Rowson v Alpass (No 2)

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST

S CI 2016 04019

BETWEEN:

MARK ROWSON	Plaintiff
v
ALAN ALPASS	Defendant

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JUDGE:	Daly AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	2, 3, 4 and 14 August 2023
DATE OF JUDGMENT:	11 April 2024
CASE MAY BE CITED AS:	Rowson v Alpass (No 2)
MEDIUM NEUTRAL CITATION:	[2024] VSC 169

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CONTRACT — Whether there was an oral agreement for the sale and purchase of the assets of a legal practice controlled by a Court appointed receiver — Masters v Cameron (1954) 91 CLR 353 and Citius Property Pty Ltd v Logos Australia Group Pty Ltd [2022] VSC 656 referred to — Whether the defendant’s conduct in not accepting or rejecting an offer to purchase the business, and his failure to disabuse the plaintiff of his mistaken assumption that the parties had entered a binding agreement, evidenced his acceptance of the plaintiff’s offer — Relevance of post-contractual conduct as to whether a contract was formed — Danbol Pty Ltd v Swiss Re International SE [2020] VSCA 274 referred to and applied — Held that there was no oral agreement for the sale and purchase of the business.

ESTOPPEL — Promissory estoppel — Whether the defendant was estopped from denying the sale and purchase of the assets of a legal practice of which he was appointed a receiver — Whether defendant’s conduct induced in the plaintiff a reasonable belief that an agreement had been reached — Held that conduct of defendant contributed to plaintiff’s assumption that they would be the purchaser, but there was no material detriment suffered by the plaintiff in reliance upon his mistaken assumption — Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, Sidhu v Van Dyke (2014) 251 CLR 505 and Pipikos v Trayans (2018) 265 CLR 522 referred to — Held that it was not unconscionable for the defendant to resile from giving effect to the plaintiff’s mistaken assumption — Held that there was no estoppel by convention as both parties did not act upon a mutually held assumption as to a matter of fact or legal effect.

LEGAL PRACTITIONERS — Receiver — Whether the defendant was immune from any liability to the plaintiff by reason of s 366 of the Legal Profession Uniform Law Act 2014 (Vic) (‘Uniform Law’) — Whether the defendant’s breach or repudiation of an agreement directly involved, or was merely incidental to, the exercise of his powers and functions under the Uniform Law — Rowson v Alpass (2017) 53 VR 196 and Board of Fire Commissioners (NSW) v Ardouin (1961) 109 CLR 105, referred to — Held that the defendant’s conduct falls outside the scope of the immunity provision.

CAUSATION — Whether the plaintiff suffered a loss of opportunity by reason of the defendant’s alleged repudiation or breach of an agreement — Plaintiff’s standing to sue on the alleged repudiation or breach of contract — Whether, on the balance of probabilities, the purchaser of the assets of a legal practice would have been able to obtain a practising certificate with trust authorisation — Held that if an enforceable agreement had been made, the plaintiff failed to establish that he suffered loss as a result of the defendant’s repudiation of the agreement — Held that the plaintiff was not ready, willing and able to perform his obligations under the agreement.

LOSS AND DAMAGE — Quantification of loss and damage claim — Reliability of expert opinion as to the value of the lost opportunity — Held that it would have been possible to assign a value to the opportunity lost by the plaintiff as a consequence of the alleged repudiation of an agreement based upon evidence of plaintiff and expert opinion — Keys Consulting Pty Ltd v Cat Enterprises Pty Ltd [2019] VSCA 136 referred to — Held that if an actionable estoppel was found in favour of the plaintiff, equitable compensation would be limited to costs thrown away by the plaintiff incurred by reason of his mistaken assumption.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr C H Truong KC with Mr S R C Cromb of counsel	Mr Christopher Dale
For the Defendant	Ms G S J Berlic of counsel	Minter Ellison

TABLE OF CONTENTS

Introduction, background and the parties................................................................................ 1
The proceeding.............................................................................................................................. 4
Overview of the evidence.......................................................................................................... 12
Chronology of relevant events.................................................................................................. 15
Was an agreement made for the sale and purchase of the Hardy’s business?.................. 34
Is Mr Alpass estopped from denying the existence of an agreement?................................ 66
Is Mr Alpass immune from any liability by reason of s 366 of the Uniform Law?............. 76
Causation and the loss and damage claim.............................................................................. 86
The Senia report and the quantification of the loss and damage claim............................ 103
Conclusion and disposition..................................................................................................... 122

HER HONOUR:

Introduction, background and the parties

The legal practice known as ‘Hardy’s’ was established in 1983 following a series of amalgamations, and had developed a significant presence in Dandenong,[1] with a substantial criminal, family law, conveyancing and wills and probate practice. However, the firm was shattered by an investigation into its affairs by the Legal Services Board (‘LSB’) in the early 2010s which revealed a number of trust account defalcations and other irregularities, which were ultimately sheeted home to its managing partner, the late Mr Robert Hession.[2]
[1]Hardy’s was said by Mr Rowson to be the second largest legal practice in Dandenong, after McPherson & Kelley. Its predecessor firms had been established in the 1950s and 1960s.
[2]Mr Hession was removed by this Court from the roll of legal practitioners on or about ! March 2018.

On 15 February 2016, this Court appointed the defendant, Mr Alan Alpass, as the receiver of Hardy’s pursuant to s 341 of the Legal Profession Uniform Law 2014 (sch 1 to the Legal Profession Uniform Law Application Act 2014 (Vic) (‘Uniform Law’).[3] Mr Alpass is a legal practitioner. He was admitted to practice in 1975, and owns and manages a substantial suburban legal practice, Alpass & Associates, based in Kilsyth. By the time Mr Alpass was appointed as receiver, the family law practice of Hardy’s had been taken over by a former partner, leaving Mr Alpass with 35 active files, a collection of archived files, sundry office furniture and equipment, and approximately 6,000 deed packets (‘deeds’).
[3]CB149.

The main task facing Mr Alpass as receiver was the sale of assets of Hardy’s (‘Hardy’s business’). To that end, Mr Alpass placed an advertisement in the April 2016 edition of the Law Institute Journal (‘LIJ ad’).[4]

[4]CB69.

In addition to receiving two rather derisory offers for the Hardy’s business early in the piece, between July and September 2016 Mr Alpass was in serious discussions with two prospective purchasers, including the plaintiff, Mr Mark Rowson, a businessman and occasional paralegal, who was also an associate of a now deceased solicitor, Mr Darroll Nelson.

Mr Rowson had a personal connection with Hardy’s. His late father was the managing partner of Hardy’s for many years until about 1995, when he had a falling out with Mr Hession. After that he ran his own legal practice, with the occasional assistance of Mr Rowson, until his death in 2015.

Mr Rowson is not a lawyer. Now in his mid 50s, he has owned and operated a number of businesses over the years, and is now a self-employed information technology consultant. He presents as an intelligent, enterprising and resourceful man. Unfortunately, he has not always utilised his skills wisely, having been incarcerated twice over the past two decades, once in connection with an elaborate tax fraud scheme, to which he pleaded guilty, and more recently, after being found guilty of theft and obtaining a financial advantage by deception over the course of 2013 and 2014, to which he pleaded not guilty. He served approximately four years in prison between 2018 and 2022 for the latter offences, with his sentence extended for a further two months after pleading guilty to a charge of attempting to pervert the course of justice. This charge related to his falsification of a character reference for a friend facing a sentencing hearing in the County Court in 2015.

Returning now to the events connected with the issues in this proceeding, the approach to Mr Alpass by Messrs Rowson and Nelson was made in the context of discussions they had in the period after the death of Mr Rowson’s late father. Mr Rowson first met Mr Nelson, who was a friend and professional associate of his father, in about 1987. After losing touch with Mr Nelson for a period of time, from about 2013 Mr Rowson regularly had lunch with Mr Nelson and his father. By that time, Mr Nelson was approaching his 80s, and his legal practice had dwindled away, no doubt not assisted by periods when his practising certificate had been suspended or surrendered for disciplinary reasons.

Mr Rowson and Mr Nelson discussed buying a small legal practice with an extensive deeds collection, with a plan to utilise the deeds for marketing and practice development purposes. Mr Rowson had access to some funds after his father’s death, with a portion of his father’s estate (somewhere between $160,000 and $200,000) ultimately paid into a trust fund managed by his brother, Gavin Rowson (‘trust’). Mr Rowson planned to utilise his administrative and information technology skills to become, in effect, the practice manager, and they hoped that the new legal practice generate sufficient work to enable them to hire an employee solicitor with skills and experience in the wills and probate field.

What transpired during the discussions between Mr Rowson and Mr Nelson on the one hand and Mr Alpass on the other hand is discussed in some detail later in these reasons. However, to put it neutrally, their bid to purchase the Hardy’s business for $25,000 was unsuccessful. On 12 September 2016, Mr Alpass wrote to Mr Rowson and Mr Nelson telling them that the Hardy’s business had been sold. This letter was sent a few days after Mr Alpass executed a contract of sale selling the Hardy’s business to Ms Jan Knight, another legal practitioner, for $20,000.

After receiving this letter, Mr Rowson and Mr Nelson engaged a solicitor. On 15 September 2016, their solicitor, Mr Christopher Dale, wrote to Mr Alpass asserting that there was a binding agreement between the parties for the sale and purchase of the Hardy’s business, and demanded that Mr Alpass put the settlement of the sale to the other purchaser on hold. Mr Alpass refused, and, following further correspondence between Mr Dale and Mr Alpass, this proceeding was issued on 3 October 2016.

Subsequent events have affected the progress of the proceeding to trial, and are also relevant to the issues in the proceeding, in particular, Mr Rowson’s claim for loss and damage (‘loss and damage claim’). Mr Nelson died on or about 15 August 2017, of an illness contracted during a hospital stay for treatment of a fractured spine after a fall. In 2018, Mr Rowson was tried and found guilty of three charges of obtaining a financial advantage by deception and 23 counts of theft, and was sentenced on 5 December 2018, with a non-parole period of approximately four years. He was first incarcerated in relation to these charges on 15 March 2018, but was released on bail later in 2018 to undergo medical treatment for a serious cardiac condition. He was released from prison in late 2022.

The proceeding

As noted earlier in these reasons, this proceeding was commenced shortly after the relevant events, on 3 October 2016, with both Mr Rowson and Mr Nelson as plaintiffs. However, some of the subsequent events outlined above, along with an absence of legal representation for a significant period of time, caused substantial delays in bringing the proceeding to trial. The trial of the proceeding was first set down to commence on 30 June 2020, but Mr Rowson’s ongoing incarceration, lack of legal representation, and complications associated with COVID-19 pandemic restrictions meant that the trial did not commence until more than three years later.

The pleadings in this proceeding were summarised by Derham AsJ in reasons published with respect to a strike out application bought by Mr Alpass in early 2017. The following summary is adapted from the reasons delivered on 7 July 2017 (‘strike-out reasons’).[5]
[5](2017) 53 VR 196 [6]-[14].

Mr Rowson and Mr Nelson (‘plaintiffs’) pleaded that in June 2016, Mr Alpass sought expressions of interest for the purchase of the Hardy’s business. On 20 July 2016, Mr Rowson contacted Mr Alpass, expressing such an interest. The following day, the plaintiffs and Mr Alpass had a meeting at which, the plaintiffs alleged, an oral agreement was entered into for the purchase of the Hardy’s business for $25,000, (‘agreement’). It was also agreed between the parties that Mr Alpass would prepare a contract to give effect to the agreement.

The plaintiffs alleged that Mr Alpass breached the agreement by not preparing the contract and endeavouring to subsequently impose a further term, being that Mr Nelson obtain a practising certificate with authority to hold trust money (‘extended practising certificate’). The plaintiffs alleged that Mr Nelson initiated the process to obtain an extended practising certificate, which was made known to Mr Alpass. However, on 12 September 2016, Mr Alpass purported to repudiate the alleged agreement, by informing the plaintiffs that the Hardy’s business had been sold.

The plaintiffs contended that based on the agreement and Mr Alpass’ conduct, they registered a new incorporated firm, HNR Lawyers Pty Ltd (‘HNR’),[6] relinquished the lease for their existing premises on 18 August 2016, sought new, larger premises, and commenced negotiations for and agreed to lease new premises for a period of four years.
[6]‘HNR’ being an acronym for ‘Hardy’s Nelson Rowson’.

Accordingly, the plaintiffs alleged that they have suffered loss and damage, said to be ‘the net present value of the future potential earnings of the [Hardy’s business] and the replacement value of the fixed and floating assets of the [Hardy’s business]’. The plaintiffs further asserted that they were ready, willing, and able to perform the agreement by paying the purchase price. In their prayer for relief, the plaintiffs sought a declaration that there was a valid agreement to purchase the Hardy’s business, a declaration that the plaintiffs hold an equitable interest in the Hardy’s business, an order that Mr Alpass be estopped from unilaterally terminating the agreement, an order for specific performance of the agreement, and alternatively, damages.

In his defence, Mr Alpass denied the agreement. He contended that an offer to purchase the Hardy’s business was made, broadly on the terms of the agreement (with some additions), by telephone on 21 July 2016 (‘offer’). Later that day, the offer was repeated by email (’21 July email’) and Mr Alpass said that the offer was neither accepted nor rejected.

Mr Alpass agreed that a meeting took place on 21 July 2016 with the offer made the next day, but denied that the meeting occurred as the plaintiffs alleged. Mr Alpass said that during the meeting, the plaintiffs told him that they wanted to inspect the files of the Hardy’s business with a view to making an offer to purchase them. Mr Alpass provided them with a list of the files, and allowed the plaintiffs to inspect them at a storage facility.

Mr Alpass admitted that in the course of a telephone conversation between him and Mr Rowson on 25 July 2016:

(a) he advised Mr Rowson that it was a prerequisite of the sale that the purchaser have an extended practising certificate;

(b) Mr Rowson advised him that he did not, and could not obtain a practising certificate, accordingly the purchase would need to be in the name of Mr Nelson; and

(c) Mr Alpass said that Mr Nelson, whilst holding a practising certificate, did not have an extended practising certificate, and accordingly could not be the purchaser of the Hardy’s business.

Mr Alpass also admitted to various conversations in which he was advised that Mr Nelson was seeking an extended practising certificate. Mr Alpass declined a subsequent offer by Mr Rowson to provide a deposit for the purchase of the Hardy’s business, and said he would sell the Hardy’s business to any third party and would only accept a deposit once a purchaser could enter into a binding contract of sale, which neither plaintiff could.

Mr Alpass also said that pursuant to s 366 of the Uniform Law (‘immunity provision’), he is immune from liability in respect of any act or omission done by him in good faith in the exercise or purported exercise of his functions under Chapter 6 of the Uniform Law, which he said includes the sale of the Hardy’s business.

Mr Alpass’ strike out application was based upon his contention that by reason of the immunity conferred upon him by the immunity provision, the claims made by Mr Rowson and Mr Nelson were untenable in the absence of any pleaded allegation that in repudiating the alleged agreement, Mr Alpass acted otherwise than in good faith. The strike-out application was unsuccessful, for reasons which will be the subject of further discussion later in these reasons.

Following Mr Nelson’s death, Mr Rowson applied for and was granted leave to proceed in the absence of a person to represent Mr Nelson’s estate. Mr Nelson was ultimately removed as a party to the proceeding. On 10 May 2018, Mr Rowson filed an amended statement of claim, which is the current version of the pleading.

The amended statement of claim did not substantially alter the claims pleaded in the original statement of claim, but provided further detail regarding the terms of the agreement and the subsequent communications between the plaintiffs and Mr Alpass. The amended statement of claim pleaded that the parties entered into an oral agreement at a meeting commencing at about 10.45am on 21 July 2016, during a telephone call between Mr Rowson and Mr Alpass commencing at 3.08pm on 21 July 2016, and the agreement was confirmed in the 21 July email, which was sent by Mr Rowson at 3.23pm that day.

The plaintiffs pleaded that the terms of the agreement were as follows:

(a) the plaintiffs would buy from Mr Alpass and Mr Alpass would sell to the plaintiffs the Hardy’s business for $25,000;

(b) the sale of the Hardy’s business was unconditional and not subject to finance;

(c) Mr Alpass would continue to manage the client files and be paid for the work in progress on the files on handover;

(d) the plaintiffs would incorporate a new legal practice to be the nominee/formal purchaser of the Hardy’s business; and

(e) Mr Alpass would prepare a formal contract incorporating the terms above and to include ‘or nominee’ in the named purchaser.

The plaintiffs pleaded that they were at all times ready, willing and able to perform the agreement by paying the purchase price of $25,000 at a time, place and date convenient to the parties.

The plaintiffs pleaded that on 25 July 2016, during a telephone conversation between Mr Rowson and Mr Alpass, the agreement was varied to include a term that Mr Nelson would obtain an extended practising certificate and that the formal contract would be in the name of Mr Nelson or nominee.

The plaintiffs alleged that Mr Alpass breached the agreement by not preparing the formal contract, and repudiated the agreement by informing the plaintiffs on 12 September 2016 that the Hardy’s business had been sold to another party. The plaintiffs pleaded that, as a consequence, the plaintiffs have suffered loss and damage:

In their various proportions, as to the shareholding in the Proposed Incorporated Firm being 2/3 to [Mr Rowson] and 1/3 to [Mr Nelson];
The Net Present Value of the future potential earnings of Hardy’s and the goodwill associated with a prompt and orderly transition had the agreement been honoured, full particulars of which will be provided before trial.

In his defence to the amended statement of claim filed on 31 May 2018, Mr Alpass repeated the matters referred to in paragraphs 18 to 22 of these reasons. In addition to what was pleaded in his original defence regarding what transpired at the meeting on 21 July 2016, Mr Alpass said as follows:

He says further that he did not and was not able to enter an agreement to sell the assets of Hardys to either of [Mr Rowson or Mr Nelson] because:
(i) Hardys’ files included files with money held in trust:
(ii)on the sale of Hardys, a principal of any law practice purchasing Hardys was required to hold an Australian practising certificate authorising the receipt of trust money, alternatively, the law practice purchasing Hardys was required to otherwise be authorised to receive trust money under the Uniform Rules, pursuant to s 150 of the Uniform Law:

(iii) at all relevant times.
(A) [Mr Rowson] did not have a practicing certificate of any type:
(B)[Mr Nelson] did not have a practicing certificate with authorisation to accept trust money and so was not able to receive trust money, pursuant to ss 150(a) and 153 of the Uniform Law: and
(C)HNR Lawyers was not authorised to receive trust money under the Uniform Rules.

Further, in response to the plaintiffs’ allegation that they were at all material times ready, willing and able to perform the agreement by paying the purchase price, Mr Alpass said as follows:

He denies paragraph 14B and says further that:
(a) [Mr Nelson] died on or about 15 August 2017:
(b)until the filing of the amended statement of claim dated 10 May 2018, the plaintiffs sought specific performance of the alleged agreement:
(c)on 2 August 2013, the Victorian Civil and Administrative Tribunal found [Mr Nelson] guilty of nine counts of professional misconduct in relation to failing to adequately supervise an employee, accepting trust funds when not entitled to do so and for failing to provide information to the Commissioner in 2009 and cancelled [Mr Nelson’s] practicing certificate for eight months. The Tribunal ordered that any future practising certificate to be issued to [Mr Nelson] was to be on the condition that he employ a bookkeeper approved by the Commissioner or make other financial arrangements approved by the Commissioner.

In his reply filed on 18 July 2018, Mr Rowson alleged, in summary, as follows:

(a) at the time that the parties entered into the agreement, Mr Alpass did not inform the plaintiffs that Hardy’s held trust money and/or that they or the intended purchaser of the Hardy’s business would be required to hold an extended practising certificate, and it was not made a condition of the agreement;

(b) on 25 July 2016 the agreement was varied to include a term to the effect that Mr Nelson would obtain an extended practising certificate, which he took steps to do;

(c) in response to Mr Alpass’ contention that he neither accepted or rejected the offer, Mr Rowson said as follows:

…the Plaintiff’s were induced to believe that [Mr Alpass] had accepted the terms of the offer and the Plaintiffs in pursuance of that belief, which [Mr Alpass] was well aware of, undertook steps in pursuance of that agreement, and [Mr Alapss is] thereby estopped from denying that there was a concluded agreement;

(d) Mr Nelson’s death was no bar to the performance of the plaintiffs’ obligations under the agreement, because had it not been for Mr Alpass’ repudiation of the agreement, the agreement could have been performed by 15 August 2017; and

(e) Mr Rowson stated as follows in relation to the defence based upon the immunity provision:

[Mr Rowson] denies paragraph 21 and states that [Mr Alpass] in breaching and repudiating the Agreement (as pleaded in paragraphs 14A and 15 of the Amended Statement of Claim dated 10 May 2018), was not exercising his functions and powers under sections 343(1)(b) and 347(2) and or under sections 343(3), 336(1)(f), 336(1)(g) and 347((2) of the Uniform Law.
Further or in the alternative, [Mr Rowson] denies paragraph 21 and states that [Mr Alpass], in breaching and repudiating the Agreement (as pleaded in paragraphs 14A and 15 of the Amended Statement of Claim dated 10 May 2018), is not immune from liability under section 366 the Legal Profession Uniform Law Act 2014 (Vic) (“The Uniform Law”) as such conduct was not a lawful exercise of his functions and powers under sections 343(1)(b) and 347(2) and or under sections 343(3), 336(1)(f), 336(1)(g) and 347((2) of the Uniform Law.

The discovery process was completed over the course of 2018. On 11 February 2019, by which time Mr Rowson was in prison, Mr Rowson dismissed his solicitor, and he represented himself until about June 2021.

On 6 August 2019, Derham AsJ dismissed an application by Mr Rowson to join Mr Gordon Cooper, an employee of the LSB’s external interventions division and the LSB as defendants to the proceeding, and to file a further amended statement of claim. Mr Rowson sought to allege that Mr Cooper persuaded Mr Alpass to breach the agreement, thus rendering Mr Cooper and LSB liable for damages in tort.

His Honour also refused to grant leave for Mr Rowson to make a further application to amend his statement of claim or to join additional parties, given the delays in progressing the proceeding to date, but did not completely shut him out from doing so. As matters transpired, no further application was made by Mr Rowson for the joinder of any additional defendants or to further amend the statement of claim.

On 13 July 2020 the trial date was vacated, and was subsequently refixed for 26 October 2020. On 28 October 2020, I granted Mr Rowson’s request for an adjournment, and refixed the trial for 17 November 2020. On 19 November 2020, I vacated the trial date, and ordered that the proceeding be stayed until Mr Rowson paid Mr Alpass’ costs thrown away by reason of the adjournment (fixed at $15,000), and filed a notice indicating that the proceeding was ready to proceed to trial.

Following Mr Rowson’s compliance with the conditions for lifting the stay, on 26 February 2021 I refixed the trial for 21 June 2021. On 16 June 2021, shortly after solicitors came onto the record for Mr Rowson, that trial date was also vacated after Mr Rowson sought time to file and serve an expert report with respect to the loss and damage claim, which I later directed be filed and served by 27 September 2021. On 5 October 2021, I listed the proceeding for trial on 27 April 2022.

On 13 April 2022, the trial date was vacated again by another judicial officer, after Mr Rowson foreshadowed making an application for further discovery. On 10 June 2022, consent orders were filed requiring Mr Alpass to make discovery of documents relevant to the loss and damage claim. On 26 August 2022, Mr Rowson was directed to issue any subpoenas by 9 September 2022, and to file and serve any additional witness outlines and expert reports by 11 November 2022. Further pre-trial directions were made on 11 November 2022, and the proceeding was fixed for trial on 6 March 2023.

However, 6 March 2023 was the first return date of objections to subpoenas issued on behalf of Mr Rowson and directed at the Law Institute of Victoria (‘LIV’), the Victorian Legal Services Commissioner, and the LSB (‘subpoenaed parties’). On that day, Mr Rowson provided amended subpoenas which subsequently reduced the scope of the documents sought by the subpoenas. I found that the amended subpoenas sought documents which were relevant to the loss and damage claim. Ultimately, I permitted the expert witness engaged by Mr Rowson, Mr Andrew Senia, to inspect a subset of the documents ultimately produced by the subpoenaed parties (‘subpoenaed documents’) upon the provision of appropriate confidentiality undertakings. The trial date was refixed for 2 August 2023, and the trial commenced upon that date after Mr Rowson retained Mr Dale and senior and junior counsel and filed and served Mr Senia’s report (‘Senia report’).

In summary, the issues in this proceeding are as follows:

(a) whether a binding oral agreement for the sale and purchase of the Hardy’s business was made on 21 July 2016;

(b) if no to (a), whether Mr Alpass was nevertheless estopped from denying the existence of such an agreement;

(c) further, if yes to (a) or (b), whether Mr Alpass is immune from any liability to Mr Rowson by reason of the immunity provision;

(d) if yes to (a) and/or (b), and no to (c) whether Mr Rowson has suffered any loss and damage by reason of Mr Alpass’ repudiation or breach of the agreement; and

(e) if yes to (d), the quantification of the loss and damage claim.

Overview of the evidence

Originally, orders were made for the witnesses to give their evidence in chief by way of witness statement. However, at the trial of the proceeding, all agreed that the witnesses should give their evidence in chief orally. However, the original witness statements were included in the court book, and were referred to by counsel for both parties during their cross-examination of Mr Rowson and Mr Alpass.

Mr Alpass’ solicitors also prepared an agreed court book, which was accepted into evidence, subject to submissions regarding the admissibility of particular documents. By way of example, Mr Rowson submitted that a number of court judgments and sentencing remarks were not admissible as evidence of the truth of the facts referred to in those documents by reason of the terms of s 91 of the Evidence Act 2008 (Vic) (‘Evidence Act’). A number of original documents reproduced in the court book were tendered into evidence separately, including original file notes, along with a small number of documents produced during the course of the trial.

Also in evidence was what was described as a ‘confidential courtbook’. The confidential courtbook contained some of the subpoenaed documents and other documents discovered by Mr Alpass. The documents in the confidential courtbook were confidential because they referred to individual clients of Hardy's.

Mr Rowson gave evidence himself, and called his brother, Mr Gavin Rowson to give evidence. He called Mr Andrew Senia, a solicitor and business consultant, to give evidence with respect to the Senia report. During the course of the trial, I admitted into evidence the Senia report over the objection of Mr Alpass. The issues surrounding the admissibility and reliability of Mr Senia’s evidence and the Senia report will be the subject of further consideration in the section of these reasons concerning the loss and damage claim. Mr Alpass gave evidence on his own behalf, and called no other witnesses.

During the course of the trial and in the course of the parties making their final submissions, a number of evidentiary issues arose in addition to the dispute regarding the admissibility of Mr Senia’s report. The following issues emerged from the evidence and the submissions of the parties:

(a) the assessment of the demeanour of the witnesses and the relevance of that assessment to the credibility of their evidence;

(b) the attack on the credibility of Mr Rowson based upon his prior convictions for dishonesty offences;

(c) whether any limitation should be imposed upon the use of a text message exchange between Mr Rowson and Gavin Rowson on 21 July 2016 (‘text message exchange’);

(d) the admissibility of the documents recording the judgments and sentencing remarks with respect to Mr Rowson, and the operation of the rule in Browne v Dunn,[7] given the asserted failure to provide Mr Rowson with the opportunity to respond to Mr Alpass’ assertions regarding the impact of his criminal history upon the credibility of his evidence;
[7](1893) 6 R 67.

(e) the attack on the reliability of Mr Alpass’ evidence, based upon his reliance upon his file notes;

(f) related to (e) above, whether the file notes accurately and fulsomely record the communications referenced in them;

(g) whether a Jones v Dunkel[8] inference should be drawn from Mr Alpass’ failure to call Mr Gordon Cooper of the LSB and staff employed by his firm to give evidence; and

(h) the admissibility of the judgments with respect to Mr Nelson’s disciplinary proceedings.

[8](1959) 101 CLR 298.

All of the issues above go to the resolution of the primary issue in this proceeding, being whether a binding oral agreement was made on 21 July 2016, save for the question of the admissibility of judgments concerning Mr Nelson’s disciplinary record, which is only relevant to causation and the loss and damage claim.

Chronology of relevant events

There was a limited number of critical communications between the parties over a period of less than three months. There was considerable, albeit not complete agreement between Mr Rowson and Mr Alpass about what was discussed and what was said during these conversations, and Mr Alpass was able to produce file notes with respect to all of the interactions between him and Mr Rowson, although the question of whether these file notes accurately and fulsomely record what was said in the critical conversations is in dispute.

Accordingly, in this section of these reasons, I will refer to the critical conversations and events in chronological order, highlighting any differences in the parties’ versions of events where necessary.

15 February 2016

Mr Alpass is appointed as the receiver of Hardy’s.[9] His main responsibilities as receiver were to conduct the necessary legal work for the remaining clients of Hardy’s, and to sell the assets of the Hardy’s business.
[9]CB149.

Mr Alpass gave evidence that he considered that the following matters needed to be taken into account when evaluating a prospective purchaser of a legal practice in his capacity as receiver:

(a) the fact that the clients of the legal practice were likely to be quite traumatised by the events which precipitated the appointment of a receiver meant that it was important to sell the practice to a legal practitioner who could deal with people on a reasonably good basis;

(b) the purchaser had to be appropriately qualified, and hold an extended practising certificate; and

(c) the price had to be right, as he was dealing with people’s assets.[10]

[10]T249 L3-27. Mr Alpass gave evidence that other issues which would need to be dealt with in any contract of sale would be the question of any GST payable on the purchase, and the need for the receiver or the LSB to recover any files to conduct further investigations (T249 L23-26).

24 March 2016

Mr Alpass received an offer to purchase the Hardy’s business for $2.00.[11]
[11]CB67.

3 June 2016

Mr Alpass received an offer to purchase the Hardy’s business for $100.[12]
[12]CB71.

6 July 2016

Ms Jacqueline Lewis, a legal practitioner, made an offer to purchase the Hardy’s business for $10,000. This offer followed a meeting between Mr Alpass and Ms Lewis on 4 July 2016 where they discussed the Hardy’s business.[13]
[13]CB73.

8 July 2016

Ms Lewis increased her offer to $20,000, subject to finance and further due diligence. Mr Alpass’ file note recorded that he told Ms Lewis that while he would encourage the clients of the Hardy’s business to transfer their files to her, he could provide no guarantee that the files would be transferred to her.[14]
[14]CB72.

13 July 2016

Mr Alpass wrote to Ms Lewis as follows:

Further to our telephone conversation on 11 July 2016, we note that we have now reached provisional agreement to the effect that you will purchase what remains of the Hardys law practice, including:-
1.        Current files;
2.        Deed Packets and Securities;
3.        Archived files;
4.        Remaining open but dormant files
for the sum of $20,000.00.
We will prepare contracts when you confirm you have organised your finance.
The Deed of Sale will include a clause to the general effect that the Receiver will write to each client with a file actively engaged, advising of the sale of the business.
You will recall that under the LPUL Rules (Rule 6), fourteen (14) days clear notice must be given to each of the clients regarding the sale and transfer of files and within that time the client has the right to refuse the transfer of their file and to collect their documents. Obviously, we will need to comply with those rules.
In addition, there is a possibility of a number of Fidelity Fund Applications.
If you wish to have a further inspection of the abovementioned client files on a confidential basis, then you are welcome to call into our office by appointment.
We look forward to your confirmation that you are ready to proceed, so that we can prepare the draft Deed of Sale for your perusal.[15]
[15]CB75.

20 July 2016

Mr Rowson telephoned Mr Alpass expressing interest in purchasing the Hardy’s business. He gave evidence that he asked Mr Alpass whether it was still for sale, and what assets were for sale.[16] He said that he told Mr Alpass that his late father had been a partner of Hardy’s. Mr Alpass told Mr Rowson that there were some active files and approximately 6,000 deeds,[17] and that there were some trust account deficiencies which were under investigation.
[16]T34 L29-T35 L3.
[17]At one point (T35 L10) Mr Rowson gave evidence that he was told there were 8000 ‘clients’, but in the end, the figure of 6000 deeds seems to have broad acceptance.

Mr Alpass gave evidence that during this telephone call, Mr Rowson told him that he was an associate of Mr Nelson. Mr Alpass said that he told Mr Rowson that the family law practice was ‘gone’, and told him the number of active files, the number of deeds (being 6,000), and that there was some furniture available. He said that he was happy for Mr Rowson to inspect the assets of the Hardy’s business. He did not recall there being any discussion about price, but he gave evidence that he may have said that he had already received an offer of $20,000 for the Hardy’s business.[18]
[18]T252 L10-11.

Mr Alpass’ file note of this telephone call was largely consistent with his recollection.[19]
[19]CB78.

Mr Rowson said that Mr Alpass made no mention of price during this telephone call, and Mr Alpass did not say that the Hardy’s business was under offer, but that no contracts had yet been exchanged. He said that Mr Alpass never said that ‘family law has gone’.[20]
[20]T106 L19-25.

Later that day, Mr Rowson telephoned Mr Alpass again to arrange for him and Mr Nelson to inspect the assets of the Hardy’s business the following morning. Mr Alpass’ file note of this call records a discussion about the deeds, with Mr Rowson telling Mr Alpass that he did not need to see the deeds as his father was familiar with a lot of the clients.[21]
[21]CB78.

21 July 2016

Mr Rowson and Mr Nelson attend Mr Alpass’ firm’s premises in Kilsyth at around 10.40am. Mr Alpass took them to his office. Mr Rowson said that at first, Mr Alpass and Mr Nelson talked about prestige cars. Mr Rowson then asked Mr Alpass to provide further details of the deeds and the files, and to explain what had happened to the Hardy’s business, and Mr Alpass did so. They then talked about Mr Rowson’s father’s history with Hardy’s.

After spending about 10 minutes in Mr Alpass’ office, Mr Alpass took them to an adjacent office where the active files were kept. After providing an oral confidentiality undertaking, Mr Rowson and Mr Nelson inspected the files. Mr Rowson said that most of the files concerned probate matters.

Mr Rowson said that after he and Mr Nelson inspected the files, they returned to Mr Alpass’ office and had a further discussion. Mr Rowson said he told Mr Alpass that they liked what they saw, and discussed the value of the work-in-progress, which Mr Alpass said was approximately $100,000.

Mr Alpass’ evidence and his file note of this meeting largely accord with Mr Rowson’s version of events regarding this meeting, albeit with less detail. The file note records a notation ‘will cost up files to c/o day’, which I assume refers to a handover date.

Mr Alpass then arranged for his practice manager, Ms Jill Crawford, to take Mr Rowson and Mr Nelson to a nearby storage facility, where the deeds, archived files, and office furniture and equipment were stored. Mr Rowson said that they inspected three of the four sheds, and surveyed a sample of the deeds, many of which seemed to be wills. Mr Rowson said that he and Mr Nelson exchanged words to the effect that ‘this is good, this is exactly what we’re looking for’.[22] They then travelled back to the office with Ms Crawford. According to a file note made by Ms Crawford at 12.07pm, they spent approximately 40 minutes out of the office travelling to and from the storage facility and inspecting the assets of the Hardy’s business at the storage facility.[23]
[22]T44 L6.
[23]CB80.

The parties are in dispute about what happened after Mr Rowson and Mr Nelson returned from their inspection of the storage facility. Mr Rowson said that he spoke briefly with Mr Nelson in the reception area, and they agreed that Mr Rowson would conduct the negotiations with Mr Alpass. He said that they returned to Mr Alpass’ office, and during this meeting (‘disputed meeting’) told Mr Alpass that they were very interested in purchasing the Hardy’s business. Mr Rowson gave evidence that, in response to a question from him as to whether Mr Alpass had received any previous offers, Mr Alpass told them that he had an offer of $20,000, subject to finance.

Mr Rowson said that he looked at Mr Nelson, then said that they would pay $25,000, not subject to finance, with settlement within 14 days, to which Mr Alpass responded after leaning back his chair and thinking about it for while, ‘well, seeing as it’s not subject to finance, I accept your offer’.[24]
[24]T46 L5-6.

Mr Rowson said he then asked Mr Alpass what was to be done now, to which Mr Alpass responded that they should work out the details. They discussed what was to be done with the work in progress, which Mr Rowson said they could not take on immediately. They discussed Mr Alpass working on the files until the handover date, when the files would be costed. After settlement, Mr Rowson and Mr Nelson would bill the clients and reimburse Mr Alpass for his work. Mr Alpass told them that he estimated that approximately $100,000 in fees remained unbilled.[25]
[25]T46 L7-22.

Mr Rowson said that he told Mr Alpass that he and Mr Nelson had discussed setting up a corporate entity to be the purchaser. He asked Mr Alpass about who would be responsible for drawing up the contract of sale, and Mr Alpass said that he would do that. Mr Rowson then told Mr Alpass that they did not yet know the name of the legal entity that would be the purchaser of the Hardy’s business.[26]
[26]T47 L1-9.

Mr Rowson said that Mr Alpass then asked whether they planned to open an office in Dandenong. Mr Rowson said that they probably would. Mr Rowson then said he would provide Mr Alpass with the name of the corporate entity which would purchase the Hardy’s business when they returned to the office.[27]
[27]T47 L7-18.

Mr Rowson gave evidence that the men then chatted about life and legal affairs, then, after they all stood up to leave, they shook hands on the deal. Mr Alpass then took them from his office to the carpark through a courtyard and saw them off.[28]
[28]T47 L19-28.

Mr Rowson gave evidence that at no time during the disputed meeting did Mr Alpass place any conditions on the sale or ask either of them about the status of their practising certificates, or whether they had trust account credentials. Mr Alpass did not say that the sale was subject to approval by LSB.[29]
[29]T48 L1-6.

Mr Alpass’ version of what happened after Mr Rowson and Mr Nelson returned from the storage facility was quite different from Mr Rowson’s version of events. Mr Alpass said that he had a brief conversation with Mr Rowson in the hallway outside his office after they returned from the storage facility. Mr Alpass saw Mr Nelson wandering around the carpark looking confused and trying to enter the wrong car. Mr Rowson said that he would get back to him the following day. Mr Alpass denied that he met with Mr Rowson and Mr Nelson again in his office, denied that Mr Rowson made an offer to purchase the Hardy’s business on that occasion, and denied that he had accepted any offer made by them to purchase the Hardy’s business.[30]
[30]T259 L8-24.

There is no record of any offer or agreement in Mr Alpass’ file note. The following note was made at the bottom of the page, under a dash which Mr Alpass said signified an end to the first meeting in his office before Mr Rowson and Mr Nelson left to visit the storage facility:

Jill then took them to inspect the Deeds etc at the storage facility. Mark tgb[31] tomorrow. Mentioned have an offer of $20G.[32]

[31]Mr Alpass’ abbreviation for ‘to get back to me’.

[32]CB79.

Later that day, Mr Rowson had the text message exchange with his brother Gavin. At 1.41pm, Mr Rowson wrote:

Gav call me soon as you can, we just bought Hardy’s back! I’m going to need 25k from cherb.[33]

[33]Exhibit A. ‘CHERB’ is an acronym for the name of the trust of which Mr Rowson is a beneficiary.

At 1.43pm, Gavin Rowson responded as follows:

Deposit?? will call in ten.

Gavin Rowson did not recall in great detail the time or contents of the discussion he had in the telephone call referred to in the text message exchange. He recalls Mr Rowson telling him what he was purchasing, saying it was the files of the Hardy’s business. Gavin Rowson gave the following evidence regarding this conversation:

When did you have this discussion? --- Ah, I assume - I assume at the end of - on the same day or within days of that conversation or that text message.
Is that your recollection?---Yes.
All right. And what was discussed with Mr - with your brother, Mark? --- Um, he’d purchased or he was put an offer in to buy the trust or the Hardy’s, and he was going to run the files with his - um, Darroll Nelson, I believe.
Yes.
And what did he say about buying it? --- Ah, he was excited because it was dad’s old business that, ah, I think, Rob Hession had owned. And then I’m not sure what happened to Rob. I think he’d been disbarred and that went to a - - -
How many discussions did you have with your brother about the purchase of - - -?---I think probably half a dozen or a dozen.
…
So, Mr Rowson, what was discussed with your brother in those conversations? --- Ah, I asked him, I suppose, what he was purchasing, and that – and how valuable he thought it was, um - - -
What did he say? --- I can’t recall, but he said there was over a thousand files, I think, or something. Over 1,200 files. I don’t recall, honestly. Um, but it seemed like a good purchase to me.[34]

[34]T70 L4-T71 L3.

Gavin Rowson gave evidence that he asked Mr Rowson a few questions about the proposed purchase, because he was the person who would be providing the money.[35]
[35]T71 L4-6.

Gavin Rowson was also asked about discussions he had with his brother about the Hardy’s business being sold to someone else. He gave the following evidence:

And what did he say about that?---Ah, he was a bit annoyed. A bit pissed off.
…
What was the manner of his tone when he spoke to you about that? --- Ah, my brother - my brother was annoyed that it – they’d put an offer in and thought they had a signed and sealed deal, and it was pulled out from under them, I suppose. So he was a bit annoyed.[36]

[36]T71 L21-T72 L2.

Gavin Rowson also gave evidence that as at 9 August 2016, the balance in the account held on trust for Mr Rowson was $41,461, based upon a text message exchange between him and Mr Rowson on that day.[37] Gavin Rowson was not cross-examined about his version of events.
[37]T269 L23.

Returning now to the chronology of events, later on 21 July 2016, Mr Rowson telephoned Mr Alpass. Mr Alpass said that it was during this telephone call that Mr Rowson offered to purchase the Hardy’s business for $25,000, unconditionally, with settlement in 14 days. Mr Alpass said that Mr Rowson offered to pay a deposit, and pay the costs of the storage facility until everything was sorted. Mr Rowson asked if Mr Alpass would be prepared to complete work on any open files if they were close to completion, saying that the deeds were more important to him and Mr Nelson than the files. Mr Alpass said that he did not accept or reject this offer, and said that he asked Mr Rowson to send him an email confirming the terms of the offer. This evidence was confirmed by Mr Alpass after being taken to his file note.[38]
[38]CB81; T269 L14-23.

Mr Rowson agreed that he telephoned Mr Alpass later that day, but that the purpose of the call was to tell Mr Alpass that he could not acquire a shelf company straight away, and to ask him whether the contract of sale could be in the name of Mark Rowson or nominee. He said Mr Alpass asked him to put in writing the terms of the agreement they had made and his offer with respect to the work in progress.[39] He said that, not being legally trained, it did not occur to him to use the word ‘agreement’ in the 21 July email.[40] He gave evidence that the purpose of the 21 July email was to provide Mr Alpass with the information he needed to draw up the contract of sale.[41]
[39]T57 L15-20.
[40]T58 L12-17.
[41]T118 L28-T119 L6.

Mr Rowson said that he asked Mr Alpass how much the storage facility was costing him, and said that they would be happy to pay for that. He asked Mr Alpass if they could have 14 days for settlement, because he was not sure whether he could lay his hands on $25,000 straight away. Mr Alpass said that was not a problem.

At 3.23pm that day, Mr Rowson sent the 21 July email from Mr Nelson’s email account. The 21 July email stated as follows:

Alan,
Thank you for your time today. We confirm our offer of $25,000.00.
We intend to set up a new incorporated practice but for now the contract can be in the name Mark Rowson &/or Nominee.
If you could please provide banking details I will organise payment of 10% with the balance to be paid on settlement on the first Monday after a fortnight.
I also confirm the arrangements re: the open files, being that Alpass & Associates should manage the files until a mutually agreed date as it will take some time for us to complete the transition, and Alpass will bill any files that are completed on handover.
Yours faithfully,
Mark Rowson[42]

[42]CB82.

Mr Rowson agreed that he received no response to the 21 July email from Mr Alpass. Mr Alpass gave evidence that he did not respond to the 21 July email because he needed to speak to the LSB about the qualifications and appropriateness of the prospective purchasers. He did not have access to the records of the qualifications and practising certificate status of legal practitioners, but LSB did.[43]
[43]T273 L1-8.

25 July 2016

Mr Rowson telephoned Mr Alpass. He said that the purpose of this call was to chase up the contract of sale. Mr Alpass asked him straight away whether he held a practising certificate, and he answered no. Mr Rowson said that it seemed to him as if Mr Alpass knew that already. Mr Rowson said that he explained that he had a prior conviction for a tax offence and would not be eligible to hold a practising certificate, and asked if Mr Alpass would be more comfortable with the contract being in Mr Nelson’s name. Mr Alpass then asked him if Mr Nelson could accept trust funds, saying that there were funds in trust. Mr Rowson told him that Mr Nelson had a practising certificate, but that he was not authorised to hold trust moneys. He told Mr Alpass that Mr Nelson was already in the process of getting an extended practising certificate, and suggested that the settlement date be extended until the date when Mr Nelson obtained an extended practising certificate.[44]
[44]T123 L3-T124 L15.

Mr Rowson gave evidence that at no time during this telephone call did Mr Alpass tell him that the absence of any authorisation to hold trust moneys was a deal breaker, or that Mr Alpass was sitting on the offer and still considering it, or that he needed to investigate their credentials before responding to any offer.[45]
[45]T63 L6-10.

Mr Rowson’s evidence regarding what was said during this telephone call was consistent with Mr Alpass’ evidence, and with what was recorded in Mr Alpass’ file note.[46] Mr Alpass’ recollection of this conversation was prompted by reviewing this file note.
[46]CB82.

Also on 25 July 2016, Mr Alpass called Ms Lewis. Ms Lewis said, among other things, that she wanted to have another look at the deeds, and she also told him that she had completed her supervision period. Mr Alpass said that he told her that her employer, Ms Jan Knight, would need to be the purchaser, because the purchaser would need an extended practising certificate. Mr Alpass gave this evidence after being taken to the file note of this conversation.[47]
[47]CB83.

Mr Alpass gave evidence that later that day, he telephoned Mr Gordon Cooper, who was an officer within the external interventions division of the LSB.[48] After discussing unrelated matters, Mr Alpass said he discussed the two prospective purchasers of the Hardy’s business with Mr Cooper. Mr Alpass’ file note records the following discussion:

Darroll Nelson to buy the practice? No, he has disciplinary proceedings re prac, m’ment. Go w. the lady Jacqueline Lewis. Nelson has offered more. Ok to walk from $5000. Is JL ok? He checking her out – she has an employee p. cert. She is subject to supervising legal practice + may not be able to buy.[49]

[48]The file note suggests that Mr Cooper telephoned Mr Alpass, but Mr Alpass gave evidence that he believed that he initiated this conversation.

[49]CB84.

Mr Alpass gave evidence that he had an independent recollection of his conversation with Mr Cooper. He recalls Mr Cooper saying unfavourable things about both Mr Nelson and Ms Lewis, and telling him that Mr Nelson had a number of disciplinary issues, which Mr Alpass did not know about prior to that, although he said that he knew that Mr Nelson had a ‘reputation’.[50] He recalls Mr Cooper saying words to the effect that the decision regarding the sale of the Hardy’s business was up to him (Mr Alpass), but Mr Cooper was quite forceful in saying that he did not want Mr Nelson to purchase the practice.[51] He wanted a good lawyer to take over the practice, and Ms Knight, Ms Lewis’ employer, would be okay. He recalled Mr Cooper saying ‘go with the lady’.[52]
[50]T344 L5.
[51]T283 L16.
[52]T284 L29-30; CB84.

Mr Alpass agreed that Mr Cooper’s opinion about who should purchase the Hardy’s business would influence his decision in that regard if Mr Cooper provided good reasons to support his opinion. He agreed that he was not obliged to seek approval for a potential purchaser from the LSB, but said that he would be a fool not to do so. He said that the reference in the file note to the words ‘Ok to walk from $5,000’ was a reference to Mr Cooper saying that it would be okay for Mr Alpass to walk away from the higher offer. He gave evidence that the reference in his file note to the words ‘Darroll Nelson to buy practice’ was not a statement to the effect that Mr Nelson had bought the Hardy’s business: rather, he asked Mr Cooper a question as to whether Mr Nelson could buy the Hardy’s business.[53]
[53]T285 L22 – T286L7.

28 July 2016

Mr Rowson telephoned Mr Alpass’ office asking Mr Alpass to call him back regarding the paperwork for the contract for the purchase of Hardy’s. Mr Alpass did not return Mr Rowson’s call.[54]
[54]CB85.

29 July 2016

Mr Alpass telephoned Ms Lewis and told her that it would be okay for Ms Knight to purchase the Hardy’s business because she had an extended practising certificate. Ms Lewis told him that she thought that her supervision period was over, but Mr Alpass said that he told Ms Lewis that she would need to have an extended practising certificate to be able to purchase the Hardy’s business, and that she should contact the LSB to ascertain what her position was.[55]
[55]T280 L30 – T281 L19.

Mr Rowson telephoned Mr Alpass and left a message asking him to call him back, telling Mr Alpass’ receptionist that ‘we have a little hiccup’. He then called Mr Rowson back and left a message saying he was returning his call about the ‘little hiccup’.[56]
[56]T288 L2-3.

Mr Alpass gave evidence that when Mr Rowson called him back, Mr Rowson told him that ‘Mr Nelson was having issues getting his certificate upgraded to trust, that he had to sit exams and there were problems’.[57] He then was taken to his file note, which records that Mr Rowson told him that Mr Nelson had completed an ethics course and that the extended practising certificate should come through soon. Mr Alpass’ file note records the following outburst:

I don’t want to waste my time drawing contracts when I have another offer unless he can give me a firm commitment as to when everything will be ready (full cert with trust).[58]

[57]T288 L7-11.

[58]CB87.

Mr Alpass said that he does not usually speak to people that way (and I agree that is consistent with his presentation and demeanour in the witness box), but he was becoming irritated and frustrated with the delay.[59]
[59]T292 L16-22.

Mr Rowson agreed that he and Mr Alpass discussed the status of Mr Nelson’s practising certificate during this telephone conversation, but denied that Mr Alpass said the words recorded in the file note reproduced above, and denied that Mr Alpass was quite firm with him during this conversation.[60]
[60]T144 L30 – T145 L7..

3 August 2016

Mr Rowson called Mr Alpass’ office and left the following message:

He has been organising application for variation of Mr Nelson’s Practising Certificate.
Anticipates it will take about 2 weeks to go through. He will be seeking that it be expedited.[61]
[61]CB88.

18 August 2016

The amended statement of claim and Mr Rowson’s witness statement refers to him relinquishing an existing lease that day, but he made no mention of that date in his oral evidence.

19 August 2016[62]

[62]I note that this date is two weeks and two days after 3 August 2016.

Mr Alpass’ personal assistant sent Ms Knight a letter, which enclosed a draft agreement for the sale of the Hardy’s business for $20,000. The letter stated as follows:

Further to recent communications, we now enclose a draft Agreement for the sale of the assets of the legal practice.
Pursuant to the Agreement, the Receiver is required to provide each client with a file actively engaged or opened, with a letter advising of the transfer of the file and trust funds pursuant to Rule 6 of the LPUL. To enable sufficient time for client responses, we have nominated the time for the letter as the 24 August 2016. So that this can be done, please facilitate an exchange prior to that date.
Please note that we have left clause 7(b) blank as to your trust account details. Kindly complete prior to exchange. Please note that we will forward the schedule of files to you shortly.
Together with the executed Agreement, please provide us with a cheque for the deposit in the sum of $5,000.00 payable to Alpass & Associates.

Should you have any queries, please telephone the writer.[63]

[63]CB90.

While the letter reproduced above refers to ‘recent communications’ regarding the sale of the Hardy’s business to Ms Knight, there was no file note in the court book evidencing any such communications between 29 July 2016 (when Mr Alpass called Ms Lewis) and this letter. However, as a matter of logic, there must have been at least one communication between Mr Alpass and either Ms Lewis or Ms Knight in that period for Mr Alpass to know that Ms Knight had agreed to purchase the Hardy’s business in substitution for Ms Lewis, and that funding for the purchase had been arranged.[64]
[64]In Mr Alpass’ witness statement, he referred to having had discussions with Ms Knight about the sale and purchase of the Hardy’s business.

26 August 2016

Mr Alpass wrote to Ms Knight, as follows:

Further to recent communications, we enclose a list of files currently current. This list can be annexed to the Contract as Schedule A.
There will be a large number of other files handed over to you at settlement which are either currently dormant or concluded and not closed.
We intend to write to all of the clients listed in Schedule A prior to settlement.[65]
[65]CB102.

29 August 2016

Mr Rowson telephoned Mr Alpass. Mr Rowson said that he made the call to update Mr Alpass on their progress in obtaining Mr Nelson’s extended practising certificate. Mr Rowson said that he offered to pay the full purchase price into Mr Alpass’ trust account if that would make Mr Alpass feel more comfortable while they waited for the extended practising certificate, but Mr Alpass told him that there was no need, given that a contract could not yet be exchanged.[66] In his witness statement, Mr Rowson also said that Mr Alpass also told him that if he and Mr Nelson could not complete the agreement within a reasonable timeframe, then Mr Alpass would consider selling the Hardy’s business to someone else.[67] When giving evidence at trial Mr Rowson first denied that Mr Alpass made that statement,[68] but accepted that he must have done so when taken to his witness statement.[69]
[66]T87 L7-12.
[67]CB106.
[68]T146 L19-25.
[69]T147 L9-19.

Mr Alpass’ version of events regarding this telephone call was different than the version of events put forward by Mr Rowson. Mr Alpass confirmed the contents of his file note, which recorded Mr Rowson telling Mr Alpass that the LSB and the LIV were dragging their feet: he had returned Mr Nelson’s trust account examination two weeks ago but he had been told that it had not yet been checked. Mr Rowson told Mr Alpass that he and Mr Nelson were about to get a new office, and offered to put money into his trust account. Mr Alpass said that he declined, and said words to the effect that ‘we will sell to anyone and will only take money if we can enter into contracts – which they can’t’.[70] Mr Alpass said that Mr Rowson said nothing in response to this statement.[71]
[70]CB106; T299 L18-19.
[71]T299 L22.

31 August 2016

HNR was incorporated by Mr Rowson.[72]
[72]CB145.

2 September 2016

Ms Knight wrote to Mr Alpass, as follows:

We refer to the above matter and enclose Agreement for Sale and Purchase duly signed together with our cheque for $5,000.00 being the deposit payable.
We await receipt of a duly executed copy Agreement signed by you to complete exchange.
Meantime, we note from our telephone discussion today that the settlement date is likely to be extended beyond 16 September 2016 to 30 September 2016. Please confirm same by return.[73]
[73]CB107.

7 September 2016

Mr Alpass wrote to Ms Knight, as follows:

Thank you for your letter dated 2 September 2016.
We enclose the Agreement for Sale and Purchase of Business duly executed by the Receiver to complete exchange.
Please note that we have amended the contract settlement date to Friday, 14 October 2016 so that we have time to notify all of the relevant clients.
If this revised date causes any problems, please contact the writer.
Please also advise us of the particulars of your trust account so that we can complete paragraph 7(b) of the Contract.[74]
[74]CB108.

12 September 2016

Mr Alpass wrote to Mr Rowson at Mr Nelson’s email address, as follows:

Further to recent communications, we advise that the assets of Hardys law practice have now been sold.[75]
[75]CB121.

14 September 2016

Mr Rowson gave evidence that it was not until this day that he and Mr Nelson saw the letter referred to above. They telephoned Mr Alpass immediately. Mr Rowson gave evidence that he was furious, and asked him if Anthony Swords or Mick Gatto had anything to do with it, because those men had recently broken into Mr Nelson’s office and stolen computers and files. He said that he did not think he said anything to Mr Alpass during this telephone call regarding the nature of the agreement they believed they had with him.[76]
[76]T148 L1.

Mr Alpass largely agreed with Mr Rowson’s evidence about what was said during this telephone call. He said it was a ‘bizarre’ call, but that it was conducted on reasonably friendly terms. He understood the reference to Mr Swords and Mr Gatto to somehow imply that he (Mr Alpass) had been ‘got at’.[77] He said that Mr Rowson did most of the talking, but Mr Nelson was in the background, listening via speaker phone. Mr Alpass said that towards the end of the call Mr Nelson asked him a few times if he (Mr Alpass) could ‘flick him a few files’. Mr Alpass refused, and said that he told Mr Rowson and Mr Nelson that he could not tell them who purchased the Hardy’s business or for how much.[78] Mr Rowson’s evidence and Mr Alpass’ evidence about this telephone call is largely consistent with Mr Alpass’ file note.[79]
[77]T301 L21-22.
[78]T301 L12-28.
[79]CB122.

15 September 2016

Mr Rowson gave evidence that after their telephone call with Mr Alpass, Mr Nelson suggested that they consult Mr Dale. Mr Dale sent the following email to Mr Alpass after taking instructions from Mr Rowson and Mr Nelson. Mr Rowson said that the instructions provided to Mr Dale came from both him and Mr Nelson:[80]
[80]T148 L7-8.

We act for Darroll Nelson and HNR Lawyers Pty Ltd.
We note that you were appointed receiver of the law practice Hardys by Order of the Supreme Court
We are instructed that you negotiated with Darroll Nelson and our client agent Mark Rowson for the sale of the law practice Hardys to a nominee purchaser which was a company to be incorporated.
An agreement for the sale of the law practice Hardys was reached on the basis that the sale price was $25,000 with a deposit to be paid. This sale was not conditional. Consequent upon agreement for the sale HNR Lawyers Pty Ltd was incorporated to be the nominee purchaser.
Subsequently you said you wanted to ensure that prior to settlement our client needed to hold a practising certificate entitling it to receive and hold trust money. Our client has been in the course of effecting that.
We are instructed that this agreement was partly in writing and partly oral and was constituted by email dated 21 July 2016, discussions between Messrs Nelson and Rowson and you at your office and by telephone.
Contrary to your agreement to sell the law practice Hardys to our client, we are instructed that by letter dated 12 September 2016 you wrote to our client’s agent, Mr Rowson, care of Mr Nelson, informing our client that the assets the law practice Hardys have now been sold. This occurred without any further communication with our client.
Can you please explain why you ignored the prior sale of the law practice Hardys to our client in purporting to sell it to another party in disregard of the prior sale. Can you please disclose the particulars of that other sale (such as the purchaser, consideration payable and terms of the sale), whether it is conditional and whether it has settled. We request that you take no further action in relation to the other sale until your response to this request.
In addition, if the subsequent sale is conditional and can be terminated, we require your undertaking by 5.00pm tomorrow, 16 September 2016, that you terminate that sale as soon as practicable and that you complete the sale to our client, failing which we shall issue proceedings seeking amongst other remedies, injunctive relief.
Given the issues raised in this email, we would appreciate your prompt response to this correspondence.[81]

[81]CB123.

In this email, Mr Dale said that the alleged agreement was partly oral and partly in writing, which is inconsistent with what was pleaded in the amended statement of claim. However, little turns on this inconsistency, given that this email was sent only the day after Mr Rowson and Mr Nelson spoke with Mr Alpass, such that Mr Dale had only limited time to take instructions and review any relevant documents.

19 September 2016

Mr Dale sent a further email to Mr Alpass requesting a response to his email above.[82]
[82]CB125.

20 September 2016

After some missed calls, Mr Alpass spoke on the telephone with Mr Dale. Mr Alpass said that, like a prudent solicitor, Mr Dale said little, and mainly listened to him speak. Mr Alpass’ file note stated as follows:

No contract exists
Your client is misinformed + has given incorrect instructions.
He seemed reasonable.
I will give as much detail as is poss.
I have very good file notes. Response this arvo. Out of state Thurs, Fri, Sat + Sunday.[83]

[83]CB128.

After this telephone call, Mr Alpass sent the following letter to Mr Dale:

We refer to your email dated 15 September 2016. We deny that any agreement has been reached with your client as alleged.
We note that your client claims that an email dated 21 July 2016 is evidence of agreement. We note that email made an offer which was not accepted. The offer was on behalf of Mark Rowson and/or nominee and mentioned that “we intend to set up a new incorporated practice”.
On 25 July 2016 Mr Rowson telephoned and stated that he did not hold a practising certificate, that he is a para-legal and that he is not a fit and proper person because of a conviction a long time ago regarding a tax offence. He also indicated that Mr Nelson could purchase but that he had a practising certificate without trust. The writer indicated that it was not possible for a sale to be effected to a person without a trust authorised practising certificate.
On 29 July 2016 two further telephone calls were received from Mr Rowson. Mr Rowson initially left a message "We have a little hiccup". In the second call he again confirmed that Mr Nelson did not hold a trust practising certificate but that he had done an ethics course and would have the trust certificate “soon”. The writer told Mr Rowson that he did not wish to waste his time drawing contracts when we had another offer, unless Mr Nelson could give a firm time commitment as to when everything would be ready. Mr Rowson indicated that he would respond on the following Monday.
On the following Wednesday (3 August 2016), Mr Rowson telephoned and said that the practicing certificate variation would take about two weeks. On 29 August 2016, Mr Rowson rang again and indicated that the Legal Services Board were, in his words, ‘dragging their feet’. The writer clearly stated to Mr Rowson, when he then offered to put money in the writer's trust account, that the offer was declined and that he would sell to anyone in the meantime and would only take funds if everybody was in a position to enter contracts, which your client certainly was not.
When contracts were eventually exchanged with another purchaser, a courtesy email was sent to your client stating that the assets of Hardys law practice has been sold. We otherwise refer your client to Section 362 of the LPUL (2014) concerning confidentiality.
In the event that your client still maintains that there was an agreement, kindly provide full particulars.
In the event that your client fails to provide the particulars requested and institutes proceedings, then we are instructed to strongly defend same and to produce this letter on the question of costs which will be sought from your client.[84]

[84]CB130.

In his evidence, Mr Alpass agreed that he prepared this letter following a review of his file notes. He accepted that this letter made no mention of the meeting between him and Mr Rowson and Mr Nelson at his office on the morning of 21 July 2016.[85]
[85]T356 L17-20.

There was further correspondence exchanged between the parties between 21 September 2016 and 3 October 2016,[86] mainly regarding Mr Alpass’ refusal to disclose the identity of the purchaser of the Hardy’s business and the amount paid by the purchaser for the Hardy’s business.
[86]CB133, 136, 138.

3 October 2016

Mr Rowson and Mr Nelson issued this proceeding.

Was an agreement made for the sale and purchase of the Hardy’s business?

The primary issue in the proceeding is whether an oral agreement was reached between Mr Alpass and Mr Rowson for the sale and purchase of the Hardy’s business on the terms pleaded in the amended statement of claim, or at all. There is no dispute about the relevant legal principles: that is, whether, viewed objectively, an intention to enter into a binding agreement can be ascertained from the words and conduct of the parties. Where the parties differ is as to what words were said at critical junctures, in particular, what was said at the disputed meeting. There is a direct conflict of evidence between Mr Rowson and Mr Alpass on that issue, such that it is necessary to determine whether Mr Rowson’s evidence is credible, and whether Mr Alpass’ evidence is reliable. There is some dispute about the relevance of post-contractual conduct to the issue of whether a contract came into existence.

Mr Rowson observed that the critical issue in this proceeding was whether Mr Alpass merely had Mr Rowson ‘on the hook’ to purchase the Hardy’s business, or whether he had already reeled him in. Mr Rowson submitted that his evidence regarding the critical conversations should be accepted, noting that the key question is ‘what a reasonable person would have thought in all of the circumstances as to whether there was a concluded bargain’.[87] Mr Rowson submitted that acceptance of an offer does not need to be express, it can be implied,[88] and evidence of the post-contractual conduct of the parties may be admissible to prove the existence of a contract.[89]
[87]Referring to the decision in White Pointer Investments Pty Ltd v Creative Academy Group Pty Ltd [2023] NSWSC 817 [205].
[88]Brogden v Metropolitan Railway Co (1877) 2 App Cas 666, 686.
[89]Danbol Pty Ltd v Swiss Re International SE [2020] VSCA 274.

Mr Rowson submitted that the oral agreement between the parties fell within the first category of agreements referred to by the High Court in Masters v Cameron,[90] being where:

… the parties have reached finality in arranging all of the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect.[91]

[90](1954) 91 CLR 353.

[91]Ibid [39].

Mr Rowson also relied upon the doctrine of part performance in support of his contention that the oral contract between the parties is enforceable. However, I do not consider that the doctrine of part performance has any application to Mr Rowson’s claims in this proceeding. Either a binding agreement was made or it was not. However, I agree that the conduct relied upon by Mr Rowson in support of his contention that there were acts of part performance may be conduct relevant to the question of whether a contract had in fact been formed.

Mr Rowson observed that most of the factual matters relevant to the question of whether an agreement had been reached were not in dispute. And, where the facts are in dispute, those disputes should be resolved in Mr Rowson’s favour. In particular:

(a) Mr Rowson had a vivid and detailed recollection of the key events, which was confirmed rather than shaken by cross-examination. The authorities suggest that the credibility of a witness is enhanced when that witness has a vivid recollection of the relevant events; [92]
[92]See the observations of Lyons J in Citius Pty Ltd v Logos Australia Group Pty Ltd [2022] VSC 656 (‘Logos’) at [32].

(b) Mr Rowson’s forthright demeanour and his answers to questions, including questions about his criminal history, confirmed him to be an honest and credible witness;

(c) Mr Rowson’s evidence about what happened during the disputed meeting was supported by the evidence of Gavin Rowson, who was an honest and credible witness. Gavin Rowson’s unchallenged evidence confirmed the authenticity of the text message exchange, and confirmed that Mr Rowson had access to sufficient funds to purchase the Hardy’s business at the relevant time; and

(d) Mr Alpass’ failure to put to Mr Rowson that his evidence should not be believed by reason of his prior conviction for dishonesty offences breached the rule in Browne v Dunn,[93] such that Mr Alpass should not be permitted to rely upon those past convictions and sentencing remarks to impugn Mr Rowson’s credit. Mr Rowson submitted that the approach taken in cross-examination was an example of counsel being ‘willing to wound, and yet afraid to strike’.[94]

[93](1893) 6 R 67.

[94]Referring to the decision of Wells J in Reid v Kerr (1974) 9 SASR 367, 374.

Mr Rowson submitted that Mr Alpass’ evidence was unreliable, and therefore should be treated with caution. In particular:

(a) Mr Alpass has almost no independent recollection of the relevant events (contrary to what he said in his witness statement), often saying during the course of giving his evidence that he relied heavily upon his file notes;

(b) his demeanour was unremarkable, save that he was ‘often quiet, and looking downwards at key and contentious points in his evidence’, was sometimes evasive, and ‘seized opportunities to advocate for his case when responding to questions in cross-examination’;

(c) he made no reference to the disputed meeting in his witness statement, despite agreeing in the witness box that the disputed meeting did occur;

(d) his answers under cross-examination were often inconsistent with other answers given by him; and

(e) Mr Rowson submitted as follows:

However, notwithstanding the above matters, the plaintiff does not ask the Court to find that Mr Alpass was dishonest or not a credible witness. Rather, the plaintiff simply submits that Mr Alpass was not a reliable witness and little weight ought to be given to his evidence, having regard to his clear lack of independent recollection, and total reliance on his notes - which reliance is misplaced…

Mr Rowson submitted that the reliability of Mr Alpass’ evidence was undermined by his heavy reliance upon the file notes, as the file notes were not a fulsome record of everything that was said during the meetings or conversations referenced in the file notes. Mr Rowson submitted further as follows:

The file notes themselves raise numerous unanswered questions, including:
(a)why was the most critical of the file notes mis-dated, not just with the wrong date, but also the wrong year (and a future year at that). One can understand writing the wrong year in the early months of a new calendar year, but not in July, let alone for a year which is yet to arrive;
(b)why was the most critical part of the file notes - that of the Second Meeting on 21 July 2016, not accompanied by the usual time notation in a circle which appears for all other attendances in the court book - leaving open the possibility that a further page or pages exist;
(c)why were the file notes altered after the fact, by a solicitor, let alone one who was aware that there was now litigation on foot for which those file notes would play an important part;

Accordingly, when considering the quantification of the loss and damage claim, it is necessary to address the following issues:

(a) whether Mr Senia’s opinion as to the value of the lost opportunity should be accepted;

(b) if no to (a), has Mr Rowson adduced sufficient evidence to enable me, doing the best I can, to assign a value to that loss of opportunity;

(c) if yes to (b), what discount should be applied to reflect the actual and potential vicissitudes which would have or might have impaired Mr Rowson’s ability to recover part or all of the likely revenue from the deeds; and

(d) if I found that there was no oral agreement, but held that Mr Alpass was estopped from denying the existence of an oral agreement, the appropriate basis for calculating any equitable compensation.

Turning now to the Senia report and Mr Senia’s opinion regarding the value of the income stream which might be generated by the deeds, I accept that many of the criticisms of the Senia report advanced by Mr Alpass are legitimate, and Mr Senia was not a particularly impressive witness. It was not that he was a partisan witness, in the sense that his evidence was tailored to support Mr Rowson’s case, but rather he was so enthusiastic about his methodology that he made quite extravagant claims about the income which could be generated from the deeds by Mr Rowson and Mr Nelson. However, the Senia report and Mr Senia’s evidence are not without some value, and the real question is what use I can make of that evidence (combined with Mr Rowson’s evidence) in order to assign a value to the lost opportunity. After all, it is all the evidence I have.

Mr Alpass submitted that neither Mr Rowson or Mr Senia adduced any evidence to support the methodology utilised by Mr Senia to value the deeds. I accept that Mr Senia’s approach seems somewhat unorthodox, and contrary to the usual principles of business valuation. Usually, one might expect evidence of the value of the Hardy’s business to involve a discounted cash flow analysis, based upon projected net income, perhaps informed by evidence of what revenue the actual purchaser of the Hardy’s business, Ms Knight,[228] was able to generate from the assets of the Hardy’s business, to arrive at a value of the Hardy’s business, to which an appropriate discount for various risks could be applied, based upon informed guesswork.
[228]Who I understand to be still engaged in legal practice, at least within recent years.

However, the fact that Mr Rowson has chosen to advance an unorthodox approach to the loss and damage claim is not fatal to his claim. Rather, his approach has simply placed some limits around his claim. To explain further, the revenue based approach inherent in Mr Senia’s methodology (along with the known facts, being Mr Nelson’s death and Mr Rowson’s incarceration) means that I cannot place any value on any income or net profit which could be generated from the deeds beyond a 12 month, or at most, an 18 month time horizon. Or, put another way, the discount that would need to be applied to any income or profit generated after that time would have to approach 100 percent. This is because, on orthodox valuation principles, some form of discounted cash flow analysis would have to be undertaken of revenue or profit generated beyond a relatively short time frame, and I have no evidence as to what an appropriate discount rate would be.

That said, I have no particular difficulty with the proposition underpinning Mr Senia’s methodology, that is, that an appropriately qualified and resourced legal practitioner with a modicum of marketing skills could have generated new business from the deeds. Such a proposition seems to be intuitively correct.

I also do not accept, without qualification, Mr Alpass’ submission that the assumptions made by Mr Senia during the course of forming his opinion are unsupported by evidence. I accept there is scope for debate about the quality and reliability of that evidence, but I do not accept that there was no evidence at all.

Using the six step framework referred to in Mr Alpass’ written submissions, I make the following observations upon the assumptions made and evidence relied upon by Mr Senia:

(a) assuming there were 6000 deeds available: Mr Alpass’ own evidence supports Mr Rowson’s contention that there were approximately 6000 deeds;[229]
[229]See transcript references at nn 197. Mr Alpass also made reference to there being 6000 deeds in his witness statement.

(b) of the 6000 deeds, 80 per cent have the potential to attract new work: this was said to have been based upon Mr Senia’s own experience, his inspection of the subpoenaed documents, and Mr Rowson’s own sampling of the deed packets at the storage facility. Mr Rowson gave evidence that most of the deeds he inspected at the storage facility were wills and powers of attorney, which Mr Senia agreed were more likely to generate new work than other types of deeds. Again, that proposition seems to me to be intuitively correct;

(c) of the 4800 deeds which might generate new work, only 20 per cent will generate new work: while this seems a somewhat arbitrary figure, it is said to be based upon Mr Senia’s experience, and it does not seem to be an unduly optimistic figure;

(d) an average of 8.38 hours is spent by a legal practitioner on a matter: again that seems to me to be a somewhat arbitrary figure, but it is an estimate based upon the experience of a very experienced legal practitioner, who has been a principal of a legal practice for many decades. Such an estimate does not seem to be an excessive amount of time for a solicitor to take instructions and review and draw documents. Further, the estimates Mr Senia provided at paragraph 319 of these reasons do not appear to be excessive;

(e) the relevant charge out rate of $450 per hour. Both Mr Senia and Mr Rowson gave evidence that this was the average charge out rate of the Hardy’s business, although Mr Rowson’s evidence no doubt offends the hearsay rule;

(f) after accounting for overheads, a legal practice should net 60 per cent of any revenue generated by the deeds: while Mr Senia has, for the reasons discussed above, the requisite experience to opine on such matters, his evidence in this regard was rather confusing. Accordingly, I propose to work on the basis that about 50 per cent of the revenue of a legal practice would be consumed by overheads.

Accordingly, I do not accept that the assumptions made in the Senia report lack evidentiary support. In any event, any risk of that one or more of the assumptions above are unduly optimistic can be taken into account when applying a discount to the value of the net revenue generated by the deeds.

However, I do not accept Mr Senia’s opinion that the potential net revenue capable of being generated by Mr Rowson and Mr Nelson (or HNR) is $2,172,000. This estimate is completely untethered from Mr Rowson’s evidence as to what he and Mr Nelson planned to do had they purchased the Hardy’s business.

Mr Rowson gave evidence that he and Mr Nelson planned to incorporate HNR, lease premises of about 400 square metres, employ a wills and probate specialist, and write to all of the clients who had deeds in the storage facility. However, Mr Senia’s opinion is that net revenue of $2,172,000 could be generated by a 12 to 18 month period by a single legal practitioner with a full time secretary. That is clearly a ludicrous proposition, as highlighted by the calculations in Mr Alpass’ submissions.

However, I am prepared to accept that Mr Rowson and Mr Nelson would do what Mr Rowson said they would do, and make the following further assumptions:

(a) a full time employee solicitor would do six billable hours per day over a 48 week year;[230]

(b) Mr Nelson (in his capacity as supervising legal practitioner) and Mr Rowson (in his capacity as a paralegal) would each generate half of the amount of income generated by the employee legal practitioner, Mr Rowson would only be able to do tasks capable of being done by a paralegal, and would also need to spend time on practice management and marketing, and, notwithstanding Mr Rowson’s evidence about Mr Nelson’s state of health, Mr Nelson was of advanced years, well beyond the normal retirement age.

[230]While there is no direct evidence as to how many billable hours might be worked by an employed solicitor, six hours seems to me to be a reasonably conservative estimate.

Adding those assumptions to the assumptions made by Mr Senia, then my estimate of the net revenue capable of being generated from the deeds by HNR, as opposed to an established legal firm with a number of partners and employed solicitors, would be $648,000 over a 12 month period. For the reasons already discussed, a longer time horizon is not appropriate, given the absence of any evidence whatsoever about appropriate discount rate to apply to any net revenue generated beyond that time.

The sum of $648,000 is calculated as follows:

(a) 5 days x 48 weeks = 240 business days;

(b) 240 days x 6 hours = 1440 billable hours;

(c) 1440 billable hours x $450 = $648,000;

(d) $648,000 + $324,000 + $324,000 = $1,296,000; and

(e) Net income = 50% of $1,296,000 = $648,000.

Using the formula above, the net revenue for an 18 month period would be $972,000. As explained above, the maximum time horizon capable of being supported by the evidence is 18 months.

However, I consider that the 12 month time horizon is the more appropriate time horizon to adopt, given the evidence about what actually happened. The evidence shows that the sale of the Hardy’s business to Ms Knight was not settled until around two months after Mr Alpass sent Ms Knight the draft contract of sale for execution. Presumably a similar period of time would have elapsed had the Hardy’s business been sold to HNR, given, among other things, the need to write to all of the clients to ask them whether they wanted to have their files transferred to the purchaser of the Hardy’s business.

However, as noted earlier in these reasons, there was no evidence that, as at 14 September 2016, being the day Mr Rowson and Mr Nelson last spoke to Mr Alpass, Mr Nelson had obtained an extended practising certificate. Even if he had obtained an extended practising certificate the following day (which I doubt he did, given there being no reference to him having done so in either the original statement of claim or the evidence), the earliest that settlement could have taken place was mid November 2016.

Further, while steps could have been taken to recruit an employee solicitor during the period prior to settlement, a new legal practice was not going to start generating income from the deeds (as opposed to existing files) from day one. Mr Rowson gave evidence that they would have to write to all of the clients, and presumably it would have taken some time for clients to call in for consultations and to provide instructions to undertake new work. Realistically, very limited income could be generated until early 2017, particularly given Mr Rowson’s evidence that he and Mr Alpass discussed a proposal that Mr Alpass retain and complete the current client files which were close to completion. Mr Nelson died in August 2017, and Mr Rowson was incarcerated from March 2018. While Mr Rowson was not in prison for the whole of 2018, he was released from prison on bail to obtain treatment for serious health issues, such that I can infer that he was largely unable to work or was unfit for work from March 2018 onwards. Accordingly, by March 2018, that is, approximately 12 months after one might expect HNR to be generating any significant income from the deeds, neither Mr Nelson or Mr Rowson could work in the new legal practice.

The evidence of what actually happened not only informs the choice of the timeframe for which the loss of income should be calculated, but also the appropriate percentage by which that figure should be discounted to take into account the risks which may have materialised, and the risks which did in fact materialise. These risks include:

(a) the risk that Mr Nelson could not obtain an extended practising certificate, combined with the risk that Mr Rowson could not locate a legal practitioner with an extended practising certificate to take his place (which would be, in any event, contrary to Mr Rowson’s evidence about the discussions between him and Mr Nelson regarding the purpose of them purchasing a legal practice);

(b) even if Mr Nelson did obtain an extended practising certificate, the risk that, after Mr Nelson’s death, Mr Rowson would not be able to locate a legal practitioner with an extended practising certificate to replace him soon after his death. If he had not been able to do so quite promptly, one might expect some form of external intervention to be put in place;

(c) given that I have found that HNR would not have sufficient resources to undertake the work Mr Senia has opined could be generated by the deeds, at least within a 12 month timeframe, the discount to be applied to take into account possible flaws in Mr Senia’s assumptions can be modest, given the significant difference between $648,000 and $2,172,000;

(d) however, a discount needs to be applied to reflect the risk that the assumptions that I have made are too generous, in particular, the assumption that both Mr Nelson (or any replacement) and Mr Rowson could each generate half the revenue generated by an employee solicitor, or that a solicitor could undertake six billable hours per business day.

Taking all of the above matters into account, and especially noting my finding that Mr Rowson has not established that it is more probable than not that Mr Nelson would be able to obtain an extended practising certificate, I consider that the sum of $648,000 should be discounted by 60 percent, two thirds of which is attributable to the risk that Mr Nelson could not obtain an extended practising certificate and that HNR would not be able to engage an appropriately qualified solicitor to be the principal of the new legal practice in his place, and one third of which is attributable to the matters to in paragraphs 360 (c) and (d) above. Accordingly, if I had found Mr Alpass to have wrongfully repudiated the agreement, the value of the net income capable of being generated by the deeds is $259,200.

However, Mr Rowson has pleaded that he and Mr Nelson would have both been shareholders in HNR, with him (or an entity controlled by him) holding two-thirds of the shares. However, there was no evidence given by Mr Rowson to that effect, save for there being reference in Mr Rowson’s witness statement to he and Mr Nelson both being shareholders in HNR, in unspecified proportions. The historical company search of HNR showed that the sole shareholder of HNR was a company which was a trustee of a family trust controlled by Mr Rowson. While this evidence only compounds the difficulties for Mr Rowson associated with the standing issue, I accept that, if those difficulties could somehow be overcome, there is no evidentiary basis for notionally apportioning that figure between Mr Rowson and Mr Nelson.

However, if I am found to be wrong about the value I have assigned to the lost opportunity to purchase the Hardy’s business or whether there was sufficient evidence adduced to be able to assign any value at all,[231] then perhaps the simplest way of valuing the Hardy’s business would be to assign a value to the Hardy’s business commensurate with what Mr Rowson offered to pay for it, that is, $25,000.
[231]See Keys Consulting [2019] VSCA 136 [70].

As for any equitable compensation payable by Mr Alpass if he had been found to have been estopped from denying that an agreement had been breached, there is a debate in the authorities as to whether the statements of the High Court in Guimelli v Giumelli[232] or Sidhu[233] to the effect that the requirement that the Court is limited to relief which is the minimum equity required to do justice between the parties (‘minimum equity principle’) does not apply to cases of proprietary estoppel, that is, where the legal owner of real property is estopped from denying the interest of a claimant in land by reason of representations or conduct which engendered an expectation as to that interest in land.
[232](1999) 196 CLR 101.
[233](2014) 251 CLR 505.

In Taylor v Taylor,[234] which, like the current case, involved a claim of promissory estoppel, not proprietary estoppel, Beach JA noted that there was some academic and judicial debate about whether the minimum equity principle has survived the High Court decisions referred to above. His Honour referred to the decision of Ward CJ in Eq in Zugic v Vesuvius Australia Pty Ltd, [235] where her Honour stated as follows:
[234][2021] VSCA 352.
[235][2020] NSWSC 106.

A not wholly unresolved point is whether the concept of the “minimum equity” has been discarded in the context of promissory estoppel (as well as in the context of proprietary estoppel). Be that as it may, in Sidhu v Van Dyke, the High Court explicitly framed the question of remedy (there, as noted, a case of proprietary estoppel) by reference to the “requirements of good conscience” (at [83]). That is not, of course, an appeal to idiosyncratic notions of fairness. The concept of good conscience is given content incrementally, by close attention to the facts and reasoning of the cases. The current holistic approach to relief for an equitable estoppel is in my view well encapsulated in the following passage from the judgment of Allsop P (Giles JA agreeing), as his Honour then was, in Delaforce at 485:
Equity will look at all the relevant circumstances that touch upon the conscionability (or not) of resiling from the encouragement or representation previously made, including the nature and character of the detriment, how it can be cured, its proportionality to the terms and character of the encouragement or representation and the conformity with good conscience of keeping a party to any relevant representation or promise made, even if not contractual in character.

What is made clear by cases such as Giumelli and Sidhu v Van Dyke is not only that any prima facie entitlement is to be framed by reference to the assumed or expected state of affairs but also that, in assessing the relief to be granted, proportionality of the remedy to the prejudice or detriment is a relevant consideration (and as recognised in Delaforce at [4], this consideration is sometimes of considerable importance). In Rodda v Ian Rodda Pty Ltd [2015] SASC 95 (see also Rodda v Ian Rodda Pty Ltd (No 2) [2015] SASC 128, again a proprietary estoppel case) , Nicholson J said at [305]:
Whilst it is not the case that the court should search for the “minimum equity” to do justice in the circumstances and it is not a case of assessing or measuring or weighing the detriment minutely in order to convert it into some equivalent of cash or kind, there must be a sufficient proportionality of any interest or remedy ultimately granted when compared with the prejudice or detriment suffered by the plaintiffs and the overall justice of the case.[236]

[236]Ibid [310]-[311].

The above extract of her Honour’s reasons also refers to the role the principle of proportionality plays in fashioning the appropriate relief in equity. In the proceeding before her Honour, a case of promissory estoppel said to arise out of representations made regarding entry into a contract of lease, her Honour decided that questions of practicality and proportionality precluded her from giving effect to any expectation arising from the alleged representation, and said that had the asserted estoppel been made out, then she would have merely awarded the costs and expenses thrown away by the party asserting the estoppel: that is, she would have in effect reversed the detriment.

In the current case, I have found that Mr Rowson incurred no material detriment acting upon any assumption induced by Mr Alpass’ words or conduct. Even if I am wrong about that, any material detriment would have been of a very modest dimension indeed. Had Mr Rowson’s claim had been made out, I would have adopted a similar approach to her Honour. The principle of proportionality would tell against making an award of equitable compensation calculated in accordance with the value of the lost opportunity.

For completeness, I would add that, had Mr Rowson established that Mr Alpass was estopped from denying the existence of an agreement, but that the modest detriment incurred by him did not warrant making an award of equitable compensation based upon the value of the lost opportunity to acquire the Hardy’s business, then the standing issue would not have impeded any recovery by Mr Rowson of any sum to recompense him for the detriment he incurred. In Salehi v Salehi[237] (‘Salehi’), I observed that there was nothing in the authorities to the effect that a claimant relying upon the principles of proprietary estoppel could not compel enforcement of an expectation that another party would obtain an interest in the relevant property.[238] Given the observations in the judicial and academic commentary to there being some convergence in the principles applicable to claims of proprietary estoppel and promissory estoppel in Australian law,[239] there seems to be no reason in principle why my observations in Salehi[240] would not apply equally to Mr Rowson’s claim in promissory estoppel, although further consideration would need to be given to the question of whether the standing issue would impede recovery by Mr Rowson of any equitable compensation based upon the value of the lost opportunity. However, given my findings to the effect that Mr Rowson has not suffered any material detriment by reason of Mr Alpass’ conduct, or, if I am wrong about that, has incurred only a very modest detriment, this is not the occasion to explore this issue further.
[237][2023] VSC 535 (‘Salehi’).
[238]Ibid [453].
[239]See, for example, the discussion by Allison Silink in ‘Rationalising Australian Equitable Estoppel in the 21^st Century: Doctrinal Coherence or Fragmentation’ in J Eldridge and T Pilkington (eds), Australian Contract Law in the 21^st Century (The Federation Press, 2024).
[240][2023] VSC 535.

Conclusion and disposition

Accordingly, my findings regarding the issues in this proceeding can be summarised as follows:

(a) I am not satisfied that a binding agreement for the sale and purchase of the Hardy’s business had been reached between Mr Rowson and Mr Alpass at the disputed meeting, or at all;

(b) similarly, while Mr Alpass’ failure to expressly reject the offer made by Mr Rowson and Mr Nelson may have induced Mr Rowson to believe that Mr Alpass would sell the Hardy’s business to them or their nominee, Mr Rowson incurred no material detriment in reliance upon his mistaken assumption, such that Mr Alpass could not be estopped from denying the existence of a binding agreement;

(c) I accept that, had I found that Mr Alpass had repudiated the alleged agreement, or was estopped from denying the existence of the alleged agreement, then Mr Alpass would not have been immune from liability by reason of the immunity provision;

(d) however, even if I am wrong about the existence of a binding agreement for the sale and purchase of the Hardy’s business, Mr Alpass’ conduct in repudiating the agreement did not cause Mr Rowson loss and damage. First, while Mr Rowson was a party to the agreement, and had standing to enforce the agreement, he did not suffer any loss and damage by reason of Mr Alpass’ conduct. Secondly, I am not satisfied on the balance of probabilities that Mr Rowson and Mr Nelson were ready, willing and able to perform the agreement, as I am not satisfied on the balance of probabilities that Mr Nelson would have obtained an extended practising certificate within a reasonable period of time, or at all;

(e) however, if I am wrong on the question of whether there was a binding agreement and the issues concerning causation of loss and damage, then I would have found it possible to assign a value to the opportunity lost by Mr Rowson as a consequence of Mr Alpass’ repudiation of the agreement, being $259,200; and

(f) if I had held there was an actionable estoppel in favour of Mr Rowson, the standing issue would be of less consequence, but the principle of proportionality would dictate that any equitable compensation be limited to any costs thrown away by Mr Rowson as a consequence of his mistaken assumption.

Accordingly, the proceeding will be dismissed. I shall hear further from the parties on the question of costs.

[2024] VSC 169

11 April 2024