Feitelson Holdings Pty. Limited v Franks Centre Lofts Pty. Limited

[2000] NSWSC 903

CITATION:	Feitelson Holdings Pty. Limited v. Franks Centre Lofts Pty. Limited [2000] NSWSC 903
CURRENT JURISDICTION:	Equity Division
FILE NUMBER(S):	SC 1766/00
HEARING DATE(S):	6 & 7 September 2000`
JUDGMENT DATE:	7 September 2000
PARTIES :	Feitelson Holdings Pty. Limited for plaintiff Franks Centre Lofts Pty. Limited for defendant
JUDGMENT OF:	Hodgson CJinEq at 1

COUNSEL :	Mr. F. Gleeson for plaintiff Mr. B. Coles QC with Mr. V. Kerr for defendant
SOLICITORS:	Holding Redlich for plaintiff Harris & Company for defendant
CATCHWORDS:	CONTRACT - Specific performance - Option for purchase of unit in development at undervalue - Benefit of contract on account of venturer's share of profit in development - Deed referring to contract for purchase of unit - Whether such contract existed - Probability of loss from development - Even if contract existed, specific performance not granted.
DECISION:	See end of judgment

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

CORAM: HODGSON, CJ in Eq.

Thursday 7th September 2000

NO. 1766 OF 2000
FEITELSON HOLDINGS PTY. LTD. V. FRANKS CENTRE LOFTS PTY. LIMITED

JUDGMENT

1   HIS HONOUR: In these proceedings, the plaintiff seeks specific performance of a contract to purchase from the defendant unit 13 in building 1 of what has been called the Franks Centre Project, for a price of $205,000; and in the alternative, the plaintiff seeks damages or remedies based on estoppel.

outline of facts

2   I will commence with an outline of facts, which are not really in dispute. 3   Between April 1997 and February 1999, the directors of the defendant were Tony Feitelson and Curtis Mann. Mr Mann is still a director of the defendant. The plaintiff is a company associated with Mr Feitelson. 4   During the period from April 1997 to February 1999, the defendant was undertaking a development on land which it owned at Camperdown which, as I have said, has been called the Franks Centre Project. This was one of a number of projects undertaken by what has been called the Whitehall Property Group, in which Mr Feitelson, Mr Mann and others were involved. 5   In May 1997, an agreement was made between various co-venturers in the Franks Centre project providing, amongst other things, for the distribution of the profits of that project. One of the venturers was Arquilateral Pty Limited, a family company of Mr Feitelson. However, the plaintiff was not a party to that agreement. 6   At around the time of this agreement, there was discussion amongst the venturers to the effect that they could take some of their profit in the venture by purchasing units in the development at a discount. 7   In about July 1997, the plaintiff by deed granted a put option to the defendant to sell unit 13 to the plaintiff for $205,000, which was to be exercised, if at all, before the expiry of one month after registration of the relevant strata plan. 8   Clause 5.1 of the put option provided that it "may be exercised by delivery of a written note of exercise" by the defendant, upon which the parties would be bound by a contract in the terms of a form of contract annexed to the option. Under the terms of that contract, completion was to take place 14 days after the vendor served a notice on the purchaser of registration of the strata plan. The option and the form of contract were executed by the plaintiff, but not by the defendant. 9   At around the same time, similar put options were granted by some of the other venturers. 10   It is common ground that the list price of unit 13 was $410,000. Although there was some question about this during the course of the hearing, it became common ground at the end of the hearing that, if the purchase of unit 13 went ahead at that price, the advantage of this to the plaintiff would be offset against Arquilateral's share of the profit from the project, that profit being calculated as if the sale had been for full price. 11   In late 1997, there was an oral agreement amongst the venturers varying the profit shares, pursuant to which Arquilateral's share became 10 per cent. 12   During 1998, Mr Feitelson informed other persons involved in the Whitehall Property Group that he wished to withdraw. There followed negotiations which ultimately led to the execution, in mid December 1998, of what has been described as the Share Buyback Deed, this deed being executed by Mr Feitelson, Mr Mann, the plaintiff, the defendant, Arquilateral and others. Negotiations for this deed between Mr Feitelson and Mr Mann were conducted by an intermediary, Graham Hurwitz. 13   On 10 November 1998, Mr Feitelson sent a facsimile to Mr Hurwitz setting out terms on which he was prepared to withdraw from the Whitehall Property Group. Paragraph 14.3 of this document stated:

The contract by Feitelson to purchase a unit (13 in building 1) is to be rescinded or cancelled.

14   On 11 November 1998, there was a meeting between Mr Hurwitz and Mr Mann, in which Mr Mann rejected the proposal in paragraph 14.3 of the document to which I have just referred. There is some dispute about the details of this conversation, but I will not need to resolve that dispute. 15   On 12 November 1998, there was a telephone conversation between Mr Hurwitz and Mr Feitelson, in which Mr Feitelson accepted Mr Mann's rejection of his proposal on that matter. 16   There were further negotiations during November 1998, and on 30 November 1998 a letter was sent from solicitors who were preparing the deed noting, amongst other things:

The Chancellery contract and the Franks Centre contract, annexures A and B, must be attached to the deed. I understand that Curtis will arrange for those contracts to be prepared and attached to the deed.

17   On 1 December 1998, Mr Hurwitz wrote to Mr Mann passing on a request from Mr Feitelson for a copy of the document he had signed in relation to the purchase of unit 13. On the next day, Mr Mann wrote to Mr Hurwitz confirming "that a copy of the contract in respect of unit 13 has been delivered to Tony Feitelson." Mr Feitelson in fact received that document in the mail shortly afterwards. 18   On 9 December 1998, the solicitors again wrote to various persons, including Mr Mann and Mr Feitelson, noting, amongst other things "The Chancellery and the Frank Centre contracts must be attached to the deed." That instruction was repeated again in a letter from the solicitors to the same persons the following day. 19   On 14 December 1998, Mr Mann sent a letter to Mr Hurwitz enclosing the Share Buyback Deed, signed by parties other than Mr Feitelson and his associated companies. The letter also enclosed a copy of the contract for sale for The Chancellery unit, a copy of the deed of option in relation to unit 13, a resolution of directors dated 11 December, which is referred to in the Share Buyback Deed, and finally two cheques payable to the plaintiff representing moneys payable to the plaintiff under the deed. 20   Thereafter the deed was executed by Mr Feitelson and his associated companies. However, the contract for sale for The Chancellery unit and the deed of option in relation to unit 13 were not annexed to the deed, and were not returned to the other parties when the executed deed was returned. 21   Some of the provisions of the deed are of importance in this dispute. Clause 1.1 contains certain definitions, including definitions of The Chancellery Contract and the Franks Centre Contract, which are in the following terms:

“Chancellory Contract” means the contract for the sale of unit 29 of the building known as the Chancellory to be entered into between Whitehall Development No.11 Pty. Limited CAN 072 081 657 as vendor and a purchaser to be nominated by Tony. A copy of the contract is attached as Annexure “A”

...

“Franks Centre Contract” means the contract for the sale of unit 13 in Building 1 known as “Union Square” to be entered into between Franks Centre vendor and a purchaser to be nominated by Tony. A copy of the contract is attached as Annexure “B”.

22   Clause 2 deals with conditions precedent and is in the following terms:

2.1 This Deed and all the transactions set out in this Deed is subject to the satisfaction of the following conditions:
(a) Tintgrove Resolution: that the Tintgrove Resolution is passed by the board of directors of Tintgrove;
(b) Chancellory Contract: that the Chancellory Contract is executed and exchanged by the parties thereto; and
(c) Franks Centre Contract: that the Franks Centre Contract is executed and exchanged by the parties thereto.

2.2(a)Curtis and Tony (as the only directors of Tintgrove) agree to use their best endeavours to do all things necessary (including the convening of a meeting of the board of directors of Tintgrove) to ensure that the Tintgrove Resolution is passed by not later than the Cut-off Date.
(b) Curtis and Tony (as the directors of Whitehall Development Co. No.11 Pty. Limited and Franks Centre) undertake to procure that the Chancellory Contract and the Franks Centre Contract are executed and exchanged by Whitehall Development Co. No.11 Pty. Limited and Franks Centre by not later than the Cut-off Date.
(c) Tony undertakes to nominate purchasers of the Chancellory Contract and the Franks Centre Contract and to cause such purchasers to execute and exchange the Contracts by not later than the Cut-off Date.

2.3 If all the Conditions Precedent has not been satisfied by 5.00pm on the Cut-off Date, then this Agreement will automatically terminate and be of no further force or effect.

23   Clause 6 deals with co-operation:

6.1 The parties acknowledge and agree that the transactions which are to take place as provided in this Deed will occur in the following order:
(a) those contemplated in clause 7.1(b), first;
(b) those contemplated in clause 4.12, fourteenth
(c) those contemplated in clause 4.1(b), third
(d) those contemplated in clause 4.6, fourth
(e) those contemplated in clause 4.7, fifth
(f) those contemplated in clause 4.8; sixth
(g) those contemplated in clause 4.9 seventh;
(h) those contemplated in clause 5.1, eighth
(i) those contemplated in clause 4.11, ninth
(j) those contemplated in clause 5.2, tenth;
(k) those contemplated in clause 5.3, eleventh;
(l) those contemplated in clause 5.4, twelfth;
(m) those contemplated in clause 4.2, thirteenth;
(n) those contemplated in clause 4.3 fourteenth;
(o) those contemplated in clause 3.1, fifteenth; and
(p) those contemplated in clause 3.2, sixteenth.

6.2 The parties undertake and agree to do all things necessary and to co-operate with each other to ensure that all transactions contemplated in this Deed are given effect to as provided in this Deed and are properly dealt with and completed in the sequence provided in this Part. Without limiting the generality of this clause, the parties will procure that all meetings of directors and of members of any company which may be required to approve or give effect to any of the transactions contemplated in this Deed, will be held in order to implement and give effect to those transactions.

24   Clause 8 deals with the Franks Centre:

8.1(a) It is recorded that the Franks Centre Project is in the process of being constructed and in due course strata units will be offered for sale.
(b) Upon the sale and completion of the sale of all the strata units referred to in clause 8.1(a), the Accountant will be instructed to prepare financial statements for the Franks Centre Project which, amongst other things, will set out the calculation of the net profits (if any) of the Franks Centre Project.
(c) For the purposes of determining the net profits of the Franks Centre Project, all income (in the form of strata unit sales) and expenditure (whether of a capital or income nature) will be taken into account by the Accountant including the project management fees referred to in clause 8.2(a) and the guarantee fee to be paid to Tony pursuant to clause 8.2(b) which fees are to be treated as expenses of the Franks Centre Project.

8.2(a) It is recorded that the Company has and will continue to provide project management services to Franks Centre for the Franks Centre Project for which it will be paid a monthly project management fee of $10,000.00. The Company will provide project management services and be paid its monthly project management fee until the strata plan is registered with the Land Titles Office.
(b) The Company undertakes to ensure that within thirty (30) Business Days of the date on which a copy of the financial statements of the Franks Centre Project are prepared by the Accountant and delivered to Tony, that Franks Centre pays a guarantee fee of $50,000.00 to Tony.

8.3(a) The Company acknowledges that Arquilateral will be entitled to be paid an amount equal to 10% of the net profits of the Franks Centre Project as set out in the financial statements prepared by the Accountant referred to in clause 8.1(b).
(b) The Company undertakes to ensure that within thirty (30) Business Days of the date on which a copy of the financial statements of the Franks Centre Project are prepared by the Accountant and delivered to Arquilateral, that Franks Centre pays to Arquilateral its profit share calculated in accordance with clause 8.3(a).
(c) When a copy of the financial statements of the Franks Centre Project is delivered to Arquilateral in accordance with clause 8.3(b), the statements must be accompanied by a certificate prepared by the Accountant setting out the calculation of the net profits of the Franks Centre Project and Arquilateral’s share thereof.

8.4 If requested by Tony or the purchaser nominated by him for the purchase of the unit described in the Franks Centre Contract, the Company will use its reasonable endeavours to assist Tony or the purchaser of the unit to sell the unit at a price and on terms agreed between Tony or the purchaser and the Company.

8.5 The Company indemnifies Arquilateral against all and any claims which may be made against it in respect of architectural services provided by it to Whitehall Development Co. No.11 Pty. Limited, Franks Centre and Allatech Pty. Limited in respect of architectural services provided that the indemnity referred to in this clause will not apply when the claim arises out of or relates to the negligence or wilful default of Arquilateral in providing those services.

25   Clause 16.5 deals with further assurance:

16.5 Each party must do all things necessary to give full effect to this Deed and the transactions contemplated by this Deed.

26   It is common ground that, at the time that deed was entered into, it was expected that the Franks Centre Project would return a profit in the order of about $5 million. However, it is also common ground that the defendant was under financial pressure at the time, and did not wish to lose any existing sales of units, including sales made to venturers or associates of venturers. 27   In December 1998, various payments were made and transfers of shares executed in performance of the terms of the Share Buyback Deed. The Chancellery contract was exchanged and settled. No contract in respect of the sale of unit 13, other than the put option itself, was executed or exchanged prior to 30 January 1999. In February 1999, Mr Feitelson resigned as a director of the defendant. 28   The development proceeded during 1999, and the relevant strata plan was registered on 17 December 1999. However, it has become apparent that it is very unlikely that the project will make a profit, and there is evidence that a loss of over $1 million on the project is expected. However, the plaintiff has now sought to proceed on a contract to purchase unit 13, giving rise to these proceedings.

ISSUES

29   The issues that have been debated include the following. 30   There is a question concerning credibility, which I will mention. 31   There is a question as to the precise terms on which the advantage to the plaintiff of the proposed contract to purchase unit 13 was to be dealt with. 32   Then there is a question whether the put option was exercised by the defendant. 33   Next, there is the question whether the Share Buyback Deed itself constituted, or else gave rise to, a contract binding the defendant to sell unit 13 to the plaintiff. 34   There is a question whether there was a failure to perform a condition precedent contained in clause 2.3 of the Buyback Deed and, if so, what was the effect of that failure. 35   Next, there is a question of whether the plaintiff has the benefit of some estoppel, either by representation or conventional. 36   Finally, there is a question of what, if any, remedy the plaintiff is entitled to if the plaintiff is successful on one or more of the other issues.

SUBMISSIONS

37   The parties have provided a written outline of submissions, which I will leave with the papers. 38   Mr Gleeson for the plaintiff submitted that during November and December 1998 Mr Mann, on behalf of the defendant, had required the plaintiff to enter into a contract to purchase lot 13. This appeared most clearly from the terms of the Share Buyback Deed itself, for which instructions had been given to the solicitors by Mr Mann. In the negotiations leading up to the deed, Mr Mann had insisted that there be a contract by the plaintiff to purchase lot 13, and in that insistence he had never suggested that he was merely referring to a put option. Mr Mann's explanation of the defendant not signing such a contract was that the defendant wished to keep control of matters, not that the arrangement then contemplated was a continuance of the put option. The option had accordingly been exercised by words and documents requiring the plaintiff to make the contract, and requiring the entry into the Share Buyback Deed. 39   Turning to the terms of that deed itself, Mr. Gleeson submitted that the definitions show quite clearly that the deed was not referring merely to the put option, but was referring to an actual contract binding both parties to proceed with that transaction. This was made quite plain by the terms of clause 2; and also by the terms of clauses 6.2 and 16.5, obliging the plaintiff and the defendant, amongst others, to give effect to the particular transaction. 40   Mr Gleeson submitted that the fact that the parties proceeded with the Share Buyback Deed, even though no formal exchange of contracts took place, could not amount to a waiver of that provision. There was no intentional act with knowledge by either the plaintiff or by Mr Feitelson. (See Craine v Colonial Mutual Fire Insurance Co Limited (1920) 28 CLR 305 at 326; Presmis Pty Limited v Turner Corporation Pty Limited (19 ) 30 NSWLR 478 at 486). Indeed, the proceeding with the agreement without a formal exchange was rather confirmation of a conventional estoppel, ie that the parties were proceeding on the basis that such an agreement had in fact been made. 41 In support of his submission that there was a common assumption that the defendant would sell unit 13 to the plaintiff, on the terms recorded in the contract for sale annexed to the deed of option, Mr Gleeson referred to the terms of the deed and the discussions between the parties; and also to Amalgamated Investment and Property Co Limited v Texas Commerce International Bank Limited (1982) QB 84 at 126; Grundt v Great Boulder Pty Gold Mines Limited (1937) 59 CLR 641 at 657, 677. 42 Alternatively, Mr Gleeson submitted that there were representations that the defendant would sell unit 13 to the plaintiff made by Mr Mann to Mr Feitelson through Mr Hurwitz, and repeated in the correspondence. Mr Gleeson referred to Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 387 at 428-9. 43 Mr Gleeson submitted that Mr Feitelson acted to his detriment in reliance on the representation. He assumed, incorrectly, that the contract had been executed by the defendant, and proceeded to carry through the terms of the Share Buyback Deed. 44 In relation to a defence under s 54A of the Conveyancing Act, Mr Gleeson submitted that there were documents sufficiently evidencing the terms of the agreement, including the contract annexed to the deed of option, letters from Mr Mann during November and December 1998, and the Share Buyback Deed itself. Mr Gleeson referred to Tonitto v Bassal (1992) 28 NSWLR 504 at 570G, 572E-G, 574A-B; ANZ Banking Group Limited v Widin (1990) 26 FCR 21 at 29-32; Re Byrne (1986) 15 FCR 255 at 261. 45 Mr Coles for the defendant submitted that it was plainly intended that the document to be annexed to the Share Buyback Deed in connection with unit 13 was the deed of option itself. He submitted that the defendant's insistence on there being a contract in relation to unit 13 made sense only in terms of the maintenance of the existing put option: there would be no point in putting it into place and concluding the contract of purchase, at a time long before the project was to be complete and long before any profits were ascertained. The reference in the documents and the conversations to the word "contract" was not a misdescription of the option. Furthermore, it was plain that the letter on 14 December enclosing a number of documents contemplated that The Chancellery contract and the Franks Centre put option were the documents to be annexed to the deed. Mr Coles submitted that, if they had been attached by a staple or bulldog clip, there could be no possible doubt about the matter; and the case could not turn on the absence of a staple or bulldog clip. 46 Mr Coles submitted that all that the Share Buyback Deed really contemplated was the continuation of the put option. However, if contrary to that submission, clause 2 meant that there should be execution and exchange of a contract, then that clause was not complied with; yet the parties nevertheless went on with all the other terms of the contract. That, he submitted, manifested an intention to be contractually bound by all the other terms, notwithstanding the non-performance of this term relating to the Franks Centre. 47 Turning to the question of the exercise of the option, Mr Coles submitted that a written notice of exercise was required and that there was no document indicating an intention to exercise the option. 48 In relation to estoppels, Mr Coles submitted that there were no representations or assumptions contrary to the true effect of the documents as he submitted it to be; and that I would not be satisfied of the beliefs which Mr Feitelson alleged he held, nor that any such reliefs could have been induced by any representations or assumptions. 49 Finally, Mr Coles submitted that, if the plaintiff was successful in establishing a contract, there should be no specific performance of that contract, because the contract was only on account of profits that Arquilateral might make and, on the evidence, it was extremely unlikely that there would be any such profits. 50 In response to that submission, Mr Gleeson submitted that, even if there was a term that the benefit to the plaintiff of such a contract was on account of Arquilateral's profit, the parties had provided in a deed, in the context of the severance of a relationship at a time when profit was expected, that there should be a concluded contract by 31 January 1999, which was to be completed 14 days after registration of the strata plan. There was no reason why the plaintiff should not be able to enforce such a contract, and if necessary account for any benefit later on.

DECISION

51   Dealing first with credibility, I have to say that I am not satisfied that I can be confident on relying on Mr Feitelson's evidence. I believe he was very conscious of his interests in the matter, and what evidence might serve those interests. Although his affidavits were drafted so as not to acknowledge this, he did accept in the witness box that the proposed contracts with the venturers or their associates were made on the basis that the benefit of those contracts was on account of the profits of the venturers, so that there would have to be a calculation of profits on the basis of sales at full value, with appropriate deduction from the profits of each venturer. 52   Mr Feitelson also agreed nothing happened to change this when the Share Buyback Deed was made, so that any advantage to the plaintiff from its contract would be deducted from Arquilateral’s 10 per cent share. 53   However, in paragraph 25 of his affidavit of 27 July 2000, Mr Feitelson said:

It was not my understanding in purchasing the unit for this price, Arquilateral’s profit share would be decreased by an equivalent amount.

54   I do not think Mr Feitelson gave a satisfactory explanation of why he made that statement. 55   In the result, I think I have to be very careful in accepting evidence given by Mr Feitelson, particularly as to his subjective beliefs, and as to the details of conversations. 56   I have no particular reason to be concerned about the evidence of other witnesses. 57   I turn next to the terms on which the advantage to the plaintiff of any contract in relation to unit 13 was to be dealt with. In my opinion, it is clear that the plaintiff and Arquilateral and Mr Feitelson were bound by an agreement with other venturers in the project that the advantage to the plaintiff of any contract to purchase unit 13 was to be on account of Arquilateral's profit share. However, there was no discussion and no consideration of how this term was to be worked out if such a contract was made and ready for completion before it was ascertained how much, if any, profit was to be made, or if there should be a loss. In my opinion, the matter needs to be approached by working out the implications of the term which I have specified in particular circumstances. 58   Next I consider whether there was an exercise of the put option. I accept Mr Cole's submission that such exercise would need to be in writing and, in any event, the exercise would have to disclose an intention that the option be exercised. I do not think any of the conversations or documents in this case could disclose such an intention. 59   In my opinion, it is clear that, in the conversations and documents occurring before the entry into the Share Buyback Deed itself, the word "contract" is used quite loosely and used in such a way as to include the put option. Indeed, this is commenced in Mr Feitelson's memorandum of 10 November, where he states that “the contract by Feitelson to purchase a unit ... is to be rescinded or cancelled”. That wording, referring to the put option as a contract, in my opinion illustrates the point that the word “contract” is not in these negotiations used in any precise sense, as being something other than the put option. 60   The next question is whether the Share Buyback Deed either itself constituted or otherwise gave rise to a contract binding the defendant to sell unit 13 to the plaintiff. In my opinion, it is plain that the parties intended to annex the put option to the contract. In my opinion, there is no other document which could constitute the annexure proposed by the contract. An intention that the annexure be the put option is manifested by the sending of the put option, along with the other documents, to Mr Feitelson with the letter of 14 December 1998; and the execution of the deed by Mr. Feitelson and his companies upon receipt thereof. 61   However, in my opinion, the wording of clause 2 must be taken as meaning that there was to be exchanged, prior to 31 January 1999, an actual contract executed by both sides in relation to unit 13; and in my opinion, that contract must be a contract in the terms annexed to the put option. 62   Having regard to the negotiations and the conversations and the subsequent actions of the parties, I think it extremely unlikely that any party actually subjectively intended that there be an execution and exchange of such contracts. It may be that the wording of the deed arises through some mistake or some misunderstanding. However, no rectification is sought, and as I have said, the wording is too clear to carry any other meaning. 63   As it happened, neither side did anything towards putting that term into effect. It would require the co-operation of both sides to put that into effect, and so the failure to put that term into effect by 31 January 1999 could not amount to a breach by either side on which the other side could rely. There was no attempt by anyone to pursue that aspect of the matter until this year, so that if there was any breach of this term by any party, it could not have occurred until after the plaintiff sought to reactivate the matter this year. 64   On the other hand, although the deed required action by the parties, and by Mr Mann and Mr Feitelson in particular, to bring about the exchange of such contracts, I do not think the deed itself amounted to an agreement for the sale and purchase of unit 13. As submitted by Mr Coles, clause 2 itself envisaged that the method by which such a contract was to be brought into existence was by an exchange of formal written contracts (see Allen v Carbone (1975) 132 CLR 528; Lezabar Pty Limited v Hogan (1989) 4 BPR 9498). The clauses requiring parties to co-operate and give further assurances, as submitted by Mr Coles, amounted to no more than an agreement to enter into such formal agreement and, as such, was not enforceable (see Coalcliff Collieries Pty Limited v Sijehama Pty Limited (1991) 24 NSWLR 1 at 40). 65 It is apparent from what I have said that, in my opinion, there was a failure to perform a condition precedent set out in clause 2.3 of the Share Buyback Deed. The question then is, what was the effect of that failure? Notwithstanding the failure the parties went ahead with all the other provisions of the deed. In my opinion that gives rise to two possibilities: one is that the parties in effect varied the agreement; and the other is they agreed to act on the conventional basis that the condition precedent had actually been complied with. That latter matter could be the basis of a claim for conventional estoppel, it seems to me. 66 However, in my opinion, when one looks at all the circumstances, including the communications between the parties and the terms of the deed itself, there is no manifest intention that the parties proceed on the fictional basis that there had been an actual exchange of executed contracts. 67 In my opinion, the intention manifested by what the parties did was to go ahead with all the other terms of the agreement notwithstanding the non-performance of the condition precedent, there being mutual consideration on both sides for the parties to do this. That varied agreement could either remove the time limit for the exchange of the contracts or, alternatively, remove from the deed altogether the requirement that there be an exchange of such contracts. 68 In my opinion, when one has regard to the treatment of the exchange as being a condition precedent, the removal of the time limit would be such a great change to the character of that part of the agreement as to make it unlikely that that was what was intended. That is confirmed by the consideration that one would have to imply some other time limit, whether this be a reasonable time or a time limit associated in some way with the completion of the project. There would be, in my opinion, great uncertainty about that time limit. In my opinion, the intention manifested by the parties was to proceed with a varied agreement omitting altogether the requirement of the exchange of executed contracts. 69 Turning to the question of estoppel, in my opinion there was nothing in the conversations or documents which could amount to a representation any different from what I have found to be the true effect of the Share Buyback Deed. I would add that I would be very hesitant in being satisfied by Mr Feitelson's evidence as to his beliefs. 70 A Trade Practices claim was pleaded, but not advanced in submissions. But in any event, in my opinion that would have to fail because of my view on the nature of the representations that were made. 71 Turning finally to the question of remedy, even if I had found the contract, I would have taken the view that the plaintiff was entitled to the benefit of that contract only on account of profits which Arquilateral might make from the project. The probability at present is that there will be no such profits. In those circumstances, I believe I would not have been minded to give specific performance of the contract. There is no suggestion that this land or property has any special quality in which the plaintiff is interested. Indeed, one of the terms negotiated was that the plaintiff would be assisted in the onselling of the property. To the plaintiff, the property is at best a source of possible monetary profit. 72 In circumstances where the high probability is that there will be no profit from the venture, and therefore no advantage to the contract which could be retained by the plaintiff, I do not think a ground for specific performance would be made out. 73 For those reasons, in my opinion the plaintiff's claim should be dismissed. 74 I dismiss the proceedings. 75 I order that caveat number 6492552 be removed. 76 I order that the plaintiff pay the defendant's costs of the proceedings. The exhibits may be returned after 28 days if there is no appeal.

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Last Modified: 09/27/2000