No 1 Victoria Dragons Pty Ltd v AEN Developments Pty Ltd

[2022] NSWSC 1345

Supreme Court

New South Wales

Medium Neutral Citation:

No 1 Victoria Dragons Pty Ltd v AEN Developments Pty Ltd [2022] NSWSC 1345

Hearing dates:

29-31 August 2022; 5-9 September 2022; 13 September 2022

Date of orders:

6 October 2022

Decision date:

06 October 2022

Jurisdiction:

Equity - Commercial List

Before:

Black J

Decision:

Plaintiff succeeds in its primary claim and defendant fails in its cross-claim. Parties to bring in agreed short minutes of order, or otherwise their respective short minutes of order and submissions, within 7 days.

Catchwords:

CONTRACTS — Construction — Interpretation — Interpretation of a clause in a nomination deed for the development of a residential apartment building — Where the clause provided for a specific mix of one, two and three bedroom apartments but included a proviso that the mix “may be varied pursuant to” statutory and Council requirements — Whether the inclusion of studio apartments was a variation falling within that proviso.

CONTRACTS — Rectification — Intention — Common intention

CONTRACTS — Implied terms — Terms implied in fact

ESTOPPEL — Estoppel by representation — “Silence”

EVIDENCE — Affidavit evidence — Where substantial parts of the affidavits of three witnesses were copied between them.

WORDS AND PHRASES – “varied pursuant to”

Cases Cited:

- Armagas Ltd v Mundogas SA [1985] 1 Ll R 1

- Attorney-General (NSW); Ex rel Corporate Affairs v Australian Softwood Forests Pty Ltd [1979] 2 NSWLR 73

- Australian Broadcasting Commission v Australasian Performing Right Assn Ltd (1973) 129 CLR 99

- Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (2000) 96 FCR 491; 169 ALR 324; [2000] FCA 2

- Australian Securities and Investments Commission v Kobelt (2019) 267 CLR 1; (2019) 368 ALR 1; [2019] HCA 18

- Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd (2021) 388 ALR 577; (2021) 151 ACSR 98; [2021] FCAFC 40

- Besier v Foster (1952) 94 CLR 526; [1952] HCA 14

- Birchill v Premier Holdings Pty Ltd [2011] NSWSC 1020

- BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 282 –283; 52 ALJR 20

- Briginshaw v Briginshaw (1938) 60 CLR 336

- British American Tobacco Australia Services Ltd v Cowell (2002) 7 VR 524; [2002] VSCA 197

- Changizi v Rizaie [2021] NSWSC 613

- Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 at 346; [1982] HCA 24

- Commonwealth v Verwayen (1990) 170 CLR 394; 95 ALR 321; [1990] HCA 39

- Dentown Pty Ltd v PWI Group Pty Ltd as trustee of The Australia No 1 Group Trust (2019) 141 ACSR 330

- Electricity Generation Corporation (t/as Verve Energy) v Woodside Energy Ltd (2014) 251 CLR 640; 306 ALR 25; [2014] HCA 7

- Esanda Ltd v Burgess [1984] 2 NSWLR 139

- ET-China.com International Holdings Ltd v Cheung (2021) 388 ALR 128; [2021] NSWCA 24

- Gunns Ltd v Marr [2005] VSC 251

- Hobhouse v Macarthur-Onslow [2022] NSWCA 158

- Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) [2008] FCA 810

- Hoyt’s Pty Ltd v Spencer (1919) 27 CLR 133

- Icon Co (NSW) Pty Ltd v Owners - Strata Plan No 97315 [2022] NSWCA 114

- Ikin v Danish Club “Dannebrog” Inc [2001] VSCA 123

- John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451

- Macquarie Developments Pty Limited and Anor v Forrester and Anor [2005] NSWSC 674

- Maybury v Atlantic Union Oil Co Ltd (1953) 89 CLR 507

- Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; 325 ALR 188; [2015] HCA 37

- Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286; [1974] HCA 18

- Perpetual Trustee Company Ltd v Meriton Property Management Pty Ltd [2004] NSWSC 1528

- Plus One International Pty Ltd v Ching (No 3) [2020] NSWSC 1598

- Price (as executor of the estate of Price (dec’d)) v Spoor (as trustee) (2021) 391 ALR 532; [2021] HCA 20

- Property Investors Alliance Pty Ltd v C88 Project Pty Ltd (in liq) [2022] NSWSC 1081

- Re Atlas Advisors Australia Pty Ltd [2022] NSWSC 705

- Re Colorado Products Pty Ltd (in prov liq) (2014) 101 ACSR 233; [2014] NSWSC 789

- Re Graziers Pastoral Pty Ltd; Re Windsor Livestock Holdings Pty Ltd; Re Windsor Livestock Pty Ltd [2021] NSWSC 1680

- Regent Land Pty Limited atf Regent Land Unit Trust v Georges River Council [2018] NSWLEC 1370

- Sanders v Snell (1998) 196 CLR 329; [1998] HCA 64

- Silovi v Barbero (1988) 13 NSWLR 466

- Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; 211 ALR 342; [2004] HCA 52

- Twigg v Twigg (No 4); Lambert v Twigg Investments Pty Ltd (No 3) [2020] NSWSC 1159

- Varma v Varma [2010] NSWSC 786

- Ventouris Enterprises Pty Ltd v Dib Group Pty Ltd [2010] NSWSC 963

- Waltons Stores (Interstate) Ltd v Maher (1998) 164 CLR 387

- Watson v Foxman (1995) 49 NSWLR 315

- Young v Holmes [2013] NSWSC 580

Texts Cited:

PW Young, C Croft and ML Smith, On Equity (Lawbook Co, 2009)

Category:

Principal judgment

Parties:

No 1 Victoria Dragons Pty Ltd (Plaintiff/First Cross-Defendant)
AEN Developments Pty Ltd (Defendant/Cross-Claimant)
Walt Coulston (Second Cross-Defendant)

Representation:

Counsel:
A McInerney SC/J Pokoney (Plaintiff)
F Santisi (Defendant)

Solicitors:
Mills Oakley (Plaintiff)
Goh Lawyers (Defendant)

File Number(s):

2019/144274

Judgment

Nature of the application and background facts

1. By Summons filed on 8 May 2019, the Plaintiff, No 1 Victoria Dragons Pty Ltd (“1VD”), seeks a declaration that it is entitled to specific performance of a document described as the “Nomination Deed” and an order, by way of specific performance of that Nomination Deed, that the Defendant, AEN Developments Pty Ltd (“AEN”), direct a firm of solicitors, Thomson Geer, to release from its trust account an amount of $1,419,736 plus GST to 1VD pursuant to cll 2.2 and 24.1 of the Nomination Deed or, alternatively, that AEN pay 1VD that amount. 1VD seeks a further order that AEN pay the amount of $200,000 plus GST to 1VD pursuant to cl 24.7 of the Nomination Deed. 1VD also seeks equitable compensation, damages, interest and costs.

2. By an Amended Cross-Summons filed on 10 May 2021, AEN seeks a range of relief based on claims for, inter alia, an implied term in the Nomination Deed, rectification, and misleading and deceptive conduct. AEN seeks a declaration that it is entitled to specific performance of the Nomination Deed, on the basis that cll 24.2 and 24.11 did not cease to be enforceable on rescission, and that it was entitled to rescind the Nomination Deed on 6 November 2018 and seek a release and refund of the Final Instalment (as defined in the Nomination Deed) of the Nomination Fee (as defined) under the Nomination Deed. It also seeks a declaration that 1VD was not entitled to raise certain tax invoices and seek payment of the Final Instalment amount, on the basis that 1VD and the Second Cross-Defendant, Mr Coulston, breached the Nomination Deed and failed to perform obligations under it by 26 November 2018. AEN also raises other claims, which I address below.

3. The basic facts are uncontested and emerge from the parties’ pleadings and documentary evidence. At the time of the relevant transactions, the State Environmental Planning Policy No 65 (“SEPP 65”) (July 2015) (Ex P2, Vol 2, Tab 1) dealt with the design quality of residential apartment developments and incorporated the “Apartment Design Guide” (17 July 2015) (Ex P2, Vol 2, Tab 2) by reference. The objectives set out in SEPP 65 include, in cl 2(3)(b), “to achieve better built form and aesthetics of buildings and of the streetscapes and the public spaces they define” and, in cl 2(3)(c), “to better satisfy the increasing demand, and changing social and demographic profile of the community, and the needs of the widest range of people from childhood to old age, including those with disabilities”. Clause 6A provides that development control plans cannot be inconsistent with the Apartment Design Guide in respect of, inter alia, apartment size and layout. Clause 28 provides for the determination of development applications, which are to take into account, inter alia, the Apartment Design Guide. Schedule 1 sets out design quality principles relating, inter alia, to context and neighbourhood character, built form and scale, amenity, and, in Principle 8, housing diversity and social interaction. That principle provides, inter alia, that:

“Good design achieves a mix of apartment sizes, providing housing choice for different demographics, living needs and household budgets.

Well-designed apartment developments respond to social context by providing housing and facilities to suit the existing and future social mix.”

4. On 23 September 2016, 1VD and Mr Overton, a real estate agent, executed a non-exclusive agency agreement in respect of a development site at Kogarah (Ex D7). In October 2016, Mr Yan and Ms Wang, who are associated with AEN, met with Mr Overton and others, but not Mr Coulston of 1VD, at that development site and commenced discussions concerning AEN’s possible acquisition of that development site. AEN, through Ms Wang, then provided undated instructions to its solicitor, Mr Ngo (Ex D1, 7-8) indicating AEN’s then commercial objectives or requirements, including that there should be no fewer than 88 units in the project; no fewer than 19 one bedroom units (including 1 bedroom units with a study) with residential carpet area (not including the balcony) no less than 48 square metres each; no fewer than 60 two bedroom units, with residential carpet area (not including the balcony) no less than 75 square metres each; and no few than 9 three bedroom units, with residential carpet area (not including the balcony) no less than 95 square metres each. Those instructions contemplated a total price payable to acquire the development site of $18 million, from which AEN was to deduct $2 million as the five year rent for a ground floor childcare centre (later abandoned) to be leased to 1VD upon completion of the project. An attached list of units referred to 19 one bedroom units, 60 two bedroom units, 9 three bedroom units, for 88 units in total and a total carpet area of 6,536 square metres.

5. A draft heads of agreement dated 6 December 2016 (Ex D9), which was substantially different from the Nomination Deed later executed by the parties and had been prepared before Mr Coulston of 1VD had met with Mr Yan of AEN, provided for a payment of $500,000 to be made on execution and that the arrangement would be subject to the gazettal of a 4:1 rezoning of the land, after which further payments would be made including to 1VD.

6. In early December 2016, meetings took place between representatives of 1VD and AEN. An exchange of text messages between Mr Overton and Mr Coulston on 6 December 2016 refers to a first meeting to take place the following day which would be attended by Mr Yan and his solicitor, Mr Ngo, and Mr Coulston (Ex J1, 708). A meeting invitation records the subject of that meeting as the “Victoria Street Kogarah deal” (Ex J1, 710). That first meeting took place on 7 December 2016 at a restaurant owned by Mr Yan, and I address a dispute as to what was discussed in dealing with the affidavit evidence and cross-examination below.

7. By a subsequent email dated 7 December 2016 (Ex J1, 711), Mr Coulston sent Mr Overton, AEN’s solicitor (Mr Ngo), and 1VD’s then solicitor (Mr Garling) an updated draft heads of agreement (Ex J1, 712) and confirmed a second meeting for 8 December 2016. That draft heads of agreement recorded the contract price for the land and noted that the total price paid by AEN would be $18 million, equating to $187,500 per hypothetical unit, subject to “a minimum 4:1 F[loor] S[pace] R[atio] at Gazettal; and a minimum 96 units at D[evelopment] A[pplication] approval”. That draft heads of agreement also referred to a first payment of $300,000 to be irrevocably released to 1VD upon signing of a share sale agreement (which was not implemented); a second payment of $550,000 to be irrevocably released to 1VD following notice of rezoning of the land to the minimum of a 4:1 floor space ratio and a third payment of $1,350,000 to be irrevocably released to 1VD within seven days of notice of approval of a development application for a minimum of 96 apartments, and also comprising repayment of 1VD’s design fees for the development application, agreed to be $200,000. That draft heads of agreement also stated, with a handwritten question mark behind it, that:

“Should less than 96 apartments be approved, $187,500 shall be deducted for each unit less than 96 from the vendor’s payment No 3”.

8. A second meeting took place at the offices of 1VD’s solicitors on 8 December 2016. Mr Garling made a contemporaneous file note of that meeting (Ex J1, 768) which recorded the attendees as Mr Yan, Ms Wang, Mr Ngo, Mr Overton, presumably in addition to himself and Mr Coulston. He recorded the matters discussed as follows:

“  8/12/16

Tim Overton – agent

Frank Ngo – Lawyer

Mr Yan & Angela

→   SSA or Nomination Deed

→They want a Nomination Deed.

→   Nomination is to occur @ the same time as they are to exercise the call option.

→   Wants confirmation of receipt of all of the option fees, extension fees and legal fees by the vendors.

→   The purchase price/nomination fee will be reduced accordingly to the following formula:

(96 – no. of units approved) x ($18,000,000.00 ÷ no. of units approved)

→   No more than 15% of one bedders

→   No more than 10% three bedders

→ Apartment Design Guide – send to Frank.

→   All apartments to be build in accordance with the A[partment] D[esign] G[uide]

→   For every apartment offered re the D[evelopment] A[pplication] above 96 apartments [1VD] gets an additional $93,750 $80,000 per unit.

→   $20k DD fee comes off payment 1.”

That file note does not record any express discussion of any requirement that that there were to be no units smaller than 50 square metres in the development, although the percentage of one and three bedroom units was discussed, or that there were to be no studio apartments, as defined in the Apartment Design Guide, to which I refer below, as “an apartment consisting of one habitable room that combines, kitchen, living and sleeping space”. I return to those matters and also address the affidavit evidence as to this meeting below.

9. AEN was incorporated on or about 8 December 2016 (Ex J1, 771). A second written set of instructions from AEN to Mr Ngo (Ex D1, 63-64), also undated, appears to have been prepared after the incorporation of AEN since it refers to the agreement being signed by the “new company”, AEN. Those instructions record that the approval for the development application should include at least 96 units, with average residential carpet area (not including the balcony) of no less than 75 square metres, with no fewer than 19 one bedroom units, no fewer than 68 two bedroom units and no fewer than 9 three bedroom units. They also refer to a staged payment of $300,000 at signing the agreement; $550,000 within 60 days of the approval of 4:1 floor space ratio by the Council; $15.8 million to the land owners within 120 days of that approval; and $1.55 million to 1VD when approval of a development application for the block was obtained, with a deduction of $200,000 for each unit if the vendor could not ensure the number of 96 units with average residential carpet area (not including the balcony) of not less than 75 square metres in the approved development application. That approach was not adopted in the executed Nomination Deed.

10. On 9 December 2016, Mr Garling sent an email to AEN’s solicitor, Mr Ngo, regarding a proposed form of Nomination Deed (Ex P6, 776). On 13 December 2016, 1VD’s solicitors followed up with Mr Ngo for an update as to his review of the Nomination Deed (Ex J1, 789). A subsequent draft of the Nomination Deed with the handwritten date of 14 December 2016 (Ex J1, 790; possibly also Ex D5, Tab 1) provided, in a schedule, for a Nomination Fee of $2,196,757, payable in three instalments. Mr Ngo, on behalf of AEN, provided comments on the then draft Nomination Deed on 14 December 2016 (Yan 7.8.20, reaffirmed 1.10.21, [69], [75], [87]; Ngo 7.8.20, [28]). Clause 24.11 of the Nomination Deed then contained an indication of the number of apartments to be included in the development, providing for not more than 15% of one bedroom apartments with not less than 50 square metres of net saleable area; and not more than 10% of three bedroom apartments with not less than 95 square metres of net saleable area. There was no specific reference to studio apartments in those instructions, although I recognise that a studio apartment would ordinarily be of a lesser size.

11. Several further drafts of the Nomination Deed were then exchanged between the parties’ solicitors. By an email dated 15 December 2016 (Ex J1, 1124; Ex D5, Tab 2), Mr Ngo sent Mr Garling a draft Nomination Deed with proposed amendments which included deleting a provision excluding any representation or warranty in relation to the development application or development approval and amending cl 24.11 of the draft Nomination Deed to provide for not less than 15% but not more than 20% of one bedroom apartments being not less than 50 square metres internal area (excluding balcony area), not less than 70% of two bedroom apartments and not less than 8% but not more than 10% of three bedroom apartments. AEN also sought to obtain a warranty, which 1VD did not give, that the development application would have an approved gross floor area of not less than 8,251.56 square metres.

12. On 19 December 2016, Mr Garling sent Mr Ngo a further mark-up of the draft Nomination Deed (Ex J1, 1178; Ex D1, 176-203), subject to 1VD’s instructions, and additional documents. Clause 24.11 in that draft Nomination Deed further amended the number of apartments and introduced a proviso that the apartment mix “will at all times be subject to all statutory, authority and Council requirements” and acknowledging that the apartment mix “may be varied pursuant to the requirements of the relevant statutory, authority and Council requirements” and that AEN would not be entitled to make any objection, requisition, claim, rescind or terminate the Nomination Deed as a result of that matter. I will refer to this proviso, which was substantially retained in the executed Nomination Deed after negotiation, as the “variation proviso”, and it prevented an exercise of AEN’s rights adverse to 1VD in respect of a variation of the apartment mix in the specified circumstances.

13. Mr Ngo forwarded documents including the draft Nomination Deed to Mr Yan’s personal assistant, Ms Wang, on 19 December 2016 (Ex J1, 1206). By email dated 20 December 2016 (Ex J1, 1211), Mr Ngo advised 1VD’s solicitor that Mr Yan would arrive in Australia that day; Mr Ngo would meet Mr Yan that afternoon to discuss the Nomination Deed and all other outstanding issues; and Mr Ngo’s timeframe was to “get everything done” by close of business on 21 December 2016.

14. A third set of instructions (Ex D1, 65) from AEN to Mr Ngo are also undated and were likely provided shortly before execution of the Nomination Deed, since they raise the possibility of that Deed being signed in both the English and Chinese languages, which was then raised by Mr Ngo shortly before that Deed was ultimately executed only in an English language version. Those instructions provided that:

“… The vendor should ensure that the DA approval should include at least 96 units. Among the 96 units, each of the 1-bedroom unit should have net interior area (not including the balcony) of no less than 50 square metres. In addition, the number of 1-bedroom units should be between 15% and 20% in the total of 96 units.

Each of the 3-bedroom unit should have net interior area (not including the balcony) of no less than 90 square metres. In addition, the number of three bedroom units should be between 8% and 10% in the total of 96 units.

Each of the 2-bedroom unit should have net interior area (not including the balcony) of no less than 70 square metres. In addition, the number of 2-bedroom units should be no less than 70% in the total of 96 units.”

15. There is again no reference to studio apartments in those instructions, which referred to a total price of $18.2 million, with $300,000 payable within 5 days of signing the agreement, $550,000 payable within 60 days of the approval of “1:4 plot ratio” [sic] by the Council, $15.8m payable to the land owners within 120 days of such approval, and the balance of $1.55 million payable to 1VD within 15 working days of the approval of the development application for the agreed land block, with a reduction of $190,000 for each unit not approved if the vendor could not ensure 96 units in the approval of the development application, and an additional $65,000 payable for each unit approved in excess of 96 units.

16. By email dated 21 December 2016, Mr Ngo sent proposed amendments to the Nomination Deed to 1VD’s solicitor (Ex J1, 1244; possibly also Ex D5, Tab 4) and proposed that the Nomination Fee be $20,000, which had already been paid, and the remaining $2,249,736 be dealt with as selling commission payable to 1VD. The amendment sought to exclude the variation proviso in cl 24.11 of the Nomination Deed. The request to exclude that provision supports an inference that AEN, or at least Mr Ngo, had by then rightly recognised that that proviso qualified 1VD’s obligations and limited AEN’s capacity to terminate or rescind the Nomination Deed or avoid payment of the Final Instalment of the Nomination Fee if the apartment mix was varied adversely to its interests in the specified circumstances. AEN was not successful in excluding that provision and ultimately executed the Nomination Deed in a form that limited its rights in that way.

17. Also on 21 December 2016, a dinner took place at the Golden Century Chinese restaurant in Sydney attended by Mr Yan and Ms Wang of AEN, Mr Overton and his wife Ms Chen, and Mr Coulston of 1VD, apparently anticipating a successful transaction. A photograph recorded Mr Coulston holding a cheque in payment of the first instalment of the Nomination Deed at that dinner (Ex J1, 1407).

18. By a handwritten note dated 21 December 2016 (Ex J1, 1243), Mr Garling recorded events on that day as follows:

“A number of phone calls between [Mr Coulston]/[Mr Ngo] and [Mr Overton] and then dinner @ Golden Century.

Discussion points:

1.   The formula re the 96 units. They were trying to delete the uplift clause entirely. [Mr Coulston] would not agree. Parties at dinner agreed that would only be an uplift if [Mr Coulston] [?] more than 96 apartments and another storey on the building. Agreed a sliding scale of prices as well.

2.   They wanted our paragraph below the apartment mixed clause deleted. [Mr Coulston] wouldn’t agree. The parties agreed that there could not be more than 22 one (1) bedroom apartments, and the ratio of 3 bedroom apartments shifted by 1%. Our paragraph to remain.

3.   Release of funds agreed to be on nominees’ solicitor approval, however this not to be unreasonably withheld.

4.   Gave us cheque and shook hands on the deal.”

19. The correspondence between 1VD’s solicitors and AEN’s solicitors between 7 December 2016 and 22 December 2016, and the draft Nomination Deeds, refer to the inclusion of one, two and three bedroom apartments but do not refer to any requirement that there be no apartments smaller than 50 square metres in the development or that there be no studio apartments in the development for which, as I noted above, AEN now contends.

20. On 22 December 2016, Mr Garling sent Mr Ngo an updated draft Nomination Deed (Ex J1, 1584; possibly also Ex D5, Tab 5) subject to final instructions, and a copy of the deposit slip for the bank cheque provided by AEN to 1VD on account of the first instalment of the Nomination Fee. Clause 24.11 of that draft continued to include the variation proviso protecting a variation of the apartment mix in the specified circumstances, although additional words were added acknowledging that the development approval may not contain more than 22 one bedroom apartments, and providing for a refund of the Final Instalment of the Nomination Fee if that occurred. Again, there was no reference to studio apartments, where the parties had apparently not turned their mind to that question at that time.

21. Also on 22 December 2016 at 11.48am, Mr Ngo sent Mr Garling a further draft Nomination Deed (Ex P6, 1614; possibly also Ex D5, Tab 6), the changes to which do not appear to affect cl 24.11 of the Nomination Deed. On the same day at 1.47pm, Mr Garling sent Mr Ngo a further draft Nomination Deed (Ex J1, 1673; possibly also Ex D5, Tab 7). At 3.15pm on 22 December 2016, 1VD’s solicitor sent Mr Ngo the final version of the Nomination Deed for execution by AEN, which included a definition of the term “Apartment Design Guide” and included cl 24.11 in its final form (Ex J1,1738; the document may be the same as that at Ex D5, Tab 8, other than for different footers),

22. 1VD and AEN then executed the final version of the Nomination Deed (Ex P2, 1339, 1368). I will address the terms of the executed Nomination Deed in dealing with issues of construction below. It is common ground that, on 22 December 2016, AEN paid the Nomination Fee into the trust account of a firm of solicitors (1VD’s Amended Commercial List Statement (“ACLS”) [4]; AEN’s Commercial List Response (“CLR”) [6]). AEN contends the Nomination Deed was later varied on 29 March 2017 and again on 29 April 2017 (CLR [2]); however, there is no evidence that the relevant variation agreements were executed.

23. On 26 May 2017, the Kogarah Local Environmental Plan 2012 (Amendment No 2) (New City Plan for Kogarah) (“LEP”) was gazetted (Ex P2, Vol 2 Tab 3). The LEP provided, inter alia, for the introduction of Zone R4 High Density Residential which permitted, inter alia, residential flat buildings with consent. Clause 1.2 of the LEP provided that it sought “… to encourage a diversity of housing choice suited to meet the needs of the current and future residents of Kogarah”; cl 2.3 deals with zone objectives and the “Land Use Table”, and that table refers to an objective “to provide a variety of housing types within a high density residential environment”; cl 4.3 provides for the maximum height of buildings by reference to a “Height of Buildings Map” and it is common ground the permissible maximum height was 33 metres; and cl 4.4 provides for the floor space ratio by reference to a “Floor Space Ratio Map”, which it is common ground was a maximum 4:1 ratio.

24. Shortly after the LEP took effect, on 2 June 2017, 1VD lodged a development application for the property with Georges River Council (“Council”) (Ex P2, 1870). It is common ground that application was prepared in accordance with the Apartment Design Guide and contained an apartment mix within the range provided in cl 24.11 of the Nomination Deed (ACLS [6], CLR [8]). The relevant design drawings, in version J dated 1 May 2017 (but also recording a date of 19 September 2016) (Ex D1, 412) provided for 17 one bedroom units, 71 two bedroom units, and 8 three bedroom apartments, totalling 96 units, within a building that exceeded the applicable height limit under cl 4.3 of the LEP and could only proceed if Council or the Land and Environment Court did not apply it. That version of the drawings did not include the studio apartments to which AEN objects, where Council’s requirement for an apartment mix including studio apartments was not introduced until January 2018, a matter to which I return below.

25. It is also common ground that further project drawings, in versions K to U, prepared between July 2017 and 4 September 2018 also provided for an apartment mix that would have complied with cl 24.11(a)-(d) of the Nomination Deed, without need to rely on the variation proviso, and provided for 96 apartments. For example, version U provided for 19 one bedroom apartments, 65 two bedroom apartments, 12 three bedroom apartments and 105 car parking spaces (Ex D1, 971-1002), in a building that exceeded the applicable height limit under cl 4.3 of the LEP and could only proceed if Council or the Land and Environment Court did not apply that limit.

26. Council did not approve the development application as lodged in June 2017 and, by 14 July 2017, it was deemed to have refused that development application (ACLS [7], CLR [9]). On 17 July 2017, 1VD commenced Class 1 appeal proceedings in the Land and Environment Court (“LEC proceedings”) concerning that deemed refusal (ACLS [8]; CLR [10]; Ex P2, 1874). Mr Yan says that he was first advised of the LEC proceedings on 18 July 2017; no claim for any breach of the Nomination Deed in that regard is raised by AEN’s Amended Commercial List Cross-Claim Statement (“ACCS”).

27. On 14 September 2017, Council filed a Statement of Facts and Contentions (“SFC”) in the LEC proceedings (ACLS [9]; CLR [11]; Ex P2, 1892) which contended that the height of the proposed building exceeded the mandated LEP height limit of 33 metres by approximately 4 metres and identified an issue as to setbacks to the street and adjoining sites (Ex P2, 1909). On 3 October 2017, Mr Coulston emailed Mr Ngo regarding lodgement of the development application and Council’s SFC (Ex P6, 1944) and advised that:

“Whilst of course disappointing that Council’s current prevailing view is that our DA should be refused, we are in the process of responding to Council’s SOFAC. This may well necessitate some changes to the submitted DA in line with Council’s stated contentions, however this should also provide us with a better chance of approval.”

28. The Kogarah DCP 2013 – Amendment No 2 – Kogarah North Precinct (“DCP”) was then adopted by Council in late 2017 and came into effect on 10 January 2018 (Ex P2, Vol 2, Tab 4) and applied to the Kogarah North Precinct. Section 14, dealing with housing choice, identifies the objectives of ensuring the provision of a “range of housing types” and “a suitable mix of dwellings that encourages social diversity within the development and addresses the needs for future residents and households” and, under the heading “Controls” provides that:

“(i)   All residential development (or residential component within a mixed development must provide a mix of studio, one bedroom, two bedroom and three bedroom apartments of a range of sizes and layouts so as to meet the needs of residents and accommodate a range of household types.

(ii)   An apartment mix is to be provided, taking into consideration:

(a)   the distance to public transport, employment and education centres;

(b)   the current market demands and projected future demographic trends;

(c)   the demand for social and affordable housing;

(d)   different cultural and socio-economic groups;

(iii)   Apartment configurations are to support diverse household types and stages of life including single person households, families, multi-generational families and group households.”

29. On 13 April 2018, 1VD filed a Notice of Motion in the LEC proceedings seeking leave to rely on amended plans (“Amended DA”) (Ex P2, 2077), which included 96 apartments across 11 residential levels, comprising 15 one bedroom apartments, 73 two bedroom apartments and 8 three bedroom apartments. It is common ground that the Amended DA was prepared in accordance with the Apartment Design Guide and also contained an apartment mix within the range contemplated by cl 24.11 of the Nomination Deed, although AEN contends that it was not provided a copy of it (ACLS [10]-[11]; CLR [12]-13]).

30. On 23 April 2018, Mr Coulston emailed Mr Ngo advising that:

“Ahead of our proposed meeting on Wednesday this week, please see below a link to the updated information regards to Victoria Street, Kogarah.

I confirm we are doing our best to have this project DA approved for Mr Yan. I also confirm that we’re aware of all of our obligations relating to the contract and all changes made since our original DA have been made at the written direction of Coun[ci]l. We would be pleased to show such evidence as required after we meeting [sic] with Mr Yan and yourself this wed.” (Ex P6, 2493)

31. By a further email dated 25 April 2018, Mr Coulston sent Mr Ngo a schedule of modifications which he described as “specific changes which have been driven by Council” and indicated that he would also bring a full plan set to the meeting (Coulston 26.8.22, Annexure G).

32. On 26 April 2018, Mr Coulston met with Mr Yan and Mr Ngo at Mr Ngo’s office in Sydney (Ex P6, 2493). By email dated 29 April 2018, marked “without prejudice” but tendered (Ex D11, 2495) without objection, Mr Coulston advised Mr Ngo he understood from the meeting with Mr Yan and Mr Ngo that:

“… we are all in agreement to proceed with the current set of plans which I tabled with you. It’s also agreed that we’ll deal with the issue of seeking additional parking (up to 130 cars) after approval of our current plan set. Just further to this point, please see below an email from Council to our planning lawyer regards to the car parking issue as it now stands. Note that if we were to go for 130 cars now, all car parking area over 81 car parks would be included in the F[loor] S[pace] R[atio] and hence we’d risk losing 7 or 8 units also of course jeopardise the whole approval process.”

33. On 23 May 2018, Council filed an Amended Statement of Facts and Contentions (“ASFC”) in the LEC proceedings in response to the Amended DA, identifying objections to the Amended DA including that the height of the proposed building was not justifiable and contributed to the bulk and scale of the development, and (at part 2.2 Built Form and Scale) that the Amended DA should be refused because it was unacceptable in terms of its built form and scale, and did not meet the Built Form and Scale principles (Apartment Design Guide Principle 2), and that “[t]he proposal exceeds the [LEP] planning control for building height by approximately 28%”, and “exceeds the [LEP] planning control for F[loor] S[pace] R[atio] by approximately 26m2”. Council also there contended the development included insufficient car parking; there were public interest reasons not to approve the development including site isolation and sterilisation of adjacent properties, overshadowing, loss of views, loss of privacy, poor aesthetics, increasing traffic and parking problems in area and a failure to meet the strategic intent of the DCP; and the apartments did not provide adequate amenity in accordance with Principle 6 of SEPP 65 and the Apartment Design Guide (ACLS [12]; CLR [14]; Ex P2, 2498). On 26 May 2018, Mr Coulston sent Mr Ngo a copy of the ASFC (Ex P6, 2519).

34. On 24 July 2018 the Land and Environment Court handed down its decision in Regent Land Pty Limited atf Regent Land Unit Trust v Georges River Council [2018] NSWLEC 1370, concerning the first application for a development application for a high rise development in the Kogarah North Precinct. Commissioner Smithson rejected that application because that development exceeded the maximum height of 33m and the requirements of cl 4.6 of the LEP to vary the height exceedance were not met, and because its floor space ratio exceeded the maximum permissible floor space ratio of 4:1. The approach there taken by the Land and Environment Court was obviously relevant to the prospects of 1VD obtaining development approval for the project in its then form and 1VD’s architect, Mr Dickson, had regard to it in preparing amended plans for the development that reduced its height.

35. On 8 August 2018, Mr Dickson, suggested to Mr Coulston that the then development application be further amended to reduce the height of the building by two storeys to meet height restrictions and deliver the apartment mix required under cl 14 of Pt E4 of the DCP by including studio apartments (Ex P6, 2546). I will address Mr Dickson’s evidence of that recommendation below. On 9 August 2018, Mr Coulston sent amended sketches to Mr Dickson which included studio apartments (Ex P6, 2550) and, on the same day, Mr Dickson sent Mr Coulston an email dealing with potential amendments to the Amended DA including variations to the apartment mix to achieve compliance with the Apartment Design Guide (Ex P6, 2551). A meeting then took place on that date at the offices of 1VD’s solicitors, attended by Mr Coulston, Mr Ngo and Mr Huang, who was an adviser or consultant to AEN. Mr Coulston’s evidence is that the possible inclusion of studio apartments in the project was first raised at this meeting. I return to that meeting in dealing with 1VD’s estoppel claim below.

36. On 12 August 2018, Mr Coulston sent an email to, inter alia, Mr Huang and Mr Ngo (Ex P6, 2555) attaching amended sketches, a dropbox link providing access to the proposed further amended plans, and a letter (Ex P6, 2554) dated 10 August 2018, which stated (in part) that 1VD:

“reserves its right to otherwise vary the apartment/carpark mix in accordance with clauses 24.11, 25.1 & 25.2 including but not limited to the inclusion of A[partment] D[esign] G[uide] compliant studio apartments in order to ensure that the DA accords with the gazettal”.

37. By email dated 14 August 2018 to Mr Ngo, Mr Coulston to Mr Ngo requested an urgent response to that email dated 12 August 2018 (Ex P6, 2556). I return to these emails in dealing with 1VD’s estoppel claim below.

38. On 17 August 2018, 1VD filed a Notice of Motion in the LEC proceedings seeking orders that the proceedings be expedited or allocated a compressed timetable (Ex P6, 2561).

39. On 21 August 2018, Mr Coulston emailed Mr Ngo regarding the extension of the DA Sunset Date (as defined) under the Nomination Deed and the proposed amendments to the plans to satisfy statutory and Council requirements necessary for approval (Ex P6, 2594). On the same date, Mr Coulston emailed Mr Dickson regarding amendments to the then Amended DA (Ex P6, 2595). On the same day, Mr Coulston emailed Ms Ware, director of legal services and general counsel at Georges River Council, foreshadowing variations to the apartment mix by including studio apartments to comply with statutory and Council requirements (Ex P6, 2596), as follows:

“Until recently we stayed with the higher scheme due in part to earlier general consentient [sic] to it in the s.34. We incorrectly thought perhaps your experts might stick with this as being a better planning outcome as it seemed the Councillors were perhaps politically motivated to vote against height late last year. I got that wrong and so that’s my fault.

The recent Regent St determination of course made it abundantly clear how wrong that strategy was. So since then at our end its been full steam to provide plans at 33m and with a lower F[loor] S[pace] R[atio] – in accordance with the conditions of the Regent St determination. These will be fully compliant plans which will be much lower in height, have greater setbacks, less parking and provide less of an isolation issue (this will be achieved in large part by reducing height and providing a greater apartment mix with introduction of Studio’s therefore providing less built space). I’m sure its this haste and also my sunset deadlines which have led in large part to these extra contentions of late (i.e. today). For this I apologise.

As I said today, there is no point in furthering plans which are in dispute and have no chance of being approved. Whilst I know protocol must be followed, I really hope that once our LEP, A[partment] D[esign] G[uide] and largely DCP compliant plans are properly tabled that we can more peacefully look to conclude the matter. Whilst I’ll accept our shortcomings to date, I do sense a level of animosity between the parties that I’m not convinced should be there and which I can’t quite put my finger on why it exists to the extent to which it seems to. If there’s anything we’ve done to cause this or if we can do anything to help resolve it, please let me know as it troubles me greatly.” [emphasis added]

It is plain from that email that 1VD was then seeking to address Council’s continued opposition to the development application in the LEC proceedings at least by reducing the height of the development to comply with the 33 metre limit under cl 4.3 of the LEP, which would necessarily require a change in the number or size of the apartments or both, and address the question of the apartment mix requirement under the DCP.

40. Ms Ware responded on the same day (Ex P6, 2598) in a manner that recognised the delay in the LEC proceedings but also made clear that Council continued to require that the development not exceed the maximum height requirement under the LEP and also gave weight to compliance with the Apartment Design Guide, and otherwise appeared supportive of 1VD’s changed approach:

“Council is committed to ensuring high quality residential flat buildings for this new precinct. The area is very important to Council, having been ear-marked strategically by the State Government and indeed identified by the former Kogarah Council as appropriate for high density.

I can understand your frustration. Two vacations of hearing dates in one matter has not occurred in any case in which I have been involved for 25 years. I acted for developers for 20 years and understand and appreciate your commercial drivers.

Council’s view is that the Regent Land decision is clear that height controls cannot be ignored in pursuit of the F[loor] S[pace] R[atio] (which is a maximum). Council will continue to press the position of compliance with height and F[loor] S[pace] R[atio], which, frankly, has been our position since adoption of the DCP in January. Particular attention is to be given towards Councils Statement of Facts & Contentions (SoFACS). LEP and A[partment] D[esign] G[uide] compliance is essential, however so too is compliance with the desired future character provisions of the Kogarah North Precinct. Your suggested approach with fully compliant plans sounds like the right one to me.

Council is not being overly bureaucratic in its approach. It is keen to ensure good outcomes for the community. On 5 July 2018, I entered into a s34 agreement on behalf of Council with another applicant on a site in the precinct. This saved both parties significant costs. Council and applicants can work together in this area an indeed throughout the LGA. I think, generally, you will find that I have a reputation for trying to ensure, where appropriate, and acting in the bests interests of Council conciliated outcomes which result in the best possible development.” (emphasis added)

41. On 22 August 2018, Mr Dickson’s firm emailed Mr Coulston an amended set of drawings incorporating studio apartments (Ex P6, 2601) and, on 23 August 2018, Council filed an Agreed Statement of Facts in the LEC proceedings (Ex P6, 2615). On 24 August 2018, Mr Coulston emailed Mr Ngo regarding revocation of a termination notice previously given by 1VD (to which tangential reference was made in these proceedings) and an extension of the DA Sunset Date under the Nomination Deed (Ex P6, 2631); on 30 August 2018, he emailed Mr Ngo claiming that 1VD continued to work in good faith in accordance with Nomination Deed in order to obtain approval (Ex P6, 2633); and, on 1 September 2018, he emailed Mr Ngo attaching a letter providing an update on the progress of the development application (Ex P6, 2636). AEN contends that letter represented that the development application as agreed was being prosecuted and that was a “false statement”; however, no such claim is raised by AEN’s Amended Commercial List Cross-Claim Statement.

42. On 7 September 2018, 1VD filed a Notice of Motion in the LEC proceedings seeking leave to rely on further amended plans (“Further Amended DA”), which reduced the height of the building from 11 to 9 storeys, and reconfigured the apartments in the building to provide a residential gross floor area of 7,284 sqm consisting of 96 apartments, made up of 17 studio apartments, 21 one bedroom apartments, 54 two bedroom apartments and 4 three bedroom apartments (Ex P6, 2638).

43. On 9 September 2018, Mr Coulston emailed Mr Ngo requesting a response to his email dated 1 September 2018 (Ex P6, 2646). AEN contends this email was “[f]urther misleading conduct” where 1VD’s actions of 7 September 2022 are not disclosed, but no such claim is raised by its Amended Commercial List Cross-Claim Statement. Version V of the project drawings, dated 19 September 2018, reflects a reduction in the height of the building to comply with cl 4.3 of the LEP and a change in the apartment mix in a manner that improves compliance with the apartment mix requirements of the DCP. It provides for 17 studio apartments; 21 one bedroom apartments; 54 two bedroom apartments, 4 three bedroom apartments and 97 car parking spaces, and reduces the gross floor area to about 7,250 square metres and reduces the floor space ratio below 4:1 ratio as a result of reducing the height of the building and providing street setbacks (Ex D1, 1123).

44. On 23 September 2018, Mr Coulston emailed Mr Huang and Mr Ngo providing an update regarding the development application approval process, including the reduction in height and variation of the apartment mix, which formed part of the orders ultimately made in the LEC proceedings approving the final version of the development application (“Final DA”) (Ex P6, 2647). He initially referred to a negotiated outcome that had been achieved with Council in respect of another project and then observed that:

“In short, the planning process continues to be a nightmare, with Council making things very hard. The L&E Court has also set a clear precedent that they (nor Council) will not accept any height exceedance except for lift overruns and communal open space on the roof top.

In order to agree an outcome with Council and obtain an approval for Palmerston St, the following concessions were required by Council:

1.   Reduce height to 10 storeys (from our earlier proposed 12 storeys);

2.   Change of unit mix to reduce from proposed 67 apartments to 51 apartments and 6 studio serviced apartments (in order to achieve our required street setback, otherwise we would have lost a lot more units);

3.   Allocation of a 10% key worker housing.

This has obviously impacted the returns from the project, however our legal option [sic] was that we would have lost in the L&E Court hearing and so this negotiated outcome was deemed to be the best outcome given the issues at hand.

We are now working up revised plans for Victoria St and would welcome the opportunity to review these with you at a mutually convenient time. Please let me know when may work for you?”

I refer to Mr Coulston’s evidence of a conversation with Mr Ngo on the next day in dealing with the affidavit evidence below.

45. On 26 September 2018, Mr Coulston emailed Mr Ngo outlining the Council’s remaining issues with the Final DA, and stating that one of the strategies being used was the inclusion of smaller Apartment Design Guide compliant studio apartments into the apartment mix (Ex P6, 2648). He there observed that:

“The good news is we’re quietly confident in our ability to provide an approved scheme in keeping with the Deed and providing 96 apartments in the near term. This will yield no more than 22 x 1 BR apartments (which is a strict condition of our Deed), however may otherwise require the mix to be amended in order to comply with Council requirements and to achieve the require yield and otherwise comply with the LEP and with the Apartment Design Guide. We understand the Deed to be quite clear that the apartment & carparking mix is at all times subject to statutory and Council requirements and that (whilst we’d prefer not to make changes – as these continual changes cost me a fortune in design, legal and planning fees) the Nominator has the ability to make such changes as required by Council in order to make the DA accord with the LEP and A[partment] D[esign] G[uide]. That said, we’re doing out level best to achieve the desired outcome in terms of unit and car parking mix. In particular, Councils view as to parking is really varied and so far we’ve had a number of difference views expressed to us by Councils parking expert. Needless to say, we’ll end up with the best outcome we can in this regard.

We’re hopeful that this matter can be resolved by way of a section 34 agreement at or before the currently listed hearing dates. When our working set of DA plans are finalised (after further discussion and direction by Council) we will send a set across for your review. Should you wish us to discontinue our efforts to seek an approval, please advise asap as it is indeed a very expensive and time consuming process.”

I return to that email in dealing with AEN’s estoppel claim below.

46. On 4 October 2018, Mr Dickson’s firm emailed amended architectural plans for inclusion in the Final DA to Mr Coulston (Ex P6, 2654) and, by email dated 5 October 2018, Mr Coulston sent Mr Ngo a copy of those plans (Ex P6, 2656, 2658) and advised that those plans:

“continue to respond to Council’s requirements in order to make the DA accord with the LEP and A[partment] D[esign] G[uide] and our deed generally.”

47. On 14 October 2018, Mr Coulston advised Mr Ngo that approval was likely to be obtained in accordance with the final architectural plans sent to Mr Ngo on 5 October 2018 (Ex P6, 2717). I return to these emails in dealing with AEN’s estoppel claim below.

48. On 17 October 2018, Council and 1VD reached agreement for approval of the Final DA at a conciliation conference under s 34 of the Land and Environment Court Act 1979 (NSW) (Ex P2, 2718) and they then requested the Land and Environment Court dispose of the proceedings by granting leave for 1VD to rely on amended plans, drawings and documents as specified. The Land and Environment Court made the requested orders on 23 October 2018 (Ex P2, 2896).

49. On 25 October 2018, 1VD’s solicitors sent AEN’s solicitors a letter advising of the approval of the Final DA by the orders made in the LEC proceedings and calculating the Final Instalment of the Nomination Fee payable under the Nomination Deed as $1,419,736 plus GST. That letter enclosed a tax invoice claiming development approval cost of $200,000 plus GST and attached a copy of the “Final Development Approval comprised of the Notice of Orders made by the Land and Environment Court of New South Wales in case number 2017/00217118” and a zip file with copies of tax invoices incurred by 1VD in respect of the development application in excess of $200,000 plus GST (Ex P2, 2953). 1VD contends, and AEN denies, that the approval of the Final DA was a Development Approval within the meaning of the Nomination Deed and that the Final Instalment of the Nomination Fee calculated in accordance with item 2(c) of the Schedule to the Nomination Deed is $1,419,736. 1VD also pleads that it has incurred reasonable consultant costs for the preparation of the development application, in excess of $200,000 plus GST and claims payment of that amount.

50. Mr Coulston then met with Mr Ngo and with Mr Yan’s wife and daughter on 5 November 2018 and recorded what occurred at that meeting in an email (Coulston 26.8.22, Annexure E) to his solicitor on the same day. He observed that:

“Whilst it was pleasant enough, there was general disagreement regards to the apartment mix. In particular Frank [Ngo] felt the studio’s [sic] should account for 1BR’s and by his logic we therefore breach the 1BR maximum set in clause 24. We’ve done good research on this and feel confident that studio’s [sic] apartments are not 1 BR’s and are clearly recognised in the Apartment Design Guide, which the deed references and relies upon. He said he will seek an instruction from Mr Yan and will get back to us.”

51. It is common ground that, on 6 November 2018, AEN’s solicitor sent a letter to 1VD which purported to rescind the Nomination Deed.

52. By letter dated 6 March 2019, the then solicitors for 1VD noted the dispute between 1VD and AEN in relation to the Nomination Fee and indicated they would abide any Court order that bound the parties to the Nomination Deed and not release the Nomination Fee unless pursuant to a Court order or an agreement between the parties to the Nomination Deed (Ex P1).

Affidavit evidence – the applicable principles

53. Both parties lead evidence of oral conversations, and AEN particularly relies on such conversations for its representational and rectification cases. I should first identify the principles which I should apply in dealing with that evidence. Even apart from the particular difficulties which arose with Mr Yang’s and Mr Ngo’s evidence, which I address below, I have regard to the fallibility of human memory which increases with the passage of time, particularly where disputes or litigation intervene: Watson v Foxman (1995) 49 NSWLR 315 at 318–319; Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) [2008] FCA 810 at [41]; Varma v Varma [2010] NSWSC 786 at [424]–[425]. I also have regard to the fact that objective evidence, where available, is likely to be the most reliable basis for determining matters of credit that arise as to the affidavit evidence: Armagas Ltd v Mundogas SA [1985] 1 Ll R 1 at 57; Re Colorado Products Pty Ltd (in prov liq) (2014) 101 ACSR 233; [2014] NSWSC 789 at [10] (“Colorado”).

54. The principles applicable to assessing claims for representations in oral form were also helpfully summarised by Slattery J in Ventouris Enterprises Pty Ltd v Dib Group Pty Ltd [2010] NSWSC 963 at [87] as follows:

“The principal conduct of the defendants that [the plaintiff] alleges was misleading or deceptive was the speaking of words in the course of a series of conversations. Special considerations apply when assessing alleged misleading and deceptive conduct in such a context. It is necessary that the words spoken be proved with a degree of precision sufficient to enable the Court to be reasonably satisfied that they were in fact misleading in proved circumstances: Watson v Foxman (1995) 49 NSWLR 315 at 318 per McLelland CJ in Eq In assessing whether spoken words were misleading the Court may have to examine relatively subtle nuances flowing from the use of one word, a phrase or a grammatical construction rather than another or the presence or absence of some qualifying word, phrase or condition: Watson v Foxman (1995) 49 NSWLR 315 at 31. The fallibility of human memory and the overlaying of memory with perceptions of self interest leading to sub conscious reconstruction are all hazards of ordinary human experience to which a Court must be alert in assessing whether particular spoken words are misleading or deceptive: Watson v Foxman (1995) 49 NSWLR 315 at 319. Ultimately each element of the cause of action must be proved to the reasonable satisfaction of the Court which means that the Court “must feel an actual persuasion of its occurrence or existence”. Such satisfaction is “not obtained or established independently of the nature and consequences of the fact or facts to be proved”, including the “seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding”: Helton v Allen (1940) 63 CLR 691 at 712.”

55. I also note the matters relevant to the assessment of spoken words in the context of a contractual dispute, which were identified by Hammerschlag J (as his Honour was then) in John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451 at [95]:

“Where a party seeks to rely upon spoken words as a foundation for a cause of action, including a cause of action based on a contract, the conversation must be proved to the reasonable satisfaction of the court which means that the court must feel an actual persuasion of its occurrence or its existence. Moreover, in the case of contract, the court must be persuaded that any consensus reached was capable of forming a binding contract and was intended by the parties to be legally binding. In the absence of some reliable contemporaneous record or other satisfactory corroboration, a party may face serious difficulties of proof. Such reasonable satisfaction is not a state of mind that is obtained or established independently of the nature and consequences of the fact or facts to be proved. The seriousness of an allegation made, inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question of whether the issue has been proved to the reasonable satisfaction of the court. Reasonable satisfaction should not be produced by inexact proofs, indefinite testimony, or indirect inferences: see Briginshaw v Briginshaw (1938) 60 CLR 336 at 362; Helton v Allen (1940) 63 CLR 691 at 712; Rejfek v McElroy (1965) 112 CLR 517 at 521; Watson v Foxman (1995) 49 NSWLR 315 at 319.”

56. I also bear in mind the observations of Bell P (as the Chief Justice then was, with whom Bathurst CJ agreed) in ET-China.com International Holdings Ltd v Cheung (2021) 388 ALR 128; [2021] NSWCA 24 at [27]-[29]:

“Whilst the quality and accuracy of oral recollection of actual conversations should be treated with care and caution given the fallibility of human memory (of which there has been a growing appreciation within the judiciary in recent decades), oral testimony may still be of value and importance, as was recognised in the nuanced observations of Leggatt J (as his Lordship then was) in Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC (Comm) 3560 at [22] (Gestmin):

“the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses' recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose – though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth.” (emphasis added)

Documents and events have to be understood in their context, and evidence of context will often be furnished by witnesses in their oral evidence. Documents, moreover, will not always present a complete picture of events. Indeed it would be rare that they do. Nor do contemporaneous documents necessarily or invariably convey or record the background or context in which events took place. That background or context will be familiar to the actors at the time of those events but may not always emerge from documents.”

57. I have here also drawn on my summary of the applicable principles in Re Atlas Advisors Australia Pty Ltd [2022] NSWSC 705 (“Atlas”) at [5].

The evidence led by 1VD

58. Turning now to the affidavit evidence, 1VD tendered documents to establish its case in chief (Ex P2) and also read, in chief, the affidavit dated 5 March 2021 of Mr Robert Dickson, who has extensive experience as an architect, urban designer and planner and was engaged by 1VD to work on the development. Mr Dickson identified relevant requirements to which he had regard in preparing the development application including the LEP, the Apartment Design Guide and SEPP 65 and the DCP, and referred to the “Housing Choice” objectives and controls in cl 14 of Pt E4 of the DCP.

59. Mr Dickson outlined the history of the lodgement of the development application with Council on 2 June 2017, the LEC proceedings, the lodgement of the Amended DA on 13 April 2018 and the ASFC filed by Council in the LEC proceedings in response to the Amended DA. His evidence (admitted with a limiting order under s 136 of the Evidence Act 1995 (NSW) as identifying the topic of the discussion) was that, on 8 August 2018, he telephoned Mr Coulston:

“To discuss an idea for further revisions to the amended development application which would see the height of the building being reduced by 2 storeys to meet the height restrictions, but would still deliver the apartment mix required, specifically clause 14 of Part E4 of the DCP Controls, as well as Council’s contentions regarding the amenity of the design expressed in the [ASFC].”

60. Mr Dickson’s evidence was that he then advised Mr Coulston that:

“The apartment mix in the Nomination Deed could be satisfied by adjusting the apartments such that there were 15% of one-bedroom apartments, 70% of two-bedroom apartments, 7% of three-bedroom apartments and 18% of another type of apartment which was not specified but could be studio apartments, which is a specific type of apartment sought in the DCP.”

Mr Dickson’s evidence was that Mr Coulston instructed him to proceed on that basis and he referred to the exchange of amended sketches including studio apartments in the apartment mix.

61. Mr Dickson then referred to the steps taken which led to the lodgement of the Further Amended DA with Council in early September 2018, which provided a gross floor area of 7,284 sqm consisting of 96 apartments, being 17 studio apartments, 21 one bedroom apartments, 54 two bedroom apartments and 4 three bedroom apartments, comprising 18% studio apartments, 22% one bedroom apartments, 56% two bedroom apartments and 4% three bedroom apartments, and reducing the building height by two floors from 11 to 9 floors. Mr Dickson refers to a further meeting on 5 March 2021 when a representative of Council agreed that the plan was suitable but sought an offset of the building from the side boundary, and to the approval of the Final DA by the orders made by the Land and Environment Court on 23 October 2018.

62. By his second affidavit dated 29 August 2022, Mr Dickson referred to a number of further documents, including a summary of the Nomination Deed which had been provided to him in September 2017. By his third affidavit dated 31 August 2022, Mr Dickson referred to the statutory requirements to which he had regard in drafting relevant plans, and the objectives which he had sought to achieve in doing so.

63. Mr Dickson was cross-examined at substantial length by Mr Santisi who appears for AEN. He was cross-examined at length as to many design drawings for the project (Ex D1) which demonstrated, unsurprisingly, that the design drawings provided for a building of greater height, which did not contain studio apartments, until they were amended in the course of the LEC proceedings to provide for a building of lower height and to introduce provision for studio apartments at the same time. I have referred to several of those drawings in the chronology which appears above.

64. Mr Dickson presented as highly experienced and knowledgeable in respect of architectural and planning matters and I formed the view that he was a plainly honest witness doing his best to assist the Court. He provided some relatively fulsome answers to questions, but I am satisfied that he did so in order to assist the Court in understanding the relevant requirements and the process which he adopted. There was no apparent basis for Mr Santisi putting to Mr Dickson, as he did, that he had been untruthful in his evidence to the Court; it was not surprising that Mr Dickson did not accept that proposition; and I also do not accept that proposition. Mr Dickson’s cross-examination supports a finding that the change in apartment mix made by 1VD was prompted by the wish to reduce the height of the building so as to comply with the 33 metre height limit, maintain the number of apartments in the building at 96 apartments and comply with the apartment mix requirement under the DCP in a manner which Mr Dickson believed would have architectural merit, by placing studios next to other apartments within a “dual key” design. Not surprisingly, Mr Dickson accepted, and I find, that that amendment in the design was prompted by the need to comply with required height limit, as well as by the perceived advantage of complying with the apartment mix requirement in the DCP in persuading Council to consent to the grant of development approval in the LEC proceedings, as it did after that change was made. I will address the consequences of that finding below.

65. 1VD relies on five affidavits dated 17 January 2020, 5 February 2021, 8 March 2021, 26 August 2022 and 7 September 2022 of its director, Mr Coulston. Mr Coulston’s first affidavit was directed to the relatively narrow contractual claim brought by 1VD against AEN, before the issues in the proceedings were substantially expanded by AEN’s Amended Commercial List Cross-Claim Statement. Mr Coulston there referred to 1VD’s entry into option deeds in relation to the several properties at Kogarah, between late December 2014 and mid-July 2015, and the entry into the Nomination Deed with AEN on 22 December 2016. Mr Coulston also referred to relevant statutory instruments and Council requirements in respect of the design of the development, including SEPP 65, the Apartment Design Guide, and to the lodgement of the development application with Council on 2 June 2017. He addressed subsequent steps in the LEC proceedings including 1VD’s Notice of Motion seeking leave to rely on amended plans filed in the LEC proceedings on 13 April 2018, and ongoing negotiations, discussions and joint conferences between expert witnesses, 1VD and Council. Mr Coulston also referred to the requirements of the DCP, the further Notice of Motion filed by 1VD on 24 July 2018 seeking to rely on further amended plans and an email sent by Mr Dickson, on 9 August 2018, regarding amendments to the Amended DA including variations of the apartment mix to achieve compliance with the Apartment Design Guide, and to subsequent correspondence with Mr Huang, an adviser or consultant to AEN as I noted above, and with Mr Ngo as AEN’s solicitor. Mr Coulston also refers to further correspondence with Council and with 1VD’s architect, Mr Dickson and employees within his firm, and further correspondence to Mr Ngo on behalf of AEN.

66. Mr Coulston also referred to a conversation, about 24 September 2018, with Mr Ngo relating to the Final DA. Mr Coulston’s evidence is that he had a conversation on the next day with Mr Ngo relating to the Final DA (Coulston 17.1.2020, [82]), as follows:

Coulston:   “Frank, I just wanted to keep you informed about the proceedings in the Land & Environment Court. I am confident that we can get the plans approved, however with some tweaking, and we will have development consent under the Nomination Deed prior to the Sunset Date. I will keep forwarding you our plans as the continue to evolve and I’d appreciate it if you could have them reviewed and advise me of any issues you may see.”

Ngo:   “Okay, thank you for keeping me informed. This will make my client very happy.”

I accept Mr Coulston’s evidence of that conversation, where his comments broadly reflect the content of his email sent the day before, to which I referred in the chronology above, and given the credit findings I reach below. Plainly, Mr Ngo did not then express the view now taken by AEN of these amendments. Mr Coulston also referred to subsequent communications to Mr Ngo, to which I have also referred in the chronology set out above, and addressed the section 34 agreement reached between 1VD and Council on 17 October 2017, the approval of the Final DA by an order made by the Land and Environment Court, and the service of that Final DA on AEN prior to the DA Sunset Date under the Nomination Deed.

67. By his second affidavit dated 5 February 2021, Mr Coulston responded to evidence led in respect of AEN’s cross-claim and particularly the affidavits of Mr Yan, Ms Wang (which was not read as she was not available for cross-examination) and Mr Ngo. Mr Coulston took issue with Mr Yan’s evidence that Ms Wang acted as his interpreter and his evidence was that Mr Ngo acted as Mr Yan’s interpreter. It is not necessary to resolve that dispute, although the probability is that both Ms Wang and Mr Ngo assisted Mr Yan with translation at various times. Mr Coulston’s evidence was that AEN first objected to the inclusion of studio apartments in the Final DA at a meeting on 5 November 2018, where AEN contended that the studio apartments were one bedroom apartments and that there were more than 22 one bedroom apartments in the development, for the purposes of the Nomination Deed (Coulston 5.2.21 [6(g)]). I have referred to that meeting in the chronology that appears above. That affidavit also summarised the disbursements which AEN incurred in respect of the development after the date on which 1VD conveyed to AEN that its design had been amended to include studio apartments, totalling $140,496.55. Those disbursements are relevant to 1VD’s estoppel claim that I address below.

68. Mr Coulston there denied several allegations made in Mr Yan’s and Mr Ngo’s evidence, including that anyone had said to him that apartments less than 50 square metres in size could not be included in the development application; that he had guaranteed that apartments of less than 50 square metres would not be included in the apartment mix in the development application; that he guaranteed or agreed that a minimum of 130 carparking spaces would be included in the development application or the final plans for approval; or that Mr Yan or Mr Ngo described units by reference to their size or square meterage in meetings he attended with them. Mr Coulston also responded to Mr Yan’s evidence of the 7 December 2016 meeting and gave evidence that he met Mr Yan only three times before the Nomination Deed was signed on 22 December 2016, at the 7 and 8 December 2016 meetings and the 21 December 2016 dinner meeting, and denied that he had met Mr Yan at the project site in Kogarah. AEN now accepts that Mr Coulston’s evidence as to the latter matter is correct.

69. I accept Mr Coulston’s evidence (Coulston 5.2.21, [23(j)]) that he said to Mr Yan, at that meeting, words to the effect that:

“Plans were likely need to be changed or amended in order to appease Council, particularly where Council requires those changes to get approval. It’s too early to lock in anything at this stage, this is why I need flexibility in design as I cannot guarantee what Council may require at this early stage in order for them to consent to our DA. If Council don’t agree to our DA plans, we may even need to run a process through the Land and Environment Court as Council may not be supportive of our application.”

Mr Coulston was cross-examined to suggest that he did not say those words at that meeting. I accept that they were said, both because of the view that I have formed as to Mr Coulston’s credit, and because of the inherent likelihood that an experienced developer would have recognised and not sought to conceal the risk that difficulties might arise in obtaining development approval for the property, where one would expect that risk would be obvious at least to the solicitors advising AEN.

70. Mr Coulston also responded to other aspects of Mr Yan’s evidence. Mr Coulston also responded to Mr Ngo’s evidence, and took substantially the same position that he took in response to Mr Yan’s evidence. That is not surprising, given the extent to which Mr Yan’s affidavit had been copied into Mr Ngo’s affidavit, or vice versa, as I will note below.

71. By his third affidavit dated 8 March 2021, Mr Coulston responded to Mr Yan’s affidavit dated 7 August 2020 and agreed that, during meetings with Mr Yan in December 2016, Mr Yan had repeatedly said through his interpreter that he wanted “at least 96 apartments” and said that Mr Coulston had responded that “I will aim to achieve 96 apartments”. Plainly, Mr Coulston’s version of that conversation did not amount to a guarantee that 96 apartments would be achieved.

72. By his fourth affidavit dated 26 August 2022, Mr Coulston gave evidence that the meeting on 7 December 2016 at Mr Yan’s restaurant, to which I referred above, was approximately 30 minutes long and had an “informal” feel and that the parties did not discuss the terms or conditions on which 1VD and AEN would enter into an agreement. Mr Coulston qualified that position in cross-examination, as I will note below. Mr Coulston also referred to the meeting of about two hours on 8 December 2016 at the offices of 1VD’s solicitors, attended by Mr Garling, Mr Ngo and Mr Overton and indicated that he did not recall if Ms Wang was present. He also referred to the dinner with Mr Yan and others at the Golden Century Chinese restaurant on 21 December 2016, and his evidence was that dinner lasted for approximately two or three hours. He also referred to additional documents and correspondence with Mr Ngo.

73. By his fifth affidavit dated 7 September 2022, Mr Coulston responded to Ms Chen’s affidavits, to which I refer below, particularly in relation to the meeting at Mr Yan’s restaurant on 7 December 2016 and annexed documentation that supported his evidence that he arrived for that meeting just after 9.30am, and reiterated his evidence that Mr Ngo interpreted what Mr Yan was saying in business meetings from Mandarin to English and what Mr Coulston was saying to Mr Yan from English to Mandarin. Mr Coulston’s evidence was that the meeting on 7 December 2016 was a casual “meet and greet” prior to the substantive meeting on the following day at the offices of 1VD’s solicitors, and there were no formal discussions about business matters concerning the number of apartments in the mix at that meeting. Mr Coulston accepted in cross-examination that some business matters must have been discussed at that meeting, although he said he did not recall them, since he had amended a draft heads of agreement between 7 and 8 December 2016 by making changes that likely reflect discussion of those matters on 7 December 2016. The concession was fairly made.

74. Mr Coulston was cross-examined at some length. He presented as an intelligent witness, who largely directly responded to questions (albeit with moments of impatience) and made appropriate concessions, including conceding that his recollection of some matters was limited. He maintained his evidence in cross-examination that he had not guaranteed that he could achieve 96 larger apartments to Mr Yan and that there had been no discussion whether or not studio apartments could be included in the project prior to his raising the possibility of doing so in August 2018. He also reaffirmed his evidence that he had never been informed that studio apartments or apartments less than 50 square metres in area could not be included in the proposed development. I accept his evidence in that regard, which is consistent with the absence of reference to that position in contemporaneous documentation. There is no inconsistency between Mr Coulston not recalling some matters and his having a clear recollection of what was not said.

Mr Yan’s evidence

75. AEN read affidavits of its director, Mr Yan, and its solicitor, Mr Ngo, in the proceedings, and also sought to read an affidavit of Mr Yan’s former personal assistant, Ms Wang, but was not permitted to do so where she was not available for cross-examination. AEN also read, by leave, three late affidavits of Ms Chen. I first address the detail of this evidence, before turning to a wider issue affecting both Mr Yan’s and Mr Ngo’s evidence.

76. AEN read Mr Yan’s affidavit dated 7 August 2020, and reaffirmed on 1 October 2021, which was lengthy, comprising 376 paragraphs over 63 pages, although Mr Yan had limited personal involvement in the dealings which were in issue. Substantial parts of that affidavit were not admissible and were not admitted; as I will note below, large parts of that affidavit were identical, word for word, with Ms Wang’s affidavit dated 7 August 2020 which was not permitted to be read where Ms Wang was not available for cross-examination; and, as I will also note below, other parts of that affidavit were identical to parts of Mr Ngo’s affidavit dated 7 August 2020. Mr Yan and Ms Wang made substantially the same errors in substantially the same terms as to what had occurred at several meetings, a matter that I address below, and sought to correct those errors when they became apparent at substantially the same time in substantially the same terms.

77. Mr Yan’s evidence is that he was and is the director and shareholder and the only decision-maker for AEN. Mr Yan referred to being approached about the Kogarah project in August 2016, prior to the incorporation of AEN, through a migration agent known to him, Ms Chen, who was Mr Overton’s wife. Mr Yan referred, in an error which also occurred in Ms Wang’s affidavit in identical words, to his and Ms Wang attending the Kogarah site in early 2016 and having been introduced to Mr Coulston by Mr Overton and his wife. Mr Yan attributed a lengthy explanation of the project to Mr Coulston, in identical words to those which appeared in Ms Wang’s affidavit, and set out his equally lengthy reply, which he says Ms Wang translated for Mr Coulston and Mr Overton as follows:

“I do not want the childcare facility, that has to come out, I want more units, I want no units to be less 50 square metres internally in the project, I want no less than 96 units, so if the childcare facility comes out they can include more units and increase it to 96. I do not want less than 96 units within the development and more 1 bedroom apartments on the upper levels and no unit less than 50 square metres internally. I don’t want more than 19, 1-bedroom units that will preserve a greater number for two bedroom and three-bedroom units. This will affect the price, if they can’t achieve this their fee is to be paid in instalments, more smaller units mean more construction cost and less sales price, people will not buy them and are harder to sell and banks will not lend on smaller apartments. I don’t want any units less than 50 square metres in internal size and no more than 19 units that provide for one bedroom. As I said, this will affect the price if they do not get this. The fee is to be released in stages.” (Yan 7.8.20, reaffirmed on 1.10.21, [44])

78. Mr Yan goes on to attribute further lengthy speeches to Mr Coulston and Ms Wang. I am satisfied that these conversations did not occur in these terms; Mr Ngo’s lengthy recollection of what was said to him, and what he said, as translated by Ms Wang, is inconsistent with his lack of precise recollection of other matters in cross-examination; and his evidence is fundamentally undermined by the fact that Mr Coulston had not attended that meeting.

79. Mr Yan also gives evidence of a second meeting in early December 2016, at which he again attributes a lengthy speech to himself, which he had asked Ms Wang to translate for Mr Coulston, in words identical to the evidence of that conversation contained in Ms Wang’s affidavit, and then attributes lengthy speeches to Mr Coulston and a further lengthy speech to himself (Yan 7.8.20, reaffirmed on 1.10.21, at [54]ff). I am satisfied that these speeches do not reflect Mr Yan’s genuine recollection, or even reconstruction based on recollection, but have been consciously or unconsciously shaped to advance AEN’s case. Mr Yan then addressed, partly in inadmissible evidence, the continuing negotiations which took place between the solicitors after he had returned to China, and parts of that evidence were also identical to Ms Wang’s evidence concerning those matters. Mr Yan’s evidence, which I admitted with a limiting order under s 136 of the Evidence Act as to his understanding, where a rectification case was brought, was that the draft Nomination Deed:

“had recorded on it the apartment mix promised by [Mr Coulston], when it was translated for me. This made me understand that at least that part of the discussions had been understood by [Mr Coulston], as to what I wanted. There was nothing said in these documents when translated for me that made me understand that [Mr Coulston] viewed studio apartments differently to one-bedroom apartments.” (Yan 7.8.20, reaffirmed on 1.10.21, [80])

80. I do not accept that evidence, so far as it implies that Mr Yan or Mr Coulston had then turned their minds to the question of studio apartments or that the Nomination Deed addressed the position as to studio apartments. Mr Yan’s evidence in cross-examination supports the finding, which I make, that he had not then turned his mind to that question.

201. AEN’s claims for misleading and deceptive conduct and unconscionability and its allegations of statutory contraventions are therefore not established

The declarations and other orders sought by AEN in the Cross-Claim

204. AEN seeks several declarations in its Amended Cross-Claim Cross-Summons. In addressing these claims, I bear in mind that the Court should not generally make a declaration, even if it has jurisdiction to do so, unless it is satisfied both that the declaration sought is appropriate and that it has sufficient practical utility or where it would merely be prefatory to other relief: Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286; [1974] HCA 18; Attorney-General (NSW); Ex rel Corporate Affairs v Australian Softwood Forests Pty Ltd [1979] 2 NSWLR 73 at 76 per Hutley JA (with whom Reynolds and Samuels JJA agreed); PW Young, C Croft and ML Smith, On Equity (Lawbook Co, 2009) at 1084.

205. First, AEN seeks, in paragraph 1 of the relief sought in the Amended Cross-Claim Cross-Summons, a declaration that AEN is entitled to specific performance of the Nomination Deed as varied on 29 March 2017 and 24 April 2017 “namely clause 24.2 and 24.11 and the Schedule as such did not merge or stop to be enforceable on rescission for breach”. I put aside the fact there is no evidence that the Nomination Deed was varied in the manner assumed by the declaration sought. I cannot make that declaration where it is directed to a hypothetical situation, since AEN has not established a basis to terminate or rescind the Nomination Deed.

206. Second, AEN seeks a declaration that it is entitled to rescind the Nomination Deed on 6 November 2018 and seeks a release and refund of the Final Instalment of the Nomination Fee. That declaration cannot be made given the findings that I have reached above, and the restrictions on AEN’s right to rescind under cl 24.11 of the Nomination Deed, which I addressed above. In any event, this declaration would not have been necessary, so far as the relevant issues have been determined by this judgment and it would be merely anterior to any relief ordered.

207. Third, AEN seeks a declaration that 1VD was not entitled to raise tax invoices and seek and demand payment of the Final Instalment amount in a specified sum, as it and Mr Coulston had breached the Nomination Deed and failed to perform their obligations under the Nomination Deed by the due date of 26 November 2018 and at all. That declaration cannot be made given the findings that I have reached above. In any event, it would not have been necessary to make that declaration, where the issues are sufficiently determined by this judgment, and that declaration could not be made in the form sought where AEN did not identify the material facts of any breach of Mr Coulston’s obligations as guarantor under the Nomination Deed.

208. Fourth, AEN seeks:

“A declaration that on a proper construction of the Nomination Deed it required [1VD and Mr Coulston] from on or about 22 December 2016 and at all times thereafter to make application to be lodged and any amendment of it to be lodged or filed such that the Development Approval to be obtained and assigned was one that as a minimum ‘did not provide and include for more than 22 apartments with a single sleeping facility namely be they, one bedroom apartments or otherwise defined that there be no more 22 [sic] apartments that allowed for just one facility as a dedicated sleeping facility or part of an open plan sleeping facility and that in fact no apartment in the mix be less than 50 square metres of internal area (excluding balcony area) in such a calculation.”

That declaration could not be made both because it does not reflect the proper construction of the Nomination Deed and because Mr Coulston was, as I noted above, only party to the Nomination Deed as a guarantor and AEN did not plead the material facts of any breach of his obligations in that respect. Fifth, AEN seeks a declaration that the Nomination Deed has an implied term in the same terms as stated in the fourth declaration above. That declaration also cannot be made, because an implied term of that kind is not established.

209. Sixth and seventh, AEN seeks two orders for rectification of the Nomination Deed and a consequential order. Those orders should not be made since AEN’s claim for rectification is not established. The eighth order sought by AEN is consequential on the making of rectification orders and should not be made where they are not made.

210. Ninth, AEN seeks a declaration that:

“[A] studio apartment was never intended as between the parties to be counted as an apartment for the purposes of the Nomination Deed such any [sic] studio apartment or in fact any apartment of less than 50 square metres in internal area excluding balcony area shall not be counted as one apartment unless the sum of such area equals 50 square metres of internal area excluding balcony area.”

To the extent that this declaration is directed to the subjective intention of the parties, there is no utility in making it, and it is otherwise not necessary where I have determined the relevant issues in the judgment and it would be merely anterior to any relief. Tenth, AEN seeks a declaration that the development approval obtained by 1VD yielded less than 96 apartments and in fact yielded less than 84 apartments. The basis for that declaration is not established, as a matter of fact, and it cannot be made. Eleventh, AEN also seeks a consequential declaration that, by reason of the ninth and tenth declarations sought, it is entitled to a refund and release of the Final Instalment amount in accordance with cl 24.1 and item 2(c) of the Schedule and/or cll 24.2 and 24.11 of the Nomination Deed. That declaration cannot be made, because the matters sought in the ninth and tenth declarations are not established and because it has no such entitlement.

211. Twelfth, AEN seeks an order, by way of specific performance of the Nomination Deed, that AEN and Mr Coulston direct the solicitors holding the first instalment amount to release and refund it to AEN, pursuant to cll 24.1, 24.2, 24.11 and item 2(c) of the Schedule to the Nomination Deed or, alternatively, 1VD and Mr Coulston pay the sum of $1,419,736 plus GST to AEN. That declaration cannot be made given the findings that I have reached above. There would in any event be no basis for making such an order against Mr Coulston where AEN did not plead the material facts of any breach of his obligations as guarantor under the Nomination Deed in that respect. Thirteenth and fourteenth, AEN seeks equitable damages and damages. No basis for equitable damages or damages was established.

212. Fifteenth, AEN seeks a declaration that 1VD’s and Mr Coulston’s conduct is in contravention of certain provisions of the Australian Consumer Law. The basis for that declaration is not established given the findings I have reached above. Sixteenth, AEN claims damages or other relief consequential on the fifteenth declaration, and the basis for that relief is not established where the basis for that declaration is not established. Seventeenth, AEN seeks interest which is not established where a claim for damages or compensation is not established Eighteenth, it seeks costs, and I will deal with the question of costs below. Nineteenth, it seeks such further orders as the Court seems fit, and the question of further orders in respect of its liability as to costs may arise after judgment.

213. Twentieth, AEN seeks an order that:

“at all material times leading up to the execution of the Nomination Deed on 22 December 2016, [1VD and Mr Coulston] engaged in conduct or otherwise made representations as to the Development Application that could be achieved in the future, which representations and conduct was intended to induce [AEN], to execute the Nomination Deed, which conduct and representation, were misleading and deceptive and in fact false as to the Development application that could in fact be achieved, knowing that such conduct was unconscionable and representations were in fact misleading and/or deceptive and false, in breach of section[s] 18, 20, 21, 29, 30, 151 and 152 of the [Australian Consumer Law].”

An order, as distinct from a declaration, could not be made in that form. Had it been sought, a declaration also could not be made in that form, because it does not reflect the findings that I have reached above. To the extent that order is premised on a claim for misleading or deceptive conduct or unconscionability, that claim was not established. To the extent that it is premised on 1VD and Mr Coulston having actual knowledge that representations were false, akin to fraud, the basis for making such a declaration was neither properly raised in the Amended Commercial List Cross-Claim Statement nor established.

214. Twenty-first, AEN seeks damages, identified as payments made to 1VD and Mr Coulston being all of the instalment amounts already released and holding costs. That order could not be made on the findings that I have reached above and because AEN has not established a cause of action that would result in an award of damages, nor has it quantified the amount of damages that could be awarded, where its quantified claim does not allow for the benefit which it has obtained from ownership of the land and the development opportunity in respect of the land, and it does not quantify the holding costs that it claims.

1VD’s reliance on an estoppel in reply

215. For completeness, 1VD also relies on an estoppel in its Commercial List Reply, apparently in the nature of a promissory or representational estoppel of the kind considered in Waltons Stores (Interstate) Ltd v Maher (1998) 164 CLR 387 (“Waltons v Maher”) and Commonwealth v Verwayen (1990) 170 CLR 394; [1990] HCA 39 (“Verwayen”), in response to AEN’s denial of its contractual claims. In its Reply to AEN’s Commercial List Response, 1VD repeats paragraph 4(c) of its Commercial List Cross-Claim Response (to which I refer below) and contends that AEN is estopped from rescinding the Nomination Deed, contending that a valid Development Approval cannot provide for more than 22 one-bedroom apartments and studios in total and/or apartments having less than 50 square metres in total area and asserting that the Final DA is not a valid Development Approval within the meaning of cl 24.1 of the Nomination Deed.

216. 1VD’s estoppel claim is more fully articulated in its Amended Commercial List Cross-Claim Response (ACCR [4(c)]), where 1VD identifies a number of occasions from August 2018 until October 2018 which it contends amounted to notification to AEN that it intended to change the apartment mix for the purposes of the Development Approval in order to meet Council’s requirements, by including studio apartments of less than 50 metres internal area such that there would be greater than 21 one bedroom apartments and studios in total.

217. 1VD refers, first, to a meeting on 9 August 2018 at the offices of 1VD’s solicitors, attended by Mr Coulston, Mr Ngo and Mr Huang. Mr Coulston’s evidence is that the possible inclusion of studio apartments in the project was first raised at this meeting. Mr Ngo denies that matter was raised at that meeting. On balance, I prefer Mr Coulston’s evidence to Mr Ngo’s evidence, both because of the view that I have formed as to their respective credit, and because it is likely that it was raised at that meeting, when it was confirmed in a letter dated the next day, 10 August 2018 (Ex P6, 2554) which Mr Coulston emailed, inter alia, to Mr Ngo and Mr Huang on 12 August 2018 (Ex P6, 2555) which also attached amended sketches and a dropbox link providing access to proposed further amended plans. By the attached letter dated 10 August 2018, Mr Coulston put a proposal as to a dispute between the parties as to 1VD’s then threat to terminate the Nomination Deed, and then went on to observe that AEN “reserves its right to otherwise vary the apartment/carpark mix in accordance with clauses 24.11, 25.1 & 25.2 including but not limited to the inclusion of A[partment] D[esign] G[uide] compliant studio apartments in order to ensure the DA accords with the Gazettal” (Ex P6, 2555; emphasis added). By email dated 14 August 2018 to Mr Ngo, Mr Coulston requested an urgent response to his email dated 12 August 2018 and provided a further copy of that letter (Ex P6, 2556).

218. However, on 14 August 2019, Mr Ngo responded (Ex D1, 1119) that:

“We are instructed that [AEN] does not agree to your proposal and will rely on the Deed of Nomination. Should you terminate, we have instructions to accept legal proceedings in the Supreme Court and seek specific performance.”

While that letter did not specifically address 1VD’s reservation of its right to vary the apartment and car park mix, it seems to me that it made clear enough that AEN was relying on its rights under the Nomination Deed and not accepting any alternative proposal. Although further correspondence followed, AEN did not then adopt any different approach which could have encouraged 1VD to any view that AEN was consenting to studio apartments or doing anything other than seeking to avoid paying the Final Instalment amount and place in itself in a position to take advantage of the expiry of the DA Sunset Date under the Nomination Deed.

219. 1VD refers, third, to emails dated 23 and 26 September 2018 referring to a change of unit mix to include “6 studio serviced apartments”. As I noted above, on 23 September 2018, Mr Coulston emailed Mr Huang and Mr Ngo providing an update regarding the Development Application process, including the reduction in height and variation of the apartment mix, which formed part of the Final DA (Ex P6, 2647). On 26 September 2018, Mr Coulston emailed Mr Ngo outlining the Council’s remaining issues with the Final Development Application, and stating that one of the strategies being used was the inclusion of smaller Apartment Design Guide compliant studio apartments into the apartment mix (Ex P6, 2648).

220. 1VD also refers to further emails dated 5 October 2018 and 14 October 2018. On 4 October 2018, Mr Dickson’s firm emailed amended architectural plans for inclusion in the Final Development Application to Mr Coulston (Ex P6, 2654) and, by email dated 5 October 2018, Mr Coulston sent a copy of the final architectural plans to Mr Ngo (Ex P6, 2656, 2658). On 14 October 2018, Mr Coulston advised Mr Ngo that approval from Council was likely to be obtained in accordance with the final architectural plans sent to Mr Ngo on 5 October 2018 (Ex P6, 2717).

221. 1VD pleads that AEN did not communicate any objection to those matters and, by its silence, represented from August 2018 onwards that it had no such objection and, in reliance on that representation, 1VD procured the Final DA, incurred costs in doing so and thereby acted to its detriment. By its Commercial List Reply to the Commercial List Cross-Claim Response, AEN responds to that claim in somewhat convoluted terms as follows:

“In further reply [AEN] denies that any transaction or matter arose that gives rise to an estoppel be it common law or equitable estoppel or promissory estoppel or otherwise and denies that [1VD] is entitled to raise such estoppel as it at all times knew that [AEN] was not consenting to any proposed changes to the Development Application and was relying on the Nomination Deed and as such anything done by [1VD] was as a volunteer not as a result of any promise or representation or things said or not said or done or not done arising and in fact [AEN] denies making any promise or representation of any nature be it oral or by any conduct.”

222. The applicable principles in respect of a claim for a promissory or representational estoppel were summarised in Waltons v Maher where Brennan J observed (at 428) that, to establish an equitable estoppel, the plaintiff must first prove that:

“… the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship.”

223. In Silovi v Barbero (1988) 13 NSWLR 466 at 472, Priestley JA (with whom Hope and McHugh JJA agreed) summarised the principle arising from Waltons v Maher as requiring, relevantly:

“the creation or encouragement by the defendant in the plaintiff of an assumption that … a promise be performed, and reliance on that by the plaintiff, in circumstances where departure from the assumption by the defendant would be unconscionable.”

224. In Verwayen, Deane J observed (at 444) that the law does not permit an unconscientious departure by one party:

“from the subject matter of an assumption which has been adopted by the other party as the basis of some relationship, course of conduct, act or omission which would operate to that other party’s detriment if the assumption be not adhered to for the purposes of the litigation.”

225. I also bear in mind Ball J’s summary of those principles and the differences between the relevant forms of estoppel in Twigg v Twigg (No 4); Lambert v Twigg Investments Pty Ltd (No 3) (2020) 147 ACSR 389; [2020] NSWSC 1159 at [147]-[149], as follows:

“In order to make out a promissory estoppel, [a party] must establish (to apply the principles as summarised by Brennan J in Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at (428–9) that (1) he assumed [a relevant matter]; (2) the [other party] induced him to adopt that assumption; (3) he acted in reliance on that assumption; (4) the [other party] knew he intended to do so; (5) his conduct will occasion detriment if the assumption is not fulfilled; and (6) the [other party] has failed to act to avoid that detriment.

In order to make out a conventional estoppel, [a party] must prove (to apply the principles as summarised by Brereton J in Moratic Pty Ltd v Gordon [2007] NSWSC 5 at [32] and approved by the Court of Appeal in Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603; [2007] NSWCA 65 at [200]) that (1) [the party] adopted an assumption as to the terms of [its] legal relationship with [the other party]; (2) [the other party] adopted the same assumption; (3) both parties conducted their relationship on the basis of that mutual assumption; (4) each party knew or intended that the other act on that basis; and (5) departure from the assumption will occasion [the first party] detriment.

The principal difference between the two forms of estoppel is that in the case of promissory estoppel, the party estopped must have induced the other party to adopt a particular assumption but need not have held that assumption themselves whereas, in the case of conventional estoppel, no inducement is required but both parties must have acted on the basis of the assumption and known or intended that the other would as well.”

226. I am not satisfied that 1VD has established the basis for a promissory or other estoppel here, given Mr Ngo’s 14 August 2019 email. On balance, I am not persuaded that 1VD (through Mr Coulston) assumed, from the point at which it advised AEN (through Mr Ngo) of the inclusion of studio apartments, that AEN did not object to that course or that AEN, by its silence after Mr Ngo’s email, induced 1VD to adopt any such assumption. I also cannot find that AEN acted on reliance on such an assumption, to establish a promissory estoppel, although I recognise that it incurred significant further costs to progress the development application in a form that included studio apartments. This is also not, it seems to me, a case of conventional estoppel, because AEN may well have been keeping its options open, being content to leave 1VD to incur the costs of completing the development approval while leaving open whether it would or would not seek to avoid paying the Final Instalment of the Nomination Fee or reimbursing those costs. On that basis, I would not find that AEN was estopped from relying on the inclusion of studio apartments in the development in order to deny 1VD’s entitlement to the Final Instalment of the Nomination Fee or the reimbursement of expenses subject to the cap in the Nomination Deed, had I reached the view that it was contractually entitled to do so.

Orders and costs

227. For these reasons, 1VD succeeds in its primary claim and AEN fails in its Cross-Claim. AEN must, in the ordinary course, pay 1VD and Mr Coulston’s costs of the proceedings, and I note that Mr McInerney has foreshadowed that an order for costs may be sought on a special basis.

228. I direct the parties to bring in agreed short minutes of order to give effect to this judgment, including as to costs, or otherwise their respective short minutes of order and short submissions as to the differences between them within 7 days of this judgment.

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Decision last updated: 06 October 2022