Votua Pty Ltd v Lineal Developments Pty Ltd
[2024] VCC 1699
•29 October 2024
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised (Not) Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-21-02060
| Votua Pty Ltd as Trustee for the AM Senia Family Trust (ACN 005 580 674) | Plaintiff |
| v | |
| Lineal Developments Pty Ltd | Defendant |
(ACN 622 508 472)
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JUDGE: | Her Honour Judge Burchell | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 23-24 and 26 April 2024, written submissions 24 May 2024 and 7 June 2024 | |
DATE OF JUDGMENT: | 29 October 2024 | |
CASE MAY BE CITED AS: | Votua Pty Ltd v Lineal Developments Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2024] VCC 1699 | |
REASONS FOR JUDGMENT
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Subject:CONTRACT OF SALE – BEST ENDEAVOURS – GOOD FAITH – AFFIRMATION – ESTOPPEL – WAIVER – SPECIFIC PERFORMANCE
Catchwords: whether the defendant breached its best endeavours clause –whether the defendant breached an implied duty of good faith – contract of sale – off the plan contract – whether the defendant waived the legal right to terminate the contract – election by affirmation – estoppel – specific performance – damages
Legislation Cited: County Court Civil Procedure Rules 2018, Order 44, Expert Witness Code of Conduct; Sale of Land Act 1962 (Vic), ss10A – 10F; Legal Profession Uniform Law ss 296 and 29, being Schedule 1 to the Legal Profession Uniform Law Application Act 2014
Cases Cited:Joseph Street Pty Ltd & Ors v Tan & Ors [2012] VSCA 113; Brooke Homes (Bicester) Ltd v Portfolio Property Partners Ltd & Ors [2021] EWHC 3015 (Ch); Hera Project Pty Ltd v Bisognin (No 3) [2017] VSC 268; New Zealand Shipping Co v Societe des Ateliers er Chantier de France (1919) AC I; Suttor v Gundowda Ltd (1950) 81 CLR 418; SMK Cabinets v Hili Modern Electrics Pty Ltd [1984] VR 391; Ottawa Northern and Western Railway Co v Dominion Bridge Co (1905) 36 SCR 347; Electricity Generation Corporation v Woodside Energy [2014] HCA 7; Bisognin & Anor v Hera Project Pty Ltd [2016] VSC 75; [2016] VSC 75; Bisognin & Anor v Hera Project Pty Ltd [2017] VSCA 322; Bisognin v Hera Project Pty Ltd [2018] VSCA 93; Primary Flooring Pty Ltd v Australian Comfort Group Pty Ltd [2019] VSC 104; Virk Pty Ltd (in liq) v YUM! Restaurants Australia Pty Ltd [2017] FCAFC 190; Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234; BP Refinery (Westernport) v Hastings Shire Council (1977) 180 CLR 266; The Commonwealth v Verwayen (1990) 170 CLR 394; Barns v Queensland National Bank Ltd (1906) 3 CLR 925; Williams v Stern (1879) 5 QBD 409; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; Alliance Building and Construction Pty Ltd v Veesaunt Property Syndicate 1 Pty Ltd [2024] QCA 75; Sargent v ASL Developments Ltd (1974) 131 CLR 634; Transfield Pty Ltd v Arlo International Ltd (1980) 144 CLR 83; Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; Etna v Arif [1999] 2 VR 353; Esso Australia Resources Pty Ltd v Southern Pacific Petroleum [2005] VSCA 228; Commonwealth Bank of Australia v Barker (2014) 253 CLR 169; Erratt v Grills [2015] NSWSC 594; North Queensland Pipeline No 1 Pty Ltd v QNI Resources Pty Ltd [2021] QSC 190; Marmax Investments Pty Ltd v RPR Maintenance Pty Ltd (2015) 237 FCR 534; Waltons Stores (Interstate) Limited v Maher [1998] 164 CLR 387; Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570; Gange v Sullivan (1966) 116 CLR 418; Donaldson v Bexton [2007] 1 Qd R 525; Immer (No 145) (1993) 182 CLR 26; Wang v Kaymet Corporation Pty Ltd [2015] NSWSC 1459; Terrell v Mabie Todd& Co Ltd (1952) 69 RPC 234; Sheffield District Railway Co v Great Central Railway Co (1911) 27 TLR 451; IBM United Kingdom Ltd v Rockware Glass Ltd [1980] F.S.R 335; Royal Botanic Gardens and Domain Trust v South Sydney Council [2002] HCA 5; Burger King Corporation v Hungry Jack’s Pty Limited [2001] NSWCA 187; Specialist Diagnostic Services Pty Ltd v Healthscope Ltd [2012] VSCA 175; Codelfa Construction Pty Ltd v State Railway Authority (NSW) (1982) 149 CLR 337; Grocon Constructions (Victoria) Pty Ltd v APN DF2 Project 2 Pty Ltd [2014] VSC 597; Ansett Transport Industries (Operations) Pty Ltd v Commonwealth Byrne v Australian Airlines Ltd (1977) 139 CLR 54; Jones v Dunkel (1959) 101 CLR 298; Payne v Parker [1976] 1 NSWLR 191; Birney v Birney [2024] NSWSC 591; Briginshaw v Briginshaw (1938) 60 CLR 336; Dougan v Ley (1946) 71 CLR 142
Publications: N C Seddon and R A Bigwood, Cheshire & Fifoot Law of Contract (11th Australian Edition, Lexis Nexis, 2017); Collins Dictionary; Cambridge Essential British Dictionary; Jeannie Paterson, Andrew Robertson and Arlen Duke, Principles of Contract Law (5th edition, Thomson Reuters, 2011)
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | A Donald | Bowman & Knox |
| For the Defendant | L Stanistreet | MNG Lawyers Pty Ltd |
HER HONOUR:
Introduction
1The plaintiff (“Votua”) claims that the defendant (“Lineal”) breached the best endeavours clause and/or an implied duty of good faith contained in a contract of sale entered between the parties on 11 July 2018 (“the contract”). Under the contract, Votua paid a deposit for an off-the-plan purchase of Lot 2 on proposed plan of subdivision PS 820509M located at Little Fyans Street, Geelong. Votua seeks an order for specific performance, alternatively, damages for breach of contract. Votua also claims that Lineal waived its legal right to terminate the contract. Lineal denies that the termination was ineffective and denies a breach of the best endeavours term or implied duty of good faith term.
2In my judgment, the affirmation, waiver and estoppel grounds are made out by Votua. My reasons in respect of each ground are set out below.
3Accordingly, I order that there is judgment for the plaintiff in the proceeding. I also order that defendant pay plaintiff the costs of and incidental to the proceeding on the standard basis, in default of agreement, unless either party has a basis for seeking a different order as to costs. I will invite the parties to prepare draft orders to give effect to these reasons and will determine any issue concerning costs on the papers.
Background facts
4On or about 21 February 2018, Lineal was registered in the Land Titles Office as the proprietor of land known as and situated at 65 and 67 Little Fyans Street, Geelong (“the land”).
5On 8 April 2018, the relevant responsible planning authority, the City of Greater Geelong (“the Council”), issued a planning permit PP 265-2018 (“the planning permit”) permitting Lineal to develop the land by constructing 6 warehouses on the land generally in accordance with endorsed plans (“developmental works”) by reason of which the land would be subdivided from 1 title into 6 titles (being 1 lot for each of the said 6 warehouses) together with title to the common property to be owned by an owners corporation (“the development”).
6As of 11 July 2018, in relation to the land and as part of the development, Lineal had prepared an unregistered plan of subdivision PS 820509M by which, in addition to common property, the land was divided into 6 lots, namely Lot 1, Lot 2, Lot 3, Lot 4, Lot 5 and Lot 6 (“the unregistered plan of subdivision”).
7On 11 July 2018, Lineal sold Lot 2 “off the plan” to Votua under the contract for the sum of $543,000.00. The purchase money was payable by a deposit of $27,150.00 with the balance in the sum of $515,850.00 payable on settlement.
8Settlement of the contract (“the settlement term”) was due on the latest of:
(a) 1 February 2019 (“the specified date”);
(b) 14 days after Lineal gave notice in writing to Votua of the registration of the unregistered plan of subdivision; or
(c) 14 days after Lineal gave notice in writing to Votua of the issuing of the occupancy permit (collectively, “the events”).
9The contract included a term under Special Condition (“SC”) 6.1 that Lineal would use its best endeavours (“the best endeavours term”) to cause the unregistered plan of subdivision to be prepared in final form for submission to the Council for certification and submission to the Registrar of Titles (“the Registrar”) for registration incorporating any variations or amendments to the plan of subdivision which:
(a) the parties may agree upon;
(b) may be required by the Registrar, the Council or any other Responsible Authority whose consent or approval to the plan of subdivision is required in order to have the plan of subdivision certified by the Council and registered by the Registrar; or
(c) Lineal may require and which do not materially affect the land.
10SC 11.1 was subject to SC 11.2 of the contract, and provided that if the unregistered plan of subdivision was not registered by the Registrar by or on 24 months from the day of sale (that is 11 July 2020), either party may terminate the contract at any time before the unregistered plan of subdivision had been registered whereupon Lineal would refund the deposit to Votua and no party will have any liability under the contract to the other (“the sunset clause”).
11Under the contract, time was of the essence, and, by operation of SC 11.2, the sunset term enured for the benefit of Lineal and Votua and may only be waived by agreement in writing.
12On 19 March 2021, Lineal purported to terminate the contract pursuant to the sunset clause.
13The occupancy permit for lot 2 was issued on 7 April 2021. The plan of subdivision was not registered by the Registrar until 14 April 2021.
14Votua commenced proceedings on 21 May 2021 seeking specific performance of the contract or damages.
The Issues
15The issues for determination are as follows:
(a) Whether Lineal breached the contract by failing to perform the best endeavours term;
(b) Whether Lineal breached an implied term of good faith;
(c) Whether Lineal was entitled to exercise its rights under the sunset term;
(d) Whether Lineal waived its rights to rely on the sunset clause;
(e) Whether Lineal affirmed the contract by election;
(f) Whether Lineal is estopped;
(g) Whether Votua is entitled to an order that Lineal specifically perform the contract; and
(h) If Votua is not entitled to an order for specific performance but is entitled to damages for breach of contract, what is the measure of Votua’s loss?
The Witnesses
Andrew Senia
16Mr Senia is the sole director of Votua which is the trustee of the AM Senia Family Trust. Mr Senia presented as an aggrieved purchaser and a man of great principle. I accept Mr Senia as a witness of truth who gave evidence with the intention of assisting the Court to the best of his ability. There is no reason to doubt that his evidence reflected his genuine recollection of the matters discussed.
17Mr Senia is a retired solicitor who practised mainly in criminal law. Mr Senia retired in 2023. He is now 76 years old. In 2017, he was considering retiring from practice. He needed an income to retire, and subsequently consulted his accountant. Mr Senia said that his accountant advised him to purchase 2 warehouses and retire from the income from the rentals. The accountant said that the market was strong for factories close to the Geelong CBD, which offered attractive yields, capital growth and low maintenance buildings.
18As a result of that advice, Mr Senia looked for warehouses to buy. One was existing. He bought one in an existing building being Unit 42, 8 Lewalan Street, Grovedale, for $800,000.00. The other warehouse that he entered into a contract of sale was the one which is the subject of this proceeding.
19On 11 July 2018, Mr Senia executed the contract as director of Votua. The purchase price was for $523,000.00. Mr Senia paid the deposit of $27,150.00. Mr Senia said that the date 1 February 2019 was inserted when he signed the contract. Mr Senia said that it was “the honourable thing to do” to seek specific performance of the contract. He understood that the contract had a sunset date of 11 July 2020.
20Mr Senia engaged Sargeants Geelong to be his conveyancers under the contract.
21Mr Senia personally guaranteed the contract on 9 July 2018. Mr Senia said that he “glanced” at the contract as he had a conveyancer acting for him. Mr Senia did not recall Sargeants giving him any particular advice about any level of risk on entering an off -the-plan commercial sale.
22Mr Senia accepted that someone else inserted the date 1 February 2019 into the contract as it is not Mr Senia’s handwriting. Mr Senia accepted that because the land is a lot of an unregistered plan of subdivision, the settlement is due on the latest of one of the three dates. Mr Senia said that whilst the box was not ticked, his reading was that settlement date was 1 February 2019, this being one of the three possible dates of settlement.
23Mr Senia referred to a Bank of Melbourne bank statement in his own name. The opening date for the statement is 26 April 2024 and the balance is $620,033.22. A second bank statement for September 2023 for a credit balance of $1,124,077.61. A third bank statement for the period including 1 October 2020 was in the credit of $716,841.47. The accounts attracted 1% interest per annum. Mr Senia accepted that the bank accounts in his name are not in Votua’s name. Mr Senia said that the Votua account has the sum of $620,000.00.
24Mr Senia gave instructions to Sargeants to send an email on 13 June 2019 to MNG Lawyers (“MNG”) about the progress of the building.
25By email dated 22 October 2019, MNG wrote to Sargeants about the two building permits for the early stages and the vendor anticipates that all walls should be installed by mid-November 2019 and the project completed by January/February 2020.
26By email dated 21 January 2020, Sargeants wrote to Lineal’s lawyers asking if they were still on track for registration to occur in late January to early February 2020. Mr Senia gave instructions to Sargeants to send an email to Lineal’s lawyers to confirm the anticipated completion date.
27Sargeants informed Mr Senia of the response given on 31 January 2020 that the vendor thinks that the construction should be completed by the end of March 2020.
28By email dated 7 April 2020, Sargeants sent an email to Lineal’s lawyers on Mr Senia’s instructions seeking an update on when the property is expected to title.
29By email dated 21 May 2020, Sargeants wrote to Lineal’s lawyers requesting an update on Mr Senia’s instructions.
30Mr Senia and his partner, Jennefer West, took photographs of the development as they were worried about the pace of the works. The photograph taken on 18 May 2020 was less than 2 months prior to the dates specified in the sunset clause. Mr Senia did not know he had to amend the sunset date because there was a lot of correspondence between the parties, it was in writing, he has no experience in conveyancing, and he expected others, especially solicitors, to keep their word. He said MNG promised him that it was promised to him. Mr Senia said he was paying others, and they did not tell him to vary the sunset clause.
31On 22 May 2020, MNG wrote to Sargeants advising that the construction would be completed in the next 4 weeks, and they would keep the purchaser informed.
32By email dated 12 August 2020, Mr Senia sent a letter to MNG and copied to the real estate agent, because the conveyancing company said that they were not getting anywhere and if Mr Senia could write a letter to Lineal’s lawyers. Mr Senia did not ask Sargeants to give him certainty in the contract.
33On 13 August 2020, MNG responded to Mr Senia that the vendor has no intention of cancelling the contract under the sunset clause despite being entitled to do so and the contract was signed with an optimistic settlement date was inserted “mainly to keep the punters happy”. Mr Senia continued to be patient and waited for the completion of the project. Mr Senia said that he was not concerned that the deal would fall over because of the second last paragraph which stated:
“I believe the construction should be completed in the next 2-3 weeks, after which we then need to deal with the council and registration of the plan of subdivision.”
34Mr Senia did not want to rescind. He wanted the rent for his pension. Mr Senia had representation, and it was up to them if they thought it necessary, to extend the sunset clause. He relied on the emails that said they were going ahead, they would not rescind, they gave updates.
35By email dated 19 October 2020, Sargeants wrote to MNG touching base regarding any further progress on Mr Senia’s instructions.
36By email dated 28 October 2020, Mr Senia received an update from McGrath Real Estate in relation to the progress of completion of construction and settlement of the property. He was advised that:
“All building works are nearing completion and we will be in a position to obtain full compliance once Barwon Water complete works on site in the next 2 weeks.
It is estimated that the certificate of compliance will be around the middle of November at which time all documents will be sent to the titles office for titles to be registered.
It is estimated that the titles can take approximately 2 to 6 weeks to be registered.
Once the titles are registered, 14 days notice to settle will be issued via the legal representatives.
Please find details below of the owner's corporation who have been engaged to managed the complex including the insurance policy for your records.”
37By email dated 30 October 2020, Sargeants sent an email to MNG to seek an update on when the property is expected to title. In response, MNG responded “fairly soon, but nothing definite” and “I believe that only the internal plumbing work needs to be finished for Occupancy Permit to issue, after which we should have the plan certified and released.”
38By email dated 15 January 2021, the conveyancers wrote to MNG asking for an update on the plan of subdivision.
39On 17 February 2021, the conveyancers again asked for an update to pass onto Mr Senia. Mr Senia still had not taken steps to push out the sunset date to a further date.
40By email dated 16 March 2021, MNG informed the conveyancers that:
“The plan of subdivision has been certified and released by the council and lodged by us for registration recently. We will notify you further in that regard when something happens.
Occupancy Permit is expected to issue very soon and we will pass it on when available.”
41A further email was sent following up that MNG forgot to advise that Lot 2 would be 61 Little Fyans Street.
42By email dated 19 March 2021, MNG advised that the plan of subdivision has not been registered and the vendor has instructed that it exercises its right pursuant to SC 11.1 of the contract to terminate immediately and refund the full deposit.
43Prior to 19 March 2021, no person indicated to Mr Senia that Lineal would not complete.
44By email dated 19 March 2021, the conveyancers wrote to MNG stating they were surprised that the vendor has purported to terminate the contract. Mr Senia agreed there were about a dozen emails between his conveyancer and Lineal’s lawyers about settlement.
45Mr Senia relies on the valuation report with a date of valuation of 26 August 2022 and the market rental. Mr Senia said he would have rented the premises out as a commercial rental property.
46Mr Senia said that if he knew that Lineal would have exercised its rights of recission in the period 11 July 2020 to 19 March 2021, he would have purchased a second warehouse and pay a price at July 2020 as opposed to July 2018.
47Mr Senia relied on a second valuation with a valuation summary with a date of inspection of 21 March 2024 and rental to the date of the report. Since May 2021, Mr Senia has seen that the premises has been occupied.
48Mr Senia said that at the time of signing the contract, he was not aware that SC 8.2 was another ground that Lineal could terminate the contract because Mr Senia did not read it in great detail.
49Mr Senia said he was aware of the sunset clause, but he thought settlement would be on 1 February 2019.
50Mr Senia said that he did not recall reading SC 11 at the time of signing the contract. He has become aware of it since. Mr Senia was also not aware at the time of SC 17, particularly that he could terminate the contract and get the deposit back if construction had not commenced within 12 months of the date of the sale.
51Mr Senia said that lot 2 was the best one there and he paid more than the others to secure it.
Chris Balaburova
52Mr Balaburova is a joint director of a company, C&D Balaburova Pty Ltd (ACN 092 189 618), (“C&D Balaburova”) which carries on a concreting business. Along with his wife, Ms Diane Balaburova, Mr Balaburova has the responsibility for the day-to-day management of all projects and business of C&D Balaburova.
53Mr Balaburova was not an impressive witness. He gave inconsistent evidence about the invoices issued, the amounts claimed and conversations with Mr Aylett about issues with the manufacturing of the panels. There were gaps in his recollection, however, his memory lapses were generally explicable by the extensive effluxion of time involved with this case.
54I am unable to rely on Mr Balaburova’s evidence absent other objective evidence.
55Mr Balaburova said that he does some excavation and concreting. He has been in the business for over 40 years. He operates from his farm in Lovely Banks. Mr Balaburova does a lot of multi-storey buildings from start to finish in the Melbourne and Geelong region.
56Mr Balaburova said that this project consisted of a suspended slab, concrete panels and carpark. There was a retaining wall on the East Boundary that required a little bit more “mucking around”.
57Mr Balaburova said that some jobs take 1-2 years depending on the size.
58Mr Balaburova said that Mr Aylett and his company partner approached him about the job. He understood that Mr Aylett was the registered builder on the project. Mr Balaburova said that he told Mr Aylett that the work would take 6-9 months to complete if all went well. Mr Balaburova agreed there was no contract between the parties.
59By email dated 28 August 2018, Mr Balaburova received an email from Mr Aylett attaching engineering for the project. Mr Aylett requested a meeting on site to discuss. He went onsite from 25 September 2018.
60By email dated 30 October 2018, Mr Balaburova had possession of the plans for the project which showed that there needed to be 129 panels.
61On 31 October 2018, Mr Balaburova was onsite doing some excavation work. The site had to be levelled off. Then they had to put in the strip footings to accommodate the panels. They then erected the panels by pre-propping.
62Mr Balaburova said on this project, the bottom layers of panels sit under the top layer of panels and there is a floating slab. His job included the manufacture and installation of the suspended slabs above stage 1, the foundations, the panels and the car park.
63By email dated 16 November 2018, Mr Eddy Miocevic, structural drawer/steel detailer, sent through drawings for the stage 1 panels for approval to Mr Balaburova and copied in the architect and Mr Aylett.
64By email dated 19 November 2018, Mr Aylett sent through a survey sketch to Mr Balaburova. On 21 November 2018, Mr Miocevic updated the drawings.
65By email dated 27 February 2019, Mr Miocevic informed Mr Balaburova that there was a construction issue. The drawings had not been approved and Mr Miocevic had made a computer error on his drawings. Mr Balaburova could not make the panels until the drawings had been approved. Mr Balaburova had not started making the panels.
66By email dated 4 March 2019, Mr Aylett sent stages 2 and 3 panels for approvals to Mr Balaburova. On 26 November 2018, C&D Balaburova provided Lineal with document recorded as a “Tax Invoice 00000571” (“Invoice 571”) dated 26 November 2018 in the amount of $118,641.60 (inclusive of GST) (“the Quotation”). The Quotation (which was accepted by Lineal) was made up of the following amounts and information:
(a) a quote for the concreting works to be undertaken by C&D Balaburova at the property in respect of the Project in the amount of $650,320.00 plus GST (“the Original Quote”);
(b) an upfront payment of $100,000.00 referred to as “Progress claim for Panels” (“the Upfront Payment”); and
(c) details of costs incurred by C&D Balaburova with respect to the property including “Tipper Hire”, “Excavator Hire”, “Tip fees” and “Labour Hire” and totalled $7,856.00 plus GST (“the Costs”).
67Mr Balaburova said that the price of the materials was going up so quickly, he asked Mr Aylett to pay the Upfront Payment to secure the price. He said that Mr Aylett agreed to the Upfront Payment when Mr Balaburova gave him the invoice. The Upfront Payment was to be used by C&D Balaburova to purchase materials including all pre-cast panels and walls for the entirety of the project, comprising stages 1 to 3 inclusive.
68Mr Balaburova said that in the weeks that followed and, having accepted the terms of the Quotation, Lineal made 4 instalment payments totalling $80,000.00 to C&D Balaburova toward the Upfront Payment as follows:
(a) $20,000.00 on 6 December 2018;
(b) $20,000.00 on 10 December 2018;
(c) $20,000.00 on 13 December 2018; and
(d) $20,000.00 on 17 December 2018.
69Mr Balaburova said the $20,000.00 were progress payments to the entire invoice. There were no further payments until 20 March 2019. Mr Balaburova had purchased all the material prior to December 2018. C&D Balaburova purchased the necessary panels for the entirety of the project including stages 1 to 3. Mr Balaburova could not recall a conversation with Mr Aylett saying that the $80,000.00 was sufficient at that time on a $100,000.00 invoice as a “deposit”. Panel stage 1 was a breakdown of $124,000.00.
70The 5 March 2019 invoice indicates that there was a progress payment of $50,000.00 on panels made onsite. The 3 April 2019 “Quote” also shows a “Break Down. Stage 1 $30,000.00. Stage 2 $50,000.00. Stage 3 $20,000.00. Total Deposit. $100,000.00 to be deducted from each stage as required”.
71The photographs from 7 March 2019 show that around 17 panels were manufactured. The foundations had been poured and Mr Balaburova said 3-4 panels were ready to be poured.
72On 20 March 2019, a further $20,000.00 was paid and then another $18,641.60 was paid on 21 March 2019. Mr Balaburova agreed that the amount owed under Invoice 571 had then been fully paid.
73Mr Balaburova conceded that on 1 April 2019, there were no panels onsite and in March 2019 he had stopped work on this project because he was owed money on “Spring Street” (about $50,000.00-$60,000.00.) Mr Balaburova said that he was experiencing cash flow issues because of “Spring Street”.
74Mr Balaburova said that he was chasing money from Mr Aylett. He denied that Mr Aylett said that he had paid the Upfront Payment on this project as a sign of good will. He denied that Mr Aylett said that he felt frustrated about lack of progress on the job when he had already paid over $100,000.00, and as at 1 April 2019, no panels had been installed. Mr Balaburova said that Mr Aylett was having cashflow issues.
75Mr Balaburova said that Mr Aylett wanted a breakdown of the whole job. The total cost of the job was $715,757.00. C&D Balaburova issued an updated quotation to Lineal being “Invoice 00000586” for stages 1 to 3 of the project (“the Updated Quotation”). The Updated Quotation was provided following a request by Mick Aylett for Mr Balaburova to issue him with a payment schedule and revised quote.
76On 6 June 2019, there was only a trench with rio installed.
77On 14 June 2019, C&D Balaburova issued by email, its third “Tax Invoice” to Lineal namely, Invoice 00000593 (“Invoice 593”) dated 14 June 2019 in the amount of $117,700.00 (inclusive of GST). Upon receipt of this invoice, Mr Aylett sent an email on the same day to C&D Balaburova noting as follows:
“…Thanks Chris, Once the work is complete I can get the assessor out to value the work and approve the payment…”
78Mr Balaburova said that he was not aware that an assessor had been out to site.
79On or about 14 June 2019, Mr Balaburova arranged for all of the concrete panels to be transported to the property to be weatherproofed by Lineal. Once the weatherproofing of the panels had occurred, the panels were ready to be assembled. Mr Balaburova noted that this process can take up to 4 days per panel, with only 1 panel being assembled at a time.
80On 14 June 2019, Mr Balaburova sent an email to Mr Aylett attaching the invoice. Mr Balaburova said that Mr Aylett had cash flow problems when he gave a bank cheque in March/May 2019. Mr Balaburova said they slowed down production on the project because of the delay in payment. He could not recall discussions with Mr Aylett about payment. Mr Balaburova subsequently gave evidence that he did chase up payment.
81As at 14 June 2018, Mr Balaburova said that the stage 1 panels had been completed (as in manufactured). In the 18 August 2019 photograph, within 1 day 10-15 panels had been erected, but all stage 1 panels had not been fully erected.
82During this assembly process, on about 19 June 2019, an inspector from WorkSafe attended the property and issued a notice requiring all work being undertaken at the property to cease immediately. Mr Balaburova could not recall what was said but there was no discussion about the number of panels installed, however, all the panels for stage 1 were onsite.
83C&D Balaburova issued its fourth tax invoice to Lineal namely, Invoice 00000642 dated 16 September 2019 in the amount of $146,636.60 (inclusive of GST) (“Invoice 642”). Invoice 642 also replaced Invoice 593, in that it contained all of the costs set out in Invoice 593 as well as further costs incurred to 16 September 2019 when C&D Balaburova (and all other persons present) were required by WorkSafe to immediately vacate the property.
84Mr Balaburova said that in June 2019, C&D Balaburova was required to vacate the property by WorkSafe. At this time, he noted that C&D Balaburova had completed stage 1 of 3 of the project and had in its possession all materials required for stages 2 and 3. Mr Balaburova said that they hired the Kobelco excavator SK235SR, depicted in the tendered photographs, due to the uneven nature of the site.
85On 18 August 2019, the panels were delivered so Lineal could weatherproof them. Mr Balaburova said that all stage 1 panels had been manufactured at this time. That is, about 50 out of 129 panels.
86By letter dated 27 August 2019, Mast Lawyers advised Mr Balaburova that Lineal wished to immediately terminate the agreement. This letter complained about the failure to comply with original timelines which required work to be completed in March/April 2019, failed to comply state of the work provided to date. Mast Lawyers noted Mr Balaburova’s props were still on site and for them to be collected. The letter further stated:
“We are instructed that our client has to date paid to you $210,062.60. Our client acknowledges that you have completed 80% of the footings and 100% of the stage 1 panels. In accordance with your quote, the total cost of the work done to date is $172,240.00 inc GST. Accordingly, you are required to refund $37,822.60 to our client.
In addition, we require that you provide certification of the work completed to date.”
87Mr Balaburova said he was never given a timeline, nor did he really have a conversation with Mr Aylett about a timeline. Mr Balaburova said that the only discussion he had with Mr Aylett about timing was in relation to the issues around the outside wall to the east side neighbour.
88Mr Balaburova had completed the stage 1 panels and foundation work. He said he had not had any discussions with Mr Aylett, nor had he received any emails or text messages about the standard of the work or that panels had to be painted to improve their appearance or about ongoing delays or that delay had caused financial loss to Lineal. Under cross-examination, he said that Mr Aylett could have said to him that the panel finishes were rough, and he might have to paint them. He then said that Mr Aylett did say he needed to paint the panels. Mr Aylett decided to paint them onsite. Mr Balaburova agreed that the internal wall would need to be smooth, but Mr Aylett did not tell him to rectify them, and instead cancelled the contract.
89By the photograph dated 24 August 2019, the panel depicted was not aligned. Mr Balaburova claimed that someone had moved it. Mr Balaburova denied that Mr Aylett told him that he was not happy with the alignment of the panels.
90Mr Balaburova said that he has not been overpaid because the invoices show the variations and work done. Mr Balaburova did not provide the certification for stage 1 because he had not been paid. To his knowledge none of his panels have been removed and the further stages have been placed on top of his panels. No engineer has contacted him about defects. Mr Balaburova collected his props after about 6 months. He charged $1.50 per day for the 98 props because the panels could not stay up without them. Mr Balaburova had to get more props to be able to do work on other jobs.
91Mr Balaburova denied said that he was making disparaging statements about Lineal to third parties. Mr Balaburova did say people asked him what was going on and he told them about the issues.
92Mr Balaburova said that as at 27 August 2019, the outstanding invoice dated 14 June 2019 in the amount of $117,700.00 (inclusive of GST) had not been paid by Lineal. Mr Balaburova did not know in real numbers how much he thinks Lineal owes him. He could not answer why the ledger shows a debit of $978,551.65 when the job costing was $715,752.00.
93Mr Balaburova said that there is always delay on projects due to weather. He denied that he had not made enough panels or that Mr Aylett expressed frustration about delay. Mr Balaburova said that he was moving at a pace of 3 made a day as they were high tech panels. It was a very intense job and had to be done right.
94By letter dated 13 September 2019, Mast Lawyers sent a follow up letter to Mr Balaburova seeking a refund of $32,822.60, the certification and to desist from making defamatory statements against Lineal.
95By invoice dated 16 September 2019, Mr Balaburova sought a balance of $143,636.60. Mr Balaburova said that Mr Aylett did not contact him saying he had been overcharged or that Mr Balaburova had been making defamatory comments. The additional costs in the invoice were for a larger crane was for stages 2 and 3 in the sum of $40,000.00 and $2,500.00. The additional work for manufacturing panels 14, 56, 79, 28, 19 and 23 and cutting 15 and 27 were due to a change in the drawings. Mr Aylett says that he did not receive this invoice. Mr Balaburova did not accept that the sum of $146,636.60 included future costs and costs not already incurred.
96Mr Balaburova said that the September 2019 invoice was partially a quote as some items were included to inform Mr Aylett of what was required for future stages. Mr Balaburova accepted that the line item is not entirely accurate. It is only accurate to what has been done on that invoice.
97Mr Balaburova said the tendered photographs show beams that were inserted by others on 11 October 2019.
98By invoice dated 28 November 2019, Mr Balaburova updated the outstanding amount to $158,279.00 which included $10,584.00 in prop hire from 19 September 2019 to 29 September 2019. It notes that Invoice 593 had been deleted due to termination. Mr Balaburova thought that the invoice had been sent to Mr Aylett. Mr Balaburova said that as far as he was concerned, all the invoices had been sent to Lineal.
99Mr Balaburova said that, between late August to earlier September 2019, C&D Balaburova ceased work at the project as at the time he had sums of money owing pursuant to its invoices. C&D Balaburova engaged lawyers to address the dispute with Lineal but ultimately neither party commenced any proceedings.
100By invoice dated 30 April 2020, the sum outstanding was $179,186.04 comprising $151,534.00 outstanding, the amount of $7,203.00 for prop hire and the sum of $4,159.40 in solicitors’ fees.
Gareth Kent
101Mr Kent is a property valuer from Preston Rowe Paterson who is based in Geelong. Mr Kent was asked to provide a current market value of the property and provide an estimated rent and associated letting costs of the property.
102Lineal did not require Mr Kent to attend for cross-examination. His report was tendered unopposed.
Justin Savage
103Mr Savage is a construction manager based in Geelong. Mr Savage was not a perfect witness, mainly due to the manner in which he had been retained and the narrow task he had been requested to undertake on behalf of Votua.
104Mr Savage gave an opinion as to the estimate of time to build six warehouses in accordance with the design drawings at the development site from the date that demolition had been completed. Mr Savage was employed at H Troon but had not worked on a project with H Troon since 2018. During his time at H Troon, he ran the structural steel department from 1999 to 2015. He moved from detailing to tendering for all the structural steel and concrete panels for all projects in around 2005, when he started project managing for projects. His Graduate Certificate in Building Construction took 4 years to complete.
105Mr Savage provided a typical construction program schedule of a builder to construct six warehouses in accordance with the design drawings and an objective to obtain an occupancy permit.
106Mr Savage has not provided expert reports for Court or the Victorian Civil and Administrative Tribunal before.
107In the letter of instruction from Bowman & Knox Lawyers dated 28 March 2023, the eleven factual assumptions were set out in the letter, and he relied on the assumptions and the documents provided. He only had three days to prepare the chart.
108He said that he had already received the drawings prior to the letter of instruction. Mr Savage had already prepared the Gantt chart prior to receiving the letter of instruction. Mr Savage then received the letter and then checked that the Gantt chart reflected the documents.
109Mr Savage then clarified that he commenced the Gantt chart and then made some changes to the document prepared. There may have been specifications that might have taken longer, and he adjusted the work to allow more time. He said that it could have been that initially it was a program of less than 8 months.
110Mr Savage could not recall if he had read the O44 of the County Court Civil Procedure Rules 2018 and the Expert Witness Code of Conduct before he prepared the Gantt chart.
111Mr Savage was taken to an acknowledgment and declaration of expert witness dated 22 March 2024 and that at the time the report was prepared, he had not made an expert declaration.
112Mr Savage went to site when he was first contacted to make the report. He saw completed buildings when he did a drive by. He described it as a standard construction and that the buildings are “factorettes” made of pre-cast panels.
113Mr Savage said the chart only provided a timeframe for stages of work and the months could move left or right depending on when the work started. Mr Savage said that 2 weeks is only allowed for contingencies on commercial builds in his contracts. Mr Savage did not agree that 2 weeks was a very short contingency on a project like the present one. He has prepared at least 50 Gantt Charts a year and prepared them for similar constructions the subject of this proceeding. He does 5-6 projects per year for commercial builds using pre-cast panels.
114Mr Savage did not agree that 5 days to install 129 panels was a short time. His experience is that they can install 30 panels a day. He assumed that all panels were ready for installation and did not allow time for fabrication of the panels. He also assumed that the fabrication was manufactured prior to the construction program. He was not asked to consider any other building permits (outside what was listed in the letter). The exercise he undertook was an achievable construction program on the build and he was not asked to consider steps prior to construction (save for the planning permit). He did an onsite construction program only. It was a narrow task.
115Mr Savage accepted that the chart assumes panels are constructed, 5 days for installation of 129 panels and shows a well-managed construction program when Mr Savage is project managing and 40 days for slab work. Mr Savage did not think that this timing was optimistic. From 2018, Mr Savage has run his own business, DV Savage Constructions, and has about 14 employees and does commercial builds. On a project like this, he would use Health and Safety Representatives (“HSR”), bookkeepers, accounts, site managers, project managers overseeing a couple of times per week, 5 riggers, a crane and driver.
116Mr Savage accepted that if the panels had not been fabricated then it would delay construction. Usually, the shop drawings would be completed prior to the on-site construction.
117Mr Savage accepted that he was not aware that the developer had fallen into a large dispute with its concreter. But, he accepted that if the panels were not there it would blow out the construction program.
118Mr Savage was not asked to consider necessary approvals required from Barwon Water. He accepted that if a Developer Deed expired and had to be extended or started from scratch from Barwon Water then it could delay the construction program.
119In terms of the drawings, Mr Savage said that it “sounds about right” that this project required about 129 panels. Mr Savage was not given a copy of the drawings attached to the MVP Engineering precast panel lifting and bracing specifications for the purposes of preparing his Gantt Chart.
120Mr Savage was shown the photographs of the prefabricated panels from 7 March 2019, and he said that if the number of panels as depicted in the photographs was all that was available for installation as at that date, then it would result in delay in the construction program.
121Mr Savage agreed that unless the suspended slab is installed, the first-floor panels could not be installed.
Michael Aylett
122Mr Aylett appeared to be a reliable witness on certain issues but not others. While I preferred his explanation of the relationship between Lineal and C&D Balaburova and the associated invoices given Mr Balaburova’s inconsistent evidence, I was not persuaded by his explanation as to why he changed his mind in a 3-day period between 16 to 19 March 2021 to use the warehouse for personal storage and terminate the sale. I am not convinced that he suddenly happened to reach this conclusion somewhat arbitrarily in the lead up to the expiration of the sunset clause.
123Where Mr Aylett expressed matters with conviction on this issue, those matters were, inconveniently for him, directly contradicted by contemporaneous correspondence from Lineal’s solicitor and agent who purported to be acting on Lineal’s instructions. Neither the solicitor nor the agent was called to give evidence.
124Mr Aylett’s evidence was unsatisfactory on key issues in relation to the correspondence relevant to the affirmation/waiver/estoppel case. His recollection was general in nature, including that he could not recollect important conversations such as instructions to Lineal’s solicitor and agent on 13 August 2020 and 21 October 2020, but distinctly recollects that he did not give instructions to Tony Gulliver of MNG on 16 March 2021.
125The plaintiff made a substantial attack on Mr Aylett’s credit in relation to his evidence given regarding whether he had given instructions to Mr Gulliver to send critical communications to Votua’s representatives that found its affirmation/waiver/estoppel case, and his reasons for termination. I find it implausible that a solicitor of Mr Gulliver’s experience would send emails to the corresponding side without his client’s instructions. Eventually, Mr Aylett, under cross-examination, conceded that he did in fact give such instructions to Mr Gulliver. Further, I find the reasons for termination and the occupation of Lineal in lot 2 to be a recent invention, given the value of the lot has increased significantly and its desirability given its size.
126To the extent that his evidence conflicted with the contemporaneous documentary records in relation to the affirmation/waiver/estoppel case, the evidence of Mr Aylett is not accepted and afforded no weight.
127Mr Aylett is a builder and one of two directors of Lineal. The other director is Mr Darron Muir, who is about 20 years older than Mr Aylett. Mr Aylett did a couple of years at RMIT studying project and construction management on a 4-year course. He then did an apprenticeship to be a builder in 2004 to 2005 and worked in carpentry. However, Mr Aylett is not a registered builder and has never been registered as one. He worked within the domestic space and architectural homes. Mr Aylett then went into property development as he had the expertise and skills. Mr Muir and Mr Aylett knew each other through family. Mr Muir was in the car industry and wanted to “wind down”. Mr Muir was aware of the financial aspect of the project. He did not have the day-to-day conduct of the project and was effectively a silent partner. Mr Aylett accepted that Lineal is like his alter ego and he runs the show.
128The purchase for the property was funded by cash in partnership between Messrs Aylett and Muir. There were two separate titles, and they paid about $800,000.00 for the property in February 2018. Lineal then chose to develop the site.
129On 14 March 2018, Lineal made an application to the Council for a planning permit for the development. The planning permit was approved for construction of six warehouses and reduction of the car parking requirement on 6 April 2018.
130By email dated 18 June 2018, Mr Aylett sent the plans and application form to Barwon Water.
131On 2 July 2018, Mr Aylett arranged for a building permit application to Geelong City Council. Axcess Demolition were nominated to demolish the site which had two old sheds.
132On 11 July 2018, Mr Aylett signed the contract of sale on behalf of Lineal. Macnamara’s Barristers and Solicitors were nominated as the solicitor for Lineal. Mr Aylett said he had read the contract before signing it. He read the best endeavours clause at SC 8.1 which he understood to mean that as best he could they should complete the project. Mr Aylett said that he could not execute the plan of subdivision without completing construction.
133Mr Aylett agreed that his solicitor drafted the best endeavours clause. He agreed that the vendor would use its best endeavours to have the plan of subdivision registered.
134Mr Aylett read SC 11.1 before signing the contract and at the time he was doing residential construction as well. He was aware of what the terms were and that he could have them in a commercial contract and that after a 24-month period he had a right to remove himself from the contract.
135Mr Aylett agreed that the contract was prepared by Lineal’s solicitors. Mr Aylett said that he initialled next to the handwritten insertion of the date “1 February 2019” in relation to settlement date. Mr Aylett conceded that he had agreed that settlement would occur on the latest of the three dates set out, which included 1 February 2019.
136Mr Aylett said that the real estate agent had a copy of the contract for him to sign and the 1 February 2019 date was on the contract, and he initialled it. Mr Aylett agreed that it was an estimate date of completion for settlement date.
137Mr Aylett signed the Vendor Statement on 11 July 2018.
138Mr Aylett agreed that the market for the sale of lot 6 was $543,000.00. Mr Aylett was taken to a valuation summary as at 26 August 2022, which valued the property at $1m (inclusive of GST). Mr Aylett saw the valuation as at 21 March 2024 at $1.4m (inclusive of GST). Mr Aylett did not disagree with the valuation evidence.
139Mr Aylett agreed that lot 1 was sold on 1 June 2018 for $540,000.00. Lot 3 also sold on 31 May 2018 for the sum of $490,000.00. Lot 5 was sold on 27 October 2018 for the sum of $435,000.00. The insertion of the dates were all estimates of when the project would be complete. They were all around the 6–8-month mark, with settlement due on 15 December 2018.
140On 20 July 2018, Mr Aylett received a building permit for the demolition works.
141On 3 August 2018, Barwon Water attached a Developer Deed. Mr Aylett said that he could not do any developer works without going through the process with Barwon Water. He was then able to engage with a consultant to do the detail design for the work Barwon Water was requesting. The initial processing plan was not as detailed as the final design.
142Mr Aylett said that St Quentin Consulting (“St Quentin”) is a planning and engineering firm. They were acting on behalf of Lineal at a town planning level at the time.
143By email dated 28 August 2018, Mr Aylett asked Mr Balaburova to meet on site and discuss the engineering for the project. Mr Aylett was introduced to Mr Balaburova through his son-in-law, who is a friend of Mr Aylett. The architect Lineal was using also knew Mr Balaburova. Mr Aylett variously called the project “sheds” or a “man cave”. But he disagreed that it was a simple construction. Mr Aylett said that a suspended slab between the two panels needed to be poured in between two portions of panels which had to sit and rest for a minimum of two weeks. It could not take 5 days as per Mr Savage’s Gantt Chart.
144By email dated 25 October 2018, Mr Aylett sent Mr Miocevic plans, asking for when details could be expected.
145Mr Aylett said that the break in the horizontal form is a 300mm cavity which is the suspended slab. The design was that the garage door was 6 metres in height, and they had to engineer the floor to take the weight. They broke up the panels into two components. The panels weighed around 20 tonnes. The structural steel running east to west walls were 30m across the building. They had to break the steel up to get it onsite.
146There were four stages. The stages were the three stages for the panels, then structural slabs, then the carpark and landscaping. The panels could be fabricated onsite, but this site did not permit that because of the size of the site. Mr Balaburova said that he could manufacture the panels on his premises. Mr Aylett was aware of a “Spring Street” project that Mr Balaburova was involved in. There were 129 panels that had to be manufactured at Lovely Banks.
147There was an original quotation with C&D Balaburova but no contract, dated 26 November 2018. It was unclear to Mr Aylett what the progress claim for panels in the sum of $100,000.00 related to.
148After receiving the invoice, Messrs Aylett and Balaburova had a discussion around the $100,000.00 invoice amount. Mr Aylett said that it was a lot of money upfront. Mr Aylett said that there was an agreement that $80,000.00 would be enough. As at 17 December 2018, Lineal had advanced $80,000.00 to C&D Balaburova.
149By invoice dated 5 March 2019, C&D Balaburova were seeking a progress claim on panels in the sum of $50,000.00. Mr Aylett was surprised to see another progress claim on panels for $50,000.00 given he had already paid $80,000.00 by Christmas 2020.
150Mr Aylett received the “quote” dated 3 April 2019 to seek a breakdown on the stages. He wanted to know why he was being asked for $100,000.00 and then another $50,000.00 on the progress claims on panels. The figures fall in line with his comments around the GST inclusive and exclusive figures and raised questions for him. Mr Aylett understood the sum of $715,752.00 to be the total price.
151Mr Aylett paid another $20,000.00 because Mr Balaburova confessed that he had cash flow issues because of the “Spring Street” project. Mr Aylett was in a position to advance Mr Balaburova $20,000.00, to attempt to get Mr Balaburova on site and get some progress on manufacturing the panels. Mr Balaburova expressed his issues with the “Spring Street” job, and he was owed a “few hundred thousand” so Mr Aylett paid a further $71,421.00 on 3 May 2019.
152Mr Aylett did not agree that the $80,000.00 paid was to fund the acquisition of the materials for all 3 stages because of the fluctuating process increasing 20-30% per month. Mr Aylett disputed that Mr Balaburova purchased the materials for the project. Mr Aylett said that he has not seen the materials and he asked Mr Balaburova to show them to him.
153Mr Aylett agreed he received the C&D Balaburova invoice dated 14 June 2019 in the amount of $117,700.00. Mr Aylett said there are no documents which challenges this amount between 14 June 2019 to 19 August 2019. Mr Aylett agreed that Mr Balaburova thought Lineal owed C&D Balaburova money, and he stopped work on 23 August 2019 on that basis. Mr Aylett said that in June 2019, stage 1 had not been completed. By 19 August 2019, stage 1 had been completed. Mr Aylett said that $124,000.00 was for stage 1 and footings were $48,400.00 so that is less than the $210,062.60 paid by Lineal.
154Mr Aylett attended the Lovely Banks property on 7 March 2019 to check on C&D Balaburova’s progress as he had concerns. Mr Aylett said that there were about 17 panels on site when he attended and took the photographs. There were about 2-3 laying on the ground 80% complete ready to pour.
155By email dated 7 March 2019, Mr Aylett gave details to Mr Chris Viglietti of Spencer Law and Signature Lending attaching permit drawings for the project looking for funding. Mr Aylett had another project on at the same time in Leopold. It was a residential subdivision with 5–10-acre farms. Lineal had settled on the first of the lots and paid cash for it. Mr Aylett advised that they were looking for around $1m for construction and to be completed within 6 months.
156Mr Aylett did not agree that, as of 7 March 2019, the project had run out of money. Mr Aylett referred to the stormwater requirements with two landowners and Lineal approached them to control the stormwater management solution. Lineal then entered into a contract of sale for the property which settled around April-May 2019 for the sum of $2.1m. Mr Aylett said that Lineal paid cash for the property which became the 20-lot subdivision.
157At the time Lineal owned 34 lots which were going through a planning and design process with Spiire and were going through approvals with Council. Construction commenced around mid-late 2019. They ran on 2 separate planning permits but ran in conjunction with each other. The initial process of the details design with Spiire, once formal approval was provided by the authorities, they then stripped topsoil, stocked what was required for top dress on completion, dug out the road base levels for final finish heights as approved, then installed all services such as NBN, power, water, stormwater into the second lot. The project also required compaction reports for roads, kerb and channel, footpaths, bitumen, light posts, street scape, landscapes, top dress lots, lead connections to pre-existing infrastructure. Mr Aylett agreed it was a big job.
158Mr Aylett said he liaised with Spiire but he did not manage the 54 lot subdivision project day to day. He said that he outsourced project management to Spiire and he acted as the developer.
159By email dated 8 March 2019, Mr Aylett sent copies of titles and sales particulars to Mr Viglietti.
160By email dated 18 April 2019, Mr Viglietti advised Mr Aylett that the funds had been arranged and would be transferred to the account provided. Signature Lending gave an offer of a mortgage loan on the secured property on 18 March 2019. By 18 March 2019, 20-30% of the footings were on site with about 17-20 of the 129 concrete panels constructed.
161Mr Aylett was taken to the mortgage’s terms and conditions which required at clause 12 that prior to the initial advance the indicative progress payment schedule must be prepared by the builder to the satisfaction of the mortgagee. No such document exists.
162Mr Aylett said that Lineal did not prepare a progress payment schedule for Signature Lending. Mr Aylett said that he did not run Gantt Charts.
163The ANZ bank account held by Lineal shows three deposits on 23 April 2019 of $63,066.42 and two lots of $200,000.00.
164Mr Aylett recalled receiving the C&D Balaburova invoice dated 14 June 2019 in the sum of $117,700.00.
165On 6 June 2019, Mr Aylett recalled about 25 panels on site, and he took photographs. The photograph shows strip footing that the panels land on top of. The trench has been dug and steel put in ready for a pour.
166On 7 June 2019, Lineal applied for a building permit for the walls. The application notes that Lineal is the owner builder. The Building Permit dated 12 June 2019 names Mr Aylett as the builder. Mr Aylett was untroubled that he is not registered as a builder. The construction of the walls could be manufactured but they could not be erected on site until after 12 June 2019.
167Mr Aylett said around 23 August 2019, C&D Balaburova stopped working. Mr Aylett said it was very difficult to get Mr Balaburova on site. Mr Aylett said that he did not receive the invoices dated 28 November 2019, 30 April 2020 or 20 January 2020.
168Mr Aylett recalled a WorkSafe officer attending site on 20 June 2019. Mr Aylett recalls a conversation with the officer along the lines of the note in the notice:
“I was informed by Director, Michael Aylett that precast concrete panels are set to be installed across the entire perimeter of the property under construction as well as internal walls and upper level for a total of approximately 140 in total, with approximately 36 panels remaining on the ground floor.”
169Mr Aylett said that the concern was that if the hydraulic failed, then the panel would fall. The site was closed, and everyone was asked to leave the site. The Kobelco excavator that was hired was removed from site.
170Mr Aylett engaged Mast Lawyers to terminate the agreement with C&D Balaburova. He instructed Mast Lawyers to send the termination letter dated 27 August 2019. Mr Aylett did not accept that C&D Balaburova had left because Mr Aylett was not paying them.
171Mr Aylett said that in the week of the 23 August 2019 he had decided that he would terminate C&D Balaburova. He claimed Mr Balaburova did not demand outstanding monies in the lead up to the termination letter.
172Mr Aylett agreed he could not produce a document showing a timeline for the Balaburova’s work to be completed by March/April 2019. Mr Aylett could not produce a document showing a revised timeline as agreed between him and Mr Balaburova or his son. The quality of the work was not of an acceptable standard and Lineal would have to spend additional funds painting the panels to improve the appearance and ensuring the tops of panels are flat. Mr Aylett did not have any document supporting issues about the defects. Mr Aylett gave unconvincing evidence about diary notes that he no longer has in his possession outlining work, timelines and when trades were on site. He does not know when the documents no longer came to be in his possession. Mr Aylett agreed that he has not discovered any documents showing loss and damage to Lineal.
173Mr Aylett agreed that Mr Balaburova has not provided certification for stage 1 because he claimed Lineal owes C&D Balaburova money. Lineal’s engineer did not find any structural issues with the panels. Mr Aylett said the panels needed to be altered but not replaced. Mr Aylett said he painted the surfaces himself. Mr Aylett said that the engineer came on site to inspect before stage 2 started when C&D Balaburova’s props could be removed around March 2020.
174Mr Aylett had not poured the suspended slab on top so that the props could be removed. However, the letter dated 27 August 2019 does not describe this work as a requirement for the props to be removed.
175On 11 September 2019, Mr Aylett received a quote from GCS Precast Concrete (“GCS”) for the remaining panels for stage 2 and 3 in the sum of $281,237.00. This came soon after the termination letter with C&D Balaburova. Mr Aylett sought the quote from GCS 1 to 2 weeks prior to receiving the quote. No invoices of delivery dockets had been discovered and are not in the affidavit of documents filed on 20 October 2022 nor provided in response to the request for particular discovery in March 2023.
176Mr Aylett had informed Mr Gulliver that the project would finish by January/February 2020 as he had the new concreter on board. Mr Gulliver wrote to Votua’s conveyancers on 22 October 2019 informing them of this.
177On 21 January 2020, Votua’s conveyancers requested an update from Mr Gulliver and if the project was still on track for a completion date of January/February 2020. They chased up again on 31 January 2020.
178Mr Gulliver responded on 31 January 2020 that the construction was scheduled to be completed by the end of March 2020. Mr Aylett did not recall instructing Mr Gulliver to tell purchasers that the project would be completed the end of March 2020, if there were no walls on site.
179Mr Aylett agreed that by 25 March 2020 all three stages had been completed.
180Mr Thomas Ward of Ward Property Valuers Pty Ltd, conducted a second progress inspection on 31 January 2020 to confirm the stage reached. The ground floor was at “base stage”. It states:
“The upper levels of the rear 3 factories have tilt slab walls, concrete floors roof steel frames and plumbing and electrical “rough in” completed. The quality and workmanship of all factories appear to be well within accepted standards. Completion is anticipated at the end of March 2020.”
181Mr Ward refers to discussions with Mr Aylett. Mr Aylett could not recall telling Mr Ward that the completion was anticipated for end of March 2020.
182By email dated 7 April 2020, the conveyancer asked Mr Gulliver for an update on when the property was expected to title. Mr Aylett cannot recall Mr Gulliver asking him about when the property was expected to title.
183Mr Aylett agreed that on 7 May 2020, Mr Ward noted the third progress inspection conducted on 5 May 2020, where:
“… the development is almost 65% completed, in 2 weeks as discussed, we would assume to have reached 80% completion.”
184On 22 May 2020, Mr Gulliver informed the conveyancer that there are indications that construction would be completed in about 4 weeks. Mr Aylett agreed that the only way Mr Gulliver knew the project would be completed by that time, was if he told Mr Gulliver.
185By invoice from Infrabuild dated 13 November 2019 in the sum of $5,976.29, Mr Aylett said that there was structural steel for the suspended slab. They ordered the material steel for the suspended slab.
186The photograph dated 12 December 2019 shows the GCS panels on the top storey.
187On 16 December 2019, Local Mix Concrete Pty Ltd charged $4,006.34 for the supply of the physical concrete.
188By invoice dated 18 February 2020, Jason Bee Concreting charged $52,085.00 to prepare and pour the internal ground floor suspended slab for the infill. On 30 April 2020, Jason Bee Concreting charged $34,078.00 for work on site that was paid to rectify the work done by C&D Balaburova on the slabs.
189Mr Aylett said that he did raise defects with C&D Balaburova. Mr Aylett said that he told Mr Balaburova that there was a slight orange tinge to the panels versus the GCS uniform panels. There were run marks and discolouration on the panels produced by C&D Balaburova. One of the panels on the stage 1 was missing part of the panel. Mr Aylett was not happy with the panels. Mr Aylett said that the panels were not installed straight, and they were “in and out”. The panels were warped and twisted. Mr Aylett said that the bed that they were manufacturing was twisted and was not flat.
190By letter dated 18 November 2019, Signature Lending advised Lineal that $700,000.00 had been advanced on the $1m loan.
191By letter dated 4 June 2020, Spencer Law wrote to Lineal regarding an increase in funds by $350,000.00. Mr Aylett had a different project running at the time which needed a stormwater management installation, and they decided it was easier to purchase the neighbouring property. It meant that the cash reserves on this project had to be diverted to the other project in Leopold.
192By 4 June 2020, the statement of accounts shows the increased funds made available. Mr Aylett agreed that the cost to build on the building permit was $1m.
193Mr Aylett said that he applied for a building permit on 3 December 2018 for footings/slabs. The application was made by Lineal, and no builder was specified. The additional monies were required for finishing the electrical, plumbing, carparking, and Barwon Water assets.
194Mr Senia wrote to Mr Gulliver on 12 August 2020 noting that settlement date had been “a moving feast”.
195On 13 August 2020, Mr Aylett conceded that he told Mr Gulliver that Lineal had no intention of rescinding the contract at that time when Mr Gulliver wrote his email to Mr Senia. Mr Aylett told Mr Gulliver that the construction would be completed in the next 2-3 weeks after which he would need to deal with the council and registration of the plan of subdivision.
196On 17 August 2020, Mr Aylett applied to vary the loan to $1.65m. The building was almost complete and another $300,000.00 was required to pay back contributions of personal funds. Mr Aylett could not tell the final figure of the cost of construction.
197By email dated 19 October 2020, the conveyancers wrote to Mr Gulliver if there was any further progress.
198By email dated 28 October 2020 from Mr Jim Cross of McGrath Estate Agents to Mr Senia, stated that works were nearing completion, and they would be in a position to obtain full compliance once Barwon Water completed in the next 2 weeks. Mr Aylett agreed that the only outstanding works was Barwon Water. Mr Aylett claimed that the information came through Mr Gulliver and not him.
199By email dated 30 October 2020, the conveyancers wrote to Mr Gulliver seeking an update. Mr Gulliver responded straight away that it was “fairly soon but nothing definite”. The only issue was internal plumbing work before the occupancy permit would be issued. Mr Aylett agreed that this information came from him.
200By email dated 15 January 2021, the conveyancers sought an update to provide a plan of subdivision from Mr Gulliver.
201On 3 February 2021, the conveyancers sought an update and when the property expected to title.
202On 16 March 2021, Mr Gulliver wrote to the conveyancer that the plan of subdivision had been certified and the occupancy permit was expected very soon.
203By email dated 3 March 2021, the conveyancers requested an update from Mr Gulliver on when the property was expected to title. Mr Aylett agreed that all through the period 11 July 2020 to 16 March 2021 there was no indication from Lineal that it would not complete the contract.
204Mr Aylett acknowledged that the lot had increased in value substantially from 2018 to 2021 and that until 16 March 2021, the Contract would complete. If Votua bought the property at 16 March 2021, it would have to pay double for the Lot.
205Mr Aylett engaged Spiire for civil engineering works on another project as a consultant. There was a detailed design required by Barwon Water and in 2018, St Quentin was Lineal’s only consultant at the time. Lineal then underwent a tendering process and they nominated Spiire in February 2019, and they provided a plan in March 2019.
206Mr Aylett could not recall if there was correspondence between Lineal or its consultants and Barwon Water or any of its consultants between 5 April 2019 and 11 June 2020. Mr Jake Hedley of Spiire could not locate the Developer Deed of 3 August 2018 for this job.
207Around early December 2018, Messrs Chris Beretta and Damien Shaw of Barwon Water discussed the project in person around the water main extension to install potable water to lots 4-5 and 6. Mr Aylett received an invoice dated 6 September 2018 from DA Beretta Pty Ltd (“DA Beretta”) after clipping a cap of the water main during the excavation. DA Beretta located the valve and fixed the leak to the damaged fire service.
208Mr Aylett noted that the Developer Deed from Barwon Water had a completion date of 18 months.
209By email dated 4 October 2018, Mr Aylett emailed Mr Paul Treloar of St Quentin after a discussion with Mr Beretta in relation to directions for the hydraulic engineers.
210Mr Aylett said that he had a working relationship with Mr Hedley, so they offered to contract to Spiire to have one consultant on all projects, and not continue with St Quentin.
211On 22 October 2018, Mr Aylett sent architectural drawings regarding the fire hydrants to his consultant.
212O 10 December 2018, Mr Aylett sent an email to Mr Beretta following up from their meeting and to discuss scope and costings for the job. They discussed the options around the water main extension and the potable water from Little Fyans Street. Barwon Water required all meters to be on the street for the property. Mr Aylett had a quote with DA Beretta.
213Mr Aylett received the email dated 20 August 2020 from Mr Hedley to Mr Shaw, advising that Mr Hedley could not locate the Developer Deed for the job. This was the first that Mr Aylett was aware that Mr Hedley was under the assumption he had “lost” the Developer Deed. Mr Aylett thought everyone had a copy of it, including Barwon Water. Spiire had prepared the detailed design dated March 2019 and they could not prepare it without the Developer Deed.
214Mr Aylett agreed that he had a copy of the 2018 Developer Deed, Mr Hedley had a copy of it and the 4 March 2019 Spiire design document produced drawings relying on it. There is an approved plan in March 2019 from Barwon Water for a servicing requirement. Mr Aylett did not do any work around Barwon Water. Messrs Hedley nor Beretta had the ability to put in a start works notice. Mr Aylett said that Mr Beretta did start doing work but did not have a start work notice in place, which allowed the Developer Deed to lapse. This was the fault of Mr Beretta. Mr Aylett did not agree that Lineal lost the Developer Deed, or that Lineal did not act on it during a 14-month period. He said that Spiire did their work and Mr Beretta did undertake work under the Developer Deed during that period.
215Mr Aylett then agreed that Lineal had the responsibility to undertake works under the Developer Deed because it was the applicant/developer. He said that Mr Beretta failed to lodge a start work notice for the works. Mr Aylett said that the work on the mains by Mr Beretta should have had a start work notice. Spiire was to undertake the detailed works under the Developer Deed, and they perform the work under the Developer Deed. Mr Aylett could not undertake the works under the Developer Deed. Mr Aylett conceded there is no document from him to his consultants, saying that the Developer Deed was about to expire.
216Mr Aylett’s understanding was that a portion of the work under the Developer Deed had been undertaken and, therefore, the Developer Deed was still current.
217Mr Aylett refers to the DA Beretta invoice dated 28 March 2019 for the CCTV inspection of the existing sewer point which was part of the works required by Barwon Water.
218Mr Aylett refers to DA Beretta’s invoice dated 14 May 2020 relating to internal points for toilets and basins, which is separate to Barwon Water. The item for excavation and lay sub floor soil and connection into the sewer point is work under the Developer Deed.
219Mr Aylett said that not much had happened between 28 March 2019 and 14 May 2020 because they were not on track with the rear walls in the back on Southcape Place. The earth was on a 45-degree angle running up to Southcape Place. From Barwon Water’s perspective, until the back wall was stabilised to keep everyone safe, they could not do external works. Further, until the panels were up, they could not do internal works.
220Mr Aylett received the new Developer Deed dated 12 August 2020. The new Developer Deed was provided by Barwon Water because Spiire handled the application as they could not get an extension on the Developer Deed. Mr Aylett claims that they were inside the 6 months grace period, but Barwon Water was entering into the new Water Services of Australia Code (“WSAA Code”), and they required Lineal to comply with their new Codes and re-apply to fall within their new requirements. Mr Aylett said that Lineal always had a copy of the Developer Deed. Mr Aylett said that he had emailed the Developer Deed to Spiire.
221Mr Aylett that the 3 August 2018 and 12 August 2020 deeds were for the same work. However, Mr Beretta had undertaken some works, but it had not been updated by Barwon Water on its systems. The requirements were the same but some of the works had already been completed.
222Mr Aylett said in examination in chief that he did not give instructions to Mr Gulliver to send the email dated 13 August 2020, to Votua.
223By email dated 16 September 2020, Mr Beretta was referring to the sewer main out the front of Little Fyans Street and its repair and Mr Aylett was comfortable that the work was accepted by Barwon Water and the work was complete. It was acknowledged by Barwon Water and Mr Beretta that work had been executed under the first Developer Deed and did not have to be done twice. The second plan had a lot more detail under the WSAA Code and the requirements around how it was going to be constructed which is a lot more stringent.
224Mr Aylett said that there were differences between the two designs under the Developer Deed. The water main location was different in the second design. The existing sewer point was rectified and appropriate for all 6 lots. The original design has “works to be completed”. The existing 25mm tapping had been done.
225Mr Aylett said that he had a discussion with Mr Gulliver to inform all purchasers under the contracts that there was an impeding settlement date coming. Mr Gulliver said that he had to give notification to all purchasers of all contracts on the development. Mr Aylett said that he was “ok with that, and it was absolutely fine”.
226Mr Aylett said Mr Cross was the selling agent for the project. Mr Aylett had a conversation with Mr Cross about the Barwon Water works. He did not recall instructing him to send the email dated 28 October 2020.
227On 25 February 2021, Mr Aylett instructed Mr David Gonzalez from MNG to execute the subdivision on Lineal’s behalf.
228Mr Aylett does not recall giving instructions to Mr Gulliver to send the email dated 16 March 2021 to Ms Jacinta Rimato.
229Mr Aylett could not recall if he told Mr Gulliver that Lineal had lodged the registration for subdivision. Mr Aylett did recall informing Mr Gulliver that the occupancy permit would issue soon.
230Mr Aylett does not recall giving instructions to Mr Gulliver to send the email dated 16 March 2021 to Ms Rimato. Mr Aylett was seeking street allocations for addresses for the lots from the Council. Mr Aylett did tell Mr Gulliver so that he could tell everybody the final address.
231Mr Aylett agreed that Mr Gulliver was Lineal’s solicitor. Mr Aylett accepted that Mr Gulliver wrote the email dated 16 March 2021 on behalf of Lineal. Mr Aylett agreed that the plan of subdivision was with the land titles’ office at the time the 16 March 2021 email was sent.
232Mr Aylett gave instructions to Mr Gulliver to terminate the contract on the morning of 19 March 2021 and Mr Gulliver subsequently drafted the email dated 19 March 2021. Mr Gulliver asked Mr Aylett if he should press “send” at 3.01pm. Mr Aylett said “yes”. The letter was sent at 3.04pm to Ms Rimato.
233Mr Aylett agreed that at 16 March 2021, he had not made the decision then to exercise the right of rescission. Mr Aylett said that it was in the narrow period between 16 and 19 March 2021 that he and Mr Muir decided to use lot 2 for their own purposes.
234Mr Aylett said that they needed a premises to run their business from. Mr Muir needed to store some things because he had sold his house. Mr Aylett, from a personal perspective, could use the space and since during that time they have occupied the space themselves and now keep equipment there for their construction work. In the office portion, they have their office space, and they operate from there.
235The ORBE Fire Engineering (“OBRE”) consultants issued a fire engineering report in May 2020. Mr Aylett said that they engaged another consultant to take on further works as he was not happy with ORBE. Mr Aylett said they need to ensure the building was built according to fire regulations. The document history shows the document was issued on 15 November 2018 with stakeholder comments which included Mr Aylett and the architect. The final date is 7 May 2020 – some 17 months later. Mr Aylett said that they did not require the report any sooner. He did not regard this as a delay.
236Mr Aylett agreed that had the plan of subdivision been registered or the occupancy permit been issued before 16 March 2021, Lineal had not made a decision to terminate the contract and would have settled with Votua.
237On 19 March 2021, Mr Aylett gave instructions to Mr Gulliver to terminate the contract. Mr Aylett had not made a decision to rescind before that date.
Chris Beretta
238Mr Chris Beretta gave evidence in relation to his engagement with Lineal and the project. He was involved in the application process for obtaining the necessary approvals from Barwon Water and the relevant documents and correspondence in relation to obtaining the necessary approvals from Barwon Water.
562Tellingly, Lineal failed to call Mr Gulliver, whose evidence would have shed much light on critical questions in this proceeding.
563Whether Lineal waived its rights to rely on the sunset clause by the “waiver” emails is an issue on the pleadings. From time to time, Mr Gulliver corresponded for and on behalf of Lineal with Mr Senia and his agents. Mr Gulliver was solely and directly instructed by Mr Aylett, a director of Lineal.
564Despite this, Mr Aylett denounced the content of the “waiver” emails and asserted that he did not provide instructions to Mr Gulliver to the effect recorded therein.
565The rule in Jones v Dunkel[112] is a rule of evidence that allows the Court to draw an inference that the evidence of a witness who is inexplicably not called by that party to give such evidence, would not assist the party who failed to call them.
[112] (1959) 101 CLR 298 at pages 308, 312 and 320–321 (“Jones v Dunkel”).
566Before such an inference may be drawn, there must first be available to be drawn on the admitted evidence an inference against the party.
567In Payne v Parker,[113] Glass JA observed that for an inference to be available pursuant to the Jones v Dunkel[114], the three following requirements must be met:
(a) the evidence that is missing would have been expected to be called by the party against whom the rule is to be relied on;
(b) the evidence that is missing would have been relevant to determining facts in issue; and
(c) no explanation is given for the absence of the evidence.
[113] [1976] 1 NSWLR 191 at [201].
[114]Jones v Dunkel.
568Further, before an inference can be drawn, the witness should be in one “camp” rather than the other and where the witness is available to both, the condition is not satisfied.[115] Here, Mr Gulliver is Lineal’s solicitor.
[115] Birney v Birney [2024] NSWSC 591 at [37].
569Mr Gulliver was clearly the most appropriate person to explain his correspondence. This cannot be ignored when weighing the evidence of his correspondence against that of the interested party, Mr Aylett.
570Not only was Mr Gulliver not called as a witness, if a finding that he acted without instructions were to be made, then he would be denied procedural fairness by being joined him as a party to the proceeding.
571Consequently, he has not had any proposition as to what instructions he received put to him, nor does he have standing to address the Court.
572The implicit allegation against Mr Gulliver arising from Mr Aylett’s evidence is a serious indictment of Mr Gulliver’s conduct as a solicitor and officer of the Court. The consequence of a finding of fact by the Court consistent with the case advanced by Lineal in respect of Mr Gulliver acting without instructions and making false representations to another solicitor in the course of his legal practice, might well have serious professional consequences for him.
573Given the gravity of Lineal’s allegations against Mr Gulliver and the seriousness of the consequences thereof, the strength and quality of evidence to satisfy the Court that Mr Gulliver conducted himself in such a manner is very high.[116] To make such findings of fact, the Court needs cogent and strict proof of the conduct. No evidence was advanced by Lineal save for the bare assertions of Mr Aylett, which were not supported by contemporaneous records.
[116] Briginshaw v Briginshaw (1938) 60 CLR 336 at [362] per Dixon J.
574In the premises, I find that Mr Aylett did instruct Mr Gulliver with the matters set out in his “waiver” emails.
575While this may not have amounted to specific approval of the exact correspondence as was the case in Alliance,[117] solicitor/client instructions in my view amounts to satisfactory notice.
[117]Alliance.
576I do not accept Lineal’s submission that Alliance[118] is not relevant because the contract in Alliance[119] specifically contemplated the superintendent giving directions to the contractor as agent for the principal. It is universally understood that a solicitor acting on behalf of a client will be acting in their capacity as agent and will have taken instructions before sending out correspondence. It would be unusual for a contract to specify that any communication on behalf of a solicitor is to be taken as an agent as it is a given. For this reason, I see no relevance in the submission that, unlike the superintendent in Alliance[120], it was not contemplated in the contract that the solicitor for the vendor is acting as an agent.
[118] Ibid.
[119] Ibid.
[120] Ibid.
577I do not agree with Lineal’s claim that the contract in Alliance[121] is distinguishable from the contract in the present case because it had a contractual regime which governed the giving of notices. While I accept that where a contractual regime exists, the giving of a notice pursuant to that contractual regime would suggest to the recipient that the notice did have contractual force, this still does not undermine the contractual force of any notice by correspondence given from the sender’s solicitor, as was the case here.
[121] Ibid.
578Without engaging with each email in great detail (noting a further analysis has already been undertaken in this judgment) I find that the principles of Alliance[122] are relevant for the following reasons:
(a) the fact the relevant correspondence came from Lineal’s solicitors would communicate to a reasonable businessperson in Votua’s shoes that the correspondence amounted to notice given on behalf of Lineal, as Mr Gulliver, in his capacity as solicitor, was clearly an agent of Lineal;
(b) a reasonable businessperson in the position of Votua would be aware of the contractual context that both parties were now entitled to terminate, and, therefore, would be aware of the contractual background and implications of the correspondence;
(c) the terms of each email were “antithetical” to the idea that Lineal wished to exercise its right to terminate the contract, as there were explicit and implicit statements to the opposite effect; and
(d) a reasonable person in Votua’s shoes would have considered that Mr Gulliver’s emails were sent for the purpose of waiving SC 11.1 through the exercise of SC 11.2. It is difficult to see what other purpose these emails had other than to reassure Mr Senia that SC 11.1 would not be used.
[122] Ibid.
The emails as an agreement under SC 11.2 of the Contract
579My analysis of each of the emails takes into account the principles of Alliance[123] and the principles of construction of commercial contract as outlined in Mount Bruce Mining Pty Ltd[124] and summarised in Votua’s submissions as follows.
[123]Alliance.
[124] Mount Bruce Mining Pty Ltd.
Gulliver email sent 13 August 2020
580I accept Votua’s submission that the expression “has no intention of doing so” is distinguishable from the colloquial term “has every intention of doing so” in the sense that the former explicitly directs that something will not be done, and the latter merely states that there is an intention of doing something. To explain further, where there is “no intention”, there is no impetus or desire to do something, and, therefore, the doing of it is impossible.
581For this reason, I find that the statement “whilst the vendor is entitled to cancel the Contract as the plan of subdivision has not been registered by the sunset date, it has no intention of doing so” as a clear expression and commitment on Lineal’s part that it will not be exercising its right to terminate.
582I do not agree with Lineal that the “tenor” of the email was “conversational and flippant” and simply amounts to a discussion about “off the plan sales generally”. As I have outlined above, the words “has no intention of doing so” is, in my view, unequivocal and is, therefore, a clear expression of Lineal's intentions regarding its contractual rights. Further, to assert that an email from a solicitor sent on behalf of a client addressing a pending settlement is merely a conversational or flippant discussion of “off the plan purchases” misses the point. While the beginning of the email might be included to provide background and insight into the transaction, there are clear expressions of contractual intention within the email (such as the “no intention” expression), and the intention of a solicitor sending this email at this critical point in the course of the transaction was to communicate a contractual intention.
583I agree with Votua that the intention of Mr Gulliver’s email was to communicate that Votua is encouraged to not exercise its termination right as forbearance for Lineal’s decision not to exercise theirs. The words “you can continue to be patient and settle when the project is completed, and the plan of subdivision is registered” comes after the acknowledgment by Mr Gulliver that “the vendor is not particularly fussed if someone cancels their Contract as a re-sale may well produce a higher figure”. The implication here is that it would actually be in Lineal’s interests for Votua to exercise its rights of termination, but that Lineal is doing the decent thing and acting in Votua’s interests by not cancelling the contract, and, therefore, it is in everyone’s interests that Votua not terminate the contract and continue to “be patient”. Further, the fact that it is implicitly promised that Votua will be rewarded for ‘being patient’ by being able to “settle” when the plan of subdivision is registered is a clear communication that if Votua does not terminate, it will be rewarded with settlement. I, therefore, accept Votua’s submission that the substance of this email boils down to an expression of “we’re not exercising our right and we ask that you not exercise yours”.
584I further do not agree with Lineal’s argument that the expression “has no intention of doing so” communicates to Votua that this is only an intention of Lineal in the present, and that it reserves its right to terminate at some later point in time. The email would not have contained advice to Votua that Votua will be rewarded for being patient with settlement if it was also leaving open the possibility that Lineal might change its mind and deprive Votua of its settlement.
585For the above reasons, I consider that both the intention and the natural interpretation of the 13 August 2020 email was to communicate that Lineal was waiving its right to terminate pursuant to SC 11.2, and that its intention was to achieve forbearance to exercise its right of recission from Votua. I also accept that the ultimate forbearance on behalf of Votua amounts to sufficient consideration supporting the waiver.
Gulliver email sent 21 October 2020
586It is hard to see how the 21 October 2020 email is meant for any other purpose than to provide assurance that the project is proceeding and that, on faith that the settlement will be achieved, Votua should start taking the necessary steps.
587I do not accept Lineal’s submissions that the 21 October 2020 email amounts to no more than instructions of steps and future steps in the course of the transaction. There would be no point outlining this if not for the intention of providing Votua with assurance that the transaction was nearing settlement.
588The 21 October 2020 email was unequivocal in the sense that there is no logical explanation for Lineal to be providing an update on the present and future steps other than to communicate that the transaction is proceeding.
589Due to its unequivocal nature, I accept that the 21 October 2020 email is also an example of waiver, and that the continued forbearance on behalf of Votua amount to sufficient consideration supporting the waiver.
Gulliver email sent 16 March 2021
590I adopt the same reasoning as applied in relation to the 21 October 2020 email to the 16 March 2021 email, as it too is an update of the progression of the transaction designed to induce Votua to believe that it would proceed.
Issue 4: Did Lineal affirm the contract by election?
591I accept Lineal’s reliance on Gardiner[125] to reiterate the point that “making a representation” is not sufficient to alter the “rights and obligation of parties to a contract” unless it is made with some form of consideration and/or detrimental reliance. I also agree with Lineal that affirmation is like waiver in this respect.
[125] Gardiner at [95]-[96].
592I acknowledge that, as per Allianz[126], if intimations of waiver were to be given contractual weight in circumstances that were not exceptional then this “would undermine other contractual rules, including those generally requiring that variation of a contract be in the form of a deed or supported by consideration”.
[126] Allianz at [31].
593It follows that Votua must prove that it provided consideration in response to the affirming representation made by Lineal. As I have already outlined, the relevant representations were the three Gulliver “waiver” emails in 2020 and 2021.
594As I previously found, Votua did provide consideration for the representation made by Lineal in the manner of forbearance, as it elected not to exercise its termination right.
595I accept Lineal’s reliance on the decision of Deane, Toohey, Gaudron and McHugh JJ in Immer (No 145) [127] as authority for the position that affirmation will also need to involve the “abandonment” of an alternative choice. I also see the relevance of Lineal quoting from Immer (No 145)[128] to assert that “abandonment” is easier to establish when the “choice arises once and for all” and is not a “continuing one”.
[127] Immer (No 145) at [42].
[128] Ibid.
596However, I do not accept that Lineal can rely on this authority to advance the argument that it did not fully abandon its right to terminate the contract and had only demonstrated its present desire not to terminate at the time of sending the “waiver emails”. The argument is also that because the right to terminate was a continuing one, Lineal could change its mind and rely on it at a later stage. In my view, if I were to accept this argument, this would undermine the consideration which Votua provided, that is, its forbearance. It would negate the whole of point of considering forbearance as consideration, for which there is good authority, if a party were allowed to make a representation, induce forbearance, and then freely depart from that representation simply because it had an ongoing right to terminate.
597I accept Lineal’s reliance on Immer (No 145)[129] that election needs to involve something more than knowledge of the right to rescind or of the “facts giving rise to the rescind” and conduct that suggests the electing party is acting “on the basis that the contract remains on foot”, that it also involves the “necessity of making a choice”. However, I disagree with Lineal that, at the time of the waiver emails from Mr Gulliver there was no “necessity of making a choice” (as was the case in Immer (No 145))[130]. There was a clear necessity as Lineal knew that Votua needed instructions as to whether Lineal was going to pursue the contract or terminate it, and that in the absence of making this “choice” Lineal would risk losing the settlement and Votua would terminate. This was clearly a factor relevant to Lineal at the time it sent the waiver emails to Votua, as I have already outlined the purpose of those emails was to reassure Votua.
[129] Ibid at [29].
[130]Ibid at [28].
598I agree with Votua that the waiver emails satisfy the elements of affirmation identified by Stephen J in Sargent[131]. This is owing to the following:
(a) Lineal had sufficient knowledge of the working of the sunset clause, and that either party had the right to terminate. This is evinced in the first email from Mr Gulliver on 13 August 2020; and
(b) The wording of the emails was “unequivocal” as the desire to represent that contract would proceed and termination would not occur is the only logical explanation for the wording therein. A more detailed analysis of the unequivocal nature of these emails is found above in my anterior findings in relation to waiver.
[131]Sargent.
599Finally, I reject Lineal’s submission that election did not occur because there were no “inconsistent rights” in the sense that prior to registration of the plan of subdivision on 14 April 2021, Lineal could not affirm a contract with a subdivision that had not been registered. In my view, a possible “affirmation” did arise because both parties had the right to terminate and were, therefore, waiting on each other to determine if they would terminate or if they would proceed to settlement. “Affirming” that they would not terminate is the same as affirming the contract.
Issue 5: Is Lineal estopped?
600I agree with Votua’s definition of estoppel as the law which prohibits a party from departing from an assumption of fact that they have caused another party to accept for the purpose of their legal relationship, and which that other party has suffered a detriment as a result of relying on that assumption of fact. The issues for determination, therefore, are first, whether, Lineal caused Votua to adopt an assumption of fact in relation to the termination or affirmation of the contract and, second, whether or not Votua suffered detriment as a result of relying on that assumption of fact.
Assumption of fact
601For the reasons I have already stated in relation to waiver and affirmation, the three “waiver” emails from Mr Gulliver on 13 August 2020, 21 October 2020 and 16 March 2021 all led Votua to adopt the assumption of fact that the contract would be completed.
Detriment as a result of departure
602I accept that if Lineal is allowed to depart from the above assumption, Votua would lose the value of the bargain, being the property itself, which was valued as of 21 March 2024 at $1,200,000.00 exclusive of GST.
603I also accept that Mr Senia could have otherwise put his money to work and sought another property had he known that Lineal was planning to depart from the contract. I am not persuaded by Lineal’s argument that Mr Senia only agreed he could have bought another property owing to a leading question. Mr Senia’s uncontested evidence was that he was seeking to provide a source of revenue for his retirement through the various investments of his trust, it is, therefore, obvious that he would have bought another property in order to provide for himself had he known he would be left with nothing from expiration of the sunset clause.
604I am also not persuaded by Lineal’s arguments that Votua was not in a position to settle because the relevant funds were held in accounts that were in his personal name and not that of Votua. Mr Senia’s evidence was, and I accept, that the point of keeping that money in the accounts dormant was to have the funds available to lend to the trust so that he could complete the purchase.
Issue 6: Is Votua entitled to an order that Lineal specifically perform the contract?
605The High Court in Dougan v Ley[132] considered whether specific performance (a Court order to perform the contract) should be granted for the sale of the taxi and its license, or if damages (monetary compensation) would be sufficient. The Court held that the taxi license was considered a unique chattel of special value, and there were very few taxi licenses available at the time, therefore, monetary damages would not be an adequate remedy. This case is significant as it establishes that specific performance can be granted for the sale of unique chattels where damages would not suffice.
[132] (1946) 71 CLR 142 (“Dougan v Ley”).
606I accept, applying the principles set out in Dougan v Ley[133] that the property in the present case is unique, and that specific performance of the contract ought to be ordered.
[133]Dougan v Ley.
Conclusion
607Accordingly, for the foregoing reasons, I am satisfied that specific performance of the contract ought to be ordered.
- - -
Certificate
I certify that these 125 pages are a true copy of the judgment of Her Honour Judge Burchell delivered on 29 October 2024.
Dated: 29 October 2024
Alexandria Peck
Associate to Her Honour Judge Burchell
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