Castronova v Tjung

[2024] NTSC 55

CITATION:Castronova v Tjung & Ors [2024] NTSC 55

PARTIES:CASTRONOVA, Margaret Lesetta

v

TJUNG, Fatima

and

DANIUM INVESTMENTS PTY LTD (ACN 108 393 817) ATF THE DANIUM TRUST

and

DANIUM, Danny

TITLE OF COURT:  SUPREME COURT OF THE NORTHERN TERRITORY

JURISDICTION:  SUPREME COURT exercising Territory jurisdiction

FILE NO:2022-021412-SC

DELIVERED:  28 June 2024

HEARING DATES:  2 May 2024 to 8 May 2024

JUDGMENT OF:  Burns J

Agents Licensing Act 1979 (NT) s 121A
Australian Securities and Investments Commission Act 2001 (Cth) s 12BG
Civil Procedure Act 1883 (Imp)
Competition and Consumer Act 2010 (Cth) sch 2 (‘Australian Consumer Law’) s 23, 24, 25, 26, 27, 224
Consumer Affairs and Fair Trading Act 1990 (NT) s 27
Evidence (National Uniform Legislation) Act 2011 (NT)
Interpretation Act 1978 (NT) s 62A, 62B
Land Title Act 2000 (NT) s 76, 169
Law of Property Act 2000 (NT) s 86
Productivity Commission, Review of Australia’s Consumer Policy Framework (Report No 45, 30 April 2008)
Return to Work Act 1986 (NT) s 186A
Supreme Court Act 1979 (NT) s 84
Supreme Court Act 1982 (Vic) s 60

ACCC v ACN 117 372 915 Pty Ltd (in liq) (formerly Advanced Medical Institute Pty Ltd) [2015] FCA 368; Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570; Australian Competition and Consumer Commission v Cement Australia Pty Ltd [2013] FCA 165; 310 ALR 165; Australian Competition and Consumer Commission v CLA Trading Pty Ltd [2016] FCA 377; Director-General of Fair Trading v First National Bank plc [2001] UKHL 52; [2002] 1 AC 481; Director of Consumer Affairs Victoria v AAPT Ltd [2006] VCAT 1493; Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; Ironbridge Holdings Pty Ltd v O’Grady [2020] VSC 344; Jetstar Airways Pty Ltd v Free [2008] VSC 539; Jones v Dunkel [1959] HCA 8; 101 CLR 298; Jones v South British Insurance Co. Ltd (1984) 71 FLR 98; Saunders v Nash [1991] 2 V.R. 63, referred to.

REPRESENTATION:

Counsel:

Plaintiff:H Baddeley

Defendants:A McLaren

Solicitors:

Plaintiff:HWL Ebsworth Lawyers

Defendants:Kelly & Partners Lawyers

Judgment category classification:  C

Judgment ID Number:                   Bur2407

Number of pages:  132

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN

Castronova v Tjung & Ors [2024] NTSC 55

No. 2022-021412-SC

BETWEEN:

MARGARET LESETTA CASTRONOVA

Plaintiff
  AND:

FATIMA TJUNG

First Defendant

AND:

DANIUM INVESTMENTS PTY LTD (ACN 108 393 817) ATF THE DANIUM TRUST

Second Defendant

AND:

DANNY DANIUM

Third Defendant

CORAM:    BURNS J

REASONS FOR DECISION

(Delivered 28 June 2024)

Brief background

1. The plaintiff was the registered proprietor of the property known as 76 East Point Road, Fannie Bay in the Northern Territory (‘the Fannie Bay property’). The first and third defendants (‘the purchasers’) entered into a contract (‘the Contract’) on 21 August 2017 to purchase the Fannie Bay property from the plaintiff for the sum of $2,000,000.00. The purchasers paid an initial deposit of $100,000.00. The Contract required the purchasers to complete the purchase on or before 12 December 2018. By agreement with the plaintiff, the purchasers were given a licence to occupy the Fannie Bay property prior to completion of the purchase, and they entered into occupation in late 2017 or early 2018.

2. The extended settlement period was negotiated by the purchasers to enable them to sell a property at 38 Bridge Street, Muirhead (‘the Muirhead property’) owned by the first defendant, and a property at 3740 Stuart Highway, Acacia Hills (‘the Acacia Hills property’) which was owned by the second defendant company, of which the third defendant was, at that time, the sole director and shareholder.

3. The purchasers were unable to complete the purchase by 12 December 2018. They sought an extension of time from the plaintiff in which to complete the Contract. On or about 5 April 2019, the plaintiff and the purchasers entered into a Deed of Variation (‘the Variation Deed’) of the Contract varying the date for completion to on or before 2 September 2019. The terms of the Variation Deed included conditions that the purchasers provide security for the performance of their obligations under the Contract as follows:

   a)a first ranking mortgage in favour of the plaintiff over the Muirhead property;

   b)a Deed of Performance Guarantee given by the second defendant, a company of which the third defendant was, at that time, sole director and shareholder (the first defendant was subsequently appointed a director on 6 July 2023). The second defendant was the registered proprietor of the Acacia Hills property; and

   c)a second ranking mortgage in favour of the plaintiff over the Acacia Hills property.

4. As required by the Variation Deed, the second defendant executed a Deed of Performance Guarantee to secure the purchasers’ obligations under the Contract. The second defendant executed a mortgage over the Acacia Hills property in favour of the plaintiff as required by the Variation Deed (‘the Acacia Hills Mortgage’). The first defendant also executed a mortgage in favour of the plaintiff over the Muirhead property as required by the Variation Deed (‘the Muirhead Mortgage’). Each of the mortgages gave the plaintiff a power of sale over the properties in the event of the purchasers failing to perform their obligations under the Contract.

5. The purchasers failed to complete the purchase on or before 2 September 2019 as required by the varied Contract. On 10 December 2019, the plaintiff issued a notice of default to the purchasers advising that they were in default of the Contract for failing to pay the balance owing under the Contract. The notice of default allowed the purchasers ten working days to remedy the default. The purchasers failed to pay any part of the balance of the purchase monies within that period.

6. On 6 July 2020, the plaintiff served a notice of termination of the Contract on the purchasers by which the plaintiff accepted the purchasers’ repudiation of the Contract and terminated the Contract.

7. On 24 September 2020, the first defendant entered into a contract to sell the Muirhead property to third parties for $495,000.00. The original date for completion of this contract for sale was 9 December 2020. The first defendant did not complete that contract and, in these proceedings, claims that her failure to complete the contract was due to a refusal by the plaintiff to discharge the mortgage over the Muirhead property. That is a claim disputed by the plaintiff. The proposed third party purchasers of the Muirhead property subsequently commenced proceedings against the first defendant in the Darwin Local Court claiming damages for the first defendant’s failure to complete the contract.

8. In around November 2020, the plaintiff entered into a contract with a third party for the third party to purchase the Fannie Bay property for $1,350,000.00. This sale proceeded to completion on 21 December 2020.

9. On or around 27 May 2022, the plaintiff served on the first defendant a notice dated 16 May 2022 (‘the Muirhead Mortgage default notice’) which demanded, within 30 days of service of the notice, payment of the amount owing and secured under the Muirhead Mortgage, failing which the plaintiff may, among other things, exercise her power to sell the Muirhead property. The first defendant failed to make the payments required by the Muirhead Mortgage default notice.

10. On or around 1 June 2022, the plaintiff served on the second defendant a notice dated 16 May 2022 (‘the Acacia Hills Mortgage default notice’) which demanded, within 30 days of service of the notice, payment of the amount owing and secured under the Acacia Hills Mortgage, failing which the plaintiff may, among other things, exercise her power to sell the Acacia Hills property. The second defendant failed to make the payments required by the Acacia Hills Mortgage default notice.

    Pleadings

11. By proceedings instituted in this Court on 23 September 2022, the plaintiff claims damages against the purchasers for breach of the Contract, as varied by the Variation Deed. The plaintiff also claims that under the terms of the Deed of Performance Guarantee, the second defendant is liable to indemnify her for any amounts which the purchasers are found to be liable to pay her under her claim.

12. The plaintiff claims the sum of $1,106,298.90 as at 22 December 2022 together with interest accruing from that date at the rate of 12% per annum.

13. The relief claimed by the plaintiff is:

    a)Judgment against each of the defendants in the amount of $1,106,298.90 plus interest on that amount at the rate of 12% per annum or alternatively interest pursuant to statute.

    b)Immediate possession of the Muirhead property pursuant to s 86 of the Law of Property Act 2000 (NT) and the Muirhead Mortgage.

    c)Immediate possession of the Acacia Hills property pursuant to s 86 of the Law of Property Act 2000 (NT) and the Acacia Hills Mortgage.

14. By a Second Amended Notice of Defence filed 28 March 2024 (‘the Defence’), the defendants denied liability on the bases that:

    a)Certain provisions of the Contract and the Variation Deed are unfair for the purposes of the Australian Consumer Law (‘ACL’) and are not binding on the purchasers.

    b)The terms of the Deed of Performance Guarantee are unfair for the purposes of the ACL and are not binding on the second and third defendants, or the Deed otherwise “stands discharged”.

    c)The terms of the Muirhead Mortgage (and an associated Memorandum of Common Provisions) are unfair for the purposes of the ACL and are not binding on the defendants.

    d)The terms of the Acacia Hills Mortgage (and an associated Memorandum of Common Provisions) are unfair for the purposes of the ACL and are not binding on the defendants.

    e)The plaintiff suffered no loss and/or failed to mitigate her loss.

15. The first and third defendants also lodged a “Set-off and/or Counterclaim” in which they claimed a right to set-off certain sums against any amount for which they may be found liable to the plaintiff. A number of the matters relied upon by the purchasers in this document were also relied upon by the purchasers for the purpose of demonstrating that the plaintiff had not suffered a loss or had failed to mitigate any loss arising out of the purchasers’ failure to complete the purchase of the Fannie Bay property.

16. The matters pleaded by way of Set-off or Counterclaim include:

    a)An allegation that because of the plaintiff’s failure to withdraw a “caveat” she had lodged on the title to the Muirhead property, the first defendant was unable to complete the sale of that property to third parties, resulting in loss to her.

    b)The need to bring to account a sum of $90,000.00 said to have been paid by the purchasers to the plaintiff.

    c)The need to bring to account a sum of $67,920.00 said to have been paid by the purchasers in renovating the Fannie Bay property during the period they occupied the property under licence.

    d)A claim that the first defendant is entitled to set-off the sum of $491,796.00, being the agreed sale price of the Muirhead property to third parties which did not proceed to completion. This claim was abandoned during the course of the hearing.

    e)Claims that the defendants are entitled to set-off amounts based upon their loss of the ability to use certain sums of money by reason of the conduct of the plaintiff, and damages for the loss of use of certain sums of money.

17. The defendants seek a multitude of orders, many of which are alternatives. These include:

    a)An order for damages.

    b)An order that the plaintiff pay the first defendant’s costs of defending proceedings in the Local Court brought by the third parties who had agreed to purchase the Muirhead property.

    c)An order “that the accounts be reopened between the parties” and certain sums be allowed to the credit of the defendants.

    d)Declarations that certain provisions of the Contract and Variation Deed are unfair.

    e)A declaration setting aside, cancelling or varying the Variation Deed.

    f)A declaration that the Muirhead and Acacia Hills Mortgages are unfair, and orders setting aside those mortgages.

    g)A declaration that the Memorandum of Common Provisions associated with the Muirhead and Acacia Hills Mortgages is unfair, and an order setting aside the Memorandum of Common Provisions. Alternatively, a declaration that specified provisions of the Memorandum of Common Provisions are unfair and invalid, and an order setting aside, cancelling or varying those provisions.

    h)A declaration that the Deed of Performance Guarantee is unfair and an order setting it aside, cancelling it or varying it. In the alternative, a declaration that specified provisions of the Deed of Performance Guarantee are unfair and an order setting aside, cancelling or varying those provisions.

18. In my opinion, the case advanced by the plaintiff is obviously correct and that advanced by the defendants is equally obviously unmeritorious.

    The evidence for the defendants

19. The evidence-in-chief of all witnesses, both for the defendants and the plaintiff, was by way of affidavit, supplemented by some oral evidence as appropriate. As the plaintiff’s claim that the first and third defendants had breached the terms of the Contract was essentially undisputed, the defendants accepted that they were dux litis. On behalf of the defendants, the following affidavits were read:

    ·Fatima Tjung (‘the first defendant’) sworn 29 November 2022 and 8 March 2024;

    ·Danial Kelly sworn 16 February 2024; and

    ·Derek Hart sworn 8 March 2024.

20. No evidence was adduced from the third defendant. No explanation was provided for the failure of the third defendant to give evidence and there was no suggestion that he was “not available” for the purposes of the Evidence (National Uniform Legislation) Act 2011 (NT) (‘the ENULA’). What flows from the fact that the third defendant did not give evidence will be dealt with below.

21. Neither Mr Kelly nor Mr Hart were required for cross-examination and the plaintiff agreed that their evidence should be accepted. I will make no further reference to their evidence because it was essentially irrelevant.

    Failure of the third defendant to give evidence

22. The plaintiff submitted that the failure of the third defendant to give evidence was unexplained and that an inference should be drawn in accordance with the well-known principles in Jones v Dunkel.[1] Those principles were recently restated by Greenwood J in Australian Competition and Consumer Commission v Cement Australia Pty Ltd:[2]

    An unexplained failure by a party to give evidence or call witnesses may (but not necessarily must) in appropriate circumstances lead to an inference that the uncalled evidence or missing material would not have assisted the party’s case. The rule operates against a party bearing the burden of proof but can also operate against a party not bearing that burden. The notion of “appropriate circumstances” contemplates circumstances existing where it is within the power of the relevant party to call the evidence not called. The significance, in deciding the questions of fact in controversy, to be attributed to the failure of a witness to be called to give evidence depends, in the end, upon whether in all the circumstances an inference can be drawn that the reason why the relevant party failed to call the particular witness was a fear of the evidence the witness might give. A party might fail to call a witness because it may not be in a position to do so or because the party may not be sufficiently aware of the evidence the witness might give or because the witness has no relevant relationship with the fact in issue about which one might expect the witness to be called.

23. The defendant in Cement Australia did not call evidence from witnesses who may be expected to have knowledge of the matters in dispute in that case, including directors of the defendant company. The effect of the failure to call these witnesses to explain their absence was expressed by Greenwood J at [2959]:

    The consequence of failing to call a witness of the degree of proximity to the respondents as its own directors, its managing director and chief executive, its analyst at the centre of its analytical work on the very subject matter in dispute and other senior executives with clear authority and standing in the corporation on the questions in issue, is that an inference arises that the uncalled evidence from these witnesses would not have helped the party which failed to call evidence from them. Thus, the Court is entitled to take into account, and weigh in the balance according to all the evidence, in deciding whether to accept any particular evidence (either on affidavit from deponents or reflected in the content of documents admitted into evidence which relate to a matter about which the absent witnesses could have spoken), the inference that uncalled evidence about the reasons and purposes for deciding to go on with the Amended Millmerran Contract and deploy the capital on site (and other matters) would not have been helpful to the relevant respondent corporations. The probative point of such an inference is that the trier of fact is more willing to draw an inference which might fairly be drawn from other evidence, because the relevant respondent corporation being in a position, through the witnesses, to prove a proposition contrary to inferences otherwise arising, has chosen not to call that evidence.

24. The third defendant was the sole shareholder and director of the second defendant at the time that the second defendant executed the Deed of Performance Guarantee and the Acacia Hills Mortgage. He was the effective mind of the company. It would be expected that he could give evidence both in his own right and as the director of the second defendant of his understanding of the transactions to which he and the second defendant were parties and the relevant documents.

25. In her affidavit sworn 29 November 2022, the first defendant said regarding the third defendant:

    My husband migrated to Australia when he was about 16 years of age. He finished year 12 and has worked in his family business ever since. His first language is Hakka. English is his third language. He can speak English fluently but he is not proficient at reading or writing. He is not good with paperwork. So, I was the person entrusted and responsible for conducting the transaction.

26. A number of factual assertions are found in this extract which may be relevant in determining whether any legitimate explanation was provided for the failure of the third defendant to give evidence. First, there is an assertion that the third defendant is “not proficient at reading or writing” and is “not good with paperwork”. These assertions do not constitute a legitimate explanation for the failure of the third defendant to give evidence. These are matters about which the third defendant himself could give evidence, as it is not disputed that he is proficient in spoken English. Additionally, the asserted facts do not mean that the third defendant could not give evidence about his understanding of the nature of the transactions into which he and the second defendant entered.

27. The second assertion is that the first defendant was the person “entrusted and responsible for conducting the transaction”. The failure of the third defendant to give evidence made it effectively impossible for the plaintiff to challenge that assertion. If it were the truth that the third defendant took no effective part in the transactions the subject of the current proceedings, this was something about which the third defendant would have been expected to give evidence. This assertion does not provide a legitimate explanation for the failure of the third defendant to give evidence.

28. Had the third defendant been called to give evidence, it may be expected that he could give evidence relevant to many significant issues in these proceedings. It would be expected that he would be able to give evidence of any statements made by the first defendant to him regarding these transactions, and whether he on his own behalf or on behalf of the second defendant sought legal advice prior to executing the Deed of Performance Guarantee and the Acacia Hills Mortgage.

1. The first defendant sought to rely heavily upon a suggestion that she routinely worked in remote locations at the time that the Variation Deed was negotiated, and accordingly had no real opportunity to obtain legal advice. I will address the first defendant’s evidence in that regard below. No evidence was adduced regarding the third defendant’s opportunity to obtain legal advice on his own behalf and that of the second defendant. There is simply no evidence that he did not have an opportunity to obtain legal advice, or, indeed, that he did not obtain legal advice.

2. I do not intend to suggest in the above that it is open for me to infer that the third defendant did, in fact, obtain legal advice. I am simply pointing out that the third defendant was a person who could clearly give relevant evidence and who would be expected to give evidence in these proceedings.

3. There was some faint suggestion that counsel for the defendants believed that the first defendant was entitled to give evidence in these proceedings on behalf of all three defendants. In that regard, counsel referred to the third defendant having provided a power of attorney to the first defendant which, amongst other things, empowered the first defendant to conduct legal proceedings on behalf of the third defendant. Any power granted by the third defendant to the first defendant in that regard would not extend to giving the first defendant an entitlement to give evidence on behalf of the third defendant, in the sense that the first defendant was purporting to give evidence of factual matters known only to the third defendant. Any such evidence must be hearsay for the purposes of the ENULA.

4. The fact that the third defendant executed a power of attorney in favour of the first defendant does not provide a legitimate explanation for the failure of the third defendant to give evidence.

5. I am satisfied that I am entitled to draw an inference from the failure of the third defendant to give evidence that his evidence would not have assisted the defendants in these proceedings. In particular, it would not have assisted them in their case regarding their understanding of the transactions to which they were parties. I do not draw any inference that his evidence would have been “affirmatively damaging” to the case presented by the defendants.[3]

   Failure of the defendants to call other witnesses

6. There were three other witnesses who were identified as witnesses who may have been expected to be able to give relevant evidence for the defendants and whose absence was not explained. The first two such potential witnesses may be considered together. These persons were Ms Meggsie Muis and Mr Trevor Tschirpig, both of whom were licenced conveyancing agents at Tschirpig Conveyancing, who acted for the defendants in negotiating the Variation Deed and Deed of Performance Guarantee with the representatives of the plaintiff.

7. As the plaintiff submitted, these persons could be expected to have direct knowledge of these transactions, what instructions were given to them and by whom, and what explanations of the nature and effect of the documents were given to the defendants.

8. Ms Muis and Mr Tschirpig are clearly persons who could give relevant evidence. They are persons that the defendants would be expected to call as witnesses. There has been no explanation provided for their failure to give evidence. I am satisfied that I am entitled to draw an inference from the unexplained failure of the defendants to call these witnesses that their evidence would not have assisted the defendants in these proceedings. In particular, it would not have assisted the defendants in their case regarding their understanding of the transactions to which they were parties. I do not draw any inference that their evidence would have been “affirmatively damaging” to the case presented by the defendants.

9. The third potential witness, Sandra Lenz, was the first defendant’s conveyancing agent on the proposed sale of the Muirhead property to third parties in late 2020. As such, it may be expected that she is a person who would have been responsible for arranging the settlement of the contract for sale of that property. This would have included ensuring that the necessary documents were completed, including ensuring that the plaintiff provided a notice of discharge of the mortgage which the plaintiff held over the Muirhead property. Ms Lenz could also be expected to be able to testify as to her dealings with the first defendant, instructions that she received from the first defendant, and the reason why the contract did not proceed to completion.

10. There has been no explanation provided for the failure of the first defendant to call Ms Lenz to give evidence in these proceedings. I am satisfied that I am entitled to draw an inference from this unexplained failure of the first defendant to call Ms Lenz that her evidence would not have assisted the first defendant in these proceedings. I do not draw any inference that her evidence would have been “affirmatively damaging” to the case presented by the defendants, and in particular the first defendant.

    Credibility of the first defendant

11. The case for the defendants was based upon the evidence of the first defendant together with documents that came into existence at around the time of the transactions in question. There can be no doubt that the first defendant was an extremely important witness for the defence. As such, her credibility was very much in issue. I formed the view that the first defendant was an unsatisfactory witness with regard to critical aspects of her evidence. In particular, I formed the view that her evidence regarding her understanding of the transactions and documents which lie at the heart of these proceedings was either untruthful or unreliable. I will deal with this in the course of my reasons.

    The evidence for the plaintiff

12. On behalf of the plaintiff, the following affidavits were read:

    ·Margaret Castronova sworn 6 September 2022, 18 December 2023 and 2 April 2024;

    ·Cassandra Emmett sworn 29 August 2022 and 13 December 2023;

    ·Nadia D’Souza sworn 13 December 2023 and 2 April 2024; and

    ·Pipina Papazoglou sworn 12 December 2023.

13. The case for the plaintiff relied mainly on the contemporaneous documents placed into evidence. The plaintiff was cross-examined. It was submitted that her evidence was unsatisfactory, that she tried to avoid answering questions and at times gave conflicting answers. The plaintiff is 84 years old and it was clear to me when she gave her evidence that she was easily confused. It was also clear that she had relied to a great extent on her lawyers and conveyancing agents in the transactions the subject of these proceedings.

14. I accept that the plaintiff was, at times, argumentative and dismissive of questions asked in cross-examination. It was clear that she had little patience for what she perceived to be irrelevant questioning in what was, for her, a straightforward matter. I observed the plaintiff and counsel for the defendants to be at cross-purposes on occasion during cross-examination. I did not form the impression that the plaintiff was being dishonest or attempting to mislead me. When questions were explained to the plaintiff, her evidence in cross-examination on significant issues was consistent with the contents of her affidavits.

15. I have sympathy for the frustration displayed by the plaintiff. She was at all times the wronged party. In addition, she acted with commendable restraint and even generosity in her dealings with the purchasers. It must have been particularly galling for her to be subjected to allegations of having acted unfairly towards them.

16. Both Cassandra Emmett and Nadia D’Souza were straightforward and honest witnesses. I have no hesitation in accepting their evidence.

17. Pipina Papazoglou is a lawyer who was retained by the plaintiff to prepare a discharge of mortgage for the Muirhead property when the first defendant proposed selling that property. I have no hesitation in accepting her evidence. She was simply retained by the plaintiff for the purpose of preparing the discharge, and no other involvement in these transactions was alleged.

18. Regrettably, counsel for the defendants suggested to Ms Papazoglou that she had embellished her evidence to assist the plaintiff. This suggestion was based on material contained in Ms Papazoglou’s affidavit, which was more extensive than her file notes of the same conversations. This was an entirely inadequate basis for an allegation of dishonesty and perjury to be levelled against anyone, let alone a legal practitioner. It was an improper allegation which should not have been made.

The chronology of events

1. It was not in dispute that on or around April 2017, the purchasers became aware of the possibility that the plaintiff may be willing to sell the Fannie Bay property. There was a minor dispute between the parties as to how the purchasers became aware of that fact, but it is not an important issue. There seems to be no dispute that the purchasers were introduced to the property by Tim Carew, a friend of theirs, who was also an employee of the plaintiff. There was a dispute between the parties as to how the purchase price of $2,000,000.00 was agreed upon, with the first defendant testifying that Mr Carew told her that this was the selling price and that it was not negotiable. For the reasons that follow, I am also satisfied that this is not an important issue.

2. In her affidavit of 8 March 2024, the first defendant deposed to her background. She has lived in Darwin for more than 40 years, and described herself as a businesswoman. She married the third defendant in October 2018, and before that they were in a de facto relationship. For the last five years she has conducted a catering business, having taken over management of that business from other family members in July 2018.

3. Prior to taking over management of that business, the first defendant was employed by the West Arnhem Regional Council for six years as a Senior Project Manager, in charge of managing their commercial portfolio which also included property management.

4. The first defendant was a real estate agent from 1989 to 1992, working for Nationwide Realty and Regent Realty. During that time, she was a Real Estate Institute of the Northern Territory agent’s representative and qualified as such. From 1996 to 2006, she spent 10 years working for Territory Housing as a Tenancy Manager and Area Manager for public housing. From 2007 to 2015 she was a Senior Property Consultant for the Northern Territory Government Commercial Property Division. In her affidavit sworn 8 March 2024, the first defendant stated:

   I have been investing in real estate since 1989. Since then I have bought and sold well over 20 properties. I study, follow and keep abreast of the real estate market in Darwin mainly, for the purpose of buying and selling real estate. I am still active in the property industry. My area of expertise lies in knowing the real estate market and the demand for it.

5. The first defendant is not uneducated. Her history of training and working as a real estate agent’s representative and having bought and sold “well over 20 properties” demonstrates that she was not an unsophisticated buyer when she entered into the purchase of the Fannie Bay property. The first defendant had experience, and claimed expertise, in the Darwin property market at the time that the purchase of the Fannie Bay property was negotiated. The only rational inference from the course of events leading up to the purchasers entering into the Contract is that the first defendant, at least, considered $2,000,000.00 to be a fair market price. That is the case no matter who suggested the figure of $2,000,000.00.

6. The Contract was executed by the purchasers on 21 August 2017. Both the plaintiff and the purchasers used the services of conveyancing agents for this transaction. In the Northern Territory, “conveyancing agents” are obliged by law to use a standard form of contract for the sale and purchase of land.[4] The Contract was in that standard form. The purchasers employed Ms Muis of Tschirpig Conveyancing as their conveyancer and the plaintiff employed Ms Gaby Vita of Aquarius Conveyancing as her conveyancer.

7. The terms of the standard form of contract provide that the deposit paid by a buyer under the contract will be held by a “stakeholder” pending completion of the contract, at which point it vests in the seller. As I understand it, the stakeholder is usually the seller’s real estate agent and the deposit is held in a trust account pending completion of the sale.

8. In the present case, the Contract at Item F of the Reference Schedule nominated the amount of the deposit as $100,000.00. The Contract, however, did not provide for the deposit sum to be held by a stakeholder pending completion. Special Conditions were agreed between the parties and incorporated into the Contract. The first such Special Condition provided that Clause 12 of the standard form of contract did not apply. This was a clause relating to the seller providing a building status report. It is unnecessary to consider this Special Condition further.

9. The significant Special Conditions are conditions 2 and 3, which provided:

   2.    Upon the Buyer providing written confirmation to the Seller’s conveyancer that this Contract is unconditional in all respects, the Seller agrees to allow the Buyer to take early possession of the property in accordance with the terms of clause 4 herein.

   3.    Upon the Buyer providing written confirmation to the Seller’s conveyancer that this Contract is unconditional in all respects, the Buyer hereby agrees that the deposit (as set out at Item F herein) will immediately be released to the Seller for her use.

10. Clause 4 of the Contract provided for the purchasers to take possession of the Fannie Bay property prior to completion. The purchasers were permitted to occupy the property as licensees subject to conditions set out in the clause. The purchasers were not required to pay a licence fee, and were only required to pay outgoings in respect of the property and to keep the property fully insured.

11. The Contract nominated the date for completion as on or before 12 December 2018. It is probable that the reason the parties agreed on Special Condition 3, permitting the release of the deposit to the plaintiff for her use pending completion, was the extended settlement period provided for by the Contract.

12. The terms of the standard contract provided for interest to be payable by a party in default in performance of their obligations under the contract. The terms of the standard contract were unaffected by any Special Conditions in the present Contract. Clause 17.1 of the Contract provided for interest to be payable by the purchasers in the event that the Contract was not completed within two working days after the nominated date for completion. Clause 17.1 provided:

    17.  INTEREST ON LATE PAYMENTS

    17.1If for any reason other than the neglect or default of the Seller:

    (a)this Contract shall not be completed within 2 working days after the date for completion, then the Buyer shall pay interest at the rate specified in Item N on the whole of the purchase price from the date for completion until and including the date on which completion actually takes place; or

    (b)(Not applicable)

13. The reference to Item N in clause 17 is a reference to Item N in the Reference Schedule to the Contract. Item N provided that the rate of default interest was “12% simple interest per annum”.

14. On 21 August 2017, the purchasers paid the $100,000.00 deposit. In September 2017, the purchasers were provided with the keys to the Fannie Bay property and took possession of that property. They did not, however, commence to occupy the property until January 2018.

15. From the time that the purchasers commenced occupation of the property, they undertook what the first defendant referred to as “renovations” to the property. In the present proceedings, the purchasers maintained that they spent over $100,000.00 renovating the property. They were able to provide invoices with respect to the following works:

No	Work done	Cost	Date of invoice	Service Provider
1.1	Internal Painting, rust treatment on balconies and external ceiling	$14,000	23 March 2018	G & J Painters
1.2	Replace AC in Downstairs living room, and (bedroom=B) B3, B4 on left of hallway	$5,346	02 Feb 2018	North Australia Electrical
1.3	Replace clips on roller doors	$550.00	May 2018	Arafura Roller Door Services
1.4	Replace AC in B1	$1,315	5 July 2018	North Australian Electrical
1.5	Install security screens to side and back entrance, B1 and loungeroom	$4,121	9 Nov 2018	Dabsco
1.6	Replace AC in B2	$1,540	19 Mar 2019	North Australian Electrical
1.7	Replace 2 toilet suits and other plumbing	$2,453	6 Feb 2019	Absolute Plumbing
1.8	Replace Solar Hot Water & replace taps	$380	20 Aug 2019	Absolute Plumbing
1.9	Replace AC upstairs lounge and kitchen	$6,116	24 Jan 2020	North Australian Electrical
1.10	Handyman to patch wall and repair doors and cupboard door slats	$2,130	03 Aug 2020	JT Construction (NT) Pty Ltd
1.11	Remove trees after cyclone Marcus 14 March 2018	$11,500	15 April 2018	FR Tiling Services
1.12	Gardening services to maintain the garden	$4,320	2018 to 2020	FR Tiling Services
1.13	Pool servicing to maintain the pool in the garden	$4,227	2018-19	Fig Leaf and Darwin Fibreglass
1.14	New irrigation Work to water the garden	$3,450	17 August 2018	FR Tiling Services
1.15	Replace old bug lights with LED lights throughout house	$4,500	August 2018	FR Tiling Services
1.16	Install/replace sensor security lights – After attempted break in	$1,400	May 2020	FR Tiling Services
Total	$67,348

1. Clause 4.1(e) of the Contract provided that the purchasers’ right to occupy the property on licence was conditional on them “keeping the property in good repair having regard to its condition at the possession date”. A further condition was found in clause 4.1(d), which provided:

   (d)     the Buyer shall not let or part with possession of or make any structural alteration or addition to the property or do anything to or upon the property which would cause its value to diminish.

2. By an email sent at 3.13 pm on 6 December 2018, Mr Trevor Tschirpig advised Ms Gaby Vita that the purchasers were “not in a position to complete this matter on the 12th December 2018”. Mr Tschirpig stated that the purchasers “have been advised to seek an extension to the settlement date to on or before June 30, 2019”.

3. By an email sent to the purchasers’ conveyancer at 11.39 am on 7 December 2018, the plaintiff’s conveyancer, Ms Vita said:

   My client has plans in place for the usage of the funds from the sale and the significant delay in settlement will incur substantial cost to her.

   My client has instructed me that IF she agrees to the extension, she would need to impose some conditions:

   1.    That the buyer pay a further non-refundable deposit of $1,000,000.00 to the Seller for her own use (in addition to the $100,000.00 already paid).

   2.    That default interest at 12% will be imposed on the balance outstanding ($900,000.00) and this additional amount will be adjusted and paid to the seller at settlement.

   3.    If completion is not achieved by Friday 28 June 2019, the buyer confirms that the $1,100,000.00 paid to the seller will not be refunded and that the buyer may not make any claim against the seller.

   4.    That in the event that the buyer is not able to complete the contract by 28 June 2019, the buyer must vacate the property by 31 July 2019. In this event, the buyer must hand the property back to the seller in good condition.

   5.    That all other terms of the contract and arrangements in place between the seller and the buyer (including, but not limited to, payment of the outgoings, insurance and property maintenance) remain in effect.

1. The purchasers’ conveyancer responded by email at 4.22 pm the same day:

   My Clients are unable to meet the terms [in the earlier email]. If my Clients had funds in the sum of $1,000,000.00 they would be able to complete on the 12th.

   My Clients counter offer with a property “trade in.” The property is known as the Acacia Hills Caravan Park which I am instructed has a UCV of $960,000.00. Settlement could then proceed shortly thereafter.

   My Clients would like the following be known:

   ·     the property, the subject of this matter, has been valued at $1,680,000.00,

   ·     my Clients operation of the business known as Uncle Sams commenced on 16th July 2018 so trading figures are limited and,

   ·     the sale of two other properties my Clients have on the market have fallen through.

2. By email sent at 4.54 pm the same day, Ms Vita replied:

   My client does not accept your clients counter offer (she does not want to own a Caravan Park).

   My client will look at other options over the weekend and get back to me with further instructions next week.

3. By an email sent to the purchasers’ conveyancer at 1.22 pm on Monday, 10 December 2018, Ms Vita said:

   My client does not accept your client’s offer of a property “trade in”.

   I am instructed to put some other options forward for your client’s consideration:

   1.    Extend the date for completion until 28 June 2019 with default interest @12% pa to be imposed in accordance with the terms of the contract (with all current arrangements regarding payment of the outgoings/maintenance remaining as is).

   2.    Extend the date for completion by 12 months, with your client to pay a rent/license fee at current market rates (my client thinks around $7000.00 per month) plus default interest @12% pa.

4. On 11 December 2018 at 2.40 pm, the purchasers’ conveyancer responded, effectively “cutting and pasting” a response from the purchasers themselves, which stated:

   Looking at either options poses great disadvantages to us financially as the outcome of the currently situation was not anticipated nor was it indented to happen this way. When Danny and I entered into this contract to purchase the property, we fully disclosed to the vendor that we will require to sell a couple of properties to facilitate this.

   One of the factors that attributed to our problems in selling the properties is the continual decline in Darwin’s property market which in turn the bank has also tighten their lending.

   We moved into this property at the end of January and during this time we have carried out improvement to the property at our own cost which are:

   ·     Rust treatment of all balcony and repaint all rails

   ·     Replace ageing life fitting thought the house with LED lights as some are hard-working and couldn’t be repaired;

   ·     Replaced most of the split system air-conditioner with the same brand “Daikin”;

   ·     Installed crimsafe to the remaining of the doors and windows;

   ·     Removes fallen trees from cyclone Marcus as well as trees identified by arborist which has termite damage;

   ·     Internal paint;

   ·     Replace toilet suites;

   ·     Replaced pool fencing panels which are rusted beyond repair.

   It is with much regret that we couldn’t settle on the property due to reasons we disclosed in our previous email so we are asking if the vendors will reconsider imposing the 12% penalty as this will put us in further financial strain.

   Will your client reconsider the default interest? (This last sentence appears to have been added by the purchaser’s conveyancer)

   (Spelling and grammar as per original)

5. At 2.50 pm the same day, Ms Vita replied:

   It should be noted that my client is now at a considerable financial disadvantage as she had committed the funds from the sale elsewhere. This will be ongoing and accruing exponentially for the duration of the delay and until settlement actually takes place.

   I will seek instructions and get back to you.

6. On 7 January 2019, Ms Vita emailed the purchasers’ conveyancer stating:

   My client has reviewed her position regarding this matter.

   As previously advised, the lengthy extension to the date for completion requested by your client will cause my client financial difficulties. Whilst my client is very keen to find a resolution, she cannot extend the date for completion without receiving financial compensation.

   My client has advised that she would be willing to extend the date for completion until 2 September 2019 if your client agrees to pay default interest at the rate of 7% pa. All other arrangements currently in place regarding early possession are to remain as is.

   I look forward to receiving your response.

7. In her affidavit of 18 December 2023, the plaintiff deposed to a telephone conversation with the first defendant on the weekend of Friday, 18 January 2019. The plaintiff stated that in that conversation, the first defendant asked the plaintiff to extend the settlement date to September 2019 so that the purchasers would have enough time to sell their two properties and be in a position to purchase the Fannie Bay property. The plaintiff stated that the first defendant told her that the purchasers were very keen to settle on the purchase of the Fannie Bay property.

8. By email sent at 10.31 am on 24 January 2019, the purchasers’ conveyancer forwarded the contents of an email which she had received from the purchasers to Ms Vita. The contents of the purchasers’ email was:

   Danny and I like to take this opportunity to thank Margaret for taking the time to speak with me over the weekend and at the beginning of the week. We express my sincere gratitude to Margaret for her patience and understanding in regards to the delay in the settlement of the property.

   During the course of the conversation I reiterate that I am committed to the purchase and have now listed my 2 properties with another agent as well as having the flexibility to also advertise to sell privately. As both the properties I have for sale is unencumbered, as soon as the sale of one of the property is sold the proceed of the sale will go directly to the vendors as further deposit/towards the purchase.

   If both properties sold, then settlement will take place. Margaret and I agreed to the settlement of September 2019. I will continue to pay the following expenses till settlement:

   ·     Water

   ·     Council rates

   ·     Twice monthly pool maintenance

   ·     Ongoing maintenance of the property

   ·     Twice monthly grounds maintenance

   ·     Any other cost associated with this property.

   I have recently undertaken the following maintenance:

   ·     Replacement of 2 toilet suites

   ·     Service of the solar hot water service

   ·     Replace seal/worn fitting on taps

   (Grammar as per original)

9. In late January 2019, the plaintiff retained the firm of HWL Ebsworth lawyers to make sure that any agreement which she reached with the purchasers to extend the settlement date was properly documented. The plaintiff directed Ms Vita not to have any further engagement with the purchasers’ conveyancer.

10. On 11 February 2019, the plaintiff’s lawyers wrote to the purchasers’ conveyancer stating:

    ·     the plaintiff rejected any suggestion which may have been intended in the email of 24 January 2019 that the plaintiff had reached any agreement with the purchasers to vary the Contract;

    ·     the plaintiff had not at any time offered to waive in full the interest payable by the purchasers, which was continuing to accrue at a rate of over $650 per day; and

    ·     the proposal advanced by the plaintiff’s conveyancer by email on 7 January 2019 had not been accepted by the purchasers and was now withdrawn.

11. The letter went on to say that the plaintiff’s current position was that she offered to vary the Contract on the following terms:

    1.    That the date for completion (Item H of the Contract) be extended to on or before 2 September 2019;

    2.    That the purchasers pay default interest at a rate of 7% per annum from 12 December 2018 until settlement occurs, which must be paid on a monthly basis in arrears between the date of the letter and settlement (at $11,666.67 per month, such that the sum of $23,333.34 is due 12 February 2018, and a further $11,666.67 on each 12th day of the month);

    3.    That the purchasers immediately pay all outstanding outgoings on the property and confirm that outgoings are up-to-date;

    4.    That the purchasers provide security for the performance of the Contract by way of registered first ranking mortgages over their current properties. The purchasers were requested to provide details and advertised prices of their properties;

    5.    That all other provisions of the Contract remain in force.

12. The letter advised the purchasers’ conveyancing agent that if these conditions were accepted by the purchasers, the variation to the Contract must be recorded in writing in a Deed of Variation signed by the parties, and that no binding variation agreement would exist until such a deed was entered into. The letter required a response by no later than close of business Monday, 18 February 2019. The letter concluded that if agreement was not reached “our client will need to consider her options to terminate the Contract for repudiation or breach and she will be entitled to damages. Further, your clients will be required to move out immediately upon termination”.

13. In her affidavit of 8 March 2024, the first defendant said that she was “surprised and confused” by this letter, as she believed that she and the plaintiff were going to reach an agreement to extend the date for completion by discussion.

14. A file note produced under subpoena by Tschirpig Conveyancing records short notes of a telephone conversation between Ms Muis and the first defendant. It reads “AOT Fatima-$700.00 per week. $8K paid to sellers account. Not keen to allow properties to be mortgaged”.

15. By an email sent at 11.54 am on 26 February 2019, the purchasers’ conveyancer, Ms Muis, responded to the letter from the plaintiff’s lawyers:

    My clients are extremely disappointed at not being in a position to settle this matter and are doing everything they can to get this resolved. They are VERY appreciative of the sellers patience to date.

    They are maintaining the house and have spent approximately $100K on improvements while they have been in possession.

    They have addressed the points noted as per your correspondence of 11 February 2019.

    1.    They agree to the settlement on 02 September 2019;

    2.    They are simply not in a position to pay the default interest at $11,666.67 (7%) monthly but have offered a licence fee of $700.00 per week which they believed to be a market rent.

    3.    A deposit of $8000 was made direct to the seller today to cover rates payments and other outgoings. The buyers were not aware these amounts were outstanding or they would have paid earlier. They still have regular pool maintenance, see attached latest received. The house and garden is maintained and they are happy to take some photos for the seller.

    4.    The caravan park is still on the market with Acacia Realty [a link to the website of that agency was included]. 28 Bridge Street is for sale with the developer. As there are covenants on the Title the property is not able to be listed with an Agent, however approval to sell privately has been given.

    5.    Agreed.

    (The reference to 28 Bridge Street is clearly a mistake and should be a reference to 38 Bridge Street)

16. From this email, it is apparent that the purchasers agreed to the proposal put forward by the lawyers for the plaintiff to the extent that settlement would be on or before 2 September 2019 and that the provisions of the Contract, including early possession provisions, would remain in force during any extension. The purchasers also addressed the requirement that they pay outstanding outgoings on the property. The purchasers stated that they were unable to meet the requirement that they pay default interest at 7% monthly. The purchasers simply did not respond to the requirement that they provide first ranking mortgages over their properties as security for their performance of the Contract.

17. On 13 March 2019, the plaintiff’s lawyers served on the purchasers’ conveyancer a Notice to Complete, requiring the purchasers to do all things necessary to complete the Contract by 5.00 pm on 1 April 2019. The letter accompanying this Notice advised the purchasers that if they failed to comply with the Notice, the plaintiff would terminate the Contract. The letter also advised the purchasers that if the Contract were terminated, the licence granted under the Contract permitting the purchasers to occupy the property would also be terminated and the purchasers would be required to immediately vacate the property. Finally, the letter noted that the plaintiff understood that alterations had been made to the premises by the purchasers without the plaintiff’s consent and reserved the plaintiff’s right to seek damages for rectification or repair if the Contract were terminated.

18. By a second letter dated 13 March 2019 and forwarded to the purchasers’ conveyancer, the plaintiff’s lawyers noted that a Notice to Complete had been served requiring completion of the sale by 1 April 2019, failing which the Contract would be terminated. The letter noted that the proposal to resolve the matter made by the plaintiff by email on 11 February 2019 had not been accepted in full by the purchasers. The letter set out the plaintiff’s final position, with a statement that if the terms were not agreed to and a deed of variation signed prior to 1 April 2019, the Contract and licence would be terminated. The final proposal advanced by the plaintiff was:

    1.    Completion to occur on or before 2 September 2019;

    2.    The plaintiff would reduce the default interest rate payable under the contract to 7% per annum. If, however, the purchasers paid $5000.00 per month in advance to the plaintiff for the months of January 2019 through to September 2019 on account of that default interest and settles by 2 September 2019, the plaintiff would waive the balance of the default interest accrued until completion. The first instalment of $15,000.00 in respect of the months January, February and March were to be paid on execution of the deed of variation to the Contract and subsequent instalments were payable on the first day of each calendar month thereafter;

    3.    The purchasers must provide security for their performance of the Contract by way of first ranking mortgages over both the caravan park and vacant land at 28 Bridge Street;

    4.    The purchasers must pay all outstanding outgoings on the property from the date of execution of the Contract until and including settlement; and

    5.    The purchasers must cease any further improvements or alterations to the property.

    (The reference to 28 Bridge Street is clearly a mistake and should be a reference to 38 Bridge Street)

19. By an email sent on 19 March 2019, the purchasers’ conveyancer advised the plaintiff’s lawyers that the purchasers were considering the offer contained in the letter of 13 March 2019 and will respond within a couple of days. By email dated 21 March 2019, the purchasers’ conveyancer informed the plaintiff’s lawyers that the purchasers “will proceed as proposed in your correspondence of 13 March 2019”. The email requested that the plaintiff’s lawyers provide a deed for signature by the purchasers.

20. In her affidavit of 8 March 2024, the first defendant described this process of negotiation as follows:

    It was not a discussion between equals. We were the buyers in default who were unable to complete the purchase despite being given a long time to complete. We were economically inferior to the plaintiff.

    …

    It seemed to us that we had no option but to agree to the terms set out in the letter dated 13 March 2019. So, we did.

21. On 27 March 2019, the purchasers’ conveyancer provided to the plaintiff’s lawyers title searches for the Acacia Hills and Muirhead properties. These documents, for the first time, put the plaintiff on notice that there was a pre-existing first mortgage registered over the Acacia Hills property.

22. By email sent later that day from the plaintiff’s lawyers to the purchasers’ conveyancer, a draft Deed of Variation was provided to the purchasers. In the email, it was noted that the title search revealed that the Acacia Hills property was already subject to a mortgage registered against it in favour of the National Australia Bank (‘NAB’). The plaintiff’s lawyers accordingly requested a current bank statement showing the loan balance and equity in the property. The email stated “We require proof of the current value of the property”. The email noted that the plaintiff had not had an opportunity to review the draft deed, and the purchasers’ conveyancer would be advised if the plaintiff required any changes to the draft deed. The first defendant accepted that she received the draft variation deed and the request for further information on 28 March 2019.

23. On 28 March 2019 at about 9.56 am, the plaintiff’s lawyer, Ms Nadia D’Souza, had a phone conversation with Ms Muis in which Ms D’Souza stated “We were not aware that there was already an existing mortgage over the caravan park property”. Ms Muis said “I’m not sure how long it will take to get information from Fatima, sometimes she is quick and other times she takes a few days. I will forward your email to Fatima and hopefully that will make her respond quickly. Leave it with me, I will get you the information as soon as I can. We need it quickly because we need to sign the variation deed by this Friday”.

24. Later that day, at about 4.02 pm, Ms D’Souza sent an email to Ms Muis asking whether Ms Muis had any further update on when the plaintiff’s lawyers could expect to receive details of the NAB mortgage.

25. On Friday, 29 March 2019, the first defendant spoke directly to the plaintiff, presumably by telephone. As a result of that conversation, the plaintiff agreed to accept a second mortgage over the Acacia Hills property. A further draft variation deed was provided to the purchasers later that day, which included a new clause that required the second defendant company to provide a deed of performance guarantee. The first defendant stated that a draft of the deed of performance guarantee was not provided at that time.

26. At 9.14 am on 29 March 2019, Ms Muis emailed Ms D’Souza stating:

    My client has just called and advised that she spoke to your client 20 minutes ago.

    Your client is apparently happy to have a second mortgage on the Acacia Hills property. My client’s advice is that there is no debt on the property it is being held as security for another property.

    I am also advised that there is now an amended Deed.

27. At 2.45 pm the same day, Ms D’Souza forwarded a copy of the amended draft variation deed to Ms Muis. This document was conveniently marked-up to allow the purchasers to identify the amendments to the original draft deed. The amended draft variation deed provided for security by way of a first ranking mortgage to be given to the plaintiff over the Muirhead property, and a second ranking mortgage over the Acacia Hills property. In addition, it required additional security to be provided by 30 April 2019 by way of a deed of guarantee of performance by the third defendant.

28. At 3.00 pm the same day, Ms Muis forwarded the amended draft variation deed to the purchasers. In the email to which the amended draft variation deed was attached, Ms Muis said:

    Can you please peruse the Deed carefully and if you are unsure of anything obtain legal advice.

    We are under extreme pressure to have this Deed signed, witnessed and returned by close of business today. Given the time of day, I have requested an extension until Monday but we have not had a response as yet.

29. At 4.10 pm that day, Ms D’Souza notified Ms Muis that the plaintiff had approved an extension until close of business Monday 1 April 2019 to arrange execution and exchange of the deed.

30. At 11.38 am on Monday, 1 April 2019, Ms Muis emailed Ms D’Souza asking whether there was a final draft of the deed for the purchasers to peruse before signing. At 1.29 pm, Ms D’Souza responded to the effect that the amended deed would be provided as soon as possible and, in the meantime, Ms D’Souza would seek instructions from the plaintiff for a further extension. The email went on to say:

    In your email dated 29 March, you advised that there is no debt against the caravan park and that it is being held as security for another property. Our client still requires proof and we ask that the buyers provide us with a current statement from their bank. We also still require proof of the current value of the property.

1. Ms Muis passed this information on to the purchasers by email at 1.31 pm that day. Ms Muis asked the purchasers to provide the requested material as soon as possible.

2. At 3.23 pm that day, Ms Muis emailed Ms D’Souza asking what the plaintiff would accept as proof of value, and advising that if a valuation was required, it could take some time. At 2.34 pm Ms D’Souza replied:

   Does your client have a bank valuation or any bank correspondence which mentions the property’s value? Or any written communication of the listing price with their sales agent or an appraisal from a real estate agent.

   If your clients are trying to sell the property, there is likely some documentary evidence of the price that they are seeking or otherwise indicating what the property is worth?

3. At 4.33 pm that day, Ms D’Souza emailed Ms Muis saying that the plaintiff’s lawyers had sought instructions from the plaintiff for a further extension of time to execute the deed. Ms D’Souza said “While we have not heard from our client, we expect that they will grant the extension”. The email concluded by stating that revised drafts would be provided the following day.

4. By email sent at 2.10 pm on 2 April 2019 to Ms Muis, Ms D’Souza informed the purchasers of the following:

   We attach the revised Deed of Variation for your review (DOV). We propose to additionally annex the following documents to the Deed:

   ·     Form 39 Mortgage – caravan park

   ·     Form 39 Mortgage – 38 Bridge Street

   ·     Deed of Performance Guarantee

   The mortgage shall be subject to the terms of the Memorandum of Common Provisions registered in dealing number 372255 (refer attached).

   Our client has confirmed an extension until close of business tomorrow, Wednesday 3 April 2019 to arrange execution and exchange of the DOV. You will see in clause 3.1(b) of the DOV that the mortgages and guarantee must be entered into on or before the date of the DOV. Can you confirm if the documents are in order or if any changes are required. Can you also advise if you have received any further information from your client regarding the value of the caravan park.

5. At 2.43 pm that afternoon, Ms Muis forwarded the above email to the purchasers together with the revised draft Deed of Variation. Ms Muis said in that email “I strongly recommend you obtain legal advice in relation to these documents before signing them – noting the time frame stipulated”.

[100]On 3 April 2019 at 11.34 am, Ms D’Souza had a telephone conversation with Ms Muis in which Ms Muis confirmed that she had received the email sent the previous day and had forwarded it to the purchasers. Ms Muis said that she had not heard anything from the first defendant at that time. Ms D’Souza asked whether she could go ahead and get the plaintiff to sign the Deed. Ms Muis responded “I’ve told my clients to get some legal advice because I won’t give them legal advice on the deeds. I’m not sure if they will be able to get legal advice so quickly.” Ms D’Souza then said “Well let me know if you would be seeking an extension as I will then need to get instructions.” Ms D’Souza said “I’ll call Fatima now and ask for an update.”

[101]At 2.41 pm that day, Ms Muis emailed Ms D’Souza saying:

My clients are happy to sign the documents but cannot do so until late this afternoon. They are going to our Coconut Grove office at about 5pm.

Can I please have an extension until close of business tomorrow to get this finalised.

[102]Ms D’Souza responded by email at 5.05 pm that day, advising that the plaintiff agreed to an extension until close of business on 4 April 2019. The email continued:

To assist with execution, we attach the following:

1.    Deed of Variation (with annexures) – print 1 copy and arrange signing on page 7 by both Danny and Fatima in front of a witness.

2.    Deed of Performance Guarantee (DOPG) – print 1 copy and arrange signing on page 9 by Danny in his capacity as sole director of Danium Investments Pty Ltd.

3.    Mortgage (38 Bridge Street) – print 2 copies double-sided and arrange signing by Fatima in front of a qualified witness. The witness must record their qualification, name and contact details.

4.    Mortgage (caravan park) – print 2 copies double-sided and arrange signing by Danny in his capacity as sole director of Danium Investments Pty Ltd.

Please note that we have added an additional clause 15 to the DOPG (and accordingly updated the index table) so that both deeds can be exchanged in counterparts by email. This was the only change made to the deed since our last draft.

[103]At 4.11 pm on 3 April 2019, Ms Muis forwarded those documents to the Coconut Grove office of Tschirpig Conveyancing, stating that they were new documents to be signed by the purchasers that afternoon.

[104]On 3 April 2019, the purchasers paid $15,000.00 to the plaintiff. The plaintiff claims that this sum was paid as the first default interest payment required by the Deed of Variation. The purchasers claim that this was a sum paid towards the purchase price of the Fannie Bay property.

1. By an email sent at 9.16 am on 4 April 2019, Ms D’Souza asked Ms Muis whether she was able to provide any further information regarding proof that there was no debt owing against the Acacia Hills property and proof of the current value of the property. Subsequently, at 10.38 am, Ms D’Souza sent a further email requesting a balance sheet for Danium Investments Pty Ltd to allow an understanding of that company’s assets and liabilities.

[106]Ms Muis replied at 2.10 pm that day providing a NAB bank statement for Danium Investments Pty Ltd simply showing a continuing debit of $600,000.00, which I understand to be the amount borrowed by the second defendant to purchase another property.

[107]At 3.14 pm on 4 April 2019, Ms D’Souza sent an email to Ms Muis saying:

Further to our discussion over the phone, our client has agreed to grant an extension until close of business tomorrow.

Can you urgently follow up your client for the requested information for our client’s review. Can you also provide us with a receipt for the further $5000 in respect of the April payment.

[108]The reference to “the April payment” in this email is clearly a reference to the sum of $5,000.00 default interest payable at the beginning of April 2019 in accordance with the agreed terms of the Deed of Variation.[5]

[109]By email sent at 4.37 pm on 4 April 2019, Ms Muis informed Ms D’Souza that her client (presumably the first defendant) travelled overseas that morning and would not return until the following Sunday. Ms Muis said that her client had advised her that the client would pay the extra $5,000.00 that same day, and that the accountants for Danium Investments Pty Ltd were working on a balance sheet. Ms Muis also said that her client would ask the agent who had the listing for the Acacia Hills property for a market appraisal.

[110]By letter dated 4 April 2019, Ms Muis forwarded the signed original Mortgages over the Muirhead and Acacia Hills properties to the lawyers for the plaintiff.

[111]It appears from the Deed of Variation that that document was executed by the purchasers on 5 April 2019. Similarly, it appears from the Deed of Performance Guarantee that it was also executed on 5 April 2019. These signed documents were, however, not provided to the plaintiff until 11 April 2019.

[112]At 4.14 pm on 5 April 2019, Ms D’Souza emailed Ms Muis asking whether she had received any further financial information for Danium Investments Pty Ltd or valuation information on the Acacia Hills property. At 5.47 pm that day, Ms D’Souza again emailed Ms Muis attaching the plaintiff’s counterparts of the Deed of Variation and Deed of Performance Guarantee both dated 5 April 2019. Ms D’Souza requested the purchasers dated counterparts in order to complete the exchange. Ms D’Souza repeated her request for “the Financial/valuation information” as soon as possible. She also required confirmation that $5,000.00 had been transferred to the plaintiff’s account in respect of the April payment.

[113]At 8.59 am on 11 April 2019, Ms D’Souza sent an email to Ms Muis requesting the counterparts of the Deed of Variation and the Deed of Performance Guarantee. Ms D’Souza repeated her request that confirmation be provided of the payment of $5,000 to the plaintiff’s bank account in respect of the April payment. Ms D’Souza also repeated her request for information as to the value of the Acacia Hills property and the financial situation of Danium Investments Pty Ltd.

[114]Ms Muis responded by email at 4.20 pm that day, attaching the signed Deeds. Ms Muis stated that she had not received any advice from her client regarding the deposit or the further information requested. Ms Muis stated that she would “chase them up again”.

[115]On 1 May 2019, the purchasers paid the plaintiff $5,000.00 which the plaintiff claims was paid in reduction of default interest under the Contract, as varied by the Deed of Variation.

[116]On 2 May 2019, the Acacia Hills and Muirhead Mortgages were registered.

[117]On 31 July 2019, the purchasers paid $20,000.00 to the plaintiff which the plaintiff claims was paid in reduction of default interest.

[118]On 13 August 2019, Ms Vita of Aquarius Conveyancing, acting on behalf of the plaintiff, forwarded an email to Ms Muis requesting an update from the purchasers on when they expected to be in a position to settle. On 26 August 2019, Ms Vita sent a further email to Ms Muis in the following terms:

My client has received a letter from your client requesting that a new contract be prepared in this matter allowing for settlement by the end of the year. Your client has advised my client that she has recently sold 2 properties. Before my client will go to the expense of having a new contract prepared, she would like evidence that your client has sold 2 properties.

Are you please able to provide an update in this matter?

1. It appears that no response was received to this email. The purchasers simply failed to complete the Contract by the extended completion date of 2 September 2019. On 11 September 2019, Ms Muis forwarded to Ms Vita an email from the first defendant stating that the purchasers had exchanged contracts to sell a property which they owned at Coomalie for $1,550,000.00, with settlement in December 2019. The first defendant said that the Muirhead property “is being signed this week and hope to settle beginning of October”. The first defendant went on to say “as the vendor Mrs Castronova have put (sic) a registered interest on the block, this will also needs (sic) to be dealt with before settlement”. The first defendant requested settlement on the Fannie Bay property be extended to 18 December 2019. It appears that the purchasers did not provide the information previously requested by Ms Vita.

[120]On 19 November 2019, the purchasers paid a further $10,000.00 into the plaintiff’s account which the plaintiff claims was for default interest.

[121]On 10 December 2019, the first defendant telephoned the plaintiff and asked her to agree to the settlement date being further extended to April 2020. On that same date the plaintiff instructed Ms Vita to prepare and issue a Notice of Default to the purchasers requiring them to settle on 24 December 2019.

[122]By email dated 17 December 2019, Ms Muis forwarded an email which she had received from the first defendant. The first defendant said that she had been in “remote homelands” without internet access. The first defendant said “Prior to leaving Darwin a couple of weeks ago I contacted the vendor to advise that I was not able to complete the sale as the sale of my property in Coomallie was not settling due to issue with the purchaser. A new sales contract was to be drafted to settle end to (sic) April 2020. I advised the vendors that I will continue to pay rent of $5000 per month till when I am able to settle and she seem ok with it.” Ms Muis asked whether the plaintiff would agree to extend the settlement date to the end of April 2020. I note that in these proceedings the plaintiff has taken issue with the assertion in this email that the purchasers had been paying $5,000.00 per month as “rent”.

[123]On 19 December 2019, the purchasers paid a further $5,000.00 into the plaintiff’s account which the plaintiff claims was for default interest.

[124]On 24 December 2019, the time for completion under the Notice of Default expired without completion occurring.

[125]On 17 February 2020 and 16 March 2020, the purchasers paid $10,000.00 (total $20,000.00) into the plaintiff’s account which the plaintiff claims was for default interest. On 5 May 2020, the purchasers paid a further $5,000.00 which the plaintiff claims was for default interest.

[126]On 15 May 2020, the plaintiff telephoned the first defendant and told her that she was considering terminating the Contract, and that if she did she would be putting the property back on the market on 1 July 2020.

[127]By email sent 22 May 2020, Ms Vita advised Ms Muis that if settlement on the Fannie Bay property was not completed by 30 June 2020, the plaintiff would terminate the Contract and place the property back on the market. The purchasers would then be expected to vacate the premises. Ms Vita asked when the purchasers expected to be able to complete the Contract.

[128]On 19 June 2020, the purchasers paid a further $10,000.00 into the plaintiff’s account which the plaintiff claims was default interest.

[129]On 6 July 2020, the Contract was terminated by the plaintiff by providing a Notice of Termination. On 31 July 2020, the purchasers vacated the Fannie Bay property.

[130]On that date, at 3.34 pm, Ms Muis emailed Ms Vita, saying:

I am advised that the seller has registered Caveats over some of my client’s properties.

Can you please confirm that those caveats will now be removed and advise when they have been.

[131]On 14 July 2020, there was apparently a telephone conversation between Ms Muis and Ms Vita. The only evidence of the content of that conversation is a file note prepared by Ms Vita which is in the following form:

“--caveats to be removed once P vacates.”

[132]On 27 August 2020, Ms Muis sent an email to Ms Vita regarding the Muirhead property, saying:

I note your client Margaret Castronova has a registered mortgage over this property.

Can you please action a discharge for this property and also any other property encumbered by the failed sale of 76 East Point Road.

[133]On 24 September 2020, the first defendant entered into a contract to sell the Muirhead property to third parties for $495,000.00 with a completion date set for 9 December 2020. The contract became unconditional on 25 November 2020.

[134]On Saturday, 10 October 2020, the Fannie Bay property was passed in at auction with no bidders. Subsequently, after further open inspections, an unconditional offer to purchase was made by BF for $1,350,000.00, which the plaintiff accepted. Contracts were exchanged on 27 November 2020.

[135]On 15 October 2020, Ms Muis sent a further email to Ms Vita saying “Just chasing up confirmation the Caveats have been removed.”

[136]On 26 November 2020, the plaintiff engaged Ms Papazoglou to prepare a discharge of the Muirhead Mortgage. In her affidavit, Ms Papazoglou states that she had the following telephone conversation with the plaintiff:

Plaintiff: I own 76 East Point Road and contracted to sell it to Fatima for $2 million back in 2017. Fatima paid a $100,000 deposit but then failed to complete the purchase and has eventually been evicted from the property. I have a mortgage over two properties belonging to Fatima which secure the amounts she owes me. I need to discharge the mortgage over one of those properties which is now being sold. Gaby Vita has recommended you to me. Are you able to prepare the discharge of mortgage for me?

Ms Papazogolou: Yes, I’m happy to act.

Plaintiff: Thank you. I have now sold 76 East Point Road for $1,350,000 but still own it until 30 December 2020 when that sale is to complete. Fatima owes me money and she agreed to give the mortgages over Fatima’s properties. HWL Ebsworth prepared the mortgages. Please call Gaby Vita who can fill you in on the background. Gaby acted for me when I initially sold the property to Fatima and now acts for the buyer of the property for which the mortgage is to be discharged.

[137]In her affidavit of 29 November 2022, the first defendant said that after the contract for the sale of the Muirhead property became unconditional, she was informed by her conveyancing agent, Ms Sandra Lenz, that “there were issues with the discharge of mortgage”. The first defendant deposed that Ms Lenz advised the first defendant to speak to the plaintiff directly.

[138]The first defendant stated that in early December 2020, well before the nominated settlement date for the sale of the Muirhead property, being 9 December 2020, she telephoned the plaintiff and informed the plaintiff that she was selling the Muirhead property. The first defendant said that she asked the plaintiff to discharge the mortgage over the property to enable the first defendant to proceed with the sale of the property. The first defendant stated that the plaintiff refused, saying that the sale proceeds of the Muirhead property would not cover what the first defendant owed her for the Fannie Bay property. The plaintiff told her that she did not want to discuss the matter any further and terminated the call.

[139]The plaintiff has denied refusing to discharge the Muirhead mortgage.

[140]On 8 December 2020, Ms Papazoglou telephoned Ms Lenz and discussed the settlement arrangements for the sale of the Muirhead property. In her affidavit, Ms Papazoglou deposed to the following conversation:

Ms Papazoglou: Hi Sandra. I act for Margaret Castronova who has a mortgage over a property owned by your client, Fatima. I have been instructed to prepare a discharge of the mortgage for an upcoming sale of the property by Fatima. When is the settlement scheduled for?

Ms Lenz: I have no idea. The buyers are keen to settle as soon as possible but Fatima hasn’t even signed the transfer yet and I’m having difficulties getting any instructions from her. She’s selling vacant land in Muirhead. She has consent from the Defence Housing Australia to sell the land as she had not complied with the registered Covenants to build a house on the land. The sale price is $540,000 which includes a buyer rebate of $48,203.88. The buyer only offered $500,000.

Ms Papazoglou: I’m instructed that the balance of the sale proceeds, once the usual conveyancing fees, rates and commission have been paid, are going to Margaret. Are you able to provide a draft settlement statement to me?

Ms Lenz: I’ll try, but as I said I’m having a lot of difficulties getting instructions and have had no contact from Fatima.

[141]On 10 December 2020, Ms Papazoglou was copied into an email from Gaby Vita, who was then acting for the purchasers of the Muirhead property, to Ms Lenz seeking an urgent update on when the first defendant would be in a position to settle. In her email, Ms Vita said that settlement was now overdue and the buyers needed settlement to go ahead as soon as possible.

[142]Ms Papazoglou attempted unsuccessfully to speak to Ms Lenz on Friday, 11 December 2020.

[143]At this time, the plaintiff was in Adelaide. On Monday, 14 December 2020, Ms Papazoglou sent an email to the plaintiff’s Adelaide solicitor attaching a discharge of mortgage form for execution by the plaintiff. About 1 ½ hours later, Ms Papazoglou received an email from the plaintiff’s Adelaide solicitor attaching a copy of the discharge of mortgage executed by the plaintiff. The plaintiff’s Adelaide solicitor stated that he would send the original documents to Ms Papazoglou by Express Post that afternoon.

[308]Having found that the terms of the Contract, the Variation Deed, the Deed of Performance Guarantee and the Mortgages are not void as alleged by the defendants, the plaintiff is prima facie entitled to relief for the defendants’ breaches of their contractual obligations. This is subject to determination of the allegation made by the defendants that the plaintiff failed to mitigate her losses, and also to resolution of the claims made by the defendants in the Counterclaim and Set-off.

Alleged failure by the plaintiff to mitigate her losses

[309]The defendants allege that the plaintiff failed to mitigate her losses in two ways:

a)by refusing to provide a discharge of the Muirhead Mortgage to enable the first defendant’s sale of that property to proceed; and

b)by delaying informing the defendants of the sale of the Fannie Bay property and her consequent losses, thus allowing default interest to continue to accrue.

[310]I do not accept that the plaintiff refused to provide a discharge of the Muirhead Mortgage and that this was the reason for the first defendant’s sale of that property not proceeding. It was not in the plaintiff’s interests to frustrate the first defendant’s sale of the Muirhead property. The plaintiff simply wanted the money owing to her by reason of the defendants’ defaults. On the evidence, this was most likely going to be achieved by sale of the Muirhead and Acacia Hills properties. The plaintiff had no motive to hold up the sale of those properties.

[311]In addition, there is the clear and incontrovertible evidence of Ms Papazoglou that she was engaged by the plaintiff on 26 November 2020 to prepare a discharge of the Muirhead Mortgage in anticipation of the sale of that property by the first defendant. It was the expectation of the plaintiff that the net proceeds of that sale would go to her in reduction of the defendants’ debt as is demonstrated by the conversation between the plaintiff and Ms Papazoglou on 26 November 2020. The actions of the plaintiff in engaging Ms Papazoglou to prepare the discharge of the mortgage is entirely inconsistent with an attitude on the part of the plaintiff that she was going to refuse to discharge the Mortgage.

[312]The defendants placed great weight on the following exchanges that occurred in cross-examination of the plaintiff:

Ms McLaren: Now, Ms Tjung says that there was a conversation she had with you in early December to late November 2020 where she asked you to discharge the mortgage over Muirhead property and you refused?... Yes, I wouldn’t refuse, that’s for sure.

And you said words to the effect, “No, I won’t”. When she asked you to discharge the mortgage, you said “No. What you’re getting for the sale of Muirhead won’t satisfy what you owe me”, or words to that effect. Is that right? ... Probably, something like that.

Now, Ms Tjung says that because you refused, she was not able to sell the property to her purchasers.

His Honour: Just before you go on. You understand that the proposition that is being put to you is that you refused to provide a discharge of mortgage over the Muirhead property to allow the sale of the Muirhead property to go ahead? … They’re two different – I wanted it discharged at the time of the sale, for sure.

Yes. But you…? … I wouldn’t discharge the mortgage until evidence of a sale was coming up.

All right? … Or the date set.

So you don’t accept the proposition, as I understand it, that you simply said, “no I’m not going to give you a discharge of mortgage”? … Correct. It was taken out of context. There could have been more in the sentence, but you can pick out just what you want out of the middle of it.

All right? … But not lift the mortgage on the only assets I’ve got.

Ms McLaren: Well, is it true that in a conversation with Ms Tjung, you said to her when she asked you to discharge the mortgage, you said to her “No, what you’re getting for that property is a lot less than what you owe me”? … I said what?

You said “No, what you’re going to get for that property is a lot less than what you owe me”, or words to that effect. Is that correct? … That would be correct, for sure.

His Honour: Again, I think it’s important that you make the witness understand that what is being suggested is that Ms Tjung got in contact with you in relation to the sale of the Muirhead property?... Muirhead, yes.

And said, “I’ve got a buyer who wants to buy it for x amount but we’ll need to get you to discharge the mortgage so that the purchase can go ahead”. And then you said, “No, I’m not going to give you the discharge of mortgage to allow the purchasers to go ahead because what you are going to get from that property isn’t enough”?... I understand what you said and that’s an incorrect statement. I will go back on the fact that I certainly would – if there was money coming in from Muirhead and that as one of the assets, then the mortgage on it would go, with the sale.

Yes?... The sale will not cover the outstanding debts that had incurred not just on the house or the property but all the legal costs that have gone through over three years – or four years. So it may come under, but I would have said “Yes, but it’s not going to cover the costs.”

All right. But do you agree with the proposition that has been put to you that you simply refused to provide a discharge of mortgage to allow that sale to go ahead?... I dispute that. If the sale is done. I think I’ve done it like 15 times in the last hour. The two go together – the sale and the mortgage together.

Ms McLaren: The question is, when it was asked of you, did you refused and say – “Oh no” – or words to that effect, “Oh no. What you’re going to get for that property is far less than what you owe me” or words to that effect. Did you say those words?... Well, yes, that would be right. But that didn’t stop the sale. You be careful how you word that one. I am still happy for Muirhead to get sold. Do that next week, I’m happy. With the mortgage you get the sale.

[313]It was apparent to me in the course of this portion of the cross-examination of the plaintiff that she was confused. I formed the opinion that the plaintiff accepted that she may have said to the first defendant, at some point in time, that she was not prepared to simply discharge the Mortgage over the Muirhead property. It was also clear to me that she was saying that she was prepared to discharge the Mortgage for the purpose of a sale of the property. When the proposition was put directly to the plaintiff that she had a conversation with the first defendant in which the first defendant said that she wanted the plaintiff to discharge the Muirhead Mortgage to enable a sale to take place and that the plaintiff had refused to provide a discharge for that purpose, the plaintiff was adamant that she would not have said that.

[314]In my opinion, the evidence given by the plaintiff accords with common sense. The plaintiff was not prepared to discharge the Mortgage over the Muirhead property unless there was a sale of that property with the proceeds of sale being paid to the plaintiff. I accept that it is possible that there was confusion in the conversation between the plaintiff and the first defendant on this issue, and that the first defendant may have come away from that conversation with the impression that the plaintiff was not prepared to discharge the Muirhead Mortgage to enable the sale to go ahead, but I am satisfied that this was not the intention of the plaintiff.

[315]In any event, I do not accept that any misapprehension on the part of the first defendant regarding the attitude of the plaintiff to providing a discharge of the Muirhead Mortgage to enable a sale of that property to take place was the cause of the failure of the first defendant to complete the sale of the Muirhead property.

[316]It is simply not credible that if the first defendant had met with a blank refusal by the plaintiff to provide a discharge of the Muirhead Mortgage to enable the sale of that property to take place, or she genuinely believed that to be so, she would not have told her conveyancing agent, Ms Lenz, that this was the case. The conversations which Ms Lenz had with Ms Papazoglou on 8 December 2020 and 14 December 2020 contain no suggestion that Ms Lenz had been told by the first defendant that the plaintiff was refusing to provide a discharge of Mortgage and that this was the reason for any delay in settlement. The statements made by Ms Lenz in those conversations make it apparent that by 8 December 2020, Ms Lenz had not been contacted by the first defendant to give instructions necessary to the settlement occurring on 9 December 2020.

[317]According to Ms Lenz, the first defendant had not, as at 8 December 2020, signed the transfer document, and a draft settlement statement had not been prepared. I am satisfied that settlement of the sale of the Muirhead property did not proceed on 9 December 2020 because the first defendant did not provide necessary instructions to her conveyancer and sign the necessary papers to allow the sale to be completed. There is nothing in these conversations to suggest that Ms Lenz understood there to be a problem with the plaintiff providing the discharge.

[318]It is also important to note that in the conversation between Ms Papazoglou and Ms Lenz on 8 December 2020, Ms Papazoglou informed Ms Lenz that she, Ms Papazoglou, had been retained by the plaintiff to prepare the discharge of the Muirhead Mortgage. There could be no reason for Ms Lenz not conveying that information to her principal, the first defendant. Even if the first defendant was, up to that date, under the misapprehension that the plaintiff was refusing to provide the discharge, that could not have been the case subsequently. It is simply unexplained why the first defendant did not give instructions to Ms Lenz to allow settlement to take place after 9 December 2020.

[319]The unexplained failure of the defendants, and particularly the first defendant, to call Ms Lenz to give evidence allows me to more safely conclude that the reason for the Muirhead sale not proceeding to completion was not due to any refusal by the plaintiff to provide a discharge of Mortgage or that the first defendant held a genuine belief that the plaintiff was refusing to provide the discharge.

[320]The defendants submitted that the discharge executed by the plaintiff did not arrive in Darwin until 17 December 2020, well after the nominated settlement date of 9 December 2020. This may be so, but this fact is not significant. First, the reason for settlement not proceeding on 9 December 2020 was that the first defendant had not signed the transfer, nor had she provided the necessary instructions to Ms Lenz to allow settlement to occur.

[321]Secondly, there was no reason why settlement could not occur on or after 17 December 2020 if the purchasers of the Muirhead property were not willing to settle until the original discharge was produced. The purchasers of the Muirhead property remained willing to complete the purchase.

[322]I also note that Ms Papazoglou gave evidence, which I accept, that she was never notified by Ms Lenz that the first defendant was in a position to proceed to settlement and setting a time and date for settlement to occur. It is therefore unsurprising that the first defendant’s conveyancer was not provided with the executed discharge of mortgage. Ordinarily, the discharge of mortgage would be produced at the time of settlement, and in the present case, no date and time for settlement was fixed because of the first defendant’s failure to provide instructions to Ms Lenz.

[323]I am satisfied that the plaintiff did not fail to mitigate her damages by refusing to provide a discharge of the Muirhead Mortgage to enable the sale of that property.

[324]The second way in which the defendants allege that the plaintiff acted unreasonably and failed to mitigate her losses was by not informing the defendants of the particulars of those losses within a reasonable time after the sale of the Fannie Bay property. It is not clear from the evidence exactly when the defendants were formally notified of the losses that the plaintiff claims she suffered as a result of the defendants’ breach of their contractual obligations.

[325]The first defendant did state that she had a conversation with the plaintiff on 11 March 2022 in which the plaintiff said that there was a shortfall of $650,000.00 on the sale of the Fannie Bay property together with interest at 12%. The plaintiff offered to accept $700,000.00 in full settlement of her claim. It is not clear whether that offer of settlement was in addition to the deposit of $100,000.00 or was inclusive of that sum. It is not necessary to resolve that issue in these proceedings. The Fannie Bay property sale to BF was completed on 21 December 2020. There seems to be no reason for the plaintiff not being able to calculate her losses within a couple of months of that sale.

[326]The plaintiff was entitled to charge interest under the Contract at 12%. A reasonable person in the place of the plaintiff, recognising that fact, would have advised the defendants of the calculation of her losses as soon as possible after the sale of the Fannie Bay property to give the defendants the opportunity to pay the sum claimed and to avoid further interest payments.

[327]In the present case, however, I am satisfied that any failure of the plaintiff to notify the defendants of the sum claimed within a reasonable period does not disentitle the plaintiff to the full amount of interest claimed under the Contract. This is so for two reasons. First, the evidence makes it probable that the defendants were not in a position to pay the damages. Secondly, the defendants’ approach to the present proceedings demonstrates that it is highly unlikely that the defendants would have accepted that the plaintiff had suffered any loss. As a consequence, any additional losses suffered by the defendants as a result of the plaintiff’s failure to immediately notify them of her losses have not been caused by any such failure.

The defendants’ Counterclaim and Set-off

[328]The first defendant claimed an entitlement to damages, which could be set-off against any damages she may owe the plaintiff, for whatever judgment sum and costs may be awarded against her in the Local Court proceedings brought by the third party purchasers regarding the failed sale of the Muirhead property. She also claimed an entitlement for damages for her own costs in defending those proceedings. For the reasons which I have given, I am satisfied that the sale of the Muirhead property did not proceed because of the failure of the first defendant to provide instructions to her conveyancing agent, Ms Lenz, and also to attend upon Ms Lenz to sign the transfer of title. I am satisfied that the failure of the sale to proceed had nothing to do with any refusal by the plaintiff to provide a discharge of mortgage. Indeed, I am satisfied that the plaintiff instructed Ms Papazoglou to prepare a discharge of mortgage and that Ms Lenz was aware of that fact.

[329]For the same reasons, the first defendant’s claim for damages for loss of the use of the proceeds of sale of the Muirhead property must fail.

[330]The next matter which the first and second defendants raised by way of counterclaim and/or set-off is a claim for $67,370.50 for renovations they undertook on the Fannie Bay property while they were occupying that property under licence. The simple answer to this claim is that there is no legal basis for it. The first and second defendant were contractually obliged to refrain from alterations to the premises during the period of occupation under licence. There is no evidence that the plaintiff requested the first and second defendants to undertake these renovations, or that she encouraged them to do so. There is no evidence that she was aware of the intentions of the first and second defendant to undertake the renovations prior to the work being undertaken. Indeed, when the plaintiff became aware of the fact that the first and second defendants had undertaken renovations in the premises, she specifically reminded them that they were not contractually entitled to undertake those works.

[331]There is simply no basis for a claim in law or equity for the plaintiff to reimburse the first and second defendants for the costs of these renovations.

[332]The final matter raised by the defendants is a claim that they are entitled to off-set against any damages awarded to the plaintiff the sum of $90,000.00 which they claimed was paid to the plaintiff in reduction of the purchase sum for the Fannie Bay property. The chronology of events makes it unarguable that the sum of $90,000.00 was paid towards accruing default interest as required by the agreement between the purchasers and the plaintiff embodied in the Variation Deed.

[333]Ultimately, it makes little difference whether the $90,000.00 is credited towards the purchase amount or to the accruing default interest. The defendants are liable to pay damages to the plaintiff including the shortfall on the sale of the Fannie Bay property and also default interest. Crediting the $90,000.00 to the purchase amount simply increases the amount owing on default interest, and vice versa. The only way in which allocation of that sum in reduction of the purchase price would be of benefit to the defendants is if I had determined that the default interest provisions of the Contract and the Variation Deed were void, which is not the case.

[334]The defendants’ counterclaim and set-off fail. They are not entitled to any of the forms of relief they sought.

The plaintiff’s relief

[335]The plaintiff is clearly entitled to the sum of $550,000.00 as the deficiency on the resale of the Fannie Bay property which accrued when the property was sold on 21 December 2020.

[336]The plaintiff claimed pre-judgment interest on the $550,000.00 from 21 December 2020 (the date of the sale of the Fannie Bay property to BF) until judgment. The defendants submitted that the plaintiff’s delay in commencing these proceedings should result in any claim for pre-judgment interest being denied. There is no merit in this submission. The plaintiff’s claim was brought within the statutory limitation period. In addition, the defendants have had the benefit of that $550,000.00 over that period and the plaintiff has not. The resolution of the plaintiff’s claim has been considerably delayed by spurious legal arguments advanced by the defendants. Delay is not a reason to deny the plaintiff pre-judgment interest.

[337]The plaintiff also seeks default interest of $55,468.49 under clauses 3.2(a) and (b) of the Variation Deed for the period from 14 December 2018 to 2 September 2019. This is calculated as follows:

a)7% simple interest per annum on $1.9m for 262 days, being $95,468.49;

b)less $40,000.00 in interest payments made by the purchasers during that period, leaving a balance of $55,468.49.

[338]This sum of $55,468.49 accrued during the period the Contract as varied by the Variation Deed was in force and was payable as it accrued in accordance with the terms of the Contract as varied. It is a liquidated debt owing to the plaintiff.

[339]The plaintiff sought pre-judgment interest on that sum from 2 September 2019 to judgment. This was opposed by the defendants on the basis that s 84 of the Supreme Court Act 1979 (NT), which gives the Court the power to award pre-judgment interest, specifically excludes the giving of “interest on interest”.[32]

[340]In my opinion, s 84 does not apply to prohibit the making of an award for interest on the sum of default interest payable by the defendants. In Saunders v Nash,[33] Vincent J considered the effect of s 60 of the Supreme Court Act 1982 (Vic), a provision of regulating the making of awards for pre-judgment interest in proceedings for debt or damages. Section 60 also contained a provision stating that the provision did not authorise the “granting of interest on interest”. With regard to that provision, Vincent J said, at 69:

Whilst sub-s. (2)(a) does not authorise the granting of interest upon interest in a proceeding for the recovery of debt, that is it prevents the making of an award under s. 60 for damages in the nature of interest which is calculated as compound interest, I do not understand this provision to be directed to a case where the debt is comprised of an amount owing as principal together with accumulated interest. In that situation the debt to the recovery of which the proceeding is directed must be regarded as the total sum due. That sum may be the subject of an award of damages in the nature of interest pursuant to s. 60(1).

[341]In my opinion, the intention of s 84 (2)(a) of the Supreme Court Act (NT) in prohibiting this Court from making an award of pre-judgment interest on interest is to make clear that the section does not permit an award of compound interest. I am satisfied that I have the power pursuant to s 84(1) to award pre-judgment interest on the amount of default interest payable by the defendants. I am satisfied that this is an appropriate case in which to make such an award.[34]

[342]The plaintiff also claims the sum of $142,394.52 in default interest owing under clause 3.2(c) of the Variation Deed and clause 17.1(a) of the Contract for the period from 3 September 2019 to 6 July 2020 (308 days) calculated as follows:

a)12% simple interest per annum on $1.9m for 308 days, totalling $192,394.52;

b)less $50,000.00 in interest payments made by the purchasers during that period, leaving a total of $142,394.52.

[343]This is also an amount owing as a debt due to the plaintiff for the same reasons given with regard to default interest claimed for the period from 14 December 2018 to 2 September 2019.

[344]The plaintiff also sought pre-judgment interest on this sum from 6 July 2020 to the date of judgment. This was also opposed by the defendants on the basis of the provisions of s 84(2)(a) of the Supreme Court Act. I do not accept the defendants’ submissions for the same reasons given at [340]-[341] above. The plaintiff is entitled to pre-judgment interest on the sum of $142,394.52 from 6 July 2020 until the date of judgment.

[345]The plaintiff also seeks orders for the possession of the Muirhead property. There is no doubt that the first defendant is in default under the Muirhead Mortgage and that the provisions of that Mortgage entitle the plaintiff to take possession of that property.

Orders

[346]I make the following orders:

(a)Judgment for the plaintiff against the defendants in the following sums:

(i)$550,000.00 together with pre-judgment interest pursuant to s 84(1) of the Supreme Court Act 1979 (NT) from 21 December 2020 to the date of judgment;

(ii)$55,468.49 together with pre-judgment interest pursuant to s 84(1) of the Supreme Court Act 1979 (NT) from 2 September 2019 to the date of judgment;

(iii)$142,394.52 together with pre-judgment interest pursuant to s 84(1) of the Supreme Court Act 1979 (NT) from 6 July 2022 to the date of judgment.

(b)An order that the plaintiff is entitled to possession of the Muirhead property, described as Lot 11813 Volume 808 Folio 391 in the Town of Nightcliff, otherwise known as 38 Bridge Street, Muirhead in the Northern Territory.

(c)Judgment for the plaintiff against the defendants on the Counterclaim and Set-off.

[347]The plaintiff will, of course, be entitled to post-judgment interest on the amounts referred to in orders (a)(i), (ii) and (iii) above.

Costs

[348]The plaintiff may, within 14 days of delivery of judgment, file and serve written submissions not exceeding four A4 pages as to the costs orders sought in these proceedings. The defendants may, within 14 days of receipt of the plaintiff’s submissions, file and serve written submissions not exceeding four A4 pages as to the costs orders that the defendants submit should be made.

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[1] [1959] HCA 8; 101 CLR 298.

[2][2013] FCA 909; 310 ALR 165 (“Cement Australia”), at [2954].

[3]    See Cement Australia at [2960].

[4] s 121A Agents Licensing Act 1979 (NT).

[5] See [81] above.

[6]See s 224 of the ACL.

[7] s 62A Interpretation Act 1978 (NT) (‘Interpretation Act’).

[8] See, for example, s 186A of the Return To Work Act 1986 (NT).

[9] [2016] FCA 377.

[10] s 121A Agents Licensing Act 1979 (NT).

[11] s 24(1)(a) of the ACL.

[12] s 24(1)(b) of the ACL.

[13] s 24(1)(c) of the ACL.

[14]s 24(2) and (3) of the ACL.

[15]     See Special Condition 3 to the Contract.

[16] s 24(4) of the ACL.

[17] (1984) 71 FLR 98 (‘Jones’).

[18] See [81] above.

[19]     See clause 20.1 of the Contract.

[20]See [62] and onwards above.

[21] See the purchasers’ email of 26 February 2019 at [79] above.

[22]See [64] above.

[23] See s 169 of the Land Title Act.

[24]See Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 62 per Gibbs CJ.

[25]     See Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570 at [35] (‘Gardiner’).

[26] See s 24(1) of the ACL.

[27] See ss 24(2) and (3) of the ACL.

[28]s 24(2) of the ACL.

[29] See [248] above.

[30] See s 23 ACL.

[31] See s 76 of the Land Title Act.

[32] s 84 (2) (a).

[33] [1991] 2 V.R. 63.

[34]See also Ironbridge Holdings Pty Ltd v O’Grady [2020] VSC 344 at [381].