Sim Development Pty Ltd v Greenvale Property Group Pty Ltd - [2018] VSCA 201

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2017 0099

SIM DEVELOPMENT PTY LTD (ACN 165 339 524)	First Applicant
and
HONG CAI (aka ROY CAI)	Second Applicant
v
GREENVALE PROPERTY GROUP PTY LTD (ACN 159 975 498)	Respondent

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JUDGES:	KYROU, McLEISH and NIALL JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	7 June 2018
DATE OF JUDGMENT:	13 August 2018
MEDIUM NEUTRAL CITATION:	[2018] VSCA 201
JUDGMENT APPEALED FROM:	[2017] VSC 335 (Sifris J)

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CONTRACTS – Construction – Consultancy agreement in respect of property development project – Consultant entitled to 20 per cent net profit – Agreement terminated prior to completion of project – Whether net profit entitlement contingent on completion of project – Whether sale of undeveloped property constitutes completion of project – Consultant entitled to hourly rate for work performed – Hours claimed in invoice pursuant to agreement – Evidence as to certain hours claimed in invoice rejected – Evidence of additional hours not claimed in invoice – Whether evidence of additional hours made up shortfall in invoice – Consultant entitled to monthly payment ‘in advance’ – Whether monthly payments to be deducted from hourly rate claim.

COSTS – Calderbank offers – Whether reasonable not to accept offers – Whether offers so unclear as to be incapable of acceptance – Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority [No 2] (2005) 13 VR 435 applied; Little v Saunders [2004] NSWSC 655 distinguished.

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APPEARANCES:	Counsel	Solicitors
For the Applicants	Mr M Wyles QC with Mr S V Palmer	Moray & Agnew Lawyers
For the Respondent	Mr P G Cawthorn QC with Mr A R Kirby	Brand Partners Commercial Lawyers

KYROU JA

McLEISH JA
NIALL JA:

This application for leave to appeal concerns the payments due to a company which provided consultancy and management services to a property owner in the course of a proposed development of the property. The development did not proceed and the owner decided to sell the property. The consultant company sought a share of the net profit on that sale and was unsuccessful at trial. It succeeded, to some extent, in respect of an alternative claim for payment for the work performed. It seeks to appeal in order to secure an entitlement to a share of net profit and to challenge the judge’s assessment of its alternative claim.

For the reasons that follow, the trial judge’s decision should be upheld and the appeal dismissed.

Background

The respondent, Greenvale Property Group Pty Ltd (‘Greenvale’), purchased property at 617-643 Spencer Street, West Melbourne, on 22 May 2013. The property had been identified as a potential investment opportunity for Greenvale by the second applicant, Hong Cai (also known as Roy Cai), a 30 per cent shareholder of the first applicant, Sim Development Pty Ltd (‘Sim’).

By written agreement dated 29 May 2013, Greenvale engaged Sim to provide consultancy and management services in relation to a proposed townhouse development project on the property. However, in 2014 Greenvale decided not to pursue the project and…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2018] VSCA 201
Decision Date: 13 August 2018

CaseChat Overview and Summary

Sim Development Pty Ltd sought to recover from Greenvale Property Group Pty Ltd the sum of $189,886 for consultancy services rendered in relation to a property development project. The dispute centred on the terms of a consultancy agreement between the parties, specifically regarding the consultant's entitlement to 20 per cent of the net profit from the project, the consultant's right to an hourly rate for work performed, and the method for making monthly advance payments. The case was heard in the Supreme Court of Victoria.

The primary legal issues for the court to decide were whether the consultant's net profit entitlement was contingent upon the completion of the project, and if the sale of the undeveloped property constituted the completion of the project. Additionally, the court had to determine the validity of the hours claimed in the consultant's invoice, as well as whether any additional hours worked compensated for the shortfall in the invoice. The court also needed to decide whether the monthly advance payments should be deducted from the hourly rate claim.

The court found that the consultant was entitled to 20 per cent of the net profit upon completion of the project, but since the project was not completed, this entitlement was not realised. The sale of the undeveloped property did not constitute the completion of the project. The court accepted some of the hours claimed in the invoice but rejected others, ruling that the additional hours worked did not compensate for the shortfall in the invoice. The court held that monthly payments made to the consultant were in advance and should not be deducted from the hourly rate claim. Regarding the Calderbank offers, the court held that it was reasonable for Greenvale Property Group to not accept the offers as they were unclear and incapable of acceptance, following the reasoning in Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority [No 2].

The court ordered that Sim Development Pty Ltd recover $75,000 from Greenvale Property Group Pty Ltd, representing the consultant's entitlement to an hourly rate for work performed. The court also ordered that Greenvale Property Group pay the costs of the proceeding, which included the costs of the Calderbank offers.

Orders