Multi-Span v Portland - [2001] NSWSC 696

No judgment structure available for this case.

CITATION: Multi-Span v Portland [2001] NSWSC 696

CURRENT JURISDICTION: Equity Division

FILE NUMBER(S): SC 2869/00

HEARING DATE(S): 18/06/01, 19/06/01, 20/06/01, 21/06/01, 22/06/01, 25/06/01, 26/06/01/, 27/06/01, 28/06/01, 29/06/01, 02/07/01

JUDGMENT DATE:
22 August 2001

PARTIES :

Multi-Span Constructions No 1 Pty Limited - First Plaintiff
Stipo Lovrinovic - Second Plaintiff
Vlatko Rasic - Third Plaintiff
Mark Komadina - Fourth Plaintiff
Stipo Kasalo - Fifth Plaintiff
14 Portland Street Pty Limited - First Defendant
CVC Communication & Technology Pty Limited - Second Defendant
Broadway Developments Pty Limited - Third Defendant
Ronald Charles Dunkley - Fourth Defendant
St Helens Broadway Pty Limited - Fifth Defendant
Sam Zdrilic - Sixth Defendant
Gavin Solomon - Seventh Defendant

JUDGMENT OF: Barrett J

COUNSEL : Mr P. Roberts SC/Mr M.K. Minehan - Plaintiffs
Mr P.W. Taylor SC/Mr A.M. Colefax - First to Third Defendants
Mr R.C. Dunkley in person - Fourth and Fifth Defendants
Mr G.L. Turner - Sixth Defendant
Mr A.J. Meagher SC/Mr M.J. Leeming - Seventh Defendant

SOLICITORS: LMG Lawyers - Plaintiffs
Landerer & Company - First to Third Defendants
Mr R.C. Dunkley in person - Fourth and Fifth Defendants
Alan Brown & Company - Sixth Defendant
Corrs Chambers Westgarth - Seventh Defendant

CATCHWORDS: CONTRACTS - general contractual principles - construction and interpretation of contracts - alleged uncertainty - effect to be given to manifest commercial intention - MORTGAGES - alleged clog on equity of redemption - right to redeem on payment not compromised - EQUITY - undue influence - presumption of undue influence in solicitor-client relationship - limited relationship - no benefit to solicitor - parties immediately benefited not on notice that solicitor acting - tests to be applied in contemporary circumstances where client is company with commercially astute principals - EQUITY - undue influence - actual undue influence - based on representations found not to have been made - CONTRACTS - statutory remedies - Contracts Review Act relief not available to company - also not available to guaranteeing directors who regularly give such guarantees - CONVEYANCING - caveat against dealings - caveat based on option to purchase lots in unregistered strata plan - caveatable interest arose but ceased when option expired - no power for court to extend caveat to protect interest not claimed therein - no additional interest shown in any event - no right to maintain caveat - CONTRACTS - general contractual principles - no contract arose from incomplete negotiation - no estoppel

LEGISLATION CITED: Contracts Review Act 1980
Real Property Act 1900
Fair Trading Act 1987
Conveyancing Act 1919

CASES CITED: Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429
Meehan v Jones (1982) 149 CLR 571
Garcia v National Australia Bank Ltd (1998) 194 CLR 395
Yerkey v Jones (1939) 63 CLR 649
Commonwealth Bank v Verwayen (1990) 170 CLR 394
Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 44
Commonwealth Bank of Australia v Ridout Nominees Pty Ltd [2000] WASC 37
Westpac Banking Corporation v Paterson [2001] FCA 556
Westmelton (Vic) Pty Ltd v Archer & Shulman [1982] VR 305
Australian Bank Ltd v Stokes (1985) 3 NSWLR 174
Forder v Cemcorp Pty Ltd [2001] NSW ConvR 55-966
Jessica Holdings Pty Ltd v Anglican Property Trust Diocese of Sydney (1992) 27 NSWLR 140
Re Henderson's Caveat [1998] 1 QdR 632
Kuper v Keywest Constructions Pty Ltd [1993] WAR 419
Ruptash v Zawick (1956) 2 DLR 145
In the Marriage of Stevens (1991) 15 FamLR 51
Hayes v O'Sullivan (2001) 27 FamLR 462
Depsun Pty Ltd v Tahore Holdings Pty Ltd (1990) ANZ Conv Rep 334
Re Spencer (1904) 4 SR (NSW) 471
Midwarren Estates Pty Ltd v Retek & Stivic [1975] VR 575
Beca Developments Pty Ltd v Idamenco (No 92) Pty Ltd (1990) 21 NSWLR 459
May v Gibson (1970) 92 WN (NSW) 904
Currie v Kennedy (1896) 17 LR (NSW) Eq 28

DECISION: See paragraphs 158 to 161

41

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BARRETT J

WEDNESDAY, 22 AUGUST 2001

2869/2000 - MULTISPAN CONSTRUCTIONS NO 1 PTY LIMITED & ORS v 14 PORTLAND STREET PTY LIMITED & ORS

JUDGMENT

HIS HONOUR:
Parties and factual background

1 These proceedings involve various disputes surrounding two property development joint ventures, one in Sinclair Street, Wollstonecraft and the other in Sydney, at the corner of Harris Street and Broadway. These are referred to as “the Wollstonecraft venture” and “the Broadway venture” respectively. It is appropriate to begin with a short statement of the parties and their background.

2 The first plaintiff is Multispan Constructions No 1 Pty Limited which I shall call “Multi No 1”. The shares in Multi No 1 were, at all material times, owned in equal proportions by two other companies, Multispan Group Pty Ltd (formerly Multispan Constructions Pty Ltd) and SM Plastering Services Pty Limited. I shall refer to those two companies as “Multi Group” and “SM”. There was no commonality of ownership between Multi Group and SM. The shares in Multi Group were owned in equal proportions by Stipo Lovrinovic (the second plaintiff) and Vlatko (“John”) Rasic (the third plaintiff). The shares in SM were owned in equal proportions by two other companies, one of which was wholly owned by Mark Komadina (the fourth plaintiff) and his wife and the other by Stipo Kasalo (the fifth plaintiff) and his wife. In concept, therefore, half the equity in Multi No 1 was ultimately owned equally between Lovrinovic and Rasic and the other half was ultimately owned equally between Komadina and his wife and Kasalo and his wife. Lovrinovic, Rasic, Komadina and Kosalo were also, at all material times, the directors of Multi No 1.

3 Lovrinovic, Rasic and Komadina owned all the equity of a separate company, Malenia Pty Limited (“Malenia”). Kasalo, the fourth participant in Multi No 1, had no interest in Malenia.

4 Lovrinovic and Rasic first became associated together in business ventures in 1988. In 1996, they undertook a residential property development at Waverton. Komadina and Kasalo had also done business together over a long period. The two pairs became associated in 1996. Lovrinovic and Rasic, who were arranging the purchase of the Wollstonecraft site, asked Komadina to join them in the development venture. He brought Kasalo with him.

5 The first defendant, 14 Portland Street Pty Limited (“Portland”) was, at all material times, a family investment company owned and controlled by Joseph Ross, a retired medical practitioner, and his wife. The second defendant, CVC Communications and Technology Pty Limited (“CVC”) was a subsidiary of Continental Venture Capital Ltd. John Read was a substantial shareholder in the latter and a director of CVC. The third defendant, Broadway Developments Pty Ltd (“BDL”), was a company the shares in which were owned in equal proportions by CVC (which, as stated, was associated with Read) and another company which was wholly owned by Ross and his wife. Ross and Read, through their corporate interests, had gone into various ventures together. Ross was essentially an investor, while CVC and Read played a more active role of seeking out projects in need of development capital and assessing potential investments. Ross saw Read as a manager of investments.

6 The fifth defendant, St Helens Broadway Pty Ltd (“St Helens”) was, at all material times, a company owned and controlled by Ronald Dunkley (the fourth defendant) and his family. They also owned and controlled St Helens Northside Pty Ltd (“Northside”), St Helens Tower Pty Ltd (“Tower”) and St Helens (WS) Pty Ltd (“WS”). Dunkley had a background in property development.

7 At the centre of the present controversy is the Wollstonecraft venture constituted by an agreement dated 5 December 1996 and made among Multi No 1, Lovrinovic, Rasic, Komadina, Kasalo, Northside, Dunkley, Multi Group and SM. The purpose of the venture was to develop land in Sinclair Street, Wollstonecraft which Multi No 1 had purchased in October 1996 for $4.1 million. The development involved construction and sale of home units. If one looks beyond corporate entities, the individuals interested in this venture were Lovrinovic, Rasic, Komadina, Kasalo and Dunkley.

8 The Broadway venture was a quite separate joint venture established by agreement dated 24 March 1997 between St Helens and BDL for the purpose of developing the site in the City of Sydney. That site had been acquired by St Helens by exercise of an option granted to it on 16 October 1996 at a price of some $8.1 million. Again looking beyond corporate entities, the principals here were Ross, CVC (or Read) and Dunkley. Before that agreement was entered into, St Helens had agreed to give Malenia an interest in any development of the Broadway site, thus introducing the interests of Lovrinovic, Rasic and Komadina. This was done by heads of agreement dated 13 December 1996, the quid pro quo being a payment of $300,000 by Malenia to St Helens. When the joint venture agreement of 24 March 1997 was concluded, the heads of agreement were varied by an agreement of the same date so that the entitlement of Malenia became an entitlement to twenty per cent of St Helens’ interest in the joint venture. In an underlying sense, therefore, the participants were, in terms of individual interests, Ross, CVC (or Read) and Dunkley and, through Malenia, Lovrinovic, Rasic and Komadina.

9 One aspect of the acquisition of the Broadway site by St Helens should be noted as it assumed importance in the matters which became the subject of this litigation. Under the purchase contract, as originally exhibited to the option agreement, certain elements of the consideration were to be satisfied by providing the vendors with title to parts of the re-developed site. To secure its obligation to make those future transfers, the purchaser agreed to grant to the vendors a second registered mortgage “in an amount of $6,350,000” (the first mortgagee being OCBC) and to provide two bank guarantees, one for $3,000,000 and the other for $3,350,000. These arrangements were altered by a “settlement agreement” made on 16 January 1998. The requirement for the $3,000,000 was waived altogether and the requirement for the $3,350,000 was replaced by an arrangement under which a sum of $3,350,000 termed a “security deposit” would be placed with a bank at interest, with a right for the purchaser to reclaim that sum upon arranging for an equivalent bank guarantee to be provided.

10 On 19 August 1997, Portland, CVC, Multi No 1, Dunkley, Lovrinovic, Rasic, Komadina and Kasalo entered into an agreement to obtain further financing for the Wollstonecraft venture. Under that agreement, Portland (associated with Ross) and CVC (associated with Read) agreed to make a loan facility available to Multi No 1 for the purpose of that venture, against the security of a registered second mortgage given by Multi No 1 over the Wollstonecraft site and guarantees given by Dunkley, Lovrinovic, Rasic, Komadina and Kasalo. The “Initial Advance” of $1.6 million was made on or about that date. A first mortgage was already held by Westpac Banking Corporation which had made available a $15 million loan facility for the Wollstonecraft venture. Westpac’s mortgage replaced a first mortgage given to St George Bank which had provided the funds to purchase the site.

11 Yet further loan financing for the Wollstonecraft venture was obtained by Multi No 1 under a deed of the same date (19 August 1997) between Sam Zdrilic (the sixth defendant) and Multi No 1. Zdrilic and Komadina were friends of some thirty five years standing. The deed of 19 August 1997 provided for a loan of $1.3 million to Multi No 1 but, because it incorporated a pre-existing debt of $380,000, the facility involved a new advance of only $920,000. A recital to the deed stated that the advance would be made upon the signing of both the deed itself and “the security documents” being “Deeds of Guarantee by” Lovrinovic, Rasic, Komadina, Dunkley and Northside. The recital also said that the advance was to be made upon simultaneous grant by Multi No 1 of “call option over” certain units in the Wollstonecraft venture. A deed of option in respect of those units was entered into on 19 August 1997 between Multi No 1 and Zdrilic, as were five separate deeds whereby payment by Multi No 1 was guaranteed to Zdrilic by each of Lovrinovic, Rasic, Komadina, Dunkley and Northside.

12 Part of the Zdrilic loan proceeds (to the extent of $500,000) was on-lent by Multi No 1 to WS by a loan agreement between Multi No 1 as lender, WS as borrower, Multi Group, SM, Northside and Lovronovic, Rasic, Komadina and Dunkley. Although persons other than the borrower and lender were parties to the agreement, they did not give guarantees. Another part of the loan proceeds received by Multi No 1 from Zdrilic was on-lent to Multi Group under a loan agreement dated 25 August 1997 between Multi No 1 as lender and Multi Group as borrrower, again with SM, Northside, Lovrinovic, Rasic, Komadina and Dunkley as parties but not guarantors. The sum lent was $200,000.

13 On or about 5 May 1998 all the parties to these proceedings (except the sixth and seventh defendants) entered into a deed which caused the affairs of the Wollstonecraft venture and those of the Broadway venture to come into direct contact with one another. That deed was entitled “Deed of Variation” and is referred to in these reasons as “the May 1998 deed”. The parties were given the following appellations in the May 1998 deed:

14 By the May 1998 deed, CVC (associated with Read) and BDL (associated with Ross and Read) agreed to make an advance of $1 million (referred to as “the Further Advance”) to Multi No 1 and St Helens. Clauses 2.1 and 2.2 of the May 1998 deed are of particular importance and should be set out in full:

“2.1 Subject to the terms and conditions of this Deed, the Lender and BDL agree to make a further advance to the Borrower and St Helens in the sum of one million dollars ($1,000,000) on the date hereof (‘the Further Advance’) in the manner agreed by the Lender, BDL and St Helens, the receipt of which is hereby acknowledged.

2.2 The parties each agree that in relation to the Further Advance:

(a) the Further Advance is to be used solely by St Helens in relation to the Broadway Project;

(b) subject to (c) below, the Further Advance is hereby secured as being part of the Second Mortgage over the Wollstonecraft Project and the Property and thus being guaranteed to the Lender and BDL by each of the Guarantors as provided in the Deed of Loan;

(c) simultaneously upon BDL and St Helens varying the Broadway JV to the effect that BDL’s interest in the Broadway Joint Venture is bought out and/or the Broadway JV is reformulated to the satisfaction of St Helens and BDL (including the provision by St Helens of the $6,350,000 bond required for the Broadway project with the consequence being the release to BDL of its current $3,350,000 deposit), then the provisions of this Deed of Variation shall have no further force or effect and the Further Advance shall thereafter not form part of any monies advanced or secured by the Borrower, the Property or the Guarantors to either the Lender or BDL as provided herein;

(d) subject to any and all other agreements and arrangements between the Borrower, the Guarantors and any related or associated parties thereto, St Helens and Dunkley each indemnify the Borrower and all other Guarantors for any liability and/or exposure to the Lender and/or BDL in respect of the Further Advance (including any interest, costs and damages);

(e) if the provisions of clause 2.2(c) apply, all fees and interest payable in respect of this Further advance to either the Lender or BDL shall be governed by the provisions of the Broadway JV and shall not be payable by the Borrower or any of the Guarantors other than Dunkley;

(f) if the provisions of clauses 2.2(c) do not apply, all fees, costs, charges and interest payable in respect of the Further Advance (at the rate of 25% per annum calculated daily and compounded monthly) shall be payable by the Borrower; and

(g) during the currency of this Deed of Variation, the Borrower is prohibited from drawing down the Second Advance in all circumstances.”

15 The genesis of the May 1998 deed should be briefly recounted. BDL (Ross and Read) had invested $5,000,000 in the Broadway venture and Malenia (Lovrinovic, Rasic and Komadina) had invested $390,000. Malenia had invested a further $500,000 into the World Square project to enhance its interest in the Broadway venture. That venture was in a state of some malaise. Pre-sales off the plan had fallen $2,500,000 short of the minimum required to permit draw down of the building finance facility made available by OCBC which, in any event, was not going to be sufficient to complete construction. Abigroup had been contracted to design and construct but required further payment before progressing the design needed to secure building approval from the City Council. It was in these circumstances that Dunkley addressed the need for a further $1,000,000 to enable the project to progress.

16 Solomon gave evidence of discussion among Ross, Read, Dunkley and himself in which the need was considered. Solomon said that Dunkley had come up with the idea of using the existing Portland/CVC mortgage over Wollstonecraft as security for a further advance by those parties to provide the additional funding required for Broadway. An affidavit sworn by Solomon reports the following statement by Dunkley at such a meeting:

“If you are prepared to put in the $1 million, I will speak to the boys to see if they will extend your mortgage over Wollstonecraft to cover this advance, subject to the mortgage falling away if we can buy you out of the Broadway JV or renegotiate the Broadway JV to our mutual satisfaction. If they agree, I will get Gavin to draft something up and send it to you.”

17 Returning to the May 1998 deed, it will be seen that, although the borrowers in respect of the advance of $1 million were stated to be Multi No 1 and St Helens, it was stipulated that the advance was to be used solely by St Helens in relation to the Broadway project. It was also stated that the advance was “hereby secured as being part of the Second Mortgage over the Wollstonecraft Project and the Property”, that being the property at Wollstonecraft of which Multi No 1 was the registered proprietor and which was the subject of the Wollstonecraft project and joint venture agreement. It was also stated that the advance was “thus being guaranteed” to CVC and BDL by each of Lovrinovic, Rasic and Komadina “as provided in the Deed of Loan”, that is, the deed of 19 August 1997. There was also a provision involving indemnity by St Helens and Dunkley.

18 The construction and effect of clause 2.2 and, in particular, clause 2.2(c) are matters at the centre of this litigation.

19 The party not so far mentioned is Gavin Solomon (the seventh defendant), a solicitor who, at all material times, was a principal of the firm Solomon Garland Partners which afterwards merged with Gadens. Solomon’s firm acted for various of the other parties in various matters, including matters involving the Broadway and Wollstonecraft ventures and the financing of them. Relevant legal work was performed in part by Solomon himself, in part by an employed solicitor Rita Ibrahim who worked as Solomon’s assistant and in part by other solicitors in the firm.

20 Solomon’s first association with any of the relevant parties appears to have been an association with Dunkley and his companies. Solomon’s firm acted for the Dunkley interests when they negotiated the option to purchase the Broadway site in 1996. There was, at that stage, a pre-existing relationship of solicitor and client. During the same period, the firm acted for the Dunkley interests in relation to not only the heads of agreement under which Multi No 1 obtained from Dunkley’s interests a promise of participation in the Broadway venture but also the formulation of the Wollstonecraft joint venture agreement. In all those matters, parties other than the Dunkley interests were represented by other solicitors - the Broadway vendors by Mr Downie, the SM interests (Komadina/Kasalo) by Michael Donovan and the Multi Group interests (Rasic/Lovrinovic) by John Shailer who, after Multi 1 had been formed, clearly dealt with Solomon on the footing that he (Shailer) was the solicitor for Multi No 1. The Zdrilic interests were represented first by Michael Taylor and afterwards by Alan Brown. The documents in evidence suggest that Solomon first established a solicitor-client relationship with Multi No 1 in November 1996 when he was retained in connection with the preparation of the construction contract for Wollstonecraft. Shailer continued, after that retainer had been entered into, to represent Multi No 1 in connection with the completion of not only the Wollstonecraft joint venture agreement but also the involvement of Multi No 1 and its principals in the Broadway venture, although there is also evidence that Donovan also represented certain of those interests, as the first draft of the Wollstonecraft joint venture agreement referred to by Solomon was forwarded to both Shailer and Donovan and subsequent correspondence on that aspect passed between Solomon and both those other solicitors until early 1997.

21 When the Broadway joint venture between St Helens and the interests of Portland and CVC was conceived, Solomon acted as solicitor for St Helens. The other parties did not employ a solicitor. Read of CVC conducted negotiations and, in the course of doing so, made detailed comments on a draft joint venture agreement prepared by Solomon, even to the extent of proposing redrafted clauses.

22 There is evidence that, in April 1998 (and specifically on 30 April 1998, a date of particular significance to be discussed presently), Brown was representing the interests of Multi Group, Lovrinovic, Rasic and others (particularly Zdrilic and a Mr Monassa) in the negotiation and documentation of an unrelated transaction. There is also evidence that, at the same time (or, at any rate, in the period surrounding 23 April 1998), Shailer was acting for Lovrinovic, Rasic and others in relation to a proposal involving the Auschina Consultant Economical and Cultural Group. Shailer had previously acted for Lovrinovic and Rasic in relation to a proposed loan from Steenbeck. It was also Shailer who prepared a power of attorney for Rasic in favour of Lovrinovic on 20 April 1998, that is, a few days before the former left for a trip to Africa. Komadina and his company SM had a solicitor-client relationship with Donovan which began in 1996 and was described by Donovan as “ongoing” when he gave evidence on 22 June 2001.

The plaintiffs’ claims

23 The plaintiffs’ case against all defendants other than the sixth is that they are entitled to a discharge of the mortgage over the Wollstonecraft property upon payment of the total secured by the August 1997 deed and without regard to the further moneys said to have been brought within that security by the May 1998 deed. This entitlement is advanced on several alternative bases, each of which goes to the question whether the May 1998 deed is the source of binding obligations.

24 The plaintiffs’ main contention is that clause 2.2(c) of the May 1998 deed has operated to cause the deed to “have no further force or effect” so that the relevant sum of $1,000,000 does “not form part of any moneys advanced or secured by the Borrower, the Property or the Guarantors to either the Lender or BDL as provided herein”. That contention is dealt with below under the heading “The May 1998 deed - construction argument”.

25 The plaintiffs next say that clauses 2.1 and 2.2 of the May 1998 deed are void for uncertainty. This aspect is dealt with under the heading “The May 1998 deed - uncertainty argument”.

26 The plaintiffs’ third contention is that the provisions of the May 1998 deed are void because they impose a fetter or clog on Multi No 1’s equity to redeem the Wollstonecraft land. This aspect is dealt with under the heading “The May 1998 deed - clog argument”.

27 The fourth avenue of attack upon the May 1998 deed or, more precisely, upon the plaintiffs’ supposed liability of Multi No 1 for the advance of $1,000,000 and interest thereon is that that advance was never actually made to Multi No 1 - see below “The May 1998 deed - ‘no advance’ argument”.

28 If none of these contentions results in an outcome favourable to the plaintiffs, they say that the May 1998 deed should be set aside because of undue influence. In this part of their case, they allege that a relationship of solicitor and client existed between Solomon and the plaintiffs (or, at least, Multi No 1) at the material time and that a presumption of undue influence on the part of Solomon operated to disentitle Portland, CVC and BDL in such a way that the May 1998 deed cannot be allowed to operate for their benefit. This aspect is dealt with under the heading “The May 1998 deed - presumed undue influence case”.

29 In addition to the case based on a presumption of undue influence, the plaintiffs advance a case of actual undue influence and misleading and deceptive conduct within s.42 of the Fair Trading Act 1987 based on representations said to have been made by Solomon on 30 April 1998. These allegations are asserted against both Solomon and Dunkley/St Helens, on the footing that relevant conduct was allegedly engaged in by Solomon as agent of those other parties. These aspects are taken up in the later parts of the judgment, as is the final assertions of the plaintiffs in relation to the May 1998 deed, namely, that it was, when made, unjust for the purposes of the Contracts Review Act 1980 and that the plaintiffs are entitled to be indemnified by Dunkley and St Helens in respect of the further advance under the May 1998 deed.

30 The plaintiffs’ case against the sixth defendant, Zdrilic, is not related to the May 1998 deed in any direct sense, although the outcomes in relation to that deed are very relevant to Zdrilic’s position as a creditor of Multi No 1 in that his position will be enhanced if the further advance covered by the May 1998 deed is found not to be secured on the Wollstonecraft property. Zdrilic’s case concerns the separate loan transaction between Zdrilic as lender and Multi No 1 as borrower. There are questions as to the construction of the loan documents, the amount recoverable by Zdrilic and whether Zdrilic obtained and continues to have an interest in the Wollstonecraft property sufficient to support a caveat under the Real Property Act 1900. These matters are covered under the heading “The Zdrilic aspect”.

The May 1998 deed - construction argument

31 The plaintiffs’ principal contention is, quite simply, that one of the alternative events upon which clause 2.2(c) is predicated has occurred, with the result that the May 1998 deed no longer operates either to require the further advance of $1,000,000 to be repaid by Multi No 1 (or, in an ancillary sense, by Lovrinovic, Rasic and Komadina) or to cause that further advance to be charged upon the Wollstonecraft property.

32 The first element of this argument is that, in the events which have happened, the Broadway joint venture has been “reformulated” in the way described in clause 2.2(c), that is:

“… to the satisfaction of St Helens and BDL (including the provision by St Helens of the $6,350,000 bond required for the Broadway project with the consequence being the release to BDL of it current $3,350,000 deposit).”

33 It is, as I understand it, common ground that a $6.35 million bond of GIO Insurance Pty Ltd was provided by St Helens in substitution for the $3.35 million security deposit and that that deposit was released, with $3 million being returned by BDL to Portland and CVC ($1.5 million each) and $350,000, by a collateral arrangement, being received beneficially by St Helens. This, the plaintiffs say, effected the reformulation to which clause 2.2(c) refers. That contention ascribes a particular meaning to “including” at the start of the words in brackets. According to that meaning, the two events mentioned in the bracketed section - the provision of the $6.35 million bond by St Helens and the consequent release to BDL of the $3.35 million deposit - themselves make up one species of contemplated “reformulation”. That result is reached by treating “including” as indicating one instance or example of the reformulation envisaged. Putting this another way, the several possible methods of reformulation to which the clause refers are described as “including”, come what may, one particular method which consists wholly of the two events involving the bond and the deposit.

34 I do not accept this construction. It does not afford due weight to at least two aspects of the clause. First, the word “reformulated” must be given its full meaning. According to the New Shorter Oxford Dictionary, 1993, “reformulate” means “Formulate again or differently”. It follows that the mere playing out of what is pre-ordained or required by a particular arrangement does not amount to its “reformulation”. Having regard to the Broadway joint venture agreement dated 24 March 1997 and an agreement of 16 January 1998 concerning the $3.35 million deposit, the arrangement with the vendor of the Broadway property and among the joint venturers existing at the time of the making of the May 1998 was that the deposit provided by BDL would be released if a bank guarantee was provided. Those steps were, at that stage, pre-ordained in the sense that no new decision making would be necessary to bring them about. It follows that, leaving aside the technicality that GIO is not a bank, the provision of the GIO bond and the release of the deposit to BDL represented a working out or performance of the Broadway joint venture, not some new or different formulation of it. It therefore cannot have been intended that those events alone would amount to the “reformulation” which clause 2.2(c) envisaged.

35 The second difficulty with the construction for which the plaintiffs contend is that it does not accommodate the words “to the satisfaction of St Helens and BDL”. Those words indicate, clearly enough, that a reformulation of the necessary kind will not arise unless and until those two parties turn their minds to it and indicate their satisfaction with it. There would be no scope for any such process if the reformulation consisted merely of the two specified and pre-ordained events concerning the bond and the deposit.

36 To my mind, the “including” phrase in the bracketed section of clause 2.2(c) prescribes what might be termed minimum content of the reformulation. It indicates that the elements involving the bond and the deposit are two essential elements of any reformulation, in the sense that the event of reformulation to which clause 2.2(c) refers will not be capable of being seen to have occurred unless at least those elements form part of the reformulation. Beyond that, however, the reformulation will have other elements and the decisive factor will be whether the totality of the elements (including the two made essential) is to the satisfaction of St Helens and BDL. The reformulation reference is thus a reference to those two essential elements plus such others as together cause the Broadway joint venture to take some form which is new or different, compared with its form in May 1998.

37 This construction is consonant with the commercial reality of the situation. Clause 2.2(c) refers to two events. The second is the event of reformulation involving the satisfaction of St Helens and BDL as discussed. The other, which entails no value judgment or assessment of satisfaction, is variation of the Broadway joint venture so that BDL’s interest is bought out. A variation entailing buy-out of BDL’s interest triggers clause 2.2(c). The parties were thus content to see the clause operate in that situation, whatever the other terms of the variation might be. But in a case of reformulation not involving buy-out, they were not so content. St Helens and BDL were prepared to see the clause operate in such a case if their interests were served by reason of the inclusion of the elements concerning the bond and deposit, but only if they found the additional elements also to their liking.

The May 1998 deed - uncertainty argument

38 The plaintiffs next say that the May 1998 deed is void for uncertainty on one of two bases: that the principal clause dealing with term, repayment, security and liability of borrower and guarantors is unsettled; or that clause 2.2(c), being dependent for its meaning upon the satisfaction of St Helens and BDL, is unacceptably vague.

39 The first contention is at odds with the terms of the document. Recital B to the May 1998 deed refers to the loan arrangement the subject of the deed dated 19 August 1997 (that is, the deed headed “Deed of Loan and Guarantee Wollstonecraft Project”). That 1997 deed is then designated the “Deed of Loan”. The property at Wollstonecraft is, by the same recital, designated “the Property”. Recital C recites the agreement of Portland and CVC (together, “the Lender”) and BDL, at the request of Lovrinovic, Rasic and Komadina (“the Guarantors”), Multi No 1 (“the Borrower”) and St Helens “to make a further advance to the Borrower and St Helens as set out herein”. The first operative clause, clause 1.1, is as follows:

“The terms and definitions contained in the Deed of Loan shall apply to the Deed of Variation.”

40 Clause 2 contains the agreement of the Lender and BDL to make “a further advance” of $1 million to the Borrower and St Helens. It is designated “the Further Advance”. Clause 2.2(b) provides that:

“Subject to (c) below, the Further Advance is hereby secured as being part of the Second Mortgage over the Wollstonecraft Project and the Property and thus being guaranteed to the Lender and BDL by each of the Guarantors as provided in the Deed of Loan."

41 It seems to me clear enough that clauses 1.1 and 2.2(b), read in the context of the references to a “further advance” (that is, an advance additional to or subsequent to some other advance or advances), indicate that the May 1998 deed was intended to be supplemental or collateral to the loan and security documents of August 1997 and that, subject always to the provisions of the May 1998 deed itself concerning that further advance, the provisions of the August 1997 documents would apply. Not only is there a specific provision in clause 2.2(b) tying the Further Advance in as part of the security and guarantee arrangements provided for in the August 1997 deed (which itself, in clause 3, provided for the second mortgage), there is also a statement that the “terms … contained in the Deed of Loan shall apply to this Deed of Variation”.

42 The August 1997 deed contained a definition of “Advance” as follows:

“ ‘Advance’ means each amount lent to or to be lent by the Lender to the Borrower, and ‘Advances’ shall have a corresponding meaning (or, where the context permits, the amount for the time being outstanding).”

43 There is, however, one factor which militates against thus importing into the May 1998 deed the relevant stipulations of the 1997 deed, namely, the fact that there is not precise correspondence between them as to either parties or roles of parties. BDL is a party to the May 1998 deed but was not a party to the 1997 deed. In addition, Kasalo, although a party to each, played a guaranteeing role in the earlier but not in the later. St Helens was a party to the May 1998 deed but not the 1997 deed. To my mind, these factors do not make it impossible to read the May 1998 deed as deriving meaning and content from the 1997 deed. It is just that the provisions of the latter need some moulding when they are applied to the latter. That does not interfere with sensible application of the parts dealing with repayment, interest, security and the like. And there is nothing fatal about a provision in a contract among A, B and C which imports and relies upon provisions of another contract between A, B and D.

44 One consideration overshadows all others in pointing to the construction of the May 1998 deed I have outlined. We are dealing here with a commercial contract. The parties are property developers and property financiers. Such parties simply do not, as a matter of practice, make and receive loans on indeterminate terms for indeterminate periods. The first questions any such person would ask, either as borrower or as lender, about a loan of a particular amount would be as to repayment regime, interest rate and security. The appropriate approach is therefore that outlined by Barwick CJ (with whom McTiernan J agreed) in Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429:

Scammell (G.) and Nephew, Ltd v Ouston (H.C. and J.G.)

45 Particularly in light of the inclusion of the cross-references to the 1997 deed, it is by no means impossible to attribute any particular contractual intention to the parties. To the contrary, those cross-references make it clear that they had the intention of bringing the advance of $1 million within the ambit and operation of the 1997 deed in order both to define those terms applicable to that advance which were not stated in the May 1998 deed itself and to cause the security and guarantee created under or pursuant to the 1997 deed to operate also upon that advance.

46 The additional or alternative aspect of the May 1998 deed which the plaintiffs say makes it void for uncertainty is the aspect of clause 2.2(c) which makes its operation dependent on the state of mind of St Helens and BDL - or, more precisely, on reformulation of the Broadway joint venture “to the satisfaction of St Helens and BDL”.

47 That submission on the plaintiffs’ part must be assessed against principles stated as follows in the judgment of Gibbs CJ in Meehan v Jones (1982) 149 CLR 571:

“When the words of a condition state that a contract is subject to finance, or to suitable finance, or to satisfactory finance, the question immediately arises whether the test which is required to be applied is a subjective or an objective one. On the one hand, the contract may be conditional upon the purchaser obtaining finance which he finds sufficient or satisfactory - such finance as he honestly thinks he needs to complete the purchase. On the other hand, the condition may be fulfilled if finance is available which the purchaser ought to find sufficient, or which ought reasonably to satisfy him, even though he honestly, but unreasonably, regards it as insufficient or unsatisfactory. The fact that opinions may differ as to which of these two meanings is given to the words of the clause does not mean that the clause is uncertain. If the Court, in construing the contract, can decide which of the two possible meanings is that which the parties intended, there will be no uncertainty.”

“It is only if the court is unable to put any definite meaning on the contract that it can be said to be uncertain.”

48 Observations in the judgments of Mason, Murphy and Wilson JJ were to the same general effect on the question whether a contractual provision turning upon whether a particular person is satisfied will be regarded as uncertain.

49 In this case, I find no difficulty in deciding what the parties intended when they caused clause 2.2(c) to operate by reference to reformulation “to the satisfaction of St Helens and BBL”. They intended that, if any rewriting or revision of the Broadway joint venture were to occur, that rewriting or revision would trigger clause 2.2(c) only if, first, it had the particular characteristics described in the bracketed section (as already discussed) and, second, it was in all other respects considered by the two named parties to be satisfactory in the light of the positions they occupied. That, to my mind, saves the clause from uncertainty.

50 The provision based on the “satisfaction” of St Helens and BDL probably imports a requirement that they act honestly and rationally in coming to their conclusion. It is not necessary in these proceedings to express a final view on that but I would be surprised if that were not the correct construction.

The May 1998 deed - clog argument

51 The plaintiffs contend that clause 2.2(c) is in any event void as a clog on the equity of redemption - presumably the equity of Multi No 1 to redeem under the second mortgage of the Wollstonecraft property given to Portland and CVC pursuant to clause 3 of the 1997 deed.

52 Although this argument was not fully elaborated in submissions, I understood it to be to the effect that the May 1998 deed, by causing the further advance to be secured by the second mortgage along with the earlier advances, had the effect, through clause 2.2(c), of subjecting redemption by Multi No 1 to the contingency of satisfaction on the part of St Helens and BDL with reformulation of the Broadway project. Theoretically, they may never be so satisfied.

53 Any such argument is, to my mind, misconceived. A mortgagor’s right to redeem arises upon payment of all moneys secured by the morgage. An impermissible clog or fetter arises if some collateral arrangement seeks to qualify that right so as to compromise the true nature of the mortgage as a security only and to contradict the fundamental proposition “once a mortgage, always a mortgage”. Nothing of that kind arises here, whether through clause 2.2(c) or otherwise. If all moneys are paid (including the further advance of May 1998 and interest thereon) a discharge will be forthcoming and nothing in clause 2.2(c) or elsewhere in the May 1998 deed will operate to prevent that result, whatever may be the factual position in relation to the matters covered by clause 2.2(c). The status of the security as a security only is not qualified and the plaintiffs’ argument based on fettering or clogging of the equity of redemption cannot be sustained.

The May 1998 deed - “no advance” argument

54 The plaintiffs say that Multi No 1 is not liable to repay the $1,000,000 further advance because Portland/CVC did not advance it to Multi No 1. Again, this contention was not developed in submissions. But the contention does not hold good. On its true construction, the May 1998 deed cast Multi No 1, Lovrinovic, Rasic and Komadina in supporting roles, with the principal actor being St Helens. It was stated by clause 2.2(a) that the further advance was “to be used solely by St Helens in relation to the Broadway project”. It may readily be inferred from this that although both Multi No 1 and St Helens were foreseen by clause 2.1 as parties to whom the loan would be advanced, the overriding intention was that St Helens alone would be the recipient of the funds as it was the party by which those funds were to be used. Multi No 1 become an obligor, but without any intent that the money would actually pass physically through its hands. It was seen as merely a constructive recipient of funds destined for St Helens. There is nothing artificial or questionable about that and no reason why the deed should not, in that respect, be accepted as valid.

The May 1998 deed - presumed undue influence case

55 The plaintiffs say that the April 1998 deed should be set aside because Portland, CVC and BDL, the parties benefiting from the participation therein by, in particular, Multi No 1, Lovrinovic, Rasic and Komadina, knew that those other participants did not bring a free will and understanding to bear in deciding to participate, they at that time being overborne in their decision making by actual or presumed exercise in an unconscientious way of a power on the part of Solomon as their solicitor. This part of the judgment deals with presumed undue influence.

56 The relevant equitable principles are explained in Garcia v National Australia Bank Ltd (1998) 194 CLR 395. After referring to the distinction drawn by Dixon J in Yerkey v Jones (1939) 63 CLR 649 between cases of actual undue influence by a husband upon his wife (where “a wife, alive to the nature and effect of the obligation she is undertaking, is procured to become her husband’s surety by the exertion by him upon her of undue influence affirmatively established”) and cases of presumed undue influence (where the ascendancy of one party over the other raises a presumption that the will of that other has not been freely exercised), Gaudron, McHugh, Gummow and Hayne JJ, referring to the particular case of a guarantee, continued:

“Thus, Dixon J was dealing with two kinds of case. In the former, the case of actual undue influence, as Dixon J says, explaining the effect of the document to the surety will not protect the creditor and ‘[n]othing but independent advice or relief from the ascendancy of her husband over her judgment and will would suffice’. In the latter, ‘[I]f the creditor takes adequate steps to inform [the wife] and reasonably supposes that she has an adequate comprehension of the obligations she is undertaking and an understanding of the effect of the transaction, the fact that she has failed to grasp some material part of the document, or, indeed, the significance of what she is doing’ cannot give her an equity to set the instrument aside.”

57 The majority judges then dealt with a submission that principles about unconscionable or unconscientious dealing discussed in Commonwealth v Verwayen (1990) 170 CLR 394 and Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 44 had overtaken the principles in Yerkey v Jones. They continued:

Yerkey v Jones

(a) in fact the surety did not understand the purport and effect of the transaction;

(b) the transaction was voluntary (in the sense that the surety obtained no gain from the contract the performance of which was guaranteed);

(c) the lender is to be taken to have understood that, as a wife, the surety may repose trust and confidence in her husband in matters of business and therefore to have understood that the husband may not fully and accurately explain the purport and effect of the transaction to his wife; and yet

(d) the lender did not itself take steps to explain the transaction to the wife or find out that a stranger had explained it to her.”

58 Item (c) in this extract refers to the understanding of the party benefited by the transaction. It makes it clear that that party is to be presumed to understand that undue influence is at work if the party has knowledge of the relevant relationship (in the present case, that of solicitor and client). That notice of the relationship is alone sufficient to sheet home to the party benefited the consequences of undue influence is borne out by subsequent decisions. It is sufficient to refer briefly to two of them, both involving, like Garcia, the relationship of husband and wife.

59 In Commonwealth Bank of Australia v Ridout Nominees Pty Ltd [2000] WASC 37, Wheeler J said:

Yerkey v Jones

Garcia

60 To the same effect are observations of O’Connor J in Westpac Banking Corporation v Paterson [2001] FCA 556. After noting that the majority in Garcia had held that equity will grant relief to a married woman if she enters into a transaction under the actual undue influence of her husband and misunderstands the nature of the transaction, her Honour continued:

61 If the principles set out in the majority judgment in Garcia are to operate in the present case by reference to some presumed solicitor-client undue influence, it will be necessary to find, first, that Portland, CVC and BDL knew that a relationship of solicitor and client existed between Solomon on the one hand and Multi No 1, Lovrinovic, Rasic and Komadina on the other; and, second, that a relevant misunderstanding on the part of the latter parties existed in fact.

62 There are difficulties with the first of these. When, in August 1997, the original funding arrangements were entered into between Portland/CVC and Multi No 1 (with Lovrinovic, Rasic, Komadina and Kasalo as guarantors), the loan agreement was prepared by Solomon. His firm was nominated in that agreement as the recipient of notices for the borrower and the guarantors. It may be accepted, therefore, that Portland/CVC at that time had grounds to believe, and did believe, that Solomon was the solicitor for those parties. Ross said in cross-examination that he knew Solomon to be Dunkley’s solicitor on that transaction. But beliefs held in August 1997 cannot have been held by Portland/CVC at the time they became parties to the May 1998 deed. The evidence shows quite clearly that Read of CVC read closely all drafts of what became the May 1998 deed and that Ross of Portland was content to rely on Read in matters of documentation. Amendments were requested and proposed by Read in several areas. Each such draft contained what was, in the final document, clause 6.3:

“The parties acknowledge and agree that Solomon Garland Partners have prepared this Deed and that they only act for St Helens and Dunkley in relation to all matters set forth in this Deed. The parties further acknowledge and that they have each been counselled by Solomon Garland Partners and have sought and received independent legal advice in relation to their individual and joint legal position in relation to the negotiation, drafting and execution of this Deed. Further, each of the parties hereto releases absolutely Solomon Garland Partners in this regard.”

63 As Read read closely each succeeding draft containing this clause, he would have seen that, in the particular context, Solomon’s firm was not acting for Multi No 1, Lovrinovic, Rasic and Komadina. He would also have read a provision which, upon the deed being executed, would become an acknowledgment by each of those parties that it or he had been counselled by Solomon’s firm and had received independent legal advice in relation to the subject matter and execution of the deed. Read’s frame of mind would accordingly have been such that he would not have regarded Solomon as the solicitor for any of them.

64 Read was cross-examined about his understanding of who was acting for the counterparties other than the Dunkley interests. The following parts of the cross-examination about clause 6.3 are pertinent:

……

65 There is not, on the evidence, any basis for concluding that Read and Ross (they being, individually or together, the guiding minds of Portland, CVC and BDL) had, in the period during which the May 1998 deed was developing or when it was executed, any knowledge of a subsisting solicitor-client relationship of the relevant kind beyond that to be inferred from clause 6.3. Ross said in evidence that he knew Solomon was acting for the Dunkley interests in the May 1998 transaction. He said nothing about solicitors for the borrower and guarantors. And Read, clearly enough, was of the view that Solomon was not acting for anyone other than the Dunkley interests. That being the state of mind of both Ross and Read, it is somewhat beside the point to inquire whether a solicitor-client relationship did in reality exist between Solomon and the borrower and guarantors. Even if it did, it was not something of which Ross and Read were at that time on notice.

66 There is, in any event, a question as to whether a basis for the application of principles as to presumed undue influence existed in this case. In their discussion of the presumption in relation to solicitor and client, Meagher, Gummow and Lehane, in “Equity Doctrines and Remedies”, 3rd ed (1992), at para 1511(c) refer to eighteen decided cases. Of these, four were decided in the twentieth century, all but one of them before the First World War and the last in 1927. The other fourteen cases were decided before 1900, six (that is, almost half of them) before the Battle of Waterloo. The results in all of these cases were, naturally enough, shaped by the particular circumstances. Without exception, the cases involved natural persons, not corporations. Many involved gifts or other dealings whereby the solicitor gained a benefit at the expense of the client in a way which involved a clear breach of fiduciary duty. It is natural that equity should have intervened in those cases. But one wonders about the utility of those older cases involving individuals as guidance in a case such as the present.

67 More pertinent and instructive, for present purposes, is the decision of the Full Court of the Supreme Court of Victoria in Westmelton (Vic) Pty Ltd v Archer & Shulman [1982] VR 305. That case involved consideration in the modern era of the presumption of undue influence in the context of a solicitor-client relationship where the client was a company. The transaction sought to be impugned was one under which the solicitor agreed to reduce his fees in return for a promise by the client company to pay him a percentage of certain future profits. Starke, Kaye and Fullagar JJ, in a joint judgment, emphasised the importance of ascertaining the facts of each case rather than seeking to distil absolute rules from decided cases. They did so as follows by reference to an example:

“It is vitally important in this class of case to ascertain the precise facts of each case which is said to be a case for the application of some such supposed sub-rule, whether the case be one of solicitor and client or not. If a client is pleased with the way a solicitor has carried out his duties of forming a company and setting up some trusts for the client, and gives the solicitor a gift of a house property, of course the presumption applies. But suppose that this very solicitor offers, in rebuttal, proof not only that he was at the time the 25-year-old son of the client, and that at the time there was a strong bond of affection between them, but that the client was also a very successful and experienced Queen’s Counsel at the height of his powers. In such a case common sense rebels at the notion that the solicitor fails to rebut the presumption, and loses the house, unless he proves also that he solemnly advised his father to take the advice of another solicitor upon the matter generally and upon the value of houses in particular; and it is not surprising to find that the law in the twentieth century provides little support for this notion. Prima facie the position would be the same even if the Queen’s Counsel was not the father of the solicitor.”

68 On the particular facts before them, the members of the Full Court found that, because the principals of the client company had “more expertise in commerce and finance than most solicitors would have”, the solicitor had no duty to advise that they obtain independent legal advice. Their Honours also said:

“But once the Court is satisfied, as the learned trial Judge was, that the solicitors dealt fairly and honestly and openly with a sophisticated and well-informed corporate client, and that the client in fact was in no way relying upon any confidence or expectation of legal advice of that character or of any character, then the Court is entitled to conclude that there was no duty to advise further.”

69 Several factors combine, in my opinion, to justify a similar view of matters in this case. Solomon was in no sense a beneficiary of the transaction centred upon the May 1998 deed. In terms of natural persons, the person who benefited most was Dunkley. The additional $1,000,000 provided by Portland/CVC relieved severe financial pressure on the Broadway project. Some $400,000 of the proceeds was paid to St Helens. The remaining $600,000 was paid, via Solomon’s trust account, to Abigroup, the builders at Broadway. An attempt was made, on behalf of the plaintiffs, to suggest that Solomon somehow benefited indirectly because he had business interests with Dunkley. While Solomon conceded that he and Dunkley had gone into unrelated business ventures together (he referred to two “small residential townhouse developments”), there was nothing in the evidence to suggest that Solomon stood to gain in any shape or form from the May 1998 deed. This removes immediately one of the main pillars supporting the undue influence principle.

70 It is important to record that Lovrinovic, Rasic and Komadina also benefited in a real and tangible way from the transaction centred upon the May 1998 deed. They too, through Malenia, were effectively joint venturers in the Broadway project and had a very distinct interest in seeing it rescued from a financial predicament. Thus, while they were in a sense burdened from the Wollstonecraft perspective, they accepted the burden in order that they might benefit from the Broadway perspective.

71 It is true that Solomon’s firm had a specific and confined solicitor-client relationship with Multi No 1 at the time the April 1998 deed was executed. The firm was acting on “off the plan” sales of units in the Wollstonecraft development. There is no evidence that Solomon’s firm was at that time acting for any of Lovrinovic, Komadina and Rasic: to the contrary, there is evidence that they were accustomed to use other solicitors and were in fact using other solicitors in unrelated matters which were then current. Furthermore, Komadina’s evidence as to his supposed conversation with Solomon on 30 April 1998 (to be examined more closely later) was to the effect that Solomon had made it clear that he was not acting for any of the individuals in the May 1998 transaction. As will be seen presently, I do not accept that this conversation took place, but Komadina’s version may nevertheless be accepted as the most he would wish to have the court believe on the question of who Solomon’s client was in the particular matter.

72 As to the transaction involving the April 1998 deed itself, an important question is whether the content of what became clause 6.3 came to the notice of the two Multi No 1 directors to whom was left the task of dealing with the matter, namely, Komadina and Lovrinovic. In the case of Komadina, I am satisfied that he read the document. He must have read and understood it in draft because he knew from a relatively early stage that Kasalo would not consent to be part of it - obviously, because Kasalo, in contrast to Lovrinovic, Komadina and Rasic who were interested in Broadway, had nothing to gain from it. And by reading any of the drafts, he would of necessity have seen what became clause 6.3 so that, despite whatever he may have said to the contrary afterwards, he was aware that Solomon’s firm would not be acting for Multi No 1 and its directors in relation to the deed. Furthermore, because Komadina knew that Solomon had created the draft document, he must have known that the statements in that clause about counselling and independent advice were effectively statements by Solomon.

73 All this is borne out and reinforced in relation to Komadina by evidence of Ibrahim as to what passed between her and Komadina on 30 April 1998:

…..

Q. You go on in your file note,

‘I pointed out clause 6.3 by which he confirms that SGP acts only for St Helens/Dunkley. He is happy with that clause.’

Q. You see what 6.3 said, just turn it up in one of those copies that you have got there. You see 6.3, the second sentence commencing, ‘The parties further acknowledge’ and the word ‘and’ is there, which presumably shouldn’t be there,

‘The parties further acknowledge and that they each have been counselled by Solomon Garland Partners and have sought and received independent legal advice in relation to their individual and joint legal position in relation to the negotiation, drafting and execution of this deed.’

Q. So the bit that you pointed out to them was the first sentence, was it,

‘The parties acknowledge and agree that Solomon Garland Partners have prepared this deed and that they only act for St Helens and Dunkley’.

74 In the case of Lovrinovic, it is clear that he had the same appreciation of Kasalo’s position. He said in cross-examination that, some time around 23 April 1998, he “flagged” to Dunkley “the problem that, that Mr Kasalo would probably not, not agree to it or Mark was going to be contacting Mr Kasalo”. There follows almost two pages of further cross-examination in which Lovrinovic goes to the extent of making the quite implausible statement that, by becoming party to the May 1998 deed, he was “just doing Mr Dunkley a favour”. The reality was eventually extracted:

75 There was thus an eventual acknowledgment that Lovrinovic himself had an incentive to procure the transaction effected by the May 1998 deed because of his interest in the Broadway project, whereas Kasalo had no equivalent interest. Lovrinovic’s appreciation of the effect of the transaction also emerged upon cross-examination:

76 Also pertinent is a later exchange as follows as to a conversation with Dunkley some time before 30 April 1998:

77 There was also evidence from Lovrinovic as to whether he had read drafts of what became the May 1998 deed which he conceded with apparent reluctance had reached him by fax in the days before 30 April 1998:

78 The implausibility of this is borne out by other evidence of Lovrinovic. Far from being a neophyte who did not scrutinise lending and financing documents by himself and needed a lawyer on hand to do so, he was an author of such documents. There was in evidence a document which Lovrinovic himself prepared, addressed to “Andrew and Linda” and dated 18 May 1998. It is on the letterhead of Multi Group and bears an impression of the common seal of that company next to Lovrinovic’s signature and the words, “Steve Lovrinovic, Managing Director”. The content is as follows:

“ Re: $20,000 LOAN TO MULTI-SPAN GROUP P/L

Dear Andrew & Linda

This letter is an acknowledgment of a loan arranged by me (Steve Lovrinovic) on behalf of Multi-Span Group P/L.

As promised I personally take responsibility for this transaction & promise to return the money & interest safely.”

79 It may readily be inferred from this that Lovrinovic’s confidence in writing documents giving effect to financing transactions would have carried over into his reading of such documents. Indeed, there is also evidence that he received, reviewed and commented upon certain letters of demand prepared by other solicitors in another connection at around the same time.

80 In the light of the whole of the evidence on this part of the case, the claim against Solomon based on a presumption of undue influence cannot be sustained. It is true that a limited solicitor-client relationship existed between Solomon’s firm and Multi No 1 in the April/May period of 1998. In light of the evidence that other unrelated transactions being pursued by Lovrinovic, Rasic and Komadina at that time were being handled by other solicitors and the absence of evidence of any then subsisting retainer by them of Solomon’s firm, the solicitor-client relationship cannot be seen to have extended beyond Multi No 1. Furthermore, I am satisfied that Komadina, a director, was aware of the content of clause 6.3 and of the significance of that content. Lovrinovic, another director, was probably likewise aware. Both had, at the time, solicitors of their own and were reasonably sophisticated operators in the relevant field. Fundamentally, there is no evidence from which any inference may be drawn that Solomon benefited from the May 1998 deed. Those who benefit included Lovrinovic, Rasic and Komadina. Finally, the essential element of the presumed undue influence case based on knowledge of the solicitor-client relationship on the part of the party benefited, being the Portland/CVC/BDL interests, is not made out. Accordingly there is no basis on which I can or should conclude that a presumption of undue influence on the part of Solomon vitiated the May 1998 deed.

The May 1998 deed - actual undue influence and misrepresentation cases

81 The plaintiffs say that their execution of and assent to the May 1998 deed were procured by representations by Solomon that the May 1998 deed was only required for six weeks at which time the Broadway joint venture would be reformulated and that the only property being encumbered under the May 1998 deed was Dunkley’s profit share in the Wollstonecraft joint venture.

82 On that basis, the plaintiffs assert against Solomon that he exercised actual undue influence over the plaintiffs and unconscientiously took advantage of their disadvantageous position; also that those representations constituted misleading and deceptive conduct on the part of Solomon for the purpose of s.42 of the Fair Trading Act 1987. The misrepresentation allegation centred upon s.42 of the Fair Trading Act is also levelled at Dunkley and St Helens on the footing that Solomon’s supposed representations were made by him as their agent.

83 The statements allegedly made by Solomon which are the foundation of this part of the case against him are said to have been made to Lovrinovic and Komadina at Solomon’s office on 30 April 1998, the day on which each of them signed the deed. Four persons were involved in relevant events of that day, disregarding persons whose activities on the day may be relevant to questions as to the whereabouts and movements of the four. The four are Lovrinovic, Komadina, Solomon and Ibrahim. It is necessary to look at their respective accounts in some detail.

84 There is no dispute that one part of the May 1998 deed was signed by Lovrinovic and by Komadina at Solomon’s office on 30 April 1998, having previously been signed by Dunkley. Lovrinovic and Komadina signed for themselves as parties and also as officers of Multi No 1, the common seal of which was affixed. Lovrinovic also signed as Rasic’s attorney, Rasic having departed for Africa on 24 April 1998. The power of attorney was prepared by Shailer’s firm (Atkinson & Vinden) and left by Rasic with them and it was they who faxed it to Ibrahim at Lovrinovic’s request for the purpose of the signing. The part of the May 1998 deed thus executed was in due course exchanged for a part executed by each of the other parties, the two being dated 5 May 1998.

85 There is, however, substantial dispute as to who was where at various times on 30 April 1998 and, in particular, as to whether Solomon spoke to either or both of Lovrinovic and Komadina. They say that he spoke to them at his office and that, in the course of so doing, he made the representations upon which their case of actual undue influence and s.42 contravention against Solomon is founded. Solomon denies this, saying that he did not see them at his office on that day. It is therefore necessary to address in some detail the evidence of each of Solomon, Ibrahim, Lovrinovic and Komadina about the events of that day.

30 April 1998 - Lovrinovic’s account

86 Lovrinovic’s evidence about the events of 30 April 1998 was preceded by statements about having signed an earlier version of the same document at the reception desk in Solomon’s office a few days beforehand. This was not mentioned in either of his affidavits and only came up in the witness box. He said that a woman had been present. She gave him the document which he “scrolled through”. She saw him sign, there being some suggestion that she may have witnessed his signature. He identified her as a woman who was sitting in court. That woman, Ms Jurd, later gave evidence. She was at the relevant time, and still is, an employee of Solomon’s firm. She said she had never seen Lovrinovic sign anything at the reception desk and had never witnessed his signature. She said it was not the firm’s practice to have people sign documents in the reception area.

134 None of these aspects of the Zdrilic deed gives rise to an estate or interest which may properly be the subject of a caveat. Clause 7 does not purport to create “the lender’s interest in the property”. It is referring, clearly enough, to some interest which exists independently of clause 7 itself. The interest created by the option to purchase granted in conformity with the Zdrilic deed is such an interest and clause 7 makes perfect sense if regarded as referring to that interest. Nor does clause 8 support Zdrilic’s contention. A clause stating the order in which different debts representing “outstanding moneys on the building” are to be repaid does not, by any stretch of the imagination, itself cause repayment of any of those debts to be secured upon “the building”. Finally, clause 10, like clause 7, is explicable by reference to the estate or interest arising from the option.

135 Zdrilic’s claim that the Zdrilic deed, as distinct from the now lapsed purchase option granted pursuant to it, is the continuing source of an estate or interest capable of supporting the particular caveat or, for that matter, any caveat therefore cannot be sustained.

136 The question posed by s.74P of the Real Property Act is whether, when Zdrilic insisted upon maintaining the caveat founded on the option after that option had lapsed, he acted “wrongfully and without reasonable cause”. That phrase was considered by the Court of Appeal in Beca Developments Pty Ltd v Idamenco (No 92) Pty Ltd (1990) 21 NSWLR 459 where there was some difference between the approach taken by Clarke JA (with whom Kirby P agreed on this aspect) and that taken by Waddell AJA. The most favourable test, from the caveator’s viewpoint, was that preferred by Clarke JA, namely, that, to sustain a claim under s.74P(1)(a) that a caveat has been entered “wrongfully and without reasonable cause”, three elements must be established: first, that the caveator did not have a caveatable interest; second, that he did not have an honest belief based on reasonable grounds that he had a caveatable interest; and, third, that the caveator lodged the caveat deliberately to infringe the interest of the registered proprietor or interested person. Translated to the present situation within s.74P(1)(c), the inquiry becomes whether, when withdrawal of the caveat was demanded by Multi No 1, Zdrilic had a caveatable interest, whether he had an honest belief based on reasonable grounds that he had such an interest and whether he maintained the caveat deliberately to infringe the interest of Multi No 1 as registered proprietor.

137 The first question must be answered in the affirmative as to requests for withdrawal made after the expiration of 90 days from 23 June 1999. As to the other two questions, reference should be made to the cross-examination of Zdrilic’s solicitor, Brown (the references to “the deed” being references to the Zdrilic deed):

138 The message here is twofold: first that the caveat was maintained on the footing that the Zdrilic deed provided some basis for its retention, apart altogether from the estate or interest arising from the options asserted in the caveat (a position which, on any interpretation of the Zdrilic deed, was untenable) and, second, that various actions of Multi No 1 which Zdrilic (or, at least, Brown, the solicitor advising and acting for him) considered to be breaches of the Zdrilic deed or otherwise inimical to the interests of Zdrilic somehow justified a continuing hold over Multi No 1’s property as a pressure tactic. And this was so in the face of provisions in both the Zdrilic deed and the separate option deed of the same date by which Zdrilic undertook not to lodge a caveat. In these circumstances, I consider that the second and third elements arising from the analysis made by Clarke JA are present in this case. It follows that, if Multi No 1 has suffered any pecuniary loss that is attributable to Zdrilic’s failure to remove the caveat after request, Zdrilic is liable to pay it compensation with respect to that loss.

139 Zdrilic’s alternative claim is that, apart altogether from the Zdrilic deed, Multi No 1 agreed to grant him a third ranking mortgage of the Wollstonecraft property or, at all events, is estopped from denying such an agreement. The alleged agreement is said to be constituted both by documents and by oral statements. To the extent that it is in writing and may be susceptible to the effect of s.23C of the Conveyancing Act 1919, the agreement is said to be protected by the principle that lack of writing must be pleaded if the defence is to be raised and that this cannot be done after the conclusion of evidence at the trial: May v Gibson (1970) 92 WN (NSW) 904; Currie v Kennedy (1896) 17 LR (NSW) Eq 28 and Part 15 rule 3 of the Supreme Court Rules. The plaintiffs did not dispute this and I shall proceed on the footing that no issue of lack of writing arises.

140 The occasion of the alleged agreement was provided by the imminence of the originally scheduled repayment date for the Zdrilic loan, namely, 19 February 1999. Initially Lovrinovic and afterwards Komadina took up with Zdrilic the question whether he would grant an extension. There was something of a falling out between Lovrinovic and Zdrilic who made it clear that he was only prepared to speak with Komadina. At that point, Komadina became the main Multi No 1 negotiator with Zdrilic, they having been friends for some thirty five years.

141 It is clear that Zdrilic began pressing for his money in January and February 1999 and went to the extent of serving formal demands and threatening legal action. It is also clear that Multi No 1 could not (or would not) pay and decided to engage Zdrilic in discussion. Zdrilic eventually indicated his willingness to extend the loan term and to accept interest at the rate of 30% rather than 40% per annum. It appears from a letter of 11 February 1999 from Brown to Lovrinovic that the latter may have told the former on the telephone that Multi No 1 would grant a registered third mortgage to Zdrilic to secure borrowings under the Zdrilic deed, and that thus made Zdrilic willing to make those concessions. Further correspondence between them reinforces this. In early April, Brown sent to Hayter (who, Lovrinovic said, was acting for him) and to Donovan (solicitor for Komadina) both a document to create a third ranking mortgage and other security documents, as well as forms of guarantee and a form of deed to amend the Zdrilic deed.

142 On 30 April 1999, Komadina went to Zdrilic’s office. While there, he placed his signature on the form of mortgage Brown had prepared. He did so in the space marked for the signature of the secretary of Multi No 1 in the section in which provision was made for the affixing of the common seal of Multi No 1 and for the signatures of a director and secretary. On 4 June 1999, Komadina signed an endorsement “I agree with the above” on a letter from Zdrilic to him dated 3 June 1999. That letter traversed a number of matters relevant to the relationship between Zdrilic and Multi No 1. After referring to the state of the indebtedness of both Multi No 1 and Multi Group to Zdrilic alone and Zdrilic and his wife respectively, the letter said:

“Both loans in 1 & 2 above are secured by ‘Bristol on Sinclair’ Wollstonecraft property (13-17 Sinclair Street).”

143 Later, the letter said:

“It should also be noted that some months ago it was agreed that Zdrilic would get a 3rd mortgage over the Wollstonecraft property for all the money owed as per 1 and 2 above. However because Stipo Kasalo was not a guarantor on the Zdrilic loans and because of concerns about Westpac’s reaction - nothing happened. Then it was agreed that a 3rd mortgage would be given to at least secure the loan as per No 1 above. That has not been done as most felt it was not necessary due to there being enough value in the project to cover all the money owing as per 1 and 2 above. Some did not like the 40% p.a. interest rate, which Zdrilic later agreed to reduce to 30% p.a. to be in accordance with the existing agreement."

144 By 19 July 1999, however, correspondence between Brown for Zdrilic and Solomon’s firm for Multi No 1 (in which the latter sought to negotiate partial withdrawals of the former’s caveat to allow sales of units to be completed) had reached a point where Brown outlined certain requirements of Zdrilic and continued:

“Our client is prepared to consider a proposal containing the following:-

1. Zdrilic takes a third mortgage behind Westpac and CVC for the full amount owing to him in respect to both Wollstonecraft and World Square.

2

All

3. Zdrilic rank third in priority for the full amount of his loans.

4. Zdrilic be entitled to retain Caveats over units with a market value of at least $4,000,000.00.

5. As an alternative to 3 above, Zdrilic takes a third mortgage for the full debt of approximately $3.1m behind the first to Westpac and the second to CVC for $3.8 mil but to rank in order of priority as follows:

1. Westpac.

2. CVC ($2.5m).

3. Zdrilic ($3.133m approx).

4. CVC ($1.4m).”

145 It is noteworthy that Brown did not assert here an existing agreement by Multi No 1 to give a third mortgage or an existing entitlement of Zdrilic to receive such a mortgage. On the contrary, the taking of such a mortgage was but one element of a series of steps put forward by Brown as a “proposal” his client was “prepared to consider”.

146 The letter of 19 July 1999 referred also to a meeting to be held the following day. A letter of 20 July 1999 from Solomon’s firm to Brown referred to “our meeting of earlier today” and stated a number of matters as being confirmed. It then concluded:

“Please deliver to us the withdrawal of caveat within 24 hours and we will then attend to lodgment of same.”

147 There was no reference in that letter of 20 July 1999 to the question of a third mortgage but that question was raised in a response by Brown dated 21 July 1999 which, after dealing with matters concerning withdrawal of caveat, expressed the view that “the meeting held at your office on 20 July was most unsatisfactory” and concluded:

“We again repeat our request to let us have a draft agreement dealing with the issues concerning our clients security, as discussed at our recent meeting, as a matter of urgency.”

148 By 9 November 1999, however, matters had reached a point where Brown wrote to Solomon’s firm complaining of application of funds by Multi No 1 “in total contravention of the agreement of 19 August 1997” and referring to particular aspects. Brown then said:

“Our client will agree to the matters set out in paragraph B below provided your clients agree to the matters listed below under paragraph A.”

149 My assessment of these events is that there was never any enforceable agreement by Multi No 1 to grant a third ranking mortgage of Wollstonecraft to Zdrilic and that the conduct of officers and representatives of Multi No 1 was not sufficient to engender in the mind of Zdrilic the kind of expectation necessary to found an estoppel. I am satisfied that both Lovrinovic and Komadina made generally encouraging statements to Zdrilic, the latter even going to the extent of signing the endorsement of agreement on Zdrilic’s letter of 3 June 1999 and placing his signature on the form of mortgage. But the letter did not, on my reading, evidence a subsisting contractual promise by Multi No 1 to grant a third ranking mortgage. Rather, as the extract quoted above shows, it related the history of discussions and negotiations, including “nothing happened” and that, at a later stage, a mortgage was not given “as most felt it was not necessary due to there being enough value in the project”. The statement in the letter that the two loans to which it refers “are secured by” the Wollstonecraft project cannot of itself operate as a contract to create a mortgage, given the continued presence on the title of Zdrilic’s caveat, whether or not he was entitled to maintain it.

150 Nor, I think, can Komadina’s signature on the form of mortgage be construed as a contract to create a mortgage in that form. The placing thereon of Komadina’s signature in the area for execution under common seal amounted, at best, to an incomplete and imperfect execution not binding upon the company. In addition and more fundamentally, it is clear from the correspondence that a process of negotiation began after the due date of payment of the Zdrilic loan passed and Multi No 1 did not pay. The evidence establishes, in my view, that that process never reached any point of finality. By 21 July 1999, for example, Brown on behalf of Zdrilic was not seeking execution of the loan extension and security documents he had prepared and submitted to the solicitors for Lovrinovic and Komadina in April. Rather, he was following up on a request that Solomon’s firm provide a draft agreement “concerning our clients security”.

151 This view of the events of 1999 works both ways. Just as I do not think that Multi No 1 agreed to give a mortgage to Zdrilic, so too I consider that Zdrilic never agreed to an extension of the Multi No 1 loan or to a revised interest rate of 30% per annum. Those aspects were part of the incomplete and inconclusive negotiations. I should only add that I do not consider anything which occurred in those negotiations to have amounted to misleading or deceptive conduct, as distinct from negotiating ploys engaged in by sophisticated property and money lending operators working, with the assistance of solicitors, in an environment of property development financing at very high rates of interest to which they were all accustomed.

152 As to the debt undoubtedly owing by Multi No 1 to Zdrilic, the governing instrument remains the Zdrilic deed of 19 August 1997, unaffected by any subsequent revision or compromise. Zdrilic is entitled to judgment for principal and interest payable in accordance with that deed.

153 It remains to consider Zdrilic’s contention that he is entitled to recover certain legal costs from Multi No 1. Zdrilic’s affidavit of 16 May 2001 said that, as of that date, “legal expenses incurred as a consequence of the default of [Multi No 1] in failing to pay the amount due to me under the Deed of Loan made 19 August 1997 amounted to $264,191.36”. In an affidavit of 25 June 2001, he explained that part of that total related to claims against Lovrinovic, Rasic, Komadina and Kasalo under their guarantees being pursued in separate proceedings, with an updated total of $256,002.45 being referable to the claim against Multi No 1.

154 The Zdrilic deed is the only possible source of any present obligation for Multi No 1 to meet any legal costs of Zdrilic. The only potentially relevant provision is clause 6:

“The Borrower shall pay all legal Costs and Disbursements associated with the loan including stamp duty and registration fees and the security documentation in relation thereto, together with the cost of any further documentation which may be required prior to the repayment of the loan.”

155 I read this clause as covering costs and disbursements directly referable to the establishment and documentation of the loan. The clause refers specifically to four items as included within its general specification, namely, stamp duty, registration fees, security documentation and the cost of any further documentation which may be required prior to the repayment of the loan. All but the last are clearly referable to loan establishment. The last is concerned with perfecting of the loan and recognises that repayment of the loan stands on a different footing from the loan itself. The whole tenor of the clause is thus concerned with the making, securing and perfecting of the advance. Unlike a great many loan documents, this one does not address in contractual terms responsibility for expenses the lender may choose to incur in attempts to recover the moneys lent or in relation to renegotiation of the loan arrangement.

156 Zdrilic is, as I have said, entitled, as against Multi No 1, to recover his loan under and pursuant to the Zdrilic deed. He is not entitled, under the Zdrilic deed, to recover legal costs of and incidental to his attempts to renegotiate and obtain repayment. Nor is he entitled to maintain his caveat. The question of compensation, if any, to which Multi No 1 may be entitled under s.74P of the Real Property Act is one which will now have to be separately determined in accordance with the order in that respect made by Bergin J before the hearing before me began.

157 Both Zdrilic and the plaintiffs have asked that I not address the question of costs as between those parties without hearing further submissions. It will be convenient if those submissions also address the quantification of the sum which Zdrilic is entitled to recover under the Zdrilic deed so that appropriate orders in that respect may be formulated.

Conclusion and orders

158 The plaintiffs are entitled to relief to the effect claimed in paragraphs 17, 22 and 23 of the Statement of Claim. I therefore make the following orders and declaration:

1. Order that the fourth and fifth defendants indemnify the plaintiffs for all liability and exposure to all or any of the first defendant, the second defendant and the third defendant in respect of the further advance referred to in the May 1998 deed (including interest costs and damages).

159 The plaintiffs’ remaining claims against the fourth and fifth defendants and the whole of the plaintiffs’ claims against the first, second, third and seventh defendants are dismissed.

160 Turning to the sixth defendant’s cross-claim, the claims in paragraphs 1 to 8 inclusive are dismissed. As for paragraph 9, the sixth defendant is entitled to a judgment for debt and interest against the first plaintiff on the basis outlined at paragraph 152 of these reasons. The proceedings will be listed for further submissions on the amount for which judgment should be entered.

161 As the plaintiffs’ claims against the first, second, third and seventh defendants have not been upheld, I order that the costs of each of those defendants be paid by the plaintiffs. The question of costs as between the plaintiffs and the sixth defendant will be listed for further submissions as those parties have requested. I do not intend making any order with respect to costs of the fourth and fifth defendants.

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Last Modified: 08/22/2001

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Citations

Multi-Span Constructions No 1 Pty Ltd v 14 Portland Street Pty Ltd [2001] NSWSC 696

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CITATION:	Multi-Span v Portland [2001] NSWSC 696
CURRENT JURISDICTION:	Equity Division
FILE NUMBER(S):	SC 2869/00
HEARING DATE(S):	18/06/01, 19/06/01, 20/06/01, 21/06/01, 22/06/01, 25/06/01, 26/06/01/, 27/06/01, 28/06/01, 29/06/01, 02/07/01
JUDGMENT DATE:	22 August 2001
PARTIES :	Multi-Span Constructions No 1 Pty Limited - First Plaintiff Stipo Lovrinovic - Second Plaintiff Vlatko Rasic - Third Plaintiff Mark Komadina - Fourth Plaintiff Stipo Kasalo - Fifth Plaintiff 14 Portland Street Pty Limited - First Defendant CVC Communication & Technology Pty Limited - Second Defendant Broadway Developments Pty Limited - Third Defendant Ronald Charles Dunkley - Fourth Defendant St Helens Broadway Pty Limited - Fifth Defendant Sam Zdrilic - Sixth Defendant Gavin Solomon - Seventh Defendant
JUDGMENT OF:	Barrett J

COUNSEL :	Mr P. Roberts SC/Mr M.K. Minehan - Plaintiffs Mr P.W. Taylor SC/Mr A.M. Colefax - First to Third Defendants Mr R.C. Dunkley in person - Fourth and Fifth Defendants Mr G.L. Turner - Sixth Defendant Mr A.J. Meagher SC/Mr M.J. Leeming - Seventh Defendant
SOLICITORS:	LMG Lawyers - Plaintiffs Landerer & Company - First to Third Defendants Mr R.C. Dunkley in person - Fourth and Fifth Defendants Alan Brown & Company - Sixth Defendant Corrs Chambers Westgarth - Seventh Defendant
CATCHWORDS:	CONTRACTS - general contractual principles - construction and interpretation of contracts - alleged uncertainty - effect to be given to manifest commercial intention - MORTGAGES - alleged clog on equity of redemption - right to redeem on payment not compromised - EQUITY - undue influence - presumption of undue influence in solicitor-client relationship - limited relationship - no benefit to solicitor - parties immediately benefited not on notice that solicitor acting - tests to be applied in contemporary circumstances where client is company with commercially astute principals - EQUITY - undue influence - actual undue influence - based on representations found not to have been made - CONTRACTS - statutory remedies - Contracts Review Act relief not available to company - also not available to guaranteeing directors who regularly give such guarantees - CONVEYANCING - caveat against dealings - caveat based on option to purchase lots in unregistered strata plan - caveatable interest arose but ceased when option expired - no power for court to extend caveat to protect interest not claimed therein - no additional interest shown in any event - no right to maintain caveat - CONTRACTS - general contractual principles - no contract arose from incomplete negotiation - no estoppel
LEGISLATION CITED:	Contracts Review Act 1980 Real Property Act 1900 Fair Trading Act 1987 Conveyancing Act 1919
CASES CITED:	Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429 Meehan v Jones (1982) 149 CLR 571 Garcia v National Australia Bank Ltd (1998) 194 CLR 395 Yerkey v Jones (1939) 63 CLR 649 Commonwealth Bank v Verwayen (1990) 170 CLR 394 Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 44 Commonwealth Bank of Australia v Ridout Nominees Pty Ltd [2000] WASC 37 Westpac Banking Corporation v Paterson [2001] FCA 556 Westmelton (Vic) Pty Ltd v Archer & Shulman [1982] VR 305 Australian Bank Ltd v Stokes (1985) 3 NSWLR 174 Forder v Cemcorp Pty Ltd [2001] NSW ConvR 55-966 Jessica Holdings Pty Ltd v Anglican Property Trust Diocese of Sydney (1992) 27 NSWLR 140 Re Henderson's Caveat [1998] 1 QdR 632 Kuper v Keywest Constructions Pty Ltd [1993] WAR 419 Ruptash v Zawick (1956) 2 DLR 145 In the Marriage of Stevens (1991) 15 FamLR 51 Hayes v O'Sullivan (2001) 27 FamLR 462 Depsun Pty Ltd v Tahore Holdings Pty Ltd (1990) ANZ Conv Rep 334 Re Spencer (1904) 4 SR (NSW) 471 Midwarren Estates Pty Ltd v Retek & Stivic [1975] VR 575 Beca Developments Pty Ltd v Idamenco (No 92) Pty Ltd (1990) 21 NSWLR 459 May v Gibson (1970) 92 WN (NSW) 904 Currie v Kennedy (1896) 17 LR (NSW) Eq 28
DECISION:	See paragraphs 158 to 161