Immix Holdings Pty Ltd v Western Port Metal Recyclers Pty Ltd
[2024] VCC 1551
•7 October 2024
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised (Not) Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-23-02283
| Immix Holdings Pty Ltd (ACN 615 811 419) | Plaintiff |
| v | |
| Western Port Metal Recyclers Pty Ltd (ACN 132 217 219) | Defendant |
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JUDGE: | Her Honour Judge Burchell | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 30-31 July, 1-2 and 19 August 2024 and written submissions dated 7, 13 and 21 August 2024 | |
DATE OF JUDGMENT: | 7 October 2024 | |
CASE MAY BE CITED AS: | Immix Holdings Pty Ltd v Western Port Metal Recyclers Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2024] VCC 1551 | |
REASONS FOR JUDGMENT
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Subject:CONTRACT – SPECIFIC PERFORMANCE
Catchwords: claim for specific performance of a sale of business – whether contract contained in Heads of Agreement – whether contract is binding – whether obligations completed by the plaintiff
Legislation Cited: Retail Leases Act 2003 (Vic), s 61; Property Law Act 1958 (Vic), 73; Corporations Act 2001 (Cth), s127; Legal Profession Uniform Law, ss 296 and 297; Evidence Act 2008 (Vic), s 42(1)
Cases Cited:Masters v Cameron (1954) 91 CLR 353; GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631; Winchcombe v Pigot (1614) 11 CORep 26b; Mantonn v Parabolic Pty Ltd [1985] 2 NSWLR 361; Locnere Pty Ltd & Anor v Jakk's Bagel & Bread Co Pty Ltd [2003] NSWSC 1123; Farrow Mortgage Services Pty Ltd v Slade (1996) 38 NSWLR 636; Hibblewhite v M’Morine [1840] Eng R 108; Federal Commissioner of Taxation v Orica Ltd (1998) 194 CLR 500; Brott v The Queen (1992) 173 CLR 426; Nurisvan International Ltd v Anyoption Holdings Ltd [2017] VSCA 141; Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424; Hart v MacDonald (1910) 10 CLR 417; BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266; Payne v Parker [1976] 1 NSWLR 191; Briginshaw v Briginshaw (1938) 60 CLR 336; Retirement Services Australia (RSA) Pty Ltd v 3143 Victoria St Doncaster Pty Ltd (2012) 37 VR 486; Etna v Arif [1999] 2 VR 353; Hope v RCA Photophone of Australia (1937) 59 CLR 348; Realestate.com.au Pty Ltd vHardingham [2022] HCA 39; Codelfa Construction Pty Ltd v State Railway Authority (NSW) (1982) 149 CLR 337; Grocon Constructions (Victoria) Pty Ltd v APN DF2 Project 2 Pty Ltd [2015] VSCA 190; Byrne v Australian Airlines Ltd (1995) 185 CLR 410; Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; Commonwealth Bank of Australia v Barker (2014) 312 ALR 356; Ansett Transport Industries (Operations) Pty Ltd v Commonwealth (1977) 139 CLR 54; Standard Chartered Bank of Australia Ltd v Antico (1993) 36 NSWLR 87; Mann v Carnell (1991) 201 CLR 1; Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; Jones v Dunkel (1959) 101 CLR 298; The Commercial Bank of Australia Ltd v GH Dean & Co Pty Ltd [1983] 2 Qd R 204; EquuscorpPty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 417; Retirement Services Australia (RSA) Pty Ltd v 3143 Victoria St Doncaster Pty Ltd (2012) 37 VR 486; Bot v Ristevski [1981] VR 120; Brien v Dwyer (1978) 141 CLR 378; Howe v Smith (1884) 27 CH D 89; Carr v Berriman (1953) 89 CLR 327; Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115; Laurinda Pty Ltd v Capalabal Park Shopping Centre Pty Ltd (1989) 166 CLR 623; DTR Nominees v Mona Homes Pty Ltd (1978) 138 CLR 423; Green v Sommerville (1979) 141 CLR 594; Foran v Wight (1989) 168 CLR 385; Bensons Property Group Pty Ltd v Key Infrastructure Australia Pty Ltd [2021] VSCA 69; Dougan v Ley (1946) 71 CLR 142
Publications: Patterson, Robertson and Duke, Principles of Contract Law (Lawbook Co., 4th ed., 2012), Seddon, Bigwood and Ellinghaus, Cheshire & Fifoot Law of Contract (LexisNexis Butterworths 10th ed., 2012), Seddon, Seddon on Deeds (1st ed., The Federation Press)
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | J D S Barber KC | James G Sloan |
| For the Defendant | I W D Upjohn KC with A C Blair | Midwinter Lawyers |
HER HONOUR:
Introduction
1The plaintiff (“IMMIX”) claims specific performance of a contract with the defendant (“WPMR”) for the purchase by IMMIX and the sale by WPMR of WPMR’s metal recycling business (“the Business”). IMMIX contends that the contract is set out in the Heads of Agreement (“the HOA”) dated 28 February 2022.
2WPMR’s defence is put on three alternative bases, first, that the HOA was executed as a deed which was materially altered; second, that there was no consensus ad idem between the parties in the HOA in relation to the amount of deposit to be paid and; third, there was a paramount oral term to the effect that the HOA was not a binding sale contract but only provided for exclusivity in negotiations during the due diligence period and, as such, there was no binding contract between the parties as contemplated by the third category in Masters v Cameron.[1] Alternatively, if the HOA constituted a binding agreement, then IMMIX wrongfully repudiated the agreement, by failing to produce a Law Institute of Victoria (“LIV”) contract and pay the deposit, which WPMR duly accepted and thereby terminated the agreement.
[1] (1954) 91 CLR 353 at page 360.
3In my judgment, IMMIX’s grounds are made out. My reasons in respect of each ground are set out below.
4Accordingly, I order that there is judgment for the plaintiff in the proceeding. I also order that defendant pay plaintiff the costs of and incidental to the proceeding on the standard basis, in default of agreement, unless either party has a basis for seeking a different order as to costs. I will invite the parties to prepare draft orders to give effect to these reasons and will determine any issue concerning costs on the papers.
Factual background
5There are two main issues. First, whether there is a binding contract. Second, if the refusal of the lease to IMMIX by the Landlord of the business premises afforded WPMR the opportunity to get out of the contract.
6The HOA was signed by Mr James Suggate, on behalf of IMMIX in his capacity as director, on 24 February 2022 and was emailed to Mr Robert Wilson of Biz Place Pty Ltd trading as Victorian Brokers (“Vic Brokers”), the broker for WPMR. Mr John Fincham, on behalf of WPMR, signed on 28 February 2022. However, WPMR requested a higher purchase price. Mr Suggate signed the second form of the HOA on 27 February 2022 and initiated the changes to the prices.
7Mr Wilson emailed it to Mr Fincham on 28 February 2022. Mr Fincham wanted a higher price again – an extra $50,000.00 because WPMR had bought more equipment. Mr Fincham inserted by hand the higher price of $3,335,000.00 with his initials beside it, and dated it 28 February 2022 and adjusted the deposit, which was not 10% but 100%. IMMIX contends this action was inconsistent with the terms of the agreement and inconsistent with a condition precedent. Mr Fincham sent it to Mr Wilson who noticed the “error” in the deposit and corrected it himself by striking through and typing in the “correct” 10% deposit in the sum of $333,500.00 and purported to “witness” Mr Fincham’s signature.
8On 1 March 2022, Mr Suggate did not sign the amended HOA but his email relevantly states:
“As agreed the 2nd increase is for the 10 additional hook bins John purchased last week”.
9IMMIX contends that Mr Suggate was plainly accepting the counter-offer with the increased purchase price. The agreement is a contract and not takes effect as a deed.
10The lease term was 5 years with a commencement date of 14 July 2019. Further terms included four by 5-year options. The commencement rent was $56,374.32 per annum, or approximately $4,700.00 per calendar month. The permitted use was for metal recycling. There was no security payment required.
11The terms of the lease contained clause 14.2 in relation to “assignment and sub-letting” which included the following:
“Not to –
(a) assign; or
(b) sub-let; or
(c) licence; or
(d) part with occupation of
the premises or the tenant's legal or equitable interest in the premises unless the landlord or the managing agent has in each instance given prior written approval.
14.3 Subject to clause 14.4, the landlord or the managing agent will not unreasonably refuse approval.”
12Clause 14.4 set outs certain reasons on which it would be reasonable for the landlord to refuse approval.
13IMMIX admitted that the Retail Leases Act 2003 (“the RL Act”) conditions apply, including the term mandated by s61(2) of the RL Act:
“… request for the landlord's consent to an assignment of the lease must be in writing and the tenant must provide the landlord with such information as the landlord reasonably requires about the financial resources and business experience of the proposed assignee.”
14By the time of the exchange of the HOA, the rent for the business premises had increased to $5,060.04 per calendar month, including GST.
15On 8 March 2022, IMMIX paid the initial deposit in the sum of $1,000.00 and correspondence between the solicitors was exchanged.
Legal framework
16The principles of whether parties have formed an agreement and intend to be legally bound by that agreement prior to signing any terms in writing are set out in Masters v Cameron.[2]
[2] (1954) 91 CLR 353.
17If parties have entered into a preliminary agreement, it will be necessary to determine whether they intended to be bound or not.
18In Masters v Cameron, the High Court set out three categories that a preliminary agreement may fall into:
“Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three cases. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.”[3]
[3] (1954) 91 CLR 353 at page 360.
19By way of summary, the first category results in parties being legally bound by the preliminary agreement, whether or not a formal written contract is ever executed. In the second category, parties are bound to bring a formal written contract into existence. In the final case, parties are not bound unless and until a formal document is executed.[4]
[4] Patterson, Robertson and Duke, Principles of Contract Law (Lawbook Co., 4th ed., 2012), page 129.
20A finding of which of the three categories a preliminary agreement falls into is determined objectively “upon the intention disclosed by the language the parties have employed” in the preliminary agreement.[5]
[5] (1954) 91 CLR 353 at page 362.
21The words “subject to contract” would usually (but not always) evince that parties do not intend to be bound unless a formal written agreement is executed, meaning that the preliminary agreement falls within the third category.[6]
[6] Ibid.
22Conversely, words such as “legally binding in principle” have been held to show clear intention of parties to be bound immediately.[7]
[7] Seddon, Bigwood and Ellinghaus, Cheshire & Fifoot Law of Contract (LexisNexis Butterworths 10th ed., 2012) at page 253, citing GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631.
IMMIX’s Submissions
23IMMIX argues that a preliminary agreement was reached and that the main reason why the contract was not completed was because WPMR failed to obtain the consent of the landlord, Mook Nominees Pty Ltd, at the premises of 1953 Frankston-Flinders Road, Hastings, (“the Premises”) for the transfer of the lease or for a new lease to IMMIX. IMMIX submits that its failure to obtain consent should be considered within the context of WPMR having second thoughts about proceeding with the sale of the Business.
24IMMIX claims that the parties intended to be bound even where the parties sought to include additional terms. It submits WPMR failed to obtain the transfer of the lease. Instead, WPMR consistently attempted to put the obligation of the transfer of the lease onto IMMIX. IMMIX did try to obtain a lease, but it was unable to do so. IMMIX argues that WPMR should not be able to take advantage of its own breach of a condition precedent.
25The HOA was signed by WPMR but not IMMIX. The document has a heading “Legally Binding”. IMMIX says the heading is a clear statement the document is binding, and it was an all-agreement contract.
“The parties acknowledge and agree that the terms of this document, incorporate the pro forma terms of the Contract of Sale of Business endorsed by the Law Institute of Victoria (the LIV Contract of Sale), are binding and constitute the entire agreement and understanding of the parties as to the terms of the sale of the Business. The parties agree that the arrangements, as set out in this document, will be more formally documented using the LIV Contract of Sale as soon as possible, unless the parties agree otherwise in writing. This document will terminate only upon the parties entering into the LIV Contract of Sale or another long form contract agreed to in writing by the parties. Each Party agrees to meet its own legal costs.” (emphasis added)
26The lease obligation stated:
“LEASE AGREEMENT: The terms, conditions and obligations of the existing lease are to be approved by the Purchaser's solicitor within Fourteen (14) days from the date of Purchaser's receipt of copy of lease. In the event that the lease is disapproved by the Purchaser’s solicitor, then at the Purchaser's discretion, this offer shall be deemed to be void and all deposit monies paid shall be refunded. in the event that the Purchaser's solicitor does not provide written notice to the Vendor's solicitor that the lease has not been approved within Fourteen (14) days from the date of Purchaser's receipt of said lease, then in such event this special condition shall lapse. Subject to a transfer of the existing lease to the Purchaser on or prior to settlement.”
27There was a settlement and act in good faith clause, whereby:
“SETTLEMENT AND ACT IN GOOD FAITH: The Purchaser agrees to, at all times, act in good faith and use their best endeavours to fulfil the conditions in this document that are applicable to them as soon as possible. The parties agree that settlement is to be effected on 06 April 2022 or by agreement between the parties.”
28The deposit clause provided:
“Upon the signing of this agreement, the Purchasers will pay an initial deposit of $1,000. Upon signing of the ‘CONTRACT OF SALE’ The Purchaser shall pay 10% of the purchase price, less the $1,000 above.”
29The LIV contract was incorporated into the contract. General Condition (“GC”) 8 lease provides that:
“8.1 The Vendor must obtain for the Purchaser by the due date for settlement, a Lease of the Business Premises either: (a) by transfer of the current Lease with the landlord’s written consent (a Transfer); or (b) by a new Lease from the landlord to the Purchaser on the terms specified in item 3 of schedule 4 (a New Lease).
8.2 Both parties must take all reasonable steps to obtain the landlord’s consent to the Transfer or the New Lease of the Business Premises.
8.3 The Purchaser must promptly provide to the Vendor information that a landlord could or does reasonably require about the financial resources and business experience of the Purchaser.
8.4 The Purchaser must prepare the deed of transfer unless the Lease provides otherwise.
…
8.7 If the Purchaser has complied with the obligations under general conditions 8.3, 8.4 and 8.6, and either: (a) the landlord has not; (i) consented in writing to the Transfer; or (ii) agreed to grant a New Lease; or (b) written evidence has not been provided that any mortgagee or chargee has consented to the Transfer or New Lease, by the date which is 5 Business Days prior to the due date for settlement, the Purchaser may by written notice to the Vendor extend the due date for settlement to a date not exceeding 14 days from the due date for settlement.
8.8 If the provisions of general conditions 8.7(a) or 8.7(b) have not been satisfied, by the due date for settlement or the extended due date for settlement (as the case may be) either party may end this contract by service of 5 Business Days’ notice of termination of contract in which case the Vendor must repay any moneys paid by the Purchaser.” (emphasis added)
30IMMIX says WPMR cannot rely on GC 8.8 as it did not comply with the conditions necessary to obtain a lease transfer or new lease from 11 March 2022.
31IMMIX submits that on 16 March 2022, Mr Daniel Jade, the solicitor for WPMR, wrote to Ms Susan Reece Jones, former solicitor for IMMIX, and accepted that conditions precedent were binding. Mr Jade noted that due diligence had been completed and the assignment of the lease process was outstanding. IMMIX observes that Mr Jade was not talking about a new lease at this stage. IMMIX contends that the email from Mr Jade is an admission in substance that the HOA is binding. IMMIX concludes that it does not make sense to have a condition precedent in a document that is not binding.
32On 16 March 2022, Mr Jade sent an email to the landlord and introduced Ms Reece Jones. IMMIX denies this was a request for consent for the assignment of the lease by WPMR. It relevantly provides:
“We understand you are the Landlord of the Premises. We also introduce the potential incoming Tenant of the business legal representative Ms Susan Reece-Jones.
We confirm that our client is in the process of a sale of business, and as such could you please kindly provide us with the following information?
...
Transfer of Lease information required to be provided by the prospective tenant for consideration and approval.”
33Ms Winsome O’Keefe, the landlord’s representative, responded to the introduction on 22 March 2022, that a new lease will need to be drawn up and still needed to be negotiated.
34Mr Jade sent an email to Ms Reece Jones on 22 March 2022, attaching a draft LIV Business Sale Agreement, which relevantly stated:
“… We also understand no contact has been made with the Landlord as yet. Please confirm if this is correct. See attached email from Landlord in response to the introduction email we sent. We note again that due to the tight deadlines, you need to use best endeavours to make contact to ensure a lease is in place by Settlement.”
35IMMIX contends that this is the first example where WPMR seeks to shift its responsibility of obtaining a transfer of the lease or a new lease onto the purchaser. Further, it argues that throughout the correspondence there is a consistent pattern of consistently putting it onto the purchaser to deal with the landlord over a new lease or a transfer of lease which is explored further below.
36IMMIX acknowledges that on 23 March 2022, Ms Reece Jones responded to Mr Jade’s email attempting to vary the HOA to obtain a different purchase price. IMMIX says that nothing ever came of it. IMMIX observes that the response from Mr Jade was swift, stating:
“We acknowledge receipt of your offer below. Our current instructions are that the current Heads of Agreement is still in effect and the DD period has been satisfied as per previous correspondence.”
37IMMIX contends that Mr Jade’s response was asserting correctly in his email that the HOA was binding.
38Further, IMMIX relies on Mr Jade’s 24 March 2022 email in which he states:
“We are also instructed that the figures attached show large growth and continual growth over the last 18 months, if your client are not going to proceed with the current Heads of Agreement (which is still on foot) which has a purchase price of $3,335,000 then we reserve all our rights in relation to this. We understand that our Client has already emailed your client regarding this as well.”
39IMMIX, again, contends this is a correct assertion that the HOA was on foot.
40On 28 March 2022, IMMIX submits that Ms Reece Jones incorrectly asserted that the HOA was not binding and that both business brokers gave evidence that they never said that the HOA was not binding, despite the email stating:
“At the time of executing the heads of agreement, your client (via its broker) represented that the terms of the heads of agreement (HOA) was not binding, was only designed to preclude others from negotiating with your client and that the sale was a matter of negotiation between our clients until formal terms were signed.
…
Accordingly, we put you on notice that if the updated financials you provided yesterday are not accurate, our client may seek not to proceed with any purchase if a sale price reflecting the true value of the business cannot be agreed.”
41IMMIX further submits that both business brokers gave evidence stating they did not say the HOA was not binding, opposing Ms Reece Jones’ statement.
42Ms Reece Jones foreshadowed a possible negotiation to change the purchase price following the due diligence but, as IMMIX contends, nothing came of it.
43Mr Jade responded to Ms Reece Jones an hour later and stated that the HOA was legally binding as contained in the document, including:
“1. Where you have outlined representations made, nothing is attached to evidence this. We note that the Heads of Agreement is legally binding as contained in the document. We also note that the Vendor’s Warranties are also outlined. We note that the DD period is where your client goes through everything needed and if doesn’t agree or wants to rely of this clause then they communicate this. After repeated follow ups we heard nothing from your office. This is made very clear in the Heads of Agreement.
2. In addition, you have not addressed the Due Diligence period in which your client had the opportunity to review and request all the information provided. As such this was satisfied and we have no record of any extension as provided In your email below, please provide this as a matter of urgency to assist with your instructions. In the absence of any confirmation, this condition has been satisfied and as your office did not bother to respond by the deadline, you cannot now reply that this was not satisfied.
…
4. We are also unclear as how your client can deny that the Heads of Agreement is not binding, we encourage you to read the agreement in detail. Please confirm on what basis you confirm this.
…
5. We also note that we had reminded your office and request on multiple occasions, see attached all the request for a response including that the DD period had been satisfied. We note your office did not take all reasonable steps/endeavours to meet these conditions precedent. We note you have not responded to our request re the Contract of Sale and have made not made any contact with the Landlord to negotiate a lease as of today according to our recent follow up. If this is incorrect please advise.”
44On 6 April 2022, Mr Jade wrote to Ms Reece Jones:
“We are instructed that our Client’s have been in discussions and it seems the Business Sale is now progressing as per the original sale price.”
45IMMIX submits that in mid-April 2022, there were emails passing between the parties’ lawyers about a more formal contract of sale of business which progressed up to 22 April 2022. Contact was also made with Ms Catherine Sutton, the landlord’s representative, who had been away.
46On 19 April 2022, Ms Sutton and Mr Suggate exchanged text communications in relation to the lease for the business premises.
47On 20 April 2022, Ms Sutton sent the landlord proposed terms to IMMIX for a new lease. The terms were five by 5 years with an 18% increase in the existing rent ($6,000.00 per month) and rental increase of 5% from the existing $5,050.00 per month rent, with and a security deposit by way of bank guarantee of $200,000.00 due to “the high cost of site clean-up” (which was $0 on existing lease).
48On 21 April 2022, Mr Suggate agreed to a bank guarantee. Ms Sutton responded “great news. At $150k?”. Mr Suggate responded that he had “requested $36k and was approved”. Financial documents were provided by IMMIX to Ms Sutton.
49IMMIX submits that also on 21 April 2022, Ms Reece Jones and Mr Jade were engaged in communications in negotiating the terms of the more formal statement of the parties’ agreement. In her email, Ms Reece Jones referred to the terms of the lease which were substantially different to the lease with WPMR. She said that the purchase price on stock would be agreed after IMMIX reviewed each item and stock valuation. IMMIX contends they were working towards the more formal contract, but they had not finalised it yet.
50On 22 April 2022, Ms Sutton wrote to Mr Suggate as follows:
“Thank you for sending through financial information. However, the letter from the accountant is insufficient. We requested a list of the company’s assets and liabilities. We are unable to accept your request to reduce the $150,000 security deposit by way of a bank guarantee. We have reduced this security by $50,000. We agree on the terms of $6000 (inclusive of GST) per calendar month and 5 percent annual rises.”
51That evening, Mr Suggate responded to Ms Sutton:
“In order for Immix to agree to your demands – noting that they are substantially different to the terms provided to the current tenant and which in our view are unreasonable, Immix must be assured that there are no issues in relation to your property in regard to current tenant.
If we are to enter a lease with you on the terms you have proposed, we want assurance that there are no outstanding issues with the tenant, that there are no outstanding issues or matters with regards to your property and that we would want a condition report provided by you, prior to signing the lease. We would also want to complete an inspection with you and for you as landlord to provide a comprehensive inspection report before we commence a lease on your proposed terms.
We have spoken with our bank which has agreed to provide us with the bank guarantee you are demanding on the basis that the lease agreement is for a 3-year term with an option to extend for another 3 years.”
52IMMIX submits that Mr Suggate had concerns about onsite contamination by the existing tenant which prompted him to send the 22 April 2022 email. At the same time, Mr Jade responded to Ms Reece Jones as follows:
“If you have a proposed Assignment of Lease already drafted, please send through so we can review. Please also confirm when you know if it will be an assignment or new lease.”
53IMMIX argues that Mr Jade put it onto IMMIX to get a transfer of the lease or new lease, however, the next morning, on Saturday, 23 April 2022 everything changed when Ms Sutton expressed an unwillingness to transfer or grant a new lease to IMMIX. Ms Sutton wrote to Mr Suggate the following:
“We do not wish to sign a lease with you."
54Mr Suggate tried to retrieve the situation by responding:
“We will agree to your terms, I feel it’s important we met asap to ensure you are comfortable with proceeding.”
55IMMIX says Mr Suggate’s email in response is not an agreement to lease. It submits that Mr Suggate could not accept an offer that had been withdrawn by the landlord. On this chronology, WPMR agreed that there was no agreement to lease.
56On 27 April 2022, Ms Reece Jones wrote to Mr Jade:
“IMMIX’s proposes that IMMIX acquire both the assets and the shares in Western Port as this will resolve the assignment of lease.”
57Mr Jade responded as follows:
“What is the update with the landlord?
Best you review the lease first, as normally a change of ownership clause is contained in Leases which is triggered and same approval is required. Please review and come back to us. We also note it can be a share purchase agreement or a sale of business/assets. One or the other.”
58IMMIX states that there is no suggestion by Mr Jade that WPMR will assist IMMIX with the landlord.
59IMMIX contends that Mr Ric Brown was offered employment on 14 April 2022 and was specifically brought on for this acquisition.
60IMMIX submits that Mr Brown met Mr Fincham on 28 April 2022 at a café and Mr Brown told him that the landlord would not sign a lease and Mr Fincham was surprised there was a problem with the landlord. They discussed Mr Fincham calling Ms Sutton to retrieve the situation. Mr Brown sent a report of his meeting with Mr Fincham later that evening by email to Mr Suggate.
61IMMIX contends that Mr Brown called Ms Sutton following his meeting with Mr Fincham. Ms Sutton told him that the landlord did not want to enter a lease with IMMIX. Mr Brown wrote her an email asking her to reconsider. There was no reply.
62IMMIX says that on 3 May 2022, Mr Brown called Ms Sutton again. He told her that IMMIX and WPMR were committed to the sale. IMMIX contends that when Mr Brown told Ms Sutton this, it caught her by surprise and her tone changed. They discussed the Premises and the possibility of IMMIX leasing it. Mr Brown was left with the impression she would talk with WPMR.
63IMMIX submits that Mr Suggate and Mr Brown met with Mr Fincham at a café around 4 May 2022. They asked him whether he still intended to sell the Business to IMMIX. He replied “yes”.
64Mr Jade wrote to Ms Reece Jones after the meeting as follows:
“We understand you were not approved as prospective Tenants with the Landlord. As such we ask for an update from your end as to whether you are still negotiating or if we now need to rescind the Heads of Agreement between the parties by agreement based on condition precedent not being met.”
65IMMIX contends by the language of “recission” and the reference to “condition precedent” is all in recognition that HOA was binding on the parties.
66On 5 May 2022, Ms Reece Jones wrote to Ms O’Keefe, relevantly, as follows:
“We are in possession of a commercial lease dated 14 July 2019 between Mook Nominees Pty Ltd (as Landlord) and WPMR (as tenant) for the Premises (Lease).
Pursuant to clause 14.2 of the Lease, Immix seeks the Landlord’s written approval of an assignment of the lease to it as incoming tenant.
Clause 14.3 states that the Landlord will not unreasonably refuse approval of the assignment.
…
Immix does not understand on what basis the Landlord is refusing to deal with it on these issues. It cannot be because Immix lacks the means, ability or experience to carry on the permitted use of metal recycling at the Premises. If there is some matter that the Landlord remains concerned about or requires further information of, please let us know so that the matter or concern can be addressed or resolved.
As matters stand, there is an enforceable contract of sale for the sale and purchase of the business and assets of WPMR. The Lease currently in place with WPMR is in a form acceptable to Immix; and there is no reasonable basis upon which the Landlord should refuse its reasonable approval to the assignment of the Lease.
Immix requires the Landlord to provide its written approval to WPMR’s assignment of the Lease.
Should such approval not be forthcoming, Immix will seek to compel WPMR (as tenant) to obtain that approval. …”
67On 5 May 2022, Ms Reece Jones sent a letter to Mr Jade, which relevantly provided as follows:
“2. We have been advised that the Landlord is refusing to either agree to a new lease or assign the current one in place with your client.
• As matters stand, our respective clients have a binding contract for the purchase and sale of your client’s business and assets conducted from its Hastings business address (being the leasehold premises), on the terms set out in the Vic Brokers Heads of Agreement. …
6 Accordingly, pursuant to clause 13.5 of the LIV’s Contract of Sale of Business; and clause 14 of the Lease, Immix requires the Vendor (as tenant) to procure the Landlord’s approval to an assignment of the lease.
Should the Landlord continue to refuse, please advise whether your client will take steps to compel the Landlord to provide its approval, in accordance with the terms of the Lease in accordance with its obligations under clause 13.5 above.
8. Immix remains committed to completing settlement.”
68Mr Jade responded on 5 May 2022:
“2. We also request you provide /account for what reasonable and genuine steps you have conducted to procure the Lease which is required under the Heads of Agreement;
3. We have continued to act in good faith throughout this whole process and have made many attempts to assist the Purchaser and Landlord effect a Lease agreement;
4. We also note that currently, your client is in breach of the Heads of Agreement and to date, we have not enforced our rights in a further attempt to enliven the parties agreement.”
69IMMIX says it cannot be in breach of an agreement that WPMR is now arguing is not binding by virtue that an assertion of a breach implies that WPMR thought the HOA was in fact a binding agreement. There was no response to Ms Reece Jones’ requirement of her point 6 (in the email correspondence set out above) requiring the vendor as tenant to procure the landlord’s approval.
70IMMIX observes that Mr Jade’s email later that day is still silent on the tenant obtaining the landlord’s approval.
71By email dated 6 May 2022, Vic Brokers attached the communications between the purchaser and the landlord in relation to the lease discussions. Mr Serhiy Tsundra requested of Mr Jade the following:
“Could you please advise if you can influence in any way to proceed with the landlord approval.”
72IMMIX says it is unaware that WPMR did anything of that nature.
73On 11 May 2022, Ms Reece Jones wrote to Mr Jade stating:
“Clause 7.2 [condition 8.1] of the LIV pro-forma places an obligation on your client as the Vendor to obtain a lease of the business premises either by transfer of the current lease with the Landlord's written consent, or by a new lease.
Clause 7.3 [condition 8.2] of the LIV pro-forma requires both parties to take all reasonable steps to obtain the transfer and the Landlord's consent, or the new lease of the business premises. …
6 On 23 April 2022, the Purchaser agreed to all of the Landlord's terms. Despite this, the Landlord advised our client that day, that she would not agree to a new lease agreement. Our client was very surprised as he was of the view that Ms Sutton was amendable to entering a new lease, particularly given Immix had agreed to all of the Landlord's new lease terms. …
As matters stand, the Vendor has rights under its lease with the Landlord to compel a transfer of the current lease. We have made that clear in our letter to the Landlord. We have seen nothing to suggest your client has done anything substantive to progress the issue. …
If there is something you require from us to progress the issue, please let us know.
As we have done, we would appreciate you providing an account of what reasonable and genuine steps your client has conducted to procure a transfer or a new lease.
Again, our client remains committed to completing the purchase of your client's business.”
74IMMIX says Ms Reece Jones has the order of events wrong at point 6 of her email. The landlord’s refusal occurred before IMMIX agreed to the landlord’s proposed terms of the lease. There was no response until 20 May 2022, after Ms Reece Jones wrote to Mr Jade again:
“We would appreciate a response to the matters raised in our letter to you dated 11 May 2022.
We would also be pleased to discuss how we might assist your client to effect a transfer of the current lease from the Vendor to the Purchaser (or execute a new lease with the Purchaser) or otherwise compel the Landlord to effect a transfer in accordance with your client's rights under the Lease and proceed to finalise this transaction.”
75Ms Reece Jones wrote to the landlord on the same day attaching her 5 May 2022 letter.
76On 20 May 2022, Ms Sutton replied to Ms Reece Jones:
“We understand from our current tenant that they do not wish to sell their business to your client, so the issue is mute [sic].”
77Mr Jade responded on 25 May 2022 referring to the 11 and 22 May 2022 correspondence as follows:
“We now agree with your view stated in your email dated 28 March 2022 that the Heads of Agreement attached (incorporating the pro forma terms of the LIV Contract of Sale) dated 28 February 2022 (“Agreement”) is not enforceable and binding and that “the sale was a matter of negotiation between our clients until formal terms were signed” (please see email attached),we also confirm in any case that it had been repudiated by your client being unwilling or able to perform its obligations under the Heads of Agreement. …
As outlined above and based on current status, we are writing to notify you, for the avoidance of any doubt, that our Client no longer wishes to continue to enter into any further negotiations for the sale of the Business and as such, all further negotiations are at an end;
We also note that your client cannot just pick and choose a narrative to suit its wants at a particular time, this is not in the spirit of this transaction and/or in good faith, this is also evidenced by your client’s lack of responses or willingness to sign a Contract of Sale and subsequently pay a Deposit. …
Furthermore, as the Landlord has not consented to a Transfer/Assignment of Lease by the due date of Settlement, our Client hereby gives notice to terminate the Agreement in 5 business days of the date of this email pursuant to General Condition 8.8 of the endorsed LIV Contract of Sale (February 2020) (“LIV Contract”) (attached). …
As required under General Condition 8.1 and 8.2 of the LIV Contract, the Vendor has taken all reasonable steps to obtain a Transfer of Lease for the Purchaser, including the following …
However, we note that ultimately our Client does not control the course of the negotiations between the Purchaser and the Landlord and whether or not the Landlord approves the Transfer of Lease to the Purchaser.”
78IMMIX submits that the HOA made it clear that the balance of the deposit was due on the signing of a formal contract, which had not happened. The letter does not set out a request for an assignment of the lease or that WPMR has taken any steps to require the landlord to approve the assignment of the lease. IMMIX argues it is only WPMR under GC 14.3 of the lease who had the right to require the landlord to approve IMMIX as a tenant.
79On 13 July 2022, Heinz Law, acting for the landlord, wrote to Mr James Sloan stating that tenant had not made a request to transfer the lease.
80IMMIX contends that WPMR, cannot rely on a failure of the condition precedent of an assignment of the lease when it is its own failure to fulfil its obligation to obtain a transfer of the lease or a new lease, and its own failure to exercise its rights under the lease to request a transfer and require the landlord to consent, that resulted in the failure of the condition.
81IMMIX contends that the fact that it explored with the landlord the possibility of a new lease does not constitute a waiver or a release of its right to a transfer of the existing lease and ignores the operation of s61 of the RL Act and the procedure of a landlord and tenant summons issued in the Victorian Civil and Administrative Tribunal (“VCAT”). Further, under s61, if the landlord does not respond to a request within the time limited, consent is deemed to have occurred. An application would only be required if the landlord actually refused consent.
82IMMIX rejects WPMR’s contention that key terms were still being negotiated by the parties and submits that the contract price changes raised by Ms Reece Jones following the due diligence went nowhere, and the stock price was contemplated in the HOA. It says that all the essential terms were included in the HOA and the LIV standard terms. IMMIX argues that WPMR’s assertion that the HOA was executed as a deed is not pleaded by IMMIX and it does not matter in any event, as on its case, the parties concluded a simple contract.
83IMMIX denies that there was a paramount oral term, and it cannot stand in the face of an express written term to the contrary. The HOA says it is binding and it supersedes oral terms where there is an entire agreement clause and another in the LIV agreement.
84IMMIX observed that WPMR’s estoppel case is not pleaded in the way set out in paragraph 13 of its written submissions. It notes that the defence at paragraph 10(c)(i) only pleads estoppel as it relates to the issue of whose obligation it was to procure the landlord's consent. WPMR clarified at trial that no amendment of the defence was sought, and it would not pursue an estoppel defence which was not pleaded.
85IMMIX claims that it never failed or refused to execute any contract of sale and pay any deposit. It submits it is quite explicable why the parties would not go on to finalise and sign a contract sale in circumstances where the landlord refused to deal with IMMIX and was refusing to cooperate.
86IMMIX asserts that it is not a breach of an essential term that IMMIX failed to provide WPMR with a fully executed long form of contract. IMMIX relies on category 1 of agreement identified in Masters v Cameron. That is, where the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. It submits that if it were in that situation a breach of an essential term to fail to enter into the fuller and more precise form, then it would mean that the category does not exist at all.
87Finally, IMMIX contends that the failure to meet a settlement date does not avoid the Contract, nor does it release the parties from their obligations.
WPMR’s Submissions
88WPMR submits that this Court is only the upholder and not a destroyer of bargains if there was a concluded bargain. WPMR argues that this case involves a written contract that is, a deed, executed as a deed, and was meant to be a deed.
89WPMR submits that no preliminary agreement “on terms of a contractual nature” was reached, thus Masters v Cameron[8] does not arise.
[8] (1954) 91 CLR 353 at page 360.
90Alternatively, it says if the Court finds that parties had reached an agreement on terms of a contractual nature, the Court should also find that the third category in Masters v Cameron[9] applies, that is, the parties did not intend to be bound unless and until a formal contract was executed.
[9] Ibid.
91WPMR observes that the HOA had a number of iterations.
92The first HOA was signed by Mr Suggate on 24 February 2022. Vic Brokers sent the HOA to Mr Fincham by email on 25 February 2022.
93On 27 February 2022, Mr Suggate amended the HOA by striking through some prices and via DocuSign, inserts his initials to the changes. There was an increase in purchase price from $3,200,000.00 to $3,825,000.00. The last change was made at 2.15pm on 28 February 2022.
94On 28 February 2022, Mr Fincham adds on another $50,000.00 to the document in handwriting with his signature next to the sum of $3,335,000.00 with a deposit for 100% of the purchase price. WPMR rebuts IMMIX’s contention that the 100% deposit is a commercial absurdity. This is because of IMMIX’s position that it did not need to execute a contract of sale until it was good and ready, which could go right up to and including settlement date.
95Mr Fincham signed the HOA on 28 February 2022 with no witnesses. It is sent at 5.54pm to Mr Wilson of Vic Brokers who sends the signed and amended version by Mr Suggate. WPMR submits that Mr Wilson materially alters the document by doing two things. First, he purports to witness the document by “pdffiller” and second, he changes the deposit to 10% of the purchase price in the sum of $333,500.00 and strikes through Mr Fincham’s change. WPMR argues that a material alteration of a deed voids the agreement and relies on the application of Pigot’s Case.[10]
[10]Winchcombe v Pigot (1614) 11 CORep 26b (“Pigot’s Case”).
96WPMR says the HOA was not binding because the broker said the HOA was only to provide exclusivity of negotiating rights to the parties during the due diligence process. WPMR contends this is evident in an email from IMMIX’s own solicitor at the time, Ms Reece Jones, dated 28 March 2022, and the paragraph stating:
“[a]t the time of executing the heads of agreement, your client (via its broker) represented that the terms of the heads of agreement (HOA) was not binding, was only designed to preclude others from negotiating with your client and that the sale was a matter of negotiation between our clients until formal terms were signed”.
97WPMR contends this is a rather precise statement for a solicitor, and WPMR asserts the Court should assume in the absence of any evidence from the solicitor, that Ms Reece Jones did so on instructions.
98WPMR submits that, on 28 March 2022, Ms Reece Jones gave an opinion that the HOA was not binding. It argues that, at the time of executing the HOA, the broker also represented to Mr Fincham that the terms were not binding and was to preclude others from negotiating with WPMR. WPMR notes that Ms Reece Jones is not being called by IMMIX to give evidence. WPMR claims Ms Reece Jones’ statement is consistent with the conduct of the parties afterwards. WPMR argues that the parties’ ongoing haggling over terms, as set out in Ms Reece Jones’ email on 12 April 2022 insisting on a number of amendments to the HOA for the formal contract of sale, suggests that the parties did not consider themselves to be bound by the HOA. WPMR conceded that the opinion of Ms Reece Jones is not conclusive as to whether there was an agreement. This is ultimately a matter for the Court to determine.
99By email dated 12 April 2022, Ms Reece Jones set out a number of amendments to the LIV contract of sale. These amendments included the settlement date moving from 6 April 2022 to 3 May 2022, the purchase price of $3,300,000.00 inclusive of all stock instead of plus stock, and a restraint of trade distance of 200 kilometres for 2 years instead of 3 kilometres for 3 years. WPMR contends that these were completely different commercial terms.
100By email dated 13 April 2022, Mr Jade agreed to most of the amendments.
101WPMR submits that by April 2022 it was too late for IMMIX to start insisting that WPMR procure the landlord’s consent. WPMR says that it would have been impossible for them to obtain consent at this point because IMMIX had already run the clock down and had already “poisoned the well” in that it had destroyed its relationship with the landlord.
102WPMR contends that on 7 March 2022, from the outset and within a week of the HOA being signed by both parties, Mr Jade wrote to Ms Reece Jones that he understood that IMMIX was negotiating a new lease with the landlord directly. He asked Ms Reece Jones to confirm if this was not the case. WPMR asserts that it was the case, and the parties proceeded on that basis until early May 2022.
103At the time of drafting, the settlement date was 6 April 2022. On 6 April 2022, it was adjusted to 3 May 2022, after due diligence was provided and there were discussions about the purchase price and the new settlement date was agreed. On 22 April 2022, Mr Jade responded to the items raised, stating:
“[i]f you have a proposed Assignment of Lease already drafted, please send through so we can review. Please also confirm when you know if it will be an assignment or new lease.”
104WPMR submits that s61(5) of the RL Act provides a statutory mechanism for the parties, landlord, tenant and prospective new tenant to get the landlord’s consent and a 14-day period for the landlord to make a response. WPMR argues that by 19 April 2022, it was too late for IMMIX to go back to WPMR and, in any event, IMMIX had scared off the landlord.
105WPMR refers to two emails in late April 2022. First, an email on 20 April 2022, from Ms Sutton to Mr Suggate which set out the landlord’s requirements for the new lease.
106Second, an email on 23 April 2022, when Mr Suggate wrote to Ms Sutton blaming his solicitors for things going wrong with the landlord. WPMR conceded that the offer for the new lease had been withdrawn by this time. Ms Reece Jones was wrong about the chronology in her letter of 11 May 2022. WPMR, therefore, did not press the argument that there was an agreement to lease at this time.
107By email dated 6 May 2022, Mr Tsundra asked if Mr Jade had any influence in any way to proceed with landlord approval. Prior to this point, WPMR claims that the parties were all talking about a new lease at this stage.
108By email dated 7 May 2022, Ms Sutton wrote to Mr Fincham setting out the chronological order of correspondence and discussions from her point of view. She characterises the email of 20 April 2022 from Mr Suggate, relevantly, as follows:
“Received email from Jim Suggate with demands that were not in the tone or action of how we do business. It was threatening. …
Email from Jim Suggate noting it was the solicitor's fault for sending a nasty email. …
We still do not have appropriate information as requested several times to determine the viability of agreements. …
Call and email from Ric Brown, Immix, blaming solicitor to nasty email.
Very aggressive and threatening call X 2 from business broker saying we must sign lease. I had to hang up the phone twice and asked him to not contact me.”
109WPMR submits that IMMIX is a special purpose company which was set up to acquire the business. It is a new company without a trading history. WPMR asserts that it is, therefore, quite reasonable for the landlord to be asking questions about IMMIX’s financial viability and asking for a substantial security deposit.
110WPMR contends that things had broken down between IMMIX and the landlord by 3 May 2022, which was meant to be the original settlement date.
111WPMR argues that IMMIX had run the clock down to 3 May 2022, and by that stage, there was no reasonable time to get consent from the landlord and in response rush off to VCAT with a vendor and purchaser summons to compel consent, when the landlord is entitled to withhold consent reasonably. WPMR claims that all it was obliged to do was cooperate, provide the introduction to Ms Sutton and assist with dealing with the landlord.
112WPMR submits that Mr Fincham explained to Mr Brown that the landlord were “old school people” and “country people with traditional values”. He recommended that IMMIX have face-to-face discussions with the landlord rather than sending emails. On 22 May 2022, when Ms O’Keefe spoke with Mr Suggate, she disliked him.
113WPMR submits, if there were binding HOA, then IMMIX failed to comply with the terms of the HOA by failing to do a number of things which needed to be done before the settlement date, including a duly executed contract of sale. WPMR contends that a formal LIV contract of sale was provided for in the HOA. WPMR notes that IMMIX says its delay in finalising a formal LIV contract of sale is explained because the parties were still in negotiations in relation to the lease and the stock. However, WPMR claims that the HOA does not say IMMIX can wait until the landlord’s consent is obtained to finalise the formal contract, and the 11 May 2022 letter from Ms Reece Jones contains a fundamental misconception of the purchaser’s obligations.
114WMPR contends that, prior to 11 May 2022, the landlord’s approach all along was to obtain a new lease and not an assignment of the existing one. WPMR claims that all it was required to do was provide an introduction and to “stay out of it”. From 7 May 2022 onwards, it was meant to be a new lease. WPMR contends that the new lease needed to be negotiated by the new tenant and the landlord directly. An assignment is a different matter.
115In reference to an email dated 20 May 2022, WPMR claims that IMMIX tries to go back to the position of WPMR seeking an assignment and the consent of the landlord. The email correspondence of Ms Reece Jones set out as follows:
“As matters stand, the Vendor has rights under its lease with the Landlord to compel a transfer of the current lease. We have made that clear in our letter to the Landlord. We have seen nothing to suggest your client has done anything substantive to progress the issue.
Immix is, as reiterated on multiple occasions, ready, willing and able to make payment of the balance of the deposit upon execution of the LIV Contract of Sale once a transfer of lease (or new lease) is executed, and then proceed to settlement.”
116WPMR says there is nothing in the HOA or LIV contract of sale that says the transfer of lease or new lease needs to be in place prior to the contract of sale being signed. WPMR submits that Clause 8 of the LIV contract of sale says the new lease is only required at settlement. WPMR contends that this is a cardinal sin of Ms Reece Jones. WPMR asserts that it cannot be that IMMIX can wait until settlement for all steps to be completed. WPMR claims it is a commercial absurdity that IMMIX can wait until settlement for the new lease, the contract of sale and to pay 100% of the deposit. WPMR submits that the contract of sale needed to be in place at a reasonable time before settlement and there was effort on the part of IMMIX to do so.
117WPMR contends that there was never a version of the HOA that had Mr Suggate’s initials to Mr Fincham’s changes. WPMR claims that Mr Fincham was not fussed who he sold the business to but by late May 2022, he ceased being willing to sell to IMMIX after there had been a long delay in the production of a contract and there was no payment of the 10% deposit. WPMR observes that there was only $1,000.00 on the line for IMMIX on a $3,000,000.00 purchase.
118WPMR argues that the HOA as a deed is void by reason of the broker’s material alterations. Alternatively, there was no consensus ad idem about the terms and there was a paramount oral term, which is inconsistent with the written term. WPMR contends that where it is not a deed, and it is only an agreement then extraneous evidence is permitted to constitute the agreement and to look at the conduct of the parties.
119WPMR contends that the oral term was agreed by the former solicitors’ correspondence, that Mr Wilson said to both Messrs Suggate and Fincham separately that the HOA was a starting point for further negotiations. WPMR claims that this is what the parties did.
120If WPMR is wrong about there not being an agreement, then it says that specific performance is not available because IMMIX was in breach of its own obligations and it cannot rely on the subsequent or related non-compliance of WPMR to not obtain the landlord’s consent. WPMR asserts that the agreement was validly terminated by the letter of 25 May 2022 within five business days thereafter.
The witnesses
121IMMIX called four witnesses and WPMR called one witness.
James Suggate
122Mr Suggate is the director of IMMIX. IMMIX recycles scrap metal and processes it for steel mills overseas. In 2022, IMMIX Group had about 36 employees. It now has approximately 64 staff and operates from six premises in Wagga Wagga, Wangaratta, Shepparton, Wodonga, Truganina, and Hallam.
123Mr Suggate was an honest witness who sought to give evidence within the limits of his memory and comprehension. There were gaps in Mr Suggate’s recollection and some of his memory lapses were generally explicable by the extensive effluxion of time involved with this case. His evidence was marked by references to matters he “did not know” or “could not recall”. Mr Suggate’s recollection of events was vague and general, and often confused. I accept that this was due to his confusion about the subtleties of the questions being asked under cross examination. His recollection diverged from the documentary record. For these reasons, where there is a contemporaneous document in evidence, I prefer the documentary record as more reliable.
124In about February 2022, Mr Suggate saw the business of the WPMR advertised for sale online by Vic Brokers. He was already aware of WPMR’s business because one of IMMIX’s staff members, Mr Ivan Orsolic, had traded with WPMR. Mr Suggate had driven past WPMR’s premises before and regarded the Hastings area as one where he wanted IMMIX’s business to grow.
125Mr Suggate contacted the broker who had placed the advertisement, Mr Wilson, and signed a confidentiality agreement. Mr Suggate was then given WPMR’s financial statements. Mr Suggate told Mr Wilson he was interested.
126IMMIX’S external accountant and Mr Suggate visited WPMR’s Premises where they met Mr Fincham and Mr Wilson. Mr Fincham said that he wanted to sell because he had had enough and wanted to stop working 7 days a week.
127Mr Fincham and Mr Suggate discussed the price of the business at the meeting and over several telephone calls.
128Mr Fincham rejected Mr Suggate’s initial offer of $3,250,000.00. Mr Wilson produced the HOA, and these were signed and sent back and forth a couple of times with different prices but were eventually finalised at a price of $3,335,000.00. Mr Suggate did not have a problem with the increase in purchase price plus stock, and he signed the HOA by DocuSign. He sent the document to Mr Wilson after signing.
129Mr Wilson called Mr Suggate who advised that Mr Fincham had acquired about 10-12 extra hook bins about 10-15 cubic metres in size. Mr Suggate agreed to the increase in purchase price. Mr Wilson emailed the revised price to Mr Suggate who responded in email that he accepted it. He did not sign it a third time as he did not think it was required. He signed it twice and his email confirmed acceptance of the additions.
130On 8 March 2022, IMMIX paid the $1,000.00 deposit. The HOA required the deposit to be paid on execution on 28 February 2022.
131Messrs Wilson, Paul Tucker, Director of BusinessDEPOT, IMMIX’s accountant (“Mr Tucker”), Fincham and Suggate had a meeting at the office at the Premises. They discussed Mr Fincham’s future, staffing, equipment, and general business. Mr Fincham would stay on as a contractor for 3 months and he was wanting to move to South Australia to spend time with his family and fly his aircraft.
132Mr Suggate could not recall any discussion about the HOA not being binding.
133By email dated 28 February 2022, there was no mention of payment of the deposit and the emphasis was on the inspection of the Premises. Mr Suggate said this was because he was thinking about purchasing the Business (not that he had purchased the business).
134After entering the HOA, Mr Suggate arranged for IMMIX to employ Mr Brown who had been working for Sims Metal on the expectation that IMMIX was acquiring the Business. He wanted Mr Brown to manage the WPMR business. The employment agreement with Mr Brown is with IMMIX Integrated Metal Management (ACN 153 681 371), a different company to IMMIX.
135IMMIX engaged Ms Reece Jones as its solicitor to manage the process of the purchase. By email dated 12 April 2022, Ms Reece Jones informed Mr Jade that she was awaiting instructions from her client in relation to the variations/issues to be added to the Special Conditions. The table included a change to settlement date, and the purchase price was different, stating that it was $3,300,000.00, including stock when Mr Suggate understood it to always be plus stock. Ms Reece Jones noted the HOA was subject to the lease arrangements. It does not state that the vendor needs to help with the lease. The restraint of trade was also varied from 3kilometres and 3 years to 200kilometres and 2 years. Mr Suggate gave evidence that he “did not tell her that” and later said that he “could not recall” giving Ms Reece Jones these instructions.
136On 28 March 2022, Ms Reece Jones tried to get IMMIX out of the HOA by sending an email saying that they were not binding and instead it was designed to preclude others from negotiating with WPMR, and that the sale was a matter of negotiation until formal terms were signed. This email was not based on anything Mr Suggate had said to her. He did not have a conversation with Mr Tsundra that the HOA was not binding. Mr Suggate said he is absolutely positive that he did not tell Ms Reece Jones that the HOA was not binding.
137Mr Suggate said that the HOA said it was WPMR’s obligation to obtain the lease or transfer the lease. IMMIX would assist and do everything it could to help. By letter dated 7 March 2022, IMMIX was negotiating a new lease with the landlord directly. Mr Suggate agreed that Mr Fincham introduced the landlord.
138Mr Suggate agreed that due diligence was important to determine if IMMIX would proceed with the sale. By around 23 March 2022, Ms Reece Jones wrote to Mr Jade noting that “we are instructed”. Mr Suggate said that “he could not say” who gave her those instructions. Mr Suggate said that there were a lot of things that Ms Reece Jones did and said that IMMIX did not agree with which is why she is no longer retained.
139At the time of the HOA, Ms Sutton, who was the representative of the landlord of WPMR’s business premises, was away. At some point in April 2022, Mr Fincham told Mr Suggate by telephone that Ms Sutton had returned and asked him to call her, and provide her with the information she wanted. Mr Fincham said that there had been a bit of a holdup, and that the landlord’s people were “relationship-based” people. Mr Suggate thought that meant they were easy to get along with, liked their clients and were adaptable as they supported Mr Fincham’s father and at times and gave him rent relief.
140In April 2022, Mr Suggate communicated with Ms Sutton about a new lease. She said she wanted the rent to be $6,000.00 per month, which was an increase on the rent that WPMR was paying. Mr Suggate said IMMIX could put up a security deposit of $36,000.00. She said she wanted $150,000. Mr Suggate agreed to this if there could be a 3-year term plus a 3-year option, and assurance that there were no issues with WPMR plus a condition report and comprehensive inspection.
141Mr Suggate could not recall why the landlord wanted such a large security deposit. He agreed that the landlord had no history with IMMIX but could not answer if the concerns were because of IMMIX having no financial history.
142By text message on 19 April 2022, Ms Sutton contacted Mr Suggate and offered a new lease to IMMIX. Her email dated 20 April 2022, set out new terms of 5 by 5-year options, an increase of rental income to $6,000.00 per month and a rental increase of 5% annually. Ms Sutton also sought a security deposit of $200,000,00 by way of bank guarantee. Mr Suggate thought the bank guarantee was unreasonable.
143By email dated 22 April 2022, Ms Sutton stated that they were unable to accept the request to reduce the $150,000.00 security deposit as they had already reduced it by $50,000.00. Mr Suggate asked if there were any outstanding issues with the tenant or the property and confirmed that IMMIX wanted a condition report prior to signing the lease.
144Mr Suggate sent the email in response to Ms Sutton, because he wondered, given the close relationship between WPMR and the landlord, whether there might be a clean-up notice for contamination on the property issued on IMMIX that they were not responsible for. Mr Suggate requested the condition report to determine if the floor was clean or contaminated.
145Ms Sutton then refused to enter into a lease with IMMIX. Mr Suggate thought it might be because he was coming across as a bit firm. He explained that some of the words used in the email dated 22 April 2022 had been drafted by his solicitor. He subsequently regretted using those words the next day.
146On 23 April 2022, Ms Sutton sent Mr Suggate an email saying the landlord did not wish to sign a lease with Mr Suggate. At that point, Mr Suggate agreed to Ms Sutton’s terms. Mr Suggate never met with Ms Sutton in person.
147About this time, because negotiations were getting difficult, Mr Suggate sent Mr Brown to the Premises to liaise with Mr Fincham and the landlord’s representative, Ms Sutton. The landlord was politely telling the vendor to “stay out of it”.
148Mr Suggate met Mr Fincham in a coffee shop in Hastings and had several telephone calls with him. He said that IMMIX were getting cold feet and were wondering what to do. Mr Suggate asked Mr Fincham “do you still want to sell the Business?” Mr Fincham said he did want to sell the Business. Mr Fincham was surprised that Ms Sutton did not want to enter into a lease with IMMIX.
149After the email of 23 April 2022, Mr Suggate got no response to his attempts to contact Ms Sutton. Ms Reece Jones sent Ms Sutton a letter on 5 May 2022 and copied it to WPMR’s solicitor, stating that “our respective clients have a binding agreement”.
150On 11 May 2022, Ms Reece Jones wrote to WPMR’s solicitor pointing out that WPMR had rights under its lease to compel a transfer of the lease to IMMIX and that she had seen nothing to suggest that WPMR had done anything substantive to progress that issue.
151On 20 May 2022, Ms Reece Jones sent Ms Sutton another letter. Again, Ms Reece Jones sent a copy to WPMR’s solicitor saying, “IMMIX remains committed to completing the transaction”.
152Ms Sutton replied by email saying, “[w]e understand from our current tenant that they do not wish to sell their business to your client, so the issue is mute (sic)”.
153Soon afterwards, IMMIX stopped retaining Ms Reece Jones and engaged its current solicitor Mr Sloan.
154Mr Suggate was not aware of any steps that WPMR took to enforce its rights under the lease of the premises to require the landlord to agree to a transfer of the lease or a new lease to IMMIX.
155Mr Suggate conceded it was possible that he asked for settlement date to be pushed out by a month as the April date was “too soon”.
156Mr Tucker looked at the financial material of WPMR during the due diligence. Mr Suggate and Mr Tucker had a discussion about the figures. They found that the values of the business had been misrepresented and the value was around $2,000,000.00 and not $3,350,000.00. Mr Suggate said that the price agreed to was $3,350,000.00 and it was not changed. He could not recall the specific details of a discussion with Mr Fincham about the value of the business.
157On 11 May 2022, Ms Reece Jones wrote to Mr Jade, relevantly, as follows:
“As matters stand, the Vendor has rights under its lease with the Landlord to compel a transfer of the current lease. We have made that clear in our letter to the Landlord. We have seen nothing to suggest your client has done anything substantive to progress the issue.
Immix is, as reiterated on multiple occasions, ready, willing and able to make payment of the balance of the deposit upon execution of the LIV Contract of Sale once a transfer of lease (or new lease) is executed, and then proceed to settlement.”
158Mr Suggate agreed that he gave instructions to Ms Reece Jones were that IMMIX was willing to sign the contract and pay the deposit, but only after there was a signed lease. Mr Suggate did not want to buy the Business if there was no premises to operate from. The Premises were key to the transaction.
159Mr Suggate could not recall at the meeting in the café asking Mr Fincham to assist with getting the landlord’s consent or that they were upset about an email that Mr Suggate had sent. He did recall that Mr Fincham said that they were “old school”. He asked Mr Fincham if he wanted to sell, and he said “yes”.
160Mr Suggate denied that he told Ms Reece Jones that the HOA was not legally binding and that it was only to give IMMIX exclusivity during the negotiation period. Mr Suggate denied that he tried to renegotiate the purchase price. He asked the question about the true value of the business following the due diligence. Mr Suggate denied re-negotiating the price. He said there were opinions about valuations from the accountant and lawyer, for example Ms Reece Jones’ email dated 23 March 2022, in which she says:
“Subject to finalising the remaining matters in relation to the proposed sale (lease, employees etc), IMMIX is prepared to offer a sum which is halfway between $3.15m and $3.3m i.e. $2.7m and finalise the sale price for Western Port at $2.7m.”
161Mr Jade responded:
“Can you please confirm that even though the Heads of Agreement is still in effect your client wants to renegotiate a lower price?”
162By email dated 28 March 2022, Ms Reece Jones wrote to Mr Jade:
“The proposed revised sale price provided by your client to their broker in response to this was $3.15 million, notwithstanding that an average annual reduction of adjusted net profit of $218,423.50 cannot logically equate to a proposed $50,000 reduction in your client’s valuation of the business.”
163Mr Suggate claims that he did not instruct Ms Reece Jones to re-negotiate the purchase price of the business.
164By email dated 12 April 2022, Ms Reece Jones wrote to Mr Jade with proposed amendments. Mr Suggate said that he did not give those instructions. Mr Suggate agreed that it is significant for a lawyer to say things without instructions. He re-stated that this was why she is no longer acting for IMMIX.
165Mr Suggate denied that Ms Reece Jones was right when she said the HOA was not binding, that the HOA was to give the parties exclusivity for a period to negotiate terms and that the terms would be in a formal contract of sale and only then the parties would be bound. Mr Suggate was not prepared to pay a 10% deposit or purchase the business without the lease because it was the crux of the deal.
166Mr Suggate said that IMMIX wished to complete its purchase of WPMR’s business.
167Mr Suggate said that when he referred to “getting cold feet” he meant that he was having doubts that Mr Fincham wanted to sell his business.
168Mr Suggate was recalled to give evidence that if the Court finds that IMMIX should have signed the long form contract and paid a 10% deposit to WPMR, IMMIX would do so. He said that IMMIX did not do that in April 2022, because at the time in April ,2022, he was under the understanding that the lease came first and then IMMIX would sign the LIV contract and pay the 10% deposit.
Ric Brown
169Mr Brown is the Senior Business Development Manager of IMMIX.
170Mr Brown generally presented as a careful, considered witness who was ready to make appropriate concessions. There certainly were gaps in his recollection and his evidence, however, his memory lapses were generally explicable by the extensive effluxion of time involved with this case. Mr Brown was an honest witness whose evidence was unchallenged, and his evidence was consistent with contemporaneous records.
171Mr Brown has been working in the scrap metal industry for about 24 years. His first job in the industry was with Menzies Metals where he bought scrap from WPMR. At that time, he dealt with Mr Fincham of WPMR. Mr Fincham’s father had bought the WPMR business from Menzies Metals some years earlier.
172After working at Menzies Metal, he moved to Sims Metal, where he continued to deal with Mr Fincham at WPMR, buying non-ferrous scrap metal from him.
173In early 2022, while he was still employed by Sims Metal, Mr Brown was approached by Mr Callum McDonald, the Operations Manager of IMMIX. He offered Mr Brown a job at IMMIX as branch manager, particularly managing the WPMR yard that IMMIX was in the process of buying. Mr Brown accepted IMMIX’s offer, and he has been employed by Immix Integrated Management since around 26 April 2022.
174On 28 April 2022, he became involved in the purchase of the Business. He learned that the purchase of the WPMR business was running into problems with the landlord of the WPMR Premises.
175Mr Brown arranged to meet Mr Fincham on 28 April 2022. They met at a café in Somerville. At the meeting, Mr Brown told Mr Fincham that there was a hiccup with the landlord who had made additional demands and were refusing to sign a new lease. Mr Fincham seemed surprised that there was a problem. Mr Fincham said the landlord has always been “a bit funny to deal with” and quite “old-fashioned” and he did not want to rock the boat. Mr Brown asked if he thought it would help if Mr Brown got in touch with Ms Sutton who was the landlord’s representative. Mr Fincham said he thought it would help if IMMMIX could get a sitting with them, but to keep “city slicker” types away as they were “country folk”. Mr Fincham then told Mr Brown about some of his staff, including the value of his current leading hand and his work ethic, and how the yard had been running.
176Later than day, Mr Brown spoke by telephone with Ms Sutton. She told Mr Brown that the landlord did not want to enter a lease with IMMIX. Mr Brown then sent her an email asking her to reconsider as IMMIX had good community values and supported the community such as sponsoring local football clubs. Mr Brown did not receive a reply to his email. He followed up with a phone call to Ms Sutton.
177His email dated 28 April 2022 referred to misrepresentation by which he meant there had been some misunderstanding due to the tone of the letters written by the solicitors, and he was looking to get a face-to-face meeting with the landlord to get things back on track.
178On 3 May 2022, Mr Brown telephoned Ms Sutton again. In the conversation she apologised to him and said that they still did not wish to go through with a new lease. Mr Brown said that IMMIX was committed to buying the WPMR business and Mr Fincham was committed to selling it, and that when Mr Brown met him, he was not sure why the lease was not approved. Ms Sutton seemed surprised by this. Her tone then changed, and she said she had not been aware that there was a contract. She said that Mr Fincham had told her he was not fussed if IMMIX bought the business or not and there could be other buyers in future. Mr Brown then discussed other possible lease arrangements and the site generally. At the end of the conversation, Mr Brown understood she intended to speak with Mr Fincham.
179Mr Brown reported the conversation with Ms Sutton to Mr Suggate by email dated 3 May 2022.
180Some days after this Mr Brown and Mr Suggate met with Mr Fincham at the café in Somerville. During the meeting Mr Brown asked Mr Fincham “Do you still want to sell the business to Immix?” He said “yes”.
181Mr Brown sought to call Ms Sutton again, but she did not answer.
Robert Wilson
182Mr Wilson is a Licensed Estate Agent and Senior Sales Consultant with Vic Brokers, a firm of business brokers and estate agents.
183There was a substantial attack on Mr Wilson’s credit by WPMR. Mr Wilson initially gave contradictory evidence in relation to the handwritten notes at Court Book 118 and 119 and 118A and 119A under cross examination. He explained that those documents were a chronology and not contemporaneous notes unlike other handwritten notes of telephone conversations. Although I accept that he gave contradictory evidence in relation to the notes that he transcribed from other scraps of paper that have subsequently been lost or destroyed, I do not accept that this is evidence of Mr Wilson generally not being a witness of truth. There was no attack as to the substance or content of the notes. Further, there is no reason to disbelieve his evidence in relation to the detailed notes made at the time of his telephone conversation with the landlord’s representative was untrue. These notes are consistent with other events at the time.
184In early 2022, WPMR engaged Vic Brokers to sell its business and gave Vic Brokers a written authority to do so. The Exclusive Authority entitled Vic Brokers to market and sell but not to sign on behalf of WPMR. Messrs Wilson and Tsundra acted as the agents. Vic Brokers advertised the business online. Vic Brokers had a lot of responses from interested buyers. Some were existing in the industry, and some were new players.
185Mr Suggate said he was interested in buying the business and had vast experience, and asked Mr Wilson to send through the confidentiality agreement.
186Mr Wilson said that price was discussed in this case with Mr Suggate. He wanted to make an offer on the business to purchase it. Mr Suggate made an original verbal offer of $3,200,000.00. It was then made in writing in a HOA.
187Mr Wilson prepared a form of HOA. This was sent to Mr Fincham for review and signing. Mr Wilson is not a lawyer. He is aware of a contract note by REIV for sale of land but this is not a sale of land. He is aware of the LIV contract of sale document. He referred to it in the HOA.
188On 24 February 2022, Mr Suggate made an offer of $3,200,000.00 plus stock at value of $70,000.00 by way of his signature on the HOA. Mr Wilson informed Mr Fincham of this but it was rejected by Mr Fincham on behalf of WPMR who asked Mr Wilson to go back and “get more”. He did not tell Mr Wilson what the higher offer was at the time.
189Mr Fincham says, by email dated 25 February 2022 from Mr Wilson, there is a reference to a recent telephone conversation that shortly after this email Mr Fincham said Mr Wilson told him that the HOA was to prevent WPMR from negotiating with any other third party while IMMIX was inspecting WPMR’s books and was not binding. He denied saying this and that it is contradictory to the terms of the HOA that says it is legally binding.
190Mr Wilson rejected the proposition that, in his email dated 28 February 2022, in which he referred to the fact that now that the business is “under offer”, that Mr Fincham is not able to negotiate with other buyers. Rather, he said that the intent was about putting off any further purchases that Mr Fincham had in mind, such as the 10 hook bins, because it would affect the purchase price again.
191By email dated 28 March 2022, Ms Reece Jones wrote to Mr Jade that:
“At the time of executing the heads of agreement, your client (via its broker) represented that the terms of the heads of agreement (HOA) was not binding, was only designed to preclude others from negotiating with your client and that the sale was a matter of negotiation between our clients until formal terms were signed”.
405On 5 May 2022, IMMIX’s solicitor wrote an email that only WPMR could overcome the issues with the landlord, and they had a duty to do that. Despite this, on 25 May 2022, WPMR purported to rescind the contract. There was no other response to the request.
406For the foregoing reasons, I find that WPMR failed in its contractual obligation to obtain the consent of the landlord to transfer the lease or a new lease. WPMR did not take any step beyond Mr Jade’s email of introduction on 16 March 2022. WPMR never made a request for the landlord’s consent as was pointed out in the letter from the landlord’s solicitor dated 13 July 2022.
Termination for Breach
407WPMR notes that the HOA contained obligations that the arrangements set out in the HOA would be more formally documented using the LIV contract as soon as possible, that time was of the essence, the parties act in good faith and would use their best endeavours to fulfil the condition in the HOA.
408WPMR contends that the obligation to execute a long form LIV contract as soon as possible is not qualified by any other text in the HOA, save for their obligations on the parties to act in good faith and to use their best endeavours. WPMR argues that IMMIX acted in a manner entirely inconsistent with this obligation. Instead, IMMIX considered that obtaining a new lease or the landlord’s consent to assignment of the lease was a condition precedent to signing the LIV contract. WPMR relies on the email from Ms Reece Jones dated 11 May 2022, which states:
“Immix is, as reiterated on multiple occasions, ready, willing and able to make payment of the balance of the deposit upon execution of the LIV Contract of Sale once a transfer of lease (or new lease) is executed, and then proceed to settlement.” (emphasis added)
409Further, WPMR notes that, during cross examination, Mr Suggate confirmed his misconstruction of the HOA that it contemplated that the lease would come before the LIV contract. Mr Suggate doubled down on this position in re-examination.
410WPMR argues that contrary to Mr Suggate’s position, the landlord’s consent for transfer of lease or agreement for a new lease was not a condition precedent to the execution of the LIV contract. WPMR was only obliged to procure the landlord’s consent or new lease by settlement date. On the other hand, IMMIX was obliged to execute the LIV contract as soon as possible, upon which, IMMIX was to pay the balance of the deposit. WPMR submits that IMMIX had shown they did not intend to be bound by the HOA.
411WPMR contends that the role of a deposit is to act as an “earnest”, being a guarantee that the purchaser will complete the contract[75] and to bind the parties to the agreement and is liable to forfeiture.[76] WPMR asserts that, to an objective bystander, IMMIX did not mean business pursuant to the observations of Brooking J in cites in Bot v Ristevski[77] where his Honour observed:
“…a deposit wears two aspects: if the purchase is carried out, it goes against the purchase money, but its primary purpose is that it is a guarantee that the purchaser means business.”
[75] Brien v Dwyer (1978) 141 CLR 378.
[76] Howe v Smith (1884) 27 CH D 89 at page 94.
[77] [1981] VR 120 at page 123 (“Bot v Ristevski”).
412WPMR submits that the failure to produce the LIV contract and pay the balance of the deposit were signs that IMMIX did not regard itself to be bound by the agreement, did not “mean business” and it was a breach of an important term that entitled WPMR to terminate the agreement as a repudiation.
413WPMR relies on the authorities of Carr v Berriman[78] and Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd[79] in relation to the relevant test for repudiation of an agreement. It further notes that repudiation of a contract is a serious matter and not to be lightly found or inferred in accordance with the observations of Deane and Dawson JJ in Laurinda Pty Ltd v Capalabal Park Shopping Centre Pty Ltd.[80] However, contends that IMMIX’s refusal to execute a LIV contract until the landlord consented to a transfer of the lease or a new lease was repudiatory conduct.
[78] (1953) 89 CLR 327.
[79] (2007) 233 CLR 115.
[80] (1989) 166 CLR 623 at page 657.
414Further and alternatively, WPMR contends that, by refusing to execute the LIV contract until after the landlord gave consent to a new lease or transfer of lease, IMMIX acted in breach of its obligations to act in good faith, use its best endeavours and perform its obligations when time was of the essence. In addition, WPMR states that by attempting to re-negotiate the contract prices and the restraint of trade terms, IMMIX conducted itself on the basis that it was not bound by the terms of the HOA.
415WPMR says that IMMIX’s payment of the sum of $1,000.00 was really a holding deposit in the context of a $3,335,000.00 transaction. WPMR observes that that money was in a trust account held by the Broker and not paid to WPMR pending completion of agreement.
416The letter of 25 May 2022 relied on clause 8.8 and the fact that there was no executed long form contract. WPMR says that the signed LIV contract was required as soon as possible, together with a 10% deposit. Mr Fincham was aggrieved about this in late April and mid-May 2022, and it resulted in his change of mind in mid-May. WPMR relied on Brooking J’s observations in Bot v Ristevski that the deposit is important as it shows the purchaser “means business”.[81] WPMR said that Mr Suggate was not “meaning business”.
[81]Bot v Ristevski at page 123.
417WPMR says that the relevant evidence about Mr Suggate’s state of mind as to the interpretation of the terms of the contract was at the time, and he does not resile from it and what he thinks now is not relevant. WPMR says that it is not their job to “make things right” for IMMIX. Mr Suggate conceded that he changed his mind about whether the landlord’s consent was required before entering into a long form contract after hearing the evidence and submissions in the trial.
418WPMR says there were no gaps that prevented the entry into a long form contract. The failure on the part of the purchaser to sign a LIV contract and pay the deposit means that IMMIX was a breach of an important term and a separate basis to terminated on the basis of repudiation on 25 May 2022.
419IMMIX submits that an alleged repudiation by it is a serious matter, not lightly to be found. It argues that IMMIX did “mean business” and the letters from Ms Reece Jones dated 5, 11 and 20 May 2022 emphasised that IMMIX was committed to purchasing the business.
420IMMIX contends that the 10% deposit was not payable until the LIV contract was signed. It says that the parties were getting close to agreeing to the long form contract, however, when the landlord’s email of 23 April 2022 arrived, IMMIX focussed its attention on that.
421IMMIX argues that if the Court finds that IMMIX was in breach of the contract by not executing the LIV contract and paying the deposit, that the Court should not conclude that this was repudiation. Mr Suggate gave evidence that he would sign a LIV contact and pay the 10% deposit if that is what the contract requires.
422IMMIX further relies on the decision of DTR Nominees v Mona Homes Pty Ltd[82] where Mason J said:
“No doubt there are cases on which a party, by insisting on an incorrect interpretation of a contract, evinces an intention that he will not perform the contract according to its terms. But there are other cases in which a party, though asserting a wrong view of a contract because he believes it to be correct, is willing to perform he contract according to its tenor. He may be willing to recognize his heresy once the true doctrine is enunciated or he may be willing to accept an authoritative exposition of the correct interpretation. In either event an intention to repudiate the contract could not be attributed to him.” (emphasis added)
[82] (1978) 138 CLR 423 at page 432 (“DTR Nominees”).
423For the reasons that follow, I find that IMMIX was not in breach of the contract for treating the landlord’s consent as a precondition to entry into the LIV contract, for the non-execution of the LIV contract and the non-payment of the balance of the deposit and that WPMR was not entitled to terminate the contract pursuant to GC 8.8 of the LIV contract.
424An execution of the long form contract was contemplated by the parties in the HOA, but the parties did not reach final agreement on its terms. In my view, the parties’ agreement to enter into a LIV contract was an agreement to agree. Further, it was not an essential term of the HOA. Therefore, IMMIX’s desire to obtain the consent of the landlord first was not a breach of contract.
425Further, the failure to sign the long form contract by IMMIX did not mean that IMMIX did not “mean business”. The full 10% deposit was payable on signing the long form contract which had not eventuated yet and therefore its nonpayment cannot be a breach of the contract. Mr Jade’s letter dated 5 May 2022 recognises that the balance of the deposit was not due until the LIV contract was entered into when he sought payment of the deposit “to provide comfort in this transaction”. He did not state that the payment of the deposit was to be made pursuant to an immediate contractual obligation.
426The parties were close to agreeing the LIV contract in late April 2022, but within a couple of days of that, the landlord refused consent on 23 April 2022 and the parties focussed on that issue. It is not right to say that IMMIX did not “mean business”. On 5, 11 and 20 May 2022, IMMIX set out it in correspondence that the HOA was a binding agreement and IMMIX wanted to complete it.
427For example, in the 11 May 2022 letter from Ms Reece Jones she states:
“Immix is, as reiterated on multiple occasions, ready, willing and able to make payment of the balance of the deposit upon execution of the LIV Contract of Sale once a transfer of lease (or new lease) is executed, and then proceed to settlement.” (emphasis added)
428If this is an incorrect statement, then it is not a repudiation. Mr Suggate was recalled and was asked if IMMIX ought to have executed a LIV contract then he would do so on its behalf. He said that he did not sign one because he thought the lease had to come first. Mr Suggate understood when he gave evidence at the hearing on 31 July 2024 was that he would sign the LIV contract once the lease was in place. He accepted that this was a wrong construction.
429Applying the principles set out in DTR Nominees[83] and Green v Sommerville[84], where Mason J gave two reasons for finding that the respondent was ready willing and able to perform the essential obligation under the contract:
… the contract, that is, by paying the balance of the purchase price. Secondly, it is a general principle of the law of contract that the court will not readily infer from a party's insistence on a wrong construction of a contract that he is unwilling to perform it according to its true construction. This principle applies to the plaintiff's readiness and willingness in a suit for specific performance. (emphasis added)
if executing the LIV contract is an essential term of the agreement, and I agree with IMMIX that it cannot be, and if Mr Suggate had a wrong construction of that essential term, first, it was never pointed out to IMMIX that it was a wrong construction at the relevant time, and second, it cannot be concluded from the circumstances of the present case IMMIX would have held to that wrong construction without direction. Instead, there was silence from WPMR until 25 May 2022 when they purported to terminate the contract.
[83] DTR Nominees at page 432.
[84] (1979) 141 CLR 594 at page 611.
430In any event, I find that the entry into a long from contract it is not an essential term because the HOA does not say it is subject to signing an LIV contract. The “legally binding” section of the HOA says:
“The parties agree that the arrangements, as set out in this document, will be more formally documented using the LIV Contract of Sale as soon as possible, unless the parties agree otherwise in writing. This document will terminate only upon the parties entering into the LIV Contract of Sale or another long form contract agreed to in writing by the parties. Each Party agrees to meet its own legal costs.”
431The HOA does not say it is subject to the entry into a LIV contract to turn it into a condition. It makes sense from a commercial perspective because all the essential terms of the bargain are in the HOA by incorporating the LIV terms. There is no indication that the parties are contemplating all sorts of other matters. This was a binding agreement, and the parties ought to be held to their bargain.
432Finally, I do not accept WMPR’s contention that, because the contract made time of the essence and the settlement date had passed, it was entitled to terminate the contract. By 25 May 2022, when WPMR purported to terminate the contract, time was no longer of the essence. Both parties had allowed the date for completion to pass without tendering performance. As such, they have waived the essentiality of the requirement as to time of performance.[85] The emails post settlement date from Mr Jade on 4 May 2022 enquiring if the parties might “rescind the [HOA] between the parties by agreement” and on 5 May 2022 enquiring as to IMMIX’s steps to procure the lease indicate that WPMR no longer regarded time being of the essence under the contract.
[85] Foran v Wight (1989) 168 CLR 385 at pages 457-458 (“Foran”).
Prevention principle
433The prevention principle provides if a party has prevented the other party from complying with their contractual obligations, then they cannot rely on a consequent breach by them as a ground for terminating or seeking damages.[86]
[86] Foran.
434WPMR contends that there was no prevention by the WPMR in its actions in dealing with or not dealing with the landlord which operate to prevent reliance upon GC 8.8 and the right to terminate, and which was given to both parties, for failure of the landlord's consent.
435WPMR relies on the Court of Appeal decision in Bensons Property Group Pty Ltd v Key Infrastructure Australia Pty Ltd[87] in which Bensons and Key Infrastructure Australia (“KIA”) entered into a Development Management Agreement, where KIA was responsible for securing a planning permit by a specified date (the “sunset date”). Bensons agreed to pay KIA a management fee contingent on obtaining the permit. The issue for determination was whether Bensons breached an implied duty to cooperate with KIA in securing the planning permit, thus invoking the prevention principle. The Court held that Bensons’ actions did not impede KIA’s performance of the contract.
[87] [2021] VSCA 69 (“Bensons Property Group”).
436WPMR relied on the landlord’s description of Mr Suggate as “aggressive”, “threatening” and “harassing”. It refers to Ms Sutton’s email dated 7 May 2022 at and its reference to “aggression” (paragraphs 11 and 12), “threaten” (paragraph 6), “mansplain” (paragraph 2) and “nasty email” (paragraph 8). WPMR contends that IMMIX “poisoned the well” and meant it was impossible and/or unreasonable for WPMR to go back to obtain the consent of the landlord to the transfer of the existing lease and IMMIX also had not provided the requisite financial material. WPMR argues that the idea that the tenant would lodge a landlord and tenants summons to force the landlord is not sensible in light of the lack of information provided.
437WPMR says that the prevention principle operated in its favour as it was impossible for them to transfer the existing lease.
438IMMIX submits that, in circumstances where the landlord was refusing to agree to IMMIX as a tenant, and where WPMR was the only party who had a right to compel the landlord to consent, it was WPMR’s failure to exercise that right that prevented fulfilment of the condition of transfer of the lease. IMMIX contends that WPMR cannot now take advantage of its own failure to exercise its right under the lease to compel the landlord to consent to an assignment of the lease by relying on GC 8.8 and the landlord’s failure to consent as the non-fulfilment of a contingent condition. IMMIX asserts that WPMR cannot take advantage of its own wrong.
439For the reasons that follow, I agree with IMMIX that WPMR’s contentions that it was entitled to terminate the contract for breach by IMMIX because termination under GC 8.8 was not available when the failure of the relevant condition precedent was due to WPMR’s own failure to fulfil its contractual obligation to obtain a transfer of the lease or a new lease.
440It was WPMR’s failure to fulfil its obligation under GC 8.1 of the LIV contract that caused the failure of the condition precedent that the landlord consent to an assignment of the lease or a new lease. As I have set out in my anterior factual findings above, WPMR:
(a) took no step to encourage the landlord to accept IMMIX as a tenant;
(b) acceded to the landlord’s direction to “stay out of it”;
(c) did not inform the landlord that WPMR was bound to sell to IMMIX;
(d) expressed to the landlord that it was ambivalent about selling to IMMIX;
(e) ultimately told the landlord that it did not wish to sell to IMMIX; and
(f) did nothing after Ms Reece Jones’ formal demand that WPMR exercise its rights under the lease sent on 5 May 2022.
441Even if IMMIX was in breach of the contract, WPMR cannot accept a supposed repudiation by IMMIX when it was in breach of its own duty to obtain a transfer of the lease or a new lease and was unable to complete the contract itself.[88] WPMR’s failure to fulfil its obligations under GC 8.1 of the LIV contract precludes it from terminating the contract and taking advantage of its own wrong.[89]
[88] Foran at pages 396-402, 423-424 and 451-452.
[89] Bensons Property Group at [102].
442Similarly, the fact that IMMIX did not produce a deed of transfer of lease does not assist WPMR in its contention that it was entitled to terminate the contract pursuant to GC 8.8, or for breach by IMMIX. The landlord’s refusal to accept IMMIX as a tenant would have made any such production moot. The law does not require a person to perform a futility.[90]
[90] Foran at pages 411 and 433.
Relief sought
443IMMIX relied on the High Court decision of Dougan v Ley[91] in support of its contention that the Court ought to order relief in the form of specific performance. In that case, the High Court considered whether specific performance (a Court order to perform the contract) should be granted for the sale of the taxi and its license, or if damages (monetary compensation) would be sufficient. The Court held that the taxi license was considered a unique chattel of special value, and there were very few taxi licenses available at the time, therefore, monetary damages would not be an adequate remedy. This case is significant as it establishes that specific performance can be granted for the sale of unique chattels where damages would not suffice.
[91] (1946) 71 CLR 142.
444I accept, applying the principles set out in Dougan v Ley[92] that the business in the present case is unique, and that specific performance of the contract ought to be ordered.
[92] (1946) 71 CLR 142.
Conclusion
445Accordingly, for the foregoing reasons, I am satisfied that specific performance of the Contract ought to be ordered.
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Certificate
I certify that these 100 pages are a true copy of the judgment of Her Honour Judge Burchell delivered on 7 October 2024.
Dated: 7 October 2024
Alexandria Peck
Associate to Her Honour Judge Burchell
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