Letizia Building Co Pty Ltd v Redglow Asset Pty Ltd - [2013] WASC 171

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: LETIZIA BUILDING CO PTY LTD -v- REDGLOW ASSET PTY LTD [2013] WASC 171

CORAM: BEECH J

HEARD: 8 - 10 APRIL 2013

DELIVERED : 9 MAY 2013

FILE NO/S: CIV 1032 of 2012

BETWEEN: LETIZIA BUILDING CO PTY LTD
Plaintiff
AND
REDGLOW ASSET PTY LTD
First Defendant
KENNETH JOHN COOK
Second Defendant
STEPHEN ANTHONY GUY
Third Defendant
MICHAEL DONALD LEADBETTER
Fourth Defendant
PAUL BUTLER
Fifth Defendant

Catchwords:

Contract - Intention to create legal relations - Statement made in angry tone in meeting - Whether intended to affect legal relations - Whether inferred agreement for mutual release - Whether gives rise to an estoppel - Turns on own facts

Legislation:

Nil

Result:

Claim for damages dismissed

Category: B

Representation:

Counsel:

Plaintiff:     Mr M L Bennett
First Defendant             :     Mr S Penglis
Second Defendant         :     Mr S Penglis
Third Defendant           :     Mr S Penglis
Fourth Defendant          :     Mr S Penglis
Fifth Defendant            :     Mr S Penglis

Solicitors:

Plaintiff:     Bennett & Co
First Defendant             :     Herbert Smith Freehills
Second Defendant         :     Herbert Smith Freehills
Third Defendant           :     Herbert Smith Freehills
Fourth Defendant          :     Herbert Smith Freehills
Fifth Defendant            :     Herbert Smith Freehills

Case(s) referred to in judgment(s):

Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191
Commissioner of State Taxation v Cyril Henschke Pty Ltd [2010] HCA 43; (2010) 242 CLR 508
Cooper v Kinsella [2011] NSWCA 45
DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423
Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95
Fazio v Fazio [2012] WASCA 72
Fitzgerald v Masters (1956) 95 CLR 420
Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641
Highfield Property Investments Pty Ltd v Commercial & Residential Developments (SA) Pty Ltd [2012] SASC 165
Holland v Wiltshire (1954) 90 CLR 409
Immer (No 145) Pty Ltd v Uniting Church (1993) 182 CLR 26
Kanjo Group Pty Ltd v Aurukun Shire Council [2012] QSC 352
Karacominakis v Big Country Developments Pty Ltd [2000] NSWCA 313
Ryder v Frohlich [2004] NSWCA 472
Sargent v ASL Developments Ltd (1974) 131 CLR 634
Societe Generale, London Branch v Geys [2012] UKSC 63; [2013] 2 WLR 50
Summers v Commonwealth (1918) 25 CLR 144
The Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) [2008] WASC 239; (2008) 39 WAR 1
Westpac Banking Corporation v The Bell Group Ltd (in liq) [No 3] [2012] WASCA 157
Wood Factory Pty Ltd v Kiritos Pty Ltd (1985) 2 NSWLR 105
Yule v Smith [2013] NSWSC 209

BEECH J:

Introduction

In late 2007 and in 2008, the plaintiff and the defendants were in a partnership. The purpose of the partnership was to identify and purchase a suitable property, and then construct commercial premises on it.
By November 2008, the property had been identified and purchased.
In January 2009, issues relating to the financing of the proposed project led to the plaintiff indicating that it would no longer be involved in the partnership. The parties agree that orders should be made for the taking of partnership accounts as at the date of dissolution. The parties agree that the partnership was dissolved by 9 April 2009, but have been unable to agree the date of dissolution. The defendants say it was 16 January 2009, while the plaintiff says it was 9 April 2009. Thus, in this action, I must determine the date of dissolution. I find that it was 9 April 2009.
It is not in dispute that, by November 2008, the parties had agreed that the partnership would contract with the plaintiff for the plaintiff to build the proposed commercial premises on a cost plus 15% basis.
In this action, the plaintiff sues on the agreement that it would contract with the partnership to build the commercial premises on the property on a cost plus 15% basis. The plaintiff claims that it was willing and able to perform that contract, but that the defendants failed to enter into the anticipated building contract.
The defendants say that:
(1)at a meeting on 7 April 2009, Mr Giuseppe Letizia (one of the directors of the plaintiff), on behalf of the plaintiff, said that the plaintiff wanted nothing to do with the construction of the commercial premises;
(2)the defendants accepted that statement, in that they did not thereafter request the plaintiff to build commercial premises on the property;
(3)consequently, the agreement between the plaintiff and the defendants for the plaintiff to build commercial premises on the property came to an end by mutual agreement;
(4)alternatively to (3), Mr Letizia's statement was a repudiation by the plaintiff of the agreement to enter into a building contract, which was accepted by the defendants; and
(5)in the further alternative, the defendants relied on what was said by Mr Letizia to their detriment, and so the plaintiff is estopped from asserting a claim to enforce the agreement to build.
The plaintiff denies that Mr Letizia made the statement at the meeting of 7 April 2009 relied on by the defendants. Further, the plaintiff says that, in any event, even if such a statement was made, it did not give rise to an agreement or a repudiation or a statement sufficient to found an estoppel. Properly understood in its context, the plaintiff contends that it was nothing more than an expression of frustration and was not intended, objectively, to affect the parties' legal relationship. The plaintiff also denies that the defendants relied on any statement by Mr Letizia to their detriment.
For the reasons that follow I accept the defendants' contentions outlined in (1) ‑ (3) and (5) above. It is unnecessary to determine the merits of contention (4).
The remainder of these reasons are organised as follows:
(a)The primary factual issue [11] ‑ [13].
(b)Findings of fact [14] ‑ [112].
(c)The defences [113].
(d)Inferred agreement for mutual release? [114] ‑ [140].
(e)The estoppel defence [141] ‑ [172].
(f)Termination by acceptance of repudiation? [173] ‑ [174].
(g)Date of dissolution [175] ‑ [186].
(h)Conclusion [187] ‑ [190].

The primary factual issue

At the commencement of the trial, the primary issues were whether Mr Letizia said words to the effect that he wanted nothing to do with the building contract; and whether those words in their context would be taken by an objective person as intended to affect the parties' legal relationship.
In closing submissions, the plaintiff accepted that the court should find that, at the meeting of 7 April 2009, Mr Letizia said that he wanted nothing to do with the defendants' building. The primary issue is whether, in context, what Mr Letizia said should be taken as objectively intended to affect the parties' legal relationship. Counsel for the plaintiff characterised the central issue as the legal effect of Mr Letizia's words spoken in anger.
Because context is important, I begin by making factual findings.

Findings of fact

Credibility

Mr Letizia and the plaintiff's accountant, Ms Rita Rasano, gave evidence for the plaintiff. The second, third and fourth defendants gave evidence. The defendants also called an officer of Westpac, Mr Shane Phillips.
Both counsel submit that credibility questions are not of crucial significance to the determination of the issues in this action. I agree.
Generally, where there is a conflict, I prefer the evidence of the witnesses called by the defendants to Mr Letizia's evidence.
In his tax invoice dated 30 June 2009 (exhibit 1A), Mr Letizia made a wildly exaggerated statement of the hours he had spent on the proposed developments for the partnership. For example, the invoice claims he spent 2,100 hours on two of the proposed developments during 2006. Notwithstanding his evidence to the contrary (ts 60 ‑ 81), I am satisfied that when he created the invoice he did not believe the truth of the statements in the invoice about the number of hours spent. Further, I am satisfied that he gave false evidence about how the invoice was created and whether it was sent to the defendants (ts 55 ‑ 58).
Generally, Mr Letizia's evidence was given in an unsatisfactory manner. At times he denied something that was in his written statement. See, for example, ts 93 and ts 96 ‑ 97. Often he argued with counsel rather than answer the question.

Background

This action concerns a partnership formed in late 2007. Some years earlier, there was a partnership between some of the parties.
In about 2000, Mr Letizia entered into a partnership with Mr Michael Leadbetter (fourth defendant), Mr Stephen Guy (third defendant), Mr Kenneth Cook (second defendant) and Mr Richard Wolozny.
The purpose of the partnership was to develop a commercial office building on Matlock Street, Mount Hawthorn. The plaintiff entered into a cost plus construction contract with that partnership.
That enterprise proved profitable.
By 2006, Mr Letizia and Mr Leadbetter were close friends.
By 2007, the second, third and fourth defendants and the director of the first defendant, Mr Ray Thompson, were the directors of Grange Insurance Solutions Pty Ltd and through Grange, conducted an insurance business.

The partnership

It is not in dispute that, by November 2007, the plaintiff and the defendants had agreed to enter into a partnership, the purpose of which was to identify and purchase a property and then construct commercial premises on it. It was intended that the partnership would sell or lease part of the constructed premises to Grange for it to conduct its business there.
Further, it is not in dispute that it was agreed that the plaintiff would hold a 45% share in the partnership; the first, second, third and fourth defendants would hold a 12.5% share; and the fifth defendant would hold a 5% share.
It is an agreed fact that the partners agreed that each partner would provide sufficient cash to pay the deposit and would obtain finance for the balance of the purchase price and the construction costs.
It is also agreed that the plaintiff would be responsible for identifying a suitable property.
The plaintiff pleads that, from the outset, it was a term of the agreement between the parties that the plaintiff would construct commercial premises on the property on a cost plus 15% basis: statement of claim [9.6]. The defendants deny that that was a term of the agreement or agreements made in 2007. However, the defendants plead that, by November 2008, it was agreed between the parties that the partnership would commission the plaintiff to build the commercial premises on the property on a cost plus 15% basis: defence [6(d)]. Nothing turns on whether that had been agreed earlier than November 2008.

Acquisition of the Property

Between the formation of the partnership and August 2008 the plaintiff identified three potential properties, being on:
(1)Oxford Street, Leederville;
(2)the corner of Bourke Street and Oxford Street, Leederville; and
(3)the corner of Edinboro Street and Scarborough Beach Road, Mount Hawthorn.
The plaintiff, on behalf of the partnership, investigated each of the properties' development potential, and the partnership resolved not to proceed with the purchase of any of the properties identified.
In about July 2008, the plaintiff identified a property at 375 ‑ 377 Charles Street, North Perth (the Property).
On 7 August 2008, the partnership entered a contract to buy the Property.

Arranging finance for the acquisition of the Property

Before entering into the contract, Mr Leadbetter received approval in principle from Mr Jason Wolfe, a senior relationship manager at Westpac, for a facility of about $300,000 for the purpose of the deposit on the Property (exhibit A4).
The second to fourth defendants and Mr Thompson (director of the first defendant) told Mr Letizia, in effect, that Grange would cover the payment of the deposit and sort it out later (exhibit 5A [46]).
In around August 2008, Mr Letizia told Mr Leadbetter that he (Letizia) had asked a financial adviser, Ms Lori Crews, to assist with arranging his finance to purchase the property (exhibit 5A [49]).
At Mr Letizia's request, Mr Leadbetter emailed a copy of the contract of sale to Ms Crews on 12 August 2008 (exhibit A8).
In early September 2008, Mr Leadbetter emailed Mr Wolfe of Westpac. In Mr Wolfe's response, he said that he had been awaiting some financial data from Mr Letizia's accountant which he had received the previous day (exhibit A9).
On or about 22 September 2008, Westpac provided an indicative financing proposal (exhibit A10).
The Westpac funding proposal stated that the plaintiff was required to provide its financial accounts as well as the schedule of estimated costs and timing to bring the development up to the development phase, including design and development approval.
A few days later, Mr Leadbetter emailed that proposal to Ms Crews.
On 30 September 2008 Mr Steve Joel of Westpac emailed Mr Leadbetter, stating that there were several matters outstanding from Mr Letizia's side, and that Ms Crews and he were working to resolve these in a timely way (exhibit A12).
In about late September or early October 2008, one of the Westpac officers told Mr Leadbetter, in effect, that Westpac then required more security in that it was only prepared to take 60% of the value of the Property, referring to the global financial crisis (exhibit 5A [60]).
The partners provided statements of assets and liabilities to Westpac in October (exhibits A14, A15, A16, A17, A18).
In October 2008, Mr Shane Phillips, a senior relationship manager at Westpac, said to Mr Leadbetter that Westpac would not approve finance for the purchase of the Property unless Mr Letizia could come up with the shortfall of $160,000 as security for the plaintiff's 45% interest in the Property. Mr Guy and Mr Leadbetter agreed to lend the plaintiff that sum (exhibit 5A [70] ‑ [71]; exhibit 6A [15] ‑ [17]). See also exhibit A25.
On 20 October 2008, Westpac provided a letter of comfort indicating approval of finance for the purchase of the Property, subject to execution of documentation (exhibit A21).
In late October 2008, there was email correspondence between Mr Phillips of Westpac and Mr Leadbetter (exhibit A23). In the email, Mr Phillips said that such of the loan as can be serviced by the lease income should be secured by the building, and the remainder of the loan split amongst the partners, secured by each individual's assets and serviced from his own sources. The email stated that that meant two questions arose. First, to what extent does the lease income support a level of debt? Secondly, to what extent can the partners individually support the level of debt that cannot be serviced by the proposed lease income? The email raised the prospect of the need for a level of presales to reduce individual debt, if capacity to service individual debt could not be demonstrated.
On 24 October 2008, Mr Leadbetter circulated that to the partners (exhibit A24).

November 2008; settlement of the Property

Settlement of the Property occurred on 14 November 2008.
On 14 November 2008, there was a meeting of the partners. The accuracy of the minutes of the meeting was not challenged. The minutes record that it was agreed by all partners that the plaintiff would be commissioned to undertake the project on a cost plus 15% basis and that Mr Letizia was to provide an estimate of construction costs based on preliminary drawings (exhibit A26). The minutes also record that:
(a)Mr Leadbetter advised that settlement had been delayed by Westpac requiring additional security from Mr Letizia, who said that that had been sorted out;
(b)Mr Leadbetter was to commence discussions with Westpac about finance for the building phase of the project; and
(c)Mr Leadbetter requested that all partners sign a letter authorising him to act on their behalf when dealing with the bank, local authorities and government departments. All partners agreed to sign.
In late November 2008, the partnership prepared an application for development approval of the Property, which was lodged in December 2008 (exhibits A27, A28).

Finance discussions in January 2009; Mr Letizia agrees to transfer the plaintiff's interest in the partnership to the other partners

Mr Leadbetter's evidence, which I accept, is that in late December 2008 or early January 2009, Mr Letizia said to him that he was having trouble getting finance approval for his proportion of the construction phase of the property. As a consequence, Mr Leadbetter spoke to the other partners. Mr Cook suggested that they approach Mr Letizia to see if he wanted to reduce the plaintiff's 45% share to assist in finding finance approval (exhibit 5A [90] ‑ [91]).
Mr Letizia says that, in January 2009, Mr Leadbetter said to him words to the effect that:
(a)the other partners wanted a larger share of the partnership;
(b)Westpac would not finance the construction of the commercial premises with the plaintiff holding a 45% share of the partnership; and
(c)Westpac wanted the plaintiff to give 25% of his share to the other partners (exhibit C [39]).
Mr Leadbetter denies saying that the other partners wanted a larger share of the partnership. He says that he told Mr Letizia words to the effect that if he was struggling to raise the funds that he could reduce the plaintiff's 45% share to a level that he and the bank were comfortable with (exhibit 5A [92]).
I accept Mr Leadbetter's evidence about what was said. I find that the other partners did not actually want a larger share of the partnership. Rather, when difficulties emerged for Mr Letizia, the other partners were willing to accommodate him by taking over some (or all) of the plaintiff's share of the partnership.
In the first half of January 2009, Ms Crews said to Mr Leadbetter that she wanted to arrange a meeting with the partnership and Westpac representatives to discuss finance for the project. She said she wanted to involve Westpac head office representatives as they may be able to provide a better deal (exhibit 5A [95]).
On 12 January 2009, Mr Leadbetter sent an email to Ms Crews. The email stated that they needed to arrange a meeting with Westpac to discuss the next phase of the project, saying that he wanted to convene the meeting as soon as possible because they could not afford any long delays with the building process. The email also said that, as previously discussed, Mr Letizia was under the impression that he does not need to produce any further security, which Mr Leadbetter was not convinced was correct (exhibit A29).
On 15 January 2009, there was a meeting at the offices of Grange between all of the partners, Mr Phillips and Mr Michael Stavretis, a property specialist at Westpac.
Mr Leadbetter says, and I accept, that at the meeting:
(a)Mr Stavretis said words to the effect that Westpac was not at the stage where it could approve any finance because it still had questions over some of the partners' ability to come up with security for the project;
(b)he also said that he thought that the partners were underestimating the cost of constructing the commercial premises;
(c)Ms Crews said that the Property was in a good location and was commercially zoned and would be commercially viable;
(d)someone on behalf of the partnership said that Mr Letizia was responsible for 45% of the cost of building and so had a strong interest in keeping the costs down;
(e)Mr Stavretis said that, as a matter of policy, the bank was not keen on owner developers being builders and, thus, drawing building fees from the bank loan and using that to service the loan (exhibit 5A [97] ‑ [99]).
About five minutes after the meeting, Mr Stavretis telephoned Mr Leadbetter and said that he wanted to speak to him. Mr Stavretis came back to Grange's offices. Mr Stavretis said words to the effect that there was no way the project was going to go ahead with Mr Letizia as the builder. Mr Leadbetter asked Mr Stavretis to put something in writing and explain the reasons for this 'decision' (exhibit 5A [100]).

Immediately after that, Mr Leadbetter called another meeting with Messrs Thompson, Cook, and Guy and told them what Mr Stavretis had said. They agreed that Mr Leadbetter should inform Mr Letizia, and that they would all increase their percentage interests to take up the plaintiff's interest. They also agreed that the plaintiff should still build the premises (exhibit 5A [101] ‑ [102]).
On 16 January 2009, Mr Stavretis sent a lengthy email to Mr Leadbetter (exhibit A30). Among other things, the email:
(a)referred to the meeting the previous day;
(b)referred to the negative of having an owner builder with questionable resources;
(c)stated that the use of an owner builder with questionable resources would be a big detriment, saying that a strong third party builder with a fixed price contract was required;
(d)included the following:
Long story short, a partnership involving current directors/shareholders of Grange Insurance Services supported by the operating business EBITDA with:
• alternate security of $1.7 million
• minimum presale GRV of $5.5 million achieved
• third party builder on fixed price contract
is the only way this property development will get traction.
That last proposition spells out that from Mr Stavretis' perspective the plaintiff could not be involved in the partnership. It also asserts that having a third party builder on a fixed price contract was the only way the development would get traction.
On 16 January 2009, after receiving the email of that date, Mr Leadbetter went to Mr Letizia's office to speak to him. It is an agreed fact that at this meeting Mr Letizia, on behalf of the plaintiff, agreed to transfer the plaintiff's 45% share in the partnership to the defendants. It is also agreed that during the meeting, Mr Leadbetter reaffirmed that the plaintiff would still construct the commercial premises on a cost plus 15% basis.
I accept Mr Leadbetter's evidence that at that meeting:
(a)he said to Mr Letizia that Mr Stavretis had met with him after the meeting of 15 January and that Westpac had a problem with him not having fixed up his security, and with having the builder and developer as one entity;
(b)in response, Mr Letizia said that Westpac was trying to send him to the wall;
(c)Mr Leadbetter agreed that Westpac had shifted the goal posts;
(d)Mr Letizia said that, for the good of the partnership, he would resign but said that he would still like to build the building;
(e)Mr Leadbetter said in response that the other partners would still like Mr Letizia to build the building, but they had to get over the banks hurdles regarding the fixed price contract;
(f)in response, Mr Letizia said he did not do fixed price contracts;
(g)Mr Leadbetter said that they would try to convince the bank to accept a cost plus contract, but the bank wanted certainty; and
(h)Mr Letizia said he wanted his name off the Property and the security released quickly so he could get on with his life (exhibit 5A [105] ‑ [110]).
At the meeting Mr Letizia handed his file (exhibit 2) containing partnership documents to Mr Leadbetter, saying 'Here's the file. Stick them up your … arse' (ts 95); see also exhibit C [48] ‑ [49].
Mr Leadbetter returned to his offices and told the first, second and third defendants of his discussion with Mr Letizia, including that Mr Letizia had resigned from the partnership. He also told them that Mr Letizia would still like to build the building (exhibit 5A [111]). Mr Guy said, and Mr Leadbetter agreed, that they should keep Mr Letizia as the builder (exhibit 6A [24]).
The remaining partners discussed the increases in their percentages of the partnership (exhibit 5A [112]).
At 3.41 pm on 16 January 2009, Mr Leadbetter sent an email to Mr Phillips (exhibit A32).
The email stated as follows:
Not sure if you have actually spoken to [Mr Stavretis] but he revisited our office late yesterday to express the bank's concern over [Mr Letizia's] ability to meet the security criteria for the building phase of the project. He followed this up with an email which he copied you in.
At the conclusion of the meeting it was obvious that we were left with no alternative but to advise [Mr Letizia] that the project was unable to proceed with his involvement.
With this I visited [Mr Letizia] to deliver the news and he has agreed to relinquish his share in the project for the good of all concerned.
To ease the situation we have asked [Mr Letizia] and he has agreed to build the structure. I am aware that this is not ideal from the bank's point of view as [Mr Letizia] builds on a cost plus basis but I honestly think that with the cost of materials and labour on the decline, cost plus is a far better way to approach the construction.
The email also stated the new percentages of the partners.
On 19 January 2009, Mr Leadbetter sent an email to an officer of the Department for Planning and Infrastructure. The attachments to the email stated, in effect, that the plaintiff was one of the partners. See, for example, the letter of authority from 'all' partners signed by, among others, Mr Letizia (exhibit A33).
On 20 January 2009, Mr Leadbetter added his comments to Mr Stavretis' email of 16 January 2009. Later that day, Mr Stavretis added further comments (exhibit A35). To Mr Stavretis' statement in the email of 16 January 2009 that there should be a third party builder on a fixed price contract, Mr Leadbetter responded that he could not agree, given the current economic conditions, that fixed price was the way to go, saying that cost plus makes more sense. Mr Stavretis commented that banks do not like the uncertainty but that he agreed with the thought process.
In Mr Stavretis' email of 16 January 2009, he had stated that having the plaintiff on a cost plus arrangement, not fully documented at a rate per square metre of $2,350, would work against the partners. Mr Leadbetter responded that he assumed it was not an issue as the bank would work on quantity surveyor figures anyway. Mr Stavretis stated in his final comments that that was correct.
On 21 January 2009, Mr Leadbetter communicated with Mr Phillips of Westpac about taking steps to have the plaintiff's name taken off the title and the security released (exhibit A36).
On 21 January 2009, Mr Letizia received a cheque from the partnership to reimburse him for the invoices he had paid in relation to the Property (exhibit C [54]; exhibit A37).
In late January 2009, Mr Leadbetter took other steps towards transferring the Property so that the plaintiff was no longer one of the registered proprietors (exhibits A38, A39, A40).

February ‑ March 2009; Mr Letizia demands $100,000

On 4 February 2009, Mr Leadbetter emailed the other defendant partners attaching a spreadsheet provided by the bank. The email stated that Mr Letizia was of the opinion that he would be able to shave at least 10% off the figures, but the bank would not accept it without substantiation (exhibit A41).
Mr Letizia says, consistently with this, that in discussions in this period he told Mr Leadbetter that he was trying to shave at least 10% off the total construction costs (exhibit C [55.2]).
Mr Leadbetter's email of 4 February 2009 to the other defendant partners also included the following:
Regardless of what we calculate the bank will insist that we engage a [quantity surveyor] to provide an estimated construction cost. We cannot do this until we have detailed drawings which cannot happen until the Town of Vincent issue a [development approval].
In that regard, we have met with the [Town of Vincent] and alterations required by the Town have now been completed. We also seem to be making progress with the easement issues and we are hopeful that this will be sorted in the next fortnight. Once the easement is sorted the plan can then be presented to the [Town] for council approval.
The next stop is to have the detailed drawings completed. This should take approximately 10 to 12 weeks and once completed the detailed plans will be resubmitted to the Town of Vincent for building approval.
Permission to demolish the existing premises and start the new building should happen a week or two after submission of final plans.
Conservatively the estimated time of commencement is mid to late June 2009 (but hopefully sooner).
As submitted by the plaintiff, this reflects an understanding on the part of the defendant partners that progress on the construction could not be made before development approval. Only after development approval was granted would detailed drawings be done, which would then be submitted for building approval.
Mr Letizia also says, and I accept, that from January to April 2009 he chased up Mr Leadbetter about the repayment of his money and the release of his properties. He says that Mr Leadbetter's response was to the effect that the partners had to apply for a different form of loan, and until that was approved the properties would not be released (exhibit C [55.1]).
Mr Leadbetter met with Mr Letizia on 15 February 2009 (exhibit 5A [122] ‑ [123]). At the meeting:
(a)Mr Letizia said words to the effect that he wanted his $100,000 back, and asked what the hold up was with releasing his security;
(b)Mr Leadbetter said words to the effect that 'the accounts were the accounts' and it was not a case of simply getting $100,000 back. Rather, Mr Letizia would get tax deductions; and
(c)Mr Letizia said he did not want tax deductions, he wanted his $100,000 back.
On 16 February 2009, Mr Leadbetter drafted an email to the defendant partners summarising the discussion of the previous day. He did not send the email, but retained it for his records. I accept that it accurately records what was said on 15 February 2009. He had a meeting with the defendant partners and outlined the discussion that he had had in accordance with the file note (exhibit 5A [124]).
The file note (exhibit A42) states, among other things:
(a)Mr Letizia was bitter towards Westpac and Ms Crews;
(b)Mr Letizia was resolute in that he wanted his money back;
(c)when Mr Leadbetter said that this was not possible, Mr Letizia's response was that 'you can do as many books as you like but I want my money back' (saying that some expletives had been deleted);
(d)Mr Leadbetter said that the books would be done after settlement, and suggested Mr Letizia seek legal advice about the matter;
(e)Mr Letizia said that he would seek legal advice about recovering money from the bank or Ms Crews or both;
(f)the email identified that matters that would need to be considered included that if Mr Letizia sued Westpac then there was no way they would fund the project with him as the builder, if he was no longer involved the potential pre‑sales may disappear, and the overall development cost may end up being higher.
In my view, exhibit A41 and exhibit A42 demonstrate that in February 2009 the intention of the defendants was that the plaintiff would construct the premises on a cost plus basis. Notwithstanding what Mr Stavretis had said in January, the defendants had not given up on that approach. To the contrary, they were continuing to work on the basis that the plaintiff would be the builder. That is apparent from the statement in Mr Leadbetter's file note of 16 February 2009 about the things that would need to be discussed if Mr Letizia decided to go ahead with his threat to sue. Only then would the plaintiff not build, raising the issues identified in the final part of that file note.
Shortly after the meeting of 15 February 2009 between Mr Letizia and Mr Leadbetter, at Mr Leadbetter's request, Mr Guy telephoned Mr Letizia. Mr Guy said words to the effect that the profit and loss statement indicated that Mr Letizia would be able to declare a loss in his accounts because of the expenses that the partnership had incurred (exhibit 6A [27]). See also ts 215 ‑ 216.
On 18 March 2009, Mr Leadbetter sent an email to Mr Phillips at Westpac (exhibit F1). Mr Leadbetter's email:
(a)stated that they were still attempting to remove Mr Letizia from the title so Westpac could release his properties and Mr Letizia could get on with his life; and
(b)asked whether Westpac was ready to settle once confirmation of the value of the block was received from the State Revenue Department.
Mr Phillips responded later that day (exhibit F2). Mr Phillips' email stated that:
(a)the documents would be prepared by 24 March for signing;
(b)because it was a new loan, the transaction had to be re‑documented with associated changes in the interest rate and fees;
(c)the interest margin would increase as would the line fee, and that an establishment fee of $5,000 would be charged; and
(d)he understood the need to release Mr Letizia's security and assured that the bank was treating it as a matter of urgency.
On 24 March 2009, the conditional development approval was granted for the development of the Property (exhibit A44).

The meeting of 7 April 2009

On 7 April 2009, there was a meeting attended by Mr Letizia, Ms Rita Rasano (Mr Letizia's accountant), Mr Leadbetter, Mr Guy and Mr Phillips of Westpac. The effect of what was said at the meeting is the central issue in the action.
Before the meeting, the partners' settlement agent, Ms Emma Foster, sent Mr Leadbetter an email. The email stated that Mr Letizia had been on the phone very agitated, and ended up hanging up on her. The email also stated that settlement was booked for 9 April 2009, asked how much money Mr Letizia was to get, and whether Mr Phillips at Westpac was going to disburse that money to him (exhibit A47).
Half an hour later, also before the meeting, Mr Leadbetter responded to Ms Foster's email (exhibit A47). In his email, Mr Leadbetter said that:
(a)he had also just had a similar conversation with Mr Letizia;
(b)Mr Letizia was not entitled to any money and that was what Mr Letizia could not understand;
(c)any cash put into the deal had been spent on stamp duty and other purchase costs;
(d)Mr Letizia was entitled to a tax deduction for those incurred costs, but not to his money back;
(e)Mr Letizia could not see that he had owned the block for six months and now felt that he could walk away from his obligation to cover the costs incurred in that period;
(f)Mr Letizia actually owed the other partners money as a result of his withdrawal and they had decided not to ask him for the additional funds; and
(g)besides legal action, Mr Letizia was also threatening to delay settlement. Mr Leadbetter asked whether that was possible.
I accept the plaintiff's submissions that this email reflects Mr Leadbetter's thinking and concerns at the time.
About 15 minutes later, before the meeting, Ms Foster responded in the following terms:
I cannot see how he would be able to stop settlement but you know lawyers - he would have to commence legal action against you today or tomorrow to stop settlement for Thursday and that would delay him freeing up his assets for a longer period of time.
I guess you will be looking for a new builder !!!!!
… (exhibit A47).
Mr Leadbetter denied that Ms Foster's statement that the defendants would be looking for a new builder reflected Mr Leadbetter's thinking before the meeting of 7 April 2009 (ts 152). I accept Mr Leadbetter's evidence in this regard.
Mr Leadbetter says that the meeting occurred at Mr Letizia's request (exhibit 5A [127]).
In the end, in closing submissions, counsel for the plaintiff did not put submissions against adoption of Mr Leadbetter's evidence of what happened at the meeting. In any event, I accept Mr Leadbetter's evidence on that topic. It is broadly consistent with the evidence of the others at the meeting, although Mr Letizia denies saying 'I want nothing to do with your fucking building'. Counsel for the plaintiff rightly accepted that I should find that Mr Letizia made that statement. It is supported by all the evidence of the other four people at the meeting, including Ms Rasano (ts 128). It is also not in issue that, in saying those words, Mr Letizia acted on behalf of the plaintiff.
I accept Mr Leadbetter's evidence that the following occurred at the meeting:
(a)Mr Letizia appeared to be in an agitated state from the beginning of the meeting;
(b)Mr Letizia opened the meeting by saying that he had called the meeting because he wanted to discuss getting his money back;
(c)Mr Letizia said that because he had to withdraw from the project the other partners owed him $100,000, and if they did not give him $100,000, he would not allow the property transfer to go ahead;
(d)Mr Guy said words to the effect that he was not entitled to $100,000 because he was responsible for 45% of all expenses incurred since the partnership purchased the Property, and that the partnership would account to him when they did the accounts;
(e)Mr Guy gave Mr Letizia and Ms Rasano a copy of his spreadsheet and went through some of the payments made;
(f)Mr Letizia said in a stern and aggressive way that he did not care, he 'just wanted his fucking $100,000 back';
(g)Mr Leadbetter asked Ms Rasano to explain to Mr Letizia that he would have a tax deduction and that he was not entitled to his $100,000 back because there had been costs and interest incurred. In response, Ms Rasano looked at him, shook her head and shrugged her shoulders, not saying anything;
(h)when Mr Phillips tried to say something about the position of Westpac, Mr Letizia interrupted and said that he held Westpac responsible. Mr Letizia said that he had sought legal advice and he had to sue the partnership in order to get to Westpac;
(i)Mr Leadbetter said to Mr Letizia that if he sued the partnership he would not be able to build the building, and that he would be walking away from a large building contract;
(j)in response, Mr Letizia said 'I want nothing to do with your fucking building'; and
(k)at this stage, Mr Leadbetter said to Mr Guy that the meeting was going nowhere, and they left (exhibit 5A [128] ‑ [138]).
Later on 7 April 2009, Mr Leadbetter sent an email to Ms Rasano, attaching a spreadsheet. The email stated that the attachment should allow Ms Rasano to present Mr Letizia with an idea of the tax deduction due. The email asked Ms Rasano to convince Mr Letizia not to pursue the litigation option, as it would only end up costing Mr Letizia dearly and that that was not what anyone wanted (exhibit A45).
Later on 7 April 2009, Mr Leadbetter sent a further email to Ms Foster saying:
Myself and Steve met with Joe and his accountant earlier today and whilst his accountant now understands the position, Joe refuses to accept that he will not be getting his money back.
Not sure what will happen now. Spoke to Shane Phillips and as far as he is concerned settlement is due on Thursday. So I suppose we carry on regardless (exhibit A46).

The parties' conduct after the meeting

On 9 April 2009, the Property was transferred into the defendant partners' names. Thus, it is apparent that between then and the meeting of 7 April 2009 Mr Letizia caused the plaintiff to execute the transfer, notwithstanding Mr Letizia's threat not to do so unless he was paid the $100,000 he had demanded.
It is an agreed fact that the defendants did not contact the plaintiff in relation to construction of the commercial premises, and the plaintiff did not contact any of the defendants in relation to construction of the commercial premises. Further, the evidence is that the parties did not communicate in any way after the meeting of 7 April 2009.
Mr Letizia says that some months later he was telephoned by Mr Louis Marchesani (the designer employed by the partnership), who told him that the remaining partners wanted to go to tender for the construction contract (exhibit C [65]).

Mr Letizia did not take any step after he had that discussion with Mr Marchesani. In particular, he did not contact the remaining partners or inquire about the building contract.
In September 2009, Mr Leadbetter sent an email to Mr Marchesani listing builders that the partnership wanted to approach for quotes on the construction on the Property (exhibit A49). The email stated that following a meeting with the bank, they had decided that 'quotations should be sought on a fixed price basis'. No witness had any real recollection about such a meeting (ts 171 ‑ 172, 240, 262 ‑ 263).
In closing submissions, counsel for the plaintiff invited acceptance of the evidence of Mr Cook given in cross‑examination to the effect that the partners discussed the possibility of offering to the plaintiff the opportunity to tender in September 2009 (ts 263 ‑ 266).
I do not accept that any such discussions occurred. Mr Cook's evidence is inconsistent with the evidence of Mr Guy, who said that the partners never discussed whether to contact Mr Letizia (ts 228). Further, Mr Leadbetter would have been party to any such discussions. He said that it never occurred to him to speak to Mr Letizia at this stage (ts 173).
Further, Mr Cook's evidence on this topic was often, especially initially, expressed in terms of what may have occurred. When he was asked whether he suggested that the opportunity to quote should be offered to the plaintiff, Mr Cook said that 'I think it may have been discussed'. When he was asked who raised it, he said it was 'probably' him (ts 263). He continued to talk in terms of what may have been the case on a number of occasions. In the course of this part of Mr Cook's evidence, I formed the distinct impression that, in effect, he rose to the challenge from counsel for the plaintiff in elevating what he initially said may have happened into what he eventually said had happened.
Further, and in any event, the serious errors in Mr Cook's witness statements lead me to treat any evidence of Mr Cook, contradicted by other witnesses, with considerable caution. Mr Cook signed three witness statements that were, on his own version of events, seriously wrong (ts 242 ‑ 246).
In April 2010, the reconstituted partnership entered into a building contract (exhibit A51).
On 28 June 2010, solicitors for the plaintiff sent Mr Leadbetter a notice of confirmation of dissolution of the partnership (exhibit A50). That notice recited that, by no later than 10 February 2009, the plaintiff had given notice of its intention to retire from the partnership. The notice requested the taking of accounts of the partnership.

The defences

The defendants submit that what Mr Letizia said on 7 April 2009, and the defendants' response to it, gives rise to three defences:
(1)an inferred agreement for mutual release;
(2)repudiation by the plaintiff which was accepted by the defendants; and
(3)the defendants acted in reliance on what Mr Letizia said, giving rise to an estoppel.
I begin with the inferred agreement defence.

Inferred agreement for mutual release?

The applicable general legal principles were not in dispute.

Legal principles

When the conduct of the parties reveals that neither intends that the contract be further performed, the parties will be regarded as having so conducted themselves as to abandon or abrogate the contract: DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423, 434; Summers v Commonwealth (1918) 25 CLR 144, 151 ‑ 152; Ryder v Frohlich [2004] NSWCA 472 [135]; Fazio v Fazio [2012] WASCA 72 [71].
The inference of abandonment may be drawn when an 'inordinate' length of time has been allowed to elapse during which neither party has attempted to perform, or called upon the other to perform, the contract between them. Thus, 'each party is entitled to assume, from the long continued ignoring of the contract on both sides, that the matter is off altogether': Fitzgerald v Masters (1956) 95 CLR 420, 432; Ryder v Frohlich [135].
The significance of the length of time during which both parties take no step in relation to the contract depends on all the circumstances: Ryder v Frohlich [137]. Those circumstances include the nature of the contract, and any manifestations of intention between the parties.
The abandonment of a contract by inferred agreement does not depend on the subjective intention of the parties, but upon whether their conduct, including both acts and omissions, viewed objectively, manifests an intention to discharge the contract: Fazio [74].
A contract of this type, like any contract, may be inferred in the absence of an identifiable offer and acceptance: Fazio [188].
The contract may be inferred from what the parties did, as well as from what the parties did not do or say. Thus, the parties' dealings are relevant both 'for what was said and not said': Fazio [189].
The question is whether the parties conduct, viewed objectively, reveals a tacit understanding or agreement, or a manifestation of mutual assent, which evinces an intention to create (here affect) legal relations: Fazio [190] ‑ [191].
The test of whether what Mr Letizia said should be taken as intending to affect the plaintiff's legal relationships with the partners is whether a reasonable person in the position of the partners would consider that Mr Letizia intended to be bound by what he said, taking into account all of the circumstances: Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95 [24] ‑ [25].
Conduct of the parties subsequent to the date postulated of a contract may be considered in deciding whether a contract has been formed: Fazio [193] ‑ [195].

The plaintiff's submissions

The plaintiff submits that the following circumstances, taken together, sustain the conclusion that, in its context and in all the circumstances, what Mr Letizia said at the end of the meeting of 7 April 2009 was not objectively intended to affect the parties' legal relationships:
(1)the subject matter of the meeting, and of substantially all of the discussion at the meeting, was not the building contract, but the plaintiff's claim to payments upon his withdrawal from the partnership;
(2)Mr Letizia's statement was a direct response to the assertion by Mr Leadbetter that the plaintiff was not entitled to anything;
(3)that assertion by Mr Leadbetter was wrong in fact and in law in that, at the least, the plaintiff was entitled to a proper account being taken;
(4)the statement was evidently made in the heat of anger, not suggestive of an intention to create or affect legal relations;
(5)to the knowledge of all parties, the building contract was still some months away. Detailed plans had to be prepared and building approval to be obtained which would not be contemplated for some time;
(6)the response of the defendants, and Mr Leadbetter in particular, was not to accept any repudiatory statement or offer from Mr Letizia. Rather, it was to say that they were not getting anywhere and to leave the meeting; and
(7)any acceptance by the defendants of what Mr Letizia said must be inferred, since it was not expressed. That could have been inferred only from conduct that did not occur until September 2009. Well before then the plaintiff's position had evidently changed because the plaintiff had executed the transfer of the Property within a day or so after the meeting of 7 April 2009.

Inferred agreement: analysis and conclusions

So far as they go, I accept the first three, fifth and sixth of the points made by the plaintiff. As to the fourth, both parties relied on the statement by de Jersey CJ in Kanjo Group Pty Ltd v Aurukun Shire Council [2012] QSC 352:
That a sentiment is expressed in anger does not necessarily exclude its being an intended statement of position. That may be more so where the statement is made in a commercial situation by contrast with a personal or domestic situation. But that is a very general suggestion, and the situation needs to be assessed by reference to the circumstances peculiar to it [25].
I respectfully adopt those general observations. But, in the end, as his Honour made clear, every case must be assessed by reference to its own circumstances.
As to the last of the plaintiff's points, while the plaintiff's execution of the transfer might be seen in a general sense as a softening of Mr Letizia's position at the meeting, that conduct did not relate to the building contract. Rather, it was to give effect to his agreed departure from the partnership. Further, I accept that, as Mr Leadbetter said, Mr Letizia could be seen, objectively, to have his own self‑interest in mind in executing the transfer (ts 164, 167).
In my view, the considerations relied on by the plaintiff do not sustain the conclusion that, in the circumstances, what Mr Letizia said was not objectively intended to affect the parties' legal relationships. For the reasons that follow, I find that Mr Letizia's statement was objectively intended to affect the parties' legal relationships.
First, Mr Letizia's statement was not made in the course of a casual conversation. It occurred in the course of a formal meeting which had been arranged at his request. The meeting was attended not only by some of the partners, but also by third parties, namely Ms Rasano and Mr Phillips.
Secondly, the subject matter of the discussion was not of a personal or domestic nature; it related to the commercial relationship between the parties.
Thirdly, what Mr Letizia said related directly to the contemplated building contract between the parties. In effect, he was saying he wanted nothing to do with the building contract that the parties were, up to then, intending be entered between them.
Fourthly, the issue about the plaintiff's entitlements as a partner had been simmering between the parties since January. Mr Letizia had repeatedly made claims for $100,000 to be paid to him, and this had been met with a response that he was not entitled to that, but only to whatever the ultimate accounts revealed. He had already manifested, before the 7 April meeting, a significant discontent about that. Mr Letizia's statement came in direct response to Mr Leadbetter's suggestion that, in effect, he should accept the position about the plaintiff's entitlements as a partner because the plaintiff would make a profit on the building contract.
Fifthly, Mr Letizia's statement was not a comment made in passing in the course of the meeting. Rather, it brought the meeting to an end. Moreover, it brought to an end the relationship between the parties, some of whom had been long term friends.
Sixthly, in my view, the fact that Mr Letizia was evidently angry when he spoke, and spoke in blunt terms, does not diminish the objective reasonableness of taking Mr Letizia's statement as meaning what he said. As Mr Letizia accepted, speaking bluntly with liberal use of swear words was by no means out of character for Mr Letizia (ts 94). There is evidence of earlier meetings in 2009 in which Mr Letizia swore, in the course of stating his position. At times, in his cross‑examination, Mr Letizia said 'bullshit' to express his disagreement with a proposition put to him (ts 101, 104). There is no evidence that Mr Letizia had, prior to 7 April 2009, displayed to his partners any propensity to say things in the heat of the moment that he did not mean.
I find that taking these matters into account, in all the circumstances, Mr Letizia's statement at the meeting was objectively intended to affect the parties' legal relationships. In my view, the defendants could have responded, then and there, by accepting that position, with contractual effect.
To my mind, the parties' subsequent conduct reinforces this view of what was said by Mr Letizia at the meeting. Further, in my view, the parties' subsequent conduct sustains the conclusion that, by September 2009, there was an inferred agreement for them to mutually abandon the agreement that the plaintiff would construct the building on the Property.
Mr Letizia did not take any step to withdraw the statement that he had made. There was no further communication between the parties. The fact that there was no further communication between the parties reinforces the conclusion that, objectively, as between the parties, Mr Letizia meant what he said at the meeting.
The defendants also point to the fact that when Mr Letizia learned, from Mr Marchesani, that the defendants were putting the building contract out to tender on a fixed price basis, Mr Letizia did not do anything, and did not make a complaint to the defendants. While that evidence supports an inference about Mr Letizia's subjective intentions, those subjective intentions are not relevant for present purposes. I do not consider this evidence is relevant to an objective assessment of the parties' intentions, because it does not reflect or reveal any communication between the parties.
In my view, as at April 2009, it is to be inferred that all parties understood that the building contract would be progressed once detailed drawings were done. Because it was understood that the building contract could not progress until detailed drawings had been completed, a short period of non‑communication between the parties was consistent with an intention that the contract remain on foot. Once detailed drawings were completed, if the contract were on foot, it was to be expected that the parties would have been in touch, for example, to progress the estimation of costs for the purpose of obtaining finance, and in relation to the building contract itself. However, over the course of many months following the meeting of 7 April 2009, neither the plaintiff nor any of the defendants made any attempt to contact the other in relation to the construction of the premises on the Property or in relation to any building contract. In my view, against the backdrop of what Mr Letizia had said on 7 April 2009, that inaction sustains a conclusion that the parties had agreed to abandon or abrogate the contract between them.
That conclusion is sufficient to dispose of the action. However for the sake of completeness, I will state my conclusion in relation to the estoppel defence.

The estoppel defence

The parties' contentions

The defendants plead that:
(a)Mr Letizia, on behalf of the plaintiff, said at the meeting of 7 April 2009 that the plaintiff wanted nothing to do with the building contract going forward;
(b)in reliance on that statement, the defendants caused a tender to be issued to a number of builders, and entered into a contract with a third party for the construction of the building;
(c)the plaintiff, through Mr Letizia, knew after 7 April 2009 that the defendants were intending to proceed with the construction of a commercial building and would call for tenders from a number of builders other than the plaintiff;
(d)the plaintiff did not at any time before the commencement of these proceedings inform the defendants that, so far as it was concerned, the defendants were still contractually bound to the plaintiff with respect to the construction of the commercial building on the Property; and
(e)had the plaintiff done so prior to the defendants entering into a contract with a third party to construct the building, the defendants would have continued discussions with Westpac with a view to obtaining Westpac's approval to finance construction of the building on a cost plus basis and, if so approved by Westpac, thereafter entered into such a contract with the plaintiff.
Consequently, the defendants contend that the plaintiff is estopped from alleging that the agreement is on foot and can be enforced by the plaintiff.
The plaintiff contends that the defendants' estoppel defence should be rejected for two reasons:
(1)first, no representation sufficient to found an estoppel was made in that what was said did not objectively reveal an intention to alter the parties' legal relationships, and was not sufficiently clear to found an estoppel; and
(2)secondly, in any event, the defendants did not alter their position in reliance on the representation to their detriment.

Legal principles

The parties' submissions did not descend into much detail on the legal principles relevant to an estoppel. For example, the parties' submissions did not analyse whether the subject matter of this estoppel meant that it was an estoppel by representation of fact, or an equitable estoppel. The doctrines remain distinct: Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191 [18]. For some purposes, including the question of the relief arising from an estoppel, the difference may matter: TheBell Group Ltd (in liq) v Westpac Banking Corporation (No 9) [2008] WASC 239; (2008) 39 WAR 1 [3458], [3551] ‑ [3553]; Westpac Banking Corporation v The Bell Group Ltd (in liq) [No 3] [2012] WASCA 157 [1747]. However, in the circumstances of this case, I do not think that the result is affected by whether the assumption is said to be one of fact (the plaintiff has no intention to perform any construction contract with the partnership) or one as to the future (the plaintiff will not perform or, implicitly, seek to enforce, any building contract with the partnership).
The purpose and effect of an estoppel is to prevent a party from unjustly departing from an assumption which it has induced the other party to adopt and to act in reliance on. The object is to prevent the detriment to the party who adopted the assumption flowing from that party's acts in reliance on the assumption, if departure from the assumption were permitted: Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641, 674 ‑ 675.
For estoppels founded on a representation, the representation must be clear and unambiguous: Australian Goldfields [195]; Bell Group Ltd (No 9) [3470] ‑ [3472]; Westpac v Bell [1749].
In order to found an estoppel, a representation must be made in circumstances that sustains the conclusion that, objectively, it was intended to affect the legal relationship between the parties. That is not the same question as to whether something said reveals an intention to create contractual relations, but it is of a similar character: Bell Group Ltd (No 9) [3472] ‑ [3473]; Australian Goldfields [196] ‑ [197].
A party asserting an estoppel may prove detriment by proving that, but for its assumption in reliance on the representation, it would have done something to pursue an opportunity. The party need not then prove on the balance of probabilities that pursuit of that opportunity would have been successful, so long as there was a real chance of success: Bell Group Ltd (No 9) [3501] ‑ [3510]. Although Owen J's findings of estoppel were overturned on appeal in Westpac v Bell, that was on factual grounds. I do not understand the Court of Appeal to have said anything adverse to this part of Owen J's reasons.

Clear and unambiguous representation?

The plaintiff points out, correctly, that the defence pleads that at the meeting of 7 April 2009, Mr Letizia stated that the plaintiff wanted nothing to do with the building contract for the Property going forward: defence [22(a)]. The plaintiff submits that that is not the representation that it is established by the evidence.
It was not in dispute, and I have found, that on 7 April 2009 Mr Letizia said that he, (meaning the plaintiff) wanted nothing to do with the building to be constructed by the partnership. The plaintiff submits that that is not a representation in terms that the plaintiff would not enforce its construction contract against the partners.
I reject that submission. As I have said in my reasons relating to mutual release, in my view, in context, the words said by Mr Letizia amount in substance to a statement that the plaintiff intended to have nothing to do with, and not to perform, any construction contract relating to the Property. Further, I am satisfied that the representation to that effect was clear and unambiguous.

The plaintiff's knowledge and inaction

I am satisfied that, from 7 April 2009 through to and including September 2009 the plaintiff, through Mr Letizia, knew:
(1)that the defendants were intending to proceed with the construction of a commercial building on the Property;
(2)from September 2009, that the defendants were causing a tender to be issued from a number of builders other than the plaintiff;
(3)consequently, thereafter the defendants would enter into a contract with a third party builder for the construction of that building.
As to the first, it was always the partners' plan to construct a building on the Property. There was nothing to suggest to the plaintiff that those plans ever changed. As to the second, Mr Letizia knew this from his conversation with Mr Marchesani in September 2009. The third is to be inferred from the first two.
At no time before 2012 did the plaintiff inform the defendants that the plaintiff considered the defendants still contractually bound to it in relation to the construction of a commercial building on the Property.

Detrimental reliance?

For the reasons given in relation to mutual release, it was reasonable for the defendants to rely on what Mr Letizia said at the April meeting. The question is whether they did, in fact, rely on that statement.
The plaintiff submits that there was, as a matter of fact, no detrimental reliance by the defendants. It submits that:
(1)the defendants wished to construct premises for Grange Insurance;
(2)holding costs meant that there was a financial imperative to progress the project as quickly as possible;
(3)the defendants had a long banking relationship with Westpac and would not have changed banks; and
(4)Westpac's position, known to the defendants, was that finance would be approved only if a third party builder on a fixed price contract was employed. Finance would not be approved on the basis of a cost plus building contract.
I accept the first three of these propositions, but not the fourth, or the plaintiff's overall submission.
The plaintiff emphasises that on 15 and 16 January 2009 the defendants acted on Mr Stavretis' advice that Westpac would not grant finance approval with the plaintiff as a partner. That is true. However, after 20 January 2009 Mr Stavretis dropped out of the picture. The defendants were dealing with their relationship manager, Mr Phillips. From Mr Phillips' point of view, Mr Stavretis' email of 20 January 2009 was not necessarily the basis of future dealings between the bank and the partnership (ts 235). In any event, as I will explain a little later, Mr Stavretis' position in relation to the need for a fixed price contract had not been expressed in inflexible or absolute terms.
The plaintiff says that the evidence of the defendants, in their supplementary witness statements, that they would have 'continued discussions' with Westpac about a cost plus contract (exhibit 5B [8]; exhibit 6B [8]; and exhibit 8B [2(a)]) should be rejected because, as at April 2009, there were no active discussions underway (ts 167 ‑ 168, 171, 250).
The statements that the defendants would have 'continued discussions' may be seen as a self serving overstatement.
Nevertheless, for the reasons that follow, I am satisfied that the defendants relied to their detriment on what Mr Letizia said.
I accept the evidence of Mr Leadbetter that, as at 7 April 2009, the partners had not made a firm decision that the construction contract must be on a fixed price basis (ts 191). They wanted Mr Letizia to do the building (although they knew that he only built on a cost plus basis). The partners knew that Westpac had a distinct preference for a fixed price contract and knew that, in order to use the plaintiff, as they intended, the partners would need to convince Westpac to permit that to occur (ts 198). Mr Leadbetter, who had the carriage of the matter on behalf of the partners, believed that there were prospects of doing so (ts 198). See also Mr Guy's evidence (ts 223 ‑ 224).
The time for those discussions with Westpac had not arisen by April 2009. That is because the discussions could only occur after the detailed drawings were done, and quantity surveyors had made an assessment. Detailed drawings had not been done by the time of the meeting in April.
The defendants' continuing intention to use the plaintiff as builder, on a cost plus basis, is supported by consideration of the documentary evidence from January 2009 onwards.
On 20 January 2009, Mr Leadbetter said, in his email to Mr Stavretis, that he (Leadbetter) did not agree with the bank's view that fixed price was preferable, rather, given the current economic circumstances a cost plus contract made more sense (exhibit A35). Mr Stavretis' response by no means ruled out that proposition. It expressed agreement with Mr Leadbetter's point about current economic circumstances, but observed that banks do not like the uncertainty of a cost plus contract.
As I have already said, Mr Leadbetter's email of 4 February 2009 to the other partners (exhibit A41) and his file note of 16 February 2009 (exhibit A42) demonstrate that in February 2009 the intention of the defendants was that the plaintiff would construct the premises on a cost plus basis. Thus, what Mr Stavretis had said and written in January 2009 had not deflected them from that intention.
I am satisfied that that continued to be the position up to the meeting in April 2009.
At the meeting in April 2009, Mr Leadbetter spoke in terms that made it apparent that the defendants intended for the plaintiff to build the premises. I am satisfied that reflected their intention at the time Mr Leadbetter spoke at the meeting.
If Mr Letizia had not said what he did at the April 2009 meeting, I am satisfied that the defendants would have continued with their intention to use the plaintiff as the builder and to have discussions with Westpac with a view to obtaining Westpac's approval to finance the construction of the building on a cost plus basis.
The evidence does not make it possible to assess, with any precision, the prospect that the bank would have given an approval of that kind. I am satisfied that it was a real, not fanciful prospect. The bank's position was not set in stone against a cost plus builder. I refer to what I have already said in relation to Mr Stavretis' position, reflected in his final email of 20 January 2009 (exhibit A35). Further, Mr Phillips' evidence was that it was not a given that there had to be a fixed price contract (ts 242).
For these reasons, I am satisfied that in reliance on what Mr Letizia said at the April meeting, the defendants altered their position in that they had no further discussions with Westpac with a view to obtaining approval for financing of construction of the building on a cost plus basis. The prospects of those discussions bearing fruit are uncertain, but there was a real, not fanciful prospect. That is sufficient to constitute detriment: see [148] above. In my view, in those circumstances, it would be inequitable and the defendants would suffer detriment if the plaintiff were permitted to resile from his representation and to enforce the agreement that it would enter into a building contract with the defendants.
That brings me to the defence of repudiation.

Termination by acceptance of repudiation?

I am satisfied that what Mr Letizia said at the April meeting was repudiatory. However, there is, or may be, a question whether the defendants accepted that repudiation. In particular, there are questions about whether communication of acceptance is required and, if so, the means by which it may be satisfied, as well as whether there are any exceptions to that requirement. See, for example: Sargent v ASL Developments Ltd (1974) 131 CLR 634, 655 ‑ 656; Immer (No 145) Pty Ltd v Uniting Church (1993) 182 CLR 26, 39; Wood Factory Pty Ltd v Kiritos Pty Ltd (1985) 2 NSWLR 105, 146 referring to Holland v Wiltshire (1954) 90 CLR 409, 416; Karacominakis v Big Country Developments Pty Ltd [2000] NSWCA 313 [155]; Ryder v Frohlich [119]; Cooper v Kinsella [2011] NSWCA 45 [70]; Highfield Property Investments Pty Ltd v Commercial & Residential Developments (SA) Pty Ltd [2012] SASC 165 [279]; Yule v Smith [2013] NSWSC 209 [39] ‑ [41]; Societe Generale, London Branch v Geys [2012] UKSC 63; [2013] 2 WLR 50; JW Carter Carter'sBreach of Contract (2nd ed, 2011) [10 ‑ 18].
Given that I have found in favour of the defendants on two grounds, each of which is, alone, sufficient, it is unnecessary to determine whether the agreement came to an end by acceptance on the part of the defendants of the plaintiff's repudiation.

Date of dissolution

A partnership can be determined by mutual agreement: Fazio [62]. The retirement of a partner, mutually agreed or unilaterally effective through notice, has the consequence of dissolving the partnership: Commissioner of State Taxation v Cyril Henschke Pty Ltd [2010] HCA 43; (2010) 242 CLR 508 [11]; Fazio [64].
Retirement by agreement can be based on an informal or inferred agreement: Fazio [68].
On 28 June 2010, the plaintiff's solicitor sent a notice of confirmation of dissolution of the partnership, which stated that by no later than 10 February 2009, the plaintiff had given notice of its intention to retire from the partnership (exhibit A50). However, the parties agree that by no later than 9 April 2009, the partnership was dissolved by an informal or inferred agreement.
The question is whether it was, as the defendants contend, dissolved earlier than 9 April 2009.
The defendants submit that by oral agreement made on 16 January 2009, Mr Letizia agreed to retire from the partnership, and the conduct of the parties after that date was to give effect to that agreement.
The defendants pointed to [19.2] of the Statement of Agreed Facts, which states that at the meeting on 16 January 2009 Mr Letizia agreed to transfer the plaintiff's 45% share in the partnership. However, there is insufficient evidence from the defendants of an agreement on 16 January to the effect that the plaintiff would retire from the partnership with immediate effect. In my view, the evidence of Mr Leadbetter, which I have accepted, does not sustain an agreement to that effect. Rather, the effect of the evidence is that Mr Letizia agreed that the plaintiff would retire, not that it was then retiring with immediate effect.
In my view, the agreement was that the retirement would take effect when the plaintiff's name was removed from the title of the Property.
In my view, the parties' conduct from January to April 2009, and thereafter, supports that conclusion. (It is not in doubt that, in the case of an oral and informal agreement, regard may be had to the parties' subsequent conduct to inform findings as to the terms of the contract.)
On 19 January 2009, Mr Leadbetter wrote to the Department for Planning and Infrastructure on the basis that the plaintiff was then still a partner (exhibit A33).
At the meeting of 7 April 2009, the defendants relied upon Mr Guy's spreadsheet (exhibit A45). That spreadsheet treated the plaintiff as continuing to be a partner and apportion 45% of expenses incurred up to March 2009 to the plaintiff (ts 219 ‑ 220). Mr Leadbetter agreed that at that meeting the defendants contended that the plaintiff was still a partner because he was still an owner of the block (ts 157 ‑ 158).
By letter of 14 January 2010, the defendants asserted that the plaintiff was responsible for 45% of certain costs up to 9 April 2009 (exhibit E).
For these reasons, I find that the date of dissolution was 9 April 2009.

Conclusion

In summary, I have found that:
(1)on 7 April 2009 Mr Letizia said words to the effect that he, and thus the plaintiff, wanted nothing further to do with the building to be constructed for the partnership;
(2)that statement was objectively intended to affect the parties' legal relationship;
(3)by the failure of both parties to do anything in relation to the contemplated building contract between the plaintiff and the partnership, in the context of what Mr Letizia had said on 7 April 2009, by September 2009 the parties had agreed to mutually abandon the contemplated building contract;
(4)alternatively, the defendants acted in reliance on what Mr Letizia said on 7 April 2009 to their detriment, and the plaintiff is estopped from enforcing the agreement to enter into a building contract.
For these reasons, I would dismiss the plaintiff's claim for damages.
I find that the date of dissolution of the partnership was 9 April 2009.
I will hear from the parties as to the precise form of orders and as to costs.