence with a degree of caution: see [84]. Mr Robb had an answer for everything, albeit some of his answers seemed unlikely or may have reflected wishful thinking on his part. To be fair to him, Mr Robb’s answers may have reflected a lack of commercial experience. Mr Robb also volunteered criticisms of the executor when the opportunity arose.

  3. There was a large divergence between the executor and Mr Robb’s account of conversations which occurred quite recently. I have deferred to the contemporaneous documents but have generally preferred the evidence of the executor to Mr Robb in the event of conflict between them.

Father’s estate

  1. The father owned a cattle farm near Byron Bay in New South Wales called “Cooldawinda”. The farm comprised roughly 140 acres with a five-bedroom homestead and has been in the Robb family for many years.

  2. In 2006, the father made his last Will, giving $250,000 to his wife and the residue of his Estate to his children, being Mr Robb, John Robb (the brother) and Melinda Robb (the sister), equally.

  3. In 2010, when the father became too ill to manage the farm, Mr Robb moved back to the property and has lived there ever since with his family. In August 2022, the father passed away. Mr Robb continued to live on the farm but stopped paying rates and outgoings “because I assumed that would all be sorted out at settlement.”

  4. In March 2023, a grant of probate was made to Mr Bull, who had done legal work for the Robb family over the years and had also been a friend of the family for several decades. The inventory of property attached to the grant of probate indicated that the farm was the only asset of substance, with an estimated value of $4.5 million. Cash at bank and the proceeds of life insurance policies added up to only about $24,000. As such, there were insufficient liquid funds to pay the legacy to the wife without selling the farm.

Mr Robb tries to buy the farm

  1. Mr Robb wanted to buy the farm. The executor, the brother and the sister were amenable to giving him the opportunity to do so. In December 2023, the executor and children executed a Deed of Family Arrangement. The children agreed that the value of the farm was $4.5 million. The brother and sister agreed to sell the farm to Mr Robb for $3 million, being two-thirds of the agreed value, conditional upon Mr Robb making a series of payments within 60 days, or any extension of that timeframe agreed by the executor: cl 3.5(a). The payments which Mr Robb was required to pay were:

  1. the legacy of $250,000 plus interest to the wife;

  2. all Estate expenses and all costs associated with the deed and its implementation; and

  3. $1.3 million to each of the brother and sister, with the remaining $400,000 to be provided by them to Mr Robb by way of vendor finance.

  1. In January 2024, Mr Robb set about to realise some assets to fund the payments under the deed. Mr Robb sold his farm for $1.4 million and cattle at auction for some $51,000. Mr Robb sought finance from banks and a private lender for the balance of the payments to be made under the Deed of Family Arrangement, but was unable to obtain finance on commercially viable terms.

  2. The executor extended the time for Mr Robb to make the payments under the deed to 4 March 2024. But, on 27 February 2024, Mr Robb told the executor that he could not get finance to complete the purchase of the farm. On 29 February 2024, Mr Robb’s solicitor confirmed that he was not proceeding with the transfer of the farm.

Putting the farm up for sale

  1. The executor told the children that he intended to list the farm for sale; if they were interested in buying the farm, they would have the same opportunity to purchase it on the open market as any other prospective purchaser. The executor appointed a selling agent. The farm was listed for sale by expressions of interest, to be submitted by 31 May 2024.

  2. On 23 May 2024, the agent issued a Sales Advice to Adrian & Marita Joseph Pty Ltd for $4.15 million. The executor reported the offer to each of the children, as was his custom. According to the executor, Mr Robb said $4.15 million was less than he was going to pay under the Deed of Family Arrangement, “I can get the finance for that. Shut it down. Tell the agent not to show any more people.” Mr Bull disagreed, adding that the agent had said that he had many more viewings booked in. Mr Robb kept saying, “Shut it down, shut it down.” The executor replied, “If you can get your finance, then put in an offer. You are not going to be anymore advantaged or disadvantaged than any other prospective purchaser.”

  3. According to Mr Robb, the executor said the highest offer received was $4.15 million and if Mr Robb was able to better or match that price then the executor, the brother and the sister agreed that the farm would be his. Mr Robb told the executor that $4.15 million was an acceptable price and that he could do that and asked for a copy of the contract.

  4. I prefer the executor’s evidence as to the contents of this conversation. Where the expression of interest period had another week to run, and where $4.15 million was less than the children had agreed that the farm was worth, it is unlikely that the executor, the brother and the sister would have agreed to sell the farm to Mr Robb at that price. The fact that Mr Robb continued to entertain higher offers (see [27]) also indicates that he understood that he needed to match whatever was the highest offer eventually made.

  5. I accept that the executor and the brother and sister were amenable to selling the farm to Mr Robb if he could match the highest offer. If Mr Robb and a third party were offering the same amount, then the executor and siblings likely preferred that Mr Robb buy the farm and continue to live there with his family, this being the outcome which the Deed of Family Arrangement had sought to achieve. But nor were the executor and siblings prepared to disadvantage the other beneficiaries under the father’s will in so doing, including the wife.

Mr Robb tries again

  1. The fact that the offer of $4.15 million was less than the agreed value of $4.5 million under the Deed of Family Arrangement prompted Mr Robb to see whether he could raise finance for this lower figure. Mr Robb approached Mr Joseph with a proposal to purchase the farm as partners in equal shares. Mr Joseph declined, citing his wife’s health. Mr Joseph did, however, introduce Mr Robb to a Melbourne businessman, Mr Rio, to discuss an arrangement to buy the farm.

  2. On 25 May 2024, Mr Rio flew from Melbourne to meet Mr Robb and inspect the farm. Mr Rio and Mr Robb discussed the possibility of Mr Rio lending Mr Robb money to purchase the farm or Mr Rio funding the purchase of the farm in consideration of, at a future time, selling his interest in the farm to Mr Robb at a profit. Mr Rio was not prepared to lend Mr Robb sufficient funds to buy the farm, as he formed the view that Mr Robb would be unable to repay the loan, “I didn’t think it was fair on Eddie … that I gave him a loan. … I thought if I gave him a loan he would eventually not be able to repay it and then I would have to foreclose which I didn’t want to do, I didn’t want to go down that particular track.”

  3. On 27 May 2024, Mr Rio and Mr Robb tentatively agreed to come to a deal. Mr Rio understood that the property would sell for about $4.2 million and was prepared to proceed on that basis. Mr Rio informed Mr Robb that the deal would not work with Mr Rio lending him money. Rather, they would purchase the property together and Mr Rio would have a 50% share in the property.

  4. On 28 May 2024, Mr Rio retained solicitor, Mr Yeo, to advise on the structure for the acquisition of the property. Mr Rio also engaged Cameron Elliott, who had a background in property development, to assist. Mr Rio tasked Mr Elliott to: conduct due diligence; liaise with the agent, Mr Rio’s solicitor and accountants; investigate the possibilities for developing the farm with the local council; and, keep Mr Rio informed on the progress of negotiations.

  5. Given Mr Robb’s personal relationship with the executor, Mr Rio decided that Mr Robb should undertake all direct discussions with Mr Bull. Obviously enough, this presented a significant advantage to Mr Rio in seeking to acquire the farm. Not only did Mr Robb have a personal relationship with the executor; Mr Robb would also be privy to commercial-in-confidence information in his capacity as a beneficiary of the father’s Estate.

  6. Mr Robb told Mr Bull that he thought he could now obtain finance to buy the farm. On 28 May 2024, Mr Bull instructed his solicitors to send the draft contract to Mr Robb to assist him to determine whether he could obtain finance. Ms Lomax emailed the draft contract for sale to Mr Robb, noting him as purchaser for $4.15 million. Ms Lomax noted that the draft contract was provided “to assist you in making enquiries as to finance.” Further:

“Neither the submission of the Contract nor this correspondence is meant to be an agreement or offer to sell. No contractual agreement or obligation shall arise as a result of this email or submission of the Contracts. No contractual obligation shall be created until a formal exchange of Contracts has occurred.”

  1. On 29 May 2024, Mr Elliott visited the farm. Mr Robb texted Mr Bull, “Everything is progressing well, my [accountant] & solicitor are just sorting things. I’ll update you as soon as I have the final details for signing & I have the deposit ready to transfer.” Later that evening, the agent called Mr Bull and said that he had two viewings for the property on 30 May 2024 and two more viewings on 31 May 2024. Amongst those inspecting the property were Wee Waa cotton farmers, Mr and Mrs Madden.

  2. On Friday, 31 May 2024, the expressions of interest period closed. That evening, Mr Bull spoke to the agent, who said he had shown two people the property and expected to receive an offer from the Maddens by Monday, 3 June 2024. Mr Bull called Mr Robb and told him that there had been viewings that day and the agent expected that the cotton farmers and another purchaser were likely to put in offers but he wasn’t sure whether another party was going to make an offer.

  3. By Monday, 3 June 2024, Mr Bull had not heard further from Mr Robb as to whether he had obtained finance. Mr Bull understood that the agent was still communicating and negotiating with two other parties who had put in expressions of interest, including the Maddens. Mr Bull was aware that the agent had received an offer to buy the farm for $4.5 million and also that Mr and Mrs Joseph were no longer proceeding with the purchase. Mr Bull called the agent a couple of times during the day. The agent advised that two offers had been received for $4.5 million, one of which was subject to finance and the other was unconditional.

  4. At 12.45pm, the executor called Mr Robb (nine minutes) and told him, in his capacity as a beneficiary, that the current offer was $4.5 million. Mr Robb had yet to advise whether he could obtain finance for that amount, and the executor had yet to convey the $4.5 million offer to the brother and sister. According to the executor, Mr Robb said that his accountant had advised him that he should purchase the property in a company; the executor suggested that he check whether this would affect any inter-generational transfer of the farm. Mr Robb replied that his accountant had suggested that that was the best way to pass the property onto his son Michael.

  5. According to Mr Robb, Mr Bull said the price was now $4.5 million and he and the family would accept that figure from Mr Robb, subject to a clear deposit being paid. Mr Robb said he accepted the price of $4.5 million and would arrange payment of the deposit. Mr Bull said the deposit would need to be paid to the agent, who would also need to be told the details of the corporate entity purchasing the property.

  6. The executor agreed that he said, “We need to know what the company is” but denied the import of the conversation as described by Mr Robb. The suggestion that he and Mr Robb had then done a deal at $4.5 million is also inconsistent with a text message sent by Mr Robb to the agent after that conversation. At 1.34 pm on 3 June 2024, Mr Robb texted the agent, “I’m maxed out at the $4.5 but can proceed. I’m waiting to hear back from the Executor. I’ll call you back when I can. [He’s] assured me that’s the price. My funder is ok, just waiting on the name for the contract”. The text suggests that the executor had told Mr Robb that, if he could meet the highest offer, then he and the siblings were amenable to selling the farm to him in preference to a third party. Mr Robb had gone away to see whether he could do that. By his text, Mr Robb advised the agent that he was prepared to match the offer of $4.5 million but, far from having done a deal with Mr Bull, was “waiting to hear back” from him. The executor was also yet to convey the offer of $4.5 million to the brother and sister: see [31].

  7. Mr Rio was told by Mr Elliott that Mr Bull would sell the farm to them for $4.5 million. Mr Rio gave instructions to Mr Elliott to proceed at that price and also said that he would organise the incorporation of a unit trust.

  8. At 4.06pm, Mr Bull spoke to Mr Robb (eight minutes). Mr Robb said that he could come up with finance to match the offers of $4.5 million. The executor spoke to the sister (25 minutes); this was the first time that Mr Bull had communicated the offer of $4.5 million to her. Later that afternoon, the executor also spoke to the brother to discuss the offers.

Setting up the structure

  1. The structure that Mr Rio decided to use in purchasing the farm was a unit trust in which Mr Rio and Mr Robb each held 50% of the units. Mr Rio would be the sole director and shareholder of a corporate trustee. He would fund the cost of purchasing the farm, together with the cost of developing the property by improving the homestead and farm infrastructure. Where Mr Rio was not prepared to lend Mr Robb the funds to buy the farm, he considered that a unit trust may be a better structure as Mr Robb could retain the farm to develop it and potentially produce revenue, enabling Mr Robb to obtain finance to buy out Mr Rio’s half-share in due course, “I could actually help him develop that property because he didn’t really, in my opinion, have the technical expertise to develop the property himself and I didn’t want him to get into trouble, you know, financially.”

  1. At about 7.30 am on Tuesday, 4 June 2024, Mr Rio attended his accountant’s offices to finalise the incorporation of a corporate trustee and unit trust. Cooldawinda Pty Ltd was incorporated. Mr Rio was the sole director, secretary and shareholder. The company had an issued share capital of $10. Cooldawinda was appointed as trustee of the Cooldawinda Unit Trust Fixed Unit Trust. The unitholders were Mr Robb and Bussolaro Pty Ltd as trustee for Quality Packaging Services Pty Ltd Superannuation Fund. Each unitholder held 50 units. The trust deed was executed on 4 June 2024.

  2. On the morning of 4 June 2024, Mr Robb texted the agent, “My guys are ready, there’s nothing to worry about. Please liaise with Cameron. [Mr Bull] has spoken to me to give me the opportunity to get it done prior to the others as promised so please contact me if there’s a problem.” An hour or so later, Mr Robb texted the executor, “Everything has been sent to the agent for the contract & I can pay the deposit as soon as we get his tax invoice”.

  3. I think the “opportunity to get it done prior to the others as promised” referred to the executor and siblings’ continuing willingness to sell the farm to Mr Robb if he could meet the highest offer, rather than to sell the farm to a third party. Of course, given the company and unit trust structure with which it was proposed to buy the farm, it could no longer be said that Mr Robb would be buying the farm and keeping it in the Robb family. Rather, the farm would be bought by a company of which Mr Rio would be the sole director. Mr Robb would have a half-share in the unit trust and thus have an interest in the farm, but he would no longer have authority to make decisions. Where Mr Rio’s interest in the farm appears to have been property development, nor could it be assumed that the operation of the cattle farm would continue as before. While Mr Rio had indicated that Mr Robb might be able to buy out Mr Rio’s interest in the farm in the future, that depended on Mr Rio’s realising a suitable profit on his investment and, thus, how that proposal might unfold is unknown. This is not to criticise Mr Rio, who was proposing to invest $4.5 million in a venture with a person he had just met and in respect of whom he obviously entertained some doubts as to his financial expertise.

  4. There was some dispute as to whether and when Mr Robb told the executor about the unit trust structure. According to Mr Robb, on the evening of 31 May 2024 (see [25]), Mr Robb told the executor that he intended to buy the farm through a unit trust and was in the process of setting up the company and unit trust, “we spoke about a unit trust at length.” The executor denied that Mr Robb said anything about purchasing the property in a unit trust.

  5. Where Mr Robb was exploiting his relationship with the executor and his siblings to gain an advantage in securing the farm ahead of other interested purchasers, I expect that he and Mr Rio would have been concerned to lose that advantage if the details of the company and unit trust structure were disclosed. I have also generally preferred the evidence of the executor to that of Mr Robb in the event of conflict between them. As such, I conclude that Mr Robb did not disclose the unit trust structure to the executor on 31 May 2024. Rather, those details emerged in the hours which followed.

A small problem

  1. At 12.30 pm on 4 June 2024, the agent emailed a Sales Advice to the parties’ solicitors. The purchaser was mis-spelt: Coolawinda Pty Ltd as trustee for Coolawind Unit Trust. At 2.41 pm on 4 June 2024, the agent sent an email to Mr Elliott, attaching an invoice for the payment of a 10% deposit, together with a copy of the Sales Advice.

  2. Mr Balzer’s legal secretary conducted an Australian Securities and Investments Commission (ASIC) search for “Coolawinda Pty Ltd”, which showed that a company by that name had been deregistered in 2002. At 4.01 pm, Mr Balzer emailed Mr Yeo, asking him to confirm, “the full legal name of your client that … is to be shown on the Contract as we note the entity appears to be coming up as de-registered on our ASIC searches?”

  3. At 4.40 pm, Mr Balzer told the executor that a Sales Advice had been received but the purchaser was showing as a de-registered entity. The executor immediately called Mr Robb (four minutes) asking, “What’s this scam? What’s this shit? Coolawinda is a deregistered company. There will be no exchange until it’s a real company.” Mr Robb said the company was not deregistered and offered to send a photograph of a certificate of incorporation to prove it. The executor retorted, “That’s bullshit. … I don’t give fuck. You can have a driver’s licence, take a photo of it and send it to me but that doesn’t prove it’s not suspended or disqualified.” The executor hung up. Obviously enough, the executor’s patience with Mr Robb was wearing thin. Nor does Mr Bull appear to have particularly trusted Mr Robb, given the executor’s suggestion that Mr Robb had engaged in a “scam”.

  4. Mr Rio instructed his administration manager to organise payment of the deposit. At 4.44 pm on 4 June 2024, a payment of $450,000 was made from a bank account in the name of “Bussolaro Pty Ltd ITF Quality Packaging Services”.

  5. At 4.51 pm, Mr Bull’s solicitor emailed a draft contract to Mr Yeo for approval, noting: (emphasis added)

“The draft Contract is subject to final approval by our client and is forwarded on the basis that no binding relationship is created prior to exchange.

Please confirm your client’s purchasing entity including ACN and ABN as the ASIC search we conducted recorded the company as de-registered.

We look forward to receiving your purchaser signed contract for exchange as soon as possible.”

  1. At 5.05 pm on 4 June 2024, Mr Robb sent a text to Mr Bull with a screenshot of the details for Cooldawinda Pty Ltd, according to which the company had been registered that day. Obviously enough, the name of the purchasing company had been incorrectly spelt by the agent. Mr Bull called his solicitor (five minutes). At 5.15 pm, Mr Bull called Mr Robb (five minutes). Also at 5.15pm, a company search was obtained, presumably by Mr Bull’s solicitor or legal secretary, which confirmed that a company by that name was registered. The company search also recorded that the director and secretary and sole shareholder of the company was Mr Rio; the issued share capital was $10. There is no evidence, however, that the solicitor conveyed the details in the company search to Mr Bull that evening.

  2. At 5.34 pm on 4 June 2024, Mr Yeo replied to Ms Lomax, confirming that the purchaser would be Cooldawinda as trustee for the Cooldawinda Unit Trust. A certificate of registration of the company was provided. Further, “We will get instructions in respect of the Contract and revert soon.” The agent re-issued the Sales Advice with the correct name of the purchaser (the name of the unit trust remained misspelt).

Oral agreement?

  1. On Wednesday, 5 June 2024, the executor called the agent (two minutes) then Mr Robb at 11.04 am (five minutes). According to Mr Robb, the executor acknowledged that the company was legitimate, the deposit had been received, the offer had been accepted and he would not be accepting other offers. The executor said that he had a deal, Cooldawinda’s purchase was finalised and Mr Robb didn’t have to worry about it. Mr Robb expressed a concern that contracts had not been exchanged, and the executor replied that Mr Robb had nothing to worry about, that the deal had been finalised; the parties just needed to “sort out the paperwork”.

  2. It was suggested to Mr Robb in cross-examination that he expressed a concern the contracts had not been exchanged as he understood the importance of exchange, but Mr Robb said that “he assured me that it didn’t matter, that I fulfilled the agreement we had, that I had matched the best price and that it was basically just administrative and clerical that we get the contract signed and it would be done.”

  3. The executor described this conversation differently. He told Mr Robb that his solicitors had confirmed that Cooldawinda was, in fact, a registered company. Mr Bull agreed that there was a discussion about whether he should apologise for suggesting there was a scam. The executor said that he would not apologise, where the fault had been that of the agent. The executor told Mr Robb that no further offers had been made at that stage, but the agent was still getting enquiries from the listing. He told Mr Robb that negotiations were ongoing and the agent was still in contact with prospective purchasers who had viewed the property during the expression of interest period. Mr Robb kept telling the executor to “shut it down”, by which the executor understood him to mean to stop negotiations with other purchasers. The executor told Mr Robb that, whilst they would not be having any new viewings of the property from prospective purchasers who were not involved in the expression of interest process, negotiations were still ongoing with prospective purchasers who had made offers of $4.5 million. The executor emphatically denied that he at any time told Mr Robb that he had a deal or a finalised agreement. There was also discussion that the contracts had to be signed.

  4. I do not accept Mr Robb’s evidence that the executor said that the funds had been received, where the deposit did not arrive in agent’s bank account until some time after this call. At 1.17 pm on 5 June 2024, the transfer of the $450,000 to the agent was processed by the bank. At 1.39pm, the agent sent a text message to Mr Robb, “Just wanted to let you know my office can see the deposit, it’s not cleared funds but it is visible[.] Well done”.

  5. I also prefer the executor’s evidence of this conversation to that of Mr Robb. Whilst the executor did acknowledge that the company was legitimate, the deposit had not in fact been received. This makes it unlikely that the executor would have said that the company’s offer had been accepted and no further offers would be accepted from others. I also consider it inherently unlikely that Mr Bull would have said the exchange of contracts was just “paperwork” and that Mr Robb did not have to worry about exchange, given the difficulties which Mr Bull had experienced in dealing with Mr Robb in respect of the sale of the farm to that point in time and his apparent mistrust of the man. The conversation as described by Mr Robb would have been a remarkable turnaround from the hot-tempered conversation the day before, which also makes it less likely.

  6. At 11.16 am, Mr Bull’s solicitors emailed the updated front page of the contract to Mr Yeo, who replied, “we are finalising instructions on the contract and will revert shortly.” At 2.35 pm on 5 June 2024, Mr Yeo emailed Mr Bull’s solicitors, “in anticipation of execution of the Contract by our client, could you kindly resend a full copy of the Contract with the correct entity and my email address corrected. I am still awaiting final instructions but otherwise understand that the parties are aiming to finalise this today.” At 4.12 pm, the contract for sale was sent to Mr Bull by DocuSign. At 4.14 pm, Mr Bull’s solicitor sent the full contract to Mr Yeo as requested.

  7. At 4.30 pm, the executor had a telephone call with Mr Robb. According to Mr Robb, the executor congratulated him on the purchase of the farm and advised that everything was in order. Mr Robb said he would sign the contracts as soon as possible. According to the executor, he said he was curious about Mr Robb’s deal for finance and how he secured it, where he had not been able to get finance for the deed when his brother and sister were providing vendor finance of $400,000. Mr Robb said to mind his own business. The executor replied, “Have it your way. It appears you have secured your finance. Congratulations on securing your finance.” The executor denied congratulating Mr Robb on purchasing the property.

A big problem

  1. The contract comprised standard conditions (The Law Society of New South Wales Contract for the sale and purchase of land 2022 edition) together with 14 special conditions. The first page of the contract noted that the purchaser was Cooldawinda Pty Ltd as trustee for Cooldawinda Unit Trust. Special condition 13, “Trustee Warranty”, set out various warranties where “the Purchaser is a trustee”. Special condition 14 provided:

“14.   Guarantee Clause

If the Purchaser is a company and/or trustee then this Clause applies;

(a)   The guarantor is ______________________.

(b)   If the guarantor has not signed this clause, the Vendor may terminate this contract by serving a notice, but only within fourteen (14) days after the contract date.

…”

  1. The importance of the guarantee is obvious. Failure to provide the guarantee entitled the vendor to terminate the contract. Where the purchaser was a corporation, commonly, one would expect the guarantor to be a person standing behind the company, most likely a director or, perhaps, a shareholder. But the guarantee clause did not specify the identity or required position of the guarantor.

  2. On receipt of the contract, Mr Yeo noticed that the guarantee clause did not specify who was to give the guarantee. He did not deem it necessary to clarify or confirm with the vendor’s solicitor whether a particular guarantor was required. Mr Rio decided that he would sign the contract of sale on behalf of Cooldawinda as sole director and Mr Robb would sign the guarantee. Mr Rio clearly remained keen to keep his potential liability to a minimum.

  3. Mr Rio electronically signed the contract of sale and, at 5.12 pm, emailed the signed contract to Mr Elliott to arrange for Mr Robb to sign the guarantee. At 8.00 pm, the agent brought the contract to Mr Robb at the farm for signing. Mr Robb signed as guarantor. The agent congratulated Mr Robb and said he knew how important the farm was to him and that he was glad that they had got it over the line.

  4. On the morning of Thursday, 6 June 2024, the agent emailed to the executor and Mr Balzer a trust account receipt for the deposit paid by “Cameron”, together with a copy of the contract signed “by both parties on the purchasers side”. The agent asked the executor to now sign the contract and for Mr Balzer to exchange the contracts as soon as possible and notify him as soon as that had been done, “I think everyone will be happy to put this sale away.”

  5. The executor only became aware of a “Cameron” on receipt of the deposit; he had no dealings with Mr Elliott. The attached contact for sale was signed by Mr Rio on behalf of Cooldawinda Pty Ltd but completed by Mr Robb as guarantor. The executor agreed that the contract for sale did not require the guarantee to be signed by a director of the corporate purchaser, but thought that Cooldawinda was Mr Robb's company and that Mr Robb was a director of the company. Mr Bull said that the contract required that, if the purchaser was a company, then it needed a guarantee for the company's performance, “it made sense to me that if Eddie’s company was the purchaser and if Eddie was the director he is the controlling mind behind the company and so he would be guaranteeing that his company would go ahead with the performance of the contract." At 11.10 am on 6 June 2024, Mr Bull signed the contract for sale, according to a DocuSign certificate.

  6. Shortly after midday on 6 June 2024, Ms Lomax returned to the office and was informed by her secretary that the agent had emailed Mr Balzer, attaching a deposit receipt and contract, but Mr Balzer was out of the office that day. Ms Lomax reviewed the contract and saw that it had been signed by Mr Rio on behalf of Cooldawinda but the guarantee had been signed by Mr Robb. Ms Lomax called Mr Bull at 12.54 pm (four minutes). Ms Lomax advised that the guarantee had been signed by Mr Robb and not by the director of Cooldawinda, being Mr Rio. The executor said this was the first time he became aware that Mr Robb was not a director of the purchaser. Ms Lomax also raised the fact that the contract had been sent by the agent with a request to exchange, and not by the purchaser’s solicitor, which was the usual conveyancing practice in New South Wales. The executor said he would go back to them and request a new contract with the guarantee signed by the director. The executor said he would also ask that the new contract be sent from Mr Yeo.

  7. At 1.40 pm, the executor called Mr Robb (three minutes). He told Mr Robb, “Fiona has done a company search and you’ve signed the guarantee and you’re not the director. You need to get the director to sign it.” Mr Robb said he didn’t believe that he could not sign as guarantor, as the contract did not say that the guarantor had to be a company director. The executor insisted that Mr Rio had to sign as guarantor. At 1.47 pm, Mr Robb called the executor back and said, “the director is refusing to sign it. He is not prepared to sign it.” The executor said, “What sort of director won't even sign on behalf of his own company?"

  8. At 2.02 pm, Mr Robb called the executor again (nine minutes). Mr Robb said repeatedly that a guarantee was not necessary and should be deleted from the contract. Mr Robb said that, if the guarantee was removed, then contracts could be exchanged. The executor said, “I’m not doing that because it’s a $2 company that was created two days ago with no assets.” Mr Robb asked the executor to leave it as it was, with Mr Robb having signed the guarantee. The executor said, “You are not a director of the company that is the purchaser and therefore you cannot control the company to make it go through with the purchase. You cannot guarantee money that you are borrowing.” The executor said he was not going to accept the contract as it had been signed. Further, the executor told Mr Robb, “That’s it. There’s not going to be an exchange. I will contact the agent and get him to secure a further offer from the cotton farmer.”

  9. The executor agreed that he was not happy that the guarantee had been signed in that way and that was where the transaction “went off the rails". The executor agreed that everything changed when Mr Robb sent the contract back signed by him as guarantor, “I wasn't comfortable that the transaction would proceed”. (The fact that Mr Bull held these concerns is confirmed by the evidence of Ms Lomax: see [64].) Whilst the executor had signed a contract in anticipation of exchange, he was then told that Mr Robb had signed the contract as guarantor when not a director and then proceeded to instruct his agent to solicit a further offer from the Maddens.

Selling to a third party

  1. At 2.34 pm on 6 June 2024, the executor spoke to the agent (six minutes) and asked him to make contact with the Maddens. At 2.44 pm, the agent called back and said that the Maddens had made an offer of $4.6 million.

  2. At 2.48 pm on 6 June 2024, the executor spoke to Ms Lomax (14 minutes). Ms Lomax recalled that the executor said he had been told that the director of Cooldawinda was refusing to sign the guarantee. The executor expressed concern that Cooldawinda had only been registered some days ago and that he had misgivings about entering into a contract with Cooldawinda. The executor also said that a higher offer had been received by a cash buyer; he considered that it was his duty as executor to accept the higher offer from the cash buyer. The executor gave Ms Lomax instructions not to exchange contracts with Cooldawinda.

  3. Mr Rio was informed by Mr Elliott that Mr Robb’s execution of the guarantee was not acceptable. At 3.09 pm on 6 June 2024, Mr Rio printed out the contract of sale that he had previously signed and signed the guarantee before sending a copy of the signed document to Mr Elliott. At 3.19 pm on 6 June 2024, Mr Yeo emailed Mr Bull’s solicitor, attaching the contract signed by his client, noting that the deposit had been paid, “We look forward to receiving the contract duly countersigned by the vendor.” Attached was a contract for sale signed by Mr Rio on behalf of Cooldawinda Pty Ltd and as guarantor. Whilst Mr Balzer accepted that the second contract was emailed to him at that time, he was out of the office on that day. In any event, by that time, the executor had already instructed his solicitors not to exchange contracts.

  1. At 4.16 pm on 6 June 2024, Mr Robb texted the executor, “The director has signed it & the contract has been sent to [your solicitor] for exchange”. The executor spoke to the agent (four minutes) then the brother (18 minutes), then Mr Robb (10 minutes). The executor said he called Mr Robb to tell him that a higher offer had been made and the executor was going to proceed with that offer, being $4.6 million and unconditional. The executor said he also understood from the agent that the cotton farmer was prepared to go to $4.75 million subject to finance. He told Mr Robb that he thought it was in the best interests of the Estate to pursue that offer in the interests of all beneficiaries. The executor said he would be conveying the same information to the brother and sister. The executor agreed that he told Mr Robb that he had taken too long, the cotton farmer had come back at $4.6 million and "I'm selling it to him." On 6 June 2024, the agent issued a Sales Advice to new purchasers, SM & AL Madden for $4.6 million.

  2. On 7 June 2024, Cooldawinda’s solicitor sent a letter of demand, demanding that the executor cease any efforts to sell the property to a party other than Cooldawinda and to deliver a counter-signed copy of the contract of sale by 5.00 pm that day, failing which legal proceedings would ensue. On 11 June 2024, Mr Yeo tried to call Mr Balzer and sent a follow up email. Mr Balzer replied, noting that he was awaiting instructions, “however … as there has been no formal exchange of contracts, there is no binding contract between the parties at this time.”

  3. On 12 June 2024, the executor spoke to the brother and sister, who each thought that the best thing to do was to proceed with the new purchaser. On 13 June 2024, Mr Robb emailed the executor, copied to the brother, expressing his view “purely” in his capacity as a beneficiary that the executor complete the contract with Cooldawinda, “if you insist on risking Estate funds for minimal or no financial gain & I suffer a financial loss from those actions, I will legally be forced to seek restitution from you.” Later that day, the executor’s solicitor responded to the letter of demand, rejecting Cooldawinda’s allegations.

  4. On 14 June 2024, the brother and sister confirmed that they were happy for the executor to exchange contracts with the new purchaser and agreed to indemnify Mr Bull. The executor’s solicitors provided the draft contract for sale to the new purchasers for approval, also informing them of the threatened litigation. The new purchasers confirmed that they wished to proceed to exchange.

  5. On 18 June 2024, Mr Rio wrote to the beneficiaries directly, pressing for sale of the farm to Cooldawinda to proceed. On 19 June 2024, the executor’s solicitor informed Mr Yeo that the executor intended to proceed to sell the property for the higher offer received from an arm’s length purchaser. The executor would be making an urgent application to the Court for judicial advice as to how to proceed, before contracts were formally exchanged with any party, “As such, we would be grateful if you would kindly let us have your client’s best and final offer in respect of the prospective purchase of the property”.

  6. On 20 June 2024, Mr and Mrs Madden paid a deposit of $460,000. The agent emailed the executor’s solicitor, recommending that the beneficiaries accept the Madden’s higher offer and proceed to exchange “given the lengthy process this has been”. Mr Yeo advised that his client would not be making an offer to purchase the property as a binding agreement was said to already exist.

These proceedings

  1. The executor commenced these proceedings by summons on 21 June 2024. The executor sought an order approving the sale of the property under r 54.3(4)(a) of the Uniform Civil Procedure Rules 2005 (NSW). Meek J made orders for short service. His Honour noted that, whilst the executor had not joined Cooldawinda as a defendant, an issue may arise on the return of the summons as to whether the company would seek to intervene in the proceedings.

  2. On 24 June 2024, Cooldawinda filed a notice of appearance and also lodged a caveat on the property. On 25 June 2024, Cooldawinda was joined as a defendant to the proceedings. On Mr Rio giving the usual undertaking as to damages as a director of the company, Meek J made an order restraining the executor from taking steps to exchange contracts or otherwise dispose of the farm.

  3. The matter was stood over to the Expedition List on 28 June 2024, when I expedited the matter and listed it for final hearing commencing 29 July 2024. The urgency was attributable to the executor’s concern that the Estate may become liable to pay capital gains tax on the sale of the farm, where completion of any sale was unlikely to occur before 2 August 2024, being the second anniversary of the father’s death. I directed Cooldawinda to provide the executor with a written undertaking to the Court by Mr Rio, acknowledging that he was bound to pay any compensation order made by the Court in these proceedings. On that basis, the interim injunction continued. Mr Rio provided a written undertaking to the Court on 5 July 2024. The hearing proceeded as listed.

Was there a binding contract?

  1. The executor seeks a declaration that he is not bound to sell the farm to the defendant but is at liberty to exchange a contract with the arm’s length purchaser who has made the highest unqualified offer, being the Maddens. In addition, an order is sought under s 74J of the Real Property Act 1900 (NSW) to remove the caveat lodged on title by Cooldawinda.

  2. For its part, Cooldawinda seeks a declaration that the executor is bound to complete the contract signed by Mr Rio on 6 June 2024, together with an order for specific performance. In the alternative, a declaration is sought that the executor is bound to complete an oral contract formed on 5 June 2024, together with an order for specific performance of that contract.

  3. The executor contended that there was ample evidence that the parties mutually contemplated that a contract should come into existence in the normal course by the exchange of contracts; the conversation between executor and Mr Robb “amounted to no more than a preliminary agreement which preceded … the signing and exchange of contracts in the usual way. And it was a preliminary agreement which was not in itself a binding contract”: Allen v Carbone [1975] HCA 14; (1975) 132 CLR 528 at 533. The executor submitted that this was a classic example of the “third category” of agreement in Masters v Cameron (1954) 91 CLR 353, where an oral agreement is not binding as the parties intend to enter into a formal written agreement detailing all the terms and conditions of the bargain, and it is not binding until such an agreement is executed: at 360.

  4. The defendant submitted that on 3 June 2024 the parties agreed on the price. On 4 June 2024, the vendor requested a 10% deposit, which was paid. On 5 June 2024, a binding contract was confirmed orally, with the signing of a written contract to follow, described by the executor as “sorting out the paperwork”. The agreement fell within the first category described in Masters v Cameron, that is, the parties had reached finality in all the terms of their bargain and intended to be immediately bound but also propose to re-state their agreement in a written document: Bicknell v Bell (1897) 3 ALR 162; Bruen v Smith (1908) 30 ALT 149; Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622 at 627-628. The contract bound the parties to perform the agreed terms whether or not the formal document came into existence and also bound them to join in settling and signing the formal document.

  5. The defendant submitted that the sale was akin to an auction, relying on Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217 at 232 (Ormison J), where the conditions of sale at an auction of real property stated that the successful bidder was required to pay the deposit and sign the contract of sale immediately the property was knocked down to them. This is a poor analogy. At an auction, the terms of the contract of sale for any bidder, should the property be knocked down to them, have been negotiated between the bidder and vendor’s solicitors before the auction. If the bidder is successful at auction, then they are obliged without further ado to pay the deposit, sign the contract with any terms as already negotiated and exchange contracts.

  6. The defendant further submitted that the parties also acted as if they were bound, in particular, the defendant proceeded to pay the deposit in “earnest” of the bargain and could not now retrieve those funds: Luu v Sovereign Developments Pty Ltd (2006) 12 BPR 23,629; [2006] NSWCA 40 at [24] (Bryson JA); Kazacos v Shuangling International Development Pty Ltd (2016) 18 BPR 36,353; [2016] NSWSC 1504 at [26] (White J). This submission does not advance the defendant’s argument, where the purchaser is only obliged to pay the deposit “on the making of this contract”: cl 2.2. It is only when the contract comes into existence and is subsequently terminated that the vendor is entitled to forfeit the deposit: cl 9.1. Absent a binding contract, the defendant is entitled to have the deposit back.

  7. The question whether there was a contract entered into between the parties is essentially a question of fact: Ta Lee Investment Pty Ltd v Antonios (2019) 19 BPR 39153; [2019] NSWCA 24 at [153] (per Bathurst CJ, Beazley P, Macfarlan JA). As Bathurst CJ observed in Pavlovic v Universal Music Australia Pty Ltd [2015] NSWCA 313 at [15]:

“It is well established that the question of whether the parties intended to bind themselves to a contract is to be determined objectively, having regard to the intention disclosed by the language the parties have employed: Masters v Cameron [1954] HCA 72; 91 CLR 353 at 362. In cases such as the present, which do not depend on the construction of a single document, what is involved is the objective determination of the question from the communications between the parties in their context and the parties’ dealings over the time leading up to the making of the alleged contract. This involves consideration of the subject matter of the communications: Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 550. As was said by Mahoney JA and McHugh JA in Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309, that includes consideration of what the parties said or wrote (at 334, 337).”

  1. For example, the contract for sale of land in Ta Lee Investment was established by evidence of telephone conversations, handing over casino chips and cheques, further conversations, handwritten notes, emails with missing attachments, a deed with no annexures, payment of cash and handing over keys. It was found that there was a binding contract to purchase land.

  2. As the High Court explained in Sindel v Georgiou (1984) 154 CLR 661, “The usual practice in New South Wales is for parties entering into a contract for the sale of land to exchange signed counterparts of a written contract … When the parties propose to enter into a contract for the sale of land by the customary procedure of exchange they do not contemplate the coming into existence of a binding contract before the exchange takes place. The exchange ‘is the crucial and vital fact which brings the contract into existence’: Eccles v Bryant & Pollock [[1948] Ch D 93 at 99]. The ceremony of exchange constitutes a mutual acknowledgement that the bargain has been struck”: at 665-666 (Mason, Murphy, Wilson, Brennan and Dawson JJ).

  3. Whilst the ordinary course is that contracts must be exchanged before a binding contract comes into existence, the parties can agree otherwise: Sindel v Georgiou at 667; GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 at 634 (per McHugh JA). In that event, “the Court must be satisfied that the parties arrived at a consensus as to the terms of the agreement, that the terms were sufficiently certain to be capable of forming a binding contract and that the parties, by their words and conduct taken in the context of the surrounding circumstances, evinced a common intention that the consensus at which they had arrived should constitute an immediately binding contract”: RT & YE Falls Investments Pty Ltd v New South Wales [2001] NSWSC 1027 at [50] (Palmer J).

  4. A surrounding circumstance of “substantial importance” is that the usual method of selling real estate in New South Wales is by means of the signing and exchanging of contracts in the approved standard form: Lezabar Pty Ltd v Hogan (1984) 4 BPR 9498 at 9501. As Barrett J observed in Khan v Khan (2004) 62 NSWLR 229 at 244:

“Where parties have agreed a price and general terms for the sale and purchase of land and proceed in the normal way towards an exchange of contracts according to ordinary and usual conveyancing practice, the expectation that they do not intend to enter into any legally binding oral agreement in advance of exchange of contracts is particularly strong.”

  1. Post-contractual conduct is also admissible on the question of whether a contract was formed: Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61 at [25]–[26].

  2. Turning to the words and conduct of these parties, there is nothing in the solicitors’ communications which supports a conclusion that the parties had agreed to form a binding contract before the exchange of contracts for the sale and purchase of land. Rather, when the executor’s solicitors provided the contract to Mr Yeo, they repeatedly stated that no binding relationship would be created until contracts were exchanged. Mr Yeo’s responses did not suggest to the contrary, even when Mr Yeo sent the contract signed by Mr Rio as guarantor at 3.19 pm on 6 June 2024. Mr Yeo then simply advised “We look forward to receiving the contract duly countersigned by the vendor.”

  3. Mr Yeo was somewhat reluctant to accept that he was then expecting to receive the vendor’s counterpart contract after exchange, “I was expecting to receive the vendor’s contract countersigned as a formality at that point in time.” Mr Yeo was reluctant to explain why he later suggested that there was a binding contract in place at that time, where his email indicated that the purchaser had simply done what it needed to do in anticipation of exchange. As to whether receipt of the vendor’s countersigned contract was a further necessary step, Mr Yeo said “I don’t know. I can’t comment on that. All I was doing was expecting the contract to be duly countersigned as a formality.” It was unclear why Mr Yeo thought that the receipt of the countersigned contract was merely a formality, where he accepted that he was not aware of what was happening directly between the parties; the extent of his knowledge was limited to the contemporaneous communications annexed to his affidavit. Mr Yeo agreed that at no time did the executor’s solicitor inform him that they did not require an exchange of contracts, “No, I suppose not.”

  4. Nor was there anything in the dealings between Mr Robb and the agent which suggested a departure from the usual practice of entering into a binding contract for the sale of land by the exchange of signed counterparties. Mr Robb accepted that the agent came to his home on the evening of 5 June 2024 for him to sign the contract so that contracts could progress to exchange as quickly as possible. However, Mr Robb resisted the notion that it was important for contracts to be exchanged, attributing the urgency to the fact that the agent wanted his commission and the executor and beneficiaries wanted the Estate finalised. He did accept, however, that “clearly there has to be a contract signed.” The fact that, the next morning, the agent sent the contract to the executor and Mr Balzer and asked the executor to now sign the contract and for Mr Balzer to exchange the contracts as soon as possible and notify him as soon as that had been done indicates that from the agent’s point of view, the usual processes were to be followed. The agent’s comment, “I think everyone will be happy to put this sale away” does not suggest that the agent thought that a binding contract had already come into existence but rather that further steps needed to be taken, which were imminent, when such a contract would be in place.

  5. Turning then to the words and conduct as between the executor and Mr Robb, the defendant’s case depends on acceptance of Mr Robb’s evidence in preference to that of the executor. I have proceeded otherwise, deferring to the contemporaneous documents and preferring the evidence of the executor in the event of conflict between them. Specifically, in the conversation in which the oral agreement is said to have been formed, I reject Mr Robb’s evidence that the executor said that the deposit had been received, where the contemporaneous documents indicate that the deposit did not arrive until sometime later: see [48]. The fact that the deposit had yet to be received makes it unlikely that the executor would have said that the defendant’s offer had been accepted and no further offers would be accepted from others.

  6. As earlier mentioned, over the course of this transaction, the executor’s patience with Mr Robb wore thin; the executor does not appear to have trusted Mr Robb, where he considered at one stage that the company identified in the Sales Advice was a “scam”. In these circumstances, I consider it inherently unlikely that the executor would have said that the exchange of contracts was just “paperwork” and that Mr Robb did not have to worry about exchange of contracts. I reject Mr Robb’s evidence that the executor said that the exchange of contracts was “basically just administrative and clerical”. I am not satisfied that the parties intended to be immediately bound without the exchange of contracts.

  7. Although the contracts were signed by both parties, there was no exchange. There was a good reason for this: the guarantor proffered by Mr Robb was not acceptable, where he was not a director the purchaser. I reject the defendant’s submission that, in doing so, the executor acted on a whim. There were two problems here. First, the proffered guarantor was not a director of the defendant company and thus was in no position to ensure that the defendant complied with its obligations under the contract. Whilst there was nothing to stop Mr Robb putting himself forward as the guarantor, there was also nothing to oblige the vendor to accept him as the guarantor either. Aside from Mr Robb’s inability to ensure that the defendant company performed the contract, the executor would likely have entertained serious doubt as to Mr Robb’s financial wherewithal to honour the guarantee, given Mr Robb’s historical inability to raise finance under the Deed of Family Arrangement. No one was keen to lend Mr Robb money, including Mr Joseph and Mr Rio. Where the executor had known Mr Robb for many years and worked with him through the Deed of Family Arrangement, its extension and non-completion, the executor was alive to Mr Robb’s financial limitations.

  8. The second, and bigger, problem was that the director of the defendant company, Mr Rio, was not prepared to give a guarantee himself. Mr Robb’s efforts to persuade the executor to accept Mr Robb as guarantor, or to delete the guarantee clause altogether, set off legitimate ‘alarm bells’ in the executor’s mind as to the veracity of the defendant company’s ability to complete this transaction, or the vendor’s ability to recover damages if it did not.

  9. The executor was free to proceed as he did. Masters v Cameron has no application, where it cannot be said that the parties had reached finality in arranging all the terms of their bargain at any time before Mr Yeo sent through the contract signed Mr Rio as guarantor, by which time it was too late. The identity of the guarantor, whilst not specified in the contract, still needed to be acceptable to the vendor. The guarantor initially proffered was, unsurprisingly, not acceptable in the circumstances. There was no agreement on a key term. Where the contracts have not subsequently been exchanged, there is no binding contract between the executor and the defendant.

Part performance

  1. If I am wrong about this, then it is necessary to deal briefly with the defendant’s alternative argument that it was entitled to buy the farm under an oral contract given acts of part performance. Contracts for the sale of land must be in writing: ss 23C(1), 54A, Conveyancing Act 1919 (NSW). The particulars of part-performance comprised incorporating the company, establishing the unit trust, paying the deposit, signing the contract for sale and delivering it to the executor’s solicitors.

  2. The defendant submitted that it did not fall foul of s 54A(1), where the agreement was in writing signed, albeit not exchanged. Further, the defendant had partly performed the contract by establishing itself and the unit trust as a special purpose vehicle to purchase the farm. Mr Robb told the executor that he intended to purchase the farm by this structure and was in the process of setting it up. (I have not accepted this). On 3 June 2024, when it is said that the executor agreed to sell to the farm for $4.5 million (I have not accepted this), the executor said the agent needed to know the details of the corporate entity that was purchasing the property. The defendant paid a deposit. Mr Rio executed the contract and delivered it to the executor’s solicitor. Performance of these acts was said to be unintelligible in the absence of a binding promise made by the executor to Mr Robb to sell the farm to Cooldawinda.

  3. In Regent v Millett (1976) 133 CLR 679, Gibbs J observed that the doctrine of part performance rests on the following principle, at 682:

“… when one of two contracting parties has been induced, or allowed by the other, to alter his position on the faith of the contract, as for instance by taking possession of land, and expending money in building or other like acts, there it would be a fraud in the other party to set up the legal invalidity of the contract on the faith of which he induced, or allowed, the person contracting with him to act, and expend his money.”

  1. Acts of part performance must be unequivocally referable to the agreement, “performance which alone and without the aid of words of promise is unintelligible or at least extraordinary unless as an incident of ownership, assured, if not existing”: Pipikos v Trayans (2018) 265 CLR 522 at [53] (Keifel CJ, Bell, Gageler and Keane JJ).

  2. I struggle with the suggestion that bringing oneself into existence the day before entry into an alleged oral contract is itself an act of part-performance of that contract. Nor can the establishment of special purpose vehicles to effect a transaction be regarded as unequivocally referable to the contract but, rather, to Mr Rio’s choice of structure by which to acquire the farm. Payment of a deposit alone is not to be treated as an act of part performance, but is a factor that can be added to other factors to a court to find part performance: Ciavarellav Polimeni [2008] NSWSC 234 at [121]-[122] (Young CJ in Eq); Phung v Phung [2019] NSWSC 117 at [71] (Darke J). None of the particularised acts of part performance add up to anything more than an unsuccessful attempt by an interested purchaser to acquire a property but ultimately failing to do so by reason of the inability to proffer an acceptable guarantor when requested to do so, and before the executor decided to proceed with a higher offer from another purchaser. There are no factors which compel equity to assist the defendant in this case.

Proprietary estoppel

  1. Further and in the alternative, the defendant sought a declaration that the executor holds the farm on constructive trust for Cooldawinda, together with an order under s 71 of the Trustee Act 1925 (NSW) vesting the fee simple estate in Cooldawinda absolutely. By reason of the executor’s representations and conduct, Cooldawinda was said to have assumed and had the legitimate expectation that the executor would sell it the farm. The executor was said to have induced Cooldawinda to adopt that assumption. The company acted or abstained from acting, in reliance of that assumption in taking the steps that it did, where it was said that the executor knew and intended that the company would so act. The company’s actions, or failure to act, would occasion detriment if its assumption was not fulfilled where the executor now alleges that he was not bound to sell the farm to the company. This was said to be unconscionable such that the executor is estopped from doing so. In the circumstances, the executor was said to hold his interest in the farm on constructive trust for the defendant absolutely.

  2. The executor submitted that to the extent that any representation alleged may be found by the Court, such representation was made to Mr Robb and not to the defendant. The executor had no knowledge who the defendant was and believed it to be an entity of which Mr Robb was director, until provision of the first signed contract to his solicitor. The defendant had not clearly articulated its alleged reliance on the alleged representations. Nor was there any relevant detriment, where the deposit was refundable. The costs incurred in incorporating the company was not incurred by an inducement of the executor; there was no requirement that the farm be purchased by a company as trustee for a unit trust. This structure was Mr Rio’s choice. Further, the defendant knew or ought to have known from the solicitors’ correspondence that there was no binding contract until exchange.

  3. The defendant relied on Mr Robb’s failed attempt to acquire the farm via the Deed of Family Arrangement as extended by the executor, including selling his own farm and some cattle; and Mr Robb’s further efforts to acquire the farm on the executor’s representation that he could have the farm for $4.15 million. In reliance on the executor’s representation, Mr Robb initiated the arrangement with Mr Rio to establish Cooldawinda and the Cooldawinda Unit Trust. Also in reliance on the executor’s representation, Mr Rio engaged Mr Yeo and Mr Elliot in respect of the proposed purchase and accompanying structure. On the executor’s representation that they had a deal at $4.5 million, Mr Rio outlaid $22,810 in accountancy, staffing and legal costs in incorporating Cooldawinda and the Cooldawinda Unit Trust and paid a $450,000 deposit. He signed the contract and guarantee. The executor “without a justifiable basis” refused to accept the contract with Mr Robb as guarantor and obtained a higher offer. Mr Robb, Mr Rio and Cooldawinda changed their position on the promise made to them that the farm would be theirs. Substantial sums were expended in the establishment of Cooldawinda and the unit trust. A large deposit was paid to the executor; it has not been refunded. That sum could have been deployed elsewhere. Departure by the executor from the expectation encouraged in Cooldawinda would be unconscionable such as to warrant the intervention of equity. The defendant submitted that the fact that the representations were made to Mr Robb from December 2023 on posed no difficulty to the defendant relying on the representations: Cramaso LLP v Ogilvie-Grant [2014] 2 All ER 270 at [25]-[26] (per Lord Reed SCJ).

  4. Estoppel by encouragement “comes into existence when an owner of property has encouraged another to alter [their] position in the expectation of obtaining a proprietary interest and [they], in reliance on the expectation created and encouraged by the property owner, ha[ve] changed [their] position to their detriment. If these matters are established equity may compel the owner to give effect to that expectation in whole or in part”: Delaforce v Simpson-Cook [2010] NSWCA 84 at [21] (per Handley AJA).

  5. There are three main elements, being an assurance, reliance and detriment. As Walker LJ observed in Gillettv Holt [2001] Ch 210, these elements cannot be treated as “watertight compartments” and often overlap, “the fundamental principle that equity is concerned to prevent unconscionable conduct permeates all the elements of the doctrine. In the end the court must look at the matter in the round”: at 225. As Walker LJ also observed in Jennings v Rice [2002] EWCA Civ 159, “The cases show a wide range of variation in … the quality of the assurances which give rise to the claimant's expectations and the extent of the claimant's detrimental reliance on the assurances. The doctrine applies only if these elements, in combination, make it unconscionable for the person giving the assurances … to go back on them”: at [44].

  6. Looking at each element in turn, the assurance which engenders the expectation of the party asserting the estoppel must possess some level of clarity: Wantagong Farms Pty Ltd as Trustee for the Bulle Family Trust v Bulle [2015] NSWSC 1603 at [63]. Ball J there relied on the formulation of Hoffman LJ in Walton v Walton (Court of Appeal of England and Wales, 14 April 1994, unreported), “The promise must be unambiguous and must appear to have been intended to be taken seriously. Taken in its context, it must have been a promise which one might reasonably expect to be relied upon by the person to whom it was made”: Wantagong at [63].

  7. As to reliance, the question is twofold: did the plaintiff in fact rely on the representations, and would the plaintiff have acted differently if the promises had not been made: Wantagong at [83]. Put another way, the extent to which it is unconscionable for the representor to seek to resile from the position expressed in their assurances to the plaintiff may be gauged by reflecting on the plaintiff’s likely response if the representator had advised at the outset that they would depart from the representation: Sidhu v Van Dyke (2014) 251 CLR 505 at [77] (per French CJ, Kiefel, Bell and Keane JJ). The promises relied upon do not have to be the sole inducement for the reliance; it is sufficient if they are an inducement: Gillettv Holt at 226; Sidhu at 526.

  8. As to detriment, the question is whether the plaintiff would have been better off if they had not relied on the representation: Wantagong at [90]. The relevant detriment is not the loss flowing from non-fulfilment of the promise but whether departure from the promise would be unconscionable in all the circumstances. The required detriment must be substantial, which depends on whether it would be unjust or inequitable to allow the assurance to be disregarded: Wantagong at [68]-[69]. For example, in Wantagong the plaintiff stood to benefit in ways not anticipated when his parents made representations concerning a proprietary interest in the family farm. Ball J held that it was not unconscionable to permit the parents to depart from the representations, as otherwise the plaintiff “would be benefitted at the expense of his siblings in a way that was neither anticipated nor intended when his parents sought to achieve a just distribution of assets that they had accumulated”: at [93].

  9. As to the assurances, the defendant relied on a number of matters which were personal to Mr Robb and had nothing to do with the defendant, including Mr Robb’s failed efforts to buy the farm under the Deed of Family Arrangement. Mr Robb accepted that he understood that the deed was essentially at an end. I do not consider that any representation made by the executor in that deed had any continuing effect when it came to sell the farm under the expressions of interest process.

  10. The second assurance said to have been made by the executor has not been established: see [15]-[17]. Nor am I satisfied that the third assurance, said to have been made by the executor on 31 May 2024, was made. According to Mr Robb, the executor said the best offer on the property was $4.2 million but he was expecting more offers over the weekend which would likely take the price to $4.4 million. Mr Bull denied this; the only information he had at the time was that offers would be made, but not the amount of the offers. I prefer the executor’s evidence. Nor have I accepted that Mr Robb told the executor at this time of the unit trust structure: see [37]. Nor have I accepted the fourth assurance, said to have been given by the executor on 3 June 2024: see [27]-[29]. Nor do I consider that any assurance can be considered to have been made by the executor from the fact that the agent attended on Mr Robb at the farm to procure his signature on the contract.

  11. I accept that, if a pre-contractual representation is made to a person, it may continue to be actionable by the corporate entity which that person brings into existence to enter into the contract in reliance on that representation: Cramaso LLP v Ogilvie-Grant [2014] 2 All ER 270 at [25]-[26]. But Cramaso is a long way from this case, where any assurances given by the executor to Mr Robb were personal to him, as the father’s son, and any corporate vehicle that he may use to acquire the farm. Whilst the executor (and siblings) were amenable to selling the farm to Mr Robb if he could raise the funds to match the highest offer made, where Mr Robb was a beneficiary of the Estate and a member of the Robb family, there is no suggestion that any preferential treatment would have been conferred on a company in which Mr Robb had no interest or role. I repeat what I have said at [36]. I am not satisfied that the assurances were made at all, nor satisfied that any assurances were made to the defendant.

  12. If I am wrong about this, then did the defendant in fact rely on the executor’s assurances and would it have acted differently if those assurances were not made? Whether Mr Robb relied on assurances said to be contained in the Deed of Family Arrangement in selling his assets and attempting to raise finance is, with respect, irrelevant. So too is Mr Robb’s introduction to Mr Rio, Mr Rio’s engagement of Mr Yeo and Mr Elliot and their discussion about the appropriate structure to use to buy the farm. These actions were entirely consistent with an effort to buy the farm but none are obviously referable to any assurance that, if Mr Robb matched the best offer, then the executor would sell the farm to him. The same can be said of Mr Rio’s payment of the deposit of $450,000. Accepting that Mr Robb was keen to buy the farm if at all possible, and that Mr Rio wanted to invest in the farm, I am not satisfied that they would have done anything differently if the executor had made no assurances.

  13. As to detriment, Mr Rio said he incurred costs in respect of the inspection of the farm, conveyancing, setting up the company and unit trust and investigating the potential development of the farm. Some $15,000 had been paid to Mr Elliott, $5,390 to his accountant and $2,420 to Mr Yeo. The defendant disclaimed the notion that its detriment was the loss of bargain, in being able to acquire the farm for less than the third party was prepared to pay.

  14. No details were given as to precisely when these costs were incurred, nor why. It is not possible to say whether, in incurring these expenses, Mr Rio did so in reliance of any particular assurance said to have been made by the executor. As far as can be told, these costs were entrepreneurial expenses, outlaid in the hope of securing the farm at an attractive price. Those efforts have come to naught. But I am not satisfied that any detriment is loss flowing from non-fulfillment of any assurances given by the executor, nor substantial, nor would it be unconscionable in the circumstances to let any loss fall where it lies.

Damages

  1. Alternatively, damages are sought for breach of contract. There was no contract. This fails.

Orders

  1. For these reasons I make the following orders:

  1. Declare that the plaintiff is not bound to sell the land situated at and known as 136 Kennedy’s Lane, Ewingsdale in the State of New South Wales being the land contained within Folio Identifier 2/746096 (“the farm”) to the defendant or any entity or party related to the defendant.

  2. Declare that the plaintiff is at liberty to exchange a Contract for the sale and purchase of the farm with an arm’s length purchaser who makes the highest unqualified offer.

  3. Pursuant to s 74J of the Real Property Act 1900 (NSW), order the Registrar-General to remove caveat No. 2605683835 (being dealing AU179442) lodged on the title of the farm by the defendant.

  4. Dismiss the statement of cross-claim filed on 5 July 2024.

  5. Order the defendant to pay the plaintiff’s costs of the proceedings.

  6. Grant liberty to the plaintiff to apply on two days’ notice in the event that he seeks a special costs order, a gross lump sum or compensation from the defendant or Robert Rio in accordance with the usual undertaking as to damages given to the Court on 25 June 2024 and / or 5 July 2024.

  7. Parties to notify any errors or omissions within seven days.

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Amendments

22 August 2024 - [8], [10], [11], [18]: amended to "the wife";


[96], [100], [101], [102]: minor typographical amendments;


[15]: "Joseph" deleted;


[24]: "front page" amended to "draft contract";


[44] last line: "Mr Rob" amended to "Mr Bull";


[109]: sentence structure amended


[115]: wording in brackets inserted

Decision last updated: 22 August 2024

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Cases Citing This Decision

1

Bull v Cooldawinda Pty Ltd (No 2) [2024] NSWSC 1602
Cases Cited

21

Statutory Material Cited

3

Allen v Carbone [1975] HCA 14
Allen v Carbone [1975] HCA 14
Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd [2000] WASCA 27