Nu Line Construction Group Pty Ltd v Fowler (aka Grippaudo)
[2012] NSWSC 587
•31 May 2012
Supreme Court
New South Wales
- Amendment notes
Medium Neutral Citation: Nu Line Construction Group Pty Ltd v Fowler (aka Grippaudo) [2012] NSWSC 587 Hearing dates: 5-7 March 2012 Decision date: 31 May 2012 Jurisdiction: Equity Division Before: Ward J Decision: Judgment for the defendants. Plaintiff's claim dismissed.
Catchwords: RESTITUTION - claim for money had and received - failure of consideration - negotiations for sale of land in 2000 - whether payments of money by individual director of plaintiff company to or on behalf of defendants was on behalf of the plaintiff company - whether payment of money to or on behalf of defendants were payments toward the purchase price or in consideration of the purchase price - whether consideration for money paid to and on behalf of defendant was keeping the subject land off the market - OBITER - claim for money had and received based on failure of consideration established - moneys were paid by the plaintiff in consideration of purchasing the land - consideration failed with cessation of negotiations in mid 2002
RESTITUTION - claim for restitutionary interest - whether interest accrued from date of moneys paid or date of cessation of negotiations - OBITER - interest accrued from date consideration failed
DEFENCES - Limitation Act 1969 (NSW) - action for money had and received falls under s 14(1)(a) as a claim in "quasi contract" - whether cause of action accrued at date moneys were paid or at date consideration failed - HELD - cause of action accrued at date consideration failed which was when (objectively) the contemplated sale failed to materialise in mid 2002 - claim statute barred as proceedings not commenced until September 2008
DEFENCES -unclean hands - not pleaded - whether failure by the principals to disclose a potential claim against the defendant to the external administrator while plaintiff company was under administration was improper conduct - s 438B Corporations Act 2001 (Cth) considered - whether immediate and necessary relation to the relief sought - whether unclean hands if not pleaded goes to discretionary relief - pleading of laches - OBITER - unclean hands, if raised, would have failed due to insufficient evidence of improper conduct and no immediate and necessary relation to relief sought - no finding of lachesLegislation Cited: Civil Procedure Act 2005 (NSW)
Corporations Act 2001 (Cth)
Evidence Act 1995 (NSW)
Limitation Act 1969 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)Cases Cited: Armstrong v Sheppard & Short Ltd [1959] 2 QB 384
Baker v Courage & Co [1910] 1 KB 56
Baltic Shipping Co v Dillon (1993) 111 ALR 269
Barker v Charley 62 SR(NSW) 296
Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566
Baumgartner v Baumgartner (1987) 164 CLR 13
Black Uhlans Inc v New South Wales Crime Commissions [2002] NSWSC 1060
BP Australia Ltd v Brown & ors [2003] NSWCA 216
Bright v Sampson & Duncan Enterprises Pty Ltd (1985) 1 NSWLR 346
Briginshaw v Briginshaw (1938) 60 CLR 336
Carantinos v Magafas [2008] NSWCA 304
Cetojevic v Cetojevic [2007] NSWCA 33
Chesworth v Farrar [1967] 1 QB 407
Clapham v Shillito (1844) 7 Beav 146
Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389
Commonwealth of Australia v SCI Operations Pty Ltd (1998) 192 CLR 285
Cooke v Gill (1873) 8 LR CP 107
Cresvale Far East v Cresvale Securities (2001) 37 ACSR 394; [2001] NSWSC 89
David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353
Dering v Earl of Winchelsea (1787) 1 Cox 318; 29 ER 1184
Deputy Commissioner of Taxation v Wellnora Pty Limited [2007] FCA 1234
Dewhirst v Edwards [1983] 1 NSWLR 34
Do Carmo v Ford Excavations Pty Ltd (1984) 154 CLR 234
Dow Securities Pty Ltd v Manufacturing Investments Ltd (1981) 5 ACLR 501
Equuscorp Pty Ltd v Haxton [2012] HCA 7
Ex parte Harper; Re Rosenfield [1964-5] NSWR 58
Faraday v Rappaport [2007] NSWSC 34
Farah Constructions v Say-Dee (2007) 230 CLR 89
Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32
Friend v Brooker [2008] HCA Trans 344
Gascoigne v Gascoigne [1918] 1 KB 223
Giumelli v Giumelli (1999) 196 CLR 101
Guardian Ocean Cargoes Ltd v Banco Do Brasil (The Golden Med) [No 3] [1992] 2 Lloyd's Rep 193 (QB)
Haller v Arye [2005] QCA 224; (2005) 2 Qd R 410
Haxton v Equuscorp (formerly Equus Financial Services Ltd) (ACN 006 012 344) (2010) 265 ALR 336; [2010] VSCA 1
In re Emery's Investment Trusts [1959] Ch 410
Kation Pty Ltd v Lamru Pty Ltd [2009] NSWCA 145
Kettles & Gas Appliances Ltd v Anthony Hordern & Sons Ltd (1934) 35 SR(NSW) 108
Jones v Dunkel (1959) 101 CLR 298
Knowles v Fuller (1949) 48 SR (NSW) 243
Lactos Fresh Pty Ltd v Finishing Services Pty Ltd (No 2) [2006] FCA 748
Learmonth v Morris (1868-9) 6 W W & A'B (E) 74
Lumbers v W Cook Builders Ltd (in liq) [2008] HCA 27; (2008) 232 CLR 635; (2008) 247 ALR 412
McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457
Meyers v Casey (1913) 17 CLR 90
Moody v Cox [1917] 2 Ch 71
Moses v Macferlan (1760) 2 Burr 1005
Murdocca v Murdocca (No 2) [2002] NSWSC 505
Muschinski v Dodds (1985) 160 CLR 583
National Australia Bank Ltd v Budget Stationery Supplies Pty Ltd (23 April 1997, unreported)
North Western Salt Co Ltd v Electrolytic Alkali Co Ltd [1914] AC 461
Ogilvie v Adams [1981] VR 1041
Pavey & Matthews Pty Limited v Paul (1987) 162 CLR 221
R v Rothery 25 SR(NSW) 461
Re Robinson's Settlement; Gant v Hobbs [1912] 1 Ch 717
Read v Brown (1888) 22 QBD 128
Richards v Morgan 122 ER 608
Roxborough & Ors v Rothmans of Pall Mall Australia Pty Limited (2001) 208 CLR 516
Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Her Majesty's Commissioners of Inland Revenue and another [2007] UKHL 34; [2007] 4 All ER 657
Spiteri v Georges [2002] VSC 473
State Bank of New South Wales Ltd v FCT (1995) 62 FCR 371; 132 ALR 653
Sykes v Stratton [1972] 1 NSWLR 145
Tolcher v Loiterton [2002] NSWSC 373
Torrens Aloha v Citibank NA (1997) 144 ALR 89
Vines v Australian Securities and Investments Commission (2007) 73 NSWLR 451; (2007) 62 ACSR 1; [2007] NSWCA 75
VL Finance Pty Ltd v Legudi [2003] VSC 57; (2003) 54 ATR 221
Ward v Roy W. Sandford Ltd 19 SR(NSW) 185
Watson v Foxman (1995) 49 NSWLR 315
West v Mead, [2003] NSWSC 161
White v Overland [2001] FCA 1333
Young v Queensland Trustees Ltd [1956] HCA 51; (1956) 99 CLR 560; [1956] ALR 939Texts Cited: P Birks, Introduction to the Law of Restitution (1985)
P Handford, Limitation of Actions: The Laws of Australia (2nd ed, 2007)
J D Heydon and M Leeming, Jacob's Law of Trusts in Australia (7th ed, 2006)
K Mason, J W Carter and G J Tolhurst, Mason and Carter's Restitution Law in Australia (2nd ed, 2008)
R Meagher, D Heydon and M J Leeming, Meagher Gummow and Lehane's Equity: Doctrines and Remedies (4th ed, 2002)
T Prime and G Scanlan, The Law of Limitation (2nd ed, 2011)Category: Principal judgment Parties: Nu Line Construction Group Pty Ltd (Plaintiff)
Peter Fowler (aka Grippaudo) (First Defendant)
Gabriella Grippaudo (Second Defendant)Representation: Counsel
T S Hale SC with J O'Connor (Plaintiff)
H W M Stitt (First & Second Defendants)
Solicitors
Diamond Conway (Plaintiff)
Hunter Lawyers (First & Second Defendants)
File Number(s): 08/280834
Judgment
HER HONOUR: In these proceedings, the claim by the plaintiff company (Nu Line Construction) is principally for restitutionary relief in respect of moneys said to have been paid by it or on its behalf to the first defendant (to whom I will refer as Mr Fowler but who is also known as Mr Grippaudo) in the period between June 2000 and February 2001 in relation to or in anticipation of the proposed purchase by Nu Line Construction of industrial land then owned by Mr Fowler's wife, the second defendant (Mrs Grippaudo), at Wetherill Park. That purchase did not proceed and the land was sold in 2009 (after the commencement of the present proceedings) to an unrelated entity.
An alternative claim for a constructive trust, based on the Muschinski v Dodds ((1985) 160 CLR 583) and Baumgartner v Baumgartner ((1987) 164 CLR 13) line of authority, was pleaded but it was acknowledged by Senior Counsel for Nu Line Construction, Mr Hale SC, that this claim turned on the same issues as those on which the restitutionary claim itself was based. Mr Hale also confirmed that no claim was made on the basis that there was any enforceable contract for the sale of the land.
As summarised by Counsel for the defendants (Mr H Stitt), the defence of this claim rests essentially on the following contentions: that Nu Line Construction has no standing to sue and therefore no cause of action against the defendants (it being contended both that the relevant agreement to purchase the land was one entered into with the principals of the company in their personal capacity and that Nu Line Construction had not established that the payments in question were made by it rather than by one or other of the principals on their own behalf) and, further, that any action to recover moneys paid to the defendants is statute barred by force of the Limitation Act 1969 (NSW).
It is submitted by Mr Stitt that even if Nu Line Construction's claim were to succeed the appropriate remedy would have been a remedy at common law for moneys had and received but that such a claim became statute barred six years from the date(s) of the payments in question. In response on this issue, Mr Hale submits that a cause of action for moneys had and received (based on a failure of consideration) accrues only on the failure of consideration (in the sense of the failure of the contemplated state of affairs, in anticipation of which the money was paid, to materialise) and that this was when the property was sold in 2009 or, at the earliest, in 2006 when the negotiations for the sale "finally" broke down. Hence it is submitted that the claim was not statute barred as at September 2008 when the proceedings were commenced.
As to the claim for a constructive trust, which ultimately was not pressed, Mr Stitt submitted that the Court should not exercise a discretion to impose a constructive trust so as to extend the limitation period within which he submits a claim for moneys had and received should have been brought. It was in this context that it was submitted that Nu Line Construction had been guilty of laches (the relevant delay being from the last correspondence in relation to the proposed purchase that took place between the parties in 2002, when Nu Line Construction failed to respond to requests for confirmation as to whether it wished to proceed with the purchase, and the bringing of the claim in 2008). Mr Stitt also submitted that an issue of unclean hands arose in this (and other) regard(s).
Issue is taken by Mr Hale to the ability of the defendants to raise the issue of unclean hands, whether by way of defence or as going to any exercise of discretion, having regard to the fact that it was not raised on the pleadings.
Issues
There are a number of factual issues in dispute (including those that go to whether Nu Line Construction is the proper plaintiff in these proceedings and as to whether it has established that all of the amounts claimed were in fact paid to Mr Fowler by or on its behalf) but ultimately the issues for determination fall into a narrow compass: whether Nu Line Construction has standing to bring this claim; whether there was a total failure of consideration for some or all of the payments made to Mr Fowler, so as to make the retention of those payments an unjust enrichment on the part of Mr Fowler, (the payments effectively falling into two classes: first, the $60,000 payment in June 2000, acknowledged by Mr Fowler at the time as being a "part payment on" the land in question, and, second, any moneys established to have been paid in relation to invoices submitted for payment by Mr Fowler in relation to building works on his own property) and hence to give rise to a prima facie liability on the part of Mr Fowler to make the restitution which has not been dispelled; whether it is open to Nu Line Construction to maintain a restitutionary claim to interest and, if so, over what period; and whether the claim made by Nu Line Construction is statute-barred.
Summary
In summary, for the reasons set out below, I have concluded as follows.
As to the payment of $60,000 made to Mr Fowler in June 2000, that:
(a) it should properly be characterised (consistently with the contemporaneous record of the payment) as a payment of part of the then agreed purchase price for the land (and in anticipation that a contract for the sale of the land would be finalised and completed), rather than as a deposit of the kind ordinarily paid on exchange of contracts or some form of holding deposit and not, as the defendants have contended as an option (for which consideration might well be said to have been given by the property having been kept "off the market" for some time);
(b) it was made on behalf of Nu Line Construction as the then contemplated purchaser of the property (and hence the company has, or had at the relevant time, standing to sue for its recovery);
(c) there was a total failure of consideration for that payment at the time when, viewed objectively, the contemplated state of affairs in anticipation of which the money was paid had failed to materialise; and
(d) that this time had arisen at or around mid 2002 (having regard to the lack of any response by Nu Line Construction to successive requests made over the period from February to May 2002 as to whether it wished to proceed with the proposed sale), such that any cause of action for recovery of the said sum based on a failure of consideration had accrued before September 2002 and was, by September 2008, statute barred.
Thus, while I accept that, as at mid 2002, there was a cause of action in restitution for recovery of the $60,000 (on the basis that Mr Fowler would at that stage be said to be unjustly enriched by the retention of that sum in circumstances where the sale of the Wetherill Park land, in anticipation of which it was paid, had by then failed to materialise and was no longer actively being pursued), I am of the view that such cause of action was no longer maintainable as at September 2008.
As to the claim for recovery of the moneys allegedly paid to third parties on behalf of Mr Fowler in respect of invoices provided by Mr Fowler, I am not satisfied that (with the possible exception of one payment of $9,075) Nu Line Construction has established that the moneys claimed were in each case actually paid out by it for the benefit or at the request of Mr Fowler. Further, I do not accept that the evidence establishes that any moneys paid in payment of the invoices were moneys paid as part of the purchase price for the land. It seems to me that the more likely explanation for any such payments is that these moneys were paid in order to assist Mr Fowler with his financial situation, in circumstances where the sale contracts had not yet been exchanged, and where they were not intended as a gift but no terms of any loan were discussed. Such a payment would be able to be characterised as moneys repayable on demand. However, even on Mr Fowler's own version of events, some such moneys were paid and they were paid with a view to a purchase of the land occurring (thus is it not unreasonable to infer that the parties would have contemplated that such payments would ultimately have been offset against the purchase price payable on the final completion of the purchase). Whether or not such an inference should be drawn, I accept that in principle any amounts established to have been paid in respect of invoices provided to Mr Fowler should be treated in similar fashion to the $60,000 deposit (not as part payment of the purchase price but as payments in anticipation of a future purchase. Nevertheless, for the same reason as above, the claim to recover any such payments as at September 2008 was in my view statute barred.
Even if any invoice moneys paid were only in the nature of advances repayable on demand (such that a restitutionary claim for their recovery would not lie), a claim for recovery of those moneys would have been statute barred in each case six years after the payment(s) in question (and hence, at the latest, by February 2007).
Had the moneys in question ($60,000 and any amount established to have been paid in respect of the invoices) been paid as an option fee (as Mr Fowler contends) or as a holding deposit to keep the property off the market pending a proposed sale to Nu Line Construction (as Mr Fowler formerly contended), no claim based on a total failure of consideration would lie (as there would then have been no total failure of consideration for the payments). However, I am not satisfied that the moneys can be characterised in such a fashion.
On the basis of the above findings, no claim for restitutionary interest arises. Had the claim for recovery of the $60,000 (and/or any such claim for the invoice payments) not been statute barred, then I would have found that there was a restitutionary claim for interest but only from the date on which it objectively became apparent that the contemplated sale had failed to materialise (not from the date on which the moneys were paid) as it was only from that later date that I consider the retention of the moneys could be said to have become unjust.
While the result of the above findings is that moneys were paid to Mr Fowler in anticipation of a contract that did not materialise and in circumstances where it had not been the intention of Nu Line Construction (or one of its then principals, Mr Mijatovic) that Mr Fowler should have a "gift" of the moneys, Mr Stitt emphasised that, from a practical point of view, Nu Line Construction had the benefit of the property not having been sold (and effectively kept off the market), hence available for it to purchase, for a considerable time and thus that the retention of the moneys was not unjust. As at mid 2002, it seems to me that this could not be said to be the case. However, I accept that the position may be viewed differently as at September 2008. The broad rationales underlying the enactment of statutory limitation periods (explained by McHugh J In Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 and noted by Spigelman CJ with approval in BP Australia Ltd v Brown & ors [2003] NSWCA 216), reflect a balancing of the interests of claimants and those against whom claims are made and involve a statutory recognition that there are cases where (a claim not having been made within the requisite time) the loss must lie where it falls. This seems to me (unfortunately for Nu Line Construction) to be such a case.
Pleadings
As emphasis was placed during the hearing on the ambit of the matters raised on the pleadings, I summarise at the outset the claims made in the pleadings before turning to the facts giving rise to the present dispute.
Nu Line Construction contends that, in about March 2000, Mr Fowler (acting as agent for and with the authority of his wife, Mrs Grippaudo) entered into an agreement for the sale to it of the Wetherill Park property. The agreement (particularised in [7A] of the Further Amended Statement of Claim filed in February 2011) is said to be oral and "entered into on behalf of Mr [Leo] Mijatovic [then one of three directors of Nu Line Construction but now the sole director of that company] for [Nu Line Construction]" and Mr Fowler for and on behalf of Mrs Grippaudo.
The terms of the alleged agreement pleaded at [8A] of the Further Amended Statement of Claim are that the purchase price was $450,000 ([8A.1]); that Nu Line Construction would pay "a deposit of $60,000 as part payment of the purchase price" ([8A.2]); that, prior to the sale of the property, Nu Line Construction would pay expenses "up to about $90,000" in relation to a separate property owned by the defendants "as and when directed to do so" by Mr Fowler ([8A.3]); that the said expenses paid prior to settlement of the sale would be part payments of the purchase price and deducted from the overall purchase price at settlement ([8A.4]); and that the parties would execute a formal written contract for the sale of the property with a stated purchase price of $300,000 ([8A.5]).
Nu Line Construction seeks to recover the amount of $152,427.55, that being the aggregate of the sums it alleges says were paid to (or for the benefit of) Mr Fowler pursuant to the alleged agreement. It does not contend that the agreement pleaded in [7A] of the Further Amended Statement of Claim is (or was) enforceable (and, hence, did not press at the hearing the claims for damages for the alleged breach of that agreement contained in its pleading). Rather, it is alleged that there has been a total failure of consideration for the payments in question and that Mr Fowler would be unjustly enriched if allowed to retain those payments in the circumstances that have transpired.
Nu Line Construction also claims interest on the moneys from the date of payment of the respective amounts as a separate restitutionary claim (or in the exercise of the original or auxiliary equitable jurisdiction) up to the date from which a statutory claim for interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) would otherwise lie.
The relief sought in the Further Amended Statement of Claim includes a declaration that, in the events that have occurred, there is a constructive trust in favour of Nu Line Construction "as to one-third of the value" of the Wetherill Park property. As adverted to above, Mr Hale indicated during opening submissions that although a claim in equity was included in the pleadings (referring, as I understand it, to the claim for a declaration as to the existence of a constructive trust), it was the restitutionary claim that was at the forefront of the claims made in these proceedings.
Paragraph [24] of the Further Amended Statement of Claim pleads, "further or in the alternative", a claim for moneys had and received "as a result of the alleged payments". (It is by no means clear, however, that a claim for moneys had and received is in truth an alternative to a claim for restitution based on a failure of consideration and, in my view, this case stands or falls on the claim as principally put, which is for restitution.)
The Defence, as filed, consists of a series of bare admissions, denials and non-admissions. A limitation defence is expressly pleaded and it is further alleged that the claim is inequitable (though without particularisation of the basis on which it is so alleged).
There was no express pleading of an "unclean hands" defence. In light of this, issue was taken by Mr Hale not only as to the maintenance of such a defence but as to reliance on such an allegation as going to any issue of discretion that might arise in relation to the relief sought by Nu Line Construction. He objected to any reliance by the defendants on matters such as the alleged failure of the directors to disclose to the external administrator of the company, during the period the company was in voluntary administration or while it was subject to a deed of company arrangement, any claim or interest in respect of the property. In particular, Mr Hale argued that had it been pleaded in the defence that no claim in restitution would lie because of a failure to disclose certain matters to the administrator then the plaintiff would have had the opportunity to find out what in fact was disclosed to the administrator and, if necessary, to call the administrator to give evidence in the proceedings. (Though, as will be noted below, Mr Mijatovic himself gave evidence from which a conclusion as to non-disclosure could be drawn.)
Rule 14.7 of the Uniform Civil Procedure Rules requires that all the material facts on which that party relies for his or her claim must be pleaded (and the same applies to a defence). Hence, if a defence were to be based on non-disclosure of matters to the company's external administrator, this fact should have been pleaded. Further, rule 14.14 requires that matters be specifically pleaded that would otherwise take the opposing party by surprise, including matters pleaded in defence that the party alleges would make the claim of the opposing party not maintainable. This rule is grounded in a wider principle that each party is given a proper opportunity to prepare and present its case (Bright v Sampson & Duncan Enterprises Pty Ltd (1985) 1 NSWLR 346; Re Robinson's Settlement; Gant v Hobbs [1912] 1 Ch 717; White v Overland [2001] FCA 1333 at [4] per Allsop J (as his Honour then was). Subrule (3) of r 14.14 provides a non-exclusive list of matters that must be pleaded (such as fraud or the statute of limitations).
In this regard, I am not satisfied that the bare allegation in the defence in this case that the claim was inequitable would suffice to bring to the plaintiff's attention that a plea of unclean hands was being raised made, let alone on what facts, matters and circumstances such a claim might be based. (Although in the initial Defence, laches was not pleaded, in the Defence to the Further Amended Statement of Claim filed on 8 June 2011, there was an express plea of laches, acquiescence and delay as a defence to any claim for equitable relief. In my reasons published earlier today I had overlooked this pleading and I have now published amended reasons to correct the error to which Mr Stitt has quite properly drawn my attention. It does not change the outcome of the proceedings.)
In some circumstances it seems that a court may take into account effect to matters that are not specifically pleaded (see, for example, Sykes v Stratton [1972] 1 NSWLR 145 at 162, a case where restoration was sought of trust property in the context of a transaction that was considered by Helsham J, as his Honour then was, to be an illegal transaction). However, the general rule is that a court would not be required to consider a defence not raised by the parties (North Western Salt Co Ltd v Electrolytic Alkali Co Ltd [1914] AC 461; Knowles v Fuller (1949) 48 SR (NSW) 243) and that cases are to be determined on the issues raised by the pleadings. It is recognised that the parties may by their conduct of the case acquiesce in a departure from, or may disregard or enlarge, a pleaded case or, in the words of Spigelman CJ in Vines v Australian Securities and Investments Commission (2007) 73 NSWLR 451; (2007) 62 ACSR 1; [2007] NSWCA 75, at 17 [57], may choose to fight the case on a different basis. Nevertheless, in the present case, it could hardly be said, in light of Mr Hale's insistence on adherence to the pleaded case, that Nu Line Construction had acquiesced in any expansion of the issues raised expressly by way of defence in the pleadings to include an allegation of unclean hands.
Pausing here, I have not been able to find in the authorities specific discussion as to the question whether unclean hands can be raised as going to the exercise of the Court's discretion, if not expressly pleaded as a defence. In Dewhirst v Edwards [1983] 1 NSWLR 34 at 45 there was reference in the judgment to facts in the summary of the defendant's submissions which Powell J, in obiter, indicated would suffice successfully to raise such a defence. In Tolcher v Loiterton [2002] NSWSC 373, again in obiter, Gzell J suggested that a ground for rejection of the cross-claim before him (had certain alleged representations otherwise been made out) would have been unclean hands (without there being an indication in his Honour's reasons that an unclean hands defence had in fact been pleaded), stating (at [24]):
Secondly, if the representations were made, the defendants were prepared to allow a document which did not reflect and, indeed, suggested the opposite situation, to be placed before the meeting of creditors. In those circumstances not only is it not unconscionable conduct on the part of the plaintiff to ignore any assumption made by the defendants, but also equitable relief should be refused because the defendants come to this Court with unclean hands (Official Trustee in Bankruptcy v Tooheys Ltd (1993) 29 NSWLR 641).
However, while I do not accept that inferences adverse to the plaintiff could not have been drawn from some of the material which it is submitted raises the issue of unclean hands (and hence considered in the exercise of any discretion as to the relief to be granted), ultimately I have reached my decision without drawing any such inferences.
Background Facts
As at early 2000, Nu Line Construction was a property development company with three directors and shareholders (Mr Michael Lebic, Mr Mick Mijatovic and Mr Leo Mijatovic). Mick and Leo Mijatovic are brothers. (Where necessary to distinguish between the two Mijatovic brothers I will do so by their first names. Where I refer simply to Mr Mijatovic, I am referring in each case to Mr Leo Mijatovic.)
Up to June 2005, the shareholding of the company was held as to 40% by Mr Lebic; as to 40% by Mr Mick Mijatovic and as to 20% by Mr Leo Mijatovic. In 2003 the company went into external administration (as will be discussed further below). After the external administration came to an end in 2005, the shareholding of the company changed and since then the sole shareholder (and director) has been Mr Leo Mijatovic.
There was a falling out between Mr Leo Mijatovic and Mr Lebic some time around late 2005 or early 2006. (Mr Lebic accepted that it was over serious allegations made against him by Mr Mijatovic, which allegations were denied; that it occurred at the end of 2005 or early 2006; and that they had not spoken since - T 232.46.) There does not appear to have been any such falling out as between the Mijatovic brothers (since Mr Mick Mijatovic attended in Court during the hearing, in Mr Leo Mijatovic's own words to 'support' his brother). Mr Mick Mijatovic was not, however, called to give evidence in Nu Line Construction's case, a matter on which Mr Stitt invites me to draw a Jones v Dunkel (1959) 101 CLR 298 inference.
As at 2000 (and until its sale in 2009), Mrs Gabriella Grippaudo (Mr Fowler's wife) was the registered proprietor of industrial land at Wetherill Park. Although the Wetherill Park property was in fact owned by Mrs Grippaudo, no issue was raised as to Mr Fowler's authority to negotiate in relation to the land on her behalf. Mrs Grippaudo, who was not required for cross-examination, swore an affidavit in the proceedings in which she deposed that she had had no dealings with Nu Line Construction and that all dealings in relation to the Wetherill Park land were done by her husband with her permission.
The Wetherill Park land is a battleaxe block on which, at the relevant time, there was a telephone tower that was the subject of leases to both Optus and Vodafone. There was no building on the land but Mr Fowler says that some of his machinery was kept on the land and he carried on some part of his construction business from the land.
- Discussions in February 2000 re proposed purchase of land
In early 2000 there were discussions between one or more of the principals of Nu Line Construction, on the one hand, and Mr Fowler, on the other hand, as to the proposed purchase of the Wetherill Park land. There is an inconsistency between the evidence of Mr Fowler and that of Mr Mijatovic as to what participation the latter had, if any, in discussions before 15 March 2000 in relation to the proposed purchase.
Both Mr Fowler and Mr Lebic gave evidence that Mr Lebic had initially contacted Mr Fowler in relation to the property. Mr Lebic says that he had heard through a third party that the land was for sale and that he contacted Mr Fowler to express interest in purchasing the land. Mr Lebic places this event as occurring in around late January or early February 2000. Both he and Mr Fowler say that there was a meeting between them on site shortly after that conversation. Mr Fowler's recollection is that Mr Mick Mijatovic was also at that meeting on site but he does not have any recollection of Mr Leo Mijatovic being at that meeting. (Mr Fowler gave evidence that he did not meet Mr Leo Mijatovic until June 2000.) For his part, Mr Lebic does not refer to anyone else being at the February site meeting.
While Mr Mijatovic does not say that he was at any February site meeting, he does depose that on about 18 February 2000 he had a conversation with Mr Fowler (and says that his "former business partner", by whom I understand him to be referring to Mr Lebic, "was also in attendance" during that conversation) in which Mr Fowler told him about the land and said he would like him to consider buying it. Mr Mijatovic deposes that, in the conversation he had with Mr Fowler in February, Mr Fowler had indicated that there was space on the land to build a warehouse and that he (Mr Mijatovic) had indicated interest in building a warehouse because "our current warehouse is getting small and we need larger premises" (at [6]). He also says that in that conversation Mr Fowler had said that the empty land alone could earn about $50,000 a year because it had a telephone tower that was leased to Optus and Vodafone.
Thus there seems to be an inconsistency as to whether it was Mr Lebic who first initiated discussion with Mr Fowler as to the possible purchase or whether it was Mr Fowler who suggested to Mr Mijatovic that he buy it. (The possibility that there were two pre-site conversations in February seems unlikely given the overlap of the discussion recounted by the respective directors of the company as taking place in February.)
Whether or not there was a February telephone conversation between Mr Fowler and Mr Mijatovic (as Mr Mijatovic deposes there was in his affidavit at [6]), there is no reason to doubt that there was a discussion between Mr Fowler and Mr Lebic on site in February 2000 as to the price for which Mr Fowler would be prepared to sell the land or that he wanted to receive for the land. Mr Fowler says (at [7] of his affidavit of 23 February 2010) that he told Mr Lebic that he wanted $300,000 for the land, referring to the need for "a considerable number" of retaining walls to be built that would reduce the effective area of the land (seemingly offering this as justification for the price). Mr Lebic's recollection (albeit in summary terms) differed in that he deposed that:
[6] ... We met on site and after looking at the property and discussing the details with Peter, I agreed to buy it. We agreed on a price of $450,000 or $460,000, I cannot now recall precisely. I believe we agreed on a deposit of up to $160,000 with $300,000 being the balance. [my emphasis]
Apart from the discrepancy as to the amount said to have been discussed or agreed at that meeting as to the total sale price (which I consider in due course), this again highlights the inconsistency between the evidence of Mr Mijatovic, on the one hand, and that of Mr Fowler (and Mr Lebic), on the other, as to when and with whom the initial agreement as to the proposed purchase price occurred.
If the discussion that Mr Mijatovic recalls taking place on 18 February is one that took place after the site meeting attended by Mr Lebic, then this would make little sense (as Mr Fowler and Mr Lebic by then had already discussed the potential sale of the property on that earlier occasion). There is no evidence from Mr Mick Mijatovic to shed any light on this, or any other, issue. However, not much turns on this (other than to highlight the difficulty of placing weight on the witnesses' recollections of events from so long ago).
Nu Line Construction, in its pleadings, contends that the "agreement" was reached in or about March 2000 (Mr Mijatovic referring at [9] and [11] to a discussion he had on 15 March 2000 with Mr Fowler), whereas the tenor of the evidence from each of Mr Lebic and Mr Fowler is that the agreed price was struck in February 2000 and that the discussions before 17 June 2000 in relation to the sale were between the two of them.
The explanation for this discrepancy may well be that the respective witnesses were using the word "agreement" in a loose sense to indicate consensus (which would not be inconsistent with the informal manner in which the parties seem to have progressed discussions in relation to the proposed sale) and hence that each of Mr Lebic and Mr Mijatovic may separately have come to a consensus with Mr Fowler as to the price (although the prospect of two separate price negotiations following the same path at different times seems unlikely - once a price had been struck one would hardly expect the process to begin all over again at the initial starting point, at least without some reason to do so). Again, little turns on whether an agreed price was struck in February or March 2000. However, it does serve to highlight the potential unreliability of the parties' present recollection of events occurring some 12 years ago. (There was also an unresolved discrepancy between Mr Mijatovic's recollection that he had dealt with Mr Fowler before this particular transaction and Mr Fowler's denial that he had had any prior business or professional relationship with Mr Mijatovic.)
Ultimately, I have little confidence in the reliability of any of the witnesses' recollections as to the timing of event or content of discussions and I place weight instead on the (few, if any) contemporaneous documents.
- March 2000
On 15 March 2000, a sketch plan showing the layout of the Wetherill Park land was forwarded by facsimile transmission from Mr Fowler to Nu Line Construction's offices. There were three versions of that sketch plan in evidence:
(i) Annexure A to Mr Mijatovic's 9 October 2009 affidavit, which was identified by him as a true copy of the facsimile that he received from Mr Fowler on 15 March 2000 and which, in the witness box, he made clear he regarded as being the original offer by Mr Fowler in relation to the land (on which copy he had handwritten the words "Original Offer by Peter & Gabrielle" at the time he provided the plan to his legal representatives);
(ii) Exhibit 2, which was a document found on the conveyancing file of Ms Mohini Gunesekera (the solicitor who had acted for Nu Line Construction in relation to the proposed sale), which copy does not contain the handwritten header referred to above and differs from (i) in some of the annotations thereon; and
(iii) Exhibit G (the provenance of which was not clear), which was tendered (without the highlighting and fresh markings thereon) and which copy not only does not contain the header in (i) but also differs in some of the markings from that in (ii).
(I note that yet a fourth version of the sketch plan appeared behind Tab 4 of the Court Book but that copy was not tendered and is not in evidence.)
The sketched lay-out of the land was the same on each of the plans. Apart from the handwritten header (which can be ignored as Mr Mijatovic's evidence is that he added that himself at a later date), the relevant differences in the various versions of the sketch plan that are in evidence are to be found in the annotations contained on the left hand side of the plan. (There is writing also on the bottom right hand corner under the heading "development data" but the content of this is common to each of the versions. The author of this handwriting was not identified. Having regard to its content, it seems likely that it was someone involved in preparation of the sketch itself.)
Logically (and this was accepted in the course of argument), anything not appearing on the version of the document which was found on Ms Gunesekera's conveyancing file (or on which only appeared as a fresh marking on that document) cannot have been on the version that was faxed by Mr Fowler to Nu Line Construction's offices on 15 March 2000. So, for example, the copy as forwarded by Mr Fowler cannot have had the boxes around the words on the left hand side that appear on Annexure A because the copy to Ms Gunesekera's file does not have boxes around the writing. Therefore, I have concluded that anything on Exhibit G, or that is not on Exhibit 2, must be something added to the document after it was sent by Mr Fowler. The difficulty is in knowing precisely what annotations (if any) were on the left hand side when it was received in that office.
What was on Ms Gunesekera's file (Exhibit 2) is a document that does not have any circles drawn along a part of the site plan; does not have any boxes around the handwriting; and appears to have some changes to the figures that appear uncorrected on Exhibit G.
The evidence of Mr Mijatovic that the document which is Annexure A was the document he received (and that the only additions were the header he put on the document) cannot be the case. Even apart from the header, there are significant differences between the documents, including that on Exhibit 2, the $500,000 figure is crossed out (and there is a handwritten reference to a 2 month notice linked to the lease back to Mr Fowler).
Other than Mr Mijatovic's assertion that the handwriting on the left hand side of the sketch plan is that of Mr Fowler, there is nothing to suggest that this was the case (and Mr Fowler denies that the handwriting on the left is his). Therefore, there is at least a possibility that the notes on the left hand side were made after receipt of the plan in Nu Line Construction's office by someone considering the value to the company of a proposed investment in the acquisition/development of the property.
It seems to me likely that Exhibit 2 (without the correction to the rental amount in the first of the notes on the left that appears to be in pen on the document removed from Ms Gunesekera's conveyancing file) is the earliest of the three versions (since the circled area on the plan is in colour in Exhibit G and appears as a copy on Annexure A, but does not appear on Exhibit 2 at all). However, I cannot be satisfied that any of the annotations on the left hand side were on the plan when it was received in the Nu Line Construction offices (as opposed to being added to the copy of the plan once it was received in those offices). While it was suggested by Mr Hale that it could be concluded from an inspection of the fax machine imprint at the foot of Exhibit G that this was the version originally printed from the machine in that office, and that may well be the case, I do not consider that I can reach such a conclusion without comparing the document to other original printouts from that fax machine and without expert forensic evidence. I cannot discount the possibility that the fax imprint on the page is itself a copy of the original document received in the office.
Further, while Mr Lebic's evidence suggested that at least some of the writing on the left hand side of the document was on the copy of the plan when it was received in the office of Nu Line Construction, Mr Lebic was hardly definite in his evidence on that point (and, as I will discuss in due course, the generality of his evidence on other points leads me to conclude that he does not have a clear recollection of events in general).
The handwritten annotations on the left hand side of the sketch plan refer to the rent payable (or that might be received) from Optus/Vodafone for the phone tower - noted variously on the different versions as $25,000 (assuming I have read that figure correctly as the 5 is overwritten on Exhibit G), $20,000 and $26,500 per year plus CPI and to a Peter Fowler lease back ($25,000 per year for 2 (or perhaps 3, depending on the way the figure is interpreted) years). They also include the note:
A Total of $50,000 per year
Total investment only $500,000
Mr Mijatovic relies on the last line of the note (ie the reference to a total investment of "only $500,000"), as I understand it, as providing support for his evidence that the agreed purchase price was $450,000 not $300,000. However, as Mr Stitt has noted, none of the witnesses deposed in the respective affidavits as to any conversation in which a price of $500,000 was mentioned. Moreover, on its face, it is not clear whether the reference in the note to a "Total Investment" of $500,000 is a reference simply to the proposed purchase price or to a total investment by the proposed purchaser in the acquisition and development of the property (particularly having regard to the discussion said by Mr Fowler to have occurred as to the need for retaining walls to be built and to Mr Mijatovic's evidence as to the proposal that a warehouse would be built on the land).
If this document did record or confirm an offer by Mr Fowler to sell the land for $500,000, then the discussion at the earlier site meeting to which Mr Lebic refers of a purchase price of either $450,000 or $460,000 (a figure which Mr Lebic says was agreed at that time) does not make sense. While that, of itself, simply reflects the conflicting recollections of Mr Mijatovic and Mr Lebic (and does not point to one or other being the correct version of events), it puts Mr Mijatovic in the position that he contradicts Mr Lebic's version of events at the same time as he seemingly seeks to rely on Mr Lebic's recollection of the agreed purchase price as supporting his contention that the price agreed was higher than that recorded in the contract for sale of land prepared by Mr Fowler's solicitors.
If the annotations on the sketch plan represented a further 'offer' from that which was discussed (and Mr Lebic says agreed) at the earlier site meeting then (on the normal principles of contractual offer and acceptance) it must logically have superseded any earlier offer or agreement in principle made in the discussions in February.
Mr Mijatovic's evidence is that, following receipt of the sketch plan (whichever version that might actually have been), he had two telephone conversations with Mr Fowler: the first in which he asked for confirmation as to the leases (which would be equally consistent with the annotation on the plan in relation to the leases having been made when the plan was sent or later during the conversation) (at [9]) and the second (after he had inspected the site) in which he says he said "I think the best we can do is $450,000" and that Mr Fowler said:
OK I can do that; but what I need is $60,000 part payment now, and I have a few invoices that are coming up. If you can pay those invoices up to $150,000 including the part payment of $60,000, we can do this. I also need the contract to show $300,000.00 with 10% deposit; and I can get my solicitor to draft this. Is this OK?
to which Mr Mijatovic says that he agreed.
Hence, on the case put forward by Mr Mijatovic (and through him Nu Line Construction), the agreement to buy the land was for a total price of $450,000 and was reached on or about 15 March 2000; whereas Mr Fowler and Mr Lebic both place the agreement as having been reached earlier, though Mr Lebic supports the contention that the price was in or about the amount for which Mr Mijatovic contends.
One of the many factual disputes between the parties (leaving aside for the moment the question as to who was to be the purchaser of the property and hence on whose behalf any payment in relation to the proposed purchase was made) is thus as to the purchase price that was to be paid in order to acquire the property (and how that sum was to be comprised).
As noted above, both Mr Mijatovic and Mr Lebic gave evidence that the purchase price was to be in the order of $450,000 (in Mr Lebic's case he was not sure if it was $450,000 or $460,000). Mr Lebic said that there was to be a "deposit" of up to $160,000; Mr Mijatovic said that the purchase price was to include a part payment of $60,000 and payment of invoices up to a further amount of $90,000, (ie a total of $150,000). Mr Fowler is adamant that the agreed sale price was $300,000 (as was recorded in the contract for sale later prepared by his solicitors).
It was not suggested by Mr Mijatovic that any explanation was proffered to him by Mr Fowler at the time as to why the contract would be required to record a lower purchase price on the face of the contract than the purchase price that had been agreed. Mr Mijatovic simply asserts that Mr Fowler made that a condition of the sale. Nor was it suggested to Mr Fowler in cross-examination that there was a reason why it would be in the vendor's interest for this to occur. Mr Mijatovic accepted in cross-examination that the effect of this would be to result in lower stamp duty being paid by the purchaser if the contract proceeded to be exchanged at the lower price (something that I note would financially be in the purchaser's favour), though denying any intention to deprive the State of revenue payable in relation to the sale.
Mr Lebic, in his affidavit, deposed that there had been a decision on about 15 March 2000 (presumably by the respective shareholders and directors of the company) to buy the property "personally in equal proportions" (by which I assume he meant in proportions referable to the in proportionate shareholdings - see [7] of his affidavit of 22 February 2010) rather than for the property to become an asset of the company. (If so, then this is inconsistent with what later occurred in relation to the preparation and signing of the then proposed contract for sale by the directors of Nu Line Construction, including Mr Lebic himself.)
Mr Lebic's evidence as to the decision to buy the property personally and not as a company asset (like much of his affidavit evidence) was expressed in general and conclusory terms and was the subject of numerous form objections by Mr Hale. I consider later the import of Mr Lebic's evidence but for present purposes note that insofar as his evidence amounted to a generalised conclusion as to matters that he asserted had been the subject of decision or agreement between the three principals of Nu Line Construction, without deposing to the substance of what was said that caused him to form that belief or reach that conclusion, I read that evidence (subject to weight) as going simply to Mr Lebic's belief or understanding that this was the consensus reached between the three individuals and not as to the correctness of that belief.
As to how the purchase price was to be comprised, there is not only a dispute as to whether the purchase price was in part to be paid by way of payment of invoices rendered by third parties to Mr Fowler (in respect of building works on his own property) but also as to whether, as at 15 March 2000, there was any agreement (in principle or otherwise) by one or more of the principals of Nu Line Construction to pay invoices on behalf of Mr Fowler (ie whether or not such payment was to be part of the purchase price). There is, however, no dispute that at some stage there was an agreement or understanding reached between at least Mr Fowler and Mr Mijatovic that the latter would arrange for payment of moneys the subject of invoices rendered to the former. Mr Mijatovic contends that this was agreed in March 2000 and was to be by way of part payment of the purchase price; Mr Fowler contends that it was, in effect, an option fee pursuant to an agreement reached in December 2001 whereby he would continue to hold the land for sale exclusively for Nu Line Construction or its principals at the earlier agreed sale price of $300,000.
Neither version of those conflicting accounts in this regard is in my view particularly compelling. The version of the conversation to which Mr Mijatovic deposes at [9] of his affidavit (extracted earlier) seems to proceed on the basis that Mr Fowler's agreement to accept a price lower than $500,000 was subject to there being part payment of the purchase price (in an amount that, on whatever version of the agreed purchase price, would exceed a 10% deposit in advance of exchange of contracts) together with payment of invoices (in an even greater amount).
Such an arrangement might make commercial sense if it was anticipated that completion of the sale would not take place in the near future (and hence might explain Mr Fowler's need to have a relatively large sum by way of part payment/payment of invoices separate from the contract price) yet there is nothing to suggest that as at March 2000 it was anticipated that there would be any delay in the matter proceeding to exchange of contracts and completion of the sale within a reasonable time frame (and there is nothing to explain how such a regime would operate in the context of a settlement in the ordinary course).
Moreover, such an arrangement would seem to me to be fraught with uncertainty as to what would happen if settlement of the sale were to occur at a time prior to payment of the total sum of $150,000 (that Mr Mijatovic says was part of the purchase price but was not to be dealt with in the contract itself). Of course, the fact that the proposed arrangement might have been uncertain in its operation or uncommercial in its terms (or might expose one or other party to the risk that it could not be enforced in accordance with its terms) does not preclude a finding that this was the arrangement that was reached between the parties. Nevertheless, the more uncommercial an arrangement the less likely that one might think it was in fact the arrangement reached between the parties (making Mr Mijatovic's version of events more difficult to accept).
That said, Mr Fowler's version of events has its own difficulties (particularly in relation to the suggestion that the $60,000 payment was an option fee to hold the property off the market, when that payment was made at a time when there was no suggestion that there would be any material delay in completion of the sale), which I discuss in due course. Foremost among those is that there is nothing in writing as to any "option" fee and it is inconsistent with the only record of payment of the $60,000 (namely, the 17 June note).
Both Mr Fowler and Mr Mijatovic seem to have considered the arrangements reached in relation to the purchase to amount to no more than (or to include) a "gentlemen's agreement" (also described by Mr Mijatovic in the witness box as an 'underhand arrangement" - see eg T 37, T109.45). At the very least, the suggestion that there would be a deposit or part payment of "up to" any particular amount (referred to by both Mr Mijatovic and Mr Lebic) is indicative of the non-binding nature of any agreement reached between them and Mr Fowler in relation to the proposed sale at the time.
Where this leaves me is that I am not convinced that either side's account is particularly compelling and therefore, again, I must place the most weight on whatever contemporaneous documents there may be that shed light on this issue.
- Preparation of draft contract
Mr Fowler contacted his solicitors in around late April to prepare a contract for the sale of the Wetherill Park land. His instructions were that the purchase price was $300,000. He deposed to the fact that Mr Lebic had provided him with "his details". Since the draft contract prepared in or about May 2000 disclosed the purchaser as Nu Line Construction, I can only assume that Mr Fowler provided those details to his solicitors and was at that stage under the understanding from Mr Lebic that the purchaser was to be Nu Line Construction.
The draft contract (noting the purchase price as $300,000) was forwarded to Ms Gunesekera on 10 May 2000, naming Nu Line Construction as the purchaser and Mrs Grippaudo as the vendor. Ms Gunesekera, who gave evidence in Nu Line Construction's case, deposed to having first received instructions in relation to the purchase of the property in a telephone conversation with Mr Mijatovic (for whom she had acted on various matters from 1994) on or around 4 May 2000.
The copy contract annexed to Ms Gunesekera's affidavit of 9 October 2009 (which has been executed under company seal by Nu Line Construction) bears certain alterations as to the purchaser's details, including its ARBN, from which (and also by reference to the correspondence attached to her affidavit) it is clear that this is not a copy of what Ms Gunesekera actually received on 10 May 2000. Nothing turns on this. What is of relevance is that the contract, as prepared, named Nu Line Construction as the purchaser (and that, when signed by the directors, the contract named that or a related company not the directors in their personal capacity as the purchaser of the property).
- 17 June 2000 payment
On 17 June 2000, a payment of $60,000 was made to Mr Fowler. The circumstances in which that payment was made and the precise characterisation of that payment are both matters in issue.
Mr Mijatovic's contention is that it (and the moneys later paid in relation to invoices at Mr Fowler's request) represented moneys paid as part payment of the purchase price for the Wetherill Park property (consistent with the agreement he says was reached on or about 15 March 2000). The existence of an agreement in advance of 17 June as to payment of that sum would readily explain the fact that there was such a sum sitting in the safe of Nu Line Construction in advance of the meeting (and would also explain the preparation in advance of the so-called "receipt" document to which I refer below, assuming that this was in fact prepared in advance of the meeting as Mr Mijatovic contends). Otherwise, it might seem fortuitous that a not insubstantial sum of money just happened to be in the safe at the Nu Line Construction offices at the time of the 17 June meeting and available for payment to Mr Fowler.
Mr Fowler's account of what happened on 17 June 2000 is markedly different to that of Mr Mijatovic. He says that the subject of a payment of $60,000 arose for the first time at the meeting on 17 June 2000. Mr Fowler deposes that, at the meeting, Mr Lebic said that "We really like this industrial property and would like to go ahead as soon as possible and we would like you to take it off the market"; that he, Mr Fowler, responded that the property had been listed with a real estate agent and that he would need some money to take it off the market; and that Mr Mijatovic left the room and returned with the cash, asking whether that was enough money for him. (On this version of events, the fact that there was $60,000 already in the safe could equally be explicable by reference to a decision amongst the principals of Nu Line Construction in advance of the meeting to offer such an amount by way of deposit.)
Mr Fowler said that he had offered to sign something (and that Mr Mijatovic then asked his secretary to type up the letter which is annexed to Mr Mijatovic's affidavit). In contrast, Mr Mijatovic says that he had prepared the "receipt" in advance and that it was he who asked Mr Fowler to sign the receipt.
Tellingly, in light of the manner in which the invoice payments are said to have occurred, Mr Mijatovic says that he needed something in writing because he was giving such a large amount of money (though later, when he says that Nu Line Construction provided an almost equally as large amount of money in payment of an invoice from DeGabriele Kitchens at Mr Fowler's request, Mr Mijatovic seems not to have seen any need for anything in writing).
Mr Fowler was adamant that this payment was an option fee (though in the first verified defence it was described as a "holding deposit"). (I should note that I do not draw any adverse inference from the fact that in the first verified defence the payment was described as a holding deposit since leave was given by Macready AsJ for the withdrawal of any admission comprised thereby.)
The defendants' position is that the agreement reached in relation to this payment was to the effect that they would take the property off the market; that the defendants would not sell the property to any other person; that the price for purchase would be fixed at $300,000; and that the individuals would have time to settle the purchase. Insofar as Mr Fowler says that this sum was offered to him (not requested by him) as consideration for further time being allowed for the settlement to take place and for the property to be taken off the market, one difficulty I have with this is that there seems nothing to suggest at that stage that completion would not take place in the ordinary course - the draft contract only recently having been provided to Ms Gunesekera and its terms not yet having been the subject of any debate between the respective solicitors. Indeed, Ms Gunesekera had not even acknowledged receipt of that contract by that stage (and when she subsequently did her response was seemingly straightforward).
This is because I am of the view that the time at which, objectively viewed, the contemplated state of affairs in anticipation of which the said moneys were paid (namely, the purchase of the Wetherill Park property, whether at the stipulated contract price or at some other price) had failed to materialise was at or about mid 2002. I draw that conclusion from the fact that Nu Line Construction, over a period of some four months, had chosen not to respond to successive requests for confirmation of its intention to proceed with the purchase. Objectively, as at mid 2002 there was no active step being taken to progress the purchase (unlike the period up to early 2002 when steps were being taken through the lawyers acting on both sides to progress the matter).
Insofar as reliance is placed on the discussion that took place in 2004 in relation to the retaining wall payment (as indicating that the parties understood the proposed purchase still to be on foot at that stage), it seems to me that the evidence is inconclusive. It would be consistent with Mr Fowler (who, as it was, thought it had been unnecessary to pay the money) simply not pursuing the issue with Mr Lebic (on the basis that the money had already been paid so there would be no point in doing so). It would also be consistent with Mr Fowler not being averse to the possibility that the stalled purchase negotiations might later be revived. It does not, however, necessarily mean that as at mid 2002 there was objectively an ongoing purchase in contemplation.
Had I been of the view that the claim was not statute-barred, I would have found for Nu Line Construction in the sum of $69,075 and awarded restitutionary interest on that amount as from the date on which the contemplated state of affairs had failed to materialise (which, on the hypothesis on which a conclusion that the claim was not statute barred would then have been based, would have been from July 2006) and statutory interest from the date the proceedings were commenced.
Orders
I dismiss the plaintiff's claim. In the ordinary course, costs would follow the event. Before I make any final order for costs I will hear any submissions the parties wish to make in relation thereto.
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Amendments
31 May 2012 - [6], [24], [26], [319] Amendments to reflect fact that laches was raised on the pleadings; [27] Minor amendment to include reference to unclean hands; [321] & [322] Further commentary on defence of laches
Amended paragraphs: [6], [24], [26], [27], [319], [321] & [322]
Decision last updated: 31 May 2012
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