D Capital 2 Pty Ltd v Western
[2022] NSWSC 1064
•12 August 2022
|
New South Wales |
Case Name: | D Capital 2 Pty Ltd v Western |
Medium Neutral Citation: | [2022] NSWSC 1064 |
Hearing Date(s): | 11–15 and 18 July 2022 |
Decision Date: | 12 August 2022 |
Jurisdiction: | Equity - Real Property List |
Before: | Meek J |
Decision: | Plaintiff’s claim dismissed; Cross-claim upheld. Parties to bring in short minutes. |
Catchwords: | VENDOR AND PURCHASER – Put and call option deeds – block of 10 units sold in one line – interdependence of contracts – single conveyancer authorised to liaise with buyer and give permissions and receive notices under deeds – option period extended – initial buyer nominates corporate entity of which vendors’ agent is sole director and shareholder unbeknownst to vendors – but known to vendors’ conveyancer – contracts exchanged and notices to complete issued – dispute regarding notices and termination and ability of buyer to complete |
Legislation Cited: | Australian Consumer Law (NSW), ss 18, 26, 236, 239 |
Cases Cited: | Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570; [2008] HCA 57 |
Texts Cited: | A E V, “Contracts for the Sale of Land — Stipulations as to Time” (1965) 39 ALJ 63 |
Category: | Principal judgment |
Parties: | D Capital 2 Pty Ltd (Plaintiff) |
Representation: | Counsel: |
File Number(s): | 2021/257791 |
TABLE OF CONTENTS
Introduction - paragraph 1
Parties and representation - paragraph 7
Summary of outcome - paragraph 15
Submissions - paragraph 18
Pleadings - paragraph 20
Relief sought on the main claim - paragraph 25
Abandoned claims - paragraph 29
Relief sought on the main claim - paragraph 44
Issues - paragraph 48
Agreed issues - paragraph 53
Issues on the specific performance claim - paragraph 56
Clarifying what was raised by illegality and issues 7-10 - paragraph 57
Evidence - paragraph 68
Events - paragraph 73
2015-2017 - paragraph 74
2018 - paragraph 78
Agency agreements – March/early April 2018 - paragraph 81
Jogat incorporated – 9 April 2018 - paragraph 89
Client service agreements - paragraph 90
Put and Call Option Deeds – August 2018 - paragraph 104
Various payments and a commission refund - paragraph 110
DA application - 2019 - paragraph 114
Purchase of Windsor Property - 2020 - paragraph 115
Variation Deeds – October 2020 - paragraph 117
Mr Danckert prepares to take over the contracts – November 2020 - paragraph 121
Nomination Deed and Calls – 25 February 2021 - paragraph 137
Exchange of contracts – 26 February 2021 - paragraph 144
Funding explored and Ms Western engaged regarding on-sales – March April 2021 - paragraph 153
Windsor Property subdivision & Vendor tensions emerge - May 2021 - paragraph 180
First notices to complete – 3 June 2021 - paragraph 191
DC2 changes representation – early to mid-June 2021 - paragraph 199
Dispute over the first notices to complete – mid June 2021 - paragraph 208
Other funding explored – late June to early July 2021 - paragraph 222
Funding issues continue – early July 2021 - paragraph 227
Second notices to complete – 12 July 2021 - paragraph 229
Attempts to obtain funding – mid to late July 2021 - paragraph 234
27 July 2021 - paragraph 244
28 July 2021 - paragraph 258
29 July 2021 - paragraph 265
30 July 2021 - paragraph 271
Notices of termination – 2 August 2021 - paragraph 273
Post termination correspondence – August 2021 - paragraph 277
Vendors exchange with other purchasers and proceedings commenced - paragraph 286
The contracts - paragraph 287
Conveyancers - paragraph 296
Principles regarding notice to complete
Text and caselaw - paragraph 307
Time stipulations - paragraph 321
Equitable context to requirements for a valid notice - paragraph 330
Principles regarding completion and tender of performance
Completion in a traditional paper settlement - paragraph 339
Completion in an electronic settlement - paragraph 346
Electronic Conveyancing & PEXA - paragraph 349
The PEXA system - paragraph 352
Some elaboration - paragraph 353
Co-operation requirements - paragraph 366
PEXA in operation – an example - paragraph 375
Some observations regarding co-operation - paragraph 386
PEXA workspace details
Vendors’ history – up to 27 July 2021 - paragraph 392
Settlement status on PEXA as at 27 July 2021 - paragraph 393
Mr Boxsell joins the PEXA workspace – 30 July 2021 - paragraph 396
Duties of agents - paragraph 397
Source of duties - paragraph 399
Fiduciary duties proscriptive - paragraph 401
Estate agent duties - paragraph 406
Duration of duty - paragraph 408
Vendors’ evidence - paragraph 409
Admissibility of evidence of what a party would have done in a hypothetical situation - paragraph 411
The evidence - paragraph 414
Principles in relation to credit and disputed facts - paragraph 430
The witnesses - paragraph 433
Mr Danckert - paragraph 434
Ms Mammoliti - paragraph 453
Ms Western - paragraph 458
Ms Oakes - paragraph 477
Ms Pocknall - paragraph 479
The other vendors - paragraph 484
Findings on various disputed matters
Mr Danckert’s non-disclosure of his interest in DC2 to the other vendors - paragraph 488
Mr Danckert’s instructions regarding vacant possession or subject to existing tenancies - paragraph 500
Mr Danckert’s meeting with Ms Pocknall - paragraph 517
Disputed matters as between Ms Western and Mr Danckert - paragraph 530
Differences between form of Option Deeds contracts and the contracts exchanged - paragraph 534
Vacant possession - paragraph 537
35 or 42 days for completion - paragraph 544
2017 or 2019 standard form of contract - paragraph 546
Contentions regarding the duration of Mr Danckert’s agency and fiduciary obligations, the intention of Mr Danckert, the knowledge of Ms Western and duties of disclosure - paragraph 555
DC2’s contentions - paragraph 558
The vendor’s contentions - paragraph 565
Consideration - paragraph 570
Issue 1 - Were the second notices to complete invalid by reason of their terms?
The claimed defects - paragraph 593
Purported right to nominate another place of settlement - paragraph 596
Failure to intimate a right to terminate - paragraph 615
The subsidiary complaints - paragraph 626
Service - paragraph 628
The omitted date in paragraph 3 - paragraph 633
Issue 2 - Were the vendors not ready and willing and able to complete on the specified completion date? - paragraph 636
The alleged lack of being ready, willing and able - paragraph 640
Creating the electronic workspace and invitation to Mr Boxsell - paragraph 643
The nomination of 12:30 PM is the time for settlement within PEXA - paragraph 651
Late provision of settlement adjustment details - paragraph 656
Failure to provide written forms of adjustment sheets - paragraph 679
Alleged invalid default interest claim - paragraph 685
Land tax clearance certificate - paragraph 699
Failure to sign the FS schedule - paragraph 709
Vendors’ preference to sell elsewhere - paragraph 716
Were the vendors not ready and willing and able to complete up to the time of termination (on 2 August 2021)? - paragraph 719
Issue 3 - Did the vendors waive the essentiality of time or elect to affirm the contracts (issue 3)? - paragraph 742
Issue 4 - Were the notices of termination invalid by reason of the matters in issues 1-3? - paragraph 763
Issue 5 - Were the contracts validly terminated? - paragraph 766
Issue 6 - Has DC2 ever been or now ready, willing and able to complete the contracts?
Mr Danckert’s evidence - paragraph 785
As at 27 July 2021 and 2 August 2021? - paragraph 800
Currently? - paragraph 805
Issue 7 - Are the contracts illegal, void or voidable at the option of the vendors by reason of contravention of s 49 PSA Act (issue 7)?
Section 49 - paragraph 818
The issue - paragraph 822
Illegality – effect of the statute – legal principles - paragraph 830
Different effects of doctrine of illegality and maxim of clean hands - paragraph 845
The provisions of the PSA Act - paragraph 848
The vendors’ contentions - paragraph 855
DC2’s contentions regarding s 49 - paragraph 858
Purposive approach - paragraph 860
Second reading speech - paragraph 861
Consideration - paragraph 868
Issue 8 - Are earlier documents which predate the contracts being Nomination Deeds (see below) and Notices of Exercise of Call Options (Calls) and the contracts made in contravention of s 49 PSA Act (issue 8)? - paragraph 879
Issue 9 - Are the Nomination Deeds, Calls and contracts or any of them enforceable by DC2 even if Mr Danckert breached s 49 PSA Act (issue 9)? - paragraph 880
Clean hands principles - paragraph 881
The vendors’ contentions - paragraph 900
SBS’s contentions - paragraph 903
DC2’s contentions - paragraph 904
Consideration - paragraph 906
Issue 10 - If the contracts are enforceable should the Court decline to grant specific performance of the contracts (issue 10)? - paragraph 929
Issue 11 - Should the court grant specific performance of the contracts on terms or award damages in lieu of specific performance (issue 11)? - paragraph 950
Issues 12-17 - Claims against Ms Western and SBS for breach of fiduciary duty and other duties - paragraph 953
Issues 18-20 - Other claims against Ms Western and SBS and defences - paragraph 955
Issues 21-33 - Issues arising out of the second group’s cross-claim against SBS and Ms Western - paragraph 956
Issue 34 - Is Mr Danckert obliged to repay the commission to the other vendors? - paragraph 959
Issues 35-43 - Issues arising out of the second group’s cross-claim against Mr Danckert and DC2 - paragraph 964
Relief against forfeiture - paragraph 967
Conclusion - paragraph 974
Judgment
Introduction
HIS HONOUR: The proceedings involve various claims by the plaintiff (DC2) including a claim for specific performance against 10 defendants including nine vendors (vendors), which vendors agreed to sell their unit (units) in a strata title block in Terrigal (block) pursuant to contracts for sale dated 26 February 2021 (contracts).
The contracts had been the subject of a number of notices to complete, but relevantly notices to complete issued on 12 July 2021 (second notices to complete) nominating a date for completion being 27 July 2021 (specified completion date).
In the events which occurred, completion did not take place on the specified completion date and all 10 contracts were purportedly terminated pursuant to notices of termination dated 2 August 2021 (notices of termination).
Subsequently, the vendors sold the units to another developer Blue Sox Investments No 4 Pty Ltd (Blue Sox) pursuant to further contracts which were exchanged on 9 September 2021 (Blue Sox contracts) and to be settled on 22 September 2022.
Numerous issues were pleaded and contested, principally on the claims of DC2 for specific performance of the contracts and relating to the validity of the notices to complete, issues of whether the vendors had waived essentiality of time or elected to affirm the contracts and issues going to the validity of termination of the contracts.
A particular issue arose regarding the effect of s 49 Property and Stock Agents Act 2002 (NSW) (PSA Act) on the contracts.
Parties and representation
DC2 was incorporated on 22 September 2020, and Wayne Danckert (Mr Danckert) is the sole director and shareholder of DC2.
Mr Danckert is a real estate agent and also a sole director and shareholder of D Capital Pty Ltd (DC) the registered proprietor of a 9 industrial units at Walker Street South Windsor: CB 68–69[10] (Windsor Property)
DC2 and Mr Danckert are represented by Mr Kelly SC and Mr Stapleton instructed by HFW Australia.
The first defendant (Ms Western) is a licensed conveyancer and the director and 50% shareholder of the tenth defendant, Step by Step Conveyancing Pty Ltd (SBS). Ms Western is the registered proprietor of units 1 and 10 at the block.
The second to ninth defendants are respectively the owners of units 2 to 9 at the block (other vendors). The other vendors are essentially represented in two groups.
The first group is the eighth defendant (Mr O'Connell) who with Ms Western (first group) are represented by Mr Allen instructed by Avondale Lawyers.
The second group are the second to seventh and ninth defendants being respectively Mr Parker, Mr Hew, Mr Young, Ms Hopwood, MALK Property Pty Ltd (MALK), Mr Szepes and Mr Tayyar (second group) represented by Mr Pesman SC and Mr Crossland instructed by Watson Law Pty Ltd.
SBS is represented by Mr Gooley instructed by Maccallum Lawyers.
Summary of outcome
In the result I have found against DC2 in respect of the issues arising out of its claim for specific performance and in particular I determine that:
(1)the contracts were not illegal or void or voidable by reason of contravention of s 49 PSA Act;
(2)the second notices to complete were not invalid;
(3)DC2 was not ready willing and able to complete the contracts in accordance with their terms on 27 July 2021;
(4)the vendors did not waive the essentiality of time nor elect to affirm the contracts;
(5)the notices of termination were valid;
(6)Mr Danckert is obliged to repay the commission received by him as sought by the other vendors;
(7)if the contracts were not validly terminated, arguably DC2 has demonstrated it may currently be in a position to perform the contracts; and
(8)nonetheless, even if the contracts were not validly terminated, I decline to grant specific performance of the contracts on the basis of DC2’s unclean hands, notwithstanding a proposal of DC2 that specific performance be on terms that a copy of the judgment be provided to the Commissioner for Fair Trading, Department of Finance, Services and Innovation (Secretary);
(9)if I am incorrect in declining specific performance outright on the basis of unclean hands, I would condition relief by imposing the terms proffered by DC2 that a copy of the judgment be provided to the Secretary; and
(10)if I am incorrect that unclean hands precludes specific performance in the circumstances of this case, I would not decline to grant specific performance on the basis of delay.
Certain other claims by DC2 against Ms Western and SBS have been abandoned. In light of the findings that I have made, as I understand it, it is agreed that other claims by DC2 against Ms Western and SBS fall away and the balance of claims by the other vendors against Ms Western, SBS, DC2 and Mr Danckert fall away.
However, in the event that I am mistaken about that, in the process of the parties bringing in short minutes of order to give effect to my reasons for judgment, they should alert me to any claims that they say still need to be determined. In that event, I reserve consideration of any such claims.
Submissions
The parties provided written submissions both prior to the hearing and on the final day of hearing as well as their counsel addressing orally on the final day of the hearing.
I will make reference to the oral submissions by transcript page reference. For convenience, I will refer to the various written submission documents as follows:
(1)DC2’s opening written submissions (POS) and DC2’s closing written submissions (PCS);
(2)first group’s opening written submissions (G1OS) and first group’s closing written submissions (G1CS);
(3)second group’s opening written submissions (G2OS) and second group’s closing written submissions (G2CS); and
(4)SBS’s opening written submissions (SBSOS) and SBS’s closing written submissions (SBSCS).
Pleadings
The proceedings were commenced by a statement of claim filed on 9 September 2021.
There have been a number of amendments to the pleadings. The hearing commenced with the then current form of pleading by DC2 being a further amended statement of claim filed on 3 June 2022.
There was dispute on the opening days of the hearing arising from the fact that DC2 whilst pleading against both Ms Western and SBS claims of various duties, breaches of such duties and alleged loss suffered, had only sought damages or equitable compensation against Ms Western and not against SBS.
The dispute was ultimately resolved by my granting leave to DC2 to file a second further amended statement of claim (main claim) on the day the hearing, 13 July 2021 to which SBS sought to raise a number of fresh defences essentially indicating that DC2 was disabled from making claims for damages on the basis that it would be contrary to public policy to permit DC2 to sue on a retainer agreement made in breach (allegedly) of s 18 of the Australian Consumer Law (NSW) (ACL) or ss 249B and 249F Crimes Act 1900 (NSW) and further or alternatively that DC2 was not entitled to equitable compensation as a consequence of the application of the doctrine of unclean hands.
The amended defence to the main claim was filed on 14 July 2021 and DC2 filed a reply to that amended defence on the same day.
Relief sought on the main claim
The relief sought by DC2 on the main claim included claims for:
(1)declaratory relief to the effect that: the second notices to complete were invalid; the vendors had waived a stipulation that the specified completion date was the time of the essence of completion of the contracts; the notices of termination were invalid; DC2 was entitled to relief against forfeiture of its right to complete the contracts; the vendors are estopped from relying upon the notices of termination; the vendors were not ready, willing and able to complete the contracts and/or did not themselves tender performance of the contracts at the specified time for completion; that it was not open to the vendors to rely upon DC2’s failure to complete on the specified date for completion as a breach entitling them to terminate the contracts; and that the notices of termination were invalid or ineffective to bring the contracts to an end;
(2)declaratory relief that the ninth defendant (Mr Tayyar) was not ready, willing and able to complete his contract and/or did not tender performance of his contract on the specified date for completion;
(3)specific performance compelling the vendors to complete the contracts;
(4)alternative orders for damages or equitable compensation against the vendors, damages pursuant to s 26 ACL, and in the event that specific performance was refused orders pursuant to s 55(2A) Conveyancing Act 1919 (NSW) that the vendors will pay to DC2 with interest the deposits paid to them under the contracts;
(5)relief against Ms Western including: damages or alternatively equitable compensation; damages pursuant to s 26 ACL; repayment of the deposit paid to Ms Western to purchase units 1 and 10; and
(6)relief against SBS for damages or alternatively equitable compensation.
The various claims for relief were based upon pleaded matters which comprise approximately 25 pages of pleadings.
Essentially the pleaded matters were in respect of: the contracts, the second notices to complete and the notices of termination; allegations against Ms Western in respect of breach of an alleged collateral contract entered into on or about 25 February 2021 (collateral contract), breach of a fiduciary duty and a duty of care, breach of fiduciary duties and the duty of care said to be owed by SBS, allegations of alleged misleading and deceptive conduct by the vendors, claims of estoppel against the vendors and claims that they were not ready, willing or able to complete their contracts.
The main claim included a claim that the retainer with Coventry Conveyancing Services (CCS) was a sham and that Ms Western had made representation to Mr Danckert that she or the vendors would permit an extension of time for DC2 to complete the contracts if it was unable to obtain the necessary finance by the time of completion (extension of time for finance representation).
Abandoned claims
DC2 in its final written submissions expressly abandoned the claims in [38], [39]–[41], [47], [93]–[110] and [102]–[114] of the main claim: PCS [112]. The abandoned claims include claims based on:
(1)the allegation that Ms Western would act for DC2 ([38]) and that the retainer of CCS was a sham: [47];
(2)that Ms Western would act on the presales: [38];
(3)the extension of time for finance representation: [38];
(4)that Ms Western’s representations induced Mr Danckert to cause DC2 to agree to Jogat’s nomination: [40];
(5)Ms Western agreed with DC2 for the contracts be sold subject to existing tenancies rather than be subject to vacant possession: [41];
(6)the claim for relief against forfeiture: [93]-[101]; and
(7)the claim of alleged personal liability of Ms Western for breach of the collateral contract: [102]-[114].
I note that the allegation in [38A] is said to be based on the allegation in [38] which is now abandoned. The allegations in [38A] being that Ms Western was the agent of the other vendors and was aware that Mr Danckert was a shareholder and director of DC2 and had actual or ostensible authority to give the informed consent to Mr Danckert obtaining an interest in the units through DC2 and did give such consent.
It seems to me that the allegation in [38A] is also impliedly abandoned.
DC2 expressly accepts that the evidence of Ms Western and Ms Pocknall in cross examination is sufficient to prove that the retainer of CCS was beset with personal difficulties on the part of Ms Pocknall, but it was not a sham: PCS [112].
The first group, second group and SBS filed separate defences to the main claim.
The first group’s defences: disputed various allegations of fact; asserted that the scope and terms of the alleged agency of Ms Western was not materially pleaded; disputed that Ms Western owed any fiduciary duty in light of the alleged pleading that SBS was a fiduciary; asserted that DC2 knew the intent and purpose of the second notices to complete; claimed that the asserted waiver of time of the essence was a fallacy and in any event was not applicable; disputed entitlement to relief against forfeiture; disputed that the collateral contract arose; denied breaches of duties; denied that DC2 was misled; denied the allegations of estoppel; and asserted that the vendors were ready and willing to complete the contracts.
In summary the first group alleged (CB 66.30 [59]) that DC2: (a) never held unconditional funding funds or any other means of completing the contracts, (b) failed to provide the draft settlement figures to the vendors, (c) did not sign in or accept the invitation to the Property Exchange Australia (PEXA) settlement and (d) failed to complete the contracts.
The first group further alleged (CB 66.30 [59]) that Mr Danckert was conflicted in acting as agent for the vendors whilst being the sole director and shareholder of DC2 and that he and DC2 were engaged in obtaining a beneficial interest in the block for DC2 contrary to the PSA Act.
The second group’s defences disputed various allegations of fact and pleaded that Mr Danckert had breached s 49(1) PSA Act with the consequence that the contracts (and a number of prior documents arising out of Put and Call Option Deeds (Option Deeds see below)) were or are void for each illegality and that DC2 is not entitled to relief under the contracts or any relief arising from the breach or purported breach of the contracts.
SBS’s defences disputed various allegations of fact and pleaded that: representations alleged to have been made by Ms Western (if found to be made) were limited and did not extend time for completion beyond the specified completion date; if it is found that SBS had breached the alleged duty of care that the claims were apportionable claims within the meaning of Pt 4 of the Civil Liability Act 2002 (NSW) (Civil Liability Act) and consequently were limited to an amount reflecting SBS’s responsibility for the damage; DC2 was a concurrent wrongdoer, and DC2 had engaged in contributory negligence and that any damage should be reduced having regard to SBS’s share responsibility for the damage pursuant to s 9 Law Reform (Miscellaneous Provision) Act 1965 (NSW). SBS also disputed causation (relying upon ss 5D and 5O Civil Liability Act) and claimed that DC2 had failed to take reasonable steps to mitigate its loss.
In light of the abandonment of the representations, this part of SBS’s defences does not need to be considered.
I will refer to the particular issues arising on the pleadings below.
The second group filed a cross-claim on 21 November 2021.
The current form of cross-claim is a further amended cross-claim filed on 26 May 2022 (cross-claim).
Ms Western, SBS, Mr Danckert and DC2 are respectively the first to fourth cross-defendants to the cross-claim.
Relief sought on the main claim
The cross-claim seeks various relief against:
(a)Ms Western and SBS for damages, damages under s 236 ACL, equitable compensation and an order for the taking of an account of profits;
(b)Mr Danckert for specific performance (or alternatively repayment of sums paid pursuant to the contracts), and orders for taking of an account of profits and in the alternative damages and reimbursement of agency fees and alternatively damages under s 236 ACL; and
(c)DC2 for an order declaring the contracts void pursuant to s 239 ACL, and in the alternative orders for refusing to order the performance of the contracts and alternatively damages under s 236 ACL.
Other ancillary relief (interest and costs) is sought against all the cross-defendants.
The various claims for relief were based upon pleaded events which comprise approximately 15 pages of pleadings.
Essentially the pleaded matters were in respect of: the contracts, and a number of prior documents arising out of the Option Deeds; duties said to be owed by SBS or Ms Western; failure by SBS or Ms Western to issue a notice to complete on 23 April 2021; alleged misleading and deceptive conduct on the part of Ms Western representing that she had issued a notice to complete; withdrawal by Ms Western or SBS of notices to complete dated 3 June 2021 (first notices to complete); the second notices to complete in the event that the claims of DC2 were upheld; alleged breach by Ms Western and SBS of fiduciary obligations; alleged liability of Mr Danckert to reimburse fees; alleged misleading and deceptive conduct by all the cross-defendants arising from failure to disclose that Mr Danckert was the sole director and shareholder of DC2 (relevant ownership knowledge); alleged breaches of fiduciary duty owed by Mr Danckert to the second group as their agent in respect of the contracts.
Issues
At a pre-trial directions hearing I directed that the parties prepare an agreed statement of facts and issues.
At the request of the parties I was asked to consider dealing separately with questions regarding quantification of any loss or damage and or equitable compensation and account of profits arising from the Court’s determination of liability. On 17 June 2022, I make an order for separate determination in the following terms:
“1 Order pursuant to UCPR 28.2 that all questions of liability in relation to all claims for relief in the Further Amended Statement of Claim and Further Amended Statement of First Cross-claim be heard and determined by the trial judge separately at the hearing listed to commence on Monday 11 July 2022, such hearing being in advance of any hearing of the questions in Order 2.
2 Order pursuant to UCPR 28.2 that the trial Judge, separately determine if necessary, at a later time from the hearing listed to commence on Monday 11 July 202, the quantification of any loss or damage and or equitable compensation and account of profits arising from the Court’s determination of liability in relation to:
a. Paragraphs 7, 8, 9 and 10 of the Relief Claimed in the Further Amended Statement of Claim.
b. Paragraphs 1-4, 6, 7 and 10 of the Relief Claimed in the Further Amended Statement of Cross-claim.”
The agreed statement of facts and issues was prepared and provided on 28 June 2022 setting out 13 agreed facts.
More particularly the agreed statement of issues and facts specified 79 issues for determination.
I noted at the commencement of the hearing that the list of (79) issues was somewhat “daunting” and I gave encouragement to the parties to prepare a revised list of issues.
Agreed issues
On the final day of the hearing the parties provided to me a revised list of issues being an “Agreed Statement of Issues”. There are 43 listed issues. I annex this document to these reasons for judgment as Annexure A.
The Agreed Statement of Issues (agreed issues) characterises the issues in the proceedings by reference to the following categories:
(1)“A” - issues arising out of the claim for specific performance (issues 1-11);
(2)“B” - issues arising out of the main claim by DC2 :
(a)against Ms Western and SBS for breach of fiduciary and other duties (issues 12-17);
(b)regarding the other claims (issues 18 & 19); and
(c)regarding the defences (issue 20);
(3)“C” - issues arising out of the second group’s cross-claim against:
(a)SBS (issues 21-31);
(b)Ms Western (issues 32-33);
(c)Mr Danckert alone (issue 34); and
(d)Mr Danckert and DC2 (issues 35-43).
As will appear below it became obvious that if the issues arising out of the claim for specific performance did not succeed many of the other issues fall away.
Issues on the specific performance claim
In the outcome of the matter, having regard to my findings on the facts, the principal issues that arise for determination are the issues which I have summarised below but should be understood by reference to the wording in the agreed issues:
(1)Were the second notices to complete invalid by reason of their terms (issue 1)?
(2)Were the vendors not ready and willing and able to complete on the specified completion date (issue 2)?
(3)Did the vendors waive the essentiality of time or elect to affirm the contracts (issue 3)?
(4)Were the notices of termination invalid by reason of the matters in issues 1-3 (issue 4)?
(5)Were the contracts validly terminated (issue 5)?
(6)Has DC2 ever been or now ready, willing and able to complete the contracts (issue 6)?
(7)Are the contracts illegal, void or voidable at the option of the vendors by reason of contravention of s 49 PSA Act (issue 7)?
(8)Are earlier documents which predate the contracts being Nomination Deeds (see below), Notices of Exercise of Call Options (Calls) and the contracts made in contravention of s 49 PSA Act (issue 8)?
(9)Are the Nomination Deeds, Calls and contracts or any of them enforceable by DC2, even if Mr Danckert breached s 49 PSA Act (issue 9)?
(10)If the contracts are enforceable should the Court decline to grant specific performance of the contracts (issue 10)?
(11)Should the Court grant specific performance of the contracts on terms or award damages in lieu of specific performance (issue 11)?
Clarifying what was raised by illegality and issues 7-10
The framing of issue 7 by the parties was in the following form:
“If DC2 is now ready and willing and able to complete the Contracts, whether any contract whereby a person obtains a beneficial interest in property in contravention of s. 49 of the Property and Stock Agents Act 2002 (Act), is illegal, void and of no legal effect or voidable at the option of the other contracting party”
Part of the difficulty with the above framing of the issue in that way and the submissions is that there are at least two general principles regarding illegality that may preclude relief.
One principle is that a contract which is entered into with the object of committing an illegal act is unenforceable (Illegality – intent to commit an illegal act). A second principle is that the court will not enforce a contract which is expressly or impliedly prohibited by statute (Illegality – effect of statute): see e.g. St John Shipping Corporation v Joseph Rank Shipping Ltd [1957] 1 QB 267 per Devlin J at 283.
The types of illegality in this respect are concisely distinguished by Devlin J in St John Shipping Corporation at 283:
"There are two general principles. The first is that a contract which is entered into with the object of committing an illegal act is unenforceable. The application of this principle depends upon proof of the intent, at the time the contract was made, to break the law; if the intent is mutual the contract is not enforceable at all, and, if unilateral, it is unenforceable at the suit of the party who is proved to have it. ... The second principle is that the court will not enforce a contract which is expressly or impliedly prohibited by statute. If the contract is of this class it does not matter what the intent of the parties is; if the statute prohibits the contract, it is unenforceable whether the parties meant to break the law or not. A significant distinction between the two classes is this. In the former class you have only to look and see what acts the statute prohibits; it does not matter whether or not it prohibits a contract; if a contract is deliberately made to do a prohibited act, that contract will be unenforceable. In the latter class, you have to consider not what acts the statute prohibits, but what contracts it prohibits; but you are not concerned at all with the intent of the parties; if the parties enter into a prohibited contract, that contract is unenforceable."
The second form of illegality, “Illegality – effect of the statute”, was clearly the subject of submissions. It is less clear to me that “Illegality – intent to commit an illegal act” was directly engaged with as between the second group and DC2.
Issue 8 seemingly in its terms sought to extend the illegality question under issue 7 to the Nomination Deeds and Calls. Issue 9 (despite its wording), when regard is had to the submissions, raised the defence of unclean hands. Issue 10 raised other equitable discretionary considerations as defences to specific performance, but principally the question of the effects of delay.
The G2CS submissions of Mr Pesman SC (G2CS [20], [46]-[47], [51]) that Mr Danckert breached s 49 on exchange of the contracts on 26 February 2021 and that that breach renders the contracts unenforceable in the case of DC2 arguably raised the issue of “Illegality – intent to commit an illegal act”.
I say ‘arguably’ because one of the ways that Mr Pesman SC says enforcement of the contracts is affected is by reference to the third category of cases mentioned by Gibbs ACJ in Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410 at 413, namely that a contract even if lawful on its face, may be unenforceable if it was made in order to effect a purpose which the statute renders unlawful: G2CS [20], [46]-[47].
Mr Kelly SC did in submissions mention the question of intent or “mens rea”: PCS [93]. However, on reviewing the submissions further, it is not clear to me that DC2 actually engaged on the issue of whether the contract is illegal because DC2 or Mr Danckert intended to commit an illegal act.
Because “Illegality – effect of the statute” was clearly raised and argued I will deal with that issue.
Lest a party considers that “Illegality – intent to commit an illegal act” was not adequately raised or that inadequate opportunity was given to address it, I will give the parties an opportunity to firstly address the question of whether this form of illegality is actually raised on the pleadings or as part of agreed issue 7 and potentially to provide further submissions on the point should they wish to do so. However, it may be that in light of my findings that there is no need to pursue this matter.
Evidence
DC2 read affidavits from Mr Danckert (CB tab 10 and tab 13) and Giuseppina Mammoliti (referred to in some of the evidence as Pina) (Ms Mammoliti): CB tabs 11 and 12.
The second group read affidavits from each of the second to fifth defendants, the seventh and ninth defendants and in the case of the sixth defendant an affidavit by Kevin Lee (Dr Lee): CB tabs 14–20.
The first group read affidavits from each of Ms Western and Mr O'Connell and Ashley Tracy Oakes (Ms Oakes), a licensed conveyancer: CB tabs 21–23.
SBS read an affidavit from Lianne Pocknall (Ms Pocknall): CB tab 24.
The affidavit of Mr Danckert sworn on 25 May 2022, although in its terms in paragraph 3 is said to be a response to the affidavit of Ms Western dated 4 March 2022, was in fact a response to an affidavit of Ms Western which was at that stage unsworn but had been served. The affidavit of Ms Western was eventually sworn on 26 May 2022. Accordingly whilst there is a seeming disconnect between Mr Danckert’s reply affidavit of 25 May 2022 to the affidavit of Ms Western sworn 26 May 2022, it is explained by what I have just indicated above, following a clarifying discussion with Mr Stapleton of counsel for Mr Danckert: T 75, 77.
Events
The following facts, drawn from the affidavit, documentary and narrative evidence are, except as I otherwise indicate, either uncontested or not seriously in dispute.
2015-2017
From about 2015, Mr Danckert traded as a real estate agent with his wife under the business name "Express Property": CB 69[11].
From about 2016, Mr Danckert formed a business relationship with Ms Western introducing multiple vendors of properties he had to her: CB 69[13].
Ms Western says she first met Mr Danckert when he delivered an exchanged contract to her office on or about 20 November 2017 for one of her clients who sold a property through his agency: CB 172[4].
In or around November 2017, discussions were had between the first group and second group owners regarding a collective sale of the units comprising the block: CB 174[16]. At that stage a collective purchase price of $4.1 million with a $100,000 option fee for a 12-month put and call option was discussed: CB 174[16].
2018
Ms Western indicates that in or about December 2017 or early January 2018, she had discussions with Mr Danckert regarding the units in the block asking him if he knew anyone who was interested in purchasing the development site to which he says he responded he was sure that he could find someone and would ask around: CB 174[17].
In January 2018, there were communications by text or email as between Mr Danckert and Ms Western from her to the other vendors regarding potential purchase of the block for $4.5 million: CB 174[18]–[21].
During February to May 2018, there were further communications regarding potential offers to purchase: CB 175[22]–[28].
Agency agreements – March/early April 2018
In or about March 2018 or early April agency agreements were signed between each of the vendors and Mr Danckert as agent nominating SBS as the conveyancer (agency agreements): CB 239–260.
The agency agreements for Ms Hopwood, Mr Szepes and Mr Tayyar appear to have been signed on 14 March 2018, and for Ms Western on 30 March 2018. Mr Pesman SC says the vendors each signed between 13 March and 9 April 2018. Nothing of substance turns on the actual date of signing.
The agency agreements were in a standard form as produced by Estate Agents Co-operative Ltd (EAC).
The appointment under the agency agreements were in the following terms:
“In consideration of the Licensee agreeing to use the Licensee's best endeavours to sell the Property the Licensee is appointed and authorised to sell the Property on behalf of the Principal, as exclusive selling agent for the sale of the Property, for the period ("the Exclusive Agency Period") commencing on 30/03/2018 and ending at midnight on 30/04/2018 AND as non-exclusive agent for the sale of the Property for the period ("the Non-Exclusive Agency Period") commencing at the expiration of the Exclusive Agency Period and terminating upon the sale of the Property or upon termination by seven days prior written notice given by the Principal or the Licensee to the other. Where the Exclusive Agency Period exceeds 90 days, the Principal may terminate the Agreement (without penalty) by giving 30 days notice in writing to the Licensee at any time after the end of the first 90 days of the term except where the agency agreement is in respect of the sale of residential property where the contract for sale provides for the construction by the Principal of a dwelling on the land.” (e.g. CB 240, 2724.207)
The remuneration provisions contained in section C of part 2 of the agency agreement for Ms Western for unit 1 is as follows:
“The Licensee's GST inclusive remuneration shall be calculated on the GST inclusive selling price in the following way:
… Flat Fee … $6,750.00 NIL As Agreed …” (CB 240, 269, 2724.207)
The remuneration provisions contained in section C of part 2 of the agency agreements for Ms Western for unit 10 (CB 256) and for the other vendors (Mr Hew CB 243, 266, 280; Mr Young CB 245, 271; MALK CB 249, 274; Mr Tayyar CB 254, 260; Ms Hopwood CB 263; Mr Parker CB 277) is as follows:
“The Licensee's GST inclusive remuneration shall be calculated on the GST inclusive selling price in the following way:
… Flat Fee … $6,750.00 …” (CB 2724.207)
The detail for Ms Szepes’ agency agreement is illegible: CB 258.
Part 3 of the agency agreements set out a number of terms and conditions, including provisions regarding remuneration as follows:
“3.1 Remuneration - The Licensee shall be entitled to the remuneration set out in Item C of the Particulars ("the Remuneration") in the following circumstances (whether or not the Licensee is the effective cause of sale):
(a) if during the Exclusive Agency Period the Principal enters into a contract (which includes by way of an option being exercised) for the sale of the Property, or of an interest in the property, to any person (including a co-owner), whether or not that person was introduced to the Principal or to the Property by the Licensee.
(b) if the Principal is a corporation - then in addition, if during the Exclusive Agency Period any person acquires by allotment, or enters into a contract (which includes by way of exercise of an option) to acquire by allotment or to purchase (either alone or jointly with another or others), one or more shares, or an interest in one or more shares, in the capital of the Principal, whether or not that person was introduced to the Principal or to the Property by the Licensee.
(c) if at any time during the Non-exclusive Agency Period a person who has been effectively introduced to the Principal or to the Property by the Licensee during either the Exclusive Agency Period or the Non-exclusive Agency Period, or another person introduced to the Principal or to the Property by such a person, enters into a contract (which includes by way of exercise of an option) to purchase (either alone or jointly with another or others) the Property or an interest in the Property, or
(d) if the Principal is a corporation - then in addition, if at any time during the Non-exclusive Agency Period a person who has been effectively introduced to the Principal or to the Property by the Licensee during either the Exclusive Agency Period or the Non-exclusive Agency Period, or another person introduced to the Principal or to the Property by such a person, acquires by allotment, or enters into a contract (which includes by way of exercise of an option) to acquire by allotment or to purchase (either alone or jointly with another or others) one or more shares, or an interest in one or more shares, in the capital of the Principal.
3.2 When Remuneration is Due and Payable - The Remuneration is due and payable by the Principal to the Licensee:
(a) Immediately upon completion of the sale of the Property; or
(b) The Principal and the Purchaser entering into a mutual agreement (whether written or verbal) to terminate or rescind the contract or otherwise not proceed with the sale; or
(c) If the sale is not completed owing to the default of the Principal after the parties have entered into a binding contract; or
(d) Upon the termination of the contract by the Principal as a result of the default of the Purchaser and the Remuneration is the same or less than the amount of the deposit which is forfeited to the Principal.” (CB 2724.208)
Jogat incorporated – 9 April 2018
On 9 April 2018 Jogat Pty Ltd was incorporated. Gameli Tamakloe (Mr Tamakloe) is a director and one of two shareholders of Jogat, the other shareholder being John Obeya: CB 2456–2458.
Client service agreements
On 10 April 2018 ten contracts for sale (Terrigal JRB contracts) were issued to Regency Lawyers with Terrigal JRB Pty Ltd atf Terrlgal JRB Trust (Terrigal JRB) noted as the Purchaser for a sale price or $450,000.00 per unit: CB 175[25].
On or about 10 and 11 April 2018, Ms Western prepared and sent to the other vendors a package of documents (see, for example, CB 320-332) being: (a) an introductory letter; (b) a property questionnaire; (c) an inclusions list; (d) an initial tax invoice; (e) an estimated account; and (f) a document headed “Client Service Agreement” (client service agreements): G2OS [24(c)].
Mr Parker (CB 307-310), Mr Hew (CB 316-319), Mr Young (CB 329-332), MALK (CB 298-301) and Mr Szepes (CB 281-284) did not sign and return the client service agreements to Ms Western, such signature and return being a condition of acceptance of the offer constituted by the transmission to the cross-claimants of those documents (p 3 of each Agreement). Mr Tayyar (CB 285-288), Ms Hopwood (CB 289-292) signed the client service agreement: G2OS [24(i)].
Numerous communications took place between SBS, Regency Lawyers and Mr Danckert in relation to amendments required to the Terrigal JRB contracts, arranging access to the units for Terrigal JRB to view and chasing for exchange of contracts to take place: CB 175[26].
In around mid to late May 2018, negotiations with Terrigal JRB broke down and the Terrigal JRB contracts were not exchanged: CB 175[27].
In approximately May 2018 Ms Mammoliti was engaged by Mr Danckert to assist with respect to finance for purchase of his personal property: CB 89[7].
On or after 22 May 2018, Mr Danckert made Ms Western aware that Jogat Pty Ltd as trustee for the Jogat Investment Trust (Jogat): CB 175[29].
In about June 2018, Mr Danckert caused Express Property Sales Pty Ltd (EPS) to be incorporated, for the purpose of his trading as a real estate agent: CB 69[12]. Nonetheless, Mr Danckert holds an individual real estate license: CB 69[12], 226.
On 11 July 2018, Jogat’s solicitor Phil Weldon from SCA Legal prepared draft Put and Call Option Deeds: CB 176[30].
There were negotiations regarding the deeds.
In or about August 2018 Mr Danckert says he became aware from conversations with Ms Western that she was negotiating on behalf of herself and the other owners of the properties (i.e. the vendors) to sell the 10 units in "one-line" to a developer: CB 69[14].
He says at that time he had discussions with Mr Tamakloe regarding development opportunities: CB 69[15]–[17].
He then shortly after had discussions with Ms Western who he says called her to indicate that the vendors had agreed to a price of $4.5 million: CB 70[18]–[19].
Shortly after that Mr Tamakloe instructed Mr Weldon: CB 70[19], 176[30].
Put and Call Option Deeds – August 2018
On 21 August 2018, Put and Call Option Deeds were entered into between each of the owners in the first and second group and Jogat (the Option Deeds noted above) whereby the vendors (described as owners) each agreed to grant to Jogat a call option to require the owner to sell the block on certain terms and conditions and Jogat agreed to grant to the owners a put option to require it to purchase the block from the owner on certain terms and conditions: CB 176[32], 335–432.
The Option Deeds contained provisions regarding interdependence of the documents in cl 8.3 as follows:
“8.3 Interdependence of documents
The Owner and the Buyer agree that:
(a) this Deed is interdependent with each and all Other Put and Call Option Deeds; and
(b) the Exchanged Contract will be interdependent with each and all Exchanged Other Contracts
and as a consequence:
(c) a breach of an Other Put and Call Option Deed shall be deemed to be a breach of this Deed;
(d) a breach of an Exchanged Other Contract shall be deemed to be a breach of the Exchanged Contract;
(e) the rescission or termination of an Other Put and Call Option Deed shall entitle the Buyer to terminate this Deed without any liability to the Owner;
(f) the rescission or termination of an Exchanged Other Contract shall entitle the Buyer to terminate the Exchanged Contract without any liability to the Owner;
(g) the exercise of the Put Option under an Other Put and Call Option Deed is conditional upon all Other Owners exercising the put option under their Other Put and Call Option Deeds at the same time, and
(h) completion of the Exchanged Contract is conditional upon the simultaneous completion of all Exchanged Other Contracts.” (CB 341)
There were provisions in relation to the owners’ conveyancer’s authority to act in cl 9, as follows:
“9.1 General
The Owner acknowledges that the Owner's Conveyancer has full authority to act on behalf of the Owner in relation to the Deed and the Contract.
9.2 Dealings through Owner's Conveyancer
The Owner shall ensure that all communications and dealings with the Buyer under the Deed or the Contract is managed through the Owner's Conveyancer and that the Owner's Conveyancer is authorised to give any permissions or received any notices required to be requested or given under this Deed.” (CB 341)
Further, there were provisions addressing dealings by owners in cl 11, as follows:
“11.1 Dealing by Owner
Before the Call Option End Date or earlier rescission or termination of this Deed, the Owner must not deal with its interest in the Property in any way except in accordance with this Deed, without the Buyer's prior written consent. This prohibition includes, but is not limited to, any of the following dealings:
(a) the sale of the freehold;
(b) a lease,
(c) licence or parting with possession;
(d) granting a security interest, mortgage, charge or pledge;
(e) increasing any amount of money secured over an interest in the Property on the date of this Deed whether by a security interest, mortgage, charge or pledge;
(f) granting of any other interest such as an easement, positive covenant or restriction on title; or
(g) any conversion, consolidation or subdivision.” (CB 343)
Under the Option Deeds "Contract" was defined to mean "the contract for sale of the Property contained in Annexure A, subject to any variation required or permitted by this Deed": cl 16.1(i): CB 527.
Each Contract for the units in Annexure A were in the standard form of contract for the sale and purchase of land, Law Society and Real Estate Institute 2017 edition (2017 edition): CB 538.
Various payments and a commission refund
On 22 August 2018, a call option fee and security fee was paid by Ms Western to the trust account of EPS: CB 176[32]. The exercise of the option was to occur by 3 October 2019. However, a development consent relating to the block was delayed and a further extension was allowable under the deed for a year to 3 October 2020: CB 176[32].
On 22 August 2018 Mr Danckert paid his commission of $13,500 (for her two units) back to Ms Western by deposit to her daughter's bank account: CB 71[26], 433.
Between 22 and 24 August 2018 Jogat deposited $450,000 into the EPS Trust Account (being a 10% deposit due under the deed of $45,000 per unit) and Mr Danckert dispersed the deposits under instructions from Ms Western less a commission payable to Mr Danckert of 1.5% of the price being $6,750.00 including GST: CB 70[23].
Further, on or about 22–24 August 2018 Mr Danckert says he had a conversation with Ms Western in words to the following effect:
“Her: Because I have helped you get the sale I want you to pay me back the commission I owe you for my units. I want you to pay the money back to my daughter’s account so that the other vendors have no trace of it.
Me: It makes no difference to me. Ok.” (CB 71 [25])
DA application - 2019
In or about December 2019 Jogat applied to the Central Coast Council for approval to demolish the properties and construct 13 new apartments on the land (DA application): CB 71[27].
Purchase of Windsor Property - 2020
On or about 8 May 2020, Ms Western was engaged by Mr Danckert to act on his behalf as director of DC and for DC in relation to the purchase of the Windsor Property which contracts were exchanged and settlement was due to take place on 15 October 2020: CB 172[5]. Ms Western states that settlement was delayed due to DC having issues in obtaining the necessary finance to complete the purchase and a Notice to Complete was issued on 28 October 2020 requiring completion by 16 November 2020: CB 172[5].
By about September 2020 DC had acquired the Windsor Property. The purchase of which settled on 30 November 2020 and Ms Western acted as conveyancer for DC: CB 71[28]. Mr Danckert incorporated DC2 to buy another property in Windsor: CB 71[30].
Variation Deeds – October 2020
By October 2020 the DA application had not been approved and Jogat was not in a position to exercise its option under the Option Deeds: CB 71[31].
On (it seems) 8 October 2020 (CB 478) variation deeds for the Option Deeds (Variation Deeds) (CB 442-491) were entered into extending the option period for each of the Option Deeds to 28 February 2021 on the basis that an additional $20,000 was paid for each unit: CB 71[32], 176[33]. Mr Weldon was at this stage still representing Jogat although now practising with a firm Norwest Family Law: CB 176[33].
In November 2020 Ms Mammoliti assisted Mr Danckert to purchase the Windsor Property: CB 89-90[8]-[9].
Eventually settlement in respect of the Windsor Property took place on 30 November 2020: CB 173[6].
Mr Danckert prepares to take over the contracts – November 2020
In late November 2020 Mr Danckert had a conversation with Mr Tamakloe. He says Mr Tamakloe informed him that he would not be able to raise funds to complete the purchase of the block and at this stage Mr Danckert decided to use DC2 to buy the block: CB 72[35]–[38].
On or about 15 December 2020, a development application in respect of the block was obtained: CB 176[34].
In or around "November/January 2020" [sic] or "maybe later but before the plaintiff exchanged contracts" Mr Danckert says he had a conversation with Ms Western in words to the following effect:
“Me: Should I tell the vendors that I'm behind the purchases?
Her: No, don't tell them
Me: Don't you think I should?
Her: They don't need to know” (CB 110[6])
In early February 2021 at around the time he was discussing with Ms Western how to arrange for DC2 to exchange contracts, Mr Danckert says he had a conversation with her in words to the following effect:
“Me: Daniel Young has been calling me. Would you like me to tell the other owners I am the buyer?
Her: No. Don't tell Daniel anything.” (CB 111[7])
Mr Danckert states that in relation to his conversations with Ms Western (CB 110–111[6]-[7]) he did not take the issue further with her in circumstances where he was aware that she was representing the vendors and she consented to DC2 becoming the purchaser and understood that he was the sole director of DC2. He states that "So far as I was concerned, Ms Western had consented to the transaction on behalf of her clients": CB 111[8].
Mr Danckert states that after his conversation with Ms Western (CB 110[6]) "as requested by Ms Western as the owners' conveyancer I did not solicit any communication with the other owners until 28 July and 4 August 2021": CB 111[9]. However, Mr Danckert accepts that from time to time he did take telephone calls from Mr Young: CB 111[9].
In early January 2021, Mr Danckert spoke with Ms Western. She states that he advised her that "he was considering taking over the Option as the Directors of Jogat were hopeless and were not going to be able to get the finance approval to be able to complete": CB 176[35].
She states that he asked him:
"who can I get to act on my behalf" (CB 176[35]).
Ms Western states that she advised Mr Danckert that she was unable to act on Mr Danckert’s behalf as she was already acting for all the vendors, and she suggested that Mr Danckert use and nominate CCS as "we had previously worked well with the business": CB 176[36].
Whilst there is some dispute about exact timing (as to whether it was mid-January or early February), more likely in or around mid January 2021 Mr Danckert instructed Ms Mammoliti of First Step Financial Solutions Pty Ltd (FSFS) to seek finance to complete the purchase of the properties: CB 74-75[54]; CB 89–90[8].
Ms Mammoliti was called by Mr Danckert, and they had a conversation to the following effect:
“Wayne: I'm considering taking over this Terrigal property from Jogat. Would I be able to get the funding myself because the units are all rented? I won't be demolishing the units until I get all my plans approved. Will the rent assist with the mortgage?
Me: Yes that would help. Send me a list of tenants and how much rental is coming from the property.” (CB 91[14])
Ms Mammoliti then contacted a number of lenders to ascertain their interest in lending in respect of the properties, and following her preliminary investigations (CB 91[15]–[16]) contacted Mr Danckert in or around mid-January 2021 and had a conversation to the following effect:
“Me: I've contacted a few lenders and they've said they like Terrigal, it’s the next hot spot on the Coast and they'd be interested in doing the construction. They will require pre-sales for the construction facility though. However, there'll be a shortfall for the lend. I have done the calculations and you'd be short by about $900k to $1m. You could use the Windsor Property as security once it's been registered for strata.
Wayne: They've given me a plan to proceed with the strata of the Windsor Property. It's full steam ahead to finalise everything to submit the documentation to the Land Registry Office for the registration of strata for Windsor Property. Would I be able to get the construction loan?
Me: Yes, as I said, you need pre-sales in place to cover the cost if they were going to do the construction.
Wayne: Ok, I'm going to proceed with taking over the Terrigal Properties from Jogat” (CB 91-92[16])
On 3 February 2021 Ms Mammoliti made contact with a potential lender Arch Finance Pty Ltd (Arch Finance) to obtain finance of approximately $4.5 million to purchase the block: CB 92[17].
Between 3 February 2021 and early April 2021, Mr Danckert exchanged various emails with Ms Mammoliti regarding offers from various lenders: CB 75[57].
In early February 2021, Ms Pocknall was asked by Ms Western if she could act for Mr Danckert in relation to the purchase of the block: CB 220[2].
On 11 February 2021 Mr Danckert had forwarded to Ms Western an email setting out the rental value for each of the units: CB 93[24], 666–667.
Nomination Deed and Calls – 25 February 2021
During late January and February 2021 right up until 25 February 2021, Mr Danckert negotiated a nomination agreement with Mr Tamakloe and negotiated the purchase of the block with Ms Western: CB 72[40].
On 25 February 2021, Jogat, DC2 and a number of other parties entered into a Nomination Deed (Nomination Deed). Jogat nominated DC2 be the nominee under the Option Deeds for the purchase of the units and to assign its right in the DA consent and plans on terms set out in the Nomination Deed (amongst other matters): CB 72[42], CB 177 [38], 697–716.
The Nomination Deed precluded the nominee from encumbering the ‘Strata Lots’ (defined as being lots 1-10: clause 1.1x: CB 700-701; i.e. the units) other than by way of a registered first mortgage where the secured sum did not exceed 65% of the valuation amount until the "second sum" is paid in full: cl 4.1a (CB 703).
The "Second Sum" was defined to mean the sum of $900,000 pursuant to cl 1.1w: CB 700.
Seemingly also on 25 February 2021 (I say “seemingly” because the documents are actually undated) DC2 pursuant to the Option Deeds made the Calls requiring the vendors to sell the units to DC2: CB 72[41], CB 176 [37], 679–696.
Mr Danckert says that by this time Ms Western had acted for him in relation to the number of matters, and he had a very high level of trust for her: CB 73[44].
Towards the very end of the negotiations about the purchase of the block Mr Danckert says he had a conversation with Ms Western at her office in words to the following effect:
“Me: You are acting for the vendors. I should be getting a solicitor to act for me on this.
Her: Don't worry. I will act for you but I will introduce you to Lianne who is a friend of mine who is a conveyancer. Her name (Coventry Conveyancing) will go on the contract so the other vendors don't know I am acting for you but I will do all of the work.
Me: ok. How is that going to work?
Her: I will arrange a meeting.
Me: OK.” (CB 73[45])
Exchange of contracts – 26 February 2021
At about the same time Mr Danckert says Ms Western arranged for her to meet Ms Pocknall at Ms Western's offices which they did: CB 73[46].
At the meeting (which Mr Danckert says took place on 26 February 2021) his version of the conversation is as follows:
“Her: Lianne wants you to sign an agreement.
Me: Ok. [I signed that agreement].
Lianne: What are you doing Wayne?
Me: We are going to build 13 prestige units on a site at Terrigal.
Lianne: Sounds good. Got to go. See you later.
Me: Elisa, I need to speak to you. [then Lianne left]. Does she know what she is doing?
Her: Don’t worry I will be doing all of the work.
Me: This is a complex settlement being ten units, ten banks. How is that going to work?
Her: I can log into her PEXA to do the settlement.
Me: OK.” (CB 73[46])
Mr Danckert says that immediately after the conversation but whilst he was still at her office Ms Western put all the contracts in front of him and said he should sign them and had a conversation with words to the following effect:
“Her: Here are the contracts for you to sign.
Me: OK
[By this time, I had already instructed my finance broker to start seeking finance to settle on the properties and was aware I may not be able to secure financing within 6 weeks that is the usual settlement period.]
Me: I am going to need time to arrange the finance. If I need an extension of time, you 're going to have to organize it for me.
Her: Ok. I can do that.
By that time, we had worked together on multiple property transactions worth millions of dollars. I trusted her completely. I believed she had the vendors under her control. I never doubted her to get me extra time to settle If I needed it. Based on that background and her reassurance in our conversation, I signed the contracts and gave them back to Ms Western
Her: I will date them and do the exchanges later on.
Me: OK.” (CB 74[47])
Mr Danckert says that by that time he and Ms Western had worked together on multiple property transactions worth millions of dollars and that he trusted her completely: CB 74[47].
Mr Danckert states that based on that background, and Ms Western's reassurance, he signed the contracts and gave them back to Ms Western who told him that she would date the contracts and do the exchanges “later on”: CB 74[47].
Mr Danckert states that at the time he signed the contracts the "vacant possession" and "subject to existing tenancies" boxes were not ticked: CB 74[48].
On 26 February 2021, the contracts were exchanged. Mr Danckert asserts that Ms Western ticked the "subject to existing tenancies" box on each contract but had not told him that she would do so and did not tell him that she had: CB 74[49].
Mr Danckert states that although he was aware there were existing tenancies including one for approximately another six months he did not agree to the contracts been subject to existing tenancies referring to the fact that this was different to the contracts under the Option Deeds which were specified to be “vacant possession”: CB 74[50]-[51].
Mr Danckert states that in the process of working through the final form of the contracts and exchanging contract he did not meet any of the vendors apart from Ms Western and only dealt with her. He says he only spoke with Ms Pocknall once and did not appoint any other solicitor or conveyancer to act for DC2. He further states that Ms Western did not say anything to him about needing to ensure that the DC2 would have to have its finance ready to complete the contracts by 9 April 2021 and that Ms Western retained copies of the executed contracts and did not provide him with a copy of any of them: CB 75[53]
Funding explored and Ms Western engaged regarding on-sales – March April 2021
Following exchange Ms Western contacted Ms Pocknall to inform her of exchange and to arrange a meeting for her to collect the contracts: CB 220[3].
On 4 March 2021, Ms Pocknall collected the contracts and states she commenced acting for DC2 in relation to the purchase of the block: CB 220[4].
In or around March 2021 Ms Mammoliti had a conversation with Mr Danckert to the following effect:
“Me: Arch Finance cannot value the Windsor Property on the current value but only on the contract price. This won't give you enough equity to borrow against Windsor for the Terrigal Properties. You will need to register the Windsor Property for strata first.
Wayne: I'm pushing the process through, and once all the documents are together we will lodge for the Windsor Property to be strata registered.” (CB 93[27])
It became clear that Arch Finance required the Windsor Property to be registered for strata and in light of that Ms Mammoliti attempted a different strategy to obtain the necessary finance for the block purchase: CB 93[28].
In early March 2021 (according to Mr Danckert) or on or about 10 March 2021 (according to Ms Western) DC2 engaged Ms Western to prepare off the plan contracts for the potential sale of the new Terrigal units, which she did: CB 75[58], 173[8].
On or about 8 March 2021, Ms Western became aware that MALK had entered into a new residential lease on 2 December 2020 for a period of six months, with an expiry date of 18 June 2021: CB 177[45].
In mid-March 2021, Ms Pocknall asked Ms Western to assist with obtaining stamp duty assessment notices as she was a registered user on E Duties: CB 221[7].
Ms Western arranged to obtain a land tax clearance certificate for unit 9, Mr Tayyar’s unit.
On 24 March 2021 a clearance certificate was issued by Revenue New South Wales and Ms Western sent a copy of the certificate to CCS: CB 218.3[4], 5 and 218.7–218.9.
On 24 March 2021 (1:58 PM) Ms Western sent Ms Pocknall an email requesting whether she was available at 10:30 AM the following morning to meet Mr Danckert at Ms Western's office: CB 111[12], 833.
On 25 March 2021 Ms Western states that Ms Pocknall arrived prior to Mr Danckert and had a conversation during which Ms Western gave Ms Pocknall a copy of the letter and the land tax certificate for unit 9 and observed Ms Pocknall write something on the certificate. She indicates that she said to Ms Pocknall "There will be some land tax that will be payable. My client’s informed me that they will be paying it on settlement". Ms Pocknall said, "That's fine. No problems. Can I borrow a pen?": CB 218.4[7]–[8].
On 25 March 2021, Ms Pocknall states that she met with Mr Danckert at Ms Western's office and carried out an identification check: CB 220[5].
At that meeting, Ms Pocknall says the conversation was to the following effect:
“Wayne: Finance will be approved shortly and I will have a solicitor check the loan documents
I will let you know who the solicitor is for the lender when its finalised.” (CB 220-221[6])
There is a file note from Ms Pocknall dated 25 March 2021 which states:
"Attended Elisa's office
Met Wayne for VOI check[.] He showed me original passport + driver’s licence
He said finance is all underway + should be approved next week[.] He will let me know who is acting for the lender + he will get lender solicitor to check the loan documents
Settlement date discussed – he said should be ready next week as there are no issues with finance +
He will be in touch" (CB 834)
On 7 April 2021 Ms Mammoliti sent an email to a financier “Nik” (relevantly) to the following effect:
“Attached is the information for the Terrigal first the land acquisition followed by construction once pre-sales are in place.
As mentioned, currently on the site there are 10 units all rented approx. $10,000 rental income per month
Hence why the client will not demolish the site until he has all requirements in place
Below is the link for information including receipts for deposits for 2 sold units …
As discussed, currently the property has 10 striated units all rented, income approx.. $10,000 per month.
Client does not have intentions to demolish the property until he has pre-sales in place and all final required reports, e.g. cc etc.
The delay in requesting funding was that the client had to sort out the other two partners, which they finally signed off and my client has now sole ownership.
Property purchase approx. 2 years ago, for $4,750,000. Client has paid $470K exchanged contract attached.
Attached are units sold similar to current building see attached as is.
Property sold with a DA in June 2020 for $6,600,000 plus to comply with the DA they needed to purchase next door for a further cost of $5,500,000 see below. Property is 14 Kurrawyba Ave, Terrigal, still in construction sold only penthouse off the plan for $3mil.
My client has 2 pre-sales in place with deposits for a 3 bedroom 2.2mil and 2 bedroom $ 1.2mil, see link presentation. … The marketing video … Client also has 3 other contracts of sale off the plan expected to be signed offed within days.
Valuation expected as todays "AS IS" minimum $6,600,000 with DA for the acquisition of the land. Followed with approx. $ 7mil borrowing for construction. Settlement must happen with in approx. 2 weeks to settle the land followed with construction funding once the pre-sales are in place.
The clients will not be doing the construction, will be tendering the construction to experience and reputable builders.
See below building companies:
…
Attached a contract of sale which represents the same for all the units, together with front page contract signed by all vendors.
Need to know the maximum lending to settle the property and construction if you are keen.
GRV, rates, costs etc. Attached is a feasibility client requested before submitting DA in Council” (CB 835-836)
On 8 April 2021 Ms Mammoliti made contact with Axius Partners Pty Ltd (Axius) with a view to obtaining a loan for the block purchase on the current value in order to avoid having to rely upon the registration of the strata plan for the Windsor Property: CB 93–94[28]–[29]. Axius could not confirm timing on when the loan would be approved, so Ms Mammoliti continued to look for other lenders: CB 94[30].
Although the date for completion of the purchase of the properties was 9 April 2021 settlement did not take place at that time. The reason for that is not entirely clear.
On 13 April 2021, Ms Western sent a number of emails to the property managers for MALK putting them on notice that MALK was in breach of the contract due to the new lease being entered into and requesting them to try and arrange to have the tenant vacated as soon as possible: CB178[50], 929, 930, 932.
His Honour made reference to the judgment of Wallace JA in Ocean City Realty Ltd v A &M Holdings Ltd (1987) 36 DLR (4th) 94 at 98; 44 RPR 312 (BCCA) to the effect that the obligation of the agent to make full disclosure included an obligation to disclose “everything known to him respecting the subject matter of the contract which would be likely to influence the conduct of his principal” or “likely to operate upon the principal’s judgment”. In such a case the agent’s failure to inform the principal would be material nondisclosure: at 465-466.
Critically, the Court held that a fiduciary who breaches the duty of nondisclosure of material facts is not entitled to prove that the transaction would have concluded had the disclosure being made and held that the trial judge erred in embarking upon that enquiry: at 466.
In relation to the consequence of the agent’s breach of fiduciary duty, Dubin CJ (at 466) referred to some Canadian authority but also English authority and in particular the judgment of Sir W.M. James, LJ in Parker v Mckenna (1874) LR 10 Ch App 96 at 124-125:
“I do not think it is necessary, but it appears to me very important, that we should concur in laying down again and again the general principle that in this Court no agent in the course of his agency, in the matter of his agency, can be allowed to make any profit without the knowledge and consent of his principal; that that rule is an inflexible rule, and must be applied inexorably by this Court, which is not entitled, in my judgment, to receive evidence, or suggestion, or argument as to whether the principal did or did not suffer any injury in fact by reason of the dealing of the agent; for the safety of mankind requires that no agent shall be able to put his principal to the danger of such an inquiry as that”.
Dubin CJ (at 466) also referred to other authority citing Lord Thankerton in Brickenden v London Loan & Savings Co [1934] 3 DLR 465; [1934] 2 WWR 545 (PC) as follows:
"When a party, holding a fiduciary relationship, commits a breach of his duty by non-disclosure of material facts, which his constituent is entitled to know in connection with the transaction, he cannot be heard to maintain that disclosure would not have altered the decision to proceed with the transaction, because the constituent's action would be solely determined by some other factor, such as the valuation by another party of the property proposed to be mortgaged. Once the Court has determined that the nondisclosed facts were material, speculation as to what course the constituent, on disclosure, would have taken is not relevant."
Dubin CJ (at 467) considered that the judgment of Lord Thankerton did not permit an inquiry as to what would have transpired if full disclosure had been made:
“Rather, once it has been determined that there has been a nondisclosure by an agent relating to material matters constituting a breach of fiduciary duty, speculation as to what would have transpired if disclosure had been made is not relevant. In my opinion, it was not open to the respondent in this case to seek to prove that the transaction would have closed had disclosure been made. The fact that in the trial judge's opinion the price was fair was, in my respectful opinion, irrelevant.”
His Honour (at 468) considered it “axiomatic that where an agent has breached a fiduciary duty in the manner disclosed in this case, the agent is precluded from claiming any commission”.
Under Australian law, it is clear that a plaintiff who has been guilty of unclean hands need not be permanently debarred from equitable relief. There is the notion that one may “wash one’s hands” by showing that one’s misconduct ceased well before the suit, or that it occurred by accident and will not recur: J D Heydon, M J Leeming and P G Turner, Meagher, Gummow & Lehane’s Equity: Doctrines & Remedies (5th ed, 2014, LexisNexis) (MGL) at 83. It is said that the process of “washing” may be achieved by the imposition of terms on the plaintiff: MGL at 83 citing Rhodes v Badenach [2000] TASSC 160.
The vendors’ contentions
Mr Pesman SC submitted that were the Court to conclude, despite the submissions above, that Mr Danckert’s conduct was illegal but that the contracts were in any event enforceable, the Court would still exercise it discretion to withhold relief. Mr Pesman SC qualified by that submission by stating that the vendors accept that if the Court finds no breach of s 49 at all then this issue does not arise: G2CS [52].
I accept that there is a breach of s 49 PSA Act.
Mr Pesman SC submitted that although equity “does not demand that its suitors shall have led blameless lives” (citing Brandeis J in Loughran v Loughran 292 US 216 at 219 (1934) quoted at [3.330] in Peter Young, Clyde Croft and Megan Smith, On Equity (2009, Lawbook Co)), equity will not intervene where there is an immediate or necessary connection between the relief claimed and the conduct complained of (see Meyers v Casey (1916) 17 CLR 90 at 124; [1913] HCA 50). He submitted that “[t]hat connection plainly exists in the present case”: G2CS [53]-[54].
SBS’s contentions
Mr Gooley referred to the conduct of DC2 regarding his discussions with Ms Western in respect of Ms Pocknall acting (CB 73[45]-[46]) and his discussions with Ms Western regarding whether he should disclose that he was the purchaser to the vendors: CB 110-111[6]-[7]. I have referred to in Mr Danckert’s evidence in respect of the last matter above.
DC2’s contentions
The submissions of DC2 on the unclean hands matter were partly premised on the basis that Mr Danckert informed Ms Western of his involvement with DC2: PC2 [93]-[107].
The submissions were also made on the basis that Mr Danckert had ceased to be an agent in 2018 and that in any event Ms Western as the person nominated under cl 9.1 of the Option Deeds and as conveyancer for the vendors had whatever responsibility there was to inform the other vendors.
Consideration
I have dealt with the first part of DC2’s submission earlier in the judgment under the heading of the duration of Mr Danckert’s agency. I reject DC2’s submission that no fiduciary obligation existed or remained under the agency agreements as at 26 February 2021 because the agency agreements came to an end by performance in 2018 and no selling task remained as at 26 February 2021 “because there was nothing left for Mr Danckert to do”.
The argument of DC2 is essentially that the vendors by entering into the Option Deed and the Deeds of Variation essentially became bound to exchange contracts once DC2 had become nominated and to abide by Ms Western’s decision-making, because of cl 9 Option Deeds.
The provisions of cl 9 (CB 341), I am prepared to accept, were to provide a single point of contact as between the vendors as collective owners and the buyer for the purposes of the Option Deeds.
However, the notion that the conveyancer has “full authority to act on behalf of the owner in relation to the Deed and the Contract” might bind the vendors in their position with the buyer, does not to my mind settle the position as between the vendors and Ms Western as the conveyancer.
I do not accept that cll 9.1 and or 9.2 of the Option Deeds were a ceding by the vendors of unfettered decision-making power to Ms Western irrespective of the wishes of the other vendors.
I consider that, at least under agency principles, Ms Western ought to have informed the other vendors, as her clients, of her relevant ownership knowledge, particularly so because apart from her acting as agent in a conveyancing capacity, she was personally interested in the contract transactions and, because of the interdependent nature of the contracts, her choices and actions directly impacted upon the other vendors.
In light of my findings in the matter it is not at least in this judgment necessary to consider the duty of care owed by Ms Western to the other vendors.
However, whatever obligation Ms Western had, it does not seem to me that that absolved Mr Danckert of any responsibility to make the disclosure.
Mr Danckert’s acts were DC2’s acts and his intention and state of mind were DC2’s intention and state of mind: Kation Pty Ltd v Lamru Pty Ltd e.g. per Basten JA at [116]—[118] citing Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2017) 230 CLR 89; [2007] HCA 22; Barnes v Addy (1874) LR 9 Ch App 244.
If it is correct that Mr Danckert remained the agent of the vendors up to and including the time of exchange and had a duty of disclosure up to that time, it seems to me that his failure as agent (as distinct from being the director and shareholder of DC2) to inform the vendors that DC2 was obtaining a beneficial interest in the block and his breach of s 49 was critical for the purposes of an unclean hands defence.
Mr Danckert made a deliberate choice not to tell the vendors about his involvement with DC2 prior to the exchange of contracts. He breached the no-conflict duty and the no-profit duty.
His failure as agent to inform the vendors that DC2 was obtaining a beneficial interest in the block and his breach of s 49 was within the analysis referred to above by Hamilton J in Lewis v Nortex at [137]:
(a)“past conduct” in the sense of being a failure to disclose his/DC2’s interest in the transaction prior to exchange of contracts and conduct leading up to these proceedings for specific performance of the contracts;
(b)conduct towards each of the other vendor defendants;
(c)conduct that has an immediate and necessary relation to the equity sued for, at least in the sense that the failure to disclose deprived them of choices regarding what they would do after the contract was exchanged and leading up to the time of the termination;
Mr Kelly SC on behalf of DC2 attacked the other vendors’ hypothetical musings as to the choices they would have made.
On one view, the decision in Raso v Dionigi suggests that the hypothetical musings are irrelevant.
Assuming that it is relevant to look at what the other vendors would have done, I am mindful of the caution in the caselaw that responses to hypothetical questions with the benefit of hindsight should be carefully scrutinised and assessed against other objective material.
However, I am prepared to accept their evidence that at the very least they would have explored either with Ms Western or with independent legal advice ways of terminating the contract.
Even if the vendors were bound to enter into the contracts once the Calls were made, that does not seem to me to be the end of the matter.
There is no certainty that the contracts would be completed.
The non-disclosure deprived the vendors of opportunities to seek other conveyancing and legal advice in relation to the performance of the contracts.
Even in early April, Mr Hew (CB 1118) and Mr Young (CB 1119) and Mr Parker (CB 1125) were concerned about delay and about the issue of notices to complete.
In the result, it seems to me that there is sufficient basis to decline specific performance on the basis of unclean hands.
DC2 submitted that the appropriate order is an order for specific performance of the each of the contracts, which requires completion within a reasonable time, on terms that a copy of the judgment be provided to the Secretary. It will then be a matter for the Secretary to take whatever disciplinary action is deemed necessary. That way, the policy of the PSA Act will be served: PCS [109].
If I am incorrect in declining specific performance on the basis of unclean hands, I would not flatly refuse relief but impose the terms proffered by DC2 that a copy of the judgment be provided to the Secretary.
Issue 10 - If the contracts are enforceable should the Court decline to grant specific performance of the contracts (issue 10)?
Issue 10, as I understood it, raises the question as to whether, separately from the matter of unclean hands, there were other discretionary considerations which might lead the court to decline to order specific performance of the contracts.
DC2 did not in its submissions refer to any very specific discretionary consideration other than to indicate that for the same reasons as it had advanced in relation to the unclean hands issue, the Court should not decline to exercise is discretion to refuse specific performance in this case. DC2 submitted that the PSA Act does not disclose an intention to render contractual rights unenforceable and a serious and proportional sanction is directed at the person concerned: PCS [108].
Mr Allen submitted that as a matter of discretion, the following militates against ordering specific performance (G1CS [56]):
(1)Specific performance would only be available because of some technical defect in termination. As specific performance is equitable relief, it is iniquitous in the circumstances for the relief to be given when as a matter of substance DC2 could not complete on 27 July 2021, or at any time until halfway through the hearing. This is why a central discretionary consideration is the ability to complete when proceedings are commenced.
(2)It is iniquitous that the only reason DC2 can now complete is because of the time this case has taken to come on for hearing. Again, this is why a central discretionary consideration is the ability to complete when proceedings are commenced. Certainly, if the matter was heard when first set down, May 2022, DC2 would not have been able to complete because it did not have the Deed of Settlement with Jogat.
Quite apart from the discretionary consideration of unclean hands, specific performance may be denied because of delay: e.g. Lamshed v Lamshed (1963) 109 CLR 440 at 452–6; [1963] HCA 60 per Kitto J.
The degree of promptness required depends upon the nature of the case and all its circumstances. Thus, Kitto J indicated there is little point in citing cases for the purpose of comparing the period of delay in the case before the court with delay which is being considered fatal to claims for specific performance in circumstances in other cases: at 453.
It is clear that the bare fact of delay is not enough: at 453.
His Honour said that equity will not allow the possibility of its making such a degree to be held unfairly long over the head of the party who denies the existence of the contract and asserts a right to deal with property as his own. This is tied back to being a particular application of the general principle of laches: at 453.
In the context of matters which may preclude relief of specific performance Spry refers to delay in the context of laches. It is said that laches is established when two conditions are fulfilled. First, there must be unreasonable delay in the commencement or prosecution of proceedings for specific performance. Secondly, in all the circumstances the consequences of the delay must render the grant of relief unjust: I C F Spry, The Principles of Equitable Remedies (9th ed, Lawbook Co, 2014) at 233.
Here there is no delay in the commencement of proceedings.
Spry specifically deals with the concept of prejudice to the parties opposing the specific performance or third parties.
There is not really in the authorities any satisfactory comprehensive description of the combinations of circumstances which will enable a Court to precisely determine whether gross delay or laches ought preclude equitable relief. In Orr v Ford (1989) 167 CLR 316 at 340-341; [1989] HCA 4 Deane J expressed this sentiment as follows:
“One searches in vain in the judgments in the above-mentioned cases (and, for that matter, elsewhere) for any satisfactory comprehensive description of the combinations of circumstances which will suffice to attract the label “gross” for the purposes of that qualification. That is not surprising since any attempt to specify exhaustively those combinations of circumstances would be likely to introduce an inappropriately arbitrary and technical element into an area of equity doctrine which has traditionally been kept free of arbitrary and technical constraints. On balance, the preferable approach is to treat the phrase “gross laches” as an intentionally imprecise one which involves not merely considerations of the period of the relevant delay but which invokes the traditional notions of equity and good conscience which are the general determinants of whether a plaintiff should be refused relief by reason of laches in the circumstances of a particular case.”
Deane J continued at 341:
“The ultimate test effectively remains that enunciated by Lord Selborne LC (not, as is often said, Sir Barnes Peacock (see Errata)), speaking for the Privy Council, in Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221 at 239–40 , namely, whether the plaintiff has, by his inaction and standing by, placed the defendant or a third party in a situation in which it would be inequitable and unreasonable “to place him if the remedy were afterwards to be asserted”: see Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1218 at 1279 , and also, per Rich J, Hourigan at 629–30.”
In my assessment there is considerable force in the submission made by Mr Allen.
The particular concern that I have regarding the question of whether relief should be precluded by delay is the concern raised by Mr Allen effectively that the only reason specific performance is even tenable is because of the delay in bringing these proceedings to hearing.
DC2 has benefited from that delay in the sense that the delay has enabled it time in order to get its “house in order” to attempt to demonstrate it has financing to complete the purchases.
I have not readily been able to find authority in which, in the context of specific performance, delay in bringing an action has improved the circumstances of the plaintiff and a court has declined relief.
Certainly, in the context of family provision proceedings, there is authority to the effect that the Court is reluctant to grant an extension of time which may have the effect of improving the applicant’s position in comparison with that in which he or she would have stood had the application proceeded in a timely way: Durham v Durham (2011) 80 NSWLR 335; [2011] NSWCA 62 per Tobias JA at [37]-[42] discussing and approving the approach of Bryson J in Davison v Staley (Supreme Court (NSW), 21 August 1986, unrep) (Campbell JA at [56] and Young JA at [87] agreeing).
Whilst I have anxiously considered the matter, on balance, I am not ultimately persuaded that I ought to decline as a matter of discretion to order specific performance of the contracts on the basis of delay.
First, whilst Durham v Durham is an interesting decision, the approach of the Court was in the context in which there was a statutory period within which to bring the family provision claim and the applicant was at first instance requiring a grant of leave to bring the application out of time and on appeal challenging the refusal to bring the claim out of time.
That circumstance does not pertain to this case.
Secondly, whilst DC2 has benefited from the delay in between the proceedings being commenced and coming on for hearing, in the sense that the delay has enabled it time in order to arguably get its “house in order”, it does not seem to me that DC2 has delayed in either commencing or prosecuting the proceedings.
Issue 11 - Should the court grant specific performance of the contracts on terms or award damages in lieu of specific performance (issue 11)?
As noted above DC2 submitted that the appropriate order is an order for specific performance of the each of the contracts, which requires completion within a reasonable time, on terms that a copy of the judgment be provided to the Secretary.
Whether the proffer of terms is regarded as being simply a discretionary consideration or part of what is described above in respect of the clean hands principles as being a process of “washing” of DC2’s hands was not explained. I do not consider there is need to go deeply into it.
In the event that I am incorrect in flatly refusing specific performance, I would impose the terms proffered by DC2 that a copy of the judgment be provided to the Secretary.
Issues 12-17 - Claims against Ms Western and SBS for breach of fiduciary duty and other duties
The claims against Ms Western and SBS for breach of fiduciary duty and other duties are predicated on the basis that Ms Western acted for DC2.
Those claims have been abandoned.
Issues 18-20 - Other claims against Ms Western and SBS and defences
The other claims against Ms Western have been abandoned: see page 4 agreed issues.
Issues 21-33 - Issues arising out of the second group’s cross-claim against SBS and Ms Western
It was agreed that the issues 21-31 on the cross-claim against SBS are only relevant in the event that DC2 succeeds: see page 4 agreed issues.
It was agreed that the issues 32 and 33 on the cross-claim against Ms Western are only relevant in the event that DC2 succeeds: see page 6 agreed issues.
It was agreed that the issues 21-31 on the cross-claim against SBS are only relevant in the event that DC2 succeeds: see page 4 agreed issues.
Issue 34 - Is Mr Danckert obliged to repay the commission to the other vendors?
Part of the second group’s cross-claim is a cross claim against Mr Danckert alone, and the issue raised is whether the terms of the agency agreements between Mr Danckert and the vendors obliged Mr Danckert to repay commission to the other vendors in the event that the contracts between DC2 and the other vendors are not completed.
Mr Kelly SC accepted that the agency agreement entered into between the vendors and Mr Danckert incorporates the terms and conditions that appear on on the reverse of the second page standard agency agreement: T312.
Clause 3.2(d) of the standard form provides that remuneration is due and payable “Upon the termination of the contract by the Principal [vendors] as a result of a default of the Purchaser [DC2] and the Remuneration is the same or less than the amount of the deposit which is forfeited to the Principal.” (Which it is, the latter sum being $47,500): G2CS [84].
Mr Pesman SC submitted that contrary to the provisions of the contract, Mr Danckert received the commission sum ($6,750) from the deposits ([17] of the main claim and the defence) and in circumstances where the sales were not completed because of the default of DC2, the other vendors seek an order that the commission or remuneration of $6,750 be repaid to each of them: G2CS [85].
In light of my findings regarding the contracts it seems to me that there should be an order for repayment of the commission.
Issues 35-43 - Issues arising out of the second group’s cross-claim against Mr Danckert and DC2
There are a group of issues arising on the second group’s cross-claim against Mr Danckert and DC2.
These issues raise questions in respect of the whether the relevant ownership knowledge ought to be imputed to the other vendors and whether Mr Danckert or DC2 had a duty to disclose the relevant ownership to the other vendors notwithstanding that Ms Western and/or SBS had such knowledge.
I have dealt with the second aspect of this. In light of my findings it is not necessary to address the question of whether the relevant ownership knowledge of Ms Western ought to be imputed to the other vendors. In any event, in the way the issues were framed, the issue only ultimately became necessary to decide in the event that an order for specific performance was made.
Relief against forfeiture
DC2 in the POS submitted that if all claims fail it claims the repayment of the deposits under s 55(2A) Conveyancing Act: POS[42].
The only submission put by DC2 was the following in its opening written submissions (POS[120]):
“If all of the above claims fail and the Vendors are entitled to sell their Property to Blue Sox Investments Pty Ltd, it would be just and equitable for them to return the deposit paid by D Capital 2 (via Jogat under the Deeds)”.
No further submission was made in DC2’s final submissions.
This issue does not appear expressly in the list of agreed issues. It also arguably may not have been pressed.
However, in case there is any lingering doubt about it I briefly note the following.
The relevant principles regarding s 55(2A) Conveyancing Act were recently summarised by Darke J in Culjak v Akrawe [2022] NSWSC 949 at [83]-[87].
I am entirely unpersuaded that there is an unjust and inequitable consequence of forfeiture of a deposit having regard to my findings in this matter.
Conclusion
I have outlined my findings at the commencement of the reasons for judgment.
I direct the parties to bring in short minutes of order to give effect to my reasons for judgment.
I have raised the question regarding the framing of the illegality issue and possibly there may be need for that to be further addressed.
I have understood that the issues on a number of the claims have now been abandoned, or in the case of issues 35-43 arising out of the second group’s cross-claim, that they do not arise or need to be determined. However in the event that I am mistaken about that, in the process of the parties bringing in short minutes of order to give effect to my reasons for judgment, they should alert me to any claims that they say still need to be determined and in that respect I reserve further consideration of any such claims.
In the result, DC2’s claims are dismissed. The parties are to bring in Short Minutes of Order on the main claim and the cross-claim and in respect of costs.
To the extent that the is debate about the appropriate costs orders the parties are to notify my Associate that that is the case and the matter may be listed to address disputed costs issues or determined on the papers.
The orders of the Court are:
(1)Direct the parties to submit agreed short minutes of order to give effect to the reasons for judgment, including as to costs, or if there is no agreement between them, their respective draft orders, submissions and any affidavits by 4:00 PM on 19 August 2022.
(2)Adjourn the proceedings to 10:00 AM on 25 August 2022.
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Amendments
26 September 2022 - Correction to case citation on coversheet
Correction to quotes in [196], [206], [231] and [275]
Addresses and title references removed
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