Rossi Recycling Pty Ltd v Buckland Valley Pty Ltd

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

COMMERCIAL LIST

S ECI 2019 05638

BETWEEN:

ROSSI RECYCLING PTY LTD (ACN 056 188 562) (AS TRUSTEE FOR THE ROSSIGNOLI PROPERTY TRUST)	Plaintiff
v
BUCKLAND VALLEY PTY LTD (ACN 059 814 961) (AS TRUSTEE FOR THE ROSSIGNOLI TRUST NO. 3 AND THE HEATHERDALE PROPERTY TRUST)	First Defendant
PAUL ROSSIGNOLI	Second Defendant

AND BETWEEN:

BUCKLAND VALLEY PTY LTD (ACN 059 814 961) (AS TRUSTEE FOR THE ROSSIGNOLI TRUST NO. 3 AND THE HEATHERDALE PROPERTY TRUST)	First Plaintiff by Counterclaim
PAUL ROSSIGNOLI	Second Plaintiff by Counterclaim
v
ROSSI RECYCLING PTY LTD (ACN 056 188 562) (AS TRUSTEE FOR THE ROSSIGNOLI PROPERTY TRUST)	First Defendant by Counterclaim
GLEN ROSSIGNOLI	Second Defendant by Counterclaim

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JUDGE:	Connock J
WHERE HELD:	Melbourne
DATE OF HEARING:	19, 20, 21, 25, 26 October 2021 and 10 November 2021; further written submissions 14, 18, 22 and 29 November; further hearing, 14 December 2021
DATE OF JUDGMENT:	18 August 2022
CASE MAY BE CITED AS:	Rossi Recycling Pty Ltd v Buckland Valley Pty Ltd & Anor
MEDIUM NEUTRAL CITATION:	[2022] VSC 467

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CONTRACT — CONSTRUCTION — Construction of deed of settlement — Alleged breach and repudiation of the deed of settlement — Calculation of rent — Obligations of parties to the deed of settlement — Whether deed of settlement repudiated — Whether alleged repudiation accepted — Alleged failure to co-operate — Alleged failure to give the other party the benefit of the agreement — Specific performance — Uncertainty — Severance of contractual terms — Implied term to do all things necessary to all the other party to have the benefit of the contract — Breach of contract — Whether deed of settlement affirmed — General principles of construction of contract — Whether failure to pay rent under an existing lease a breach of the deed of settlement — Masters v Cameron — General principles regarding repudiation of contracts — Implied terms — Uncertainty — Affirmation — Acceptance of repudiation.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff and Defendants by Counterclaim	Dr M Barrett	Dunemann Sutherland Pty
For the Defendants and Plaintiffs by Counterclaim	Mr D Farrands QC with Mr R Kruse	Aptum Legal

TABLE OF CONTENTS

Part A: Introduction and summary................................................................................................ 1

Part B: Background and some factual matters............................................................................ 6

Part C: The Settlement Deed........................................................................................................ 21

Part D: Witnesses............................................................................................................................ 25

Part E: Terms and operation of the Settlement Deed.............................................................. 29

Part E.1 – Defendants’ contentions regarding the Settlement Deed and the claimed engagement of Masters v Cameron principles............................................................................................ 30
Part E.1.1 – Masters v Cameron – Defendants’ position................................................. 30
Part E.1.2 – Masters v Cameron – Plaintiff’s position..................................................... 35
Part E.1.3 – Principles and observations – Masters v Cameron..................................... 38
Part E.1.4 – Consideration and determination – The defendants’ Masters v Cameron contention............................................................................................................... 45

Part E.2 – Settlement Deed execution and date that it came into effect............................. 55
Part E.3 – Object and purpose of the Settlement Deed......................................................... 56
Part E.4 – Implied term of the Settlement Deed requiring the parties to co-operate....... 58
Part E.5 – Construction of commercial contracts................................................................... 66
Part E.6 – Was the New Lease to come into effect and operate from no later than 1 October 2019?.............................................................................................................................................. 71
Part E.6.1 – New Lease from 1 October 2019 – Plaintiff’s position............................. 72
Part E.6.2 – New Lease from 1 October 2019 – Defendants’ position........................ 74
Part E.6.3 – Principles and observations – Time for performance of contractual obligations.................................................................................................................................. 78
Part E.6.4 – Consideration and determination – New Lease from 1 October 2019? 82

Part E.7 – Clause 4 of the Settlement Deed and the entitlement to a six-month licence of the top floor of Unit 27 ‘at no cost’............................................................................................... 92
Part E.8 – Whether the terms (ie the words) of clause 2(b) regarding the rental determination mechanism for the New Lease were intended to be an express term of the New Lease 94
Part E.9 – The premises the subject of the New Lease.......................................................... 96
Part E.10 – Commencement of the New Lease and discontinuance of the 2016 Lease.... 97
Part E.11 – Was Rossi Recycling obliged to pay rent under the 2016 Lease?.................... 97
Part E.12 – Clause 2(e) of the Settlement Deed: construction, uncertainty, and severability. 99
Part E.12.1 – Plaintiff’s position – Clause 2(e)............................................................... 99
Part E.12.2 – Defendants’ position – Clause 2(e)......................................................... 102
Part E.12.3 – Principles and observations – Uncertainty and severance................. 103
Uncertainty........................................................................................................ 103
Severance........................................................................................................... 109

Part E.12.4 – Consideration and determination – Clause 2(e), construction, uncertainty and severance............................................................................................................... 113

Part E.13 – Item 22 of the schedule to the 2016 Lease.......................................................... 123
Part E.13.1 – Consideration and determination – Item 22......................................... 124

Part E.14 – Brief summary of conclusions regarding the operation and construction of the Settlement Deed............................................................................................................... 127

Part F: Alleged breaches of the Settlement Deed by the defendants, the notices of breach, and the taking possession of the 2016 Lease Premises and other parts of Unit 27.................... 129

Part F.1 – Alleged breaches of the Settlement Deed by Paul or Buckland Valley........... 130
Part F.1.1 – Failing or refusing, or continuing to fail or refuse, to draft a lease..... 131
Part F.1.2 – Not responding to the plaintiff’s proposed valuer and not agreeing or proposing to refer the question of market rental to the Australian Property Institute 136
Part F.1.3 – Demanding rent pursuant to the 2016 Lease for the months of October 2019, November 2019 and December 2019 and thereafter; issuing notices of breach alleging failure to pay rent pursuant to the 2016 Lease; and taking possession of the 2016 Lease Premises and other parts of Unit 27 for failure to remedy defaults referred to in the notices of breach issued under the 2016 Lease................................................ 140
Part F.1.4 – The validity of the notices of breach issued by Buckland Valley on 18 and 22 November 2019 and the taking of possession of the property by Buckland Valley on 8 and 10 December 2019, including whether it was ‘wrongful’ or ‘unconscientious’................................................................................................................................ 146

Part G: Rossi Recycling and Glen’s estoppel claim............................................................... 150

Part H: Alleged breaches of the Settlement Deed by Glen and Rossi Recycling............ 153

Part H.1 – Alleged breaches of the Settlement Deed by Glen............................................ 155
Part H.1.1 – Glen taking steps to appoint himself as a director and terminate Paul as a director without the consent or authorisation of Paul; Glen taking steps to transfer Paul’s shares in Rossi Recycling without the consent or authorisation of Paul; Glen filing forms with ASIC to reflect resignation, appointment and transfer............. 155
Submissions....................................................................................................... 155
Consideration and disposition....................................................................... 156

Part H.1.2 – Refusing Paul access to the Business premises to permit Paul to take possession of commercial waste bins................................................................................... 162
Part H.1.3 – Failing to give Paul possession of commercial waste bins.................. 168
Part H.1.4 – Causing the 2016 Lease to be terminated............................................... 169
Submissions....................................................................................................... 169
Consideration and disposition....................................................................... 170

Part H.2 – Alleged breaches of the 2016 Lease by Rossi Recycling or Glen and related matters............................................................................................................................................ 174
Part H.2.1 – Whether Rossi Recycling or Glen breached the 2016 Lease by the non-payment of rent for October, November and December 2019....................................... 175
Part H.2.2 – Whether Rossi Recycling or Glen demanded or evinced an intention that Rossi Recycling would not remedy the rental payment breaches of the 2016 Lease unless Buckland Valley agreed to a monthly rent of $16,666.66 payable under that lease................................................................................................................................ 176
Part H.2.3 – Whether Rossi Recycling or Glen denied the existence of any ongoing monthly tenancy over the premises the subject of the 2016 Lease............................... 179
Part H.2.4 – Whether Rossi Recycling or Glen denied the existence of the 2016 Lease 179
Part H.2.5 – Whether Rossi Recycling or Glen refused or failed to recognise Buckland Valley’s contractual rights under the 2016 Lease or any existing lease...................... 181
Part H.2.6 – Whether Rossi Recycling or Glen committed trespass by re-taking possession of the premises on 9 December 2019 before being locked out again by Paul and Buckland Valley at about 5am the following morning.................................................... 182
Part H.2.7 – Whether Rossi Recycling or Glen caused the 2016 Lease to be terminated by any or all of the conduct referred to in Parts H.2.1 to H.2.6 above...................... 185

Part I – Whether Glen or Rossi Recycling repudiated the Settlement Deed by reason of the conduct referred to in Parts H1 or H2 above...................................................................................... 186

Part I.1 – Principles and observations – Repudiation.......................................................... 187
Part I.2 – Defendants’ repudiation position.......................................................................... 191
Part I.3 – Rossi Recycling and Glen’s repudiation position............................................... 194
Part I.4 – Consideration and disposition – Repudiation..................................................... 196
Part I.5 – Was any repudiation accepted by Paul and Buckland Valley and did Paul and Buckland Valley affirm the Settlement Deed?.............................................................................. 202
Part I.5.1 – Defendants’ submissions............................................................................ 203
Part I.5.2 – Glen and Rossi Recycling’s submissions.................................................. 203
Part I.5.3 – Consideration and disposition – Acceptance of repudiation and affirmation 205

Part I.6 – Was the taking of possession of Unit 27 by Buckland Valley done under the Settlement Deed, an affirmation of it, and/or a failure to give quiet possession under the 2016 Lease?............................................................................................................................................ 212

Part J: Is Rossi Recycling entitled to an order for specific performance of the Settlement Deed?..................................................................................................................................................... 214

Part J.1 – Glen and Rossi Recycling’s submissions.............................................................. 214
Part J.2 – Paul and Buckland Valley’s submissions............................................................. 217
Part J.3 – Specific performance............................................................................................... 218
Part J.4 – Consideration and disposition – Specific performance...................................... 220

Part K: Paul’s counterclaim in respect of the Alleged Rossi Debt...................................... 229

Part L: Summary of conclusions................................................................................................ 230

Part M: Other matters................................................................................................................... 236

Part N: Conclusion and proposed orders................................................................................. 237

Attachment 1................................................................................................................................... 239

Land Diagram........................................................................................................................... 239

Attachment 2................................................................................................................................... 246

Revised Issues List.................................................................................................................... 246

Attachment 3................................................................................................................................... 251

Rossi Recycling’s Proposed Lease Schedule......................................................................... 251

Attachment 4................................................................................................................................... 254

Schedule to the 2016 Lease...................................................................................................... 254

HIS HONOUR:

Part A: Introduction and summary

These reasons relate to the determination in part of acrimonious disputes that have arisen over a number of years between members of the Rossignoli family in connection with a recycling business, property and other assets of related companies and discretionary trusts. In broad terms, the disputes have been between Paul Rossignoli on the one hand, and his three adult children on the other, namely, Glen, Matthew, and Catherine[1] — and in the current context, between Glen and Paul in particular. Glen is the second defendant to counterclaim. Matthew and Catherine are not parties to this proceeding.
[1]As the parties did at the hearing and in submissions, for ease of understanding in these reasons I respectfully refer to the family members by their first names.

The family disputes have a long and involved history and have been the subject of two previous proceedings in this court and other proceedings. The two previous proceedings in this court (Settled Proceedings) were settled on the terms set out in a deed of settlement dated 6 September 2019 (Settlement Deed).

The claims and counterclaims in the current proceeding relate to the meaning, operation, and alleged breaches of the Settlement Deed. The plaintiff (Rossi Recycling or plaintiff) claims that the defendants have breached the Settlement Agreement and seeks orders for specific performance of the Settlement Deed, damages for its breach, and other relief.

The defendants resist these claims. The first defendant (Buckland Valley) alleges that the Settlement Deed was repudiated by the plaintiff, that the repudiation was accepted by at least early December 2019, and that the Settlement Deed is at an end. Buckland Valley seeks a declaration to this effect by its counterclaim. By his counterclaim the second defendant (Paul) also alleges that the Settlement Deed was repudiated and terminated. Paul claims damages from Rossi Recycling for an alleged breach regarding the provision of waste bins to him and a breach of clause 6 of the Settlement Agreement, which is alleged to have imposed a contractual obligation upon Rossi Recycling to re-pay to Paul a debt of $353,281 (Alleged Rossi Debt).

At the request of the parties, and because some damages issues cannot be determined prior to certain independent third party rental valuation steps occurring if specific performance of the Settlement Deed is ordered, the trial was split and the hearing the subject of these reasons did not address any damages or compensation issues.[2]
[2]See consent orders of Connock J made 16 June 2021 as amended by consent orders made on the first day of trial on 19 October 2021.

Central to the disputes, issues, and the terms of the Settlement Deed, are the recycling business known as Eastern Recycling (Business) owned by the plaintiff as trustee of the Rossignoli Property Trust (RP Trust), and the premises from which it operates in Ringwood, Victoria. That property is owned by Buckland Valley as trustee of two trusts, the Rossignoli Trust No. 3 (RT3 Trust) (as to 70%) and the Heatherdale Property Trust (HP Trust) (as to 30%). The Business employed about 22 staff at the time of the hearing, and its previous year’s turnover was said by Glen to have been about $5.6 million, with it being said that the Business was on track for a turnover of about $7 million to $8 million for the current year.

Paul started the Business,[3] and Glen has worked in the Business from a young age. In 2012 Glen was appointed by Paul as its General Manager. Paul and Glen no longer get on and have not done so for some years. Paul is, and was at all relevant times, the sole director and shareholder of Buckland Valley. At the time of entry into the Settlement Deed, Paul was also the sole director of, and held 6 of the 12 shares (50%) in, Rossi Recycling. At that time, Glen, Matthew and Catherine each held 2 shares in Rossi Recycling.[4]
[3]As well as other businesses.
[4]Clause 1 of the Settlement Deed recorded that Paul agreed to, among other things, resign forthwith as director of Rossi Recycling and transfer forthwith to Glen, or at his direction, Paul’s shares in Rossi Recycling.

The premises from which Rossi Recycling operates the Business is the subject of a five-year lease between Rossi Recycling and Buckland Valley, the term of which commenced on 1 October 2016 (2016 Lease).

The 2016 Lease utilised the standard form Law Institute of Victoria (LIV) (Commercial Property) lease document. It was common ground that this LIV standard form lease document is what is referred to in clause 2(e) of the Settlement Deed, which was apparent on the evidence in any event.

The premises the subject of the 2016 Lease (2016 Lease Premises) were described in the following terms:

First Floor office area factory 27, Unit 38 (weighbridge) and Unit 39 (storage area) 87-91 Heatherdale Road Ringwood and S3 Industrial Area 1 (with exeption [sic] of 800m in lots 13 and 14 on north side industrial 1 Area of the property[5]

[5]This description was part in typed text and part in handwriting, with the underlined parts above indicating the handwritten part. The underlining does not appear in the original.

It was common ground that the reference to areas 38 and 39 was intended and understood to be a reference to areas 48 and 49, and that the reference to lots 13 and 14 was intended and understood to be a reference to lots 14 and 15.[6] Although there had been some potential for confusion regarding the identification and layout of the premises as a result of some land subdivision over time, this was addressed in a helpful annotated land diagram document tendered by the defendants that was not relevantly controversial.[7] For ease of reference this document (Land Diagram) comprises Attachment 1 to these reasons.
[6]It was also common ground between the parties that the 2016 Lease was in place between the parties with effect from 1 October 2016, notwithstanding that it had not been signed.
[7]Noting that the reference in note 6.2 of the Land Diagram to ‘Lots 13 and 14’ is intended to be a reference to ‘Lots 14 and 15’.

The disputes the subject of the Settled Proceedings related in part to the Business, the premises from which it operated, and the 2016 Lease. In one of the Settled Proceedings (Trustee Removal Proceeding) Glen was seeking to have Rossi Recycling and Buckland Valley removed as trustees of the trusts earlier referred to. Allegations were made against Paul regarding his fitness to act, including an allegation that the rental set by Paul for Buckland Valley as lessor, and accepted by Paul for Rossi Recycling as lessee under the 2016 Lease, was materially excessive. In the second of the Settled Proceedings (Receiver Proceeding), Paul was seeking to have receivers appointed to Rossi Recycling on the basis of an allegation that the Business was not financially viable. It was during the trial of these proceedings in 2019 that a settlement agreement was reached and the relevant parties entered into the Settlement Deed.

The Settlement Deed is set out later in these reasons. In broad terms[8] the Settlement Deed provided for, among other things: Paul to step away from Rossi Recycling and the Business; Glen being transferred Paul’s shares in Rossi Recycling and becoming the appointer and guardian under the RP Trust; Buckland Valley agreeing to enter into a new five-year lease[9] with Rossi Recycling at a rent to be agreed or determined by an independent valuer (New Lease); certain related party loans being dealt with; the retention by Paul of some specified items of equipment and waste bins; the dismissal of each of the Settled Proceedings; and the parties releasing each other from further claims.
[8]And subject to the disputes and issues addressed in this proceeding that are dealt with in these reasons.
[9]With the four further options each of five years. As will be seen, in this proceeding the defendants contend that the agreement to lease was not intended to be immediately binding and, among other things, that the Settlement Deed was repudiated by Rossi Recycling in any event.

After the Settlement Deed was entered into further disputes arose between Glen and Paul regarding, among other things: its meaning and operation; what was required of each party; the appointment of an independent valuer to determine the rental under the New Lease; the amount of rental payable in the meantime; the equipment and waste bins to be retained by Paul; and some other matters. In early December 2019 this saw Paul locking Glen and Rossi Recycling out of the 2016 Lease Premises for alleged non-payment of rent and the serving of notices of re-entry; Glen and Rossi Recycling seeking to take back possession of the 2016 Lease Premises and conduct the Business; and Paul and Buckland Valley taking further steps locking Glen and Rossi Recycling out of the 2016 Lease Premises and seeking to terminate the 2016 Lease.

On 11 December 2019 this proceeding was commenced by Rossi Recycling seeking urgent relief. The relief sought included declarations that the notices of breach of the 2016 Lease dated 18 and 22 November 2019 were void and of no effect; specific performance of the Settlement Deed; an interlocutory injunction restraining the defendants from interfering with the plaintiff’s occupancy; and relief from forfeiture if the notices of breach were valid.

Relief from forfeiture orders were made by Macaulay J in December 2019, from which time Rossi Recycling has continued to operate the Business from the premises the subject of the 2016 Lease.[10]
[10]But not including the upstairs of Unit 27 after the six-month period referred to in clause 4 of the Settlement Deed. This is addressed in more detail later in these reasons.

Since that time the interlocutory steps in the proceeding have been drawn out and there have been many amendments to claims and counterclaims, as well as other interlocutory disputes and issues between the parties. Many issues for determination were raised and identified by the parties, ultimately leading to a further revised list of issues being in the form provided to the court during the trial on 28 October 2021 (Revised Issues List). This list is reproduced as Attachment 2 to these reasons. In these reasons some of the issues have been addressed in different order or under broader or more collective topic headings.

A summary of my determinations and conclusions is set out in Part L of these reasons. As will be seen, I have concluded that:

(a) Orders will be made requiring Buckland Valley and Paul to specifically perform their respective obligations under the Settlement Deed, including the obligations under clause 1, the Co-operation Terms, and the entry into the New Lease pursuant to clause 2 at the independently determined current market rental addressed in clause 2(b) of the Settlement Deed.

(b) Buckland Valley and Paul’s counterclaim for a declaration that the Settlement Deed has been repudiated by Glen and Rossi Recycling, and terminated by Buckland Valley and Paul, has failed and will be dismissed.

(c) Paul has failed in his counterclaim:

(i) against Glen and Rossi Recycling seeking damages for breach of the Settlement Deed in relation to the waste bins;[11]
[11]Noting also that in the end there was only an issue in relation to the Last Bin, which is addressed later in these reasons.

(ii) against Rossi Recycling for damages or payment of an amount of money (and interest) in respect of the Alleged Rossi Debt.

These counterclaims will be dismissed.

(d) The decree of specific performance and the precise form of orders will be further addressed with the parties, including:

(i) whether the position with the Last Bin, or payment of the second instalment under clause 6(b) of the Settlement Deed, should be addressed by way of conditions in connection with the orders granting specific performance;

(ii) directions and orders for the future conduct of the proceeding and the hearing and determination of the remaining issues in the proceeding regarding the plaintiff’s damages and compensation claims.

Part B: Background and some factual matters

Tractax Pty Ltd (ACN 056 188 562) was incorporated on 3 June 1992. On 3 June 1992, the RP Trust was created by deed, the trustee of which was Tractax Pty Ltd.

On 19 April 1993, Buckland Valley was incorporated. Paul is and was at all material times the sole director of Buckland Valley.

Paul also owned and controlled a demolition company, Able Demolition and Excavation Pty Ltd (Able Demolition), which is currently in liquidation.

On 20 April 1993, the RT3 Trust was created by deed.

On 1 June 1994, the Business was established, which was acquired by Tractax Pty Ltd on 14 March 1995.

On 11 June 1996, Tractax Pty Ltd was renamed Rossi Recycling.

Glen was appointed as General Manager of Rossi Recycling in July 2012 and took up the role of managing the Business. The appointment of Glen as General Manager was due to Paul suffering a mental health breakdown. Paul stated that he considered that his family members would be the best option available to run the Business.

Glen stated that during his working life he had only worked at Rossi Recycling and other companies owned by Paul, including Able Demolitions.

On 5 September 2001, the HP Trust was created by deed.

On 4 October 2001, Buckland Valley purchased two properties located at 87–91 Heatherdale Road, Ringwood and 22 Palmerston Road, West Ringwood, respectively. The two properties were each purchased by Buckland Valley — as to 70% as trustee for the RT3 Trust, and as to 30% as trustee for the HP Trust.

On 1 October 2016, Buckland Valley as lessor and Rossi Recycling as lessee entered into the 2016 Lease.[12] Paul said a lease was required because he could not agree with Glen on the running of the Business and Paul wanted to make sure that there was no doubt about the rent that had to be paid.
[12]As earlier noted, the 2016 Lease was not executed, but it was common ground between the parties and confirmed to the court that the 2016 Lease was and had been in place between them.

The rent for the 2016 Lease recorded in item 6 of the schedule to the 2016 Lease was $334,908[13] inclusive of GST per annum payable monthly in advance on the first day of each month. The term of the lease was for five years, starting on the first day of October 2016, with four five-year options to renew. Between 1 October 2016 and 1 September 2019, Rossi Recycling paid rent consistent with the terms of the 2016 Lease, which was not in issue between the parties.
[13]Being $27,909 per calendar month, which later increased to $29,304 per calendar month.

On 28 February 2018, Glen commenced the Trustee Proceeding in the Supreme Court of Victoria against Rossi Recycling, Buckland Valley and Paul. The Trustee Proceeding was commenced by Glen due to disagreements with Paul around the Business and what Glen considered was materially excessive rent being charged by Buckland Valley to Rossi Recycling under the 2016 Lease. The relief sought included:

(a) injunctions preventing Paul, Rossi Recycling and Buckland Valley from acting other than in the ordinary course of business and preventing Paul from exercising his power as guardian and appointor of the RP Trust, the HP Trust and the RT3 Trust; and

(b) replacement of Rossi Recycling and Buckland Valley as trustees of the RP Trust, the HP Trust and the RT3 Trust.

The allegations in the Trustee Proceeding included an allegation that the ‘fair market rental for the premises under the 2016 Lease was approximately $200,000 per annum’ and that Paul had ‘caused [Rossi Recycling] to pay significantly higher than market rental’.

On 29 November 2018, Paul commenced the Receiver Proceeding against Rossi Recycling seeking the appointment of a receiver to the assets and business of Rossi Recycling. In the lead up to the commencement of the Receiver Proceeding, Paul had stated that he had formed the view that the Business was not viable and that he wanted to close it down and sell the property from which it operated.

On 6 September 2019, and following a mediation held during the trial of the Settled Proceedings, Rossi Recycling, Glen, Paul and Buckland Valley executed the Settlement Deed.

On 13 September 2019, the defendants’ then solicitors, Slater and Gordon (Slaters) wrote to the plaintiff’s solicitors, Dunemann Sutherland (Dunemanns) proposing valuers to assess the rental amount. In part that letter stated:

… our client is content for your client to arrange for the drafting of the relevant documentation regarding the matters set out in clause 1 of the Deed …
We advise that our client as landlord will attend to drafting the lease of the property. …
Further to clause 2(b) of that Deed we are instructed to propose the following valuers:
1. Joe Perillo …
2. Roger Scrivener/John Forsyth …
Please advise whether your client is agreeable to the appointment of any of the above valuers.

On 18 September 2019, Dunemanns wrote to Slaters, enclosing for Paul’s signature forms for:

(a) Paul’s resignation as director and secretary of Rossi Recycling;

(b) Paul’s resignation as appointor and guardian of the RP Trust; and

(c) the nomination of Glen as appointor and guardian of the RP Trust.

On 19 September 2019, Slaters wrote to Dunemanns advising that Paul wished to attend the 2016 Lease Premises on 21 September 2019 to collect assets belonging to him as it was said he was entitled to do pursuant to the Settlement Deed. Dunemanns responded stating that upon the return of the documents provided to Slaters, which needed to be executed and returned by Paul, Glen would provide assistance in facilitating Paul’s wishes. Slaters responded stating that the documents would be executed, and informed Dunemanns that a tradesman had been organised to attend the premises on Saturday and requested a key to enable him to access the office.

On 20 September 2019, Dunemanns wrote to Slaters, informing them that they did not agree with Buckland Valley’s and Paul’s proposed valuers and proposed the appointment of an alternative valuer, Mr David Matler. No reasons for not agreeing to use the valuers named by Buckland Valley and Paul were given.

No response to the proposed alternative valuer was received from Paul or Buckland Valley, although further correspondence was exchanged, including that referred to below.

On 20 September 2019, Paul attended the premises but did not take any waste bins away with him. Glen and Paul provided slightly differing accounts of what was said, aspects of which are discussed later in these reasons when addressing the issues. To the extent that there were inconsistencies in the accounts of Glen and Paul, I generally prefer the evidence of Glen over that of Paul, including in relation to this issue. As I discuss further below, I found Glen to be a more credible and reliable witness. That said, and as will be seen, the issues regarding the waste bins narrowed considerably during the trial and in closing submissions. Ultimately the dispute related to one 27m² waste bin only (Last Bin),which at the time of trial had not been provided. Some of the waste bins were already in Paul’s possession and others had been placed by Glen on land controlled by Paul (defined later below as the Red Lot), which was ultimately not controversial. Paul said he already had four or five of the bins and that he collected a further four from the Red Lot.

Glen gave evidence, which I accept, that all of the waste bins in question were owned by Rossi Recycling. Although there had initially been an issue about ownership of the bins in connection with Able Demolition, this fell away. In any event, to the extent that Paul’s evidence about ownership of the waste bins was inconsistent with Glen’s evidence, I do not accept it. I also accept Glen’s evidence regarding some of Rossi Recycling’s waste bins having been lent to Able Demolitions at some point to assist with a large project.

Glen was also consistent in his evidence that Paul was entitled to ‘retain’ the 10 waste bins referred to in the Settlement Deed and his evidence that Paul already had some of the waste bins and that he (Glen) needed to work out what Paul already had so he could make the balance available. That was a reasonable and understandable position to take. I accept Glen’s evidence on this topic, although by the end of the trial there was little or no controversy on the point. As things transpired, events and Paul’s position overtook things so that as at the time of trial the Last Bin had not been requested by Paul. As will be seen, I accept Glen’s evidence that he intends to give the Last Bin to Paul when he asks for it, or at least make it available for collection.

After Paul attended the 2016 Lease Premises on 20 September 2019, further correspondence passed between Slaters and Dunemanns, which concluded in Dunemanns stating:

Please have your client provide a list of those items that he asserts are not the property of Rossi Recycling Pty Ltd and are located at the transfer station on the land coloured yellow on the plan annexed to the Deed of Release.
We believe the documents provided by our client and to be executed by your client are all that is required to transfer control of the trustee and trust as provided in the Deed of Release. Any further documentation is secondary.
Any application brought by your client will be strenuously defended and all recent correspondence will be produced to the Court to support our client’s assertion that your client has not honoured his obligations as provided for in the Deed of Release.

In September 2019, Glen filed forms with ASIC recording the following changes with effect from 13 September 2019:

(a) the resignation of Paul as a director and secretary of Rossi Recycling;

(b) the appointment of Glen as a director and secretary of Rossi Recycling; and

(c) the transfer of Paul’s shareholding in Rossi Recycling to Glen.[14]

[14]As later discussed, it appears that these forms were lodged on 25 and 30 September 2019, although it makes no difference to the result if they were assumed to have been lodged on 13 or 19 September 2019 as referred to in the chronology. See Part H.1.1 below.

Rossi Recycling did not pay rent pursuant to the 2016 Lease for the month of October 2019 on 1 October 2019. This is addressed in more detail later below when dealing with the issues regarding the date from which the New Lease was to commence.

On 10 October 2019, Paul again attended the premises but did not take any waste bins from the Red Lot or ask for any more waste bins.

Rossi Recycling did not pay rent pursuant to the 2016 Lease for the month of November 2019 on 1 November 2019.

On 18 November 2019, Slaters sent a letter to Dunemanns enclosing a notice of breach of lease. The notice alleged failure to pay rent on each of 1 October 2019 and 1 November 2019 pursuant to a lease dated 1 October 2019[15] over premises being factory 27, unit 38 (weighbridge), unit 39 (storage area) and S3 (excluding 800m²).
[15]Emphasis added.

On 21 November 2019, Dunemanns responded to Slaters’ letter, stating in part as follows:

We refer to your client's purported Notice of Breach of lease and advise that our client does not accept the validity of the same. …
Never having executed such a lease, our client is completely unaware of the provisions of any lease dated 1 October 2019 and we request that you provide a copy of the same.
We note that our letter of 20 September 2019 has received no response. As, apparently, your client does not accept the appointment of the valuer nominated by our client and our client does not accept the valuers nominated by your client ... we suggest that the parties agree to the nomination of a valuer by the president of the Law Institute of Victoria. ...
Our client has instructed us to repeat that a correct market rental for the premises is in the region of $200,000 per annum and accordingly has instructed us that it is prepared to pay rental to your client at the rate of $16,666.66 per month whilst an appropriate rental is determined by a valuer. Please advise if your client is prepared to accept this arrangement and whereupon payment for the past two months can be made.
Finally we request that you let us have draft lease documentation as provided for in the Deed of Settlement at your earliest convenience. In that regard we confirm having offered to prepare this documentation but your Ms Young advised the writer that she would prepare the same.

As a consequence of the typographical error in Slaters’ notice of breach of 18 November 2019, which mistakenly referred to a 1 October 2019 lease instead of the 1 October 2016 lease, on 22 November 2019, Slaters responded to Dunemanns’ letter, enclosing two further notices of breach. In part that letter read as follows:

Please find enclosed Notices.
In the event that it is found that a lease commencing 1 October 2016 is in existence the first Notice is relied on. In the event it is found that the lease is not in existence, we are of the view that your client is subject to a monthly tenancy and we rely on the second Notice.
In addition, we are concerned in relation to the solvency of your client. We would be grateful if you could provide a copy of your client's financial statements for the year end 30 June 2019 and a copy of the monthly trading reports for the period July to October 2019.

The first notice of breach sent on 22 November 2019 alleged a failure to pay rent on 1 October 2019 and 1 November 2019 in the sum of $29,304.45 (each month) pursuant to a lease dated 1 October 2016 over premises being factory 27, unit 38 (weighbridge), unit 39 (storage area) and S3 (excluding 800m²) — being the 2016 Lease. The second (alternative) notice of breach sent on 22 November 2019 alleged a failure to pay rent on 1 October 2019 and 1 November 2019 in the sum of $29,304.45 (each month) pursuant to a month-to-month tenancy with respect to the same premises.

On 25 November 2019, Slaters sent a letter to Dunemanns enclosing a resignation and nomination form executed by Paul. The form provided for the resignation of Paul as appointor and guardian of the RP Trust and for the nomination of Glen as appointor and guardian of the RP Trust.

Rossi Recycling did not pay rent on 1 December 2019 pursuant to the 2016 Lease for the month of December 2019.

Glen stated in his evidence, and I accept, that the legal advice he had received was that he was not obliged to pay an amount of rent for October, November and December 2019 unless it was independently and properly determined in accordance with the terms of the Settlement Deed. He said, and I accept, that he was not trying to get out of paying rent at all and that the money for rent was not spent or needed elsewhere and it stayed in the bank.

On 4 December 2019, Dunemanns wrote to Slaters, stating that:

Your client's assertion that somehow a monthly tenancy has arisen is refuted by our client. Equally our client denies the purported legitimacy of a lease dated 1 October 2016 as the same was not executed as at that date.
We note that by the Deed of Settlement ... an arrangement was made whereby a formal lease would be entered into at a rental to be assessed independently. We have made suggestions to your client concerning resolution of the current impasse between our respective clients relating to nomination of a rental assessor. Your client has not responded to these suggestions. Further your client has not provided a draft lease the terms of which would be relevant to any rental assessor.
Accordingly we are instructed to request that your client honour its obligations under the Deed of Settlement and advise if nothing further is forthcoming from your client then our client will be forced to return this matter to court.

Although the purported legitimacy of the lease was referred to in this letter, Glen stated in his evidence that he regarded the 2016 Lease as continuing.

On 8 December 2019, Paul attended the premises, attached two notices of re-entry, and changed the locks so as to exclude Rossi Recycling and Glen from the 2016 Lease Premises. The first notice of re-entry provided in part:

WHEREAS by a lease with a commencement date of 1 October 2016 (“the lease”) where Buckland Valley Pty Ltd (“the landlord”) let you Rossi Recycling Pty Ltd as tenant the premises situated at and known as Factory 27, 87-91 Heatherdale Rd Ringwood in the State of Victoria 3134 (“the premises”)
...
AND WHEREAS you are in breach of agreement to pay rent and such rent is in arrears for a period in excess of 14 days from the date on which the same is payable
...
AND NOW THEREFORE TAKE NOTICE that the landlord HEREBY ENTERS into and upon the premises to the intent that the lease and the term thereby created upon such re-entry absolutely cease and determine AND TAKE FURTHER NOTICE that the landlord requires you to quit and deliver up possession of the premises forthwith.

The second notice of re-entry provided in part:

WHEREAS you have been occupying premises (“the tenancy”) where Buckland Valley Pty Ltd (“the landlord”) let you Rossi Recycling Pty Ltd as tenant the premises situated at and known as Factory 27, 87-91 Heatherdale Rd Ringwood in the State of Victoria 3134 (“the premises”) on a month to month basis
...
AND WHEREAS you are in breach of agreement to pay rent and such rent is in arrears for a period in excess of 14 days from the date on which the same is payable
...
AND NOW THEREFORE TAKE NOTICE that the landlord HEREBY ENTERS into and upon the premises to the intent that the Right to Occupy and the term thereby created upon such re-entry absolutely cease and determine AND TAKE FURTHER NOTICE that the landlord requires you to quit and deliver up possession of the premises forthwith

On 9 December 2019, Glen attended the premises, ‘jemmied’ the locks and operated for the day.

On 10 December 2019, security guards engaged by Paul attended the premises at approximately 5am, and on the instructions of Paul took possession of the 2016 Lease Premises and the other parts of Unit 27 for Buckland Valley, changed the locks and excluded Rossi Recycling and Glen from the premises. A dispute arose and the police were called, although they did not stay involved because it was a civil matter. Glen and Rossi Recycling were prevented from accessing the 2016 Lease Premises.

On 11 December 2019, Rossi Recycling filed the writ in this proceeding seeking, among other things, specific performance of the Settlement Deed, relief from forfeiture if the notices of breach were valid, and injunctive relief against Buckland Valley and Paul.

A contested hearing before Macaulay J took place on 12 December 2019. The material relied upon by Buckland Valley and Paul included an affidavit of Glen sworn 10 December 2019 and an affidavit of Paul affirmed on 12 December 2019. The reasons of Macaulay J record that Rossi Recycling:

openly offered in court to pay the arrears of rent at $29,304.45 per month for October, November and December and undertook to pay rent in the same monthly sum until the determination by an independent valuer of any different market rental, under a new lease in accordance with the deed of settlement.[16]

[16][2019] VSC 825, [16].

On 12 December 2019, interim orders for possession were made by Macaulay J until 11am on 13 December 2019, pending payment of $87,913.35 as rent claimed by Buckland Valley pursuant to the 2016 Lease. Glen gave evidence, which I accept, that there was sufficient money in the Business account at that time, which he estimated to be about $300,000.

When concluding that it was appropriate to grant the relief sought, Macaulay J also observed that he did:

not regard it as equitable that [Paul] should be able to take advantage of Rossi’s failure to pay three month’s rent, which Rossi now undertakes to pay, as the grounds for being able to secure a radically different outcome to the one he agreed to three months ago, to the substantial detriment to Rossi.[17]

[17]Ibid, [27].

The rental arrears under the 2016 Lease for the months of October, November and December 2019 was paid by Rossi Recycling to Buckland Valley on 12 December 2019.

On 13 December 2019 orders were made by Macaulay J in the following terms (excluding formal matters):[18]
[18]The reference in paragraph 4 of the order to January 2019 was a slip and intended to be a reference to January 2020, which slip was corrected by a further order made 13 December 2019.
ORDER
…
OTHER MATTERS: A. This order is signed by the Judge pursuant to rule 60.02(1)(b) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (Rules).
B.On 12 December 2019, on the return of the plaintiffs summons dated 11 December, INTERIM orders were made ordering the defendants to give possession of the premises until 11 am on 13 December 2019 pending payment to the first defendant of $87,913.35 as rent for the premises. That order was made on the basis that if that payment was made, the same orders for possession would be made on an INTERLOCUTORY basis pending the hearing and determination of the proceeding.
C.On 12 December 2019, the plaintiff paid $87,913.35 to the defendants, accordingly, the orders for possession are made on an INTERLOCUTORY basis as follows:
THE COURT ORDERS THAT:
1.The defendants give possession to the plaintiff of the properties referred to in the Deed of Settlement dated 6 September 2019 identified as:
a.The top floor of Unit 27, 89 Palmerston Road Ringwood;
b.That part of the plan attached to the Deed of Settlement dated 6 September 2019 marked yellow.
2.The defendants are restrained until further order, but subject to the terms of any lease that may subsequently be entered between the plaintiff and the first defendant, from interfering with the plaintiff’s possession and quiet enjoyment of:
a.The top floor of Unit 27, 89 Palmerston Road Ringwood;
b.That part of the plan attached to the Deed of Settlement marked yellow.
AND THE COURT FURTHER DIRECTS THAT;
3.Notwithstanding non-compliance with r 5.04(3) of the Rules, the indorsement of claim on the writ shall stand as the plaintiff’s statement of claim and compliance with r 14.02 (that the plaintiff serve a statement of claim within 30 days of the defendants’ appearance) is dispensed with.
4.By 4:00 pm on 31 January 2019 the defendants file and serve their Defence.
5.The proceeding be listed for directions before a Judge in the Commercial Court for directions.
6.Costs of the plaintiff’s summons are reserved.

In early 2020, Paul took some initial steps to list for sale part of the 2016 Lease Premises, being what was known as (variously) the upstairs of Unit 27, factory 27, area 27, or lot 27 (Unit 27).

On 5 February 2020, Dunemanns wrote to Slaters, stating:

We are instructed that [Paul] attended our client’s business premises yesterday, unannounced and uninvited with an estate agent, Rowan Thompson, demanding access to our client's office so as to allow inspection by potential purchasers. Our client, rightfully, refused admission.
The estate agent later confirmed your client has listed Lot 27 for sale.
We refer to paragraph 5 of the Deed of Settlement dated 6 September 2019 and wherein your client granted our client a 12 month option to purchase Lot 27. Your client's present actions referred to above tend to suggest that your client does not consider himself bound by the Deed of Settlement. Please immediately confirm that your client does not intend to sell the property and will honour his said contractual obligations. In the absence of receiving such advice our client will be forced to bring yet further proceedings against your client seeking an injunction to restrain any such sale.
We refer to paragraph 2 of the Deed of Settlement dated 6 September 2019 and confirm that no agreement has been reached concerning the appointment of an independent property valuer to determine the initial rent and that we have received no response to our client's suggested valuers. In these circumstances our client will not unilaterally seek such appointment.

On 14 February 2020, Slaters responded to Dunemanns’ letter of 5 February 2020 stating that Unit 27 had been taken off the market:

We refer to your letter of 5 February 2020 and advise that the property at Unit 27, 87-91 Heatherdale Road, Ringwood and referred to in your letter as Lot 27 has been taken off the market.

On 15 March 2020, a notice relating to the RP Trust was executed by Glen stating:

Take notice that Rossi Recycling in its capacity as Trustee of the RPT intends after the expiry of 14 days from the date hereof to exclude [Paul] as a General Beneficiary of the RPT.

The notice was executed by Glen, who it was stated was authorised to sign on behalf of Rossi Recycling as the sole director.

On 18 March 2020, Buckland Valley requested Rossi Recycling to provide copies of: financial statements of the RP Trust for the six month period ending 31 December 2019; monthly trading statements for January to February 2020; and the cash balance of the RP Trust as at 13 March 2020.

On 19 March 2020, Slaters wrote to Dunemanns. Through this letter, Buckland Valley notified Rossi Recycling of its intent to take possession of ‘area 27’ on 23 March 2020, stating in part:

We note that the existence of a Deed of Settlement dated 6 September 2019 is currently in dispute. Regardless of whether those terms are applicable, the term in paragraph 4 granting a licence over “area 27” has now expired.
As a result, our client intends to take possession on 23 March 2020.
Please ensure your client has vacated the premises and clear access is provided so that possession can occur by that date.

On 20 March 2020, Rossi Recycling provided some information via correspondence from Dunemanns to Slaters, namely: Rossi Recycling bank balances between September 2019 and 13 March 2020; and Rossi Recycling profit and loss statement for the period July 2019 to December 2019.

On 23 March 2020, the six-month period referred to in clause 4 of the Settlement Deed came to an end and Rossi Recycling gave up possession of those parts of Unit 27 referred to in that clause to Buckland Valley.

On 1 April 2020, by declaration of exclusion dated 1 April 2020 and executed by Paul for Rossi Recycling as trustee of the RP Trust, Paul was excluded from the class of general beneficiaries of the RP Trust.

During September 2020, Buckland Valley requested Rossi Recycling to provide copies of: financial statements of the RP Trust for the period 1 January 2020 to 1 June 2020; monthly trading statements for March to August 2020; and the cash balance of the RP Trust as at 30 August 2020.

Following a change in the structure of Slaters’ legal practice, by September 2020 Paul and Buckland Valley were (and continued to be) represented by Aptum Legal.

In connection with the claims in this proceeding, a court-appointed expert was appointed to provide an opinion regarding market rental under the 2016 Lease. The parties considered that this may assist in resolving the disputes. The court-appointed expert was Mr Brindley. It was common ground that this was not an appointment under the Settlement Deed, which Paul alleged was at an end in any event. On 20 February 2021, Mr Brindley provided a report and determined that, in his opinion, the market rental for the premises under the Proposed Lease was $216,500 per annum (plus GST) which was $19,800 per calendar month with two months’ rent free[19] (Brindley Report). It was common ground between the parties that in this part of the hearing, the parties were not relying upon the Brindley Report for the purposes of establishing the market rental or in relation to damages.
[19]The basis of the valuation was addressed by reference to various different assumptions and other matters referred to in the terms of the orders made by Connock J on 14 December 2020.

On 26 March 2021, Aptum Legal issued a demand to Rossi Recycling for payment of the Alleged Rossi Debt of $353,281. This amount was not paid by Rossi Recycling.

Dunemanns responded on 29 March 2021, noting that the assertion that the Settlement Deed had been repudiated ‘is hotly contested in this proceeding before the Supreme Court.’ Reference was also made to Buckland Valley acting consistently with the Settlement Deed by taking possession of Unit 27 at the expiry of the six-month period referred to in clause 4 of the Settlement Deed. Dunemanns stated that if any steps were taken to enforce the Alleged Rossi Debt, urgent injunctive relief would be sought together with indemnity costs orders.

On 17 June 2021, Dunemanns wrote to Aptum Legal seeking confirmation as to whether, pending the hearing of this proceeding, they required payment of the $114,427 due pursuant to clause 6(a) of the Settlement Deed, which addressed the Alleged Rossi Debt. That letter read as follows:

We refer to clause 6 of the deed of settlement executed on 6 September 2019 pursuant to which Rossi Recycling was obliged to pay to Paul Rossignoli the sum of $114,427 by 1 July 2021, with a further payment of $114,427 by 1 July 2022.
Rossi Recycling is ready, willing and able to make such payments, and in particular for present purposes, is ready willing and able to pay the sum of $114,427 to Paul Rossignoli by 1 July 2021 pursuant to the terms of the Deed of Settlement.
Please confirm whether your client accepts that the deed of settlement continues to bind the parties so that the amount of $114,427 is payable by 1 July 2021, in which case the payment will be made by the due date. For the sake of clarity, our client’s position is that the deed of settlement has not been repudiated and continues to bind the parties.
Alternatively, please confirm by return correspondence if your client continues to maintain that the deed of settlement has been repudiated so that the sum of $114,427 is not payable by 1 July 2021. If so, our client will not make any such payment. But failure to make such payment should not be taken to be an acceptance by our client that deed of settlement has been repudiated. As stated above, our client’s position is that it has not been repudiated.

On 22 June 2021, Aptum Legal responded stating, in part:

It is a matter for your client whether it pays Mr Paul Rossignoli the amount of $114,427 on 1 July 2021. If it does not, we will be submitting at trial that that conduct is consistent with the repudiation of the deed of settlement by your client.
You should be aware that if your client decides to pay the above at the time your client itself contends it is obliged to do so, Mr Rossignoli will treat that amount in reduction of the damages payable by your client for breach of clause 6 of the deed of settlement and will indicate to the Court at trial that it accepts that reduction in damages.

On 1 July 2021, Rossi Recycling paid $114,427 to Paul, which was accepted by Paul and stated by Aptum Legal to be ‘received as a reduction in damages recoverable by the second plaintiff by counterclaim from the first defendant by counterclaim, and the claim for such damages will be reduced accordingly at trial’. Dunemanns had previously stated on 28 June 2021, as the ‘final say’ in the matter, that the payment was made by Rossi Recycling in satisfaction of its client’s obligations under the Settlement Deed.

On 1 August 2021, Rossi Recycling did not renew the 2016 Lease, and Aptum Legal wrote to Rossi Recycling stating that ‘from 30 September 2021 Buckland Valley will remain in possession of the Premises on a monthly overholding basis pursuant to clause 10 of the Lease’ and that the monthly rent would remain at $29,304.

Part C: The Settlement Deed

The Settlement Deed is relatively short, although that has not deterred the parties from enthusiastically arriving at points of difference regarding its meaning and operation. It is convenient and helpful to set out its terms in full.[20]
[20]Excluding the plan attached to it referred to in clause 2.
DEED OF SETTLEMENT
This deed of settlement is dated 6 September 2019
BETWEEN:
GLEN ROSSIGNOLI
and
PAUL ROSSIGNOLI
and
ROSSI RECYCLING PTY LTD
(as trustee of the Rossignoli Property Trust)
and
BUCKLAND VALLEY PTY LTD
(as trustee of the Rossignoli Trust No3 and the Heatherdale Property Trust)
RECITALS
A.The parties to this deed are parties to proceeding S Cl 2018 00737 and S Cl 2018 02512 in the Supreme Court of Victoria (the Proceedings).
B.The parties wish to settle all issues between them in the Proceedings on the terms set out herein.
C.In this deed the following abbreviations am used:
‘GR’ means Glen Rossignoli
‘PR’ means Paul Rossignoli
‘RR’ means Rossi Recycling Pty Ltd
‘BV’ means Buckland Valley Pty Ltd.
‘RPT’ means the Rossignoli Property Trust
‘RT3’ means Rossignoli Trust No3
‘HPT’ means Heatherdale Property Trust
NOW BY THE TERMS OF THIS DEED IT IS AGREED AS FOLLOWS:
1.PR agrees to:
(a)Resign forthwith as director and secretary of RR;
(b)Transfer forthwith to GR, or at his direction, his total shareholding in RR;
(c)Irrevocably and permanently resign his position as appointor and guardian of the RPT and appoint GR in his place.
2.Subject to clause 3, BV, and PR as its controller, agree that BV will enter into a commercial lease for the property shown in yellow on the attached plan, on the following terms:
(a)The initial term shall be for a period of 5 years, to commence with effect from the execution of the lease, with 4 consecutive options for 5 year extensions of that term thereafter, such renewals to be on the same terms subject to rental and renewal provision herein;
(b)The initial rent payable shall be that rental which is determined by an independent property valuer who is a certified property valuer with the Australian Property Institute to be appointed by the parties by agreement and if no agreement to be appointed by the Australian Property Institute as being a current market rental for the property and to whom each of PR and GR may make such representations as they see fit and both GR and PR agree to abide the outcome of the valuer’s determination without complaint or appeal;
(c)The costs of the independent valuer shall be borne equally by the parties;
(d)During each term there shall be rent rises of 3% per annum, and at the commencement of each further term there shall be a market rental review;
(e)The lease terms shall be on a standard LIV commercial lease, subject to the Retail Leases Act and to terms reasonably permitted by that Act;
(f)The area of the leasehold shall be the land coloured yellow as set out in the attached map at Annexure A, to be recorded within the terms of the lease;
(g)The lessee shall be entitled to modify the premises as it thinks fit with the consent of the landlord, such consent not to be unreasonably withheld.
3.The existing lease over the property shall terminate immediately upon RR and BV entering into the lease referred to in paragraph 2.
4.For a period of 6 months from the date of this deed, RR shall be entitled to a licence to occupy and use the top floor of the property referred to within the area referenced by “27” on the attached map, at no cost, together with the right to use the toilets, safe and telephone system on the ground floor, which licence shall be irrevocable for that period.
5.For a period of 12 months from the date of these terms, RR shall have an option to purchase the property referenced by “27” on the attached map, at market value.
6.The parties agree that in relation to the loan recorded in the books of account of RR, that RR is indebted to PR in the amount of $353,281 as at 30 June 2018, and which together with any further loan amounts shall be wholly discharged upon the following payments by RR to PR:
(a)$114,427 payable by 1 July 2021;
(b)$114,427 payable by·1 July 2022.
And the parties further agree that the partial payment required by this clause shall discharge the said loan to the extent of such payment.
7.Subject to paragraph 10, the parties agree that the proceeds of sale from the property known as S5 at Palmerston Road Ringwood, may be distributed to PR as a beneficiary of the RT3 and HPT or otherwise dealt with as BV considers fit.
8.BV and RR agree that the amount of $579,757 is owed by RR to BV as at 30 June 2018 and BV hereby agrees to release RR from that debt together with any other indebtedness which has accrued since 30 June 2018.
9.GR acknowledges and agrees:
(a)That the distribution in paragraph 7 is an authorised and valid distribution;
(b)That BV (as trustee of the trusts) is indebted to PR (and/or his associated entities) in the amount of approximately $3.956 million, which indebtedness is payable at call;
(c)That, subject to these terms, BV as the trustee of the above trusts has an unfettered discretion to make distributions (corpus or income or otherwise) in accordance with the trust deeds of those trusts, including PR and associated entities, including a distribution of $10,000 per month to PR and/or his nominee, without prejudice to any other distributions to which the trustee; BV, may make to PR and/or his associated entities, or other benefits, at any time and from time to time.
10.GR hereby releases and discharges PR and/or his associated entities from any claims, actions, demands, or suits in respect of any action or decisions of BV and/or PR and/or his associated entities, or associated, in respect of, any of the matters referred to in the preceding paragraph (a)-(c).
11.PR shall indemnify RR against all outstanding legal costs and disbursements as at 5pm 30 August 2019, in relation to the Proceedings incurred but not yet paid by RR including any expert and legal costs.
12.PR shall be entitled to retain the following plant:
(a)The deck screen;
(b)Wood splitter;
(c)Bale spikes;
(d)Laser level;
(e)10 bins, being 2 each of 27m, 18m, 10m, 8m and 6m.
13.The parties release and discharge each other from all claims and demands of whatever kind raised in, or arising out of the subject matter of, the Proceedings.
14.Upon the execution of these terms, the parties agree to the dismissal of the proceedings with no orders as to costs and shall sign consent orders to that effect.
15.The deed may be executed in counterparts.
16.The parties agree that this deed is confidential to the parties and cannot be disclosed to any third party other than in order to meet taxation or other legal requirements or otherwise by operation of law.
17.This deed comes into effect at 5pm on 13 September 2019
Executed as a Deed this [6^th] day of September 2019.
…………………………………………
Glen Rossignoli
…………………………………………
Paul Rossignoli
…………………………………………
Rossi Recycling Pty Ltd (as trustee for the Rossignoli Property Trust) by Paul Rossignoli as director.
…………………………………………
Buckland Valley Pty Ltd (as trustee for the Rossignoli Trust No3 and Heatherdale Property Trust) by Paul Rossignoli as director.
Part D: Witnesses

The only witnesses to give evidence were Glen and Paul. They each gave oral evidence in chief[21] and were cross-examined. Due to restrictions associated with the COVID-19 pandemic their evidence was given remotely by audio visual link, which was clear and allowed me to observe each of them closely when they gave their evidence.
[21]There were no witness statements, but witness outlines had been filed. Aspects of Paul’s affidavit affirmed on 12 December 2019 and filed when resisting the application before Macaulay J in December 2019 were also relied upon.

Glen had worked for his father from a young age and ever since he left school. Glen presented as a straightforward, open, honest and credible witness doing his best to answer questions asked of him, even when at times the question was not always clear to him. His concern was evident and genuine. He was not defensive in cross-examination and did not present as a witness who was seeking to embellish his evidence to suit his position, or as a witness wanting to make speeches. To the extent it was submitted otherwise, I do not accept those submissions. His responses were generally fluent and responsive. He also made concessions or statements that he might have perceived not to suit his position when addressing some of the questions asked.

These features of Glen’s approach and credibility were apparent through various aspects of his evidence, including, for example, when he addressed the basis of the suggested $200,000 per annum rental pending the obtaining of a market value. He said, and I accept, he was trying to put a number in place until the issue was resolved. Another example was when he naturally volunteered that he had gained access to the premises when first locked out and that he had cut the locks and jemmied open the doors. A further example was his acknowledgement regarding the time it may have taken to get a valuation. It was also apparent from what he said, and I accept, that he was seeking and acting upon legal advice relating to the events and circumstances as they unfolded.

It was plain that he considers the relationship breakdown with his father and the ongoing commercial and other disputes to be unfortunate and stressful, financially and otherwise. Given the circumstances as reflected by the history of the proceeding and the evidence, this was unsurprising.

The above observations do not overlook the matters raised in cross-examination, or the occasional added comment of Glen regarding his perception of his father, Paul, and Paul’s approach and attitude. Given the history of the relationship and disputes over many years, this was understandable and did not detract in any material way from his credibility.

The result is that Glen generally presented as a genuine, credible, straightforward and honest witness. To the extent that Paul and Buckland Valley submitted otherwise, I do not accept those submissions. Having regard to some concerns I express below regarding Paul’s evidence, where there was a contest upon issues of fact and recollections of events with which they were each involved, I generally prefer the evidence of Glen to that of Paul, subject of course to the impact of any other corroborating evidence.

At the time Paul gave evidence he was of advancing years. His evidence regarding his personal history revealed him to have been a hardworking person who, through that hard work, had established successful businesses, including fruit stands at South Melbourne Market, a tree removal business, a demolition business with Able Demolitions, and the recycling business with Rossi Recycling. Paul said, and I accept, that his highest level of education was ‘grade 7’, which he commenced but did not complete. He said he could not read at all until the age of 32, and described his current level of literacy as being able to read slowly. It was apparent that Paul has been a street smart, hardworking businessperson.

With respect to emails, he said that he writes out what he wants to say and his partner, Jane Fulton, types them. Although the language and terms of at least one email, viewed in the context of Paul’s evidence regarding his level of literacy, allows for the inference that, at times, Paul’s partner is likely to have had greater substantive input on some of the communications than Paul’s evidence suggested, it matters not for present purposes.[22] That said, I did regard Paul’s evidence on this topic as being at least a little self-serving and defensive.
[22]I refer to Ms Fulton’s email of 17 February 2020 by way of example.

Paul presented as a strong-willed and proud man who in the past, and currently, considers that he knows what is best so far as his children and the Business is concerned. His own evidence and Glen’s evidence suggested that he has firm and fixed views, and is not particularly open minded so far as Glen is concerned — or, at times, with others who do not agree with him. His evidence and my observation of Paul saw him appear as a strongminded person with very strong self-belief who likes things to go the way he wants them to.

It is possible that these characteristics are what led to Paul presenting at times as someone who was responding to some questions and issues with an eye to what he perceived to be of assistance to his position, rather than always openly and responsively addressing that which was asked of him — which also occurred in evidence in chief. He also was not slow to volunteer matters even if what was being said was not responsive. An example was his added (non-responsive) comment during evidence in chief that he had ‘reluctantly’ collected waste bins from the Red Lot because they were not in good condition.

One concerning example was Paul’s evidence in his affidavit affirmed 12 December 2019 in the hearing before Macaulay J regarding a new lease having been entered into as at 12 December 2019 with a security firm called ‘Security Guards Melbourne’, which was relied upon by Paul to seek to resist the application for relief from forfeiture heard by Macaulay J. In cross-examination in this trial it became apparent that there were real issues regarding the accuracy or truth of this evidence, which was underscored by Paul’s statements on the topic in cross-examination. To the extent that Paul equated the grant of a lease to the security firm (as referred to in his 12 December 2019 affidavit relied upon before Macaulay J) with asking ‘them to stay there and guard the property until things are resolved’, I do not accept that evidence as a credible explanation, which in my view was self-serving and not believable. I also accept that, having regard to Paul’s cross-examination on the topic, what was said in his affidavit of 12 December 2019 regarding Buckland Valley having now granted a lease to Security Guards Melbourne cannot be accepted. Paul’s evidence and approach to this topic during cross-examination materially undermined his credibility and underscored my impression of his willingness to say at times what he considered to be helpful to his case, whether accurate or not.

The end point is that on contested factual issues with Glen, and in the absence of meaningful corroborating evidence, it is in my view necessary to approach Paul’s evidence with caution. As I have said, I generally prefer the evidence of Glen where there is a contest with the evidence of Paul.

I add that Paul also appeared to have little or limited appreciation of the role he played as a director of the trustees of the relevant trusts, it being apparent that he considered the assets and property to have been more his, than assets of the trusts.

That said, and as the parties acknowledged, the majority of factual matters were not in dispute, which was reflected in part in the agreed chronology, the documentary evidence, and various aspects of the parties’ written submissions.

Part E: Terms and operation of the Settlement Deed

A number of issues were raised regarding the terms, construction, and operation of the Settlement Deed that first need to be addressed before turning to allegations regarding alleged breaches of the Settlement Deed and related matters.

In this Part, I address the following matters regarding the operation of the Settlement Deed:

(a) The defendants’ contentions regarding the Settlement Deed and the claimed engagement of the Masters v Cameron principles.

(b) When the Settlement Deed came into effect.

(c) The object and purpose of the Settlement Deed.

(d) Whether there was an implied term of the Settlement Deed requiring each of the parties to co-operate so as to allow the other parties to have the benefit of the agreement embodied in the Settlement Deed.

(e) Whether, upon the proper construction of the Settlement Deed, it provided for the terms (ie the words) of clause 2(b) of the Settlement Deed to be set out as terms of the New Lease, or provided for the rental amount to be independently determined first, with that amount then to be inserted into the New Lease.

(f) Whether, upon the proper construction of the Settlement Deed, it provided for the New lease to be entered into at the new rental from 1 October 2019 or alternatively, such reasonable time as may be determined.

(g) What premises were to be the subject of the New Lease.

(h) The proper construction of clause 2(e) of the Settlement Deed, whether it is uncertain, and whether it is severable if it is.

(i) The proper construction of clause 4 of the Settlement Deed, including the reference in it to the entitlement to a licence of the top floor of Unit 27 being ‘at no cost’.

(j) When the New Lease was to commence and the 2016 Lease was to end.

(k) Whether Rossi Recycling was obliged to pay rent under the 2016 Lease, and if so, in what amount for the months of October, November and December 2019.

(l) What, upon the proper construction of the Settlement Deed, the terms of the New Lease were to be.

(m) Whether, upon the proper construction of the Settlement Deed, the terms of Item 22 of the schedule to the 2016 Lease (Item 22) are to be included in the New Lease.

Part E.1 – Defendants’ contentions regarding the Settlement Deed and the claimed engagement of Masters v Cameron principles
Part E.1.1 – Masters v Cameron – Defendants’ position

The defendants submitted that the Settlement Deed did not grant a tenancy and submitted that the objective intention of the parties under clauses 2 and 3 of the Settlement Deed was to reflect an intention to settle on what would be the terms of the new lease if one was to be made, rather than to grant a new lease by the Settlement Deed. It was submitted that the parties should not be bound to any new lease unless and until the parties have executed a formal lease.

It was submitted that clauses 2 and 3 of the Settlement Deed recorded an intention to settle on what were to be terms of a new lease, if it should be made, with the parties not being bound to any such new lease unless the parties executed a formal contract. This, so it was said, was a ‘classic third category of Masters v Cameron, namely that the new lease wouldn’t come into effect unless and until there was a[n] execution of the lease where the terms and conditions have been agreed’.

It was emphasised that it was one thing for two parties to settle upon what would be the terms of an agreement if it should be made, and quite another thing to make the agreement. The defendants submitted that clauses 2 and 3 of the Settlement Deed did not create a binding lease on Buckland Valley but created a framework for agreement only when the parties agreed to and executed a formal contract, consistent with the third category in Masters v Cameron.

In support of this position in their written and oral submissions, the defendants relied upon what were said to be seven matters. In substance it was submitted as follows:

First, whilst it was well recognised where the parties intended to make an immediately binding agreement and believed they had done so, the courts will strive to uphold the agreement despite the omission of terms or a lack of clarity. That is not the position where the question before the court is whether or not the parties intended to make a binding contract. It was said that this enquiry ought not to be approached with any predisposition in favour of upholding anything, and that the question was whether there was anything to uphold.

Second, the Settlement Deed was to be construed carefully. Clauses 2 and 3 were not intended to have, and did not have, any binding effect of their own. It was submitted that clause 2 of the Settlement Deed does not of itself grant a tenancy until a formal lease is entered into. It was further submitted that clause 2 was in effect a ‘subject to contract’ provision. In this context, reference was also made to clause 2(a) providing that the new lease was to commence with effect from the time of execution of the New Lease.

Third, it was submitted that it was clear that the parties only got so far in the course of this settlement because if they had got all the way then all of the new lease terms would have been specified, or there would have been a mechanism or criteria (such as referral to arbitration or reasonableness) that could provide certainty as to the terms and a provision for formalising the same. The defendants contended that the Settlement Deed specifically contemplated that the agreement for a new lease had not been made and that, upon its proper construction, there was only an ‘expectation’ of a new lease.

Fourth, the terms of clause 2(e) were relied upon. It was submitted that the other parts of clause 2 dealt with major matters, but clause 2(e) expressly contemplated that other provisions would be agreed upon and operate together as one contract once completed, with the 2016 Lease continuing in the meantime. The defendants contended that clauses 2 and 3 provided the expectation of a seamless transition from the existing lease to a new lease if a new lease could be agreed but, if it could not be agreed, the existing lease would continue according to its terms subject to the variation of premises as referred to in clause 4.

In this context, reference was made to the new lease being ‘on’ a standard LIV lease rather than on terms being those ‘in’ such a lease, and to the further terms to be negotiated under clause 2(e) that were reasonably permitted by the Retail Leases Act 2003 (Vic) (RLAct) — as opposed to reasonable terms. Reference was made to the Settlement Deed not dealing with or prescribing any of the inclusions required which might be inserted into the schedule to the standard LIV lease document, including those regarding, for example: guarantors; outgoings; public risk insurance; the interest rate on money due; the security deposit; the mediation procedure; and whether there would be any additional terms. Reference was also made to Item 22 of the schedule, which is discussed later below. In addition, the defendants referred to the terms included in the court order addressing the court-appointed expert valuation process and Rossi Recycling not wanting such provisions or a guarantee to be part of the new lease.

The above matters were said to reveal that the terms to be negotiated were not mechanical but had real commercial substance and were to be agreed in order to make a standard LIV lease complete.

It was submitted that clause 2(e) of the Settlement Deed provided the framework for the negotiation of commercially significant terms to go into a new lease but did not commit either the landlord or the tenant to a new lease in the absence of all terms being negotiated and agreed.

Fifth, it was submitted that it could not be reasonably concluded that if the parties to the Settlement Deed did not agree on terms of the kind referred to above that they nevertheless intended under the Settlement Deed that Rossi Recycling should have a new lease and be confined only to the terms referred to in clauses 2 (a)–(d) and (f)–(h) of the Settlement Deed.

Sixth, it was submitted that the conduct of the parties after the entry of the Settlement Deed could inform the question of whether the parties intended that there would be a new tenancy agreement between Rossi Recycling and Buckland Valley upon the Settlement Deed coming into effect. The defendants contended that Rossi Recycling’s conduct after the Settlement Deed was executed was consistent with the parties not intending that the Settlement Deed would create a new binding lease unless and until the parties had agreed and executed a new lease. In this context, reference was made to Rossi Recycling’s solicitors’ letter of 21 November 2019 requesting draft lease documentation and Glen’s evidence during cross-examination on that topic regarding the prospect of negotiations.

Seventh, it was contended that the court should also take into account the nature and magnitude of the transaction, which was said to be significant for both parties. Without the further kinds of terms referred to above by the defendants it was contended that the new lease would be missing terms usually found in such a lease thereby creating significant elements of commercial uncertainty and incompleteness for both parties, which cannot be ignored when assessing the intention of the parties. The defendants contended that it was inherently unlikely that the parties would have bound themselves to a commercially significant new lease at the time of executing the Settlement Deed.

It was submitted that clause 2 of the Settlement Deed alone could not sensibly govern a more than a 20-year commercial relationship and it was missing terms of the kind earlier referred to.

The defendants further submitted that the parties to the Settlement Deed have demonstrated that they cannot agree on the terms of any proposed new lease to be made, that a formal new lease cannot be executed, and therefore specific performance cannot lie.

It is also to be noted in this Masters v Cameron context that during the exchanges with senior counsel for the defendants during closing submissions, it was confirmed by senior counsel that there was no question that the Settlement Deed was intended to be immediately binding and that clause 2 was intended to be binding. However, it was put that the more pertinent question was whether, embedded in clauses 2 and 3, there was an intention to be bound to a lease or an intention to be bound to a lease if one could be made.

In the alternative to their Masters v Cameron submissions, the defendants submitted that clause 2 of the Settlement Deed was unenforceable because clause 2(e) of the Settlement Deed rendered the proposed lease indeterminant and, further, that the clause cannot be excised and the indeterminacy cannot be cured. The defendants submitted that although clause 2 prescribed essential terms, these were necessary but not sufficient. As a result, the further terms contemplated by clause 2 were indeterminant, and any agreement to enter into a new lease failed for want of the complete agreement as to terms. That is, it was insufficiently certain, or void for uncertainty.

In this context, it was submitted that clause 2(e) could not be severed because, even if it was, the tenancy remained incomplete in material commercial respects and the lease envisaged by the remainder of clause 2 would not be what the parties had intended by the Settlement Deed.

It was further submitted that terms of the kind referred to by the defendants could never be the subject of implied terms or be dealt with by reference to considerations of reasonableness, and that the court could not fill the gaps by such techniques. Reference was made to clause 2 not providing the criteria upon which the court could determine the kinds of terms that should or should not be included in the new lease, noting there was no other mechanism, such as the appointment of an arbitrator to determine further terms, to resolve any uncertainty as to terms.

The end point remains that I am satisfied that Glen and Rossi Recycling have established that they are ready, willing and able to carry out their respective obligations under the Settlement Deed.

As to the contention that the specific performance remedy should be denied because the failure to provide such financial information as existed in response to or in connection with the call at trial constitutes unclean hands of a kind that should deprive the plaintiff of the remedy, I do not accept that submission.[384] I refer to the observations made above regarding the financial position, rental payment and history of events. That which transpired in connection with the call does not travel at all close to establishing unclean hands in the context under consideration. Although each case, of course, depends on its own facts, Nettle J’s observations on this topic in IGA also merit extraction here:[385]

[246] I turn finally to the question of clean hands. Apart from cases of fraud or misrepresentation or illegality or a breach of contract leading to a lack of readiness or willingness on the part of the plaintiff to perform his obligations, there are broadly speaking two main categories of cases in which plaintiffs are denied specific performance on the basis of a lack of clean hands[386]: first, where the plaintiff is shown materially to have misled the court or to have abused its process, or to have attempted to do so; and, secondly, where the grant of relief would enable the plaintiff to achieve a dishonest purpose and where in all the circumstances it appears to the court to be inequitable to grant the particular relief in question. It is the second of those categories which is said to be of relevance here.
[247] The gist of that second category of case is that equity will not assist the unconscionable conduct on the part of the plaintiff, either by enforcing a right already improperly obtained or by otherwise furthering unconscionable purposes. But the undesirable behaviour in question must involve more than mere “general depravity”. It must have an immediate and necessary relation to the equity sued for; it must be a depravity in a legal as well as in a moral sense; and, in order to have an immediate and necessary relation to the equity sued for, the plaintiff must seek to derive advantage from his dishonest conducti n so direct a manner that it is considered to be unjust to grant him relief.
[248] In my view, that is not the present case. IGA is not engaging in unconscionable conduct. Its rights under the agreement for lease were not improperly obtained and it does not pursue those rights in furtherance of any unconscionable purpose. What is put against IGA is that, in submitting the new forms of agreement under cover of the letter of 21 June 2001, IGA had in mind the evasion of duty properly payable on the original agreement for lease. But even assuming that were so, it would rise no higher than the category of “mere general depravity”, lacking an immediate and necessary relation to the specific performance of the original agreement.

[384]Or in relation to any other conduct of Glen or Rossi Recycling.

[385][2002] VSC 440. I also refer generally to JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow & Lehane’s Equity: Doctrines & Remedies (LexisNexis Butterworths, 5^th ed, 2015) [3-090]–[3-120].

[386]Spry, supra at p.245.

In the present case, it is also the fact that Glen and Rossi Recycling’s rights under the Settlement Deed were not improperly obtained and it has not been alleged or established that the rights are being pursued in furtherance of any unconscionable purpose. In any event, however the circumstances are characterised in relation to financial information, the financial position of Rossi Recycling, or the call made at trial, it is plain that the conduct does not possess a sufficient and immediate relation to specific performance of the Settlement Agreement so as to work against the grant of specific performance. All things considered, in my view there is no sound basis for contending that any conduct on the part of Rossi Recycling or Glen should preclude an order for specific performance being made.

It was not put that the present case falls into the category of cases where the hardship to the defendants as a result of the nature of the deal done would or might warrant the discretion to be exercised against Rossi Recycling because of the financial position. Had such submission been made I would not have accepted it, noting again the absence of any information or financial hurdles in the Settlement Deed and the other matters I have addressed above regarding the payment of rental. I also refer generally to the following observations of Nettle J in IGA regarding ‘hardship’ as a discretionary factor in this context:[387]

These contentions may be dealt with briefly. The sort of hardship which will preclude the grant of specific performance does not extend to precluding specific performance because the defendant has made an improvident contract. If the defendant has agreed to the terms of the contract sought to be enforced, they should be enforced[388]. There may be cases in which the bargain which is sought to be enforced is so improvident from the defendant’s point of view that equity will refuse specific relief, but the circumstances will be rare and where they occur there is likely to be involved something tantamount to undue influence which renders enforcement unconscionable. The defendant has to show that a decree of specific performance would impose hardship amounting to oppression far outweighing the inconvenience to the plaintiff if he is left to his remedy in damages[389].

[387][2002] VSC 440, [243].

[388]Pacta sunt servanda in equity as much as at law: Axelsen v O’Brien (1949) 80 CLR 219 at 226.

[389]Dowsett v Reid (1912) 15 CLR 695.

To the extent that the defendants pressed the contention that specific performance ought to be refused because the grant of the remedy will require constant supervision from the court, I do not accept that submission. First, requiring Paul and Buckland Valley to comply with their obligations under the Settlement Deed so as to result in compliance with clause 1, the market rental determination taking place, and the New Lease between Buckland Valley being entered into is not something that can be fairly or properly characterised as requiring constant supervision or anything akin to it. The circumstances here present as ripe for the grant of specific performance.

Second, and in any event, the extent to which any supervision may be needed is a factor for the court to take into account and does not present as a disqualifying factor. In the present circumstances, even if an element of so-called ‘supervision’ is needed, given the obligations under the Settlement Deed to be enforced, it is not of a character that weighs against the grant of specific performance in the circumstances of this case. It may be noted in this context that judicial discussion and engagement on this topic reveals a slide away from supervision concerns being a material factor against the grant of specific performance in some cases, although each case of course depends on its own facts when the judicial discretion falls to be exercised.[390]
[390]As to some of the discussion regarding supervision not always being seen as a material impediment, see, for example: Co-op Insurance Society Ltd v Argyll Stores Holdings [1998] AC 1; Riltang Pty Ltd v L Pty Ltd (2004) 12 BPR 22, 347, [51]; Patrick Stevedores Operation No 2 Pty Ltd v Maritime Union of Australia (No 3) (1998) 195 CLR 1.

To the extent the defendants maintained an alternative position that if specific performance was to be ordered then the court should include lease terms of the kind that had been included by them as assumptions for part of the Brindley Orders, I do not accept that submission. That exercise was of an entirely different character that was carried out in a different context for a different purpose. That said, it appeared to be ultimately acknowledged in oral closing submissions by senior counsel for the defendants that it would not be an appropriate course for the court to be taking in this case. In any event, so to do would also be inconsistent with the determinations I have made regarding the proper construction of the Settlement Deed and the terms of the New Lease.

The result is that orders should be made requiring the defendants to specifically perform the Settlement Deed so as to comply with clause 1, co-operate so as to bring about the current market rental determination as at 13 September 2019 and result in the entry into the New Lease between Buckland Valley as lessor and Rossi Recycling as lessee on the basis that I have earlier referred to in Part E above.[391] The precise form of the orders will be addressed with the parties.

Part K: Paul’s counterclaim in respect of the Alleged Rossi Debt

[391]And subject to any consequential adjustments.

Clause 6 of the Settlement Deed recorded that the parties agreed that, in relation to the loans recorded in the books of Rossi Recycling, Rossi Recycling was indebted to Paul in the amount of $353,281 as at 30 June 2018. Clause 6 also provided that this loan amount, together with any further loan amounts, shall be wholly discharged upon Rossi Recycling making a payment to Paul of $114,427 by 1 July 2021 and $114,427 by 1 July 2022.

As recorded in the Background section of these reasons, Rossi Recycling paid $114,427 to Paul on 1 July 2021. This was said by Rossi Recycling to have been paid pursuant to clause 6 of the Settlement Deed. Paul said, through his lawyers, that the amount would be received as a reduction in the damages payable consequent upon the breach and repudiation of the Settlement Deed and its termination.

I have found that the Settlement Deed was not breached, repudiated or terminated. The Settlement Deed remained on foot and under its terms Rossi Recycling was not required to pay the Alleged Rossi Debt of $353,281 to Paul. I also find that, as was stated by Rossi Recycling’s solicitors at the time of payment, the payment of $114,427 to Paul by Rossi Recycling on 1 July 2021 was payment of the instalment required to be paid by Rossi Recycling to Paul pursuant to clause 6(a) of the Settlement Deed.

That being so, and noting also that the claim that the Settlement Deed was repudiated and terminated has also failed, Paul’s allegations that Rossi Recycling was obliged by the terms of the Settlement Deed to pay the Alleged Rossi Debt and that he breached clause 6 of the Settlement Deed by not doing so, have not been made out. Rossi Recycling did not breach the Settlement Deed by not paying Paul the Alleged Rossi Debt and Paul’s counterclaim for damages (or for the payment of this amount)[392] fails.
[392]Noting for completeness that damages are claimed in the prayer for relief and it is pleaded as a breach of contract claim in paragraphs 65 to 69 of the pleading filed 26 October 2021 (although the heading to that section of the pleading refers to the Alleged Rossi Debt as a debt due).

I add that, at the time of the hearing, the date for payment of the second instalment by Rossi Recycling to Paul pursuant to clause 6(b) of the Settlement Deed had not arrived, and on the evidence before me it is not currently known whether this amount was paid by 1 July 2022 or some other arrangement was made — although no application in relation to this matter has been foreshadowed or made by any party. That said, I will allow the parties to make submissions in connection with the grant of specific performance as to whether any conditions should be imposed relating to the payment of the second instalment if it has not already been paid.

Part L: Summary of conclusions

Given the large number of issues raised by the parties, it is likely of assistance to collect together a summary of the primary conclusions reached above. Of course the conclusions as expressed should not be considered in isolation but in the context of the more detailed discussion in other parts of these reasons. The summary is set out in the paragraphs that follow.

It was the parties’ objective intention to be immediately bound by the terms of the Settlement Deed, including clauses 2, 3 and 4 of the Settlement Deed.

No relevant issue arises as to the date the Settlement Deed came into effect.

The commercial purpose and object of the Settlement Deed was to the effect described in Part E.3 above.

There were implied terms of the Settlement Deed to the effect of the Co-operation Terms imposing obligations upon the parties to co-operate, as referred to in Part E.4 above.

Although what was to be determined pursuant to clause 2(b) of the Settlement Deed was the current market rental for the New Lease Premises at the time the Settlement Deed became operative on 13 September 2019, upon the proper construction of the Settlement Deed it did not provide for the New Lease to come into effect from 1 October 2019.

Clause 2 of the Settlement Deed imposes an obligation upon Buckland Valley to enter into the New Lease with Rossi Recycling within a reasonable time.

A reasonable time for entering into the New Lease by Buckland Valley was by no later than three months after the 13 September 2019 operative date of the Settlement Deed, or the next business day if that time ended on a non-business day.

Pursuant to clause 3 of the Settlement Deed, the 2016 Lease terminates immediately upon Buckland Valley and Rossi Recycling entering into the New Lease.

Until the 2016 Lease terminates it remains on foot without variation to the rent or the 2016 Lease Premises.

Clause 4 of the Settlement Deed does not alter the terms of the 2016 Lease or require Rossi Recycling to pay any additional amount to Buckland Valley for the licence entitlement the subject of that clause.

The terms or words of clause 2(b) of the Settlement Deed were not objectively intended to be transported into the New Lease as an express term of the New Lease. The objective intention of the parties was to have the market rental determination carried out prior to the entry into the New Lease and then to insert the independently determined rental amount as the rent under the New Lease.

The premises the subject of the New Lease are as described in the Settlement Deed and are the same as the 2016 Lease Premises except for the first floor of Unit 27, which is excluded.

The New Lease commences when it is entered into, which is also when the 2016 Lease terminates.

Rossi Recycling was obliged to pay rent under the 2016 Lease in October, November and December 2019.

Upon their proper construction, the closing words of clause 2(e) of the Settlement Deed mean such other terms, if any, as are agreed between the parties and are permitted by the RL Act.

Neither clause 2, clause 2(e), or the closing words of clause 2(e) are void or unenforceable for uncertainty. Even if the closing words of clause 2(e) had been uncertain, they would be severed.

If clause 2, or the whole or first part of clause 2(e), had been uncertain, they would not be severable and the Settlement Deed would have been void or unenforceable for uncertainty.

Upon the proper construction of the Settlement Deed, the New Lease referred to in clause 2 was to be on the same terms as the 2016 Lease except for the changes reflected in the Settlement Deed, and clause 2 in particular. Otherwise, the schedule to the New Lease is to be in the same terms as the schedule to the 2016 Lease, as is referred to in Part E.13.1 above.

The New Lease is not to contain a term to the effect of the term in Item 22 of the schedule to the 2016 Lease.

Paul and Buckland Valley breached the Co-operation Terms of the Settlement Deed by failing to prepare a form of the New Lease document and to provide it Glen and Rossi Recycling within a reasonable time, or at all. A reasonable time was no later than the next business day after four weeks from the 13 September 2019 operative date of the Settlement Deed, namely, by Monday 14 October 2019.[393]
[393]Which takes into account that a period of four weeks after 13 September 2019 ended on Saturday 12 October, 2019, which was not a business day.

Paul and Buckland Valley breached the Co-operation Terms of the Settlement Deed by failing to respond to Glen and Rossi Recycling’s suggested valuer within a reasonable time of that suggestion being made on 20 September 2019, or at all. A reasonable time was no later than 14 days after 20 September, 2019, namely, by Monday 7 October 2019.[394]
[394]Which takes into account that a period of 14 days after 20 September 2019 ended on Saturday 5 October, 2019, which was not a business day.

Paul and Buckland Valley did not breach the Settlement Deed by not taking steps to have a valuer appointed by the Australian Property Institute to determine the current market rental for the New Lease Premises pursuant to clause 2(b) of the Settlement Deed. Given Paul and Buckland Valley’s breach of the Co-operation Terms in relation to the valuer nominated by Glen and Rossi Recycling, the time for nomination of a valuer by the Australian Property Institute had not arrived. It would have arrived if Paul and Buckland Valley had responded within a reasonable time to Glen and Rossi Recycling’s proposed valuer and said they did not agree to the valuer suggested by Glen and Rossi Recycling.

Paul and Buckland Valley did not breach the Settlement Deed by demanding rent pursuant to the 2016 Lease for the months of October, November, and December 2019, or by issuing notices of breach or re-entry pursuant to the 2016 Lease alleging a failure to pay rent for those months.

The notices of breach dated 18 November and 22 November 2019 issued by Buckland Valley based on the 2016 Lease[395] were valid notices under the 2016 Lease.
[395]As opposed to the alternative notice based on a month-to-month tenancy.

Paul and Buckland Valley did not breach the Settlement Deed by taking possession of the 2016 Lease Premises insofar as the taking of possession related to the 2016 Lease Premises other than the upstairs of Unit 27.[396] That taking of possession was not wrongful or unconscientious.
[396]The other parts of Unit 27 were not part of the 2016 Lease Premises, although they were the subject of the licence entitlement in clause 4 of the Settlement Deed.

Paul and Buckland Valley did breach clause 4 and the Co-operation Terms of the Settlement Deed by causing Buckland Valley to take possession of Unit 27 on 8 and 10 December 2019. That taking of possession was therefore wrongful, although it was not established to be unconscientious.

Neither Paul nor Buckland Valley represented:

(a) that the next rental to be paid after the entry into the Settlement Deed (which was payable on 1 October 2019) was to be a new market rental for the premises actually leased (that is, excluding the top floor of Unit 27) determined in accordance with clause 2 of the Settlement Deed; or

(b) that the defendants would prepare a New Lease to that effect.

Rossi Recycling’s estoppel claims[397] have not been established.
[397]Being the promissory estoppel and estoppel by deed claims referred to in Items 8 and 9 of the Revised Issues List and addressed in Part G above.

Glen did not breach the Settlement Deed in one or more of the ways referred to in sub-paragraphs (a) to (f) of Item 10 of the Revised List of Issues (Attachment 2 to these reasons).

Rossi Recycling breached the 2016 Lease by not paying rental pursuant to that lease on 1 October, 1 November and 1 December 2019.

Rossi Recycling and Glen did commit trespass on 9 December 2019 in the manner referred to in Part H.2.6 above.

Neither Rossi Recycling nor Glen repudiated the Settlement Deed by one or more aspects of their conduct, whether each aspect of their conduct is considered alone, together, or in any combination. It follows that neither Buckland Valley nor Paul accepted any repudiation of the Settlement Deed by Rossi Recycling or Glen because the Settlement Deed was not repudiated by either of them.

If it had been the case that Glen and Rossi Recycling had repudiated the Settlement Deed by their conduct, including their conduct in connection with the non-payment of rent under the 2016 Lease:

(a) the service of the notices of breach under the 2016 Lease, the service of the notices of re-entry under the 2016 Lease, the taking of possession of the 2016 Lease Premises, and the taking of preliminary steps in connection with a sale of the 2016 Lease Premises, would not have amounted to an effective acceptance of repudiation or effective election to terminate the Settlement Deed;

(b) Paul affirmed the Settlement Deed by signing and sending to Glen and Rossi Recycling the notices of resignation and appointment relating to the RP Trust pursuant to clause 1(c) of the Settlement Deed on 25 November 2019;

(c) if non-payment of rent on 1 December 2019 under the 2016 Lease had been a repudiation of the Settlement Deed, Paul’s statement in paragraph 33 of his affidavit[398] of 12 December 2019 would have amounted to an effective acceptance by Paul and Buckland Valley of repudiation and an effective election to terminate the Settlement Deed from the time of receipt of the affidavit on 12 December 2019 by Glen and Rossi Recycling; and

(d) assuming a repudiation of the kind referred to in sub-paragraph (c), absent a fresh agreement between the parties, any conduct of Paul and Buckland Valley subsequent to 12 December 2019 in connection with Unit 27 or acceptance of the payment made on 1 July 2021 by Rossi Recycling (or other aspects of the Settlement Deed) would not have altered the fact that the Settlement Deed would have come to an end as a result of Paul and Buckland Valley’s election on 12 December 2019 to terminate the Settlement Deed.

[398]Which was made on behalf of Buckland Valley and filed on behalf of both defendants.

The top floor of Unit 27 remained as part of the 2016 Lease Premises under the 2016 Lease, which was on foot when possession of Unit 27 was taken by Buckland Valley in March 2020. Rossi Recycling was entitled to its right of quiet possession of the 2016 Lease Premises, and the terms of the Settlement Deed did not provide Buckland Valley with the right to take possession of the top floor of Unit 27 in March 2020 because the 2016 Lease remained on foot at that time.

The other parts of Unit 27 were not part of the 2016 Lease Premises and the taking of possession of those parts of Unit 27 by Buckland Valley or Paul at the end of the six-month licence period referred to in clause 4 of the Settlement Deed did not result in any failure to give quiet possession of the 2016 Lease Premises to Rossi Recycling.

Rossi Recycling is entitled to relief requiring Paul and Buckland Valley to specifically perform their respective obligations under the Settlement Deed, including the obligations under clause 1, the Co-operation Terms, and the entry into the New Lease pursuant to clause 2 at the independently determined current market rental as at 13 September 2019.

Given the findings made, Buckland Valley and Paul’s counterclaim seeking a declaration that the Settlement Deed was repudiated by Glen and Rossi Recycling and terminated by Paul and Buckland Valley’s acceptance of that repudiation fails.

Paul’s counterclaim in respect of the Alleged Rossi Debt and the waste bins has not been made out and will be dismissed.

Part M: Other matters

As noted at the commencement of these reasons, the trial was split at the request of the parties and this part of the trial did not address any damages or compensation issues. Primarily this was because it was first necessary to determine whether the Settlement Deed was terminated, whether alleged breaches by Paul and Buckland Valley were established, and whether specific performance was to be ordered. If specific performance was to be granted, it was considered to be necessary to allow the independent market rental valuation process to occur before considering any damages or compensation questions given the significance of the market rental assessment to any damages assessment.

When addressing the terms of the orders to be made granting specific performance I will also address with the parties appropriate directions for the future conduct of the proceeding.

Relief from forfeiture orders were made by Macaulay J on 13 December 2019. It was not suggested by the defendants or the plaintiff that they did not take effect permanently. That relief was ordered by Macaulay J for the reasons he then gave, applying the well-established principles he referred to. Given the manner in which Macaulay J’s orders are expressed, I will hear from the parties as to whether any further final orders are necessary to be made regarding such relief. If further orders are necessary, and having regard to the facts to which I have referred, the findings made, the conclusions reached, and the applicable principles regarding relief from forfeiture, it is clear that such orders should be made.[399]

Part N: Conclusion and proposed orders

[399]And it was not suggested otherwise by any party.

The plaintiff has succeeded in its claim for breach of the Settlement Deed against Paul and Buckland Valley and is entitled to orders requiring Paul and Buckland Valley to specifically perform their respective obligations under the Settlement Deed. The issue of damages is to be dealt with in the next phase of the proceeding.

Buckland Valley and Paul have failed in their counterclaim seeking a declaration that the Settlement Deed was repudiated by Glen and Rossi Recycling. This counterclaim will be dismissed.[400]
[400]Although the prayer for relief records Buckland Valley as the party that seeks this relief, paragraph 51 of the pleading (filed 26 October 2021) records that both Paul and Buckland Valley seek a declaration in relation to the repudiation and termination of the Settlement Deed.

Paul has failed in his counterclaim:

(a) against Glen and Rossi Recycling seeking damages for breach of the Settlement Deed in relation to the waste bins;

(b) against Rossi Recycling for damages or payment of an amount of money (and interest) in respect of the Alleged Rossi Debt.

These counterclaims will be dismissed.

The precise form of orders to be made and the question of costs will be further addressed with the parties, including:

(a) the terms of the orders to effect specific performance of the Settlement Deed by Paul and Buckland Valley;

(b) whether the position with the Last Bin, or payment of the second instalment under clause 6(b) of the Settlement Deed, should be addressed by way of any conditions in connection with the orders granting specific performance; and

(c) directions for the future conduct of the remaining issues in the proceeding.

Attachment 1
Land Diagram

Attachment 2
Revised Issues List[401]
[401]Adjusted in part according to the defined terms used in these reasons.
Claim
1.The parties agree that on the proper construction of the Settlement Deed there was a duty to co-operate but disagree as to whether it was breached.
2.Are there terms of the Settlement Deed, on its proper construction, that the new lease would be entered into for a tenancy, at the new rental, starting on 1 October 2019, or alternatively within such reasonable time as may be determined?
3.What is the proper construction of clause 2(e) of the Settlement Deed?
4.Did Buckland Valley and Paul breach terms of the Settlement Deed (and if so, which ones and when) by:
(a)failing or refusing, or continuing to fail or refuse, to draft a lease?
(b)failing or refusing, or continuing to fail or refuse, to respond to the plaintiff’s proposal for a valuer in its letter of 20 September 2019?
(c)if they did not agree to Rossi Recycling’s proposal of a valuer, failing or refusing, or continuing to fail or refuse, to agree or propose to refer the question of market rent to the Australian Property Institute to nominate a valuer in accordance with clause 2 of the Settlement Deed?
(d)demanding rent pursuant to the 2016 Lease for the months of October 2019, November 2019 and December 2019 and thereafter?
(e)issuing notices of breach alleging failure to pay rent pursuant to the 2016 Lease?
(f)taking possession of the premises (including Unit 27) for failure to remedy the defaults referred to in the notices of breach issued under the 2016 Lease?

5.Were the notices of breach for failure to pay rent issued by Buckland Valley and dated:
(a)18 November 2019; and
(b)22 November 2019

valid Notices?
6.Was the defendants’ taking of possession of the property on 8 and 10 December 2019:
(a)Wrongful?
(b)Unconscientious?

7.After the execution of the Settlement Deed, was Rossi Recycling obliged under the 2016 Lease to pay monthly rent in the amount of $29,304.45 on:
(a)1 October 2019?
(b)1 November 2019?
(c)1 December 2019?

If so, did such an obligation continue by reason of the defendants’ breaches of the Settlement Deed?
8.By entering into the Settlement Deed and by stating in correspondence on 13 September 2019 that Buckland Valley and Paul would prepare the new lease, did Buckland Valley and Paul thereby represent:
(a)The next rental to be paid after the entry into the Settlement Deed (which was payable on 1 October 2019 in advance for the month of October 2019) was to be market rental for premises actually leased (that is, excluding Unit 27) determined in accordance with clause 2 of the Settlement Deed?
(b)They would prepare a new lease, inter alia giving effect to the above?

9.If the representations were made:
(a)Did Rossi Recycling rely on them to its detriment?
(b)Was it, or would it be, unconscionable for Paul and Buckland Valley to resile from those representations by:
(i)failing to prepare a lease with effect from 1 October 2019, or within such other reasonable time as the Court determines?
(ii)asserting an entitlement to rent pursuant to the 2016 Lease for the months of October, November and December 2019 and thereafter?
(iii)issuing notices of breach for failure to pay rent pursuant to the October 2016 Lease for the months of October, November and December 2019?

(iv)taking possession of the premises (including Unit 27) for failure to pay rent pursuant to the 2016 Lease for the months of October, November and December 2019?
(c)Are Paul and Buckland Valley thereby estopped from doing so?

10.Did Glen breach the Settlement Deed by:
(a)taking steps to appoint himself as a director of Rossi Recycling and terminate Paul as a director of Rossi Recycling without the authorisation or consent of Paul?
(b)taking steps to transfer Paul’s shares in Rossi Recycling to Glen without the authorisation or consent of Paul?
(c)filing forms with ASIC to reflect (a) and (b)?
(d)refusing Paul access to the Rossi Recycling premises to permit Paul to take possession of commercial waste bins?
(e)failing to give Paul possession of commercial waste bins?
(f)causing the 2016 Lease to be terminated?

11.Did Rossi Recycling and/or Glen:
(a)breach the 2016 Lease by failing to pay rent for the months of October 2019, November 2019 and December 2019?
(b)demand, or evince an intention, that Rossi Recycling would not remedy the alleged breaches of the 2016 Lease unless Buckland Valley agreed to a monthly rent of $16,666 payable under that lease?
(c)deny the existence of any ongoing monthly tenancy over the premises?
(d)deny the existence of the 2016 Lease?
(e)refuse or fail to recognise Buckland Valley’s contractual rights under the 2016 Lease or any existing lease?
(f)commit trespass by re-taking possession of the premises in December 2019?
(g)by any or all of that conduct, cause the 2016 Lease to be terminated?

12.If Glen and/or Rossi Recycling:
(a)engaged in the conduct referred to in paragraph 10 above;
(b)engaged in the conduct referred to in paragraph 11 above;

did that conduct, whether alone or in combination, amount to a repudiation of the Settlement Deed by Glen and/or Rossi Recycling?
13.Did Buckland Valley and Paul:
(a)accept any repudiation of the Settlement Deed by Glen and/or Rossi Recycling?
(b)affirm the Settlement Deed?

14.Was the taking of possession of area 27 by Buckland Valley on 23 March 2020:
(a)Done under the terms of the Settlement Deed?
(b)An affirmation of the Settlement Deed?
(c)Alternatively, a failure to give quiet possession of the premises during the term of the tenancy in accordance with the 2016 Lease, and a breach of that lease?

15.Is the plaintiff entitled to an order for specific performance? And if so, on what terms?
Counterclaim
(The issues raised on the Counterclaim are addressed under issues 9 to 13 above.)

Attachment 3
Rossi Recycling’s Proposed Lease Schedule

Attachment 4
Schedule to the 2016 Lease

[2022] VSC 467

18 August 2022