Raine G2C Pty Ltd v Errichetti Nominees Pty Ltd - [2006] WASC 308

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: RAINE G2C PTY LTD -v- ERRICHETTI NOMINEES PTY LTD & ANOR [2006] WASC 308

CORAM: MASTER SANDERSON

HEARD: 2527 OCTOBER 2006

DELIVERED : 21 DECEMBER 2006

FILE NO/S: CIV 1809 of 2006

BETWEEN: RAINE G2C PTY LTD (ACN 108 287 743)
Plaintiff
AND
ERRICHETTI NOMINEES PTY LTD (ACN 008 792 916)
First Defendant
THE REGISTRAR OF TITLES
Second Defendant

Catchwords:

Agreement for sale of land - Representation as to settlement date - Estoppel - Turns on own facts

Legislation:

Corporations Act 2001 (Cth), s 129(2), s 129(4)
Trade Practices Act 1974 (Cth), s 52

Result:

Specific performance ordered subject to plaintiff being able to settle within 30 days

Category: B

Representation:

Counsel:

Plaintiff:     Mr M D Cuerden
First Defendant             :     Mr P G Clifford
Second Defendant         :     No appearance

Solicitors:

Plaintiff:     Verschuer Edward
First Defendant             :     Lawton Gillon
Second Defendant         :     No appearance

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

Cousens v Grayridge Pty Ltd [2000] VSCA 96
Entwells Pty Ltd v National & General Insurance Co Ltd (1991) 5 ACSR 424
Hely‑Hutchinson v Brayhead Ltd [1968] 1 QB 549
Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451

Case(s) also cited:

Australasian Brokerage Ltd v Australian & New Zealand Banking Corporation Ltd (1934) 52 CLR 430
Bahr v Nicolay (No 2) (1988) 164 CLR 604
CrabtreeVickers Pty Ltd v Australian Direct Mail Advertising Co (1975) 133 CLR 72
David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353
Earnshaw v Gorman & Sons Pty Ltd [2001] WASCA 50
Epple v Wilson [1972] VR 440
Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2006] QCA 194
Freeman & Lockyer (a firm) v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480
Garnac Grain Co Inc v HMF Faure & Fairclough Ltd [1968] AC 1130
Gascoigne v Gascoigne [1918] 1 KB 223
Luxury Homes Pty Ltd v Danieli [2005] NSWSC 379
Mehmet v Benson (1965) 113 CLR 295
Melbourne Coach Terminal v Talbot [2002] VSC 445
Meyers v Casey (1913) 17 CLR 90
Nece Pty Ltd v Ritek Incorporation (1997) 24 ACSR 38
Re Altim Pty Ltd [1968] 2 NSWR 762
State Rail Authority of New South Wales v Heath Outdoor Pty Ltd (1986) 7 NSWLR 170
Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315
Thompson v Palmer (1933) 49 CLR 507
Travel Compensation Fund v Tambree t/as R Tambree & Associates [2005] HCA 69
Western Pacific Developments Pty Ltd (In Liq) v Murray t/as Murray Excavators [2000] VSC 436
Williams v Roffey Brothers & Nicholls (Contractors) Ltd [1991] 1 QB 1
Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410

MASTER SANDERSON: There was a time when the southern seaside town of Rockingham was unfashionable. Not any more. An enlightened town planning scheme allows for high‑rise beachfront development. As a consequence property close to the beachfront which will allow for views over the town's tranquil bay is much sought after. This case concerns a parcel of land on the beachfront.
Mr and Mrs Errichetti are now in their late 80s. Both have worked hard during their life and they have been very successful. By 2004 the fruits of this success were to be found in Errichetti Nominees Pty Ltd. The company was the trustee of a trust. Essentially it was a property holding company. Occasionally it would dispose of a property but an acquisition was more likely than a sale. Had the unfortunate series of events which I will relate below not occurred the value of the company would have been in the region of $15 million to $20 million.
Although the company had four directors it was essentially run by Mr Errichetti. It was his retirement interest. He tinkered with the property holdings and kept an eye on the assets. But it was clearly understood within the family that it was Mr Errichetti's business. There were no formal directors' meetings. From time to time Mr Errichetti might discuss a property with one of the other directors but the final decision was his. Management of the company was very conservative. Mr Errichetti liked to keep a cash balance of around $1 million in the company. If the cash balance fell much below that figure he became unsettled.
Apart from Mr and Mrs Errichetti the other two directors of the company were Mr Peter Errichetti and Mrs Donna Di Camillo. Peter Errichetti and Mrs Di Camillo are the children of Mr and Mrs Errichetti. Prior to November 2004 Mrs Di Camillo had very little involvement with Errichetti Nominees or with the business world in general. Her parents lived with her and her husband and inevitably from time to time she would discuss with her father the affairs of the company. As she made plain in cross‑examination she simply wanted to enjoy her time with her parents. She had no real interest in the company or the business world in general and that the discussions she had with her father were really a way of engaging with him rather than a reflection of her enthusiasm to become involved in the affairs of the company.
In November 2004 Mrs Di Camillo went to the bank to cash a cheque drawn on the Errichetti Nominees account. The cheque had been given to her by her father as a birthday present. She was surprised when told by the bank that there were insufficient funds in the company's account to meet the relatively modest cheque. She thought there may have been some reorganisation of the company's affairs. She approached her father to see if he could explain why payment on the cheque had been declined. Her father told her the bank must have made a mistake. There had been no reorganisation of the company's banking arrangements and he was sure that the credit balance was around $1 million. Mrs Di Camillo went back to the bank. There was no mistake. There was virtually nothing in the account. Errichetti Nominees had been the victim of a massive fraud.
The fraud was perpetrated by Peter Errichetti. He had been responsible for maintaining the books and accounts of the company for a number of years. He is a forger and a fraudster. Without any authority from the board at all and without the knowledge of any of the other directors he had acquired property in the company's name, he had arranged mortgages from various lending institutions where necessary to achieve his nefarious ends, he had simply forged the signature of his fellow directors. All of this quickly emerged after November 2004 when Mrs Di Camillo undertook an investigation of the company's affairs.
It is important in the context of this case to say something about how Mr and Mrs Errichetti and Mrs Di Camillo reacted to news of Peter Errichetti's fraud and the predicament the company found itself in. Mr Errichetti effectively gave up - he withdrew from the affairs of the company and has taken no real part in its management. Mrs Errichetti has followed developments and discusses some matters with her daughter. But given her age she has not been in a position to contribute much to the resolution of the company's problems. That means the burden has fallen to Mrs Di Camillo. She has gone from having little or no interest in and little or no experience of the commercial world to dealing with a corporation beset by problems. She is in an unenviable position.
Watching Mrs Di Camillo during cross‑examination two things became apparent. First, she is a completely honest person. She is what might be called "reactively honest" - honesty comes as naturally to her as breathing. It would not occur to her to do or say something dishonest to her own advantage. She unthinkingly expects other people she deals with to behave in the same way.
Second, Mrs Di Camillo cannot, even now, bring herself to admit that the woes that have befallen Errichetti Nominees are the result of her brother's conduct. There is no doubt that they are - the first defendant's case accepted that undeniable fact. But Mrs Di Camillo simply seems unable to accept that her brother could have acted as he did. This is important because it has effected the way that she has dealt with the company. Faced with the facts one might have expected that Mrs Di Camillo's first step would have been to ensure that Peter Errichetti had no contact or involvement with the company. But that has not happened. In all probability it has not happened because Mrs Di Camillo has not been prepared to accept the reality of the situation.
After the difficulties of Errichetti Nominees came to light in November 2004 Mrs Di Camillo arranged for the company's accountants to undertake an investigation of its affairs. One of the things that she found was that the company owned certain property on the beachfront in Rockingham. Neither she nor her parents were aware that the company owned the asset. None of them had signed any documents to facilitate its acquisition. Nonetheless, the company was the registered proprietor and Mrs Di Camillo proceeded on that basis.
It is convenient at this point to turn to the plaintiff. Mr Graham Geoffrey Harler is the sole director of the plaintiff and one of its shareholders. For all intents and purposes the plaintiff is the alter ego of Mr Harler. The plaintiff is a $2 company which was incorporated in March 2004. Mr Harler is an architect by profession. He is experienced in property development.
Mr Harler first got to know Peter Errichetti in about 1983. They were what might be described as business acquaintances. They often discussed potential projects and regularly swapped ideas. They could not really be described as friends because there was not that level of intimacy between them. But through their interaction there had developed a level of trust and at least on Mr Harler's part, a belief that they could do business to their mutual benefit. That meant Mr Harler was prepared to do what he could to assist Peter Errichetti, always believing that it would be to their mutual advantage.
In about mid‑2004 Peter Errichetti told Mr Harler that the Errichetti family owned land in Rockingham. Mr Harler was told by Peter Errichetti that the land was owned by Errichetti Nominees. They discussed the possibility of developing the property. The land was already subject to a development approval allowing for a hotel resort complex. Mr Harler told Peter Errichetti that he could increase the value of the project by amending and resubmitting the development application. The two men reached an agreement and during 2004 Mr Harler put considerable work into redesign and further development of the resort complex.
During this period Mr Harler became aware that Peter Errichetti was in some financial difficulty. He was never aware of the specifics but he was aware that Peter Errichetti was under pressure from his bankers. For this reason, in June 2004 the plaintiff entered into a written agreement to purchase the Rockingham property for an amount of $6.55 million. This agreement required the plaintiff to pay to the first defendant a non‑refundable deposit of $400,000. The contract itself had more to do with placating the concerns of Peter Errichetti's bankers than it did to any agreement between the parties which was to be put into effect.
However, pursuant to the agreement for sale, on 14 October 2004 Mr Harler paid an amount of $100,000 to Errichetti Nominees. Peter Errichetti later indicated to Mr Harler that his bankers had refused to allow him to draw any of the $100,000 which had been deposited in Errichetti Nominees' account. He asked that any further payments be made to Barcardi Holdings Pty Ltd. In line with that request on 30 November 2004 the plaintiff paid a further $133,000 with a cheque made out to Barcardi Holdings. A further $80,000 was paid to Barcardi Holdings on 16 December 2004. That left a balance of $67,000. Mr Harler explained to Peter Errichetti that the plaintiff had no further funds available. Peter Errichetti indicated he would not insist upon payment of the outstanding amount.
Throughout this time Mr Harler was working on the redesign of the units. The original approval had been for 88 short stay apartments and 34 residential apartments and certain other facilities. On 27 June 2005 approval was obtained for a development with 121 hotel rooms, 42 residential apartments with enlarged hotel and office support facilities. This was a considerable advance on the earlier approval and no doubt enhanced the value of the site.
All the while he had been working on redesigning the project he had been looking for sources of finance. He had approached various lenders in Australia and overseas without success. But this was not for want of trying. The plaintiff maintained that it was important to its case that there be a finding of fact that at all material times Mr Harler was using his best endeavours to obtain finance to allow the resigned resort to be constructed. Mr Harler's evidence on that question was uncontradicted. It may be that his efforts to find finance were misconceived and doomed to failure. But there is no doubt, in my view, that from mid‑2004 up to the date of trial and even probably thereafter Mr Harler was using his best endeavours to obtain finance for the project.
Though the latter half of 2005 Mr Harler was aware that Peter Errichetti was under heavy financial pressure. This was the catalyst for the parties to enter into a further contract on 10 February 2006. The purchase price shown in this contract was $8.5 million, up from the $6.55 million shown in the earlier contract. The contract also anticipated a payment of a further deposit of $400,000. Peter Errichetti told Mr Harler that he wanted the date for settlement to be shown as 28 February 2006 and the contract to be unconditional with respect to finance. This was so Peter Errichetti could show the contract to his creditors. Mr Harler also says that Peter Errichetti told him that "he would not insist on the plaintiff complying with any time limits under the Contract": par 102 of Mr Harler's statement. This alleged representation is central to the outcome of this dispute and I will return to it later in these reasons.
The sale contract was prepared by Mr Harler and he signed it in the presence of Peter Errichetti. Peter Errichetti then told him he would take the contract to his mother and sister to get them to sign it. Peter Errichetti told Mr Harler that he was taking this step - something he had not done with earlier documentation - because his father and his sister (Mrs Di Camillo) were taking a close interest in anything that affected their interests. Peter Errichetti said that his family told him they wanted to view and sign any important documents. In fact this contract was signed by Mrs Errichetti and Mrs Di Camillo.
The $400,000 deposit was not actually paid by the plaintiff to Errichetti Nominees. It was paid by a company known as International Developments Concept Ltd. This company was associated with Mr Harler. It paid the first $100,000 of the deposit on the signing of the contract. The remaining $300,000 was paid on or about 17 March 2006. At the time this second tranche of the deposit was paid Mr Harler requested from Peter Errichetti and obtained a letter dated 17 March 2006 signed by him, purportedly on behalf of Errichetti Nominees, giving the plaintiff a further extension of settlement without penalty to 30 April 2006. This letter also contained the following clause:
"It is also confirmed that should a problem occur with settlement on this date Errichetti Nominees Pty Ltd gives Raine G2C Pty Ltd the option to on‑sell the site with the proviso that any profit gained over the contract sum of $8,500,000 would be shared 50/50."
By further letter dated 4 May 2006 Peter Errichetti again purportedly on behalf of the first defendant, gave the plaintiff a further extension without penalty on the settlement dated to 25 May 2006. Mr Harler says that both of these letters were in his view unnecessary. He says that Peter Errichetti had earlier represented to him there would be no deadline on the settlement date. The obtaining of these letters was rather more important to Mr Harler's associates than to Mr Harler himself.
It is now appropriate to return to Mrs Di Camillo. After she and her mother executed the sale agreement in February 2006 they appointed solicitors to act on their behalf. A firm of settlement agents were acting for the plaintiff. By letter dated 1 May 2006 the settlement agents advised the solicitors that the plaintiff would be in a position to effect settlement on or about 5 May 2006. On 4 May 2006 the solicitors enquired whether the contract had been stamped and whether funds were available to settle the purchase. No response was received. Not surprisingly that caused Mrs Di Camillo some disquiet. A meeting was arranged to discuss the matter. There is some dispute as to when this meeting took place and who was to attend. According to Mr Harler the meeting was set for 5 June 2006 and was to be attended by Peter Errichetti, Mrs Di Camillo, Mr Harler, Mr Greg Lee, an associate of Mr Harler and Mr Ross Gillon, the first defendant's solicitor. According to Mr Harler neither Peter Errichetti nor Mrs Di Camillo attended the meeting. According to Mrs Di Camillo the meeting took place on 26 May 2006. The only other persons present were Mr Harler and Mr Gillon, the first defendant's solicitor. In the end, it is probably not important on precisely what date this meeting took place and who attended. What can be said is that it is common ground there was a meeting.
It is also common ground that at the meeting Mr Harler explained his efforts to obtain finance for the project. He was confident that funds would be available in the very short term. Mr Gillon advised Mr Harler that Errichetti Nominees had no knowledge of the two letters granting the extensions of time and the option to on sell the properties. Mr Gillon also advised that Peter Errichetti was not a director of Errichetti Nominees at the time of signing those letters. Mr Harler says that came as a shock to him. He had checked the ASIC records in 2004 and Peter Errichetti was shown as a director of Errichetti Nominees.
There is one area of sharp disagreement between the parties. Mrs Di Camillo says that Mr Harler acknowledged that Errichetti Nominees had been more than patient with him in allowing him time to find finance and complete the purchase. She says that Mr Harler acknowledged that it would be unsurprising if Errichetti Nominees took steps to terminate the contract. Mr Harler denies that he gave any such acknowledgement. In my view, nothing turns on this disagreement as to what occurred at the meeting. It is therefore unnecessary for me to determine whose recollection of events is the more accurate.
On 8 June 2006 the solicitors for Errichetti Nominees served on the plaintiff a notice of default. This was followed on 27 June 2006 by a notice of termination of the contract. Thus, the battlelines were drawn.
The position of Errichetti Nominees can be summarised in this way. It says that Peter Errichetti was not authorised at any time to represent to Mr Harler that there would be an extension of time under the February 2006 contract. It says that Errichetti Nominees was therefore entitled pursuant to the terms of the contract to issue the default notice and has properly terminated the contract. It says that the plaintiff now has no interest in the Rockingham property and that pursuant to its terms it has forfeited any deposit paid. Furthermore, it says that any option purportedly granted to the plaintiff by Peter Errichetti is of no force and effect and does not amount to an interest in the land. It seeks to have the plaintiff's action dismissed with costs.
On behalf of the plaintiff it is said that representations made by Peter Errichetti were made on behalf of Errichetti Nominees because he was, properly viewed, their agent. The plaintiff says that based upon these representations Errichetti Nominees are estopped from relying on the terms of the contract and any purported termination of the sale agreement is ineffective. It says then that it is entitled to proceed to settlement and it seeks an order for specific performance. To complicate its position, as at the date of trial the plaintiff did not have funds available to effect settlement. It was seeking an order for specific performance in circumstances where it was ready, willing but not able to settle. In opening, counsel for the plaintiff conceded that the plaintiff could not have unlimited time to obtain funds to allow it to proceed to settlement. He submitted that it would be a proper order to allow the plaintiff one month from the date of judgment to complete the settlement on the Rockingham property.

As an alternative, the plaintiff submitted that it was entitled to a declaration that it had an option over the land to the effect that it was entitled to 50 per cent of the proceeds of sale of the land over and above $8.5 million. As an alternative to that proposition the plaintiff sought repayment to it of the $800,000 deposit paid under the terms of the two sale contracts.
At my direction, prior to trial, the parties prepared an agreed statement of issues. This agreed statement was in the following terms:
"1.Whether Peter Errichetti's knowledge of the matters in paragraphs 5 and 6 of the statement of claim was knowledge of the first defendant.
2.Whether Peter Errichetti had express, implied or ostensible authority on behalf of the first defendant to make the representations pleaded in paragraph 7 of the statement of claim ('the Representations').
3.Whether the plaintiff was otherwise entitled to assume that Peter Errichetti had authority to do so by virtue of section 129(4) of the Corporations Act 2001.
4.Whether the plaintiff relied upon the Representations as pleaded in paragraph 8 of the statement of claim.
5.Whether the first defendant had validly terminated the Contract in equity.
6.Whether the plaintiff is ready and willing to perform its essential obligations under the Contract.
7.Whether the payments by the plaintiff under the First Earlier Agreement and the Second Earlier Agreement totalling $800,000 are to be considered as part‑payments under the Contract.
8.Whether the plaintiff has suffered loss or damage in reliance on the Representations as pleaded in paragraph 18 of the statement of claim.
9.Whether Peter Errichetti had express, implied or ostensible authority on behalf of the first defendant to enter into the option agreement pleaded in paragraph 19 of the statement of claim ('the Option Agreement').
10.Whether the plaintiff was otherwise entitled to assume that Peter Errichetti had authority to do so by virtue of section 129(4) of the Corporations Act 2001.
11.Whether the payment of $300,000 under the Contract was valid consideration for the Option Agreement.
12.What payments have been made by the plaintiff to the first defendant on one or more of the contracts.
13.Whether the Option Agreement if valid creates an interest in the real estate sufficient to support a caveat.
14.Whether the Option Agreement is binding on the first defendant."
With respect to counsel and after hearing all of the evidence I think the issues can be reduced to four. They are:
1.Did Peter Errichetti make representations to the plaintiff to the effect that settlement date on the February 2006 contract for the sale of the Rockingham land would be extended indefinitely?
2.If such representations were made, were they made by Peter Errichetti as agent for Errichetti Nominees so that they are binding upon Errichetti Nominees?
3.If the representations are binding on Errichetti Nominees, to what relief is the plaintiff entitled, if any, given that at the date of trial it was ready, willing but not able to settle the sale on the sale agreement?
4.Is the option agreement of any force and effect and, if it is not, is the plaintiff entitled to any restitution from Errichetti Nominees for the $800,000 it has paid by way of deposit in relation to the two sale agreements?
Before dealing with these issues in turn I should mention two matters which arise out of the agreed statement of issues. The first has to do with pars 5 and 6 of the statement of claim. These paragraphs plead that at all material times Errichetti Nominees knew that the plaintiff's reason for purchasing the Rockingham property was to carry out a development and that it also knew that the plaintiff would be borrowing moneys to carry out the development. I will deal with those issues in these reasons but I should say that it does not seem to me to be material to the outcome of this case. What is crucial is Peter Errichetti's authority - or lack of it - to act as agent for Errichetti Nominees.
Second, there is s 129(4) of the Corporations Act 2001 (Cth). That section is to the effect that a person may assume that officers and agents of the company proper perform their duties of the company. While that section may be of some assistance I would have thought that s 129(2) is of more relevance. This section says that a person may assume that anyone who appears from an ASIC search to be a director of a company has been duly appointed and has authority to exercise the powers and perform the duties customarily exercised or performed by a director of the company.
The evidence showed that Peter Errichetti was, for a time, disqualified by ASIC from acting as a director of a corporation. It would appear that disqualification made no different to his conduct in relation to Errichetti Nominees. Mrs Di Camillo and the other directors were not ever aware of the disqualification. The ASIC record at all material times showed Peter Errichetti as a director. More importantly, once Mrs Di Camillo became aware of her brother's activities in November 2004 she did nothing to terminate his involvement as a director (if indeed he was one) or to make any amendment to the ASIC registry. That is, in my view, a significant omission.

Did Peter Errichetti make representations to the plaintiff to the effect that settlement date on the February 2006 contract for the sale of the Rockingham land would be extended indefinitely?

It is first necessary to establish what representations the plaintiff says were made by Peter Errichetti. They are found in par 7 of the statement of claim and they are three in number. First, it is said that it was represented by Peter Errichetti that Errichetti Nominees would support the plaintiff to the conclusion of the project. Quite what that representation means or how it affects the outcome of this case is not clear. Perhaps it is best considered as background to the two representations that follow.
Second, it is said that Peter Errichetti represented that Errichetti Nominees would not insist on compliance by the plaintiff with time limits in the February contract - those time limits being 28 February 2006 and 31 March 2006.
Thirdly, it is said that Peter Errichetti represented that Errichetti Nominees would grant to the plaintiff any extension of time required by it to effect settlement under the contract.
I am satisfied on the evidence that all three of these representations were made. Given the nature of the interaction between Peter Errichetti and Mr Harler it is not possible to say precisely when and in what terms each of the representations were made. This was a situation where the two men were in frequent contact. They doubtless had numerous discussions about the development and the progress Mr Harler was making in obtaining finance. All the while, Peter Errichetti was under intense financial pressure. He needed documents indicating imminent availability of funds to satisfy his bankers. But whatever the precise nature of the discussion that took place, whatever the timeframe within which they took place, I am satisfied that what is pleaded in par 7 of the statement of claim is an accurate representation of what was told to Mr Harler by Peter Errichetti. On this point the plaintiff has made out its case.

If such representations were made, were they made by Peter Errichetti as agent for Errichetti Nominees so that they are binding upon Errichetti Nominees?

From the first it was Errichetti Nominees' position that irrespective of what representations were made by Peter Errichetti to Mr Harler they were not made with the company's authority. It can be accepted that there was no direct authority given to Peter Errichetti by the company. By that I mean, there was no discussion between Mrs Di Camillo or her parents with Peter Errichetti in the course of which Peter Errichetti was authorised to offer the unlimited extension on settlement. Mrs Di Camillo said - or at least her lawyer said during the meeting he had with Mr Harler - that the company had no knowledge of the two extensions and that Peter Errichetti was not authorised to grant those extensions. There was no evidence to the contrary.
But in my view it is clear that Peter Errichetti had either implied authority to act on behalf of the company or ostensible authority. There is a difference between the two forms of authority and the nature and content of each is discussed in various cases including Hely‑Hutchinson v Brayhead Ltd [1968] 1 QB 549 at 584 ‑ 587, 592; Entwells Pty Ltd v National & General Insurance Co Ltd (1991) 5 ACSR 424 at 427; Cousens v Grayridge Pty Ltd [2000] VSCA 96 at [5] and Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at [38] – [39].
There can be no doubt that Peter Errichetti was the first defendant's agent for purpose of negotiating the February 2006 contract. That contract was drawn up by Mr Harler and signed by him. Peter Errichetti took it away and it was signed by Mrs Di Camillo and her mother. These facts can allow for no other interpretation beyond that Peter Errichetti was authorised by the company to negotiate the contract. After Mrs Di Camillo and her mother had signed the document they handed it to Peter Errichetti who then took it back to Mr Harler. What, one might ask, was Mr Harler to think? He did think, and he was entitled to think, that Peter Errichetti had authority to act on behalf of the company. There is no reason why, when it came to extending the time for settlement, he should have doubted that Peter Errichetti had the authority to take that step. After all, the contract as signed anticipated a settlement date of 18 February 2006. No‑one from Errichetti Nominees contacted Mr Harler to enquire why settlement had not taken place on the due date and when it might be expected. Knowing about Peter Errichetti's past dishonest conduct, the company was prepared to allow him to deal with the plaintiff on the sale of the Rockingham property. It should not have been surprised when, true to form, he engaged in dishonest conduct by extending the settlement date.
Second, there is the matter of the ASIC records. His disqualification from holding a position of a director is of no real consequence. What is important is what Peter Errichetti actually did. The evidence shows that he actually acted as a director of Errichetti Nominees. He did so during the time when he was disqualified and he did so in relation to the sale in February 2006. He negotiated the terms of that sale. It was a significant transaction and it would be expected that only a director of a corporation could undertake such discussions and commit the company. Moreover, when Errichetti Nominees was contemplating disposal of the Rockingham property discussions took place between Mrs Di Camillo and Peter Errichetti as to how best to approach the matter. There is no suggestion in any of the evidence that Peter Errichetti was sidelined or did not participate in the decision‑making process. He clearly did and he was clearly a de facto director of the company.
Finally, there is the question of the ASIC record. It is difficult to understand why, when she discovered the extent of the fraud on the company by Peter Errichetti in November 2004 Mrs Di Camillo did not take steps to remove her brother as a director and have the records amended accordingly. Based upon s 129(2) of the Corporations Act Mr Harler was entitled to assume that Peter Errichetti was a director of the company. That presumption has not been rebutted by evidence led on behalf of Errichetti Nominees. In fact there was no evidence on that point. On that basis alone the authority of Peter Errichetti to bind the company must be assumed.

If the representations are binding on Errichetti Nominees, to what relief is the plaintiff entitled, if any, given that at the date of trial it was ready, willing but not able to settle the sale on the sale agreement?

The plaintiff maintained that on the facts of this case it had two courses of action - one in estoppel and the other under the Trade Practices Act 1974 (Cth). In my view, both are made out. This was a situation where relying on the representation that time in the contract would not be enforced the plaintiff acted to its detriment in paying over the deposit. It would now be unconscionable for Errichetti Nominees to retreat from its undertaking.
If anything, the position is clearer under the Trade Practices Act. The representation was made and that was conduct in trade and commerce. In reliance upon that representation the plaintiff entered into the contract. The representation has been shown to be false and as a consequence the plaintiff has suffered loss and damage. All elements of a cause of action relying on s 52 of the Trade Practices Act have been made out. That being the case, the question is what relief the plaintiff is entitled to. As I mentioned earlier in these reasons, counsel for the plaintiff, in his opening, accepted that the representations could not be given an unlimited temporal operation. The question is whether the plaintiff should be given one month from the publication of these reasons to settle the transaction.
On this question, counsel for Errichetti Nominees had two submissions. His first was that, however the position may have been represented to the plaintiff by Peter Errichetti after the meeting in late May or early June 2006 the plaintiff was put on notice that the open‑ended nature of the representations was curtailed and prompt settlement was required. Counsel referred to the notice of default which actually provided a period within which the plaintiff could have settled the transaction. It was his submission that the time provided was sufficient to allow the plaintiff to meet its obligations. It was said then that irrespective of whether or not an estoppel had arisen or there had been misleading and deceptive conduct, the plaintiff simply could not settle in a timely fashion and that was the end of the matter. It was further pointed out by counsel for Errichetti Nominees that Mr Harler had repeatedly said that settlement was just a matter of time and it was alleged that representation was repeated at the May/June meeting.
The alternative put by counsel was that the remedy sought by the plaintiff was simply not available to it. What the plaintiff is seeking is specific performance of the agreement. The plaintiff admits that it is not able to settle. Therefore, it was not able to meet the necessary pre‑conditions to allow the remedy of specific performance to be granted. On that basis, it was submitted, the plaintiff's claim ought be dismissed.
Dealing with counsel's first submission, it must be said that there is a certain ambiguity in the plaintiff's position. Mr Harler has repeatedly said that finance was just a matter of days away. He was prepared to enter into the February agreement on the basis that settlement was to take place 18 days after the agreement was signed because he expected by that time settlement funds would be available. Ten months later no funds are available. In my view, it is more likely than not that at the May/June meeting Mr Harler indicated that funds would be available in a matter of days. That would explain why there is no correspondence from the plaintiff complaining about the issue of the default notice. Mr Harler expected the funds to be available within the time specified in the notice.
However, on balance I am satisfied that the plaintiff ought be given 30 days from the date of publication of these reasons within which to settle the transaction. As I have indicated, I am satisfied that an estoppel has arisen in the plaintiff's favour. It is, in my view, unconscionable for Errichetti Nominees to insist upon the terms of the sale agreement. The preferred remedy of the plaintiff is to be given a 30 day period within which to settle the transaction. I am satisfied that is the appropriate remedy in the circumstances.
Having reached that conclusion the argument about the inability of the plaintiff to settle the sale transaction falls away. If within 30 days the plaintiff is not able to settle because it does not have funds then there will be no specific performance of the contract. If it does have the funds then it will, by definition, be ready, willing and able to settle on the due date.

Is the option agreement of any force and effect and, if it is not, is the plaintiff entitled to any restitution from Errichetti Nominees for the $800,000 it has paid by way of deposit in relation to the two sale agreements?

That leaves the question of whether or not the option contained in the March 17 letter is of any force and effect. The parties referred to the letter as the option agreement. I am not sure that is an appropriate description. It seems to be a variation to the sale agreement. In its defence Errichetti Nominees says it is ineffective for two reasons. The first is the agency point and the alleged lack of authority on the part of Peter Errichetti. I have dealt with that issue. The second point is an alleged failure of consideration. It was submitted that pursuant to the sale agreement the plaintiff was obliged to pay the remaining $300,000 by way of deposit. Payment of that amount could then not be consideration for the variation to the sale agreement. As no other consideration could be identified there was no enforceable contract between the parties.
In my view, that argument is correct. Try as one might it is not possible to identify any consideration passing between the plaintiff and Errichetti Nominees for the variation to the contract. Analysing the transaction in terms of benefit/detriment, it is difficult to see here what is the benefit to Errichetti Nominees of the variation or the detriment to the plaintiff. The plaintiff's obligation to pay money remains the same. It does not take on any additional obligations to derive the benefit of the variation. In my view, the contract is unenforceable.
That then leaves the question of whether, if the sale is not settled, the plaintiff is entitled to repayment of its deposit. As pleaded, that claim is made only if it is established that Peter Errichetti did not have the authority to make the representations he did. As I have determined he did have such authority this claim falls away.

Conclusion

Given the conclusion I have reached in this matter the orders may take some crafting. I will give the parties the opportunity to discuss those orders and if no agreement can be reached then I will settle them in due course. I will also hear the parties as to costs.