Citius Property Pty Ltd v Logos Australia Group Pty Ltd
[2022] VSC 656
•21 November 2022
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S ECI 2019 01659
BETWEEN:
| CITIUS PROPERTY PTY LTD (ACN 102 392 923) | Plaintiff/Defendant by Counterclaim |
| v | |
| LOGOS AUSTRALIA GROUP PTY LTD (ACN 602 111 866) | Defendant/Plaintiff by Counterclaim |
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JUDGE: | LYONS J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 1, 2, 7-10, 14-16 February 2022, 13 May (mention), 23-24 May 2022, 3 June (mention) and 22 June 2022 Further written submissions dated 15 and 27 July 2022 |
DATE OF JUDGMENT: | 21 November 2022 |
CASE MAY BE CITED AS: | Citius Property Pty Ltd v Logos Australia Group Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2022] VSC 656 |
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CONTRACT – Whether intention to create binding contract – Language of relevant communications – Whether agreement incomplete – Delaney v Delaney [2022] VSCA 48 considered – No intention to create binding contract established – Whether agreement enforceable – Whether agreement incomplete and/or uncertain – Agreement unenforceable.
MISLEADING AND DECEPTIVE CONDUCT – Competition and Consumer Act 2010 (Cth) sch 2 – Representations alleged not made.
PRACTICE AND PROCEDURE – Application by plaintiff to re-open case at conclusion of trial – Spotlight Pty Ltd v NCON Australia Ltd (2012) 46 VR 1 considered – Application refused because, among other things, even if allowed, further evidence would not change the outcome of the proceeding.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Evans KC (to 24 May 2022) and Mr P Fary SC (from 3 June 2022) with Mr A J Purton | Neylon Legal |
| For the Defendant | Mr A T Strahan KC with Ms S C B Brenker (to 24 May 2022) and Ms V Blidman (from 3 June 2022) | Dentons Australia |
TABLE OF CONTENTS
1... INTRODUCTION........................................................................................................................ 1
2... ISSUES, PARTIES AND WITNESSES.................................................................................... 8
2.1.... The issues.............................................................................................................................. 8
2.2.... The passage of time........................................................................................................... 11
2.3.... Citius and its witnesses..................................................................................................... 12
2.4.... Logos and its witnesses.................................................................................................... 15
3... RELEVANT MATTERS............................................................................................................ 21
3.1.... LALV Trust......................................................................................................................... 21
3.2.... Fees payable by the LALV Trust to the Logos Group.................................................. 22
3.3.... Approvals by LALV Trust and Unitholders................................................................. 23
3.4.... Development management and project management services.................................. 25
4... EARLY 2016................................................................................................................................. 26
4.1.... Citius investigates the Marsden Park properties.......................................................... 26
4.2.... Citius’s dealings with M&G............................................................................................. 28
4.3.... The feasibility model......................................................................................................... 32
4.4.... Early February 2016........................................................................................................... 33
5... INTRODUCING LOGOS TO THE MARSDEN PARK PROPERTIES.......................... 36
6... DEALINGS BETWEEN CITIUS AND LOGOS IN LATE FEBRUARY.......................... 39
6.1.... The 25 February letter....................................................................................................... 39
6.1.1... The evidence........................................................................................................... 39
6.1.2... Submissions and findings in relation to the 25 February letter...................... 45
6.2.... 26 February conversations............................................................................................... 47
6.2.1... Evidence of the conversation between Mr Tobin, Mr Hemingway, Mr Mead and Mr Timso....................................................................................................................... 49
6.2.1.1..... Mr Tobin’s Evidence........................................................................... 49
6.2.1.2..... Mr Hemingway’s evidence................................................................ 51
6.2.1.3..... Mr Mead’s evidence............................................................................ 51
6.2.1.4..... Mr Timso’s evidence........................................................................... 53
6.2.2... Submissions and findings concerning the call with Mr Tobin, Mr Hemingway, Mr Mead and Mr Timso.............................................................................................. 55
6.2.3... Evidence of conversations between Mr Tobin and Mr Iliffe........................... 60
6.2.4... Submissions and findings as to the conversations between Mr Tobin and Mr Iliffe on 26 February 2016.................................................................................................... 63
6.3.... The 26 February letter....................................................................................................... 66
6.4.... Mr Iliffe’s understanding of the fees to which Logos was entitled............................ 69
6.5.... Other Citius and Logos communications in late February 2016................................ 72
7... 29 FEBRUARY CONVERSATION......................................................................................... 74
7.1.... Mr Tobin’s evidence.......................................................................................................... 76
7.2.... Mr Hemingway’s evidence.............................................................................................. 83
7.3.... Mr Iliffe’s evidence............................................................................................................ 85
7.4.... Submissions on 29 February conversation.................................................................... 92
7.5.... Findings on the 29 February conversation..................................................................... 95
8... DEALINGS BETWEEN CITIUS AND LOGOS IN EARLY MARCH........................... 104
8.1.... 1 March email................................................................................................................... 104
8.2.... 2 March (9.22am) email................................................................................................... 106
8.3.... The 2 March (4.51pm) email........................................................................................... 109
8.4.... 2 March (5.20pm) email.................................................................................................. 112
8.5.... 2 March (5.35pm) email.................................................................................................. 113
8.5.1... 2 March (5.35pm) email...................................................................................... 113
8.5.2... 2 March letter....................................................................................................... 115
8.5.3... Attachments to the 2 March (5.35pm) email.................................................... 117
8.6.... Further communications on 2 and 3 March 2016........................................................ 119
8.7.... The Logos letter of intention and the Hargreaves HOA........................................... 120
8.8.... The Consultancy Agreement......................................................................................... 128
9... SUBSEQUENT DEALINGS BETWEEN CITIUS AND LOGOS.................................... 134
9.1.... Issues concerning structure of purchase...................................................................... 134
9.2.... Work performed and invoices issued by Citius prior to the purchase................... 137
9.3.... From the time of the purchase in July 2016................................................................. 138
9.4.... Negotiations from mid-August 2016............................................................................ 139
9.5.... Termination...................................................................................................................... 143
10. OTHER RELEVANT FINDINGS/MATTERS.................................................................... 144
10.1.. Development management and project management agreements.......................... 144
10.2.. Ability to perform............................................................................................................ 147
10.3.. Approvals......................................................................................................................... 149
10.4.. Mr Tobin’s evidence about the alleged reframed agreement................................... 151
11. THE INCENTIVE FEE............................................................................................................. 152
11.1.. Significance of the incentive fee in the proceeding.................................................... 152
11.2.. The evidence of Mr Singh............................................................................................... 157
11.3.. Closing submissions........................................................................................................ 163
11.4.. Assumptions in, and some issues with, Annexure 2.................................................. 166
11.5.. The re-opening application............................................................................................ 168
11.6.. Submissions on Annexure 2........................................................................................... 172
11.7.. Consideration of the re-opening application............................................................... 179
12. ISSUES 1-3................................................................................................................................. 185
12.1.. The issues.......................................................................................................................... 185
12.2.. Submissions as to the relevant legal principles........................................................... 185
12.3.. Submissions as to the application of legal principles................................................. 187
12.4.. Relevant legal principles................................................................................................ 193
12.4.1. Intention to create a binding agreement.......................................................... 193
12.4.2. A legally enforceable agreement....................................................................... 195
12.4.3. Completeness and the Delaney appeal decision............................................. 196
12.4.4. Finality and Masters v Cameron....................................................................... 198
12.4.5. ‘In principle’ agreements.................................................................................... 199
12.5.. Consideration................................................................................................................... 201
12.5.1. Summary............................................................................................................... 201
12.5.2. Relevant context/surrounding circumstances................................................ 205
12.5.3. The relevant pre-contractual communications............................................... 209
12.5.4. The relevant contractual communications....................................................... 212
12.6.. Consideration of the intention issue............................................................................. 214
12.6.1 Language of the relevant contractual communications.................................. 214
12.6.2 Unaddressed matters........................................................................................... 217
12.6.3 Other matters......................................................................................................... 222
12.7.. Consideration of the enforceability issue..................................................................... 224
12.8.. The Development Conditions........................................................................................ 228
12.9.. Answers to issues 1-3...................................................................................................... 229
13. ISSUES 4-7................................................................................................................................. 229
14. ISSUES 8-11............................................................................................................................... 232
15. CONCLUSIONS....................................................................................................................... 232
HIS HONOUR:
1. INTRODUCTION
The plaintiff (Citius) provides strategic consultancy services including assisting in the purchase and development of industrial properties for a fee. It brings claims in respect of an agreement allegedly entered into with the defendant (Logos) on or about 2 March 2016 (the alleged agreement). The alleged agreement related to an opportunity to purchase and develop two adjoining properties, including one of about 21 hectares, being lots 23 and 24 Hollinsworth Road, Marsden Park, Western Sydney (the Hargreaves Property).
The defendant is part of the Logos Group, often referred to as Logos Property. The Logos Group is a developer and fund manager of real estate, in particular, real estate which services the logistics and transport industries. At the time of the alleged agreement, the Logos Group had entered into a joint venture with the Abu Dhabi Investment Authority (ADIA) for the purpose of acquiring and developing real estate projects in Australia to create a portfolio of logistics facilities to be held on a long term basis (the joint venture). As part of the joint venture, ADIA holds a 95% interest and the Logos Group holds a 5% interest.
At the time of the alleged agreement, the Hargreaves Property was owned by EJ Cooper and Sons Pty Ltd (EJ Cooper) which had granted an option to purchase the Hargreaves Property to MP3 Pty Ltd (Hargreaves or MP3). The alleged agreement also related to an adjoining property of about 20 hectares, being lots 21 and 22, Hollinsworth Road, Marsden Park, Western Sydney and owned by Busways (the Busways Property or the Adjoining Property). For convenience I will refer to the Hargreaves Property and the Busways Property collectively as the Marsden Park properties.
The nature of the alleged agreement pursued at trial was different from the nature of the agreement alleged in the amended statement of claim dated 15 October 2020 (ASOC). In summary, in the ASOC, Citius alleged that (the ASOC agreement):
(1) Citius would introduce Logos to the Hargreaves Property and Logos would enter into a heads of agreement with Hargreaves in order for Logos to undertake a due diligence process as to the feasibility of the commercial development of the Hargreaves Property (the Project), with this due diligence to be managed by Citius;
(2) if Logos then purchased the Hargreaves Property, Logos would engage Citius to act as the development manager of the Project (which was expected to take four years) and as the project manager for the construction of the Project; and
(3) Citius and Logos would be paid in respect of the work performed half of the fees that Logos (or a related entity) would receive in respect of the acquisition and development of the Hargreaves Property under its joint venture with ADIA. I will deal with the nature of those fees (which were in dispute) further below.
At trial, Citius maintained the terms of the agreement at [4](1), but instead of [4](2), asserted that under the agreement Citius and Logos would jointly perform development management and project management services with the determination of the services which Citius would in fact perform being at the direction or election of Logos.
Further, in closing submissions, Citius submitted in relation to [4](3) above (arising from the changes referred to in the previous paragraph) that Citius was not required to perform any work to receive payment of half of the fees that Logos (or a related entity) would receive from the joint venture (collectively the alleged reframed agreement).
As is evident, the alleged reframed agreement is a very different form of agreement to the ASOC agreement, notwithstanding that Citius appeared to dispute that this was so. As a result, I requested Citius to consider whether amendments were necessary to the ASOC to reflect the alleged reframed agreement, its terms (including the relevant particulars) and the breaches in fact relied upon by Citius. On the first day of oral closing submissions I allowed Citius to amend its claim to allege the alleged reframed agreement in a further amended statement of claim (FASOC). This was because the basis of the agreement alleged in this proceeding has always been primarily based upon: (1) a conversation on 29 February 2016 between the principals of Citius and Logos (the 29 February conversation); and (2) emails between them on 1 March 2016 and 2 March 2016 (4.51pm). This was also because of the way in which the trial was conducted. However, I granted leave to file the FASOC on the condition that Logos be able to cross-examine the principal of Citius on the reframed term relating to payment.[1]
[1]The FASOC also deleted a number of claims pleaded in the ASOC but not pursued at trial. Most of these claims were premised on the basis that the Court found that the alleged agreement was not a binding and enforceable agreement, namely, for estoppel, for misleading conduct, and for the fair and reasonable value of the services Citius provided to Logos in relation to the Project. Citius also abandoned a claim that Citius and Logos embarked on a joint venture involving the implementation of the Project with the result that, from at least 2 March 2016, Citius and Logos owed each other fiduciary duties.
As to the nature of the fees, at all relevant times until written closing submissions Citius alleged that Logos would pay four fees to Citius, based on the fees payable to the Logos Group under its joint venture with ADIA:
(1) an acquisition fee of the equivalent of 0.25% including GST;
(2) a development management fee of the equivalent of ‘2.5% of all commercial development costs, excluding the [Hargreaves Property], until the completion of the Project’;
(3) a project management fee being equivalent to ‘0.625% of the commercial development costs until the completion of the Project’;[2] and
(4) an incentive fee, being in the nature of a performance fee and which fee would be equivalent to 50% of that part of the Performance Fee payable to the Logos Group pursuant to its joint venture in respect of the Hargreaves Property.
[2]In its written closing submissions, Citius no longer claimed the project management fee. I will deal with this further below.
Logos disputed the facts giving rise to, and the existence of, the ASOC agreement or the alleged reframed agreement. For convenience, where appropriate, when referring to the ASOC agreement and/or the alleged reframed agreement I will refer to the alleged agreement. There were two central but related issues at trial, namely, having regard to the 29 February conversation and the early March emails:
(1) whether the parties intended to create a binding contract or to make a concluded bargain (the intention issue); and
(2) assuming there was such an intention, whether the parties reached agreement on sufficient terms to constitute a legally enforceable agreement (the enforceability issue).
Logos submitted that that there was no intention to create an immediately binding agreement and that there was no enforceable agreement reached. In summary, Logos relied upon incompleteness and uncertainty as to the parties, the property which was the subject of any agreement, the scope of services which Citius was to perform and the fees which Citius was to receive, including the structure of the payment of fees during the alleged reframed agreement and on its early termination. It disputed the incentive fee was capable of calculation given the fee payable under the joint venture was payable by reference to all joint venture properties. Indeed, Logos submitted that the differences between the ASOC agreement and the alleged reframed agreement illustrated that there was no meeting of the minds.
Further, Logos submitted that the nature of the alleged reframed agreement with Citius at that point in time (early March 2016) was commercially absurd and was inconsistent with any enforceable agreement or an objective intention to create one. Logos submitted that entering into a legally binding agreement in respect of project management and development management services of the kind alleged by Citius (amounting to millions of dollars) before the address of either of the Marsden Park properties had even been disclosed to Logos was commercially absurd. This was particularly so if the entire amount of the fees were payable in the event Logos did not direct Citius to perform project management and development management services, or in the event of early termination of the alleged reframed agreement.
As to the facts, at all times Citius alleged that, pursuant to the alleged agreement:
(1) Citius introduced Logos to the Hargreaves Property with the intention that the Hargreaves Property would be purchased as one of the portfolio properties owned by the joint venture;
(2) Logos then entered into a heads of agreement with Hargreaves in relation to that purchase which included a due diligence process in respect of the Hargreaves Property (the DD process);
(3) Citius managed the DD process in respect of the Hargreaves Property; and
(4) Following the DD process, in July 2016, Logos purchased the Hargreaves Property as one of the portfolio properties of the joint venture.
Further, at all times Citius alleged that, from July 2016, it acted as the development manager and project manager. Citius also alleged that in breach of the alleged agreement, Logos:
(1) refused to pay invoices for the work done;
(2) prevented Citius from performing its development management and project management duties, including by refusing to execute a development management agreement;
(3) failed to disclose the manner of the calculation of the Performance Fee that Logos (or a related entity) would receive under the joint venture; and
(4) denied the alleged agreement was legally binding and enforceable.
Logos did not dispute the substance of these allegations on the basis that it contended that no agreement was ever reached between them. However, it disputed that Citius managed the DD process. It acknowledged that a number of invoices for work done by Citius were paid by Logos in 2016.
At all times Citius alleged that it accepted Logos’s repudiation on 10 April 2017 or by issuing the proceeding. However, Logos submitted that the alleged reframed agreement raised different issues of breach and repudiation to those alleged in the ASOC and which were not addressed in the FASOC. I will deal with this further below. It suffices to say that Logos also denied the existence of the alleged reframed agreement.
In the ASOC, Citius sought damages, alleging it had the ‘lost the benefit’ of the alleged agreement. Citius claimed that it was entitled to unpaid invoices totalling $154,748, a ‘Development Management Fee’ of $2,878,187 and a ‘Project Management Fee’ of $630,796. It also claimed it was entitled to an ‘Incentive Fee’, which was not able to be ascertained because the basis of its calculation had not been disclosed by Logos and/or the Performance Fee had not in fact been paid to Logos.
In written closing submissions, Citius sought damages for only 50% of a development management fee of $6,570,788 (the amount of which was agreed between the legal advisers for the parties) and an incentive fee which was based upon the Performance Fee in fact paid on 16 December 2021 (which Citius estimated in the order of $12 million). Citius also sought damages for the first time for the unpaid portion of the acquisition fee which it in the sum of approximately $243,000.
Logos disputed any such entitlement to damages.
Further, Logos also issued a counterclaim. As to the counterclaim, Logos alleges that Citius made representations relating to Citius’s ability to control and lease the Marsden Park properties (the Development Representations) which were false and misleading in contravention of the Australian Consumer Law, being sch 2 to the Competition and Consumer Act 2010 (Cth) (ACL). It alleged that:
(1) between 26 February and 2 March 2016, Citius represented to Logos on a number of occasions that:
(a) it had control of the 40 ha site which made up the Marsden Park properties (the Control Representation); and
(b) it had a tenant or tenants for the 40 ha site which made up the Marsden Park properties (the Tenant Representation);
(2) if Logos entered into any agreement with Citius, it was induced to do so by reason of the Development Representations; and
(3) but for the Development Representations, it would not have entered into any agreement relating to the Hargreaves Property with Citius but would have identified MP3 as the option holder and effected a transaction to similar effect but without the involvement of Citius.
Thus, Logos sought an order rescinding any agreement with Citius or, if it is not entitled to an order for rescission, damages in excess of the amount of Citius’s restitution claim (which claim was not pursued at trial).
Logos also alleged that the Development Representations were conditions precedent to any binding agreement with Citius (the Development Conditions) and that Logos would never agree to pay fees of the kind claimed by Citius without being assured that Citius had control of, and tenants for, the Hargreaves Property: otherwise it would have just paid an agents’ fees to Citius.
For the reasons that follow, in respect of the alleged reframed agreement, I have concluded that:
(1) Citius has not established that the parties intended to create an immediately binding contract on or about 2 March 2016; and
(2) assuming there was such an intention, the parties did not reach agreement on sufficient terms in the alleged reframed agreement to constitute a legally enforceable agreement.
As a result, it is unnecessary to address further the claims for damages under the alleged reframed agreement, or the counterclaim. Nevertheless, in light of the relationship between the issues in the claim and counterclaim, I have concluded in respect of the counterclaim that:
(1) Citius did not make the Development Representations: this is because, while Citius made the Control Representation on 26 February 2016 it did not make the Tenant Representation;
(2) as a result of (1) it is not necessary for me to consider whether Logos has established that the Development Representations were false and misleading in contravention of s 18 of the ACL or that, but for the Development Representations, it would not have entered into the alleged reframed agreement; and
(3) nevertheless, the Control Representation made on 26 February 2016 was false and misleading.
2. ISSUES, PARTIES AND WITNESSES
2.1 The issues
The parties identified a list of key issues for determination in the proceeding. In summary, they relate to whether:
(1) the alleged agreement is binding and enforceable and, if so, any amounts that are payable to Citius; and
(2) whether the Development Representations were made and, if so, whether the alleged agreement remained on foot.
As a result of the FASOC, the issues that remain to be resolved are as follows:
1
Did Citius and Logos enter into a binding agreement on or around 2 March 2016 in relation to the commercial development of Lots 23 and 24 Hollinsworth Road, Marsden Park [i.e. the Hargreaves Property]?
2
If the parties did enter into a binding agreement, then was the agreement void for uncertainty?
3
If the parties did enter into a binding agreement, then what were the terms of the agreement?
4 If there was a binding agreement, then did Citius represent to Logos that:
(a) it had control of the [Marsden Park properties] [i.e. the Control Representation]; and/or
(b) it had a tenant or tenants for the [Marsden Park properties] [i.e. the Tenant Representation]?
5
If the answer to 4(a) and/or 4(b) is “yes”, is it the case that, but for those Development Representations, Logos would not have entered into the agreement?[3]
6 If the answer to the previous question is “yes”, then:
(a) is Logos entitled to rescind the agreement pursuant to s 237 of the [ACL] or in equity?
(b) is Logos entitled to damages under s 236 of the [ACL]?
7
If Logos is entitled to damages under s 236 of the [ACL], then what is the amount of damages to which it is entitled?
8
If there was a binding agreement, was Logos required to make any payments to Citius under the terms of that agreement?
9
If the answer to the previous question is “yes”, then what was the amount which was payable to Citius by Logos under the terms of the agreement?
10
If there was a binding agreement, then is the amount payable to Citius by Logos to be reduced by reason of the amounts which Citius would have been required to expend in the performance of the works required to be done, and if so, by what amount?
11 If there was a binding agreement, then is the amount payable to Citius by Logos to be reduced by reason of any benefits derived by Citius from alternative projects it was able to undertake by reason of its resources not being applied to discharge its obligations under the agreement? [3]I note that the formulation at the commencement of issue 5 (‘[i]f the answer to 4(a) and/or 4(b) is “yes”’) is inconsistent with the counterclaim to the effect that Citius made the Development Representations i.e. the Control Representation and the Tenant Representation. I will deal with this further in section 13 below.
It is obvious from what I have said that there were changes in the contract claim made by Citius. There were also changes in the particulars relied upon in support of the agreement alleged. The particulars to the ASOC agreement in [5] of the ASOC were extensive: oral particulars of communications from February 2016, written particulars of communications from 26 February and implied particulars (including from conduct between March and November 2016 and by law).
By contrast, in written closing submissions, Citius submitted that the alleged reframed agreement was reached on 2 March 2016. As a result the ‘contractual communications’ relied upon on in section D.2 of the written closing submissions of Citius were much more confined (the relevant contractual communications), namely:
(1) the 29 February conversation;
(2) the email from Mr Simon Tobin of Citius to Mr Trent Iliffe of Logos on 1 March at 9.47am (the 1 March email); and
(3) the email from Mr Iliffe to Mr Tobin on 2 March 2016 at 4.51pm (the 2 March (4.51pm) email).
Citius relied upon earlier communications alleged in the particulars to [5] of the ASOC as ‘pre-contractual communications’. As noted above, I gave counsel for Citius the opportunity to bring the pleadings in line with the alleged reframed agreement before oral closing submissions commenced. However, the particulars (in so far as they were alleged to be in writing or oral) in the FASOC of the alleged reframed agreement and its terms were the same as in [5] of the ASOC. This uncertainty was, to say the least, unhelpful.
I raised this issue with counsel for Citius in the application to re-open Citius’s case on 22 June 2022. I advised that I would proceed on the basis that the relevant contractual communications in the written closing submissions of Citius were the relevant communications relied on to constitute the alleged reframed agreement. Counsel agreed this was so by email dated 24 June 2022 to my chambers. However, I am conscious that in oral closing submissions, Citius also contended that some of the terms were at least partly implied.[4]
[4]This is consistent with the particulars in [5] and [6] of the FASOC which alleged that the alleged reframed agreement and its terms were also said to be partly implied including from the ‘relationship between the parties’, ‘[b]y reason of the use made by Logos of Citius’ services’, and ‘[b]y operation of law’. These allegations had also been made in [5] and [6] of the ASOC.
Further and for completeness, in oral closing submissions, counsel for Citius sought to further amend the particulars to the terms alleged in [6](f) and [6](g) by including reference to the 1 March email. I determined to allow the amendment because the 1 March email has always been central to the alleged agreement and there was no prejudice caused by the amendment.
In addition, after concluding oral closing submissions, counsel for Citius also sought to re-open Citius’s case. I will deal with the re-opening application further below. It suffices to say that I have not allowed the re-opening application. However, in the hearing of the re-opening application, it was evident that the FASOC did not reflect in a minor way the amendments intended to be made by Citius. As a result, I granted leave to file a second further amended statement of claim (the 2FASOC) which included the changes to the particulars to the terms alleged in [6](f) and [6](g). While I am conscious of these minor amendments in the 2FASOC, for convenience, hereafter in these reasons I will refer to the FASOC unless indicated to the contrary.
2.2 The passage of time
As is evident from what I have said above, most of the facts relevant to the determination of this proceeding took place approximately six years ago. Indeed, the content of conversations held in 2016 (particularly in late February 2016) were the subject of detailed cross-examination. It is difficult to recall with any precision what someone said, what someone heard or what someone believed all that time ago. Common experience tells us that the more significant the issue is to a person, the more likely it is that he or she will recall the event, even after a long period of time. However, it is important to acknowledge that, in such circumstances, a person’s recollection may be coloured by feelings, by emotion and by personal interest.
This seems true in this case. On the one hand, Mr Tobin’s company, Citius, claims in this proceeding that it has been denied fees in the order of approximately $19 million pursuant to the agreement he alleges was reached with Logos. That is a very substantial sum of money to anyone, including each of Citius and Logos. On the other hand, Logos claims that no such agreement was reached and that Citius is not entitled to any such sum.
Further, Logos submitted that the principal witness for Citius (Mr Tobin) was not telling the truth before me and had ‘an essentially deceptive approach to business’.
As I have noted in previous judgments, judges are not given special powers to discern whether a particular witness is not telling the truth. Consistent with practice and common sense, I consider the surest test to determine credibility and reliability in any criminal or civil case is to assess:
the inherent consistency of the witness’ account; the consistency of that account with those of other witnesses; the consistency of that account with undisputed facts; the ‘credit’ of the witness (based upon matters which include, for example, demeanour); any relevant infirmities of the witness; and, importantly, the inherent probability or improbability of the evidence in question.[5]
[5]Pell v The Queen [2019] VSCA 186 (‘Pell’), 255-56 [897] (Weinberg JA) relying upon Sir Richard Eggleston, Evidence, Proof and Probability (Weidenfeld and Nicolson, 2nd ed, 1983). Ferguson CJ and Maxwell P relied upon the same passage by Sir Richard Eggleston in their joint judgment in Pell at [56].
As a result of all these issues, it is my usual practice in considering the credibility and reliability of witnesses to rely very much upon the contemporaneous documents produced in evidence, the objective facts, and the inherent probability or improbability of oral evidence.
However, in this proceeding, Logos submitted that some of the contemporaneous documents created by Mr Tobin were not accurate or indeed truthful. This applied in particular to the 1 March email sent after the 29 February conversation. I will deal with this further below.
2.3 Citius and its witnesses
Citius called three witnesses. First, it called Mr Simon Tobin who has been and remains the sole director of Citius since it was established. Prior to establishing Citius in 2002, Mr Tobin worked for a company called CRI which also conducted development and project management services. CRI was based in Sydney and Mr Tobin ran its Victorian office. During his time at CRI, Mr Tobin was involved in development and project management services for large logistics facilities predominantly in Victoria. However, some of his work was in New South Wales.
Citius is a property development and project management company which provides strategic consultancy services. Citius has a number of large institutional clients including DEXUS, Colonial Funds Management and CBUS. It has also acted for large industrial and logistical users such as Coles and Woolworths. Citius works with these clients to provide project development and management services in relation to projects such as large warehouses and distribution centres, and in relation to civil works to service those projects (such as power, water, sewerage, roads etc.). Since Citius was established, it has undertaken work predominantly in Victoria.
Mr Tobin gave evidence of the work undertaken by Citius, his introduction to the Marsden Park properties and his dealings with Logos from early 2016 in relation to them. Mr Tobin further gave evidence of the work performed by Citius from early March 2016 during the due diligence process and in the development management and project management phase. He also gave evidence of his dealings with Logos after the contract to purchase the Hargreaves Property was signed in July 2016.
I found Mr Tobin to be experienced and knowledgeable in relation to project development and project management. I formed the view that he was a man who was keen to do a deal and was dogged in his attempts to ensure a deal was done. This is evidenced from the contemporaneous documents relating to this transaction with Logos and from the correspondence with another investor client of Citius (M&G Asia Property Fund, M&G) which determined not to pursue the Marsden Park opportunity.
As to his evidence, Mr Tobin rarely answered a question directly. This appeared due in part to the fact that he attempted to determine the purpose of the question before formulating his answer, rather than simply answering the question. Indeed, on one occasion, he answered a question to the effect that he was not sure of the point the cross-examiner was trying to make.[6] Further, and relatedly, his answers often sought to argue his case rather than directly address the question asked.
[6]T354:l18-23.
As to his credit, consistent with my conclusion that Mr Tobin was dogged to do a deal, I formed the view that Mr Tobin is a person who in the hope of achieving financial gain is prepared to lie, or (at the very least) to withhold the whole truth, thus creating a false and misleading impression. The clearest example is his email to Mr Wall dated 26 February 2016 (the 26 February Citius email). I will deal with this email and Mr Tobin’s evidence in relation to it further in section 6.5 below. It suffices to say that I have formed the view that Mr Tobin wrote this email with the intention of conveying to Hargreaves that M&G may still enter into a heads of agreement in relation to the Hargreaves Property when he knew by 25 February (at the latest) that M&G was no longer interested in pursuing the Hargreaves Property. He did not tell the truth in that email.
In addition, I have formed the viewed that at times Mr Tobin gave evidence which exaggerated or misstated the true position in order (as he saw it) to improve Citius’s prospects of success in the proceeding. That is evident from my narrative of events.
For example, there was a continuing issue at trial about whether Citius had entered into an agreement with Hargreaves in relation to the Hargreaves Property in late February 2016. This is notwithstanding that no heads of agreement was signed by Hargreaves and notwithstanding the fact that M&G was no longer interested in purchasing the Hargreaves Property after 24 February 2016. This issue was relevant to the Control Representation and more generally to Mr Tobin’s credit and reliability.
I will deal with Mr Tobin’s evidence in relation to any such agreement further in sections 4.4, 6.1.1 and 8.2 below. It suffices to say that I found his evidence both inconsistent with the objective facts and with his own evidence. Further, I consider it was disingenuous of Mr Tobin to assert that there was an ‘agreement’ with Hargreaves for the purchase of the Hargreaves Property in late February or by 2 March 2016 when Citius (which could not fund the purchase itself) had been unable to identify a purchaser who had the capacity to buy it, and had not agreed with Hargreaves on the due diligence period.
As noted above, Logos submitted that Mr Tobin had ‘an essentially deceptive approach to business’ and that his evidence in this case exhibited strong signs of being reconstructed or tailored to assist Citius’s case. On the evidence before me, I am unwilling to accept such a general submission to the effect that Mr Tobin had ‘an essentially deceptive approach to business’. However, I refer to my comments in above, in particular [43] and [44]. In the circumstances, the real concerns I have about Mr Tobin’s credit set out in this section have led me to consider very carefully his oral evidence and the documents he created, particularly in light of the contemporaneous facts and contemporaneous documents emanating from others.
Second, Citius called Graham Hemingway, an experienced licensed real estate agent who conducted his real estate business in 2016 through Gill Property Pty Ltd. Mr Hemingway gave evidence pursuant to a subpoena issued by Citius. Mr Hemingway had dealt with each of Mr Tobin and Mr Iliffe in a professional capacity prior to 2016. He continues to deal with each of them. He gave evidence that, with the consent of Mr Tobin, he introduced Mr Iliffe to the opportunity to acquire the Marsden Park properties in mid-February 2016. He also gave evidence of being with Mr Tobin during an important telephone conversation with Mr Iliffe on 29 February 2016. I found Mr Hemingway to be an honest witness. In his evidence he frankly conceded that he now had little recollection of what was said in 2016 but gave evidence of the matters he could recall, or his impression of them, in a direct way. As a result, I have not placed any great weight on this evidence.
2.4 Logos and its witnesses
Logos called a number of witnesses including five lay witnesses and one expert witness. First, Logos called Mr Trent Iliffe who is the joint managing director of the Logos Group. Before establishing the Logos Group with John Marsh in 2009, Mr Iliffe worked as a real estate agent and later for LaSalle Investment Management in China. As to the business of the Logos Group, I refer to my comments in [2] above.
Mr Iliffe and Mr Marsh own a part of the Logos Group through their respective companies. As a result, Mr Iliffe and Mr Marsh are directors of many entities in the Logos Group. One other corporate investor in the Logos Group is the Macquarie Group.
The Logos Group was originally established in Australia. It now has 29 development funds across 10 countries for a range of institutional capital partners who develop logistics facilities for tenants or customers such as DHL, Amazon and Alibaba. In summary the Logos Group:
(1) identifies land for acquisition, obtains development approvals and secures investor approval;
(2) develops the land on behalf of the particular investor; and
(3) sources tenants to fill the buildings constructed on developed land and has an ongoing management role to deliver returns for investors.
As to the experience of Mr Iliffe, by early 2016 Mr Iliffe had significant experience in acquiring land and being part of the process of development by reason of working for LaSalle Investment Management and the Logos Group. In particular, he had experience both in relation to the requirements of development management and project management, including in relation to the construction of logistics facilities and warehouses.
Mr Iliffe had limited dealings with Mr Tobin in the year or two prior to early 2016. Mr Iliffe gave evidence that he understood in early 2016 that Citius was a project management company and that Citius was not in the business of investing millions of dollars in facilities in the way that the joint venture would. Mr Iliffe recalled speaking to Mr Marsh prior to February 2016 about Mr Tobin’s reputation and ability if Logos were looking to do something in Melbourne.
Mr Iliffe’s credit was challenged in cross-examination. I formed the view that Mr Iliffe is knowledgeable in relation to projects for the acquisition of land for the construction of logistics facilities and in relation to the development and project management for such projects.
As to his evidence, for the most part, and unlike Mr Tobin, Mr Iliffe answered questions directly. However, in my view, at least initially, he gave evidence which was consistent with the case of Logos, and in particular, its counterclaim relating to the Development Representations. For example, initially he gave evidence, in substance, that Mr Tobin said he ‘had control’ and ‘had tenants’. However, when further questioned, he acknowledged that Mr Tobin in fact said he had ‘strong tenant interest’ and/or ‘strong demand from tenants’. I will deal with this further below.
Based on the evidence before me, I formed the view that he was a successful, shrewd and determined businessman, who was very focused on the success of the Logos Group. Mr Iliffe appeared a ‘deal maker’ within the Logos Group, by which I mean someone who focuses on, and pursues, commercial opportunities and commercial outcomes for Logos and its investors.
The 1 March email and Mr Iliffe’s response to it were central to the issues in this proceeding. The 1 March email sought Mr Iliffe’s ‘confirmation’ of the terms contained in that email, as a result of which Citius was prepared to disclose the details of the Marsden Park properties to Logos. Many of the terms contained in the 1 March email were expressed to have been discussed or agreed in the 29 February conversation between Mr Tobin and Mr Iliffe. Mr Iliffe responded by the 2 March (4.51pm) email stating ‘[i]n principle we are ok’ with the matters set out in the 1 March email subject to two qualifications (the Logos qualification). However, in the 2 March (4.51pm) email, Mr Iliffe did not correct many of the other inaccuracies which he asserted at trial were contained in the 1 March email. Nor did he do so in subsequent correspondence.
Mr Iliffe explained in evidence that this was because he thought it was ‘too early’ in the course of the negotiations with Citius to do so. I will deal with this evidence further below. It suffices to say that I do not accept that evidence, particularly given the language of the 1 March email. Rather, I have formed the view that it is likely that Mr Iliffe decided it was not in the commercial interests of Logos at that time to express any more detail of his concerns about the ‘agreement’, which Mr Tobin asserted had been reached in the 1 March email, other than the Logos qualification. I refer to my comments in section 8.1 and 8.3 below.
Further and relatedly, Mr Tobin contacted Mr Iliffe on a number of occasions to resolve outstanding issues in relation to Citius’s involvement in the development of the Hargreaves Property from about early March 2016. However, Mr Iliffe chose not to contact or deal with Mr Tobin over this period. On occasions, he delegated this role to more junior executives (like Mr Singh or Mr Mead) who either appeared not fully briefed by Mr Iliffe about his discussions and communications with Mr Tobin, or lacked the authority to reach an agreement with Mr Tobin without Mr Iliffe’s approval. In my view, such conduct on the part of Mr Iliffe does him no credit.
The concerns I have about Mr Iliffe and his evidence have led me to consider carefully his oral evidence, particularly in light of the contemporaneous facts and contemporaneous documents.
Second, Logos called two continuing employees of the Logos Group and one former employee: David Timso, Sean Singh and Andrew Mead.
Mr Mead is a qualified civil engineer and is now a semi-retired consultant. From July 2015 to January 2021 he was the Development Director at the Logos Group. In this role, he was responsible for overseeing management and development activities which included due diligence and site acquisition. For the most part he gave evidence about a conversation on 26 February 2016 between Mr Hemingway and Mr Tobin on the one hand, and Mr Timso and himself on the other.
Mr Timso is currently Group Executive of Property at the Logos Group. Between 2013 and 2018, he was the General Manager of Asset Management at the Logos Group. His role in 2016 was to oversee the Australian based portfolio of the Logos Group which included overseeing developed assets, the acquisition of new assets and the disposal of existing assets. For the most part he gave evidence about the conversation with Mr Hemingway, Mr Tobin and Mr Mead on 26 February 2016.
Mr Mead struck me as direct and straight talking. He was frank in acknowledging his limited recollection of events and, in particular, the details of the conversation on 26 February 2016. However, he was able to recall some matters of significance to him at the time. Mr Timso had a clearer recollection of the events leading up to, and the conversation on, 26 February 2016. He gave answers in a responsive way to the best of his recollection. I formed the view that each of Mr Mead and Mr Timso was a credible witness.
Mr Singh has a Bachelor of Property Economics and a Masters of Applied Finance. He is currently the Head of Fund Management for the Logos Group. From May 2015 until June 2020, Mr Singh was a Fund Manager of two funds within Logos, the LALV Trust and another fund. In that role, he was responsible for managing the investment strategy and the performance of various property funds that the Logos Group managed, including the LALV Trust. That role involved overseeing and making recommendations regarding investment activities, including the acquisition of properties, the proposed development of properties, the divestment of properties and the financing of properties and projects. Mr Singh was also involved in overseeing the execution of legal documents relating to these investments, monitoring performance and reporting back to the investor.
Mr Singh gave evidence as to his dealings in relation to the Hargreaves Property from early March 2016, including his dealings with Mr Tobin, with Hargreaves and its representatives, and his internal dealings within the Logos Group, including with Mr Iliffe. In addition, Mr Singh gave evidence about how the Performance Fee was calculated and whether it was possible to calculate such a fee based only on the performance of the Hargreaves Property.
I formed the view that Mr Singh was a credible and reliable witness. He gave his evidence in a clear and considered way and provided his best recollection of relevant events. Mr Singh acknowledged that on occasions he had to refer Mr Tobin to Mr Iliffe as he did not have first-hand knowledge of the relevant events or issues.
Further, I formed the view that Mr Singh was intelligent and knowledgeable in his area of expertise. Notwithstanding his continuing position in the Logos Group, his evidence in relation to the possibility of calculating the Performance Fee by reference to the Hargreaves Property was considered, fair and balanced. I also considered this part of his evidence both credible and reliable.
Third, Logos called Michael Wall, who is now an industrial real estate agent at Savills. From 2013 to 2019, Mr Wall worked at Jones Lang LaSalle (JLL). In early 2016 his title was ‘Head of Industrial NSW’ for JLL. Mr Wall gave evidence about introducing Mr Tobin to the Marsden Park properties, negotiations between Hargreaves and Citius in relation to the Hargreaves Property when Citius was itself negotiating with M&G as potential purchaser, and the negotiations between Hargreaves and Citius when Citius was negotiating with Logos as potential purchaser. For the most part I found Mr Wall to be an honest witness.
Fourth, Logos relied upon the expert reports of Greg Incoll dated 8 March 2021 and 31 January 2022. Mr Incoll is a project and development manager with 40 years’ experience. In summary, Mr Incoll’s reports provided evidence about the role of a development manager and a project manager in the context of the development of a 20 ha industrial site and the key commercial elements ordinarily associated with development and project management agreements. Mr Incoll’s evidence was not challenged by Citius: indeed, he was not cross-examined.
I wish to note at this stage that in correspondence between the parties and in evidence reference was commonly made to the ‘site’. It was often difficult to ascertain whether this was a reference to the Marsden Park properties or one of them i.e. the Hargreaves Property or the Busways or Adjoining Property. On occasions, it was possible to ascertain the meaning based upon the use of the word ‘site’ in its context. On occasions, in the course of evidence, I requested that the witness clarify what he meant by the use of the word ‘site’. I wish to record at this stage that on occasions I have been unable to determine whether the use of the word ‘site’ referred to the Marsden Park properties or one of them. However, in these reasons, I have used the word ‘site’ where that term was referred to by the witness or in a relevant document.
3. RELEVANT MATTERS
There are two issues very relevant to this proceeding which it is appropriate to address before I set out the relevant events.
The first issue is the relationship between the Logos Group and ADIA, and the fees payable to the Logos group by reason of that relationship. This is because the Hargreaves Property was purchased for the joint venture between ADIA and the Logos Group. The second issue is the nature of development management services and project management services, which were alleged to be the subject of the alleged agreement, and which each of Citius and Logos provided prior to 2016.
3.1 LALV Trust
In summary, in about 2014, ADIA (through a related company, Harina Company Limited) and the Logos Group entered into a joint venture for the purpose of acquiring and developing logistics real estate projects in Australia to create a portfolio of logistics facilities to be held on a long term basis. I refer to my comments in [2] above.
Pursuant to the arrangement, the Logos Group would identify the sites and provide development management and project management services to deliver logistics facilities with secure tenants. The Logos Group received fees for providing these services to the joint venture. I will deal in this section with the services provided (including the distinction between development management and project management) and the fees payable for those services.
The joint venture vehicle was a unit trust called the Logos Australian Logistics Venture Trust (the LALV Trust) with The Trust Company (Australia) Limited as trustee (the LALV Trustee). The arrangements in relation to the joint venture are recorded in agreements in evidence before me, namely:
(1) the Unitholders’ Agreement between Harina, Logos Australia Investments Pty Ltd, and the LALV Trustee, which set out the rights between unitholders and the decision making process within the LALV Trust (the Unitholders’ Agreement); and
(2) the LALV Investment Management Agreement (the LALVIM Agreement) between Harina, Logos Investment Management Pty Ltd (Logos IM) and the LALV Trustee, which appointed Logos IM as the LALV Investment Manager to provide Investment Management Services, including asset management services, strategic coordination and other investment management services to the LALV Trust.
It suffices to say that, by the time of this proceeding, the LALV Trust had acquired eight sites and that logistics facilities had been built or were being built on seven of them. On the eighth site, the existing logistics facilities had been expanded. The Logos Group identified the sites and has provided development management and project management services to deliver logistics facilities with secure tenants on those sites.
3.2 Fees payable by the LALV Trust to the Logos Group
The fees payable to Logos IM as the LALV Investment Manager are set out in the LALVIM Agreement. In summary these were:
(1) an Equity Investment Fee, determined in accordance with sch 2, being, in summary, a fee payable of 1% of the equity (i.e. excluding debt) contributed by unitholders to the LALV Trust in connection with one or more of the properties held by the LALV Trust during the relevant month;
(2) an Investment Management Fee for investment management services (i.e. in relation to investment and asset management) determined in accordance with sch 3; and
(3) the Performance Fee, payable at the end of a 7 year period and dependent on the performance of all assets of the LALV Trust determined in accordance with sch 5. In summary, it is calculated as 18% of the amount by which the assets in the LALV Trust outperform an annual hurdle rate of 11% return.
Further, pursuant to cl 5.1 of the LALVIM Agreement, it was a requirement that a Development and Project Management Agreement be entered into with a Logos related entity (Logos DM) for the sole provision of development and project management services of any property acquired. A ‘Pro-forma’ Development and Project Management agreement was contained in sch 6 to the LALVIM Agreement (the Pro Forma Agreement). Pursuant to cl 8.3 of the Pro Forma Agreement, a Development and Project Management Fee was payable, being an amount equivalent to 5% of the Project Costs (as defined in the Pro Forma Agreement).
3.3 Approvals by LALV Trust and Unitholders
The relationship between Harina and the Logos Group was also regulated by the Unitholders’ Agreement. The terms of that agreement are relevant to an issue raised by way of defence, namely, given Citius’s knowledge that Logos was seeking to acquire the Hargreaves Property for the joint venture, the likelihood that any agreement of the kind alleged between Citius and Logos would require approval if it became or was intended to be binding. Logos relied on approval within the joint venture and approval within the Logos Group. It is appropriate that I set out now the provisions of this and other agreements relating to the approvals process within the joint venture and the Logos Group.
As to the joint venture, cl 3 of the Unitholders’ Agreement provides for the establishment of a Venture Committee. In summary it provided that the Venture Committee would be made up of representatives of the Unitholders (Logos and Harina) with each Unitholder entitled to nominate one representative for the Committee. The purpose of the Venture Committee was to make decisions on behalf of the LALV Trust in respect of key investment decisions and other matters of strategic significance.
The Unitholders’ Agreement specifically provided that the LALV Trustee and Logos IM were not able to act with respect to certain matters without approval of the Venture Committee. These matters were provided for in schs 1 and 2 of the Unitholders’ Agreement. Relevantly, sch 1 provided that approval by a ‘Special Majority’ of the Venture Committee was required for the following actions:
(1) entry into, ratification, variation, termination, waiver of rights or enforcement of any material contract that could not be terminated without penalty upon less than 90 days’ notice, or that was of a total value above $250,000, or that was of a term of longer than 2 years (sch 1(i));
(2) termination of a development and project management agreement or the appointment of a replacement development manager (sch 1(w));
(3) entry into a development and project management agreement to the extent that the agreement deviates from the Pro Forma Agreement (sch 1(cc)); and
(4) appointment of personnel and approval or replacement of the development manager, or any legal or tax advisor in relation to a development and project management agreement (sch 1(ff)).
Logos submitted that approval under these provisions was required for the alleged agreement.
As to the Logos Group, its internal arrangements are governed at least in part by a Securityholder’s Deed dated 23 October 2014, which regulates their rights and obligations in relation to the Logos Group’s dealings (the Securityholder’s Deed). Relevantly, cl 4.13(b)(ii) requires the approval of a special majority of directors prior to entry into or termination of a contractual arrangement with a consideration over $200,000. Logos submitted this would include the alleged agreement.
3.4 Development management and project management services
Some of the issues in this case related to the nature of services to be provided by a development manager on the one hand and a project manager on the other, and the usual key terms of agreements to provide such services. I will deal with the first of these issues now.
As to the evidence that was led, there seemed to be little difference between the parties as to the nature of development management services and project management services. In oral closing submissions it was not in dispute that:
(1) development management is a holistic role with respect to developing a site. The development manager’s role is to source the land, manage due diligence on the land, get development approvals to build buildings, source customers or tenants for the buildings, and present to investors on the developments and budgets; and
(2) project management, by contrast, is a coordination role. The project manager reports to the development manager and is responsible for the time, cost and quality outcomes of the design and construction components of the works. The role includes overseeing consultants, managing approvals for civil infrastructure and building works and coordinating Project Control Group meetings. The project manager does not deal with investors.
Each of Mr Tobin and Mr Iliffe gave evidence that each role was different although there was some overlap. Each gave evidence to the effect that the role of the development manager was to focus on delivering commercial outcomes to the investor: a completed site to either be sold for commercial return or leased for commercial return. Each gave evidence that the role of the project manager is more limited: in summary to arrange and oversee construction on a site necessary for the facility to be completed and to make sure the project runs on budget and on time. As is evident, each agreed there is a need to work closely between the development manager and the project manager.
4. EARLY 2016
4.1 Citius investigates the Marsden Park properties
In late 2015 or early 2016, Citius was looking at sites for two clients in Western Sydney. One client was a large transport company called Border Express. The other was M&G, a large global institutional investor with its Australasian business conducted from Singapore. Mr Tobin said M&G was seeking large-scale industrial sites predominantly to develop as industrial or logistics assets in particular in Sydney or Western Sydney with an end value of at least $50-$100 million.
Mr Tobin said he was looking for ‘off market’ opportunities for these clients. Mr Tobin said that there were advantages in dealing with ‘off market’ opportunities, namely, the absence of direct competition and the opportunity of structuring the conditions of sale consistent with the purchaser’s requirements. As a consequence, Mr Tobin contacted a number of people experienced in the property industry in this area. Mr Tobin was referred to Mr Wall of JLL by contacts in Melbourne.
There was an email exchange between Mr Tobin and Mr Wall on 23 December 2015. Mr Wall mentioned a number of potential sites and gave the address of three sites including the address of the Hargreaves Property and the Busways Property. He did not give the address of one site called Prestons because he stated that he had been asked to keep it confidential. Mr Tobin said it was not unusual for the address of potential sites to be confidential and private. This was to prevent competition from being aware of them. I refer to his comments about off market sales in the previous paragraph.
Mr Tobin said that in January 2016 he considered that Mr Wall was acting as a broker to see if there was a potential deal between Citius on behalf of M&G and a vendor of land. As set out below, Mr Wall’s role was clarified by mid-February 2016.
By email dated 13 January 2016, Mr Wall advised Mr Tobin of a proposed inspection of a number of properties in Western Sydney including the Hargreaves Property and the Busways Property. The email noted that they were proposing to meet with Scott Coltman of Taylors who had ‘a position’ on the Hargreaves Property and the Busways Property, and with Chris Wilson. Mr Tobin said he did not know what was meant by the reference to Taylors having ‘a position’ on these properties. Mr Tobin knew Taylors was a large industrial construction company but he had not met Mr Coltman. Mr Wilson worked for Willowtree Planning which acted as planning consultants. Mr Tobin knew of Willowtree Planning but had not met Mr Wilson.
In the context of an email dated 13 January 2016 from Mr Wall, Mr Tobin came to know that Taylors and Willowtree Planning had undertaken some works in relation to some of the properties mentioned and that they were attending the inspection in order to develop a relationship with Citius in the hope that they might play a part in the development of some of these properties should they be purchased by a client of Citius.
Mr Tobin inspected sites including the Hargreaves Property and the Busways Property with Mr Wall on 15 January 2016. Mr Tobin could not recall the details of these inspections or when he met Mr Coltman and Mr Wilson on that day. Mr Tobin gave evidence that, at about this time, he became aware from Mr Coltman and/or Mr Wilson that the Hargreaves Property was owned by EJ Cooper but that Hargreaves had an option to purchase the Hargreaves Property which it intended to exercise. He also became aware at about this time that the Adjoining Property was owned by Busways, a bus transport company.
By email dated 18 January 2016, Mr Tobin advised Mr Wall that he wished to focus on the Marsden Park properties and a further property in Erskine Park. In his email, Mr Tobin detailed the further information he wished to receive from Mr Wall in relation to them. Mr Tobin gave evidence that he considered that:
(1) the Marsden Park properties were very well located in terms of road infrastructure, which was a key aspect of any transport or logistics business; and
(2) the Hargreaves Property already had planning or development approval (referred to in the documents as DA).
Mr Coltman prepared a response which was sent to Mr Tobin on 19 January 2016. It provided details of the Hargreaves Property and the Busways Property. Mr Coltman also provided preliminary estimates of the costs required to make these properties ready for construction.
4.2 Citius’s dealings with M&G
On 18 January 2016, Mr Tobin wrote to Mr Askham of M&G informing him of two Sydney industrial sites which Mr Tobin considered offered ‘outstanding potential for large-scale industrial development’. In cross-examination, Mr Tobin acknowledged that this referred to the Marsden Park properties. The email relevantly provided:
We do not have exclusive control over these sites, but do have direct contact with the owners and are confident we are able to negotiate the acquisition of either, or both of the sites, on fair terms.
It is important however, that we move swiftly to secure any negotiating position with the owners, as we do know of several other institutional groups are also looking at the region closely, with an intension [sic] to acquire.
Obviously, not having formal control of the sites requires the application of good faith from all of us, in the nomination of the sites, and the future negotiations surrounding the potential acquisition of the site(s) and ongoing Development Management by Citius.
On 19 January 2016, Mr Tobin sent an email to M&G enclosing a summary of the project parameters for the acquisition and development of the 40 ha site (i.e. the Marsden Park properties) but did not identify the address of the site. The email enclosed an attachment which set out at a high level both a commercial summary of the development and a partnership/commercial structure which envisaged Citius being appointed as both development and project manager. The last paragraph noted that ‘[a]s has been discussed, we don’t yet have control of this site, and need to move swiftly if we are to secure it’.
Mr Askham replied on 19 January 2016 noting that the opportunity looked interesting to M&G and suggested that the next step would be to receive details of high level terms and to reach agreement in relation to them. He also requested a capability statement from Citius for developing such a project. Mr Tobin sent a further email to M&G on 20 January 2016 (the 20 January Citius email). He wrote among other things:
As requested, I’ve now attached a more detailed description of the terms we propose would form part of a more detailed Development Management Agreement, that would apply to this project. I’ve also attached a summary of some of our experience in the type of development we’re proposing to undertake with M&G.
We believe our joint experience and capability (M&G and Citius), when combined on the subject site, will result in a very successful project. There is already very high quality industrial development and excellent road infrastructure very close to this site and I have no doubt opportunities to be accommodated at the site will be offered to us immediately by companies and agents alike.
Should the terms detailed in the attached correspondence be acceptable, I’d like appreciate [sic] receiving your confirmation of such, so we can nominate the site to you formally. We don’t want to appear overly hasty, but must continue to move quickly to secure the site privately.
Upon the appointment terms being agreed, we intend to put a conditional offer to the land owners at the earliest opportunity, ideally within the next 24/48 hours to confirm our interest and advance our negotiations with the owner(s).
Mr Tobin attached a document entitled ‘Citius Profile’ which listed a number of projects in which Citius had been involved. He also enclosed a letter from Citius to M&G dated 20 January 2016 setting out in more detail the nature of the partnership/commercial structure, including the details of the development management and project management role to be undertaken by Citius. It listed the following fees (excluding GST):
(1) an acquisition fee of 1.25% of the purchase price;
(2) a development management fee of $29,500 per month;
(3) a project management fee of 2.15% of construction costs; and
(4) a transaction fee of 1.5% of the completed value/sale price of the project.
On 21 January 2016, Mr Tobin wrote an email to Mr Askham again, consistent with the 20 January Citius email, noting that, as soon as Mr Tobin received an email ‘confirming the details discussed today’, Mr Tobin would nominate the site details and provide further advice as to the intended acquisition strategy.
Mr Askham replied on 22 January 2016 in the following terms (the 22 January M&G email):
Thanks for the call yesterday.
As discussed the broad structure looks okay, but the scopes, roles and fees are something we can’t turn around quickly.
Obviously if the site is of interest and there is a deal to do, we can agree the above.
Notwithstanding this less than definitive reply, Mr Tobin sent an email to Mr Askham dated 22 January 2016 providing details of the Marsden Park properties and noting that the owner of the Hargreaves Property was EJ Cooper (the 22 January Citius email). In light of M&G’s qualified reply, Mr Tobin wrote:
[T]hank you for your confirmation of the introduction of the above prospective development site [i.e. the Marsden Park properties].
We look forward to working with M&G in the development of the site(s) and progressing with the immediate analysis and acquisition of the site.
We also acknowledge the conditions of any engagement of Citius by M&G remain subject to those proposed terms and fees detailed in our email to you dated Wednesday 20th January, being reviewed and agreed by both parties.
This response, in particular in providing the address and other details of the Marsden Park properties, seems at odds with the 20 January Citius email which insisted upon confirmation of the terms in that email from M&G ‘so we can nominate the site to you formally’. Rather, in the 22 January Citius email, Mr Tobin acknowledged that the engagement by M&G of Citius remained subject to the terms detailed in the 20 January Citius email ‘being reviewed and agreed by both parties’. Nevertheless, Mr Tobin was still prepared to disclose the address and other details of the Marsden Park properties. In cross-examination, Mr Tobin accepted that the 22 January M&G email did not represent any sort of binding agreement with M&G.
While seeking to secure the agreement with M&G, Mr Tobin continued to advance the Marsden Park opportunity. On 19 January 2016, there was an email exchange between Mr Tobin and Mr Wall in relation to an analysis of sales and leasing of industrial facilities in Western Sydney.
On 21 January 2016, there was an email exchange between Mr Coltman, Mr Tobin and Mr Wall relating to a proposed offer which Citius wished to make for the Hargreaves Property and the Adjoining Property. Of course, there was no suggestion that Citius itself would be offering to purchase these properties on its own behalf: it was seeking an investor (i.e. M&G) to do so. Mr Tobin sought assistance as to the form of the offers in light of the fact that it may be necessary to relocate Busways’ operation from the Adjoining Property to the Hargreaves Property. Mr Coltman replied that Busways are ‘very slow in making decisions’. By contrast he wrote that ‘EJC on the other hand is a matter of going in at the right price. So I think we should prepare an offer based on Taylors previous offer that was excepted [sic] by EJC’. In response, Mr Tobin noted that he had discussed with Mr Wall the option of securing the Hargreaves Property first and then approaching Busways.
On 27 January 2016, Mr Tobin sent Mr Wall an email, copied to Mr Coltman, attaching an offer for each of the Hargreaves Property and the Adjoining Property. The offer in respect of the Hargreaves Property provided that:
(1) Citius was working with M&G in expressing its interest in the Hargreaves Property;
(2) Citius was interested in purchasing the Hargreaves Property for a purchase price of $40.812 million ($190/m2) plus GST if applicable, with a deposit of 5%;
(3) the purchaser required a minimum five week period to complete a due diligence in respect of the Hargreaves Property and to obtain the necessary approvals; and
(4) the interest in the Hargreaves Property recorded in the letter did not create a binding legal agreement.
As to the offer for the Adjoining Property, the evidence before me was to the effect that Busways responded that the offer would not be entertained. There was no objective evidence before me of any negotiations with Busways after this time. Mr Wall gave evidence that he contacted EJ Cooper at about this time and was informed that EJ Cooper had entered into a contract with Hargreaves in relation to the Hargreaves Property. Mr Wall then called Mr Greg Hargreaves of Hargreaves. They met in a café in Thornton on 28 January 2016 at which Mr Hargreaves signed an agency agreement or sales authority in favour of JLL. From this point, Mr Wall acted as an agent of Hargreaves with respect to the sale of the Hargreaves Property.
Mr Wall provided a written response to the offer on behalf of Hargreaves to Mr Tobin on 28 January 2016. The response advised that Hargreaves:
(1) wanted $210 per m2 totalling $45,108,000 (plus GST) and a 5% deposit, including a $350,000 non-refundable deposit; and
(2) required that M&G ‘must acquire the shares in the purchasing entity of the current contract’ and enter into a non-binding heads of agreement by 5.00pm on 29 January 2016.
This response made clear that MP3 had been granted an option to acquire the Hargreaves Property. Mr Tobin responded by an email to Mr Wall dated 29 January 2016 advising that he would not respond regarding the price until this had been reviewed with M&G.
On 29 January 2016, Hargreaves sent an email to Mr Wall providing further information in relation to the Marsden Park properties. This included a drop box containing aerial pictures, planning details, plans lodged and consents provided. Mr Wall sent this on to Mr Tobin on the same day. Mr Tobin said that he used this information for a feasibility model for the Marsden Park properties.
4.3 The feasibility model
Mr Tobin gave evidence that in January and February 2016 he developed and analysed the potential commercial development of the Marsden Park properties on the basis of construction on either or both of them. The first version of the feasibility model for the Hargreaves Property in evidence is dated 18 February 2016.
Mr Tobin gave evidence, in substance, that the purpose of the feasibility model was to consider all the costs and expenses involved in building and developing a property and the likely sale price or rental returns on a property in order for a client to determine whether it should proceed with a proposed investment.
Mr Tobin gave evidence that, when reviewing possible development sites, Citius commenced rudimentary calculations regarding the acquisition costs, building costs and approximate sale price and approximate rentals. These calculations became the basis of a feasibility model. He said it was the practice of Citius to conduct an exhaustive and comprehensive review in order to build an informed feasibility model for any project. He said that a feasibility model was updated as further information was provided, such as price increases or decreases, and costs associated with infrastructure works. He said Citius worked closely with its various experts and utilised Citius’s own experience in determining the assumptions to be built into the model on which the feasibility study was based.
Even if the structure of the payment of the fees was not essential, at the very least, I have formed the view that it was an inessential but important term which would signal the parties intention whether or not they were to be bound. In my view, the failure by the parties to address the structure of the payment of fees at this times tells very much against the existence of an intention to make an immediately binding contract.
At all times until written closing submissions, Citius’s case was that, if the alleged reframed agreement was terminated at any time after 2 March 2016, all the fees referred to in the 1 March email became payable, even if their calculation needed to wait the development of the Marsden Park project. In my view, any construction of the alleged reframed agreement to this effect is commercially absurd. That is to say that I consider it was commercially absurd that, in return for disclosing the Marsden Park details and offering to undertake development management or project management services which might never be performed, Citius would be entitled to all of the fees referred to in the 1 March email, which at the time were in the order of millions of dollars and now are in the order of approximately $18.8 million. In this regard, I refer to my conclusions about the limited commercial value of the Marsden Park details as set out in section 12.5.2 above.
As is evident, I have formed the view that there was no objective consensus as to the structure pursuant to which the fees in the 1 March email would be paid, most relevantly, the development management fee, the project management fee and the incentive fee. As noted above, that relates to when the payment or payments were to be made and on what basis (i.e. hourly or lump sum) as well as what was to happen on termination. In this context, I wish to note that the evidence concerning the structure of the payment of the fees in the 26 February letter was inconsistent with the discussion about fees during the 29 February conversation. There was no evidence that the structure of the payment of these three fees, in particular as set out in the 1 March email, was discussed in the 29 February conversation, or subsequently.
At best, on the evidence before me, it might be suggested that the structure of the payment of fees would be the subject of further discussion and agreement, and would most likely have been recorded in the ‘joint development management agreement which [w]ill be entered into by ADIA and LOGOS/Citius’ referred to in the 1 March email.
Citius appeared to contend that, in the absence of these matters being addressed as at 2 March 2016, matters relating to the structure of the payment of fees could be the subject of further agreement. However, as set out above, the absence of agreement on such important terms at this time tends very much against an objective intention to create an immediately binding agreement. The reference in the 1 March email to the need for a joint development management agreement begs the question: were enough of the essential or inessential but important terms of such an agreement, or the means for identifying them, agreed at this time? As these reasons make plain, the answer to this question is no.
These conclusions are confirmed by the terms of the draft CA prepared by Mr Tobin in early March encompassing the ‘agreement’ with Logos as he saw it. As set out in section 8.8, the draft CA contained three separate stages of services and four stages of fees, encompassing a variety of different fees, some of which were not referred to in the relevant contractual communications. Further, it contained a detailed regime for the invoicing and payment of invoices (including on termination), which were not referred to in the relevant contractual communications.
As to [792](4) above, the terms of the kind in [792](1) to (4) had not been resolved by 2 March 2016 in the relevant contractual communications. I have addressed the substance of many of those terms above when addressing the allocation of roles, the incentive fee and the structure of the payment of fees. However, these comments apply with equal force to the terms relating to the circumstances in which variations might be allowed, and the circumstances in which such an agreement may be terminated and how fees are to be adjusted or finalised as a result. I refer to my comments at [745] above.
In all these circumstances, Citius has not established an intention to create a binding contract between Logos and Citius as at 2 March 2016. I have reached this conclusion in respect of each of the matters identified in [792](1) to (4) above. As noted above, the greater the number and significance of the ‘unaddressed important matters’, the more likely it is that a court will conclude that the parties did not intend to create an immediately binding contract.
12.6.3 Other matters
I wish to record that I would have reached the same view on the intention issue even if I had not taken into account the incentive fee as set out in [792](2) above.
I have analysed the intention issue, and will analyse the enforceability issue, on the basis that the issue of the role that Citius would perform and the fees to be charged were not linked. However, I consider that there is a proper basis to conclude that these two items were linked, particularly in light of the evidence of Mr Tobin summarised at [486] and section 10.4 above. Nevertheless, I wish to record that, if I had taken any such a link into account, it would have strengthened my view that the role of Citius and the fees were essential terms to any alleged reframed agreement.
For completeness, I do not accept the submission of Logos that there was any issue regarding the identity of the parties or the properties in relation to the alleged reframed agreement. The substance of the submission was that it was unclear whether the alleged reframed agreement was entered into by Logos on its own behalf, or on behalf of the LALV Trust or a related entity of the LALV Trust.
As to the parties, from 26 February 2016, negotiations were conducted on the basis that the parties to any agreement would be Citius and Logos, and that Logos was acting on behalf of the LALV Trust. Of course, the fact that any agreement to purchase one or both of the Marsden Park properties, or any development management or project management agreement, would be with an entity nominated by Logos within the LALV Trust is not inconsistent with that conclusion.
As to the properties, all the negotiations between Citius and Logos took place in light of the opportunity arising from the Marsden Park properties. Mr Tobin and Mr Iliffe had been discussing the two Marsden Park properties with particular attention on 29 February to the Hargreaves Property in light of the statements of Mr Tobin that he had reached ‘agreement’ with Hargreaves to purchase the Hargreaves Property. Of course, it is true that the precise details of the Marsden Park properties had not been disclosed: that was at the heart of the negotiations between Citius and Logos at the time. As a result, I can see no issue regarding the identity of the properties to the alleged reframed agreement relevant to the intention issue.
There is then the issue of approvals. Logos submitted that Mr Tobin knew that Logos would require approval from the joint venture (relevantly ADIA) and/or internally within Logos to enter into the alleged reframed agreement in light of its terms, including relating to any development management or project management role for Citius. I refer to my comments in section 10.3. As a result, I do not consider that the issue of the approval of the joint venture (or internally within Logos) to purchase the Marsden Park properties in the context of the alleged reframed agreement is relevant to the intention issue.
Finally, as set out earlier in this section, I have formed the view that a number of essential matters or important matters (listed in [792]) had not been addressed between Citius and Logos as at the end of 2 March 2016. These were to be the subject of further discussion and/or agreement between the parties. Further, to the extent it is relevant to the intention issue, I do not consider that leaving these matters for further agreement between the parties provided a means to ascertain or identify these terms. Reasonable minds could disagree, in particular, on how the structure of the payment of fees and the terms of the kind set out in [792](4) could be addressed in a development of the scale of either or both of the Marsden Park properties. In my view, the finalisation of those terms would require the exercise of subjective judgment and compromise by each party in order to achieve a mutual consensus. Given the significance and nature of these terms, I am unable to conclude that there was an intention to be bound as at 2 March 2016. Further, and relatedly, I also consider there is no relevant finality in respect of these terms and I do not accept Citius’s submission that the alleged reframed agreement falls within the fourth category of Masters v Cameron.
For completeness, I do not consider that negotiations between Citius and Logos after the alleged reframed agreement was entered into cause me to change my view that the parties did not intend the alleged reframed agreement to be immediately binding. This is in a context where Citius itself did not rely upon any subsequent negotiations, save for the 16 June 2016 invoice.
As sections 8.8 and 9 record, there was much inconsistency in the positions of the parties between 10 March 2016 and April 2017 when Citius accepted Logos’s repudiation of the agreement then alleged. I note in passing that, during this period, the solicitors for Citius asserted that all invoices were issued pursuant to the ‘Consultancy Agreement’. I refer, for example, to [532] above.
12.7 Consideration of the enforceability issue
Given my findings in relation to the intention issue, it is not necessary to determine the enforceability issue. Nevertheless, I wish to record that I am not satisfied that the parties reached agreement on sufficient terms to constitute a legally enforceable agreement.
First, there was incompleteness in the sense that essential terms (set out in [792](1) to (4)) were not agreed as at 2 March 2016, nor was there an adequate means to ascertain them. Relevantly, as to any adequate mechanism to ascertain those essential terms, there was no means by which those terms could be objectively ascertained.[191] I refer to my comments in section 12.6.2 (excluding [795] and [799]) and section 12.6.3, in particular, [813] above.
[191]See, eg, Godecke v Kirwan (1973) 129 CLR 629; Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) 149 CLR 600.
Second, and for similar reasons, there was uncertainty in that terms, which I consider were essential to the alleged reframed agreement, were not agreed, nor was there an adequate objective means to ascertain them.
It is appropriate that I now address Citius’s argument that the determination of the allocation of roles could be implied. Citius alleged in [6] of the FASOC that the alleged reframed agreement contained a term that the determination of these roles should be, in substance, as required by (i.e. at the election of) Logos. As noted above, counsel for Citius said this was inherent in the 1 March email: the particulars to [6] of the FASOC alleged that each term is to be implied.
There are two points to make. First, that was not a term alleged by Citius prior to the trial. As noted above, in the ASOC, Citius alleged that it was a term that it would perform all of the project management and development management services. By contrast, in oral openings and its closing submissions, Citius alleged that the project management and development management services were to be performed ‘jointly’ by either Citius or Logos at the election of Logos. Counsel for Citius submitted that this term was obvious from the relevant contractual communications. However, it bears noting that it was not obvious to the legal advisers for Citius before the commencement of the trial. To the extent that it was said to be inherent or implied, in my view, such a term is not so obvious that it goes without saying.
Second, the term seems inconsistent with the 1 March email which refers to the allocation of roles to be determined ‘in future discussions’. The Logos qualification did not dispute the need for further agreement stating only that ‘[i]n principle we are ok’ with the matters in the 1 March email ‘subject to clarity of … allocations’. The Court will not fill a gap with an implied term where the parties were not silent.[192]
[192]See, eg, Relwood Pty Ltd v Manning Homes Pty Ltd [1990] 1 Qd R 481.
Further, it is appropriate to address the incentive fee term in the context of the enforceability issue. I consider that, on the evidence before me, Citius has not established that the incentive fee term was sufficiently certain given that the Performance Fee (on which it is based) is calculated by reference to all the projects and assets of the LALV Trust. Once again, I consider that the incentive fee was an essential term of the alleged reframed agreement: it was and remains a very significant part of the ‘price’ Citius claims to be entitled to. I refer to my comments in [797] above.
The submissions of Citius on this issue were not consistent. I refer to my comments in [672] above. For my part, it was not made clear to me how either of alternative A or B met the test in BP Refinery (Westernport) Pty Ltd v Shire of Hastings,[193] in particular, that either of these terms was so obvious that it goes without saying. I note that, in the context of the final oral submissions, counsel for Citius appeared to submit for the first time that alternative B was not to be implied but was a matter of construction of the alleged reframed agreement. Counsel made this submission in the context that, if the alleged reframed agreement had remained on foot, at the end of the 7 years, it would be necessary to undertake a process of contractual construction to work out exactly how that fee could be calculated. Counsel submitted that was not the case at hand. Nevertheless, it was not made clear to me how this process of contractual construction would work or how it would result in an enforceable incentive fee term, let alone on alternative B. In this context, I am conscious that there was no evidence as to how the incentive fee might be ascertained, and more relevantly, whether alternative A, alternative B, or some other alternative was the proper means of ascertaining the incentive fee for the purpose of the enforceability issue.
[193](1977) 180 CLR 266, 283.
As noted in section 11, Annexure 2 (i.e. the pure apportionment basis) was relied upon primarily as the basis for providing an estimation of damages for non-payment of the incentive fee. However, Citius relied upon Annexure 2 in support of the enforceability of the incentive fee term. I have concluded that, in the context of the enforceability issue, Annexure 2 does not provide a sufficient basis upon which a court could conclude that the incentive fee is capable of being objectively ascertained.
As set out in section 11.7, even if the re-opening application were allowed, there would be no evidence which addresses the appropriateness of the adjusted figures, or more relevantly, the appropriateness of the assumptions on which some of those adjusted figures are based, and/or the appropriateness of the methodology used in Annexure 2, in particular relating to the apportionment of the Total Liabilities of the Trust. Thus, the Court could not feel confident that Annexure 2 provides a sufficient basis on which to conclude that the incentive fee is capable of being objectively ascertained.
In this regard, the 1 March email stated in respect of the incentive fee that Logos was ‘to provide more detail of structure and calculation’. As set out in [797] above, the means of calculating the incentive fee had not been resolved by the time that the alleged reframed agreement was purportedly entered into, and was to be the subject of further discussion and/or consideration in light of the further details to be provided. This was because the incentive fee (payable in respect of the Marsden Park project) was based upon the Performance Fee which was calculated at the LALV Trust level.
In my view, it is clear that, in light of the matters taken into account in calculation of the Performance Fee, reasonable minds could disagree on the basis of calculating the incentive fee by reference to the Marsden Park project, including any adjustments or assumptions to be made. This is evident from the variety of methods which Citius has put forward in order to determine the incentive fee, or damages for breach of the incentive fee term. Even on the pure apportionment basis, it seems to me that reasonable minds could disagree on the basis for calculating the Performance Fee relating to the Marsden Park project. The clearest example is in relation to any attempt to apportion the Total Liabilities of the Trust in respect of the Marsden Park project. Further, I refer to my comments generally in [668]–[669] above. Thus, in the sense described in the Delaney appeal decision, the incentive fee term is also incomplete in the context of the enforceability issue.
This is quite apart from the fact that seeking to imply the pure apportionment basis into the incentive fee term seems inconsistent with the relevant contractual communications between the parties, as referred to in [826] above.
12.8 The Development Conditions
Finally, related to issue 3, I will deal with the submissions of Logos that any alleged agreement contained the Development Conditions.[194] The Development Conditions were based upon, and for the most part mirror, the Development Representations. I will deal with this further below.
[194]See [5](d)(i) of the further amended defence and counterclaim dated 14 December 2021, which refers to [5](b)(i).
For the reasons set out in section 13, I have concluded that (based on the pleadings and the way in which the trial was conducted) the Development Representations case was premised on the fact that both the Control Representation and the Tenant Representation were made. For similar reasons, and as a consequence, I have concluded that the Development Conditions case was premised on the basis that both of the Development Representations were made.
Further, for the reasons set out in section 13, I have concluded that Logos has not established that the Development Representations were made. This is because, while the Control Representation was made on 26 February 2016, the Tenant Representation was never made.
Thus, on the basis that the Development Conditions case was premised on the fact that both Development Representations were made, Logos has also not established that the Development Conditions formed any part of any alleged agreement with Citius.
However, in the event that I am wrong and the Development Conditions case was premised on the fact that either of the Development Representations were made, it is significant to note that each of the Development Representations relate to the 40 ha site i.e. the Marsden Park properties. Whilst I have concluded the Control Representation (relating to both of the Marsden Park properties) was made on 26 February 2016, I have concluded that no such Control Representation was made after that time. Rather, I have concluded that in the 29 February conversation, Mr Tobin only stated that Citius had control of the Hargreaves Property. In this regard, I refer to the evidence of Mr Iliffe and my findings in [373] above. As a result, the Control Representation made on 26 February 2016 was qualified and limited only to the Hargreaves Property in the 29 February conversation.
In any event, even if one or both of the Development Representations were made, I am not satisfied that Logos made it objectively clear that these representations were conditions precedent to any agreement. Based upon my findings set out above, any suggestion that they operated as conditions precedent was not made clear in the 29 February conversation, the 1 March email or the 2 March (4.51pm) email. Further, I refer to my comments at [375]-[376] above.
12.9 Answers to issues 1-3
As a result of the conclusions set out in this section, the answer to issue 1 is ‘no’ and it is unnecessary to decide issue 2 or issue 3.
13. ISSUES 4-7
Issues 4 to 7 relate to the counterclaim of Logos to the effect that Citius made the Development Representations in breach of the ACL. All those issues are premised on the basis that I have found a binding agreement between Citius and Logos. In light of my conclusions in section 12 and my answer to issue 1, it is unnecessary to address these issues. Nevertheless, it is appropriate that I say something about them.
First, I summarised the relevant principles in respect of a claim under s 18 of the ACL in the Delaney primary decision at [440] and make these comments in light of those principles.
Issue 4 relates to whether Citius made the Development Representations. Of course, in Logos’s further amended defence and counterclaim, there are two Development Representations, namely, that Citius represented ‘that it had control of the 40 Hectare Site‘ (i.e. the Control Representation) and had ‘a tenant or tenants for the 40 Hectare Site’ (i.e. the Tenant Representation). As is evident from the chronology of events, I have concluded that:
(1) Citius did not make the Tenant Representation; and
(2) Citius did make the Control Representation in the 26 February 2016 conversations.
As noted in footnote 3 above, the opening words of issue 5 (‘[i]f the answer to 4(a) [i.e. was the Control Representation made] and/or 4(b) [i.e. was the Tenant Representation made] is “yes”’) are inconsistent with Logos’s further amended defence and counterclaim. The formulation of the opening words of issue 5 are also inconsistent with the balance of issue 5 (‘but for those Development Representations, Logos would not have entered into the agreement’). In these circumstances, I have proceeded on the basis of the further amended defence and counterclaim.
My decision is confirmed by noting Mr Iliffe’s evidence at trial to the effect that the Control Representation and the Tenant Representation were both made and that both were important to Logos. This is also in light of the way that these issues were run at trial, namely, that the Control Representation and the Tenant Representation were both made, were both important to Logos and were part of a package. I refer to my comments at [746] above.
I am conscious that some of the evidence in relation to the conversations on 26 February 2016 lacked a degree of specificity. Nevertheless, as set out in sections 6.2.2 and 6.2.4, I am satisfied that Mr Tobin said words to the effect that he had control of the Marsden Park properties in these conversations. In this regard, I am satisfied that the words spoken have been proved with a degree of precision sufficient to enable the Court to be satisfied that they were in fact misleading in the proved circumstances, consistent with the principles set out by McLelland CJ in Watson v Foxman.[195]
[195](1995) 49 NSWLR 315, 318-19. This is in the context of the Control Representation alleged in the further amended defence and counterclaim.
For completeness, I note that Logos submitted that the evidence at trial was to the effect that Citius and Logos had a mutual understanding as to the meaning of ‘control’, namely, an exclusive right to deal with land, even if that right is pursuant to a non-binding agreement. By contrast, Citius submitted that it appeared from the evidence that ‘control’ may have a specific meaning in an industrial property development context, yet there was no evidence of what it actually meant in the context of the Marsden Park properties. Citius submitted that there were different levels of ‘control’. In oral closing submissions, Logos submitted that ‘control’ in the context of the Marsden Park properties could also bear its ordinary meaning. It is unnecessary to address these arguments in detail in light of the answer to issue 1. However, I wish to record that, in my view, the reference to ‘control’ in the context of the Marsden Park properties has its ordinary meaning, being, ‘to exercise restraint or direction over; dominate; command’.[196]
[196]Macquarie Dictionary (online at 31 October 2022) ‘control’.
As is evident from my comments in the chronology of events, I consider that the Control Representation (which I have found was made on 26 February 2016) was false and misleading because, on the evidence before me, Citius did not have control of the Marsden Park properties (in the sense set out in the previous paragraph) at that time, or indeed at any time prior to 2 March 2016. This is because Citius had not entered into an agreement, even a non-binding agreement, with Hargreaves granting it an option to purchase the Hargreaves Property. Secondly, there was no evidence before me that Citius had entered into any agreement with Busways to purchase the Adjoining Property. Indeed, no documentary evidence was produced to evidence any such negotiations other than the 27 January 2016 offer referred to in section 4.2 above.
Issue 5 is whether, but for the Development Representations, Logos would not have entered into the alleged reframed agreement. In light of my finding that the Tenant Representation was not made, it is not open on the pleadings for me to answer issue 5 in favour of Logos.
Issues 6 and 7 relate to the consequences for the alleged reframed agreement in the event that the misleading and deceptive conduct as alleged had occurred and caused Logos to enter into the alleged reframed agreement. As a result of my conclusions that there was no alleged reframed agreement between Citius and Logos in section 12, and also my conclusions in this section, it is unnecessary to answer these questions.
14. ISSUES 8-11
Issues 8 to 11 are premised on the basis that there was a binding agreement between Logos and Citius. In light of my conclusions in section 12, it is unnecessary for me to answer any of these issues.
It is also unnecessary for me to consider whether the alleged reframed agreement raised a different issue of breach and repudiation to that alleged in the FASOC. However, I wish to record two things. First, the alleged repudiation in the FASOC related to the repudiation of the ASOC agreement (indeed based on the draft CA) on 10 April 2017 and not the alleged reframed agreement. I refer to my comments in section 9.5 above. Second, Logos disputed the existence of the alleged reframed agreement in any event as these reasons disclose.
15. CONCLUSIONS
As a consequence of these reasons, I have concluded that:
(1) Citius has not established that there was an intention for the alleged reframed agreement to be an immediately binding contract; and
(2) assuming there was such an intention, Citius has not established that Citius and Logos reached agreement in the alleged reframed agreement on sufficient terms to constitute a legally enforceable agreement.
As a result, it is unnecessary for me to consider in detail the issues raised by the counterclaim. However, I have concluded that:
(1) Citius did not make the Development Representations: this is because, while Citius made the Control Representation on 26 February 2016, it did not make the Tenant Representation;
(2) as a result of (1), it is not necessary for me to consider whether Logos has established that the Development Representations were false and misleading in contravention of s 18 of the ACL, or that, but for the Development Representations, it would not have entered into the alleged reframed agreement; and
(3) nevertheless, the Control Representation made on 26 February 2016 was false and misleading.
The parties are requested to confer about the form of Order including in relation to the costs of the proceeding. In the absence of agreement as to the form of Order, I will hear the parties at a convenient time.
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