Kingston Village Investment Pty Ltd v Polin
[2004] VSC 98
•2 April 2004
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL LIST
No. 2022 of 2003
F5533
| KINGSTON VILLAGE INVESTMENT PTY LTD (ACN 097 603 686) | Plaintiff |
| v | |
| MARTIN POLIN | Defendant |
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JUDGE: | BYRNE J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 19, 23, 24, 25, 27 February, 3 March 2004 | |
DATE OF JUDGMENT: | 2 April 2004 | |
CASE MAY BE CITED AS: | Kingston Village Investment Pty Ltd v Polin | |
MEDIUM NEUTRAL CITATION: | [2004] VSC 98 | |
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Contract – Joint venture agreement – Whether repudiation – Whether notice of determination effective.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr R.M. Garratt QC and Mr G.J. Ahern | Heather M Masters |
| For the Defendant | Mr P.D. Santamaria SC and Mr N. Frenkel | Gadens Lawyers |
HIS HONOUR:
Martin Polin, the defendant, was described in the evidence as an elderly and eccentric American who had been a successful lawyer in that country. He moved to Tasmania in 1983 and lived there until he returned to the United States in December 2002 to live there permanently. He appears to have been a reclusive man; with one exception he had no direct dealings with any of the persons involved in the commercial venture which gives rise to this litigation. He preferred to deal with them through his Australian lawyer and attorney under power, Ian George Lewis.
The issues in this case may be shortly stated. Mr Polin on 17 August 2001 entered into a joint venture agreement with the plaintiff, Kingston Village Investment Pty Ltd (“KVI”), to develop and exploit a supermarket property in Kingston, Tasmania, and to lease it to Coles Myer Ltd. About 12 months later, Mr Polin decided not to proceed and he repudiated the joint venture agreement. KVI did not accept this repudiation and the project moved forward. In March 2003 there occurred a series of conversations which are in dispute. Following these conversations KVI gave notice terminating the joint venture agreement for breaches by Mr Polin. He, for his part, says that, in the conversations, his position reverted to that of a willing venturer so that the notice by KVI was itself a repudiation which he has accepted. KVI, but not Mr Polin, seeks damages. With the concurrence of the parties I have ordered pursuant to Rule 47.04 that this trial proceed on all issues other than quantum.
Mr Polin entered into the joint venture agreement with KVI on 17 August 2001 for the purpose of developing and exploiting two adjoining pieces of land in Kingston, Tasmania. At or shortly before this time, the first piece of land, situate at and known as 20-22 Channell Highway, Kingston, was owned by him. This, “the Polin land” had a supermarket on it which was leased to Coles Myer Ltd under a lease dated 26 February 1982. The term of the lease was 25 years expiring on 5 December 2006 with two 5 year options. The second piece of land, situate at and known as 24 Channell Highway, Kingston was owned by one Roberts. This, “the Roberts land”, had been purchased by KVI with settlement due on 17 August 2001. The promoters of the joint venture were the directors of KVI, Mark Alexander Leadbeater and Jonathon Graeme Altson. The scheme of the joint venture was for the two pieces of land to be consolidated and shops and car-parking constructed on the Roberts land. Some improvements, too, were to be carried out to the existing supermarket on the Polin land. The consolidated property would then be leased to Coles Myer on terms which would be commercially satisfactory for all parties.
Pursuant to cl. 2 of the joint venture agreement the Roberts land would be purchased in the name of KVI to be held by it as to one half as trustee for Mr Polin. Mr Polin would provide one half of the purchase price of the Roberts land and would share the costs equally. By cl. 3, Mr Polin granted to KVI an option to purchase a one half interest in the Polin land for $1.5M. The agreement also made provision for rights of pre-emption in the event that the project did not proceed.
The day to day management of the project, including negotiations with Coles Myer, dealings with local authorities, financial arrangements and the design and building work, was left with Mr Altson and Mr Leadbeater. They reported progress from time to time to Mr Polin’s representative.
The purchase of the Roberts land was duly settled in August 2001 with Mr Polin paying his half share. By June 2002 Mr Leadbeater reported that KVI had incurred costs of about $25,000. He requested Mr Lewis to arrange for Mr Polin to contribute the sum of $22,543.69 towards on-going expenses. Mr Lewis wrote in response on 17 July 2002 saying that he was seeking urgent instructions from Mr Polin “and hopefully obtain a contribution to the out-goings”.
About this time, August 2002, it seems that Mr Polin received information which reflected adversely on the probity of Mr Altson. I am not concerned with the substance of this information nor with its accuracy. Nobody, other than Mr Polin, appears to have given any credence to it and Mr Polin himself later became persuaded that he could properly proceed with the project involving Mr Altson.
Be that as it may, perhaps for this reason, Mr Polin decided to withdraw from the project. There is some dispute as to whether this change of heart was communicated to the co-venturers in August or September 2002 and in what form. According to Mr Altson and Mr Leadbeater at a meeting with Mr Lewis on 2 September 2002 Mr Lewis just said that he was “having difficulties with Mr Polin” and that KVI should consider making an offer to buy out his interest. Mr Lewis said that he told the two co-venturers in August that his principal did not wish to proceed.
It is not necessary that I resolve this dispute. On 22 October it became clear beyond doubt what was the attitude of Mr Polin. On that day Mr Leadbeater and Mr Altson were unhappy with the conflicting information which they were receiving from Mr Lewis. Mr Altson accordingly telephoned Mr Polin at his home in Sandy Bay, Hobart to discover where he stood. This is the only direct communication between Mr Polin and his co-venturers. Mr Polin said he would not proceed with the project and that he wanted to buy out KVI’s interest. He said that the joint venture agreement had no standing, expressing himself in words that left no room for doubt, Mr Altson reports him as saying: “As long as the sun came up and the sun set he would not go forward with the” joint venture agreement. When Mr Altson protested that there was an agreement between them and that KVI intended to go ahead, Mr Polin said “No, you’ve gambled and you’ve lost”.
It was accepted by all parties before me that in this conversation Mr Polin repudiated the joint venture agreement. Nevertheless, KVI did not accept this repudiation so that the agreement remained on foot, at least until the end of March 2003. I will not set out in detail the events of this five month period.
KVI continued its negotiations with Coles Myer for a new lease and these had produced a letter of offer from that company dated 14 October 2002. Coles Myer, however, required a written acceptance of this offer before the proposal would be placed before senior management and the board of directors for approval. This requirement was passed on by Mr Lewis to his principal.
I pause for a moment to deal the conflict of evidence which is important to the resolution of this case. Mr Lewis said he made it clear in his discussions with Mr Leadbeater and Mr Altson that, while he thought the Coles Myer lease offer was satisfactory, he had clear instructions from his principal not to go ahead. Their evidence was to the effect that his statements were much less forthright. They were, of course, aware of Mr Polin’s definite refusal to proceed on 22 October, but they said that Mr Lewis continually spoke in terms only of his having difficulty obtaining instructions from his client. He, nevertheless, assured them that he had the expectation that these instructions would be forthcoming and that the project would go ahead.
I accept the account given by Mr Altson and Mr Leadbeater of their dealings with Mr Lewis in this five month period. I am satisfied that he was not as definite as he would have me accept. This engendered in the minds of the co-venturers the expectation and belief that they were dealing with a principal who was vacillating, wilful and difficult, but whom they reasonably hoped would see the wisdom of going ahead.
The evidence shows that, while Mr Lewis had sought to persuade his principal to change his mind without success, he did in fact entertain the hope that Mr Polin would reconsider his position so that the project would go ahead. This put him in an awkward position. On the one hand he had clear instructions which he was obliged to respect notwithstanding that this exposed his client to the risk of litigation which may be brought by the joint venturer and to an award of damages. On the other hand, his natural inclination as a lawyer led him to hedge his client’s position, especially as he entertained the hope that reason would prevail. Furthermore, it was Mr Lewis’ opinion that the commercial interests of his client dictated that the project proceed. If it did, there was the prospect of profit. If it did not, Coles Myer would, as it had indicated, not exercise its right of option so that Mr Polin would then be left with an untenanted supermarket. This provides an explanation for the mixed messages he was conveying to the KVI directors.
Mr Lewis tended not to respond to correspondence which clearly called for reply on behalf of his client. Nevertheless, relations between him and Mr Altson and Mr Leadbeater remained good and Mr Lewis encouraged them to press on with the project, merely speaking of his difficulties getting instructions from Mr Polin. He did not say that his client would definitely not go ahead. For example, Mr Lewis told the other two to proceed with the acceptance of the Coles Myer lease offer. Nevertheless, neither Mr Polin, nor Mr Lewis on his behalf, signed the Coles Myer offer and did not make any contribution towards the costs of the project.
I prefer their evidence also because this is the tone of the few letters which Mr Lewis wrote. It is also consistent with his behaviour in the matter of the expert determination to which I shall shortly turn. Finally, I was impressed with the evidence of Mr Altson and Mr Leadbeater in the witness box. They had a clear recollection of the events which they recounted and gave their evidence in a forthright and convincing way. On the other hand, I must say that, in many important respects, I found the evidence of Mr Lewis to be less reliable. His recollection is often uncertain and in some cases admittedly erroneous. He did not have the support of diary notes and memoranda which might have been expected of an experienced legal practitioner. To the extent that his evidence is at variance to that of Mr Altson and Mr Leadbeater, I prefer to act on theirs.
The joint venture agreement contained in cl. 9 a stated procedure for resolving disputes between the venturers. The complainant first was to give notice in writing of the dispute. The disputants then were each to nominate a representative authorised to settle the dispute on its behalf. If the representatives were unable to resolve the dispute by negotiations, it passed to an independent third party. This person was to attempt further to negotiate a settlement, failing which he was “to decide all matters the subject of the Dispute and [his] decision shall be binding on the parties”.
By letter dated 7 November 2002 KVI gave to Mr Polin notice of dispute pursuant to cl. 9.2. Three matters are raised in this letter. First, the failure of Mr Polin to give approval in writing to the Coles Myer offer of lease notwithstanding his oral approval. Second, the failure of Mr Polin to contribute towards the costs of the venture; and, third, his failure to provide the Commonwealth Bank with information to support the joint venture funding application.
Mr Polin’s reaction was to refuse to pursue the contractual dispute resolution process. KVI then issued a proceeding in this Court on 29 November 2002 seeking an order directing him to appoint a representative. Weeks went by with the solicitors for KVI seeking to discover whether Mr Lewis had instructions even to accept service on his client who had, in late November, left Australia for the United States. On 20 December 2002 an order for substituted service of the originating process on Mr Lewis was obtained. On 23 January 2003, five days before the matter was returnable in the Practice Court, Mr Polin conceded and appointed a representative. Throughout this whole process, Mr Lewis was in contact with the joint venturers telling them, as always, that he was having difficulty getting instructions from his client and that he (Lewis) was trying to have his client move forward. On 11 December 2002 he told Mr Leadbeater that Mr Polin was “coming around” to meeting his obligations under the joint venture agreement.
In due course, the dispute was on 20 February 2003 referred to Mr Richard Park as independent third party pursuant to cl. 9.5 of the joint venture agreement.
On 25 February Mr Park convened a meeting of the disputants to identify the matters in dispute and to discuss the process for their resolution. The KVI representative set out its claims. When asked his client’s position, Mr Lewis representing Mr Polin said that he had no issue at all with what was said: his only problem was obtaining instructions from Mr Polin to go forward with the joint venture. There was a degree of urgency attending the reference to Mr Park because Coles Myer had imposed a deadline for the acceptance of their lease offer. This was originally 31 January 2003 but it was later extended to 31 March 2003. It should be noted that Mr Lewis wrote to Coles Myer on 22 January 2003 a letter in which his client agreed to the extension. I mention this as another act on behalf of Mr Polin which suggested he was minded to proceed with the venture notwithstanding his stated position. Theoretically, if the offer were not signed off by the venturers by the due date it would lapse with the prospect that the commercial objective of the venture would be lost. The evidence showed that this was in fact a theoretical rather than a real risk, for Coles Myer was at this stage happy for the project to go ahead when their lease expired in 2006, so that the time for acceptance was not critical. Its public position, however, was one of seeking to close the deal. It was for this reason that KVI wrote to Mr Park on 17 March 2003 drawing attention to the Coles Myer deadline of 31 March and requesting him to have regard to this in making his determination. Given the position adopted by Mr Lewis before Mr Park, there was, at this stage, every prospect that KVI would obtain from him a favourable determination.
This, then, represents the background to the critical events and conversations of 20 March to 1 April 2003. In summary, Mr Polin’s stated position was that he would not proceed but the indications from his representative, Mr Lewis, were more hopeful. On his behalf, Mr Lewis was giving assurances that Mr Polin would sign the Coles Myer offer. Mr Leadbeater and Mr Altson, however, were becoming impatient with this conflicting information and, increasingly so, as the Coles Myer deadline approached. The time for signing a building contract, too, was fast approaching, for the works had to be completed well before Christmas trading. They were understandably reluctant to commit themselves to any binding obligation so long as Mr Polin’s position remained uncertain. It may be, too, that Mr Lewis was himself becoming sensitive about his client’s uncertain attitude. He said that he had told his principal at some unspecified date in 2002 that “for personal reasons” he would not act as his attorney under power. Mr Leadbeater and Mr Altson were, however, still keen to proceed if possible. I make this finding notwithstanding the suggestion, which they rejected, that by this time it was them who had decided to withdraw from the joint venture and they were manoeuvring so that they might do so and recover the expected profit by way of damages from Mr Polin.
On the morning of 19 March 2003 Mr Lewis spoke by telephone with Mr Polin. In this conversation he pressed his client again with the wisdom of proceeding with the project. According to the witness statement of Mr Lewis his client said, “Okay, I’ll change my mind. I’ll go ahead with the joint venture”. Mr Lewis then made a note of this conversation. I will set out this note in full.
“You now feel will proceed with development of Coles property, as discussed.
We to so advise Coles and Kingston Village Investments.
You cannot read the valuation and would have to get someone to read it to you.
You to authorise Scott to pay share of costs of Roberts property ie rates and land tax.
You would like the Bank to lend money without security from your assets, as too hard to arrange.”
The reference to Scott is to the person at Deloittes who was handling Mr Polin’s financial affairs in Tasmania.
Mr Lewis then telephoned Mr Leadbeater. According to Mr Lewis, he announced his client’s change of heart and Mr Leadbeater responded that he would tell Mr Altson. Later, Mr Leadbeater called back and arranged a meeting for the next day. According to Mr Leadbeater, Mr Lewis simply phoned him and said he would like a meeting to discuss the project and the Coles Myer offer. Of these two versions I prefer that of Mr Lewis notwithstanding my general observations as to the relative value of his evidence. I accept his account of his conversation with his client. In these circumstances it is very likely that he was keen to pass on the good news to the co-venturers. Moreover, the evidence of Geoffrey Noel Tampling, the State Retail Property Manager of Coles Myer, confirms this. He said that on 19 March Mr Lewis phoned him to advise that the project was going ahead. I mention in passing that, according to Mr Tampling, this was the second call to this effect in March. He said with respect to the first, that he (Tampling) responded that this was good news and that he looked forward to formal correspondence confirming that. His account of the 19 March conversation was that it was to the same effect. He said that his diary note of it simply read: “Ian Lewis advised Polin has agreed with formal notice to advise shortly”. I accept this evidence and observe that no formal notice or confirmation in writing was ever given by or on behalf of Mr Polin.
The critical meeting took place at the Pavilion Coffee Shop in North Road, Brighton on 20 March. Present were Mr Lewis, Mr Leadbeater and Mr Altson. There was a conflict between the account of Mr Lewis and those of the other two men. According to Mr Leadbeater he and his colleague went back to the KVI office immediately after the meeting and made a file note of the discussion. This note was not put into evidence nor was it the subject of cross-examination.
According to Mr Lewis he announced to the others that Mr Polin had changed his mind, that he would proceed with the joint venture and that he accepted the Coles Myer lease. This statement, he said, was made without qualification. The discussion then moved to the implementation of this decision. Discussion as to the contribution for the costs of the venture proceeded on the basis that KVI might continue to bear these costs and that the share of Mr Polin would be brought to account when the time for KVI to pay for half of the Polin land arrived in due course. As to the bank finance documents, Mr Lewis proposed that the Bank be asked to provide the funds on the security of an equitable mortgage over the unencumbered title to the land. Another matter discussed was the need for Mr Polin to sign the building contract. Again, to meet the difficulties of obtaining Mr Polin’s signature, he suggested that this might be signed by KVI alone on behalf of the joint venture. Pursuant to cl. 5.2.7 of the joint venture agreement this might be done with the written approval of Mr Polin. He said that the two others stated that they would consider these matters and come back to him in due course.
The account of this meeting given by the other two participants was very different. According to Mr Leadbeater, Mr Lewis announced that his principal would go ahead with the venture subject to certain variations, as to which he (Lewis) did not have specific instructions. Mr Polin would reimburse the co-venturers only for statutory costs incurred on the Roberts land; the remaining costs could be treated as total project costs. He would not sign the mortgage documentation or any building contract; the funds for the development would therefore be obtained from the Commonwealth Bank upon security of an equitable mortgage. Mr Lewis said he had spoken to Mr Tampling of Coles Myer and told him that Mr Polin would accept the proposed lease. Mr Altson protested that these were variations to the joint venture agreement and that they would jeopardise the bank funding. Mr Lewis also said that he had been advised that the joint venture agreement had been “frustrated”. When mention was made of the pending determination of the existing disputes by Mr Park, Mr Lewis said that he had counsel’s advice that any determination would not be binding. Mr Lewis said, too, that if KVI were to take steps to get a court order, presumably to enforce the expected Park determination, Mr Polin would just ignore it.
The account of this meeting given by Mr Altson also differed from that of Mr Lewis. He told me that Mr Lewis said that Mr Polin was not prepared to proceed under the terms of the joint venture agreement but that he would be prepared to negotiate a new arrangement under which he would not sign a mortgage or a building contract and would pay his share of the project expenses only upon completion. The witness also recalled that Mr Lewis spoke of the joint venture agreement being invalid by way of frustration, an assertion denied by Mr Lewis. Mr Altson protested that this proposal was inconsistent with the existing contractual arrangements and that he would prefer therefore to await Mr Park’s determination. The witness told me, and Mr Lewis denied this, that, even if he (Lewis) instructed Mr Polin to comply with his obligations under the joint venture agreement his client “would simply ignore Park’s decision and that, being located in America, he would simply sit on his hands and do nothing”.
Let me say immediately that I accept the version of these discussions given by Mr Altson and Mr Leadbeater. I have already indicated my general view that their evidence is more reliable than that of Mr Lewis. As may be supposed, the three witnesses were pressed hard in cross-examination with respect to this meeting. The answers given by Mr Altson and Mr Leadbeater confirm my confidence in their recollections. Their account is, in certain important respects, also confirmed in the ultimatum letter from the solicitor for KVI sent on 27 March. I was pressed, too, on behalf of KVI, with an argument based on the fact that the first mention of this important meeting which appeared in the pleadings of the defendant was in its third defence which was not filed until December 2003 and that, even then, the date of the meeting was given incorrectly as 28 March. The position adopted by Mr Polin at the meeting, as Mr Altson and Mr Leadbeater describe it, is entirely consistent with the history of his dealings with them over the preceding five months and did nothing to assuage their concerns. Furthermore, as will appear, in the days that followed this meeting neither Mr Lewis’ client nor he, as solicitor and attorney for his client, took any steps which might have encouraged the co-venturers, or indeed myself, to conclude that Mr Polin had changed his position. In my assessment, the co-venturers were entitled to leave the meeting of 20 March in the belief that Mr Polin had not departed from his October 2002 refusal to accept the obligation to comply with all of the terms of the joint venture agreement and I find that they did have that belief after the meeting. The statements of Mr Lewis, which I find were made, reinforced and repeated Mr Polin’s repudiation of the joint venture agreement.
Friday 22 March, and the following weekend, passed without further event.
On Monday 24 March, Mr Park published his determination and this was collected by Mr Altson on the afternoon of that day, upon payment to Mr Park of his costs in the sum of $3,795. The determination was sent by fax to Mr Lewis at 4.40 pm on the same day. Pursuant to cl. 9.8 of the joint venture agreement, Mr Park’s costs were to be borne equally by Mr Polin and KVI. Mr Lewis nevertheless took no step to pay his client’s share of Mr Park’s costs. In his determination Mr Park decided that Mr Polin should:
§ pay one half of the project costs incurred to 26 February 2003. The amount of these costs in the sum of $34,231.55 was said to be undisputed.
§ provide the information reasonably required by the lending bank to enable the joint venture to obtain finance.
§ provide to KVI by 10 am on Monday 31 March 2003 his written acceptance of the Coles Myer lease offer. This was the extended date upon which, according to Coles Myer, the offer would lapse.
Mr Lewis said that he did not remember forwarding the Park determination at this time to his client. He took no steps to implement any of the directions of Mr Park. He did, however, telephone Mr Tampling two days later, on 26 March. Mr Tampling’s note simply records that Mr Lewis “confirmed the deal”. In particular, Mr Lewis took no step to provide written acceptance of the Coles Myer lease offer to KVI as Mr Park directed, or to Coles Myer as Mr Tampling had noted. He took no step to arrange for payment of the $17,115.78 for Mr Polin’s share of the joint venture costs. He made no contact with the lending bank.
And so things stood on Tuesday 25 March, Wednesday 26 March and Thursday 27 March. On this last date the solicitors for KVI wrote to Mr Lewis on behalf of Mr Polin an ultimatum letter. This letter was sent by fax to Mr Lewis’ office at 2.19 pm. The letter concludes with the following demands:
“1.By 3.00 pm on Monday, 31 March, 2003, pay KVI the moneys determined by Mr Park as owing by Mr Polin, plus $1,870.00, which is 50 % of the costs of Decision (inclusive of GST);
2.by 10.00 am on Monday, 31 March, 2003, provide written acceptance to KVI of the Coles Offer to Lease;
3.by 3.00 pm on Monday, 31 March, 2003, provide to KVI all of the financial information required to obtain funding of the Project on a non-recourse basis, all of which is detailed in KVI’s previous correspondence to you and in KVI’s submission to Mr Park also provided to you;
4.by 3.00 pm on Monday, 31 March, 2003, give an undertaking promptly to provide all required title documents and promptly to execute all security and other documentation reasonably required to enable the financing and execution of the Project to take place, including but not limited to mortgage documents and the Building Contract.
If all of the above are not furnished as and when specified above, KVI shall treat itself as at liberty to regard all of your client’s conduct as a repudiation of his obligations under the JVA and of the JVA itself, and shall take whatever action it may be then advised.”
As it happened, Mr Lewis had left the office at about 12 noon on that day and the letter did not attract any attention. He was absent from the office at a funeral on Friday 28 March and did not return until 11.30 am on Monday 31 March. For some reason, he did not, even then, read the letter until the afternoon, perhaps late in the afternoon, because he then made two telephone calls: the first to Mr Tampling and the second, five minutes later, to Heather Margaret Master, the solicitor for KVI, at 5.10 pm. In his call to Mr Tampling, Mr Lewis advised simply that the deal was proceeding. Mr Lewis said that he also told Mr Tampling, yet again, that he would confirm Mr Polin’s acceptance in writing.
The content of the conversation between Mr Lewis and Ms Master at 5.10 pm on 31 March is also in controversy. He told her that he had advised Mr Tampling of his client’s decision to proceed. She replied that this advice was required to be in writing. She enquired about the other requirements of the ultimatum letter to which he responded, in now familiar terms, that he did not have instructions. His version of the conversation, insofar as it referred to the payment of the project costs referred to in the determination is confusing and contradictory. Mr Lewis had made no attempt to arrange payment even of the statutory costs of the project which, he said, his client had agreed to pay on 19 March. I was reminded on the question of credit that Ms Masters is the wife of Mr Leadbeater. I accept nevertheless her evidence which was to the effect that Mr Lewis said he had no instructions upon the matters she enquired about and that he had no idea when he might get them. He did not seek any further time to comply with the ultimatum letter.
Following this conversation, KVI decided to terminate the joint venture agreement and on the following day, Tuesday 1 April, at 9.40 am its solicitors wrote to Mr Lewis accepting the repudiation of Mr Polin.
It is surprising that Mr Lewis made no response to this for six weeks, a month after KVI commenced this proceeding on 15 April 2003. On 14 May he wrote to the solicitor for KVI denying the repudiation and asserting that the letter of 1 April was itself a repudiation by KVI.
In its statement of claim KVI alleges that Mr Polin evinced an intention not to be bound by the terms of the joint venture agreement and that it was entitled to accept this repudiation on 1 April. The matters relied upon as giving rise to the repudiation are his non-compliance with the directions of Mr Park of 24 March and with the ultimatum letter of 27 March.
To this Mr Polin raises a number of defences. I shall concern myself only with those which were pursued in final submissions.
First, it was said that the decisions of Mr Park with respect to payment of project costs, provision of information to the bank and the acceptance in writing of this Coles Myer lease offer were, not part of his obligations under the joint venture agreement. I will not dwell on this. It is sufficient that there was a dispute between the parties about them and that this dispute was determined in accordance with cl. 9. The parties were bound by Mr Park’s determination. No party has sought to set it aside.
Second, it was put that there is in Mr Park’s determination no time specified for Mr Polin to make payment of the project costs, or to provide information to the bank. This is correct. These things must therefore be done within a reasonable time. The sum is not large and the requirements of the bank not severe. They were matters long outstanding. There is no evidence of particular difficulty in compliance. The evidence shows no attempt whatsoever by Mr Polin to comply. I am satisfied that the time given in the letter of 27 March was reasonable.
The requirement for written acceptance of the Coles Myer lease offer is to be complied with by 10 am on the deadline date. It is clear from the evidence that Coles Myer would have accepted a letter of approval by Mr Lewis on behalf of Mr Polin. In his conversations with Mr Tampling at the end of March the provision of such a letter was more than once requested or offered. In fact, there was no difficulty for Mr Lewis in giving such a letter; one was sent by him on 2 April. It was put that an oral acceptance on behalf of Mr Polin would suffice. I think not. Mr Park directed a written acceptance. This is what Mr Tampling and KVI expected, and were entitled to expect, particularly, having regard to the history of his attitude.
Third, it was put that the terms of the letter of 27 March affirmed the continuing existence of the joint venture agreement[1]. I do not read this letter as an affirmation. When the letter was sent the joint venture agreement was still on foot. The terms of the letter imposing, as they did, reasonable time limits for Mr Polin’s performance, and requiring execution of documentation were altogether appropriate in the circumstances where KVI had for some months failed to accept a course of repudiatory conduct and it might have been contended that time was not or had ceased to be of the essence with respect to the conduct the subject of the ultimatum.
[1]Defence, para 26(c)
Next, it was said that I should not infer an intention in Mr Polin not to proceed with the joint venture agreement as at 31 March for a number of reasons. The first was that, in the period 19 March to 2 April Mr Polin expressed or demonstrated his readiness to perform his obligations[2]. I have considered the evidence of the events up to and including 31 March. It will be apparent from my findings that I reject this contention. With respect to the letter of 2 April Mr Polin can derive little comfort from it. This is a letter sent by Mr Lewis to Coles Myer. Significantly, no copy was sent to KVI. In it, Mr Lewis says, rather disingenuously, that his client is prepared to accept the lease offer but that KVI “has decided not to proceed in a joint venture with our client”. He then adds that he will contact Coles Myer as soon as possible “in regard to a redevelopment of the site”. I do not read this letter as an unequivocal statement of Mr Polin’s intention to proceed with the joint venture agreement. As I have mentioned, Mr Polin took no step thereafter to attempt to revive the joint venture, at least for some months.
[2]Defence, para 28(b)
The second pleaded indication of the plaintiff’s determination to comply with his obligations has about it an air of audacity. It is that on 4 August 2003 he sent $15,734.25 to KVI being one half of the rates and taxes for the joint venture[3] . The sum was sent four months after the suggested termination. The sum does not represent a share of all of the outgoings, only those that Mr Polin said he would pay on 20 March. He still withholds some project costs which are mentioned in the determination and in the ultimatum letter. He has not paid his share of the costs of the determination. This payment shows a consistent attitude of complying only where it suits him to do so.
[3]Defence, para 28(c).
The third pleaded indication is that KVI was at all times aware that Mr Polin was old and ill and overseas. Much has been made of this in this litigation. I accept for present purposes that the facts are true although the evidence of his infirmity is far from satisfactory. He was, nevertheless, competent on 22 October 2003 when he spoke by telephone from Hobart. He was well enough to travel to and around USA in November 2002 and shortly thereafter. There is no evidence of mental deterioration between then and 1 April 2003. In any event, he was assisted by competent legal and accounting representatives in Australia at all relevant times.
It will be apparent from my recitation of the facts as I have found them, that Mr Polin repudiated the joint venture agreement again and again in the months prior to 1 April 2003. By his words on 22 October 2002 and those of his solicitor and attorney, Mr Lewis, and by his acts, including his conduct and his failure to act after the 20 March meeting, he evinced an intention not to proceed with the joint venture or to do so only on terms and in a manner which suited himself. Such protestations as were made by Mr Lewis of his determination to honour his obligations under the joint venture agreement were belied by the qualifications which were attached to them and by his conduct. This was his position on 31 March 2003 right up to and at the time of the telephone conversation between Mr Lewis and Ms Masters. I am satisfied that on 1 April 2003 KVI was entitled to accept his repudiation and to terminate the joint venture agreement and that it did so by its letter of that date.
It follows from all of this that I find that KVI lawfully terminated the joint venture agreement on 1 April by reason of Mr Polin’s repudiatory conduct. It further follows that KVI is entitled to damages, the amount of which will be determined.
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