JB Asset Management v LBA Capital Pty Ltd (No 2)
[2025] VSC 166
•2 April 2025
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
S ECI 2019 03875
| JB ASSET MANAGEMENT & ANOR (according to the Schedule attached) | Plaintiffs |
| v | |
| LBA CAPITAL PTY LTD & ORS (according to the Schedule attached) | Defendants |
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JUDGE: | M Osborne J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 10 February - 12 February 2025 |
DATE OF JUDGMENT: | 2 April 2025 |
CASE MAY BE CITED AS: | JB Asset Management & Anor v LBA Capital Pty Ltd & Ors (No 2) |
MEDIUM NEUTRAL CITATION: | [2025] VSC 166 |
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CONTRACT – Whether the execution and backdating of contract had the effect that a payment constituted an advance under the contract – Reasonable business persons understanding of what the terms of the contract to mean – Consideration of language used, circumstances addressed by the contract and commercial purpose or object to be secured by contract – Inferences to be drawn by conduct of the parties to the contract – Assumption of liability – No consideration – Whether contract wholly executory and enforceable – Repudiation – McKay & Anor v National Australia Bank Limited [1998] 1 VR 173 – McRae v Commonwealth Disposals Commission (1951) 84 CLR 377 – David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353.
CONTRACT – Reliance losses as a species of damages recoverable for breach of contract – Facilitation principle – Cessnock City Council v 123 259 932 Pty Ltd (2024) 98 ALJR 719 – 123 259 932 Pty Ltd v Cessnock City Council (2023) 110 NSWLR 464.
CONTRACT – Post contractual admissions – Relevance of post contractual conduct where such conduct constitutes an admission against interest – Whether admission relates to a matter of fact or question of law or mixed fact and law – Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603 – FAI Traders Insurance Co Ltd v Savoy Plaza Pty Ltd [1993] 2 VR 343.
CONTRACT – Whether contract entered into – Implied and express terms – Material terms of the contract – Whether funds advanced pursuant to the contract – Narrower terms established.
EQUITY – Money had and received – Money had and received by the defendant to the use of the plaintiff – Money paid by the plaintiff to the use of the defendant – Distinction between money paid by mistake or on a consideration that happens to fail and a promise by the defendant to repay the money to the plaintiff that had been provided at the defendant’s request.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | T Warner with H McAvaney | Johnson Winter Slattery |
| For the Tenth to Twelfth Defendants | P Ehrlich KC with R Kornhauser | Madgwicks Lawyers |
| For the Fourteenth Defendant | H Hill-Smith (on 10 February 2025 only) | Batten Sacks |
TABLE OF CONTENTS
Introduction........................................................................................................................................ 1
The relevant participants.................................................................................................................. 3
Relevant events................................................................................................................................... 4
The assignment to the plaintiffs................................................................................................... 18
Facility Agreement claim................................................................................................................ 19
Trivett’s defences............................................................................................................................. 30
No consideration......................................................................................................................... 30
Facility Agreement wholly executory and hence unenforceable......................................... 33
LBA’s wrongful repudiation of the Facility Agreement....................................................... 36
Post contractual admissions........................................................................................................... 44
Background.................................................................................................................................. 44
Relevance of post contractual conduct.................................................................................... 47
Letter from Madgwicks Lawyers to GPZ Legal dated 18 October 2019............................. 49
Letter from Madgwicks Lawyers to Allens dated 6 November 2020.................................. 50
Letter from Madgwicks Lawyers to Allens dated 10 December 2020................................. 50
Affidavit of Richard Gregory Goldberg made 11 December 2020....................................... 51
Letter from Madgwicks Lawyers to Allens dated 15 December 2020................................. 51
Letter Madgwicks Lawyers to Allens dated 7 June 2022...................................................... 51
Defence of the Tenth and Eleventh Defendants to the Third Further Amended Statement of Claim filed 21 November 2022.................................................................................................... 52
NSL Loan Agreement claim........................................................................................................... 53
Moneys had and received claim.................................................................................................... 58
Conclusion......................................................................................................................................... 68
HIS HONOUR:
Introduction
The plaintiffs, JB Asset Management and KB Kookmin Bank, are Korean companies which provided LBA Capital Pty Ltd (‘LBA’) with a pool of funds for investment purposes. LBA provided $2.97 million from the pool, to or for the benefit of one or more of the tenth defendant, Next Stage Living Group Pty Ltd (‘NSL Group’), the eleventh defendant, Next Stage Living Moonee Ponds Pty Ltd (‘NSLMP’), the twelfth defendant, Trivett Property Partners Pty Ltd (‘Trivett’) or the fourteenth defendant, Next Stage Living Pty Ltd (‘NSL’) (collectively ‘the NSL companies’). In this proceeding, the plaintiffs seek to recover the sum of $2.97 million together with interest from one of the NSL companies on a variety of bases. The plaintiffs have taken an assignment of the rights of LBA and therefore stand in the shoes of LBA with respect to the claims against the NSL companies. LBA is the first defendant but the plaintiffs’ claims against it were resolved long ago and it played no active role at trial.
LBA is a company associated with James Charisiou and Mario Charisiou who are the fifth and eighth defendants. James Charisiou is now in jail after being convicted of crimes connected to LBA’s investment of the funds provided by the plaintiffs. The claims against James and Mario were resolved long ago and they too played no active role at trial.
NSL played no active role at trial[1] either but filed a written outline of submission on 29 January 2025. In substance it says that it is liable to LBA and hence to the plaintiffs for $2.97 million with respect to an action by the plaintiffs as assignee, for moneys had and received to the use of NSL on 2 August 2019.[2]
[1]Counsel appeared on the first day of trial but was excused from further attendance.
[2]NSL notes that the claim against it is pleaded only as if it were a claim for moneys had and received to the use of LBA. This matter is addressed in the reasons below dealing with the moneys had and received claim.
NSL Group, NSLMP and Trivett actively defended the claims against them. In broad terms, each denies that it is liable and submits that NSL is the only entity which has any form of liability to the plaintiffs.
The plaintiffs called no oral evidence. This was explicable given that they were effectively strangers to the transaction between LBA and one or more of the NSL companies. The plaintiffs sought to rely upon documentary evidence tendered at trial. The NSL companies did not call any oral evidence either. They too relied solely on the documentary record.
The claims brought by the plaintiffs as assignees of LBA’s rights fall into the following categories:
(a) against Trivett for $2.97 million plus interest allegedly payable under the terms of a facility agreement between LBA and Trivett dated 19 June 2019 (‘Facility Agreement’) (collectively, ‘Facility Agreement claim’);
(b) alternatively, a claim by the plaintiffs against one or more of NSL, NSL Group and NSLMP for $2.97 million plus statutory interest, alleged to be owing pursuant to an agreement between LBA and one or more of NSL, NSL Group and NSLMP on or around 20 or 21 June 2019 (‘NSL Loan Agreement’) (collectively, ‘NSL Loan Agreement claim’);
(c) alternatively, a claim brought by the plaintiffs against one or more of NSL, NSL Group and NSLMP for moneys had and received (‘moneys had and received claim’).
If the plaintiffs succeed with respect to the Facility Agreement claim, they claim they are entitled to recover $2.97 million together with interest under the Facility Agreement which calculated to the first day of trial, totalled $5,268,094.68. Alternatively, if they succeed in relation to the NSL Loan Agreement claim, they contend that the interest payable is at the lower end $78,115.07, as against NSL, or at the higher end $1,401,189.04, alternatively $503,679.45 as against NSL Group and/or NSLMP.
As the evidence at trial was entirely documentary, it is necessary to give close attention to the documentary record in order to determine what occurred and the inferences that can be drawn from the documents. As is not uncommonly the case, when commercial parties engage in transactions, the participants do not turn their mind to relevant matters with the precision and care which might otherwise be desirable.
Nevertheless, in the result, the critical facts and conclusions as to the basis of liability of the NSL companies comes down to a relatively confined number of documents.
The relevant participants
Before examining the documentary record, it is helpful to identify some of the more significant individuals involved. The key transaction was the acquisition by NSLMP of vacant development land and an existing retirement village[3] in Moonee Ponds from Ardmillan Place Nominees Pty Ltd (‘Ardmillan’) for a price of circa $30 million pursuant to a contract of sale (‘contract of sale’) and asset sale agreement entered (‘asset sale agreement’) dated 5 August 2019.
[3]The proposed transaction incorporated both the existing land and improvements comprising the retirement village as well as the underlying business.
NSLMP intended to develop the vacant land and thereby construct an expanded retirement village.
It is uncontroversial that LBA agreed to provide funding which was to be used to complete the transaction and effect the development. Of the promised funding of $18.5 million, LBA only provided $2.97 million.
In the relevant communications between LBA and the NSL companies, LBA’s communications were effected by Mario Charisiou and, to a lesser extent, James Charisiou. They were assisted at times by LBA’s solicitor, Nick Galatas from GPZ Legal.
NSL was incorporated on 13 March 2018. NSL Group and NSLMP were incorporated on 8 November 2018. At the relevant times Joshua Balsim and Daniel Milentijevic, were the two directors of each of the companies and it appears that the shares in each were owned by Trivett and by another company associated with Mr Milentijevic.
Trivett’s directors were Raffaele Aiello and Asya Balsim. The Australia Securities and Investments Commission’s records show that Asya Balsim and Joshua Balsim both have the same residential address and as such are evidently related. The shares in Trivett were apparently owned by Leo Trivett Pty Ltd (‘Leo Trivett’) as trustee of the Leo Trivett Trust and Balsim Family Holdings Pty Ltd (‘Balsim Family Holdings’) as trustee of the Balsim Family Trust. Mr Aiello is the ninth defendant. He is now a bankrupt and no claims against him remain on foot. Anatoly (Tony) Balsim, another remember of the Balsim family was also party to some of the relevant correspondence.
Rick Goldberg from Madgwicks Lawyers acted for one or more of the NSL companies during the relevant transaction. Anthony Cuzzupi, from an organisation known as the Jasmine Development Group Pty Ltd also assisted the NSL companies, apparently acting as some form of finance broker or intermediary. Dimitrios Zartaloudis was an accountant who assisted one or more of the NSL companies.
Relevant events
In October 2018, Madgwicks Lawyers and NSL entered into a retainer pursuant to which Madgwicks Lawyers agreed to provide NSL with legal services in connection with the acquisition of 11-45 Derby Street, Moonee Ponds (‘Property’). Trivett also signed the relevant costs agreement as guarantor/third party payer.
Later in October 2018, NSL and Ardmillan entered into a terms sheet which in broad terms provided that NSL would purchase land and acquire the business, including taking an assignment of an existing lease, from Ardmillan for a price of $26.05 million for the Property and $3.95 million for the business. The terms sheet contemplated that the price would be payable as to a holding fee of $30,000, a deposit of 10% of the purchase price less the holding fee (being $2.97 million) payable on execution of the asset sale agreement and contract of sale, followed by two further payments of $3.555 million and $1.445 million, with payment of the latter entitling the purchaser to take possession of the Property and settle the asset sale agreement. The balance of the purchase price of $22 million was to be provided by vendor finance and be repayable 24 months after the purchaser took possession of the Property and business.
For reasons which are neither clear nor relevant, the parties did not enter into formal documentation until 13 May 2019 when they entered into a put and call option which related to both the Property and the business. Relevantly, the put and call option was entered into by Ardmillan as vendor and NSLMP as purchaser with the purchaser’s obligations under the put and call option guaranteed by Mr Milentijevic, Joshua Balsim and Trivett, among others. Annexed to the put and call option were unexecuted copies of the contract of sale and asset sale agreement.
Shortly afterwards, on 16 May 2019, Mr Aiello emailed Mario Charisiou attaching, among other things, a proposed cash flow and feasibility summary. It is apparent that Mr Aiello sent the documentation to Mario Charisiou in connection with an effort to obtain finance from LBA as the cashflow identifies LBA as a source of funding including with a need for just over $3 million in June 2019 which would attract interest at 15% with a further drawdown of just over $12 million in September 2019. The funding proposed to be provided by LBA was designated as equity funding distinguishing it from three further loans, two from Rexnova the second of which was a construction loan and the third, a bank loan.
On 20 May 2019, Mr Milentijevic emailed Mario Charisiou, copying in Tony Balsim, Joshua Balsim and Mr Aiello, enclosing a copy of the asset sale agreement and contract of sale, both of which, consistent with the put and call option, specified the name of the purchaser as NSLMP.
By 30 May 2019, LBA appeared to be of the belief that the proposed purchaser and borrower was to be Trivett. So much is apparent from an email sent by Mario Charisiou to Mr Galatas dated 30 May 2019 in which Mario Charisiou asked whether Trivett was to be a special purpose vehicle for the sole purchase of purchasing ‘Ardmillan’, asked for copies of the contract of sale between Trivett and the vendor and stipulated that LBA would enter into an agreement to fund the project at an interest rate of 15% but that the shareholders (of Trivett) would have to personally guarantee the funds.
On 31 May 2019, Mr Zartaloudis, Mr Galatas, Mr Aiello and James Charisiou exchanged emails including one from Mr Zartaloudis to Mr Galatas and Mr Aiello copied to James Charisiou (and a Jude Bedier from ABD Group) which attached a current structure chart for the NSL companies. The attached structure chart identified Trivett as the holder of 80% of the shares in NSL Group with the shares in Trivett being held as to 50% each by Leo Trivett and Balsim Family Holdings with NSL and NSLMP, amongst others, as wholly owned subsidiaries of NSL Group.
Later on 31 May 2019, Joshua Balsim emailed Mr Zartaloudis, copied to Mr Aiello and Tony Balsim, attaching a draft letter with the subject line ‘LBA Capital Funding Agreement Letter DRAFT’. The draft letter contained provision for signature by both Trivett and LBA and specified that LBA was to provide funding of AUD19 million, excluding the vendor finance (including construction and consultants), at 15% interest, and to provide the funds as per the attached cash flow. The subject line for the draft letter was ‘Ardmillan Place by [NSLMP] – Funding Agreement’.
On 3 June 2019, Mr Cuzzupi sent a copy of the executed put and call option to Mario Charisiou and James Charisiou. The put and call option had annexed to it an unexecuted copy of the contract of sale. Both specified NSLMP as the purchaser.
On 11 June 2019, Mr Cuzzupi emailed Joshua Balsim, Tony Balsim, Mario Charisiou, James Charisiou and Mr Aiello with the subject line ‘Project Update/WIP Moonee Ponds’ and attached two documents, one of which was a project review document tabled at a meeting the previous Friday. The covering email also referred to a project WIP identifying items on the critical path. Those items included, among other things, the resolution of three condition precedents in the contract of sale, vendor approval of the deposit payment into a trust account, and project bank account. The email stated ‘[a]s payment of deposit is imminent, completion of above items and agreement on program and strategy (namely TH) is critical to ensure timely ROI’.
The attached project review document specified total acquisition funding of $30 million comprising holding fee of $30,000 with a date October 208 (sic), deposit of $2.97 million June 2019, settlement of $5 million September 2019 and settlement of $22 million September 2019 (sic). Item 4, the loan repayment schedule (vendor and LBA), specified an opening balance in connection with the LBA loan of $19 million together with an opening balance of the vendor loan of $22 million.
On 12 June 2019, Mario Charisiou emailed Mr Cuzzupi requesting a copy of the constitution for Trivett so as to ‘set up the account’.
Mr Cuzzupi obtained a copy of the constitution which he onforwarded to Mario Charisiou and James Charisiou on 17 June 2019.
On 18 June 2019, Mr Cuzzupi emailed Mr Zartaloudis advising that James Charisiou from LBA would phone soon and that he wanted confirmation as to whose name the joint bank account should be held under. Mr Cuzzupi’s email noted that they had been progressing on the basis that the joint account would be in the names of LBA and Trivett. Mr Cuzzupi’s email also referred to a loan agreement between the parties and asked if Mr Cuzzupi was assisting with that.
Later on 18 June 2019, Mr Cuzzupi emailed Mario Charisiou providing details of Madgwicks Lawyers’ trust account which read ‘[b]elow are our trust account details for payment of deposit which will be due to be paid to Ardmillan when the relevant documentation has been entered into’.
On 20 June 2019, Mr Cuzzupi emailed Mario Charisiou, James Charisiou, Joshua Balsim, Tony Balsim, copied to Mr Aiello. The email which was addressed to ‘Mario/James’ set out the ‘relevant details pertaining to the payment of holding deposit for Ardmillan Place Moonee Ponds’. It went on further to say ‘[p]ayment is to be made today’. He provided the contact details for Madgwicks Lawyers and requested that they advise Madgwicks Lawyers when payment is made. The email specified an amount of $2.97 million.
Mario Charisiou’s email in response sent 21 June 2019 requested that Madgwicks Lawyers contact LBA’s solicitor, Mr Galatas on ‘a couple of things’. The email continued:
The funds to be transferred are lent to the group hence a loan agreement needs to be in place to the purchasing entity with guarantees in place. If this can’t occur fast enough I suggest have Madgwicks email Nick ASAP, that the funds will remain in their trust account until we have our loan facility/agreement in place, when this is done, the funds can be issued out to the Vendor (I believe the funds are only in trust to show the vendor that we have the funds and to go to contract, which should give us time to produce the loan agreement).
Mr Cuzzupi responded by email sent 21 June 2019 to Mario Charisiou, James Charisiou, Joshua Balsim, Mr Galatas and copied to Mr Aiello stating:
Confirming Jen (Madgwicks) will contact Nick and arrange all particulars pertaining to the loan agreement.
As noted below, Jen will also confirm to Nick, in writing, that the funds will remain in the Madgwicks Trust Account and request Nick proceed and transfer funds today. This will ensure the Vendor receive confirmation of the transfer by Monday and the loan agreement can be finalised over coming days.
Madgwicks Lawyers emailed Mr Galatas on 21 June 2019. The email confirmed that they acted on behalf of ‘Next Stage Living’. The email continued:
As mentioned in recent correspondence, the vendor has requested we provide proof we hold funds in our trust account in anticipation of payment of the deposit.
We confirm the funds which are to be transferred into our trust account will be held until such time as the loan agreement is put in place between our client and the lending group.
We have been advised by our client the funds are to be transferred into our trust account as a matter of urgency. Would you please provide us with receipt of the transfer so that we can allocate the funds to the correct file immediately.
…
Would you also please provide us with the agreed terms of the loan agreement so that we may commence preparation of the relevant documentation.
On 24 June 2019 (which was a Monday), Madgwicks Lawyers emailed Mr Galatas acknowledging receipt of $2.97 million into Madgwicks Lawyers’ trust account over the weekend. On the same day, Madgwicks Lawyers sent a trust account receipt dated 21 June 2019. The trust account receipt was addressed to [LBA]. The relevant entry read:
File SJH 038064 Next Stage Living Pty Ltd
Acquisition 11-45 Derby Street, Moonee Ponds
Deposit/Acquisition of Ardmillan Moonee Ponds
Received from [LBA]
Received by Direct Deposit
Trust Account Receipt #026876
Received: Two million, nine hundred and seventy thousand Dollars only
Receipted by Alan Trang
Earlier on 24 June 2019, Mr Milentijevic emailed Madgwicks Lawyers requesting that Madgwicks Lawyers notify MinterEllison (who were acting for the vendor) ‘that you are holding the deposit in your Trust account which will be released upon satisfaction of the CPs in the Put & Call Option’. In accordance with that instruction, Madgwicks Lawyers emailed MinterEllison confirming that ‘we currently hold funds in trust for payment of the deposit due to Ardmillan’.
On 1 July 2019, Mr Milentijevic emailed Mr Cuzzupi, copied to Tony Balsim and Joshua Balsim, enclosing a 12 month look ahead cash flow summary for discussion the next day. His email continued:
In summary $17.5m peak funding in October ‘19 required from Trivett. This figure is inclusive of the deposit and consultants already paid of $3.2m spent to date.
Settlement is 2nd September 2019 $12.22M incl my estimate of all adjustments. This figure may vary if existing vacant stock is settled prior to our settlement, or new vacancies occur.
Balance of funds will be the $22m vendor loan as shown on the attached.[4]
[4](Emphasis in original).
On 19 July 2019, Mr Cuzzupi emailed Mario Charisiou, copied to Mr Aiello and another, with the subject line ‘Moonee Ponds – Settlement Confirmation’. A document was attached entitled ‘Moonee Ponds feasibility study July 2019 LIVE.xlsx’. The covering email addressed to Mr Aiello and Mario Charisiou noted that the particulars ‘regarding formal release of the deposit and settlement dates had been agreed in principle’. He then set out, among other things, the parties agreement to terminate the put and call option, to sign the amended asset sale agreement and release of deposit on 1 August 2019 and settle and take possession of the business on 2 September 2019.
On 26 July 2019, Mr Cuzzupi emailed Mario Charisiou. His email recorded that a loan agreement was required to formalise the funding arrangement between LBA and Trivett. He set out his thoughts and suggested that they discuss and agree on the most efficient process. He then set out a number of bullet points which included reference to an overarching loan agreement outlining the total loan amount and all required particulars, drawdowns including deposit drawdown with confirmation of amount and process for the drawdown along with project funding drawdowns with funds to be transferred at agreed intervals and to be transferred from LBA to either Trivett trust or project bank account.
On 31 July 2019, Mr Cuzzupi emailed Madgwicks Lawyers requesting advice as to the actions required to ensure that the ‘deposit is released tomorrow’. Mr Milentijevic responded to this email advising that Madgwicks Lawyers had confirmed that they simply need an email instruction from a director of NSLMP (that is, Mr Milentijevic or Joshua Balsim) to release the deposit.
On 1 August 2019, Mr Milentijevic sent two emails to Madgwicks Lawyers, the first of which advised that [they] were at MinterEllison’s office about to sign the documents and that he would advise when complete in order to release the funds. He sent an email shortly afterwards confirming that the documents had been executed and requesting that Madgwicks Lawyers arrange ‘to remit the deposit per the instructions below’ (which is a reference to the bank account details provided by the vendor).
Earlier that day, Mario Charisiou had emailed Mr Zartaloudis, copied to Mr Galatas, Mr Aiello and Tony Balsim, advising that:
We are moving towards contracts now and we need to have a facility put in place which will be funding to the group. Can you please forward the directors and or names of the company making the purchase along with the shareholders and or beneficiaries so that we can have them nominated as guarantees.
On 2 August 2019, there was an exchange of emails between Madgwicks Lawyers and MinterEllison confirming release of the deposit on 2 August 2019.
On 5 August 2019, the asset sale agreement and contract of sale were formally executed. There was no change of any significance to those that were earlier appended to the put and call option with NSLMP again being recorded as the purchaser.
On 6 August 2019, Mr Cuzzupi emailed Joshua Balsim and Tony Balsim attaching a Moonee Ponds feasibility cashflow. His cover email advised that the cashflow would be sent to Mario Charisiou that day to finalise the loan agreement. The attached cashflow, among other things, referred to financing to be provided by Trivett. Relevantly, it recorded an increase in the funding provided by Trivett from $208,311 as at the end of May 2019, to $3,211,393 at the end of June 2019. At the end of September 2019, the amount of funding was to step up from the $4,534,360 in the preceding month to $17,061,083 with provision for repayment thereafter in August 2023.
On 7 August 2019, Mr Cuzzupi sent a further email to Tony Balsim and Joshua Balsim and to Mr Milentijevic, copied to Mr Aiello, which set out a list of the information requested by LBA to finalise the loan agreement. Mr Cuzzupi’s email confirmed that he would be the only point of contact with LBA and he asked that all the information be provided to him to collate and distribute. The list of requirements included, among other things, details of the cashflow requirement for August to December 2019, funds required for acquisition (funds to be directly deposited in Madgwicks Lawyers’ trust account), funds required for project running costs (funds to be directly deposited into the project bank account).
In response, Mr Milentijevic provided Mr Cuzzupi with a copy of the cash flow and an estimate of the settlement funds required. In a further email sent on 8 August 2019 to Tony Basim and Joshua Basim, he set out what a summary of what he had earlier sent Mr Cuzzupi:
Funds to Madgwicks Trust Account $12,000,000
Total Funds required $17,500,000
Less Funds drawdown to date ($325,595.55) attached
Less Funds to Madgwicks a/c ($12,000,000)
Less Deposit Paid ($3,000,000)
Balance of Funds to project account $2,174,404 (including outstanding invoices below)
On 14 August 2019, Mr Cuzzupi emailed Mario Charisiou, copied to Mr Aiello, Joshua Balsim and Tony Balsim enclosing a draft of the Facility Agreement for his consideration. He requested that Mr Charisiou review and provide comments at the earliest opportunity. The draft of the Facility Agreement specified the lender as LBA, the borrower as Trivett with guarantees to be provided by Asya Balsim and Mr Aiello. The schedule to the agreement specified a facility limit of $18.5 million and a repayment date of 36 months from the date of the initial drawdown date. The draft of the Facility Agreement had been prepared by Madgwicks Lawyers.
On 16 August 2019, Mr Milentijevic prepared a memorandum headed ‘Ardmillan Place Funding’. It identified the deposit paid of $3 million and total funds required at settlement of $12.39 million which was broken down as to business and land $5 million, construction $2.47 million, vacant stock $2.93 million, stamp duty $1.73 million and land tax $0.26 million. The document was signed by Mr Milentijevic and underneath his signature recorded that he was a director of NSLMP.
On 18 August 2019, Mr Milentijevic emailed Mario Charisiou attaching a drawdown notice for the Ardmillan settlement together with account details for Madgwicks Lawyers’ trust account. The drawdown notice was in the name of NSLMP, specified amount of $13 million and was addressed to LBA.
Later that day, Mario Charisiou emailed Mr Milentijevic and requested that he make the amount total in the drawdown notice $17 million. Accordingly, Mr Milentijevic sent a further drawdown notice to LBA again in the name of NSLMP requesting drawdown of $17 million.
By email dated 19 August 2019, Mario Charisiou requested that Mr Milentijevic date the drawdown notice ‘last week please’. Mr Milentijevic complied with the request and attached a further copy which was dated ‘last Friday’ (which was 16 August 2019).
On 19 August 2019 at 6:45am, Mr Milentijivic emailed Mario Charisiou, copied to Tony Balsim, attaching signed copies of the deed of termination of the put and call option, the contract of sale and the asset sale agreement.
On 19 August 2019 at 10:07am, Mario Charisiou emailed Joshua Balsim attaching an unexecuted copy of the Facility Agreement and requested that he have the Facility Agreement ‘signed and dated back two weeks ago and send to me asap this morning please’.
On the same day, Mr Milentijevic emailed Mr Cuzzupi requesting that he provide Mr Milentijevic with Trivett’s bank account details to return surplus funds from Madgwicks Lawyers, which Mr Cuzzupi did by email return.
Notwithstanding the request by Mario Charisiou to Joshua Balsim on 19 August 2019 that the Facility Agreement be signed and dated ‘two weeks ago’, it is common ground that the Facility Agreement when executed by LBA and Trivett was in fact dated 19 June 2019. 19 June 2019 is two days before LBA transferred the $2.97 million into the Madgwicks Lawyers’ trust account.[5]
[5]Whilst the guarantors executed the Facility Agreement in the space designated for signing by the guarantors they never executed the contemplated separate Limited Guarantee and Indemnity.
The recitals to the Facility Agreement record that the lender (LBA) has agreed at the request of the borrower (Trivett) and the guarantor (Asya Balsim and Mr Aiello) to provide the facility to the borrower.
‘Facility’ is defined as ‘the revolving cash advance facility granted pursuant to cl 3.1 for the Facility Purposes’. ‘Facility Purposes’ is defined as ‘the purposes for which the Advances are to be used as stated in Item 5 of Schedule 1’. Item 5 in Schedule 1 specifies the loan purpose as ‘[f]or working capital of the Borrower’.
‘Advance’ is defined as ‘any drawing pursuant to this Agreement up to the maximum amount of the Facility Limit, and where appropriate, the amount of each Advance’.
The ‘Facility Limit’ is defined as the amount specified in item 1 of Schedule 1 which in turn reads $18.5 million (which is) ‘available for drawdown in one or more Advances on or after the Initial Drawdown Date’.
‘Initial Drawdown Date’ is defined as the date of the first Advance under this Agreement being the date specified in item 2 of Schedule 1 which is the date which is ‘by no later than five (5) Business Days after the later of the date of this Agreement and the date of satisfaction of the Conditions Precedent’.
‘Drawdown Date(s)’ is defined as ‘the date on which an Advance is or is proposed to be made and includes the Initial Drawdown Date’.
On 9 October 2019, Tony Balsim sent an email to James Charisiou and Mr Galatas attaching Trivett’s drawdown notice, an earlier copy of which had been sent on 7 October 2019. The drawdown notice was in Trivett’s name, was addressed to LBA and was in the amount of $14 million.
On 11 October 2019, Mr Galatas wrote to Tony Balsim on LBA’s behalf. His letter referred to the Facility Agreement and noted that ‘our client has previously advanced $2.97 million to you pursuant to that Agreement’. His letter continued by advising that the funds that LBA had represented were available under the Facility Agreement were no longer available and accordingly LBA could not proceed with the Facility Agreement. He advised that LBA would not be making the drawdown requested and required the immediate return of the $2.97 million previously advanced by way of loan together with interest accrued from 21 June 2019.
On 14 October 2019, Trivett sent a default notice to LBA with respect to the failure to provide advances in response to the drawdown notice sent 7 October 2019.
On 18 October 2019, Madgwicks Lawyers wrote to LBA’s solicitors advising that they acted for Trivett and stating the following:
The Facility Agreement entered into by our respective clients on 19 June 2019 (Facility) does not provide for the return of any moneys advanced to our client until the Repayment Date, being 36 months from the Initial Drawdown Date. That date has not passed and as such, the moneys are not due.
Furthermore, there is no discretion provided for in the Facility which would entitle your client to terminate or otherwise end the agreement. As such, it is your client who is in breach of the Facility and if any party is entitled to payment it is ours.
We therefore put your on notice that unless your client complies with its obligations owed pursuant to the Facility our client will make a claim against LBA for the loss and damage suffered by our client. Such a claim would include (but is not limited to) the following heads of damages:
– Loss of the deposit paid which will be forfeited to the vendor;
–Damages for breach of contract including any that are required to be paid to the vendor;
–Damages for loss of profits in respect of the development of the property;
–Damages in respect of the additional costs and interest that will be incurred should our client be able to procure alternative finance; and
–Damages in respect of the additional legal, finance and valuation costs associated with procuring a new loan.
As you can see from the heads of damages, the claim against your client may well be tens of millions of dollars. In all the circumstances our client will not be remitting any funds, rather, they look forward to receipt of the balance of the funds payable pursuant to the Facility.
We note that our client is in the process of mitigating its loss by attempting to procure alternative finance. Should those attempts prove fruitless, we have instructions to proceed as set out above.
NSLMP subsequently commenced proceedings in this Court against Ardmillan in which it sought, inter alia, an order for repayment of the deposit and/or judgment in the amount of the deposit. This was on the basis, inter alia, that Ardmillan had wrongfully repudiated the asset sale agreement and contract of sale and that the repudiation had been accepted by NSLMP who had validly determined the contract of sale and asset sale agreement accordingly.
Following a trial, the Court ordered there be judgment for NSLMP against Ardmillan for loss and damage in the sum of $5,516,250 plus interest thereon in the further sum of $1,011,060.62 in accordance with s 60 of the Supreme Court Act 1986 (Vic). Further that Ardmillan repay to NSLMP the deposit paid under the contract of sale in the sum of $2,605,000 together with interest thereon in the sum of $485,315.09, as well as the deposit paid under the asset sale agreement in the sum of $365,000 together with interest in the further sum of $68,000.
From the above, the following key facts emerge:
(a) From about October 2018, Madgwicks Lawyers commenced acting for NSL in respect of the acquisition of the Property. It is clear that Madgwicks Lawyers’ retainer extended to advising the purchaser and further that from at least 13 May 2019, the NSL companies had determined that the purchaser would be NSLMP.
(b) On 26 October 2018, NSL signed a term sheet with Ardmillan as vendor styled ‘Derby Street Acquisition - Terms Sheet’.
(c) On or around 13 May 2019, Ardmillan as vendor and NSLMP as purchaser and others including Mr Milentijevic, Joshua Balsim, NSL Group, Decca Design Pty Ltd and Trivett, entered into the put and call option, the annexures to which included the asset sale agreement and contract of sale.
(d) On 21 June 2019, LBA paid $2.97 million into the trust account of Madgwicks Lawyers.
(e) The payment of $2.97 million into Madgwicks Lawyers’ trust account was made for the purpose of demonstrating to Ardmillan that funds would be available to fund deposits that would become payable upon satisfaction of conditions precedence and the exercise of rights under the put and call option deed. In addition, that otherwise the $2.97 million was not to be released from Madgwicks Lawyers’ trust account until such time as a formal loan agreement was in place between LBA and the borrower which was to be one of the NSL companies.
(f) Notwithstanding that no formal loan agreement was in place, on 2 August 2019, the sum of $2.97 million was paid to Ardmillan in payment of the deposits payable by NSLMP under the contract of sale and the asset sale agreement.
(g) On or around 5 August 2019, NSLMP and Ardmillan executed the contract of sale and the asset sale agreement.
(h) By no later than about 26 July 2019, the NSL companies had determined that Trivett would be the entity that would be party to the formal loan agreement with LBA and that the funds provided by LBA pursuant to this agreement would form part of the funding obtained to satisfy NSLMP’s obligations under the contract of sale and that the asset sale agreement would be financed in part by a vendor loan and otherwise by funds provided by Trivett.[6]
[6]This is evident from the emails and attachments at [38]-[40] above.
(i) Accordingly, on or about 19 August 2019, LBA and Trivett executed the Facility Agreement which was backdated to 19 June 2019.
(j) On 7 October 2019, Trivett issued a drawdown notice to LBA seeking a drawdown of $14 million from LBA pursuant to the Facility Agreement.
(k) On 11 October 2019, LBA sent a letter to Trivett in which it refused the drawdown notice.
(l) On 14 October 2019, Trivett issued a default notice to LBA.
(m) On 25 May 2020, Ardmillan repudiated the contract of sale and the asset sale agreement which repudiation was accepted by NSLMP as a consequence of which the contract of sale and the asset sale agreement came to an end.
(n) By orders dated 5 April 2022, the Court made orders, inter alia, that Ardmillan repay NSLMP the deposit paid under the contract of sale and the asset sale agreement in the respective amounts of $2,605,000 and $365,000.
The assignment to the plaintiffs
By an assignment deed dated 17 August 2022, LBA assigned to the plaintiffs any and all rights it held arising out of the Facility Agreement in respect of the $2.97 million purportedly paid pursuant to the Facility Agreement.
On 19 August 2022, the plaintiffs served notices of assignment on Trivett and Aysa Balsim, informing Trivett and Aysa Balsim of the assignment.
On 21 October 2022, the plaintiffs made a demand for repayment from Trivett.
On 2 June 2023, LBA entered into an assignment deed with the plaintiffs by which it assigned:
(a) any and all rights it held in respect of the $2.97 million paid to NSL Group and/or NSLMP pursuant to the NSL Loan Agreement; and
(b) any and all rights, including causes of action, it held at the general law or in equity as regards to the $2.97 million paid to NSL Group and/or NSLMP.
On 9 June 2023, the plaintiffs served notices of assignment on NSL Group and NSLMP informing NSL Group and NSLMP of the assignment.
On 9 June 2023, the plaintiffs made another demand for repayment from Trivett.
On 9 June 2023, the plaintiffs made a demand for repayment of the $2.97 million from NSLMP and NSL Group.
On 31 October 2024, LBA entered into an assignment deed with the plaintiffs by which it assigned to the plaintiffs:
(a) any and all rights it held in respect of the $2.97 million paid to NSL Group, NSLMP and NSL, alternatively one or more of them, pursuant to the NSL Loan Agreement; and
(b) any and all rights, including causes of action, it held at the general law or in equity as regards to the $2.97 million paid to NSL Group and NSLMP and NSL, alternatively one or more of them.
On 6 November 2024, the plaintiffs served notices of assignment on NSL Group, NSLMP and NSL informing NSL Group, NSLMP and NSL of the assignment.
On 6 November 2024, the plaintiffs made a demand for repayment of the $2.97 million to NSL Group, NSLMP and NSL, alternatively a demand for repayment of the $2.97 million from one or more of NSL Group, NSL MP and NSL.
These facts are all admitted save that the NSL companies say that there are no rights to assign in essence due to the various defences each has to the claims. In any case there is no dispute between the parties that the plaintiffs claim is only as good as the claim that LBA had under the Facility Agreement, the NSL Loan Agreement or for moneys had and received (as the case may be).
Facility Agreement claim
The plaintiffs as assignee seek to recover the sum of $2.97 million from Trivett on the basis that the $2.97 million paid by LBA on 21 June 2019 constituted an Advance to Trivett within the scope of cl 3.1 of the Facility Agreement.
Clause 3.1 reads:
3.1 Nature
Subject to the terms of this agreement, the Lender [LBA] will make available a revolving cash advance loan facility under which the Lender must, upon request of the Borrower [Trivett], provide Advances to the Borrower up to the amount of Facility Limit by way of cash advance(s) on the Drawdown Date(s) on the terms and subject to the conditions set out in this Agreement. The Advances will be provided to the Borrower by way of bank cheque(s) or by telegraphic transfer payable to the Borrower or as to the Borrower directs in writing.[7]
[7]For the definition of Advance, Facility Limit, Initial Drawdown Date and Drawdown Date(s) see above [60]-[63].
The plaintiffs contend that although LBA and Trivett executed the Facility Agreement on 19 August 2019, the effect of its execution and backdating to 19 June 2019 means that the $2.97 million paid into the Madgwicks Lawyers’ trust account on or about 21 June 2019[8] is the provision of an Advance pursuant to cl 3.1. The payment falls within the definition of Advance contained in cl 1. It sits conformably with the definition of Drawdown Date(s) (which) ‘means the date on which an Advance is or is proposed to be made and includes the Initial Drawdown Date’. The Initial Drawdown Date (is) ‘(means) the date of the first Advance under this Agreement being the date specified in item 2 of Schedule 1’. The date specified in item 2 of Schedule 1 for the Initial Drawdown Date is ‘by no later than five (5) Business Days after the later of the date of this Agreement and the date of satisfaction of the Conditions Precedent’. ‘Conditions Precedent’ in turn is defined as meaning ‘each of the conditions precedent set out in Schedule 2’. The list of conditions appears under the heading ‘Part A – Initial Advance Conditions Precedent’. The conditions specified a range of matters. Some had no application (e.g., items 4 and 8). Others, such as items 2 and 6 contemplated the provision of documentation or information to the lender. Others contemplated the lender being satisfied about certain matters (e.g., items 1 and 5). The plaintiffs did not lead any evidence of satisfaction of the conditions precedent. It is common ground that the ‘Security’ at least in the form of the Limited Guarantee and Indemnity was not in fact executed by the guarantors. Unless the conditions precedent were satisfied or the parties agreed that they were satisfied or their satisfaction was waived by LBA, the Initial Drawdown Date could never come about. Whilst the date of the Facility Agreement is 19 June 2019, the Initial Drawdown Date is the later of this date and the conditions precedent satisfaction date. The $2.97 million payment made on 21 June 2019 was made no later than five days after the date of the Facility Agreement, 19 June 2019, but unless satisfaction of the conditions precedent occurred or was waived or was agreed to have taken place, prior to or by 19 June 2019, the payment made on 21 June 2019 could not have been the first Advance, being the Advance made on the Initial Drawdown Date.
[8]See above [36]; [70(d)].
The plaintiffs submit that the effect of the backdating of the Facility Agreement is that the parties intended that its terms would have a retrospective operation and apply to the 21 June 2019 payment.
Among other cases, the plaintiffs point to the observations of Hall J of the Supreme Court of New South Wales in Dong v Monkiro[9] (‘Dong’). In Dong, the plaintiff sought to recover a loan made to the first defendant alleged to have been made pursuant to a deed dated 11 February 2000. The sum sought to be recovered was $1.1 million. Of the payments which made up the $1.1 million, all were made prior to the date of the loan deed. The recitals recorded that the investor had agreed to make a loan to the developer, whilst cl 2 of the loan deed provided that the investor shall lend the developer a sum of $1.1 million on the date of the deed in respect of which $287,360 had been paid to the developer. One of the defences advanced by the borrower (developer) was that no moneys were advanced under the deed and that therefore there were no obligations to pay in accordance with the deed’s terms. In effect, the first defendant’s case was that the payments which preceded the date of the deed did not fall within its ambit.
[9][2005] NSWSC 749. See also V Quattro Pty Ltd v Townsville Pharmacy No 4 Pty Ltd [2024] QCA 34 [24].
His Honour found that the antecedent payments fell within the ambit of the deed stating the following:[10]
In principle, it has been observed, it should be open to the parties to a contract to agree upon the date (including a date in the past) from which their legal relations commenced to have effect and that it should be open to the courts to enforce that agreement: Gilsan (International) Limited v Optus Network Pty Limited (No 2) [2005] NSWSC 38.
On the unchallenged evidence, by executing the Loan Deed at the time they did, the plaintiff and the first defendant plainly intended that all rights and obligations as between them with respect to the loan advances for the Rena Street project should be governed by the provisions contained in the Deed. The terms of the Deed reflect the retrospective nature of the Deed’s operation and indeed one can additionally imply a term giving it retrospective operation.
The law has adopted a practical approach to the operation of commercial contracts having regard to earlier dealings between contracting parties. The law does not assume that acceptance of an offer cannot have retrospective effect so as to make the contract apply to things done earlier in anticipation of the contract. In Trollope & Colls Limited v. Atomic Power Constructions Limited (1962) 3 All ER 1035, Megaw, J. stated:-
... there is no principle of English law which provides that a contract cannot in any circumstances have retrospective effect, or that, if it purports to have, in fact, retrospective effect, it is in law a nullity. If, indeed, there were such a principle, there would be many Mercantile contracts which would, no doubt, to the consternation of the parties, be nullities. Frequently in large transactions a written contract is expressed to have retrospective effect ...: and this in cases where the negotiations on some of the terms have continued up till almost, if not quite, the date of the signature of the contract. The parties had meanwhile been conducting their transactions with one another, it may be for many months, on the assumption that a contract will ultimately be agreed on lines known to both the parties, though with the final form of various constituent terms of the proposed contract still under discussion. The parties have assumed that when the contract is made – when all the terms have been agreed in their final form – the contract will apply retrospectively to the preceding transactions. Often, as I say, the ultimate contract expressly so provides. I can see no reason why, if the parties so intend and agree, such a stipulation should be denied legal effect.
[10]Dong v Monkiro [2005] NSWSC 749 [61]-[63] (emphasis in original).
On a number of occasions, the NSL companies[11] submitted that the plaintiffs were seeking to advance a claim which went beyond their pleaded case. I do not accept that. The plaintiffs’ case is that Trivett is liable under the Facility Agreement for $2.97 million. The $2.97 million is obviously a reference to the $2.97 million paid into the Madgwicks Lawyers’ trust account on 21 June 2019. The only basis on which Trivett could be liable under the Facility Agreement is if the $2.97 million payment falls within the ambit of the Facility Agreement and the only basis on which it could have so fallen was if it fell within the scope of cl 3.1.
[11]For convenience, submissions advanced by counsel for NSL Group, NSLMP and Trivett are generally referred to as submissions of the NSL companies without distinguishing the position of NSL which played only a limited role at trial.
On occasion the plaintiffs referred to the $2.97 million paid to Madgwicks Lawyers on 21 June 2019 as an advance. To the extent to which this means that as events stood on 21 June 2019 this ‘advance’ (small ‘a’) was a small ‘a’ advance to Trivett (or one of the other NSL companies) it could be apt to confuse as it purports to characterise a fact, namely the payment to Madgwicks Lawyers in a particular way and there is some controversy as to its character at that date and as to whose benefit it was paid. The same applies with respect to the character and beneficiary of the payment made from the Madgwicks Lawyers’ trust account to the vendor’s account on 2 August 2019. The only issue which is relevant to the Facility Agreement Claim is whether the payment made into the Madgwicks Lawyers’ trust account on 21 June 2019 is an Advance (capital ‘A’) within the meaning of the Facility Agreement dated 19 June 2019 but in fact executed on 19 August 2019. I do not accept, however, that any consequence follows from such a minor and irrelevant arguable infelicity in nomenclature.
In contrast, Trivett’s submissions appeared to depart from its pleaded defence, although nothing turns on this either.
Paragraph 25M28 of the Sixth Further Amended Statement of Claim filed 2 December 2025 (‘6FASOC’) reads:
On 30 June 2019, being the first Interest Payment Date after 21 June 2019 under the Facility Agreement, Trivett failed to pay LBA interest at the Standard Interest rate of 15% per annum on the $2,970,000 which had accrued, and has continued to accrue on a daily basis, since the advance of $2,970,000 on 21 June 2019.
In the responsive paragraph of the defence filed by NSL Group, NSLMP and Trivett to the 6FASOC filed 11 December 2024 (‘Defence to the 6FASOC’),[12] they admit that Trivett failed to pay interest to LBA, referred to paragraphs 25N1 to 25Q3 for the reasons as to why there was no obligation to do so (which raised Trivett’s total failure of consideration and repudiation and discharge/damages for breach defences).[13] They then stated that ‘the Facility Agreement did not, in fact, exist as of 30 June 2019, such that no interest could have been payable on that date’ but then importantly stated ‘specifically say that no advance was ever made by LBA to Trivett whether under the Facility Agreement or at all’.[14]
[12]Paragraph [25M28] of the Defence to the 6FASOC.
[13]Those paragraphs also raised claims for deceit and misleading and deceptive conduct however the claims were not pressed by the tenth to twelfth defendants as per paragraph [464] of their outline of opening submissions filed 28 January 2025.
[14]This plea is to be contrasted with a plea of NSL Group and NSL MP to an earlier iteration of the claims against them; see below [163].
A fair reading of the Defence to the 6FASOC is that Trivett denied that it ever assumed any liability under the Facility Agreement or otherwise with respect to the $2.97 million.
In contrast, in the NSL companies’ outline of opening submissions filed 28 January 2025, they say that it has never been denied that by Trivett’s entry into the Facility Agreement, it assumed liability subject to the terms of the Facility Agreement, for repayment of the sum of $2.97 million paid into the Madgwicks Lawyers’ trust account. The basis on which Trivett assumed that liability is not further explained in the outline.
Trivett argues that by entering into the Facility Agreement it assumed liability subject to the terms of the Facility Agreement but received no Advance pursuant to that agreement because the payment made to Madgwicks Lawyers on 21 June 2019 had been paid by LBA to NSL (or NSL Group or NSLMP). Trivett argues that its liability was a form of concurrent liability, or one akin to that of a guarantor who assumed a liability for repayment of the $2.97 million already paid to one of the NSL companies but only did so in consideration of the promise of further advances to Trivett, which in the result were not made.
The critical question is whether the execution and backdating of the Facility Agreement to 19 June 2019 had the effect that the payment made into the Madgwicks Lawyers’ trust account on 21 June 2019 constitutes an Advance within the meaning of cl 3.1 of the Facility Agreement.
Whether that is so turns on what reasonable business people would have understood cl 3.1 to mean. This will in turn require consideration of the language used by the parties, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract.[15] The meaning of cl 3.1 therefore must be ascertained in the language the parties have used, considered in the light of the surrounding circumstances and the object of the contract. As the High Court stated in Pacific Carriers Ltd v BNP Paribas:[16]
…the meaning of commercial documents is determined objectively: The construction of the letters of indemnity is to be determined by what a reasonable person in the position of Pacific would have understood them to mean. That requires consideration, not only of the text of the documents, but also the surrounding circumstances known to [the parties], and the purpose and object of the transaction.[17]
[15]Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104, 116 [47] (‘Mount Bruce Mining’).
[16](2004) 218 CLR 451.
[17]Ibid 461-462 [22] (citations omitted); see also Mount Bruce Mining (n 15) 116-117 [46]-[52].
Once it is appreciated that the operative date for the purposes of determining the parties’ rights and obligations is 19 June 2019, the date of the Facility Agreement, it most likely follows that the parties intended that the payment made to the Madgwicks Lawyers’ trust account on 21 June 2019 was an Advance within the ambit of cl 3.1 of the Facility Agreement. Subject to any complications arising from the conditions precedent issue earlier noted,[18] the making of the payment on 21 June 2019 falls within the scope of cl 3.1 on its terms having regard to its intended retrospective operation.
[18]Neither the plaintiffs or the NSL companies addressed issues arising from the conditions precedent and any consequential effect on the Initial Drawdown Date.
This is consistent with parties’ intention which can be inferred from the following matters known to both:
(a) First, from 21 June 2019 until at the latest 2 August 2019, LBA and the NSL companies including Trivett intended that the $2.97 million to be paid into the Madgwicks Lawyers’ trust account and held there until a formal loan agreement was entered into by LBA with one of the NSL companies (and would in the meantime satisfy the vendor that funds were available to pay the deposit under any contract of sale).
(b) The moneys were paid out of the Madgwicks Lawyers’ trust account on 2 August 2019 to the vendor to satisfy the obligation of NSLMP to pay the deposit.
(c) Between about 21 June 2019 and the execution of the Facility Agreement on about 19 August 2019, the parties communicated with respect to the proposed terms of the Facility Agreement. However by at least 6 August 2019, it was contemplated by the NSL companies including Trivett that the $2.97 million paid into the Madgwicks Lawyers’ trust account would be treated as having been provided by LBA to Trivett and then by Trivett to NSLMP. So much is implicit from the content of the email from the accountant, Mr Cuzzupi to Joshua Balsim and Tony Balsim on 6 August 2019 which attached a Moonee Ponds feasibility cash flow and advised that the cash flow would be sent to Mario Charisiou that day to finalise the loan agreement. The cash flow, among other things, referred to financing to be provided by Trivett to NSLMP which included the $2.97 million the subject of the payment by LBA to the Madgwicks Lawyers’ trust account on 21 June 2019. Whilst there is no direct evidence that a copy was provided that day to Mario Charisiou, there is every reason to infer it was. That was Mr Cuzzupi’s intention; it appears that Mario Charisiou wanted it as part of the materials needed to finalise the loan agreement. It was evidently important for the lender to know when the drawdowns would be needed and when and how its borrower, Trivett, would be able to meet its interest and repayment obligations. It is also implicit from Mr Cuzzupi’s further email on 7 August 2019. It is reinforced by the provision of a draft of the Facility Agreement which specified a facility limit of $18.5 million, between LBA and Trivett, which it can be inferred included the $3 million deposit which had been paid. That it included the $3 million deposit is apparent from, among other things, the cash flow statement which referenced total funds required of $17.5 million from which there had been various deductions including the deposit of $3 million. The $3 million deposit therefore represented a subset of the $17.5 million required which was related to and constituted the majority of the proposed facility limit of $18.5 million.
The NSL companies rely upon the fact that in the email from Madgwicks Lawyers to Mr Galatas with the subject line ‘Ardmillan Place Holding Deposit’ sent 21 June 2019,[88] Madgwicks Lawyers wrote advising that they act on behalf of ‘Next Stage Living’. They also relied on the fact that when Madgwicks Lawyers emailed Mr Galatas on 24 June 2019, having received the moneys on 21 June 2019, attaching Madgwicks Lawyers’ trust receipt for LBA’s records, the trust receipt[89] recorded that the relevant file name was ‘SJH 038064’ in the name of ‘Next Stage Living Pty Ltd’. They draw attention to r 36 of the Legal Profession Uniform General Rules 2015 (‘Uniform Rules’) which relate to receipting of trust money. Rule 36 requires, among other things, the law practice to make out a receipt as soon as practicable after the trust money is received and that the receipt must, among other things, clearly identify the name of the client in respect of whom the money was received and the matter description and matter reference, which the NSL companies argue refer to NSL, not NSLMP. They therefore submit that the Uniform Rules support the inference that the funds received, which were receipted as being received for NSL, could only then have been used by NSL, not NSLMP, which according to the NSL companies used the moneys made available to it by NSL to pay the deposit. They otherwise rely on the fact that Mr Galatas did not object or otherwise say anything in response when he received the receipt.
[88]See above [35].
[89]See above [36].
The plaintiffs’ money count claim succeeds against NSLMP, not NSL. It was NSLMP who received the money on 2 August 2019 to its use, not NSL.
First, the trust account receipt is more equivocal than the NSL companies submission suggests. Whilst it records that the relevant file was a file opened in the name of NSL, not NSLMP, it is common ground that as at 21 June 2019 NSLMP was also a client of Madgwicks Lawyers. Madgwicks Lawyers first commenced acting in matters concerning this transaction and opened a file on 10 October 2018 having previously issued a fee proposal to NSL on 3 August 2018 and a revised proposal to NSL on 25 September 2018. As at the date of these events, NSLMP had not been incorporated; it was not incorporated until 8 October 2018. The fact that the trust account receipt was referenced against a file opened in the name of NSL is explicable on the basis that NSL was the entity that entered into the formal retainer with Madgwicks Lawyers, it being the only entity at that stage which had been incorporated. Equally importantly, the trust account receipt, in accordance with r 36 of the Uniform Rules, is required to provide particulars sufficient to identify the reason for which the money is received. That reason identified in the trust account receipt was the deposit (in connection with) acquisition of ‘Ardmillan Moonee Ponds’. The receipt therefore records that the funds had been received from LBA for the purposes of the ‘Deposit/Acquisition of Ardmillan Moonee Ponds’. The acquirer and hence the party required to pay the deposit was NSLMP. The trust account receipt did not record that the purpose for which the $2.97 million was received was for NSL’s general purposes or, more particularly, for a loan by NSL to another company in the NSL group of companies.
Secondly, the communications which passed between the relevant NSL companies’ actors on 31 July and 1 August 2019 are all entirely consistent with the moneys held in the trust account being used to pay the deposit due from NSLMP, not used by NSL for the purposes of lending those moneys to NSLMP for that purpose.
So much appears from the following:
(a) At 12:26pm on 31 July 2019, Mr Cuzzupi emailed Madgwicks Lawyers asking that Madgwicks Lawyers advise ‘the process/actions required to ensure deposit is released tomorrow’.
(b) At 2:24pm on 31 July 2019, Mr Milentijevic emailed Mr Cuzzupi, Tony Balsim and Joshua Balsim, the email subject line ‘Ardmillan release of deposit’ with the email reading:[90]
[90](Emphasis added).
Hi Anthony
Madgwicks have confirmed that they simply need an email instruction of a Director of NSL Moonee Ponds P/L to release the deposit being either myself or Josh.
(c) On 1 August 2019 at 1:40pm, Mr Cuzzupi emailed Joshua Balsim, copied to Tony Balsim and Mr Aiello attaching an Excel spreadsheet with a Moonee Ponds feasibility cashflow statement. That cash flow statement showed that funding of just under $3 million was to be provided by Trivett in respect of the acquisition of the Property and assets by ‘Next Stage Living’. This is consistent with Trivett borrowing the money from LBA and then lending the money to the acquirer of the Property. It also shows various acquisition costs and thereafter anticipated project revenue in connection with ‘Ardmillan Place by Next Stage Living’. Given that there is no suggestion that NSL was to acquire the Property, the most likely inference is that the reference to Next Stage Living was in fact a reference to NSLMP. This is supported by the fact that the cash flow also includes after the words ‘Next Stage Living’ on the next line, the words ‘Moonee Ponds’.
(d) At 3:24pm on 1 August 2019, the vendor’s representative emailed Mr Milentijevic and asked that he have Madgwicks Lawyers release the deposits into the following Bank of Melbourne account, which was an account in the name of Palalow Pty Ltd, with an accompanying request that Madgwicks Lawyers provide email confirmation to MinterEllison when the transfer is made with a payment receipt attached.
(e) At 3:50pm, Mr Milentijevic emailed Madgwicks Lawyers forwarding on an email from the vendor’s representatives. Mr Milentijevic’s email read:
We are at Minters offices about to sign the documents and will advise you when complete in order to release the funds.
(f) At 4:42pm, Mr Milentijevic again emailed Madgwicks Lawyers confirming that the transaction documents had been executed and requesting that the deposit be remitted as per the instructions below.
The email from Mr Milentijevic to Madgwicks Lawyers sent on 1 August 2019 at 4:42pm therefore was plainly an email from Mr Milentijevic as one of the directors of NSLMP authorising the release of the $2.97 million into the Bank of Melbourne account, in the name of Palalow Pty Ltd, which was referred to in the earlier email from the vendor’s representative sent at 3:24pm.
The plaintiffs emphasise that the requirement on Madgwicks Lawyers’ behalf that they needed an instruction from a director of NSLMP to release the deposit (by that meaning pay it out of their trust account to the Bank of Melbourne account in Palalow Pty Ltd’s name) was a request which was explicable by s 138(1) of the Legal Profession Uniform Law.[91] This section provides that a law practice can only authorise the release of moneys held in a trust account upon receipt of a direction given by the person on whose behalf the trust money had been received. The plaintiffs therefore argue that this is a strong indicator that Madgwicks Lawyers considered that it was holding the moneys in trust on 2 August 2019 for NSLMP.
[91]Legal Profession Uniform Application Act 2014 (Vic) sch 1.
In closing submissions, the NSL companies submitted that the request was variously one which related to an instruction to pay the deposit due under the contract of sale and/or that the reference to release involved the release of the deposit to the vendor in accordance with s 27 of the Sale of Land Act 1962 (Vic) (‘Sale of Land Act’).
I do not accept that is so. There was no mention of the deposit being released to the vendor in accordance with s 27 of the Sale of Land Act or otherwise as opposed to being paid to the vendor as the deposit due under the contract of sale which required its payment on the day of sale in accordance with the provisions of the contract. Thereafter, special condition 7 of the contract of sale would govern the manner in which the deposit would be held, which relevantly included a joint direction from the vendor and the purchaser that the deposit would be invested by the vendor’s lawyer in a controlled moneys account at a bank until such time as the deposit could be lawfully released in accordance with the Sale of Land Act.
Further, it would have been an easy matter for the NSL companies to have called evidence, documentary or oral, from the directors of any of the companies seeking to establish that the payment made on 2 August 2019 was a payment by NSL in discharge of an obligation of NSLMP and which created a relationship of debtor and creditor between the two and not, as the feasibility cash flows contemplated, financing provided by Trivett to NSLMP.[92] The fact no-one gave such evidence provides further support for the conclusion (which I would draw in any event from the documents identified) that the use was by NSLMP.
[92]See above [99(c)].
Not only did no director of NSL or NSLMP give such evidence, the NSL companies made a deliberate choice not to lead that evidence having first, in their outline of opening submissions filed 28 January 2025, foreshadowed tendering ledger entries of NSLMP and NSL which they submitted constituted prima facie evidence of an indebtedness on the part of NSLMP to NSL.
The NSL companies ultimately chose not to tender that evidence after being put on notice of an application by the plaintiffs for leave to adduce further additional evidence which was said to establish that an examination of metadata revealed that the ledger entries were created well after the relevant transactions. This reinforces the conclusion that it was NSLMP who used the money in the trust account to pay its deposit, not that NSL used the money to lend it to NSLMP so that the latter could pay the deposit.
In short, aside from the fact that the file was opened in the name of the only NSL company then in existence and that the receipt was referenced to that company, there is a complete absence of any evidence which speaks to a contemporaneous use of the moneys by NSL, by way of loan or some other form of transaction (such as would enable NSLMP to pay the deposit). As the plaintiffs’ submit, and I accept, this was simply a product of the circumstances attending the opening of the file. I do not accept that this somehow means that Madgwicks Lawyers mishandled trust money. NSLMP was a client, as was NSL, and it acted on instructions from its directors (who were directors of both companies). As the plaintiffs’ note, moneys held in trust for the same client were later used to pay NSLMP’s costs of its litigation with Ardmillan. This reinforces the entirely proper and orthodox use of moneys in the trust account, on the file opened for NSL, for NSLMP.
Had I not therefore found in favour of the plaintiffs against Trivett in relation to the Facility Agreement claim, I would have found in favour of the plaintiffs against NSLMP with respect to an action for moneys had and received by NSLMP to its use arising as and from 2 August 2019. I would not have precluded the plaintiffs from obtaining judgment on that basis notwithstanding that the claim, as pleaded, was for moneys had and received by NSLMP to the use of LBA and not moneys had and received by NSLMP to the use of NSLMP. As noted above, the plaintiffs’ framing of the case did not clearly distinguish between the two at trial and the NSL companies accepted that one of them had a liability on this basis as and from 2 August 2019. The real debate was as to who received the funds on 2 August 2019, NSL or NSLMP.
Conclusion
In the circumstances the plaintiffs will be entitled to judgment against Trivett for the sum of $2.97 million together with interest payable under the Facility Agreement at the rates prescribed in the Facility Agreement from 21 June 2019.
The claims against the NSL Group, NSLMP and NSL will be dismissed.
I will hear the parties as to the quantification of interest together with appropriate orders as to costs.
SCHEDULE OF PARTIES
S ECI 2019 03875
| JB ASSET MANAGEMENT | First Plaintiffs |
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| KB KOOKMIN BANK (ALSO KNOWN AS KOOKMIN BANK) | Second Plaintiff |
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| NEXT STAGE LIVING GROUP PTY LTD (ACN 629 888 240) | Tenth Defendant |
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| NEXT STAGE LIVING MOONEE PONDS PTY LTD (ACN 629 891 765) | Eleventh Defendant |
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| TRIVETT PROPERTY PARTNERS PTY LTD (ACN 621 615 727) | Twelfth Defendant |
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| NEXT STAGE LIVING PTY LTD (ACN 624 960 978) | Fourteenth Defendant |
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