Long Forest Estate Pty Ltd v Singh

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

PROPERTY LIST

S CI 2018 01064

LONG FOREST ESTATE PTY LTD	Plaintiff
-and-
GURPREET SINGH	First Defendant
SHRI GURU PROPERTY DEVELOPMENT PTY LTD	Second Defendant

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JUDGE:	John Dixon J
WHERE HELD:	Melbourne
DATE OF HEARING:	2-5, 9-12, 23 June 2020
DATE OF JUDGMENT:	23 September 2020
CASE MAY BE CITED AS:	Long Forest Estate Pty Ltd v Singh & Anor
MEDIUM NEUTRAL CITATION:	[2020] VSC 604

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REAL PROPERTY – Conveyancing – Section 32 statement – Gazettal of threatened species and ecological communities by Commonwealth Minister for Environment – Referral of development application to Minister for approval – Whether gazetted instruments and documents concerning development application under Commonwealth environmental legislation required to be contained in section 32 statement – Whether purchaser entitled to rescind contract – Whether any contravention ought reasonably be excused – Environment Protection and Biodiversity Act 1999 (Cth) ss 18, 67– 72, 74, 75, 77, 130, 131AA, 133, 170A, 178, 181, 184, 194; Sale of Land Act 1962 (Vic) ss 32, 32D, 32K.

REAL PROPERTY – Caveat – Claim for compensation for lodging caveat without reasonable cause – Whether honest belief based on reasonable ground for caveatable interest – Where question of whether reasonable grounds existed was dependent on issues to be determined in the proceeding – Transfer of Land Act 1958 (Vic) s 118.

STATUTORY INTERPRETATION – Legislative intention – Disclosure required by section 32 of the Sale of Land Act 1962 (Vic) – Legislative history of section 32 – Meaning of ‘directly and currently affecting’ land – Whether State Parliament intended references to ‘public authority’ to include Commonwealth authorities – Interpretation of Legislation Act 1984 (Vic) s 48.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr A P Rodbard-Bean	Septimus Jones and Lee
For the Defendants	Mr C E Shaw SC with Ms N Hassan of counsel	Impex Lawyers & Advisers

TABLE OF CONTENTS

Introduction........................................................................................................................................ 3

Summary of findings........................................................................................................................ 4

Issues on the claim........................................................................................................................ 4
Issues on the defence and counterclaim.................................................................................... 5
Sale of Land Act................................................................................................................... 5
Misrepresentation................................................................................................................ 5
Remedies............................................................................................................................... 5

Mode of trial........................................................................................................................................ 6

General findings of fact.................................................................................................................... 8

Findings about witnesses............................................................................................................. 8
Mr Batzios and Mr Matthews............................................................................................ 8
Mr Kelemen and Mr Giannakidis..................................................................................... 8
Mr Singh.............................................................................................................................. 12

General findings concerning the transaction.......................................................................... 19
Engagement of Kelemen’s and preparation of the IM................................................. 20
The first meeting................................................................................................................ 21
The second meeting........................................................................................................... 22
The third meeting.............................................................................................................. 24
Execution of the contract.................................................................................................. 25

Sale of Land Act issues.................................................................................................................... 27

Environment Protection and Biodiversity Conservation Act....................................................... 28
Relevant provisions........................................................................................................... 28
Analysis............................................................................................................................... 35

Long Forest refers proposed development for approval...................................................... 35
Long Forest’s application for a planning permit.................................................................... 38
Progress of the applications....................................................................................................... 39
Preparation of the vendor’s statement..................................................................................... 41
Was there actionable non-disclosure in the vendor’s statement?........................................ 43
Was Mr Singh precluded from rescission?.............................................................................. 54

Representation based claims......................................................................................................... 60

Was there reliance?..................................................................................................................... 63
Reliance on own consultant....................................................................................................... 70
Progression of Urban Growth Framework Plan and further Mesh retainer...................... 74
The meeting on 6 March 2017.................................................................................................... 75
The valuation............................................................................................................................... 78

Singh’s search for finance.............................................................................................................. 78

Operative conditions of the contract............................................................................................ 86

A further twist................................................................................................................................... 88

Dealings following rescission....................................................................................................... 94

Long Forest’s s 118 claim for compensation........................................................................... 96
Principles applying to s 118 claims........................................................................................... 97
Analysis of s 118 claim............................................................................................................... 98

Conclusion....................................................................................................................................... 102

HIS HONOUR:

Introduction

A parcel of five titles comprising about 107 hectares of farm land was acquired by the plaintiff in June 2011. I will refer to this parcel of land, which is the subject matter of this proceeding, as ‘Long Forest Estate’ or ‘the property’.

The property is adjacent to the Long Forest Nature Conservation Reserve, to the north of Bacchus Marsh Road between Melton and Bacchus Marsh. Long Forest Estate is located in the Shire of Moorabool and is subject to the Moorabool Planning Scheme. The site was in a Rural Conservation Zone with a Design and Development Overlay over the majority of the site. The Overlay identified Long Forest Estate as part of the ‘Bences Road Area’, defined as a ‘significant environment both from potential effects on the Long Forest Nature Conservation Area and the ridgeline viewed from the Bacchus Marsh Valley’.

The plaintiff (‘Long Forest’), whose directors are Mr Christios Batzios and Mr Bradley Matthews, acquired the land for residential development but without any active planning approvals in place. The previous owner had undertaken some limited ancillary works under a lapsed permit and had failed in his attempts at VCAT to reinstate that approval.

The plaintiff contracted to sell Long Forest Estate to the first defendant (‘Mr Singh’) in October 2016. Mr Singh paid a deposit of $400,000. In May 2017, Mr Singh nominated the second defendant (‘Shri Guru’) as purchaser under the contract. The plaintiff claimed in this proceeding that it had validly terminated the contract for non‑payment of the residue of the purchase price on the settlement date, that the deposit was forfeited to it, and that it was entitled to compensation for additional financing costs occasioned by caveats lodged by the defendants on the property without reasonable cause.

The defendants contended that either or both of them terminated the contract before the plaintiff’s notice of rescission was effective. First, the defendants contended that they validly rescinded the contract pursuant to s 32K(2) of the Sale of Land Act 1962 (Vic) (‘SOL Act’), by reason of the plaintiff’s failure to comply with s 32D. That contravention was alleged to have been caused by the absence of details in the section 32 statement (‘vendor’s statement’) of certain declarations and decisions under the Environment Protection and Biodiversity Conservation Act1999 (Cth) (‘EPBC Act’) said to affect the property. The plaintiff denied that contention but replied that if it be established, the defendants could not rescind the contract on that ground by reason of s 32K(4) of the SOL Act.

The defendants further contended that the contract was validly rescinded because the plaintiff, by their agent—Kelemen Commercial Pty Ltd (Kelemen’s)—made representations concerning the developability of the property in the short term that constituted misleading and deceptive conduct in trade or commerce, or misrepresentation in equity. The defendants submitted that they were entitled to compensation for the loss of the opportunity to have applied the $400,000 deposit to the purchase of an alternative property in the nearby suburb of Rockbank.

Summary of findings

I can conveniently state my conclusions in the form of responses to the statement of issues posited by the parties for resolution by the court.

Issues on the claim

The defendants breached the contract of sale by failing to settle on 13 June 2017, entitling the plaintiff to serve a notice of rescission.

The contract was validly terminated on 27 June 2017 when the defendants failed to remedy the breach specified in the rescission notice.

Under the terms of the contract, the $400,000 deposit was forfeited to the plaintiff.

Notwithstanding the preceding findings, Mr Singh did not lodge his caveat on 18 December 2017 without reasonable cause, having had an honest belief, based on reasonable grounds, that he was entitled to the interest claimed on the grounds identified.

It is unnecessary to assess the quantum of the loss that the plaintiff claimed to have sustained by reason of the defendants’ caveats.

Issues on the defence and counterclaim
Sale of Land Act

The plaintiff did not contravene s 32D of the SOL Act by reason of the vendor’s statement failing to disclose the matters alleged in paragraph 39 of the Amended Defence and Counterclaim (‘AmDCC’).

Had I found that the plaintiff was in breach of the SOL Act, the defendants were not entitled to rescind the contract on 26 June 2017 because pursuant to s 32K:

(a) the plaintiff acted honestly and reasonably and ought fairly to be excused for the contravention; and

(b) the defendants were substantially in as good a position as if all the relevant provisions of the SOL Act had been complied with.

Misrepresentation

It was not necessary to reach concluded findings in respect of the representations alleged to have been made by plaintiff or Kelemen’s because:

(a) the defendants needed to prove that Mr Singh relied on the alleged representational conduct when he entered into the contract and that the conduct caused loss and damage;

(b) Mr Singh did not rely on Long Forest’s representational conduct when entering into the contract and paying the deposit; and

(c) accordingly, the defendants could not succeed in their claims under the Australian Consumer Law[1] (‘ACL’) or in equity.

[1]Competition and Consumer Law Act 2010 (Cth) sch 2.

Remedies

The defendants failed to show that by reason of the plaintiff’s said conduct, the contract was void ab initio, alternatively voidable or alternatively lawfully rescinded on 26 June 2017. Accordingly, the defendants are not entitled to repayment of the $400,000 deposit.

The remaining issues of whether the defendants suffered loss and damage by reason of the plaintiff’s conduct did not arise. The defendants were not entitled to damages for:

(a) finance application fees of $21,230; or

(b) the value of the lost opportunity to invest in a property at Rockbank.

The defendants did not lose any opportunity to purchase the Rockbank property, having passed up that property to pursue the greater commercial opportunity presented by the Long Forest Estate purchase.

Mode of trial

The circumstances caused by the COVID-19 pandemic prevented the parties, legal representatives and witnesses from physically attending court for the duration of the hearing, and the trial proceeded as a virtual hearing, using the Zoom platform.

Virtual hearings became a feature in many jurisdictions across the country in 2020, as the national public health response to the pandemic unfolded. Courts have conducted the vast majority of civil business since April 2020 using an array of virtual hearing platforms. While difficulties have been encountered, the transition to virtual hearings has been successful. This is in large part due to the preparation undertaken by parties before a hearing to ensure that all participants have the necessary devices and internet connectivity to adequately participate, and so documentary material can be accessed and viewed by participants during a hearing in a uniform way.

The overarching purpose stipulated by the Civil Procedure Act 2010 (Vic) is to achieve the just, efficient, timely and cost-effective resolution of the real issues in dispute in a proceeding.[2] As has been recently observed,[3] the overarching purpose must be given effect when considering whether circumstances caused by the COVID-19 pandemic warrant the exercise of discretion in case management of a proceeding, including the adjournment or vacation of hearings. How that discretion is to be exercised is necessarily fact dependent. The way in which the pandemic has impacted each person is varied, as is the ability for parties and witnesses to properly participate in virtual hearings.
[2]Civil Procedure Act 2010 (Vic) s 7.
[3]Cossari v Wells [2020] VSCA 133; Mulquiney v Reynolds (Ruling No 1) [2020] VSC 119; Ascot Vale Self Storage Centre Pty Ltd v Nom De Plume Nominees Pty Ltd [2020] VSC 242; Gatto v Australian Broadcasting Corporation (No 1) [2020] VSC 420.

The trial in this proceeding, as will be seen from these reasons, involved substantial credit issues. I drew factual findings that were critical to the ultimate conclusions I have reached from conflicting evidence about the timing of and statements made in meetings, telephone calls and in-person conversations.

I did not find assessment of credit more challenging than it would have been if the various witnesses were physically in court and gave evidence from the witness box. Counsel did not appear to be impeded in their work. Consistent with recent observations made by other judges,[4] I found ample opportunity to assess demeanour and determine credibility for each witness in the virtual hearing. There were other advantages flowing from the relative speed at which witnesses were able to navigate the electronic court book. I respectfully agree with McDonald J in Ascot Vale Self Storage Centre Pty Ltd v Nom De Plume Nominees Pty Ltd that issues of credit ought not, in and of itself, be a basis to conclude that a proceeding must be heard as an in-person trial.[5]
[4]Capic v Ford Motor Company of Australia Limited (Adjournment) [2020] FCA 486, [19]–[20]; Australian Securities and Investments Commission v GetSwift Limited [2020] FCA 504, [33]; Tetley v Goldmate Group Pty Ltd [2020] FCA 913, [16]; Auken Animal Husbandry Pty Ltd v 3RD Solution Investment Pty Ltd [2020] FCA 1153, [46]–[49]; Porter v Mulcahy and Co Accounting Services Pty Ltd (Ruling) [2020] VSC 430, [26].
[5][2020] VSC 242, [19].

Although some practical challenges in using the technology emerged, they were not insurmountable, were promptly addressed by the parties, and did not cause any material delay in the proceeding. Whether a trial will proceed smoothly will depend on the parties’ preparation pre-trial, particularly in ensuring that the technology used by each participant—especially witnesses—will allow them to properly participate in the hearing, and that the directions given by the court before the hearing are complied with. There is usually ample opportunity to deal with any issue, technical or otherwise, that may arise during a virtual hearing.

General findings of fact
Findings about witnesses

The evidence was substantially documentary and proof of the documents was mostly uncontroversial, with some exceptions that I will note where appropriate. As is common, the contemporaneous written records created before the threat of litigation were mostly a more reliable indicator of what occurred than the oral evidence. Judges have consistently noted that careful analysis of the contemporaneous documentary record has great utility.[6] In this proceeding, that has been my primary source for my factual findings. That said, there were a number of meetings and conversations of significance where my findings depended on the oral evidence.
[6]Onassis and Calogeropoulos v Vergottis [1968] 2 Lloyd’s Rep 403, 431; Watson v Foxman (1995) 49 NSWLR 315, 319; Thomas v SNP (International) Pty Ltd [2010] NSWSC 822, [23]; Gestmin SGPS S.A. v Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm), [15]–[23]; Linfield Developments Pty Ltd v Shuangxing Development Pty Ltd [2016] NSWSC 68, [10]–[14].

Mr Batzios and Mr Matthews

Long Forest’s key witnesses to the relevant events were its directors, Mr Batzios and Mr Matthews, each of whom was credible and generally reliable. There were minor differences between them and varying degrees of recollection on some topics, but overall their evidence was reliable and consistent. On due consideration of these matters and of their presentation and demeanour, I accepted their evidence.

Mr Kelemen and Mr Giannakidis

Long Forest also relied on the estate agents at Kelemen’s, Mr Rudy Kelemen and Mr Peter Giannakidis. I largely accepted Mr Giannakidis as credible and generally reliable, except as to the dates of events, notwithstanding some lapses in memory and some confused recollection (such as recalling the Department of the Environment and Heritage as the EPA).

In light of my conclusions about Messrs Kelemen and Singh that follow, and my assessment of the presentation and demeanour of each of Mr Singh, Mr Kelemen, and Mr Giannakidis, in the circumstances of conversations between these three men, I have mostly preferred the evidence of Mr Giannakidis when it was necessary to make findings about what occurred in their meetings. That said, there were some aspects of the evidence of each of Messrs Kelemen and Singh that carried an undeniable ring of probability or were independently corroborated.

I did not find Mr Kelemen to be a credible witness. His evidence concerning critical documents that Kelemen’s provided to Mr Singh was illustrative of his unreliability as a witness. Two examples will suffice.

I am satisfied that Mr Kelemen first met Mr Singh on 29 August 2016. Mr Kelemen, initially, was most emphatic that he first met Mr Singh in early June 2016 and that Mr Singh took away from that meeting two key documents: the ‘Information Memorandum’ (‘IM’) prepared by Kelemen’s and the ‘Project Concept Summary’ (‘PCS’) prepared by Long Forest from which the IM was derived. The evidence surrounding these documents and a third document, entitled ‘Residential Development’ (‘RD document’) was confusing, to say the least, but I want presently to focus on the dates. Mr Kelemen’s evidence that the first meeting took place in June suggested an improbable three month gap until his second meeting with Mr Singh, which was in early September, on a date that was not in dispute.

Mr Kelemen was, as Mr Singh’s counsel submitted, remarkably emphatic that he was correct about the date of this first meeting and his confidence was founded on an email said to have been sent on 9 June 2016 from Mr Singh to Mr Nick Hooper, a director and the general manager of Urban Development Planning Design at Taylors whom Mr Kelemen had recommended when they first met, attaching the copy of the IM that Mr Kelemen had given Mr Singh at the first meeting. Mr Kelemen said:

I am absolutely adamant that Nick Hooper received, on 9 June, an email from Singh containing an IM that I’ve given him.

Even when his cross-examiner pointed out that the IM was dated August he remained insistent that the document, or a version of it, was given to Mr Singh in June. His confidence was unshakable:

For the record, I’ll say – I would say it one more time. It will be proven without any shadow of a doubt.’

Mr Kelemen was ‘sure’ the email was in the court book. When it became apparent that an email dated 9 June 2016 was not in the court book, he offered to show a copy from his records to the camera.

Mr Singh’s counsel called for the email that Mr Kelemen absolutely insisted existed, but it not produced. It transpired the following day that the email Mr Kelemen was referring to was in the court book, as he thought. He had been taken to it, but he had been confused by the American dating system and thought that the email, which was dated 6 September 2016, was instead dated 9 June 2016.

As Mr Singh’s counsel submitted, it was not the mistaken reading of the date that was significant. That is a common error readily forgiven. The issue was that the witnesses’ insistent attitude squarely demonstrated that Mr Kelemen was reconstructing events from a mistaken reading of contemporaneous documents. He did not have a reliable memory. His unwillingness to make that concession was materially damaging to his credit. He went to extraordinary lengths insisting that he was right and attempting to imbibe his evidence with an air of certainty and confidence that it did not warrant. In failing insistently to demonstrate his reliability as a witness, he cast significant doubt on his credibility.

A second passage of evidence worthy of note was also indicative of the false attitude of certainty that Mr Kelemen sought to convey. In response to uncontroversial puttage by his cross-examiner about elapsed time, Mr Kelemen gave what was, in substance, an extraordinary response:

… I think you understand when I say that there are things we don't remember, but we remember the important things. So let's not make any mistake as to what I will say, and, please, to keep this nice I'm telling you very honestly I'm not going to make up stories, I only stick to the truth. I have been doing this for 45 years and nobody has ever been able to accuse me of deceptive and misleading conduct. So I take it very, very personally, sir.

Counsel did not directly challenge this statement in cross-examination, but in final submissions described it as ‘entirely incredible’.

I reject the notion that Mr Kelemen ‘only sticks to the truth’. Vouzas v Bleake House Pty Ltd & Anor,[7] in which Kelemen’s was the second defendant, was included in a joint folder of authorities provided to the court. Incidentally to the purpose for which it was cited, I noted that Macaulay J recorded that Mr Kelemen was the estate agent engaged by the vendor to sell ‘The Beach’ hotel in Albert Park. Mr Kelemen was unambiguously accused of misleading and deceptive conduct. He gave evidence in that trial, which ran for six days in March 2013 and attracted significant media interest, because the substance of the allegations concerned the status of the Collingwood Football Club as a tenant of the property being sold.
[7][2013] VSC 534.

Even though he was not confronted with this proceeding in cross-examination before me, I cannot accept that he could not recollect this experience or that he was truthful when he made the unprompted declaration ‘nobody has ever been able to accuse me of deceptive and misleading conduct’.

Mr Singh made a number of other submissions about Mr Kelemen’s reliability and credibility as a witness that I accept:

(a) Mr Kelemen slipped from giving evidence of events to being an advocate for Long Forest;

(b) Mr Kelemen frequently failed to directly answer questions, preferring embellishments or speeches;

(c) Mr Kelemen particularly lacked credibility when confronted with inconvenient facts, an example being the comparison of the IM with the PCS;

(d) Mr Kelemen suggested that in early 2017, a Mr Nick Baldi offered to purchase the property for $11 million, but the offer was never put in writing. Mr Kelemen asserted that the conversation could be substantiated by reference to telephone records. None were produced. Mr Singh denied that such an offer was communicated to him. There may be a Mr Baldi, but I do not accept that there was an offer.

I rejected Mr Kelemen’s evidence, save in those circumstances where it carried an undeniable ring of probability or was independently corroborated. However, although I accepted the defendants’ submission that Mr Kelemen was a most unsatisfactory witness, I was not persuaded to take the further step Mr Singh urged on me and prefer his evidence whenever it conflicted with that of Mr Kelemen.

Mr Singh

Mr Singh’s evidence required careful evaluation. He is an intuitive and resourceful person, having migrated to this country as a young adult. He completed a hospitality qualification before establishing his apparently successful transport business. Although his naivety concerning large scale subdivisional land development was evident on careful assessment, Mr Singh worked hard to convey a confident, successful business persona. Significantly, his counsel in final submissions identified Mr Singh’s primary objective in the purchase of the property to be residential subdivision and development. In many ways, Mr Singh was not actually what he appeared to be.

Having carefully considered the substance and context of his evidence and his demeanour when giving evidence, I did not find Mr Singh to be credible or reliable. I rejected his evidence, save in those circumstances where it carried an undeniable ring of probability or was independently corroborated.

There are numerous examples in the transcript where Mr Singh was unresponsive to questioning or querulous. Usually, his inability to directly address a question did not stem from any language difficulty (and I was looking carefully for any such disadvantage),[8] but from his desire to present a construct of events that would justify his claim for the return of the deposit. Mr Singh’s insistence that, when he signed the contract, his interest was in residential development within the current rural conservation zone planning classification (limited to a minimum lot size of 7,500sqm) and that he was not interested in its likely future development potential (being 600sqm residential lots), cannot be accepted. Mr Singh was not being truthful.
[8]Although Mr Singh’s English was good, I observed that it did not appear to be his first language.

The key marker of his mendacity was his evidence of his dealings with Mesh Consulting (‘Mesh’), a property development consultancy he retained to advise him about the proposed transaction. I reject his claim, a central plank of his case theory, that he did not properly read or understand the report he received from the Mesh, being a document addressed to him dated 26 September 2016 and titled ‘Due Diligence’ (‘Mesh Report’). This document, dated one day earlier than the date that the contract was executed, identified that the future development opportunity of the property was for a much more intensive, and profitable, residential development.

I am satisfied that Mr Singh well understood what the Mesh Report told him, either directly through his own study of the report or through discussions with others. The fact that Mr Singh knew precisely how well he had purchased was clear, not just from his conduct in the period between signing the contract and its settlement date, but also from his conduct in the proceeding.

The following further circumstances and conclusions are relevant, many of which are discussed in these reasons.

Starting with his conduct before the issue of the proceeding:

(a) after receiving the Mesh Report, Mr Singh did not undertake any further enquiries and struck a deal to purchase a one half interest in the property;

(b) Mr Singh waived the due diligence period provided in the contract;

(c) Mr Singh’s conduct and statements at the meeting with Mr Batzios and Mr Matthews on 6 March 2017 evidenced knowledge of the environment and development issues concerning the property;

(d) notwithstanding that knowledge, Mr Singh’s further dealings with Mesh, both shortly prior to and after the meeting on 6 March 2017, exhibited a desire to move forward with the development of the property;

(e) Mr Singh’s insistent and increasingly desperate steps to raise the finance for the purchase were ultimately unsuccessful (for reasons unrelated to the alleged conduct of Long Forest), and this was the real reason that he did not settle the contract;

(f) the purported non-disclosure in the vendor’s statement was not alleged by Mr Singh until after he was in default under the contract;

(g) Mr Singh made no timely demand against Long Forest based on the representations (including the silence) prior to, or in the aftermath of the contract being agreed, up until the removal of the caveats, because he did not rely on that conduct; and

(h) rescission for non-disclosure by the vendor’s statement was, on one view, part of a strategy to avoid the contract that he could not complete, but the involvement of Rigby Cooke Lawyers (‘Rigby Cooke’), Harry Stamoulis and Stamoulis Property Group Pty Ltd (‘Stamoulis Group’) showed that Mr Singh’s real motive was not to walk away. He wanted to see the purchase completed with such equity as he could maintain in the project.

Mr Singh’s conduct after the proceeding was issued included that:

(a) he chose not to reveal the Mesh Report to Long Forest until required to do so by his legal team shortly prior to trial. I am satisfied that he understood his discovery obligations, yet he declined to discover a critical document that was very damaging to his case. I am satisfied that he did so intentionally;

(b) to cover this conduct, he falsely asserted that he took the Mesh Report to Mr Giannakidis at or about the time he entered into the contract. I accept Mr Giannakidis’ denial that he was shown the Mesh Report, and I would add that, when attempting to drive a bargain at a lower price, the probabilities are that a purchaser would not give the vendor’s agent information that conveyed that the vendor’s asking price was a very good bargain; and

(c) I am satisfied that Mr Singh did not call evidence from his consultant, Ms Bronwyn Pettitt of Mesh, because he feared her evidence would undermine his claimed ignorance of the content of her advice.

The following passage from his evidence are examples of the manner in which Mr Singh advanced the false notion that he did not understand the advice given to him by his own independent consultant:

MR RODBARD-BEAN: Is there anything in that e-mail that you don’t understand?---I didn’t understand, like, you know, this thing about the referral thing and then I asked her about this one with Mr Giannakidis and I asked her about the Mesh. They said it’s a referral but if that was the outcome you have told (indistinct words) information memorandum. I asked her – that’s what Bronwyn said. Bronwyn said they can’t find any - - -
Your Honour, with respect, this is unresponsive.
HIS HONOUR: I quite agree. It’s completely unresponsive and you can deal with that in final submissions or you can interrupt the witness and ask another question.
MR RODBARD-BEAN: I will do both, Your Honour. (To witness) My question to you was, Mr Singh, was there anything in this e-mail that you did not understand?---Yes, I didn’t understand about this, there was the application withdrawn [referring to Long Forest’s application for a planning permit] and I did ask about this.
So your evidence is you didn’t understand about the thing which was withdrawn; you didn’t understand that?---Yes.
Is there anything else in this e-mail you didn’t understand?---I didn’t understand the referral to the Commonwealth on threatened species.
You didn’t understand that?---Yes.
So they are the two pieces of information in this e-mail. So you didn’t understand, effectively, what this e-mail was saying to you; is that your evidence?---Sorry?
Is that your evidence, that you didn’t understand the two pieces of information in this e-mail?---This is the same wording, like, it’s the same wording if you look at the Mesh report. This is the same wording in the Mesh report.
I’m asking you this question: there’s two pieces of information in this e-mail, one about the permit application being withdrawn and the second in relation to the threatened species?---Yes.
There’s two pieces of information in this e-mail. Is it your evidence that you didn’t understand either of those two things?---Yes and I had a question about it, yes.
And further into his evidence:
HIS HONOUR: The next section is under the heading, ‘Strategic Directions’?---Yes.
Did you read that?---Read a little bit of this. I read a little bit of this, Your Honour, yes.
You would have been pretty excited to read that?---Yes and they mentioned about the, like, strategy, like things that can happen in the future, yes.
What about the second-last paragraph; did you read that? ‘From the information currently available it is likely that the urban growth framework plan will provide strategic directions’?---Which paragraph, Your Honour?
The second-last paragraph on p.1837?---‘From the information currently available’?
Yes?---Yes, ‘it is likely that the urban growth framework will be available’. Yes, they mention it, they talk about the 2041, the 2050 housing for Bacchus Marsh.
Sorry, just say that again?---That’s what Bronwyn said, it’s 2041 or 2051 housing. The future area will be considered, yes, of the development.
What do you understand to be the implication of the area being considered for residential purposes?---I understand it is residential land and we can use for the residential purposes.
You understood it was residential land?---Yes and it can be used for residential development.
You understood it was rural conservation land?---Yes.
That’s different than residential land, isn’t it?---The rural conservation residential land, that is the same. Rural conservation residential land.
Is that an honest answer? As I understand it, you are about to enter into an arrangement to spend $4 million buying development land?---Yes. Your Honour, sorry, can you repeat the question again, sorry?
What did you understand by the last sentence: ‘We understand the Merrimu area is being considered for residential purposes’? Did you appreciate the importance of what you were being told there?---What you are asking, Your Honour, is what – this is, like, they are talking about the residential land which is like rural residential land and that’s what all – they are talking about the future growth of 2041 and 2050.
Did you read the next paragraph, the last paragraph in the letter?--- I didn’t understand – didn’t read, Your Honour, line-by-line, no.
You did not read it?---I didn’t read it, no, line-by-line because I just came straight up to the conclusions.

In these passages, Mr Singh was giving false evidence. As I will later explain, I am satisfied that prior to the execution of the contract, Mr Singh understood from Mesh that the deliberations of the Victorian Planning Authority (‘VPA’) and the Moorabool Shire Council (‘Council’) could substantially improve prospects for residential subdivisional development of the property, and he well understood that the value of the interest that he would purchase would significantly increase.

On occasions, Mr Singh staged displays of displaced emotional distress. By this observation, I do not mean to suggest that Mr Singh was not genuinely anguished about the consequences for him in the circumstances in this case. However, his emotive response was not derived from having been misled by the plaintiff, as he unconvincingly claimed. He despaired at having lost the opportunity to settle on the property and enjoy a substantial return on his investment. As will become apparent, this outcome was not caused by the conduct alleged against the plaintiff.

Mr Singh made many unsubstantiated allegations of dishonesty and impropriety against the plaintiff’s witnesses. He also sought to avoid answering specific questions in cross-examination with the assertion that his cross-examiner was trying to trick or confuse him when, objectively assessed, he was being asked straightforward or direct questions.

A central contention in the case was whether Mr Singh received a copy of the PCS or the RD document. There was much cross-examination concerning these documents. Although the two documents appear similar, they are materially different in respect of the planning history and environmental issues concerning the property. Long Forest’s contention was that Kelemen’s gave Mr Singh a copy of the PCS, being the document that provided a more fulsome explanation about those matters, and he was accordingly aware of the issues that he contended were misrepresented. Mr Singh claimed that he never received the PCS. Rather, Kelemen’s gave him a USB stick containing the RD document.

I reject Mr Singh’s evidence that he received a copy of the RD document prepared by Long Forest by means of a copy contained on a USB stick handed to him by Mr Kelemen during the second meeting. I accept Long Forest’s submission that Mr Singh regarded it as important to his case theory to show that he received the RD document, primarily because the representations about the short term developability of the property he alleged were made were best sourced from it. Mr Batzios and Mr Matthews both gave evidence that the RD document was not provided to Kelemen’s. Mr Giannakidis said that the PCS was the only document he received from Long Forest to prepare the IM.

The USB stick was never discovered and I am satisfied that had it been provided by Mr Singh to his solicitors, as he claimed, it would have been discovered. I pause to add that the late discovery of the Mesh Report was explained in a similar fashion. Mr Singh’s solicitors did not give evidence supporting these claims that the failure to make proper and timely discovery was their omission.

Further, Long Forest having provided a copy of the RD document to Kelemen’s that was subsequently provided to Mr Singh, is inconsistent with the fact that the document can only be sourced from the plaintiff’s discovery. It is relevant to note that:

(a) Mr Singh’s subpoena to Kelemen’s did not produce a copy of the RD document;

(b) neither the Mesh Report or the correspondence between Mr Singh and Mesh makes any reference to the RD document;

(c) Mr Singh only emailed Mr Hooper a copy of the IM when seeking his advice about the property, not the RD document;

(d) when he was asked what documents he provided to Rigby Cooke, Mr Singh identified the contract, the IM and the emails from the consultants (Mr Hooper and Mesh), but not the RD document; and

(e) the RD document is not referred to or relied on to support the allegations of misrepresentation made by Rigby Cooke in its letter to the plaintiff’s solicitors dated 26 June 2017.

More significantly, Mr Singh’s evidence about how he obtained what was, for his case theory, a critical document, by way of a USB stick, was never put to either Mr Kelemen or Mr Giannakidis in evidence. I am satisfied that cross-examining counsel did not put the circumstances around the USB stick to those witnesses because they did not receive those instructions.

I find it improbable that the PCS was provided to Mr Singh. Like the RD document, there is no evidence of it being provided to or relied on by Mesh, Mr Hooper or Rigby Cooke. If he possessed it, there was no reason why Mr Singh would have chosen not to provide this document to his advisors. Further, although the PCS contained information that Long Forest may have been content to share with its agent, it was clearly a document intended for internal use and contained information that did not appear intended for public consumption. The plaintiff provided the PCS to Kelemen’s for no purpose other than to assist it in preparing the IM.

Although Mr Singh did not pursue his case concerning the mortgage representations, his evidence about such representations was relevant to his credit. It was false evidence, manufactured by Mr Singh after he was unable to independently raise the finance to complete the purchase and gain the significant opportunity for profit that Mesh had identified to him.

General findings concerning the transaction

Before turning to the specific issues joined between the parties, I will set out my general findings of fact about the transaction between them to provide a sufficient context for the consideration of those issues.

Engagement of Kelemen’s and preparation of the IM

In early 2016, Long Forest was determined to sell the Long Forest Estate. It had held the property for four and a half years. In that time, not only had Long Forest been unable to obtain a planning permit, but communications from the Council about its future prospects were discouraging. Further, at least one of its passive investors wished to exit the investment and relations had soured. The directors believed there had been capital appreciation since the initial purchase and a sale could realise an acceptable return on their investment.

During March and April 2016, Messrs Matthews and Batzios met with a couple of firms of real estate agents. On 13 May 2016, Long Forest appointed Kelemen’s as its estate agent for the property under an exclusive sale authority, which specified the vendor’s price in the range of $11 - 14 million. By a special condition, the agents were precluded from recovering any commission in the event of a sale to Mr Stamoulis and/or the Stamoulis Property Group.

Kelemen’s subsequently commenced a marketing campaign for the property, including the preparation of the IM that was provided to prospective purchasers. Under the IM, expressions of interest were required to be submitted by 1 September 2016. Mr Giannakidis undertook the bulk of the work to prepare the IM. Mr Batzios provided the PCS to Mr Giannakidis to assist him produce the IM.

Relevantly, the IM stated that:

(a) ‘The overall area of the development site comprises of 107ha (265 acres). The short term opportunity is for a residential subdivision into lot sizes of minimum 7,500m² under current controls or with a rezone and a separate T/planning Application into standard residential housing allotments.’;

(b) ‘[The property] is situated at the easterly fringe of the Bacchus Marsh CBD and residential precinct making it an excellent land bank opportunity.’;

(c) ‘The property is located within the fastest expanding growth corridor on the Western side of Melbourne and is on a raised plateau of flat land adjacent to an established Fauna Reserve.’;

(d) ‘Lots S2, S3, S4, and S6 & S7 are predominantly included within a Rural Conservation zone under the Moorabool Planning Scheme. Lots S2 and S3 are partially included within a Pubic Conservation and Resource zone under the Moorabool Planning Scheme being of no or little affect in value to the site’;

(e) ‘It is highly unlikely that at some time in the near future a property of this magnitude remains undeveloped.’; and

(f) ‘More time, effort and financial input here may result in a normal density subdivision (STCA)- circa 600m²@ lots.’.

Mr Singh became aware of the property in August 2016. He saw it advertised on the internet and contacted Mr Giannakidis who on 17 August 2016 emailed a copy of the IM to Mr Singh and gave directions that enabled him to inspect the property, which he did.

The first meeting

Mr Singh first met with Mr Kelemen and Mr Giannakidis at the office of Kelemen’s on 29 August 2016 (‘first meeting’). The first meeting went for about 45 minutes and at least part of it involved exchange of pleasantries and general discussion. Although the IM had been earlier emailed to Mr Singh, a printed copy was provided at the meeting.

What was said at the first meeting was disputed. Mr Singh recalled being told that:

(a) the property presented a good opportunity for subdivision, with the opportunity to make millions of dollars in profits;

(b) the property previously had a permit for the subdivision of 80 lots; and

(c) he would have to apply for a permit for subdivision, but once received, it could be subdivided into 80 to 100 lots.

It is probable that such statements were made to him by one or other of the agents. It is also probable that there were discussions around the type of subdivision that was possible under the existing zoning, as described in the IM.

I do not accept Mr Kelemen’s statement that he informed Mr Singh about the environmental issues affecting the site, described later in these reasons, and I was not persuaded by Mr Giannakidis that he made any particular representation about environmental issues. Absent a clear statement made by the agents, Long Forest’s case that the agents explained the environmental issues rested on the content of the PCS and the assertion, which I do not accept, that it was provided to Mr Singh.

I am satisfied that the agents recognised Mr Singh’s naivety about subdivisional land development and recommended that he obtain independent advice, introducing him to Taylors. The discussion included reference to price. The agents told Mr Singh that Long Forest was looking for $13 million, but Mr Singh did not indicate any intention to make an offer at this stage, stating that he needed to discuss a possible purchase with his family.

Although the closure of the expressions of interest period was then imminent, ultimately no formal expressions were received and the agents continued to deal with Mr Singh.

The second meeting

On 5 September 2016 Mr Singh, Mr Kelemen and Mr Giannakidis met for a second time at the offices of Kelemen’s (‘second meeting’). Price and terms were both discussed at this meeting, although the evidence about the specific figures is in conflict. Mr Singh’s evidence was that he suggested he could offer $6 million for the property on a three month settlement. Mr Kelemen said that Mr Singh offered $8 million for the property. In any event, the agents responded to the figure that was advanced by indicating that Long Forest would not be prepared to accept such a low offer.

I am not persuaded that the precise sequencing of figures discussed between the parties at the second meeting was accurately recalled by any witness, but I am satisfied that Mr Singh raised the possibility of purchasing some of the titles, instead of the entire property. The agents responded that the vendor would not sell individual titles, although, again, I could not be satisfied about the precise discussion around this issue, save that the suggestion emerged that Mr Singh might buy a 50% interest in the total offering and then participate in the subdivision of the land with the vendor as a joint venture.

It is also probable that the suggestion that Mr Singh obtain independent advice from Taylors was again mentioned because he first contacted them the following day.

It is likely that there was some discussion about the development of the land and the possible profit to be made. Mr Giannakidis identified a general discussion along these lines, while Mr Kelemen and Mr Singh insisted that much more specific, although different and conflicting, representations were made. I accept Mr Giannakidis when he stated:

Go on, please. If you can recall what occurred at this meeting?---We spoke about the land. There was a document produced which outlined the site. In that document there was an executive summary which we proceeded to discuss, outlining the attributes of the land, and then we started talking about price, settlements and the like. We spoke about the land and its potential use, as well as its shortcomings and environmental issues, most of which involved around the EPA and things that needed to be done in order for the land to at some point become developable.
Are you able to recall what you were told about what you described as the EPA?--- Well, basically that there were some environmental issues with the land, revolving around native fauna, wetlands, insects, grasslands. There were steps being made and Chris and Brad were actively involved in discussing and meetings with the EPA and surrounding landholders in an effort to resolve environmental issues.
Were you told anything at this meeting in relation to planning issues with the local council?---The only planning issues that we were told about was that they had made an application to subdivide the land. We were told that that application didn't go all that well. It subsequently had lapsed and they hadn't made any attempt to do that. There was an application that was put in for the subdivision of the land but that application didn't really go anywhere. Nothing came of it. Of course, the application had lapsed and nothing more had happened. That's as far as I know.[9]

[9]Mr Giannakidis’ references to the EPA in this evidence ought properly to have been a reference to the Commonwealth Department of the Environment and Heritage.

Long Forest invited me to find that the agents told Mr Singh about the history of the site, the planning history, and the environmental issues. On the other hand, Mr Singh submitted that he ought to have been told about these matters, but was not. For reasons that appear later in this judgment, it is unnecessary to resolve this conflict, or to make specific findings about precise representations. As events transpired, it did not matter what was said. However, I am not satisfied that any of the environmental issues affecting the land were discussed at this meeting.

I am satisfied that how Mr Singh would finance the purchase was not discussed during the second meeting.

Following the second meeting, three developments occurred. First, Long Forest rejected Mr Singh’s offer. Secondly, Mr Singh separately contacted Taylors and Mesh to discuss the possibility of engaging those firms for a due diligence enquiry. He spoke with Mr Hooper (Taylors), who gave evidence, and Ms Pettitt (Mesh), whose absence from the witness box was unexplained. On 7 September 2016, Mesh provided a fee proposal to Mr Singh.

At around this time, Mr Singh contacted QPF Finance Group (‘QPF’), a finance broker. He was referred to Mr Paul Stevenson at QPF, who sought an indication from Oasis Mortgage Group (‘Oasis’) as to the nature of loan finance that Mr Singh would be able to secure. On 7 September 2020, Oasis provided an indicative loan finance proposal in the sum of $2.5 million.

The third meeting

On 7 September 2020, Mr Kelemen, Mr Giannakidis and Mr Singh met again in Kelemen’s boardroom (‘third meeting’).

The agents told Mr Singh that Long Forest confirmed that it would not sell individual titles and they suggested to him that he focus on a possible purchase of a 50% interest in the property. Mr Giannakidis told Mr Singh that Long Forest was happy to retain an interest in the property and would consider a more limited sale.

Mr Singh went to the third meeting armed with a cheque for $280,000 that he proffered in conjunction with an offer of $2.8 million to purchase a half interest in the property. When the agents told Mr Singh that Long Forest was unlikely to accept that offer, he increased his offer to $3.5 million on a three month settlement, and handed over the cheque as a show of good faith.

Mr Singh asserted that he informed the agents at this meeting that he was looking to obtain finance and that Mr Kelemen said that the vendor would sign all documents required for Mr Singh to obtain a mortgage over his 50% interest. I reject this evidence. At that time, Mr Singh was seeking finance on the basis of the whole of the property being offered by him as security. There was no objective corroboration for these assertions and there is an undeniable ring of probability to Mr Kelemen’s denial that the Long Forest would agree to mortgage the property to secure Mr Singh’s loan to purchase a half interest. Rather, I am satisfied that Mr Singh projected himself as capable, as the operator of a highly successful transport business who had the necessary funds to complete the purchase. Although they would later question this assumption, at this stage the agents considered Mr Singh to be a serious prospective purchaser of a half interest in the property and saw no reason to demand proof of his ability to complete the purchase.

During the third meeting, Mr Singh informed the agents that he had looked at another property in Rockbank and there was some general comparative discussion about the two opportunities.

Execution of the contract

Following the third meeting, Mr Singh followed up with Mr Hooper at Taylors and discussed with Ms Pettitt the work that Mesh had done on his behalf. For present purposes, I note that by 12 September 2016, Mr Singh had no ongoing relationship with Mr Hooper concerning Long Forest Estate and by 27 September 2016, Mr Singh had received the Mesh Report and had discussed it with Ms Pettitt. These matters are considered later in these reasons.

On 27 September 2016, Mr Singh submitted the offer that Long Forest accepted. Both Mr Kelemen and Mr Singh suggested this meeting took place in Kelemen’s boardroom. It is likely that the meeting ended up there, as the final document contained the handwriting of each of Mr Singh, Mr Giannakidis and Mr Kelemen, but I am satisfied that Mr Giannakidis initially went to Mr Singh’s work premises in Laverton, intent on closing a deal and returning with a signed offer. Mr Giannakidis distinctly recalled that he was with Mr Singh for a significant part of the day and had to cancel a number of other commitments.

Mr Giannakidis provided Mr Singh with a copy of the vendor’s statement and had with him the contract of sale as prepared by Long Forest’s solicitors. Mr Giannakidis realised there was no prospect of a sale unless Mr Singh increased his offer to $4 million, because he believed that in the absence of other interest in the property, Long Forest would accept that offer for a one half interest.

There were conversations around price and the settlement terms over several hours before agreement was reached on:

(a) a price of $4 million for a 50% interest;

(b) a deposit of $400,000 of which $280,000 had already been paid; and

(c) settlement occurring on 10 June 2017.

When the contract was signed and dated was contested. I am satisfied that Mr Singh made the offer in the circumstances I have described on 27 September 2016 and he signed the contract that day. I reject Mr Singh’s evidence that he signed the contract on 6 October 2016, but left the date of execution blank and did not date it as 27 September 2016. Mr Singh gave no evidence that suggested he had a reason for not dating the contract when he signed it. Additionally, in cross-examination, Mr Singh conceded that the date on the acknowledgement of receipt of the vendor’s statement was accurate and in his handwriting. I find it likely that this document was signed at the same time that the contract itself was signed.

It is unclear when Mr Batzios signed the contract, but Mr Matthews was not able to sign it until 4 October 2016. He wrote that date as the date of the vendor’s acceptance of the offer. I accept that the handwritten due diligence clause was discussed in Kelemen’s boardroom and principally inserted because the agents were uncertain whether Mr Singh had completed appropriate due diligence and wanted to be seen to have offered that opportunity. Neither Mr Batzios nor Mr Matthews had any concern about the due diligence special condition. Had Mr Singh produced the Mesh Report prior to signing the contract, as he asserted, it is improbable that the agents would have added this special condition. In any event, there is no evidence that Mr Singh took any further step by way of due diligence enquiry to take advantage of the opportunity presented by the special condition.

Sale of Land Act issues

It is convenient to first deal with the issues arising under the SOL Act.

Although the defendants pleaded their case as non-disclosure in breach of ss 32C and 32D of the SOL Act, the defendants did not press a s 32C claim at trial. The defendants submitted that the vendor’s statement had failed to disclose, as required by s 32D(a):

[P]articulars of any notice, order, declaration, report or recommendation of a public authority or government department or approved proposal directly and currently affecting the land, being a notice, order, declaration, report, recommendation or approved proposal of which the vendor might reasonably be expected to have knowledge…

The asserted non-disclosure fell into two distinct categories.

First, there were three declarations of the Commonwealth Minister for the Environment and Heritage (‘the Minister’) under the EPBC Act, being:

(a) a declaration dated 11 July 2000, establishing, pursuant to ss 178, 181 and 184, a list of threatened species, ecological communities and key threatening processes;

(b) a declaration dated 20 November 2002 amending the list of threatened species established under s 178 to include Synemonplana (‘golden sun moth’); and

(c) a declaration dated 29 May 2008 amending the list of threatened ecological communities established under s 181 to include the Natural Temperate Grassland of the Victorian Volcanic Plain (‘NTGVVP’),

(together, the ‘declarations’).

Second, the Minister made two decisions under the EPBC Act, referred to later in these reasons as the ‘Long Forest controlled action decision’ and the ‘Long Forest proposed approval decision’, which related to the Long Forest’s proposal to construct the Long Forest Estate residential development.

Before I identify this latter category of documents with specificity, and express my findings of fact in relation to the question of non-disclosure under s 32D of the SOL Act, I will set out sufficient detail of the regulatory structure under the EPBC Act to properly illuminate the statutory context in which these documents came into existence, and their place (if any) in the disclosure obligations created by s 32 of the SOL Act.

Environment Protection and Biodiversity Conservation Act
Relevant provisions

The objects of the EPBC Act are found in s 3:

3 Objects of Act
(1) The objects of this Act are:
(a)to provide for the protection of the environment, especially those aspects of the environment that are matters of national environmental significance; and

(b)to promote ecologically sustainable development through the conservation and ecologically sustainable use of natural resources; and
(c)to promote the conservation of biodiversity; and
(ca)to provide for the protection and conservation of heritage; and
(d)to promote a co‑operative approach to the protection and management of the environment involving governments, the community, land-holders and indigenous peoples; and
(e)to assist in the co-operative implementation of Australia’s international environmental responsibilities; and
(f)to recognise the role of indigenous people in the conservation and ecologically sustainable use of Australia’s biodiversity; and
(g)to promote the use of indigenous peoples’ knowledge of biodiversity with the involvement of, and in co-operation with, the owners of the knowledge.

(2) In order to achieve its objects, the Act:
(a)recognises an appropriate role for the Commonwealth in relation to the environment by focussing Commonwealth involvement on matters of national environmental significance and on Commonwealth actions and Commonwealth areas; and
(b)strengthens intergovernmental co-operation, and minimises duplication, through bilateral agreements; and
(c)strengthens for the intergovernmental accreditation of environmental assessment and approval processes; and
(d)adopts an efficient and timely Commonwealth environmental assessment and approval process that will ensure activities that are likely to have significant impacts on the environment are properly assessed; and
(e)enhances Australia’s capacity to ensure the conservation of its biodiversity by including provisions to:
(i)protect native species (and in particular prevent the extinction, and promote the recovery, of threatened species) and ensure the conservation of migratory species; and
(ii)establish an Australia Whale Sanctuary to ensure the conservation of whales and other cetaceans; and
(iii)protect ecosystems by means that include the establishment and management of reserves, the recognition and protection of ecological communities and the promotion of off-reserve conservation measures; and
(iv)identify processes that threaten all levels of biodiversity and implement plans to address these processes; and

(f)includes provisions to enhance the protection, conservation and presentation of world heritage properties and the conservation and wise use of Ramsar wetlands of international importance; and
(fa)includes provisions to identify places for inclusion in the National Heritage List and Commonwealth Heritage List and to enhance the protection, conservation and presentation of those places; and
(g)promotes a partnership approach to environmental protection and biodiversity conservation through:
(i)bilateral agreements with States and Territories; and
(ii)conservation agreements with land-holders; and
(iii)recognising and promoting indigenous peoples’ role in, and knowledge of, the conservation and ecologically sustainable use of biodiversity; and
(iv)the involvement of the community in management planning.

Sub-section (1)(b) above identifies the object of promoting ecological sustainable development, the principles of which are set out in s 3A:

3A Principles of ecologically sustainable development
The following principles are principles of ecologically sustainable development:
(a)decision-making processes should effectively integrate both long‑term and short‑term economic, environmental, social and equitable considerations;
(b)if there are threats of serious or irreversible environmental damage, lack of full scientific certainty should not be used as a reason for postponing measures to prevent environmental degradation;
(c)the principle of inter‑generational equity – that the present generation should ensure that the health, diversity and productivity of the environment is maintained or enhanced for the benefit of future generations;
(d)the conservation of biological diversity and ecological integrity should be fundamental consideration in decision‑making;
(e)improved valuation, pricing and incentive mechanisms should be promoted.

To achieve the stated objects, including the principle of ecologically sustainable development, the EPBC Act recognises certain species and ecological communities as being threatened. These are determined by the Minister’s exercise of the following statutory powers:

Listing of threatened species 178

(1)The Minister must, by legislative instrument, establish a list of threatened species divided into the following categories:
(a)extinct;
(b)extinct in the wild;
(c)critically endangered;
(d)endangered;
(e)vulnerable;
(f)conservation dependent.

…
181 Listing of threatened ecological communities
(1)The Minister must, by legislative instrument, establish a list of threatened ecological communities divided into the following categories:
(c)critically endangered;
(d)endangered;
(e)vulnerable.

…
184 Minister may amend lists
Subject to this Subdivision, the Minister may, by legislative instrument, amend a list referred to in section 178, 181 or 183 by:
(a)including items in the list in accordance with Subdivision AA; or
(aa)including items in the list in accordance with subsection 186(3), (4) or (5); or
(b)deleting items from the list; or
(c)in the case of the list referred to in section 178 or 181 – transferring items from one category in the list to another category in the list in accordance with Subdivision AA; or
(d)correcting an inaccuracy or updating the name of a listed threatened species or listed threatened ecological community.

…
194 Lists must be publicly available
The Minister must ensure that:
(a)up-to-date copies of the lists referred to in sections 178, 181 and 183 are available for free to the public on request; and
(b)up-to-date copies of the lists are available on the internet.

Section 18 creates a default prohibition on a person taking an ‘action’ that has, will have, or is likely to have, a significant impact on threatened species or endangered ecological communities that are listed by the Minister.

Section 523(1) defines ‘action’ as:

(a)      a project; and
(b)      a development; and
(c)      an undertaking; and
(d)      an activity or series of activities; and
(e)an alteration of any of the things mentioned in paragraph (a), (b), (c) or (d).

Section 18 is a civil penalty provision, with penalties of $5,000 for individuals and $50,000 for body corporates applying. Section 18A is an offence provision, with elements that mirror those in s 18. The offence is one of strict liability.

To displace the default prohibition on taking an action that may affect listed threatened species and ecological communities,[10] the EPBC Act creates an approval process for a proposed action by the mechanism of a ‘controlled action’.
[10]By s 19 of the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (‘EPBC Act’), neither ss 18 or 18A apply to an action if an approval of the taking of the action by the person is in operation.

Section 67 defines a controlled action:

67 What is a controlled action?
An action that a person proposes to take is a controlled action if the taking of the action by the person without approval under Part 9 for the purposes of a provision of Part 3 would be (or would, but for section 25AA or 28AB, be) prohibited by the provision. The provision is a controlling provision for the action.

Section 67A prohibits a person from taking a controlled action unless an approval for taking the action by the person is in operation.

The process of seeking approval for a controlled action starts with a reference by the person proposing to take some action. Section 68 states:

68 Referral by person proposing to take action
(1)A person proposing to take an action that the person thinks may be or is a controlled action must refer the proposal to the Minister for the Minister’s decision whether or not the action is a controlled action.
(2)A person proposing to take an action that the person thinks is not a controlled action may refer the proposal to the Minister for the Minister’s decision whether or not the action is a controlled action.

References to the Minister can also be made by State governments, or State and Commonwealth agencies, for a decision whether a proposed action is a controlled action.[11] Further, the Minister may call in a proposal by requesting the person proposing to take the action, or the relevant state government/agency, to refer the proposal to them.[12]
[11]EPBC Act ss 69, 71.
[12]EPBC Act s 70.

A proposal is referred in accordance with the regulations,[13] and the Minister may invite the provision of information on the referred proposal from other sources.[14]
[13]EPBC Act s 72.
[14]EPBC Act s 74.

The Minister must decide whether the proposed action is a controlled action (‘controlled action decision’), and, if so deciding, must:

(a) designate a person as proponent of the action;[15] and

(b) give written notice of the decision to the proponent of the action.[16]

[15]EPBC Act s 75(3).

[16]EPBC Act s 77.

Section 170A relevantly requires the Secretary to publish on the internet, every week, notice of each controlled action decision.

Once a proposed action is deemed a controlled action, the Minister must cause it to be assessed to understand the relevant impacts if it were to be approved. The Minister must decide what approach will be adopted for assessment.[17]
[17]EPBC Act s 87. In the present case, the Minister determined that the assessment would be approached on preliminary documentation under Division 4. This method proceeds either on the basis of the information already available (s 95), or by requesting further information relevant to assessing the relevant impacts of the controlled action, including information about strategies for mitigating any adverse impacts (s 95A).

At the conclusion of the assessment process, the Secretary must prepare and give to the Minister a recommendation report relating to the controlled action that must include recommendations on whether the taking of the controlled action should be approved, and, if approval is recommended, any conditions that should be attached to the approval.[18]
[18]EPBC Act s 95C.

Under the ‘basic rule’,[19] the Minister must decide whether or not to approve the taking of the action. Before the Minister makes that decision, they must inform the designated proponent of the decision that the Minister proposes to make and of any conditions the Minister proposes to attach to the approval and invite the designated proponent to comment in writing on the proposed decision and any conditions (‘proposed decision on approval’).[20]
[19]EPBC Act s 130.
[20]EPBC Act s 131AA.

The grant of approval is governed by s 133. What is approved under that section is the taking of the controlled action by the designated proponent. Section 133(2A) provides that:

Persons who may take action covered by approval
(2A)An approval granted under this section is an approval of the taking of the action specified in the approval by any of the following persons:
(a) the holder of the approval;
(b)a person who is authorised, permitted or requested by the holder of the approval, or by another person with the consent or agreement of the holder of the approval, to take the action.

Notice of the approval is to be given to the designated proponent, and to any person who asks for it.[21]
[21]EPBC Act s 133(3).

Analysis

The declarations are to be relevantly understood as follows. The first declaration, made just prior to commencement of the EPBC Act,[22] was to establish the initial lists of threatened species and ecological communities under ss 178 and 181 respectively. The second and third declarations amended the lists, pursuant to s 184, to add the golden sun moth to the list of threatened species and the NTGVVP to the list of threatened ecological communities respectively.
[22]16 July 2000.

The declarations, which the defendants say ought to have been disclosed in the vendor’s statement, were published, freely available legislative instruments declared by a Minister of the Commonwealth under federal legislation.[23] So much is clear from the fact that copies of these documents were discovered by the defendants and put in evidence by them. I am satisfied that these documents had never been in Long Forest’s possession and that its directors were unaware of these documents when the vendor’s statement was signed. That is not to say, however, that Long Forest was unaware of the golden sun moth, the NTGVVP, and the implications of the EPBC Act.
[23]EPBC Act s 194 requires up-to-date lists of threatened species and ecological communities to be freely available on the internet.

Further, neither the declarations nor the approval of a controlled action are referrable to land constituting habitat or environment that might be affected per se, or more particularly, land identified by its title particulars.

Long Forest refers proposed development for approval

The plaintiff’s referral of the proposed action under s 68 of the EPBC Act was made in July 2013. It contained the following short description of the proposed action:

Long Forest Estate is a proposed urban development in Merrimu, approximately 60 kilometres (km) north-west of Melbourne (refer to Figure 1). The site covers approximately 108 hectares (ha) including urban development that will provide subdivided blocks of land with associated infrastructure such as roads and services, and a conservation area (refer to Figure 2).

The referral identified that 41ha was proposed to be cleared for urban development (including 3ha for associated services such as roads) and 64ha was proposed to be set aside for conservation. The referral stated that a previous owner had proposed urban development across the entire 108ha of the property. This was not considered feasible due to the potential impact on ecological values, such as the removal of 108ha of potential habitat for golden sun moth and 74.41ha of NTGVVP. However, the referral contended that the alternative of no urban development of the property was not also considered feasible, due to the long term demand for housing in the area and the existing planning intent for urban development at the site.

The plaintiff submitted a detailed ecological desktop assessment undertaken on its behalf by Ecology and Heritage Partners Pty Ltd that showed the presence of an ecological community at the property, namely the critically endangered NTGVVP, and a subsequent field assessment of the site identified a population of the critically endangered golden sun moth.

The referral noted that the proposed urban development would cause the loss of 43.98ha of potential habitat for the golden sun moth that would require an offset, and that the development would secure the conservation of 64ha of potential habitat for the moth. Further, the urban development would result in the loss of 28.83ha of NTGVVP while securing the conservation of 46.06ha of NTGVVP, but also requiring an offset.

Following the referral, the plaintiff’s consultants, Aecom Australia Pty Ltd and Ecology and Heritage Partners Pty Ltd, provided further information to the Minister in response to a request.

On 23 July 2014, the Minister informed the plaintiff of his referral decision for the Long Forest Estate residential development project. That decision was published on the website of the Department of the Environment and Heritage (‘Department’). The document that was notified was entitled ‘Notification of REFERRAL DECISION AND DESIGNATED PROPONENT – controlled action DECISION ON ASSESSMENT APPROACH’ (‘Long Forest controlled action decision’).

The correspondence from the Department that provided the Long Forest controlled action decision confirmed that it also would be published on the internet, as was required by s 170A of the EPBC Act. The decision identified the plaintiff as the designated proponent and described the proposed action – to construct the Long Forest Estate residential development in Merrimu, Victoria, approximately 5km northeast of Bacchus Marsh (EPBC Act referral 2014/7251) as a controlled action. The decision stated that the project would require assessment and approval under the EPBC Act before it could proceed. The project was to be assessed by preliminary documentation and the relevant controlling provisions were those relating to listed threatened species and ecological communities.[24]
[24]Being EPBC Act ss 18 and 18A.

On 27 November 2015, the Minister informed the plaintiff that its proposal to construct the Long Forest Estate residential development had been assessed for its impacts on listed threatened species and ecological communities, and that the Minister proposed to approve the controlled action subject to conditions (‘Long Forest proposed approval decision’). The Minister’s delegate sought further comment from the Long Forest The Long Forest proposed approval decision was a decision made under ss 130(1) and 133 of the EPBC Act. It identified the proposed action as the construction of the Long Forest Estate residential development at Merrimu.

The conditions of approval were significant. There were 14 conditions but I need not note them all. Relevantly:

(a) the developable area was not to impact more than 36.94ha of golden sun moth habitat and not impact more than 28.35ha of NTGVVP;

(b) to compensate for the loss of 22.9ha of golden sun moth habitat and 17.3ha of NTGVVP within stage 1 and stage 2 of the developable area, the plaintiff must, prior to the commencement of construction activities, have placed a long term protection mechanism on the conservation area to formalise its protection as an environmental offset, and design and implement appropriate grassland management measures to increase the cover of grassland within the conservation area from 45.5ha to a minimum of 58ha within a 5 year period; and

(c) to compensate for the loss of 14.05ha of golden sun moth habitat and 10.49ha of NTGVVP within stage 3 of the developable area, the plaintiff must have located and secured an additional direct offset, consistent with the relevant policy, of at least 45ha of golden sun moth habitat and 35ha of NTGVVP.

Long Forest requested a short extension of the period in which its response was to be provided, but it ultimately did not respond and thereafter ceased to press the application. On 1 February 2018, more than two years later, the Department informed the plaintiff’s solicitors that it had not received any communication from the plaintiff since the request for an extension of the time, and because the requested comments on the proposed approval had not been received and the period for comment exceeded, the Minister had not progressed to the final approval decision. The Department stated that if the plaintiff wished to progress with the proposed action, enquiries could be made as to what steps were then appropriate.

I am satisfied that the plaintiff abandoned the application for approval under the EPBC Act by the end of 2015, by taking no further steps following the expiry of the period of time for comment under the Long Forest proposed approval decision. The Minister effectively treated the application as having been abandoned.

Long Forest’s application for a planning permit

During this period, Long Forest applied to the Council for a planning permit for the Long Forest Estate residential development. Long Forest’s planning consultants provided it with a report recommending an application to subdivide the property into 69 allotments. 55 allotments, ranging in size from 0.75ha to 0.82ha, would be for future rural-residential development. The remaining 14 allotments, ranging between 1.8ha and 35.96ha in size, were identified as conservation allotments. This proposal was consistent with the plaintiff’s referral to the Minister, in that approximately 44ha of the property would be subdivided, while the conservation allotments, an overall area of approximately 64ha, would be suitably encumbered for environmental conservation and offset purposes.

On 4 June 2017, Mr Singh sent Mr Matthews a proposed deed of variation of the contract prepared by Rigby Cooke. By the document, Mr Singh suggested two options:

(a) Long Forest agree to permit the Mr Singh to take out a mortgage over the property, and to enter into a contract to sell its remaining 50% interest in the land to Mr Singh for $5 million, payable twelve months after the day of sale, with a 5% deposit payable on execution and a further 5% deposit three months later; or

(b) alternatively, the contract be amended to provide for the sale of the whole of the property to Mr Singh for $8 million, with Long Forest to provide vendor finance of $4 million for a period of 12 months.

Mr Matthews, who now believed there was a very real prospect that Mr Singh could not complete the contract, responded by requesting a copy of Mr Singh’s lender’s approval letter and the proposed mortgage documentation. Mr Matthews then departed on an overseas holiday, but chased Mr Singh by email for a response while he was out of the country.

On 8 June 2017, Mr Singh responded:

Appreciate for patience.My Broker told me
Offer letter is getting prepared.They promised
It for today.
Also , I spoken to my mate he is ready to go head
With me for other 50% for 4.6million.
So we can settle all together for whole lot for 8.6million next week.
Please let us know.
Much appreciate for your assistance.

Later on 8 June 2017, Mr Singh emailed part of an offer letter to Mr Matthews with the following message:

Please see old offer letter attached. This might had some technical error.
But we have new one with few changes.Lender’s solicitor could not finish today.
I thought send this one to you until new one comes in.

The attached letter of offer was the first page of the letter of 26 May 2017 from Equity-One.

Mr Matthews responded by email on 9 June 2017 in the following terms:

This lenders letter is a total nonsense.
I do not know what discussions you or your Broker had with your proposed lender but how or why would we be giving guarantees ?
Your SMS’s yesterday ask me for a response to this email when all I have is an incomplete letter from a proposed lender (dated 26 May) .This incomplete letter requires Chris and I to give personal guarantees and also agree to secure your loan over the 50% of the property which we own.
This is a ludicrous request.
I told you in our meeting at our office and my phone discussion with you on Saturday 3rd that we need to see in detail and understand what you are proposing and what we have is insufficient to make the decision that you require.
Please send to me a the full Approval Letter from the Lender.
To be in this position after you have had 8 months to organise your funds and settlement does not inspire confidence .
We have made financial commitments to other parties off the back of your purchase and we are now placed in an unacceptable position because of this.
Wait to receive the full and current Approval letter

Remarkably, Mr Singh’s response was:

That’s why i was waiting on new letters.
Have you conider to sell whole lot one I sent you email yesterday. I have my mate interested with me.
We can settle 100% for 8.6million next week
Please let me know.

This offer was in substance restated by Belleli King by letter dated 9 June 2017.

The contract of sale signed in September 2016 provided for settlement on 10 June 2017, a Saturday, and was scheduled for 3:30pm on the next business day, 13 June 2017.[54] At 10.50am on the day of settlement, Mr Singh sent Mr Matthews the following message:

We are settling cash now, please confirm price of other 50% if you like?
Also that offers letter based on 50% now and 50% after 12month or for 50% they need full title.
Which is not required because it’s not acceptable by you.

[54]12 June 2017 was a public holiday.

At 1:05pm, Mr Matthews responded expressing his appreciation for the good news that the contract would be settled by a cash payment with no request of Long Forest for a mortgage. Mr Matthews stated that he was happy to continue the conversation after settlement about sale of the remaining 50% of the property, but on the basis that Long Forest would be expecting a much higher sale price than $4 million.

Shortly before the time for settlement arrived, and in a contradiction to Mr Singh’s earlier email, Belleli King wrote to Long Forest’s solicitors in the following terms:

Our client is experiencing issues with regard to his financier due to the fact that he is only purchasing 50% of the property. To enable this transaction to move forward our client has instructed to request the following variations to the Contract:
1. That our client purchase 100% of the property for the sum of $8,600,000.00; and

2. The settlement date be varied to Tuesday, 27 June 2017.
In light of the proposed variations our client has requested if your client would consider waiving penalty interest?
In all other respects the said Contract is to remain the same.

Following receipt of the letter, Mr Matthews emailed Mr Singh and demanded immediate proof that clear funds were available to settle the contract, failing which he would instruct Long Forest’s solicitors to issue a rescission notice.

Later that afternoon, Long Forest’s solicitors served a rescission notice. The notice described the purchasers’ default as the failure to pay the residue of the purchase price, namely $3.6 million, on the date fixed for payment of the same, namely 13 June 2017, or at all, and stated that unless the default was remedied, together with payment of costs and interest within 14 days of service of the notice, the contract would be rescinded pursuant to general condition 28(2).

On 27 June 2017, the plaintiff’s solicitors wrote to Mr Singh’s solicitors stating that neither the purchaser, Mr Singh nor the nominee, Shri Guru had completed the purchase by 4:00pm that day, as required by the contract and the rescission notice, and that accordingly, the contract was terminated and the deposit was forfeited.

Operative conditions of the contract

The operative conditions of the contract of sale can be noted as follows:

(a) Special condition 9.1 required that the balance of the purchase price must be paid on the settlement date, identified in the particulars of sale as 10 June 2017.[55]
[55]10 June 2017 was a Saturday. By operation of general condition 16.2, settlement was extended to 13 June 2017, being the next business day.

(b) By general condition 10.1, the purchaser was obliged to pay the balance of the purchase price at settlement.

(c) General condition 16.1 provided that time was of the essence.

(d) General condition 27.1 provided that the vendor was not entitled to exercise any rights arising from the purchaser’s default, other than the right to receive interest and the right to receive money owing, until the purchaser was given and failed to comply with a written default notice.

(e) General condition 27.2 specified the requirements for a valid default notice, which was not an issue raised in this proceeding.

(f) General condition 28.2 provided that the contract immediately ended if the default notice also stated that unless the default was remedied and the reasonable costs and interest were paid, the contract would be ended, as the default notice in this case stated.

(g) General condition 28.4 provided that if the contract ended by a default notice given by the vendor, the deposit (up to 10% of the purchase price) was forfeited to the vendor as its absolute property.

(h) General condition 25 provided that a party who breached the contract must pay the other party, on demand, compensation for any reasonably foreseeable loss resulting from the breach and any interest due under the contract as a result of the breach.

(i) Special condition 10.1 defined the meaning of foreseeable loss in the following terms:

10.1 Meaning of Foreseeable Loss
For the purposes of this Contract, the expression “foreseeable loss” referred to in General Condition 25 will include:
10.1.1any loss which the Vendor may directly or indirectly suffer under any other contract or agreement entered into by the Vendor whether prior to, on or after the Day of Sale as a result of the Purchaser’s breach of this Contract;
10.1.2interest payable by the Vendor under any existing mortgage over the Property for the period between the settlement due date and the date which this Contract actually settles;
10.1.3legal fees and disbursements on a full indemnity basis and any counsel or consultant’s fees and expenses at the rate charged to the Vendor incurred in obtaining any relevant advice about breach or failure to comply; and

10.1.4 any penalties or expenses incurred or additional costs.

A further twist

Between the date of the notice of rescission and the letter of termination, a further development demonstrated that the defendants could not finance the residue payment and were not ready, willing and able to settle the contract. Further, the defendants wanted the sale completed. Mr Singh was now looking for a mechanism to preserve his investment of the deposit of $400,000 in the future development of the land.

I noted at the outset that prior to the engagement of Kelemen’s to market the property, Long Forest was negotiating with Mr Stamoulis about a potential sale of the property to him. He controlled substantial land holdings in the locality suitable for subdivisional development. Kelemen’s was specifically excluded from a commission in the event of any sale to Mr Stamoulis or the Stamoulis Property Group. Mr Batzios and Mr Matthews both gave evidence that discussions with Mr Stamoulis remained on foot at the time that Kelemen’s was appointed. It can be readily inferred from what follows that Mr Stamoulis had an ongoing interest in acquiring the property. These dealings suggest that the ‘environmental issues’ raised by Mr Singh were not, in fact, of concern to Mr Singh at this time, or at any time. They were instead raised as a strategic bargaining chip by Mr Stamoulis. Mr Singh, probably unwittingly, was a bit-player.

On 26 June 2017, Mr Singh and Shri Guru entered into a deed with Mr Bill Karvela, a solicitor at Rigby Cooke. Mr Karvela was described in the deed as the ‘Nominee’. Recital H of the deed contained a further reference to ‘Nominee’; identified as ‘Bill Karvela and/or Stamoulis Property Group Pty Ltd (ACN 606 815 196) or a related entity’.

In summary, the deed:

(a) acknowledged that Mr Singh was not in a position to settle the contract and stood to lose the $400,000 deposit he had paid as a result of Long Forest’s rescission;

(b) identified a potential failure by Long Forest to properly disclose information required to be included in the vendor’s statement that was known to Mr Karvela, which could, if established, avoid its rescission of the contract;

(c) permitted Mr Stamoulis to use this alleged deficiency as leverage in negotiating with Long Forest, independently of Mr Singh, but in his name and that of Shri Guru, whom Rigby Cooke would assert in written correspondence they acted for;

(d) conceived that Mr Stamoulis, if successful in persuading Long Forest that a contract with him as the purchaser was a better outcome than the risk that the contract would be found to have been improperly rescinded, would secure an interest in a property worth substantially more than he had paid for it; and

(e) ensured that Mr Singh would retain a modest interest in the property, commensurate to the amount he had originally paid as a deposit.

By the recitals:

(a) Shri Guru admitted that it was not in a position to effect settlement; and

(b) the Nominee recited that it had the financial capacity to be nominated as the substituted purchaser and effect settlement, or, to enter into a new contract with the vendor for either a half share in the property or the entire property.

By clause 1 of the deed, Mr Singh and Shri Guru acknowledged to the Nominee that the non‑refundable deposit of $400,000 was the property of Long Forest and that they did not have the financial capacity to settle the contract.

Clause 2 of the deed was in the following terms:

2.1As soon as this Deed is signed and exchanged, the Nominee must instruct its lawyers, Rigby Cooke, to issue correspondence to the Vendor’s lawyers in which the letter will:
2.1.1 specify that Rigby Cooke acts for [Mr Singh] and [Shri Guru];
2.1.2assert, among other things, that the statement pursuant to section 32 of the Sale of Land Act (Vic) given by the Vendor to [Mr Singh] in connection with the Property is defective and that defect entitles [Mr Singh] and/or [Shri Guru] to terminate the Contract and recover the full amount of the Deposit; and
2.1.3request, on a without prejudice basis and before formally terminating the Contract, the notice of rescission referred to in Recital F be withdrawn or the date for compliance with the notice of rescission be extended to a date which is at least 21 days after the date of the Rigby Cooke letter to allow for negotiations on the Contract or the entry into of a New Contract.

2.2For the purposes of clause 2.1.3, the negotiations may be in connection with the price or any term under the Contract or in connection with the Nominee purchasing a 50%or 100% interest in the Properly under a New Contract.
2.3The Nominee must advise [Mr Singh] and [Shri Guru] as to any response it receives from the Vendor to the letter pursuant to clause 2.1.1.
2.4. If the Vendor agrees to engage in any negotiations, those negotiations will be conducted solely by the Nominee without references to [Mr Singh] and Shri but will keep [Mr Singh] and [Shri Guru] updated as to the outcome of any negotiations and any responses from the Vendor.
2.5. If the Nominee:
2.5.1. reaches, as part of any negotiations, an outcome with the Vendor which is acceptable to the Nominee; or
2.5.2. wishes to acquire the 50% interest In the Property on the terms of the Contract or a New Contract for a 50% Interest In the Property,

then the Nominee will nominate as substitute purchaser under the Contract or enter into a New Contract with the Vendor (depending on the outcome of the negotiations with the Vendor).
2.6. If the Vendor requires compliance by [Mr Singh] and [Shri Guru] with the Contract and does not wish to engage in any negotiations with the Nominee, the Nominee will, at its sole direction, either treat this Deed as being at an end or proceed to nominate as substitute purchaser under the Contract as contemplated by this Deed.
2.7. The Nominee is solely responsible for all costs of Rigby Cooke in connection with any correspondence or negotiations undertaken by the Nominee with the Vendor as contemplated by this clause 2 and in connection with any nomination under the Contract or entry into any New Contract.

The deed further provided that, in the event that the Nominee was successful in acquiring an interest in the property, in consideration of the payment of $400,000 deposit when the contract had been executed, Shri Guru would acquire a ‘deemed fixed interest’, capped at 10% if the nominee acquired a 50% interest in the property, and capped at 5% if the Nominee acquired the whole property.

Assuming, although the evidence perhaps contradicted the fact, that Mr Singh was independently advised as to whether to enter into the deed, such a deal may have represented the best outcome for Mr Singh in what was otherwise a dire situation. He might not lose his deposit, and could retain a small stake in the upside of the purchase.

On 26 June 2017, presumably acting for the Nominee consistently with the deed, Rigby Cooke wrote to Long Forest’s solicitors, notifying them that it now represented Shri Guru in respect of the contract of sale. Those solicitors noted that:

(a) they were in possession of numerous documents that proved that Long Forest was aware of ‘extreme limitations’ imposed on the current and future use of the property as a result of ‘the environmental sensitivities relating to various fauna and flora found’ on the property;

(b) none of these documents were disclosed to the original purchaser or its nominee, Shri Guru as required by s3 2 of the SOL Act; and

(c) Shri Guru immediately rescinded the contract and demanded the return of its deposit.

Rigby Cooke did not claim to act on behalf of Mr Singh or to assert that he sought rescission under the SOL Act and return of the deposit. In a subsequent email sent later that day, Rigby Cooke also asserted that Shri Guru did not lack funds and was now in a position to settle the contract. Long Forest’s solicitors responded to this email by noting the inherent contradiction between seeking to rescind the contract while simultaneously agitating for its settlement.

On 27 June 2017, Long Forest’s solicitors responded to Rigby Cooke’s letter of the previous day. They contended that Shri Guru, as a nominee, had no right to terminate the contract by reason of any breach of the SOL Act and that there had been no indication that Belleli King had ceased to act for Mr Singh, or that Rigby Cooke now acted for Mr Singh. The solicitors noted further that the contract had not been completed in accordance with the rescission notice and was now at an end.

Rigby Cooke did not respond to this correspondence, the negotiations contemplated by the deed between Mr Singh and Mr Stamoulis’ nominee appearing to come to an abrupt end. However, that was not the end of Rigby Cooke involvement in Mr Singh/Shri Guru’s affairs.

These dealings appear to raise more questions than they answer.

According to Mr Singh, Mr Karvela was acting for Mr Stamoulis or Stamoulis Property Group when he entered into the deed. I have already noted that Mr Singh believed Rigby Cooke were acting for him from when he was unable to finance the payment of the residue of the purchase price with a facility from Equity-One. When cross-examined, he denied any knowledge of the terms or effect of the deed, said that he had just signed it, referred to it as ‘a lawyer’s thing’ and invited his cross-examiner to take up any questions about the deed with his counsel. I do not accept Mr Singh’s denial of knowledge of the terms of the deed or his assertion that he signed the deed without reading or understanding it.

I cannot resolve whether the terms of the deed were discussed between Mr Singh and Mr Karvela or Mr Stamoulis and were agreed upon before being reflected in the deed, which I can only accept at face value. Rigby Cooke may have been exercising care to only appear to be acting for Shri Guru, leaving Belleli King on the record as Mr Singh’s lawyers. Mr Singh may have received, or waived a right to, independent legal advice. However, potential and actual conflicts of interest appear to surround this deed and the transactions that followed on Rigby Cooke becoming involved in Mr Singh’s affairs. I am unable to make any assessment or draw any conclusions on the evidence save that I was not satisfied that Mr Singh fully grasped the nuances of his circumstances at this time.

This is particularly so in circumstances where Mr Singh, without explanation, did not call Mr Stamoulis, or any solicitor (from Rigby Cooke or Belleli King) to provide the court with any better explanation of the transaction than what can be gleaned from the deed and subsequent correspondence. I am satisfied that, as with Ms Pettitt from Mesh, Mr Singh feared that calling a witness to the deed transaction to give evidence would have exposed facts unfavourable to him.[56] I can more comfortably infer from the terms of the deed that Mr Singh wanted to complete the sale, but could not finance the settlement and that Mr Singh understood the ‘environmental issues’ from his earlier dealings that I have set out above. Alleging breach of s 32 of the SOL Act as a basis to immediately rescind the contract before Long Forest’s rescission notice became effective was not Mr Singh’s instruction. It arose on the suggestion of the Stamoulis camp as a bargaining strategy.
[56]Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361, 384–5 [63], citing Jones v Dunkel (1959) 101 CLR 298, 308, 312, 320–1.

However, the resolution of the parties’ rights under the contract of sale was unaffected by these dealings so I do not need answers to these questions. As I have reasoned, and ignoring Shri Guru’s status as a nominee company only registered on 2 May 2017 well after relevant events, neither Mr Singh nor Shri Guru was entitled to rescind the contract pursuant to the provisions of the SOL Act. The attempts to engender doubt in the validity of Long Forest’s rescission of the contract and renegotiate to keep the transaction alive were ineffectual to prevent the contract coming to an end pursuant to its terms. This was due to the defendants’ default in failing to pay the residue of the purchase price, by the due date, while time remained of the essence.

Dealings following rescission

The term of Long Forest’s loan, secured against the property by a contributory mortgage managed by Wisewould Nominees Limited (‘WNL’), expired prior to the settlement date. On expiry of the loan term, the loan accrued interest at a higher rate of 16%. Notwithstanding the expiry of the loan term, WNL continued to charge interest at the lower rate of 12% and Long Forest negotiated that it would repay the loan on settlement from the proceeds.

On 21 June 2017, after Long Forest served its rescission notice, Belleli King lodged a caveat for Shri Guru, claiming a freehold estate with an absolute prohibition on dealing on the grounds that the caveator was a purchaser under an uncompleted contract of sale. As I have noted, around this time Rigby Cooke were asserting in correspondence to Long Forest’s solicitors that it acted for Shri Guru.

In September 2017, Long Forest’s solicitors wrote to both Belleli King and Rigby Cooke and demanded the immediate withdrawal of the caveat, on the basis that Shri Guru was not a party to the contract of sale and held no proprietary interest in the property.

In early October 2017, Mr Singh contacted Mr Matthews and attempted to reopen discussions to purchase the property. He told Mr Mathews that he now had finance and he wanted to know whether Long Forest would be interested in discussing the sale of 50% of the property. Mr Matthews responded that he was open to a discussion, but that any price would be much higher than had been agreed to under the rescinded contract, because of the increased probability that the land could be rezoned. I pause to note this further example of Mr Singh remaining motivated to acquire an interest in the property when he well understood the environmental and planning issues relating to it.

Mr Matthews met with Mr Singh at his office on two further occasions when Mr Matthews refused to reinstate the sale at the earlier agreed $4 million price or refund the deposit under the rescinded contract. In response, Mr Singh stated that his backers wanted their money back, that they were not nice people and that they knew where Mr Matthews lived. I accept Mr Matthews’ evidence that Mr Singh said words to this effect. Mr Matthews was entitled, as he did, to consider them a threat. Mr Singh’s evidence about this threat reflected poorly on his credit.

Following the rescission of the contract, Long Forest successfully negotiated an offer from RMBL to refinance the WNL loan at a lower interest rate of 6.85% per annum. RMBL’s letter of offer was open for acceptance until 6 December 2017. Removal of the Shri Guru caveat prior to settlement was a special condition of the offer.

On 14 November 2017, Long Forest applied under s 89A of the Transfer of Land Act 1958 (Vic) for the removal of the caveat.

On 18 December 2017, in response to the s 89A notice, Rigby Cooke simultaneously withdrew the caveat lodged by Belleli King and lodged two replacement caveats on behalf of Mr Singh and Shri Guru, each claiming a purchaser’s lien to secure repayment of monies paid under the contract of sale, namely the $400,000 deposit.

On 9 February 2018, Long Forest’s solicitors demanded of Rigby Cooke that these further caveats be removed, contending that the contract of sale had been validly terminated by Long Forest and the deposit forfeited to it in accordance with the terms of the contract. Long Forest stated its intention to apply for summary removal of the caveats. It also notified the defendants that the caveat was preventing refinancing its loan at a lower interest rate and foreshadowed a claim for compensation under s 118 of the Transfer of Land Act for the loss it was suffering by reason of the refinancing delay.

Following some inconclusive negotiations between the parties, the defendants refused to withdraw the caveats and Long Forest applied to the court for summary removal under s 90(3) of the Transfer of Land Act. An agreement was then reached that the caveats would be withdrawn, provided Long Forest’s solicitors held $400,000 in trust on an undertaking that it will not be withdrawn except with the express written agreement of the parties or by order of the court. This agreement was reflected in orders made by Keogh J on 26 March 2018.

It was not in dispute between the parties that the caveats were removed on 5 April 2018. The refinance was settled on 11 April 2018.

Long Forest’s s 118 claim for compensation

Long Forest claimed compensation for the delay in refinancing from 22 November 2017 to 11 April 2018, which loss it assessed on the basis of the principal sum of $2,470,000 outstanding on the loan to WNL.

The particulars of the compensation calculation, totalling $94,808.58, were:

(a) the interest differential (3.35%) between the WNL loan and the RMBL loan (3.35% x $2,470,000 = $82,745 ÷ 365 = $226.70 per day x 141 days = $31,964.70);

(b) the 4% differential between WNL’s higher interest rate of 16% and WNL’s lower interest rate of 12% (4% x $2,470,000 = $98,800 ÷ 365 = $270.68 per day x 141 days = $38,165.88); and

(c) the procuration default fee on the matured WNL’s loan paid by Long Forest ($4,113 per calendar month x 6 months until the removal of the further caveats = $24,678).

The defendants resisted this claim. They first contended that Mr Singh had a caveatable interest in the land that was correctly described in the 18 December 2017 caveat as a purchaser’s lien. A purchaser who has paid part of the purchase price under a contract of sale has a purchaser’s lien that secures the repayment of the money if the sale does not go ahead. If the contract is rescinded for any reason not involving default on the part of the purchaser, the purchaser is entitled to repayment of the purchase price.[57]
[57]Hewett v Court (1983) 149 CLR 639, 645, 653–4, 664, 667.

On this basis, ignoring any other caveats, they submitted that the compensation claim must fail as Mr Singh was entitled to maintain the caveat until Long Forest agreed (as it did) to hold the disputed deposit in trust, subject to any further order of the court.

This argument depended on Mr Singh’s entitlement to rescind the contract pursuant to the SOL Act. However, as he had no such entitlement, that submission alone could not defeat the claim under s 118.

The defendants’ second contention was that compensation is not awarded under s 118 of the Transfer of Land Act simply on the basis that the caveator did not have a caveatable interest. Long Forest must show that Mr Singh did not have an honest belief, based on reasonable grounds, that he had a caveatable interest.

Principles applying to s 118 claims

Section 118 of the Transfer of Land Act provides:

118 Compensation for lodging caveat without reasonable cause
Any person lodging with the Registrar without reasonable cause any caveat under this Act shall be liable to make to any person who sustains damage thereby such compensation as a court deems just and orders.

The authorities show that although it is necessary that Long Forest must first establish that the caveat was lodged without reasonable cause, it is not sufficient to establish simply that the caveator did not have a caveatable interest. So far, my reasoning only supports the latter finding. The caveator may believe that it did have such an interest, particularly in circumstances where the caveator has taken legal advice. It is well established that the applicant for compensation has the onus of proving that the caveator did not have an honest belief based on reasonable grounds that it had a caveatable interest. This is a different inquiry from whether the purchaser was entitled to rescind the contract.

The proper approach to the application of s 118 was considered by the Court of Appeal in Edmonds v Donovan & Ors[58] and by the New South Wales Court of Appeal in New Galaxy Investments Pty Ltd v Thomson & Ors.[59] More recently, the current state of the law was reviewed in KB Corporate Pty Ltd v Sayfe & Anor.[60] With due respect to his Honour’s careful analysis of these decisions, with which I agree, it is convenient to set out his conclusion:
[58](2005) 12 VR 513.
[59](2017) 18 BPR 36,811; [2017] NSWCA 153 (‘New Galaxy’).
[60][2017] VSC 623 (‘KB Corporate’).

These two cases permit the following propositions to be stated concerning an application for compensation under s 118 for lodging a caveat without reasonable cause:
(a)the applicant must show the caveator had no caveatable interest;
(b)the applicant must show the caveator did not have an honest belief based on reasonable grounds that a caveatable interest existed;
(c)the test is partially subjective and partially objective;
(d)the subjective component requires an examination of the caveator’s belief and whether it was honestly held;
(e)it is objective in that it requires that the belief is held on reasonable grounds;
(f)it is a fallacy is to think that the absence of a caveatable interest at the time when the caveat was lodged establishes that the caveator did not have a reasonable basis for a belief that it was entitled to lodge a caveat; and
(g)legal advice that the caveator was entitled to lodge the caveat may be of considerable significance in determining whether the claimant has established that the caveat was lodged without reasonable cause, but the content and accuracy of the legal advice must be evaluated with all other relevant circumstances.[61]
[61]KB Corporate (n 60), [19].

Analysis of s 118 claim

The first requirement was satisfied. Long Forest demonstrated that Mr Singh had no caveatable interest. The issue of whether Long Forest demonstrated that Mr Singh did not have an honest belief, based on reasonable grounds, that he had a caveatable interest required further analysis.

Where a caveat is lodged by solicitors on behalf of a caveator, it would usually be inferred that those solicitors received instructions, gave advice and were then further instructed to lodge the caveat. Ordinarily, such inferences will be drawn in the absence of specific evidence demonstrating departure from expected conveyancing practice.[62]
[62]New Galaxy (n 59), 36,825 [64].

The defendants submitted that Long Forest had not established that they did not have an honest belief, based on reasonable grounds, that there was no caveatable interest, because Rigby Cooke who lodged the caveats on their behalf, advised that they were entitled to do so. In the circumstances already explained, the relationship between Mr Singh and Rigby Cooke was rather complex and does not bear direct comparison with the usual case of a solicitor acting in a conveyancing transaction who lodges a caveat for a party to a transaction that has ended in a dispute.

The onus of proving that Mr Singh did not have the requisite belief remained with Long Forest. A number of matters could support an inference that he did not.

First, Mr Singh and Shri Guru acknowledged by deed recital to Rigby Cooke, as the Nominee, that the non‑refundable deposit of $400,000 was the property of Long Forest and that they did not have the financial capacity to settle the contract. Having received that admission, Rigby Cooke were not in a position to assert otherwise.

Secondly, while Mr Singh could not credibly assert an honest belief that he was entitled to the deposit after making the recital representations in the deed, he was not cross-examined about whether he had any belief that he had a caveatable interest on the grounds of a purchaser’s lien.

Thirdly, Rigby Cooke was instructed to invite Long Forest to believe they were the solicitors for Mr Singh and Shri Guru for the sole purpose of advancing the interests of Stamoulis. They chose to do so only on behalf of Shri Guru. That company, as nominee under the contract, was not entitled to rescind it on a basis that accrued prior to both its incorporation and its nomination. I cannot determine whether the deed continued to be relevant to the relationship between Mr Singh/Shri Guru and Rigby Cooke from September 2017.

Mr Singh stated that he was advised by Rigby Cooke about this deed. This proposition, and the apparent conflict of interest for Rigby Cooke had it done so, was not analysed during the trial. Implicit in these circumstances was a belief on the part of Mr Singh, based on advice from Rigby Cooke, that he was not entitled to a refund of the deposit. If Mr Singh acknowledged he was not entitled to a refund of the deposit, then he could not believe that he possessed a purchaser’s lien.

On the other hand, the Stamoulis interests probably quickly established that Long Forest would not deal further with Mr Singh, or, it would seem, directly with them. It is possible that Mr Stamoulis dropped out and, in those circumstances, improbable that he would have continued to fund Rigby Cooke to act in Mr Singh’s continuing dealings with Long Forest. The basis on which Rigby Cooke continued to appear to act for Mr Singh may have then changed. However, if one accepts that a law firm cannot change colour, chameleon like, to the detriment of its adversaries, there was no reason to regard Rigby Cooke as not acting for Mr Singh, and continuing to act for the Stamoulis interests, when the caveats were substituted in December 2017. It seems clear that, when the nature of the interest claimed under the caveats changed, the Stamoulis interests were no longer pressing for the opportunities that had hoped for under the deed.

In any event, irrespective of the identity of the interests they were attempting to advance, it is likely that Rigby Cooke remained committed to the incorrect view of the proper construction of the disclosure obligation under s 32D of the SOL Act that they initially asserted, on behalf of the Stamoulis interests, when contending that Shri Guru had validly rescinded the contract. Although no representative of that firm gave evidence enabling any positive finding in this respect, Long Forest bore the onus of proof and it did not persuade me that Rigby Cooke either never genuinely advised Mr Singh that there was a proper basis to contend for breach of the disclosure obligation under s 32D, or were not Mr Singh’s lawyers at the relevant time.

Mr Singh‘s evidence that Rigby Cooke had generally given him advice about his legal rights in respect of the contract of sale from around June 2017 through until March 2018 was not challenged. Notwithstanding the absence of challenge, it is probable that Rigby Cooke were retained by Mr Singh/Shri Guru after the Stamoulis group lost interest in the prospect of a deal. It could not be said that the evidence supported a conclusion that Mr Singh did not receive legal advice that he was entitled to the return of the deposit, or that he acted contrary to advice that he was not entitled to a lien for the un-refunded deposit when Rigby Cooke lodged the caveats in December 2017. The inference that Mr Singh instructed Rigby Cooke to lodge the further caveats in December 2017 is clearly open from the fact that they did so, following on from their involvement in negotiations with Long Forest’s solicitors that did not appear to be in discharge of instructions from the Stamoulis interests as identified by the deed.

Mr Singh was not cross-examined about his reasons for instructing Rigby Cooke to lodge the caveats, or about his belief in a right to do so. Long Forest asked a single question, which was unhelpful in determining whether Mr Singh had in fact given those instructions:

You subsequently instructed caveats to be lodged over the property, didn't you?---Look, that's a lawyer. I'm not a lawyer. It was all legal and I had a legal right and everything so you talk with Mr Shaw [Mr Singh’s trial counsel] the legal argument please.

Most favourably for Mr Singh, he was expressing a belief in a legal right identified by his lawyers that he could not readily explain. He was not cross-examined further about that belief or the grounds for it. He was not cross-examined about whether Rigby Cooke had given him specific advice about his right to lodge the caveats. It was not put to him that he did not honestly believe that he had a legal right to lodge the caveats.

In these circumstances, I infer that Rigby Cooke were Mr Singh’s solicitors at the relevant time and that in accordance with usual conveyancing practice, those solicitors received instructions from Mr Singh, gave him advice and then were further instructed by him to lodge the caveats. Long Forest did not persuade me that Mr Singh did not have an honest belief, based on reasonable grounds, that a caveatable interest existed.

Further, I was not persuaded that there was not a genuine dispute between the parties about the termination of the contract and the entitlement to the deposit, a dispute that has only been quelled by this judgment. Consistent with Mr Singh’s honest belief, based on reasonable grounds, he did not unconditionally withdraw the caveat when confronted with the application for its summary removal. He withdrew the caveat on the basis that the deposit was held on trust pending the outcome of this proceeding in which he contested his right to the return of the deposit. Having regard to my reasoning in respect of the SOL Act non-disclosure claim, Mr Singh’s contentions were not hopeless or fanciful.

Conclusion

The proceeding will be listed for entry of judgment, final orders and further directions on 28 September 2020 at 9:30am:

(a) I will declare that Long Forest terminated the contract of sale on 27 June 2017 and pursuant to general condition 28.4 of the contract the deposit was forfeited to Long Forest as its absolute property;

(b) I will order that the trust sum of $400,000, together with accrued interest, held by the plaintiff’s solicitors be forthwith paid out to the plaintiff;

(c) The plaintiff’s claim to compensation under s 118 of the Transfer of Land Act, 1958 will be dismissed; and

(d) The defendants’ counterclaim will be dismissed.

(e) Costs will be reserved.

I direct that by 4:00pm on 7 October 2020, the parties jointly confer and identify whether the issue of costs in the proceeding can be agreed by consent, and, if so, prepare a minute of consent order on that question.

If the parties are unable to agree on costs, I further direct that each party file and exchange any affidavits and a short outline of submission in respect of costs and any other or ancillary orders that may be sought by 14 October 2020. Unless the parties submit in their outlines of submission that a further hearing is necessary, and I am so persuaded, I will determine the issue of costs on the papers.

[2020] VSC 604

23 September 2020