Xanthoulas v Lifestyle Residences Hobson's Bay Pty Ltd
[2025] VSC 517
•26 August 2025
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S ECI 2021 01418
| STERGIOS XANTHOULAS | Plaintiff |
| v | |
| LIFESTYLE RESIDENCES HOBSON’S BAY PTY LTD (ACN 615 058 305) (and another according to the Schedule attached) | Defendants |
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JUDGE: | M Osborne J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 11 August 2025 |
DATE OF JUDGMENT: | 26 August 2025 |
CASE MAY BE CITED AS: | Xanthoulas v Lifestyle Residences Hobson’s Bay Pty Ltd & Anor |
MEDIUM NEUTRAL CITATION: | [2025] VSC 517 |
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PRACTICE AND PROCEDURE – Application for final relief and damages assessment – Judgment sought by plaintiff to recover commission pursuant to property consultancy agreement – Entry of final orders – Damages awarded with statutory interest – Interlocutory judgment for damages to be assessed precludes alternative judgment for debt – Liability established of first defendant as undisclosed principal bound to perform contract – Second defendant executed agreement as agent for first defendant – Application of undisclosed principal doctrine – Alternative misleading and deceptive conduct claim against second defendant not made out – Form of judgment when pleading alleges inconsistent counterfactuals – Damages against second defendant assessed at nil – Declaratory relief when default judgment obtained – Appropriateness of declaratory relief - Supreme Court Rules (General Civil Procedure) Rules 2015, rr 24.02, 21.03, 21.04, 59.01.
COSTS – Standard basis – Indemnity costs refused – Defendants’ failure to accept Calderbank offer not unreasonable in the circumstances – Prior orders made for final costs payment – Additional order for costs incurred post-interlocutory judgment – No further departure from the usual order as to costs warranted.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | I Upjohn KC with A Blair of counsel | MLS Lawyers |
| For the Defendants | No appearances | Welner Lawyers |
HIS HONOUR:
Introduction
On 4 May 2021, the plaintiff, Stergios Xanthoulas (‘Mr Xanthoulas’), commenced proceedings against the then sole defendant, Lifestyle Residences Hobsons Bay Pty Ltd (‘Lifestyle’). The proceeding was brought to seek relief in the form of a debt claim for $1.7 million plus GST, or alternatively, damages for that same amount. This sum was said to be payable by Lifestyle to Mr Xanthoulas as commission pursuant to an agreement between the two parties. In broad terms, the agreement related to the provision of consultancy services by Mr Xanthoulas in respect of a potential sale of a property at 274B Millers Road, Altona North (‘the property’) owned by the Greek Orthodox community of Hobsons Bay Inc (‘Greek Community’). Lifestyle subsequently entered into a contract of sale with the Greek Community under which it acquired the property for $11 million (‘contract of sale’) and later became the registered proprietor.
Later, the second defendant, Dale Harrison (‘Mr Harrison’), was joined to the proceeding, and Mr Xanthoulas obtained leave to file and serve an amended writ and an amended statement of claim in the form of a second further amended statement of claim (‘2FASOC’).
From 14 June 2022, Welner Lawyers were appointed to act for Lifestyle (in place of MCK Legal) and for Mr Harrison.
In any case, as at 14 September 2022, receivers and managers had been appointed to Lifestyle. By order made 4 November 2022, the name of the first defendant in the writ was amended to ‘Lifestyle Residences Hobson’s Bay Pty Ltd (ACN 615 058 305) (Receivers and Managers appointed)’. Although a solicitor for the receivers and managers appointed to the first defendant appeared before a judge of the Court on 4 November 2022, it seems that Welner Lawyers remained (and continue to remain) as the solicitors on the record for both Lifestyle and Mr Harrison. On 14 October 2023, Lifestyle filed a further amended defence and amended counterclaim with the Court. It appears that no defence was every filed on behalf of Mr Harrison.
On 3 December 2024, following a series of instances of non-compliance by Lifestyle and Mr Harrison with various Court orders,[1] a judge granted interlocutory judgment in favour of Mr Xanthoulas upon his application as follows:
[1]The history of non-compliance is set out in the reasons at [2024] VSC 780 (Garde J).
THE JUDGMENT OF THE COURT IS THAT:
1.The further amended defence of the first and second defendants and the first defendant’s counterclaim filed 14 October 2023 be struck out.[2]
2.There be interlocutory judgment for the plaintiff in the proceeding against the first and second defendants for damages to be assessed.
3.The hearing and determination of the final relief to be granted to the plaintiff in the proceeding and the assessment of damages be adjourned to 2:15pm on 21 February 2025 for directions.
4.The plaintiff file and serve its submissions and any affidavits to be relied on in the assessment of damages on or before 4.00pm on 14 February 2025.
5.The plaintiff’s costs to date in the proceeding (except where otherwise ordered in favour of the defendants) including reserved costs, the costs of the counterclaim and the cost of and incidental to the summons are to be taxed by the Costs Court at the standard rate and when taxed paid by the defendants.
6.This order is made pursuant to r 2.07(1) of the Supreme Court (Miscellaneous Civil Proceedings) Rules 2018.
[2]See [4] above.
The interlocutory judgment was granted following the hearing of a summons filed by Mr Xanthoulas on 26 September 2024. Mr Harrison appeared at the hearing; Lifestyle did not.
Subsequently, by orders made 21 February 2025, at a hearing attended by counsel for Mr Xanthoulas and Mr Harrison in person, the judge made orders, inter alia, for the filing and service of affidavits and submissions by the parties and listed the matter for hearing for the assessment of damages and final relief for 8 July 2025 on an estimate of two days, with such hearing to be conducted by a judge of the Court.
As the judge originally allocated to hear the matter on 8 July 2025 became unavailable, the matter was instead re-listed for 15 July 2025 and the parties were advised accordingly that the hearing would not take place on 8 July. However, for reasons set out more fully below, the matter was subsequently listed for directions on 8 July 2025. On that day, I made orders, inter alia, listing the matter for assessment of damages and final relief on 11 August 2025 on an estimated duration of one day, extended the time for Mr Harrison to comply with the previous orders for the provision of affidavits and submissions by him and ordered that he pay Mr Xanthoulas’s costs of and incidental to the directions hearing.
When Mr Xanthoulas’s application for final relief and the assessment of damages came on for hearing on 11 August 2025, there was no appearance for either Lifestyle or Mr Harrison.
At the hearing, Mr Xanthoulas sought orders in the following terms:
1.There is judgment for the Plaintiff against the First Defendant [Lifestyle] in the sum of $1,798,584.42 plus interest fixed in the sum of $836,664.78 as at 11 August 2025 and continuing (to) accrue at $492.44 per day.
2.The Court declares that the First Defendant is a party to the consultancy agreement with the Plaintiff and Second Defendant formed on or about 5 July 2017 and varied on or by 27 November 2017.
3.The Court declares that the Plaintiff is a chargee of the property described in certificate of title volume 12241 folio 868 to secure the sum set out in paragraph 1.
4.The Court declares that the Plaintiff is entitled to maintain the caveat with dealing number AU169079T on certificate of title volume 12241 folio 868.
5.The Court declares that the First Defendant holds ten percent of the property described in certificate of title volume 12241 folio 868 and the development thereon on trust for the benefit of the Plaintiff.
6.The Second Defendant shall pay damages to the Plaintiff pursuant to section 236(1) of the Australian Consumer Law (Victoria) in the sum of $930,000.00 plus interest fixed in the sum of $397,479.45 as at 11 August 2025 and continuing (to) accrue at $254.63 per day.
7.Paragraph 5 of the orders made on 3 December 2024 is varied such that the plaintiff’s costs in this proceeding and in the proceeding no S ECI 2021 01063 inclusive (except where otherwise ordered in favour of the defendants) including reserved costs, the costs of the counterclaim and the costs of and incidental to the summons to 15 June 2023, are to be taxed by the Costs Court at the standard rate, and thereafter, to be taxed on an indemnity basis, and when taxed paid by the defendants.
In support of his application, Mr Xanthoulas relied upon:
(a) an affidavit sworn by Mr Xanthoulas as to damages and costs, dated 14 February 2025, with exhibits thereto (‘Xanthoulas Affidavit’);
(b) Mr Xanthoulas’s outline of submissions assessment of damages dated 14 February 2025;
(c) affidavit of Mr Xanthoulas’s solicitor, Mr Molnar, sworn 7 August 2025;
(d) Mr Xanthoulas’s outline of submissions as to costs of the directions hearing of 4 July 2025 [sic];[3]
(e) Mr Xanthoulas’s further submissions dated 13 August 2025, filed pursuant to orders made 11 August 2025.
[3]Given that the directions hearing only took place on 8 July 2025, the 4 July 2025 date is clearly an error.
Despite being an undefended action arising after the defendants’ defence has been struck out, Mr Xanthoulas’ application for relief was not straightforward.
Relevant provisions in the Rules
It is necessary firstly to set out some of the relevant provisions in the Supreme Court (General Civil Procedure) Rules 2015 (‘the Rules’). Under ord 24, r 02(1)(b), where a party fails to comply with an order of the Court including an order for discovery, the Court may order if that party is a defendant, that the defendant’s defence, if any, be struck out.
In those circumstances, ord 24, r 02(2) provides that a defendant whose defence is struck out in accordance with paragraph 1(b) shall, for the purpose of r 21.02(1), be taken to be a defendant who, being required to serve a defence does not do so within the time limited for that purpose.
Rule 21.01 applies in the case of judgment in default of appearance, whilst r 21.02 applies in respect of judgment in default of defence. Rules 21.03 and 21.04 govern specific types of default judgment.
Rule 21.03 applies to judgment for the recovery of debt, damages or property. It states:
(1)Where a claim is made for the recovery of a debt, damages or any property, whether or not another claim is also made in the proceeding, and the plaintiff is entitled to judgment on that claim against any defendant in accordance with Rule 21.01 …, the plaintiff may –
(a)for the recovery of a debt, enter final judgment against that defendant for an amount not exceeding the amount claimed in the writ or, if the plaintiff has served a statement of claim, the amount claimed in the statement of claim, together with interest from the commencement of the proceeding to the date of the judgment –
(i) on any debt which carries interest, at the rate it carries;
(ii)on any other debt, at the rates payable on judgment debts during that time;
(b)for the recovery of damages, enter interlocutory judgment against that defendant for the damages to be assessed;
(c)for the recovery of land, enter judgment for possession of the land against that defendant;
(2)Upon entering judgment under paragraph (1), the plaintiff may also enter judgment for costs.
In the context of r 21.03(1), ‘debt’ means a ‘debt or liquidated demand’. It refers to a pecuniary demand where the amount due is fixed and specific, or where it could be readily reduced to certainty by a mathematical calculation/computation.[4]
[4]TheCity Mutual Life Assurance Society Ltd v Giannarelli [1977] VR 463, 468 (McInerney J).
Rule 21.04 deals with judgment other than recovery of debt, damages or property. It provides:
(1)Where a claim is made other than for the recovery of a debt, damages or any property, whether or not a claim for such recovery is also made in the proceeding, and the plaintiff is entitled to judgment on that claim against any defendant in accordance with Rule 21.01 … the Court may give judgment for the plaintiff upon the statement of claim.
(2)An application for judgment under paragraph (1) may be made without notice to the defendant.
Broadly, r 59.01 deals with general relief, and provides the Court with the discretion in making any judgment or order. It states:
The Court may, at any stage of the proceeding, on the application of any party, give such judgment or make such order as the case requires notwithstanding that the judgment or order had not been sought in the originating process or other documents of the party in the proceeding.
It seems clear enough that the interlocutory judgment made 3 December 2024 was of a hybrid nature amounting to an interlocutory judgment for damages to be assessed pursuant to r 21.03(1)(b) and an application for judgment for other relief pursuant to r 21.04. Relevantly, there was no judgment entered, final or otherwise, for debt pursuant to r 21.03(1)(a).
The statement of claim
It is convenient next to set out some salient paragraphs of the 2FASOC.
Under the subheading ‘Parties’, paragraphs 1-3 plead, inter alia:
1. Since at least mid-2016 the plaintiff (Xanthoulas):
(a) had a close association with the Greek Community;
…
(c) was an acquaintance of the third defendant (Harrison).
2. The first defendant (Lifestyle) at all relevant times:
(a) since 28 September 2016, was a duly incorporated company;
…
(f)from 28 September 2016 was under the directorship of Mr David Burgess (Burgess);
(g) from at least mid-2017, had Harrison as its general manager.
3. At all relevant times, the Second defendant (Harrison) was:
(a) the son-in-law of Burgess;
(b) the general manager of Lifestyle; and
(c) an officer and/or agent of Lifestyle.
Paragraph 4 pleads the ownership of the property by the Greek Community. Paragraph 5 was deleted, paragraphs 6-9 need not be set out in full, but in broad terms contained a plea that Mr Xanthoulas and Mr Harrison worked together on the proposed development of the property.
Paragraph 10 can be passed over, but then paragraph 11 pleads that on or about 5 July 2017, in reliance on a representation made by Mr Harrison that a special purpose vehicle would be used to purchase the property that he would control (‘SPV Representation’), Mr Xanthoulas entered into a contract with Mr Harrison and a then unidentified special purpose vehicle to be nominated by Mr Harrison. This contract, defined as the ‘Harrison Consultancy Contract’ is said to be express and in writing. Some of the relevant terms and conditions are then set out in paragraph 12. These written terms pleaded are consistent with the written document which is in evidence having been exhibited to the Xanthoulas Affidavit and are set out below.
In paragraph 18, Mr Xanthoulas pleads that on or about 28 November 2017 or alternatively 29 November 2017, an agreement varying the Harrison Consultancy Contract was executed by each of Mr Xanthoulas and Mr Harrison (‘the Lifestyle Consultancy Contract’). The Lifestyle Consultancy Contract is again said to be express and in writing and otherwise partly implied but only to the extent to which Mr Harrison executed the agreement in his personal capacity.
Paragraphs 21-23 are important and warrant being set out in full. They read:
21.In executing the Lifestyle Consultancy Contract, Harrison was acting on behalf of Lifestyle as its agent:
(a) within the scope of his actual authority; or
(b)alternatively, by reason of the foregoing, within the scope of his implied or ostensible authority.
PARTICULARS
The scope of Harrison’s implied or ostensible authority arose at law, including Lifestyle’s appointment of Harrison as general manager, including without limitation to execute contracts on its behalf.
22.In the alternative, viz a viz Xanthoulas, Lifestyle was the undisclosed principal of Harrison.
23.By reason of those matters pleaded in paragraphs 21 and 22 herein, Lifestyle:
(a)was and is bound to perform the Lifestyle Consultancy Contract as Harrison’s principal; or
(b)alternatively, was and is estopped from denying that it was and is bound to perform the Lifestyle Consultancy Contract as Harrison’s principal.
Paragraph 24 pleads that the Lifestyle Consultancy Contract had the effect of, inter alia, varying the Harrison Consultancy Contract.
Otherwise, paragraph 25 which contains subparagraphs (a)-(k), sets out what are said to be express terms of the Lifestyle Consultancy Contract and which, for the most part, set out rights and obligations as between Mr Xanthoulas and Lifestyle. It is more convenient to set out the relevant parts of those terms when examining the terms of the Lifestyle Consultancy Contract itself, which was exhibited to the Xanthoulas Affidavit.
Paragraphs 25A-25C, as well as 25E-25G, can be passed over, as those paragraphs were not relied upon by Mr Xanthoulas in support of any claim for relief.
Paragraph 26 pleads that on or about 30 November 2017, the Greek Community and Lifestyle entered into a contract of sale providing for the Greek Community to sell the property to Lifestyle upon its subdivision from a larger allotment for $11 million.
Paragraph 27 pleads that on or about 24 December 2020, the contract of sale settled and Lifestyle was thereby duly registered as the proprietor of the property.
Paragraph 28 pleads that by on or about 24 December 2020, Mr Xanthoulas had fulfilled his obligations to provide the services under the Lifestyle Consultancy Contract.
Paragraphs 30 and 31 relate to the lodgement of a caveat which is more conveniently considered below.
Paragraph 32 alleges that in breach of the Lifestyle Consultancy Contract, Lifestyle failed or neglected:
(a) to notify Mr Xanthoulas that the contract of sale was to settle prior to its settlement or thereafter that it had settled; and
(b) further and alternatively, to pay to Mr Xanthoulas the amount of the commission.
Paragraph 32A pleads that by reason of Lifestyle’s breaches of the Lifestyle Consultancy Contract, Mr Xanthoulas was wrongfully prevented from issuing any invoice 14 days prior to settlement pursuant to clause 8.3 despite which he remained ready, willing and able to do so at all material times
In paragraph 32B, Mr Xanthoulas pleads that in breach of clause 8.5(c) of the Lifestyle Consultancy Contract, and further or alternatively the equitable obligations referred to in paragraph 25A2, Mr Harrison and/or Lifestyle granted rights in, or charges over, the property to third parties, including Immuto Fleur Nominees Pty Ltd (‘IFN’) as mortgagee pursuant to a mortgage of even date. It is alleged that on or about 2 June 2021, IFN lodged a caveat over the property claiming an interest as mortgagee from 1 June 2021. Mr Xanthoulas further alleges that, on or about 26 March 2022, despite knowledge of the charge in favour of Mr Xanthoulas, IFN attempted to register its purported mortgage on the register of titles.
In paragraph 33, Mr Xanthoulas pleads that he suffered loss and damage with the particulars of loss said to be the amount of the commission, $1.87 million (being $1.7 million plus GST) plus damages in the nature of interest, less the amounts paid in advance and set out in the particulars subjoined to paragraph 32 of the 2FASOC, in the sum of $71,415.58.
In paragraph 34, under the subheading ‘Debt’, Mr Xanthoulas alleges: ‘Further and alternatively, by reason of the foregoing matters in paragraphs 17 and 18, and 21-29A, and 32 and 32A, as and from 24 December 2020, Lifestyle was indebted to Mr Xanthoulas in the amount of the Commission’.
Paragraphs 34A-34D contain a plea said to support the imposition of a remedial constructive trust. This claim was not pressed and can be passed over.
Paragraphs 35-51 contain the claim against Mr Harrison. This claim alleges misleading and deceptive conduct contrary to ss 18 or 21 of the Australian Consumer Law (‘ACL’) committed by Mr Harrison through various acts or omissions. The claim is introduced by the words ‘in the alternative to paragraphs 21 and 22’. Those paragraphs, as set out above, recite that in executing the Lifestyle Consultancy Contract, Mr Harrison was acting on behalf of Lifestyle as its agent and within the scope of his authority, or alternatively that Lifestyle was the undisclosed principal of Mr Harrison.
The relevant counterfactual pleaded in relation to the misleading and deceptive conduct claim is set out in paragraph 50 of the 2FASOC under the subheading ‘Consequences if no contravention of ACL.’ It is alleged that if Mr Harrison or, further or in the alternative, Lifestyle had not contravened the ACL:
(a) [Mr] Xanthoulas would have ensured that Lifestyle was a party to the Lifestyle Consultancy Contract before entering into it; or
(b) Alternatively, if Lifestyle failed or refused to enter into the Lifestyle Consultancy Contract as a party:
(i) the Greek Community would have refused to enter into the contract of sale (with Lifestyle); and
(ii) further, [Mr Xanthoulas] would have procured the Greek Community to enter into a contract of sale providing on like terms with a different developer, in return for the payment of an amount not less than the amount of the commission and an interest in the development in an amount not less than the net equity, and otherwise on similar terms.
The counterfactual plea is then followed, in paragraph 51, by a plea of loss and damage suffered by Mr Xanthoulas or, an alternative plea that ‘Lifestyle has obtained significant benefits to which it would not otherwise be entitled’. The particulars advise that particulars of loss and damage and further, the value of the significant benefits, will be provided after expert reports are filed and served.
The Harrison Consultancy Contract and the Lifestyle Consultancy Contract
Next, it is convenient to now refer to some of the terms of the Harrison Consultancy Contract and the Lifestyle Consultancy Contract.
The documents constituting these agreements were exhibited to the Xanthoulas Affidavit.
The Harrison Consultancy Contract consists of a letter and an attached schedule. The letter has been signed by both Mr Harrison and by Mr Xanthoulas, with each having initialled the schedule. Although the letter is undated, a footer to the letter and schedule bears the date 5 July 2017, and Mr Xanthoulas deposed to entering into that agreement on that date.
Under the heading ‘AGREEMENT DETAILS’, the letter then identifies ‘The Purchasers’ described as ‘Dale Harrison the nominated special purpose vehicle to purchase (SPV).’ Under the subheading ‘The Greek Community’, reference is made to the ‘site located at 272-278 Millers Road, North Altona, Victoria. ’Under the subheading ‘The consultant’, there is reference to Mr Xanthoulas and/or nominee.
The letter then states that the Purchasers are prepared to engage the Consultant to undertake the services on a consultancy basis on the terms set out. The letter, inter alia, specifies in paragraph 5 that the fee payable by the Purchaser is as outlined in item 6 of the schedule (which sets out a fee of $2.8 million payable on terms set out therein). The letter concludes with a statement that acceptance of the proposal required the signing of a duplicate copy of the letter and a return of the signed letter to Mr Harrison. Mr Harrison signed the letter with the words ‘Property Developer’ appearing beneath his signature. Above Mr Xanthoulas’s signature and under the subheading ‘Acceptance’ appear the following words: ‘The above proposal including the entire Schedule and Terms and Conditions of Engagement whereby the Purchaser offers to engage Stergios Xanthoulas & or Nominee … to perform the Services described in item 1 of the Schedule is accepted’.
The Lifestyle Consultancy Contract comprises a 13-page written document (excluding the cover page) dated 29 November 2017, expressed to be made between Mr Xanthoulas as the Consultant and Mr Harrison as the Developer. The recitals, among other things, record that the Developer has agreed to engage the Consultant on the terms set out in the document (recital D), whilst recital E records that the Developer has agreed to pay the Consultant a fee in the form of commission as described in the document. There are then a range of defined terms including the commencement date of 23 August 2017, a definition of ‘confidential information’ which, among other things, is defined as meaning the Developer’s IP, the Consultant’s material, contract IP, contract material, personal information and all other information belonging to the Developer or any Related Entity.
Clause 2, headed ‘Engagement’ provides: ‘the Developer appoints the Consultant to provide the Services in accordance with this agreement from the Commencement Date until … (a) the Completion Date’. ‘Completion date’ is defined as having the meaning set out in the agreement (see clause 1).
Clause 4(a), headed ‘Obligations’ states that it is agreed that the Consultant:
(a)Upon execution of this agreement, negotiate with the Greek Community on the Developer’s behalf in relation to the acquisition of the land by the Developer and/or the Developer’s nominee described herein for the purchase price that is no greater
than the valuation prepared by James Nagy dated 8 March 2017. ‘Sutherland Farrelly dated 24th November 2017’ which has been initialled by the parties.
Clause 7, headed ‘Relationship’ includes one subclause (7.1) headed ‘Nature of Relationship’ which reads:
The parties agree that their relationship is one of principal and independent contractor, not employer and employee, principal and agent, partnership or joint venture.
Clause 8, headed ‘Payment’ reads as follows:
8. Payment
8.1 Fees
The Developer will pay the Consultant the fees of $1,700,000 plus GST for providing the Services. The Fee is only payable on completion of the purchase of the land by the Developer and/or its nominee.
8.2In addition to the 8.1, and subject to the Developer making frank disclosure of its liabilities associated with the development, the Consultant is entitled to 10 per cent (10%) of the total net equity in the development for the purpose of this agreement. Notwithstanding, the Consultant retains the liberty to verify the authenticity of the Developer’s disclosed liabilities
8.3 Invoicing
The Consultant must issue invoices to the Developer 14 days prior to completion of the purchase of land, containing sufficient details to enable the Developer to verify the time spent by the Consultant providing the Services, in the form of Tax Invoices quoting the Consultant’s Australian Business Number.
8.4 Payment
Within 7 business days of the Developer receiving a Tax Invoice in compliance with clause 8.3, the Developer will pay the Consultant the Fees specified in the Tax Invoice into the Consultant’s Solicitors’ Trust Account and such payment will be released upon being instructed by the Developer or his Solicitors.
8.5 Disputes Over Fees
Where the Developer disputes the Fees:
(a)the Developer will pay the undisputed portion of the invoice (if any) and advise the Consultant of its dispute regarding the balance; and
(b)if the resolution of the dispute determines that the Developer is to pay an amount to the Consultant, the Developer will pay that amount upon the resolution of the dispute within 7 business days and subject to the provision of a tax invoice.
(c)In order to secure any payment, the Developer hereby charge (sic) the land described herein with the payment of all amounts that may become due and payable to the Consultant. This entitles the Consultant to lodge a caveat on the title of the property restricting transactions with the property until the Consultant’s costs are paid.
A handwritten note, initialled by the parties, adds: ‘This charge will rank behind the principal lenders’.
Clause 16, headed ‘Assignment’, is in standard form, providing that the parties are not permitted to subcontract, assign, sublicence, transfer, charge or in any manner make over or deal with any part of the document or its rights under the document without the prior written approval of the other party.
Clause 18, headed ‘Notice’, includes subclause 18.3, which provides that a person’s address and fax number are those set out above, or as the person has notified the sender.
Clause 19, headed ‘General’, includes an entire agreement clause (19.3) which provides that this document supersedes all previous agreements about its subject matter and embodies the entire agreement between the parties.
Clause 22 is handwritten and initialled, stating:
It is also noted that the contract to purchase has been altered to accommodate payments for landscaping and carparking costs for landscaping and carparking on the Greek Community land paid for by the Developer will be deducted from the fee in clause 8.1.
The relief sought by Mr Xanthoulas
Returning to the Mr Xanthoulas’s claim for relief, paragraphs 1-5 of the proposed orders all proceed on the premise that Lifestyle is a party to the Lifestyle Consultancy Contract, notwithstanding that the face of the document suggests that Mr Harrison —not Lifestyle — is the contracting party.
Mr Xanthoulas contends that, in circumstances where a defendant has not filed a defence, the allegations in the statement of claim are taken to be admitted.[5] Relatedly, the particulars referred to in and served with the statement of claim form part of the statement of claim for the purposes of any deemed admission.[6]
[5]Victorian WorkCover Authority v White [2021] VSC 458, [13] (Connock J); Yang v Finder Earth Pty Ltd [2019] VSCA 22, [24] (Maxwell P, Tate and Emerton JJA).
[6]United Telephone Co v Smith (1889) 61 LT 617, 618.1 (Chitty J).
On that basis, Mr Xanthoulas submits that the following facts are taken to be admitted as a consequence of there being no defence to the 2FASOC:
(a) that on or about 28 November 2017, or alternatively 29 November 2017, an agreement varying/replacing the Harrison Consultancy Contract was executed by each of Mr Xanthoulas and Mr Harrison (paragraph 18 of the 2FASOC);
(b) that in executing the Lifestyle Consultancy Contract, Mr Harrison was acting on behalf of Lifestyle as its agent:
(iii) within the scope of his actual authority; or
(iv) alternatively, by reason of the foregoing, within the scope of his implied or ostensible authority (paragraph 21);
(c) in the alternative, viz-a-viz Mr Xanthoulas, Lifestyle was the undisclosed principal of Mr Harrison (paragraph 22);
(d) by reason of the matters pleaded in paragraphs 21 and 22 of the 2FASOC, Lifestyle:
(i) was and is bound to perform the Lifestyle Consultancy Contract as Mr Harrison’s principal; or
(ii) alternatively, was and is estopped from denying that it was and is bound to perform the Lifestyle Consultancy Contract as Mr Harrison’s principal;
that the Lifestyle Consultancy Contract had the effect of, inter alia, varying the Harrison Consultancy Contract (paragraph 24);
(e) that the Harrison Consultancy Contract was a contract entered into on or about 5 July 2017 between Mr Xanthoulas and Mr Harrison, as well as a then unidentified special purpose vehicle to be nominated by Mr Harrison, which contract included various terms and conditions imposed upon Mr Harrison and the nominated special purpose vehicle;
(f) that the effect of those matters was that the terms of the Lifestyle Consultancy Contract were such that they imposed the relevant obligations set out in that written contract not on Mr Harrison, but on Lifestyle (generally paragraph 25);
(g) that on or about 30 November 2017, the Greek Community and Lifestyle entered into a contract of sale providing for the Greek Community to sell the property to Lifestyle upon its subdivision for $11 million;
(h) that on or about 24 December 2020, the contract of sale settled, and Lifestyle thereby became the duly registered proprietor of the property (paragraph 27);
(i) that in breach of the Lifestyle Consultancy Contract, Lifestyle failed or neglected:
(i) to notify Mr Xanthoulas that the contract of sale was to settle prior to its settlement, or thereafter that it had settled; and
…
(iii) further or alternatively, to pay to Mr Xanthoulas the amount of the commission (paragraph 32);
(j) that as a result, Mr Xanthoulas suffered loss and damage (paragraph 33);
(k) in the alternative, by reason of the foregoing matters, Lifestyle is indebted to Mr Xanthoulas in the amount of the commission (paragraph 34).
The position is not as straightforward as Mr Xanthoulas submits.
First, because the Court is being asked to make a declaration, the Court must be satisfied not only that the form of the declaration is appropriate, but also that there is a real legal controversy and that the resolution of that controversy is such as to justify a declaration in the form sought.
The Court’s role is not to simply ‘rubber stamp’ the form of declaration sought merely because there has been no defence filed to the 2FASOC. The making of declarations, regardless of the circumstances, is a matter which involves a discretionary judgment by the Court (and is not a mechanical exercise).
Secondly, a court is not bound to act on admissions made by the parties or on statements of fact agreed by/between the parties.[7] In Damberg v Damberg, Haydon JA (with whom Spigelman CJ and Sheller JA agreed) summarised the position as follows:
… the courts will act on admissions of or agreements about matters of fact where there is no reason to doubt their correctness. But they are reluctant to do so where there is reason to question the correctness of the facts admitted or agreed.
[7]Gramophone Co Ltd v Magazine Holder Co (1911) 28 RPC 221, 225 [35] (quoted with approval in Damberg Damberg v Damberg (2001) 52 NSWLR 492, 522 [160] (‘Damberg’).
Thirdly, certain paragraphs of the matters pleaded in the 2FASOCare not material facts as such, but rather are conclusions of law. To take one example; the plea in paragraph 14E is that ‘Consequently, Lifestyle was a party to the Harrison Consultancy Contract’. This is a legal conclusion following from the antecedent plea in paragraph 14D that ’On or about 30 November 2017 or shortly before, Mr Harrison identified Lifestyle as the special purpose vehicle for the purposes of the Harrison Consultancy Contract’. These paragraphs in turn have to be read in the context of the plea in paragraph 11 that ‘the Harrison Consultancy Contract was an agreement entered into between Mr Xanthoulas, Mr Harrison and a then unidentified special purpose vehicle to be nominated by Mr Harrison’. The interaction between these asserted material facts gives rise to the conclusion of law that Lifestyle became a party to the Harrison Consultancy Contract. The Court should not accept that this is so simply because Mr Xanthoulas alleges it and it is not denied by the defendants as a result of the failure to file a defence or its striking out which is to the same effect. Deemed admissions arising from the failure to file a defence apply only in relation to allegations of fact, and do not extend to allegations of law.[8]
[8]Middlesex County Council v Nathan [1937] 2 KB 272, 276 (du Parcq J).
Fourthly, the Xanthoulas Affidavit exhibits both the Harrison and Lifestyle Consultancy Contracts. The two contracts in question are before the Court. That being so, it is necessary for the Court to examine the documents in order to assess whether there is reason to doubt the correctness of the critical conclusions of law pleaded by Mr Xanthoulas in the 2FASOC. The conclusions that require consideration are that Lifestyle became a party to the Harrison Consultancy Contract, that the Harrison Consultancy Contract was varied on or about 28 November 2017 or alternatively 29 November 2017 by the execution of the Lifestyle Consultancy Contract and, thirdly, that Lifestyle is bound by the Lifestyle Consultancy Contract as a principal because that contract was entered into by Mr Harrison as agent for Lifestyle as an undisclosed principal with the authority of Lifestyle are facts in respect of which there is no need to question their correctness.
Was Lifestyle a party to the Harrison Consultancy Contract?
I do not accept that Lifestyle became party to the Harrison Consultancy Contract.
Mr Harrison signed the relevant letter comprising the agreement, thereby giving rise to the alleged contract on behalf of the purchasers (plural), who were described as ‘Mr Harrison and the nominated special purpose vehicle to purchase (SPV)’. On Mr Xanthoulas’s case, Mr Harrison therefore entered into that agreement as one of the two principals, with the second principal being ‘a (to be) nominated special purpose vehicle’.
Thus, Mr Harrison entered into the agreement partly as a principal and partly as agent on behalf of an identifiable but not yet ascertained principal, namely the (to be) nominated purchaser. The position is somewhat analogous to a pre-incorporation contract, where a promoter enters into a contract on behalf of a-yet-to-be incorporated entity. The contract only becomes binding on the subsequently incorporated company if the company ratifies the contract within a reasonable time.[9] There is no plea of ratification here.
[9] Corporations Act 2001 (Cth), s 131.
Although Lifestyle was incorporated at the time the Harrison Consultancy Contract was entered into, this does not assist. It makes the position worse. Unlike the pre-incorporation contract scenario, Lifestyle had the capacity to authorise Mr Harrison entering into the contract on its behalf. There is no plea that it did so. Both the content of the letter evidencing the contract and the balance of the plea are inconsistent with a plea of authorisation. The letter refers to a ‘to be determined SPV’. There is no plea of authority, and the face of the document is inconsistent with the existence of any authority from Lifestyle at the time of entry into the contract. Absent such authority, Lifestyle could only have become bound by subsequent ratification by a principal of an agent’s purported acts on behalf of the principal in circumstances where those acts are unauthorised.[10]
[10]Keighley, Maxsted & Co v Durant [1901] AC 240.
As such, the Harrison Consultancy Contract did not become binding on Lifestyle.
Variation of the Harrison Consultancy Contract
Nor do I accept that the effect of the Lifestyle Consultancy Contract was one which varied the Harrison Consultancy Contract. Setting aside the difficulty of varying an earlier contract to which Lifestyle was not party, there is nothing in the Lifestyle Consultancy Contract which suggests that this occurred. The Lifestyle Consultancy Contract is entirely silent with respect to the Harrison Consultancy Contract and, in any event, contains an entire agreement clause.
Did Mr Harrison enter into the Lifestyle Consultancy Contract as agent for an undisclosed principal (Lifestyle)?
Although the pleading is cast in terms that the Lifestyle Consultancy Contract varied the Harrison Consultancy Contract, the terms alleged to be breached are those set out in the written Lifestyle Consultancy Contract. Whether the latter contract effected a variation of the Harrison Consultancy Contract or not, is a distraction. The pertinent question is whether Mr Harrison, in executing the Lifestyle Consultancy Contract in his own name as the Developer, acted as the authorised agent of Lifestyle as an undisclosed principal, and therefore bound Lifestyle to the contract.
Mr Xanthoulas’s plea that Mr Harrison’s execution of the Lifestyle Consultancy Contract occurred on behalf of Lifestyle as its agent and within the scope of his actual authority is not traversed. It stands then as an admission of those facts. Those facts are capable of supporting the plea in paragraph 22 of the 2FASOC that Lifestyle was the undisclosed principal of Mr Harrison. Although the plea in that paragraph is said to be an alternative plea to paragraph 21, this characterisation makes very little sense given that the document, on its face, suggests that Mr Harrison is the principal and makes no mention of Lifestyle, the plea in paragraph 22 is not in the alternative at all but a legal characterisation of that which follows from the facts in paragraph 21.
That being so, the only relevant remaining question is whether there is any reason to doubt the correctness of the facts[11] alleged in paragraph 21 or the legal characterisation asserted in paragraph 22.
[11]See Damberg (n 7) 492.
A modern statement of the relevant law pertaining to undisclosed principals was provided by Lord Lloyd in Siu Yin Kwan v Eastern Insurance Co Ltd who said:[12]
(1)An undisclosed principal may sue and be sued on a contract made by an agent on his behalf, acting within the scope of his actual authority.
(2)In entering into the contract, the agent must intend to act on the principal’s behalf.
(3)The agent of an undisclosed principal may also sue and be sued on the contract.
(4)Any defence which the third party may have against the agent is available against his principal.
(5)The terms of the contract may, expressly or by implication, exclude the principal’s right to sue, and his liability to be sued. The contract itself, or the circumstances surrounding the contract, may show that the agent is the true and only principal.
[12][1994] 2 AC 199, 207.
The facts required to give rise to liability are those set out in points (1) and (2). Fact (1) is squarely alleged and hence established. Fact (2) is partly expressly alleged or to the extent not, is implied by the introductory words of paragraph 21(a) of the 2FASOC. The only remaining question is whether the terms of the contract, expressly or by implication, exclude Lifestyle’s right to be sued or, to put the matter slightly differently, whether the contract itself or the surrounding circumstances show that Mr Harrison is the only principal.
The face of the agreement alone suggests that it was entered into by Mr Harrison as principal. He executed the agreement, is identified as ‘the Developer’, and the relevant obligations and rights are imposed on and held by the Developer.
In Humble v Hunter,[13] the Court did not accept evidence which was sought to be adduced so as to show that a charter party executed by a third person had been entered into by that third person as agent for an undisclosed principal. The relevant charter party was signed by the plaintiff’s son with the words of the agreement recording an agreement between the son, described as the ‘owner of the good ship or vessel called the Anne’, and the defendant. At the trial, the plaintiff called the son as a witness to prove that she was the real owner of the vessel and that the son had signed the charter party as her agent and not as principal.
[13](1848) 12 QB 310.
The Court concluded that the doctrine of the undisclosed principal did not apply where the agent contracted as principal and had done so by describing himself as the owner of the ship. Relevantly, Patterson J noted that the relevant question turned on the form of the contract and that if the contract had been made in the son’s name merely without more, it might have been shown that he was agent only and that the plaintiff was the principal. His Honour considered that because the document itself represented that the son contracted as owner, the proper construction of the contract was to the effect that the property which was the subject of the contract belonged to the son alone.
Similarly, in Formby Bros v Formby,[14] the Court of Appeal, in considering an appeal from the King’s Bench Division, considered a written contract made between James Rimmer (JR), described as the proprietor, and the plaintiffs, by which it was agreed that the plaintiffs should build two houses for the proprietor and that the proprietor should pay them an agreed price. JR signed the contract as the proprietor. The Court of Appeal dismissed an appeal against the decision of the Trial Division which deemed as inadmissible oral evidence which was sought to be admitted to establish that JR entered into the contract for an undisclosed principal. The Court accepted that Humble v Hunter was good law notwithstanding the criticism of that decision in Killick v Price.[15]
[14](1910) 102 LT 116.
[15]12 Times L Rep 263 (Lord Russell CJ).
The decisions in Humble v Hunter and Formby Bros v Formby have been frequently discussed and criticised.[16] Critics argue that the doctrine of the undisclosed principal would be rendered close to nugatory[17] if the cases stand for the proposition that the contracting parties’ description of itself functions to exclude an undisclosed principal from taking the benefit or bearing the burden of the contract.
[16]See, eg, Epps v Rothnie [1945] KB 562, 565 (Scott L.J.) (‘Epps v Rothnie’).
[17]Diamond Stud Ltd v New Zealand Bloodstock Finance Ltd [2010] NZCA 423, [23].
By contrast, in Fred Drughorn Ltd v Rederiaktiebolaget Transatlantic,[18] the House of Lords held that the description in a charter party of a contracting party as ‘charterer’ did not, of itself, serve to designate that person as the only one who could fill that position. Later, when an action for breach of the charter party was brought by the plaintiffs who claimed to be undisclosed principals of the charterer, evidence was admissible to show that the plaintiffs were, in fact, the charterers. Lord Sumner considered that Humble v Hunter and Formby Bros v Formby were cases in which the contract itself, truly construed, excluded the application of the rule as to undisclosed principals.
[18][1919] AC 203.
Viscount Haldane added that:
It is in accordance with ordinary business common-sense and custom that charterers should be able to contract as agents for undisclosed principals who may come in and take the benefit of the charter party.[19]
[19][1919] AC 203, 207.
In Danziger v RJ Thompson,[20] Lawrence J held that the description of a person in the lease as ‘tenant’ did not of itself negative agency and admitted evidence to show that the tenant was merely a nominee for her parents as a result of which the parents were held liable for the tenant’s arrears in rent. His Lordship remarked that ‘the description ’tenant’ no more negatives agency than would the description ’contracting party’.[21]
[20][1944] KB 654.
[21]Ibid, 657; see also Epps v Rothnie (n 17) (agent described as landlord).
The importance of analysis of the relevant contract in question is highlighted by Ferryways NV v Associated British Ports.[22] The relevant contract was entered into by a crew management company, Ambra, described in the contract of employment as the ‘employer’ and a crew member. The relevant issue was whether Ambra acted as agent for the claimant ship operator. There were indicia both ways in the language of the contract. Three clauses were identified by the judge as being consistent with the intervention of the claimant ship operator; first, the claimant was designated as the final arbiter in the event of a grievance by an employee, the second prescribed code of conduct which referenced the standards laid down in rules and regulations of the claimant and the third indicated that the claimant had established a system to contribute to the safe transport of goods and passengers. According to the judge, these clauses suggested that it was envisaged that an entity other than Ambra would have the rights and obligations of the employer under the contract of employment and therefore presented as an indication that the claimant was able to intervene in the contract of employment as an undisclosed principal.
[22][2008] 1 Lloyds Reports 639.
Applying a similar analysis to the Lifestyle Consultancy Contract, the mere designation of Mr Harrison as the ‘Developer’ and his signature to the arrangement in that capacity does not, of itself, preclude Mr Harrison’s entry into the consultancy arrangement as agent for an undisclosed principal. The contract must be interpreted objectively, by what a reasonable person in the position of the parties would have understood it to mean in light of its text, the surrounding circumstances and its purpose or object.[23] Where the parties are business persons to a commercial contract, a business like interpretation[24] is necessary. Lifestyle had made a written offer to purchase the property on 27 November 2017 The Lifestyle Consultancy Contract was executed on or around 29 November 2017 and its terms provide, among other things, for the commission payable by the Developer to be secured by a charge from the Developer over the property, and for Mr Xanthoulas to share in the development profits with the Developer. Such terms are consistent with Mr Harrison entering into the contract as agent for Lifestyle as undisclosed principal. They certainly do not exclude that possibility.
[23]Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451, [22].
[24]International Air Transport Association v Ansett Australia Holdings Ltd (2008) 234 CLR 151, [8].
In addition, clause 1.2(d) of the consultancy arrangement provides that a reference to a party to this document includes the party’s successors, permitted substitutes and permitted assigns. The reference to ‘permitted substitutes’ would include the undisclosed principal.
I was initially concerned that clause 4(a) of the agreement which refers to the acquisition of the land by the Developer and/or the Developer’s nominee points in a contrary direction. However, on further reflection, that is not necessarily so; if Mr Harrison was an agent for the undisclosed principal then the Developer meant the undisclosed principal and not Mr Harrison, in which case the nominee would be a nominee of the undisclosed principal.
In circumstances where relevant facts are admitted by reason of there being no defence, the task is confined to considering whether the terms of the contract as construed are inconsistent with and exclude the intervention of an undisclosed principal. They are not. As such, there is no impediment to the Court acting on the facts, deemed to be admitted, that Mr Harrison executed the Lifestyle Consultancy Contract with the authority of Lifestyle which was an undisclosed principal under the contract.
Paragraph 1 relief
In light of that conclusion, it is necessary to return to the relief sought by Mr Xanthoulas. In paragraph 1 of his proposed orders, Mr Xanthoulas seeks judgment against Lifestyle ‘in the sum of $1,798,584.42 plus interest fixed in the sum of $836,664.78 as at 11 August 2025 and continuing (to) accrue at $492.44 per day’. In form, the order is one for judgment for a debt. Mr Xanthoulas’s outline of submissions and the assessment of damages confirms that this is the appropriate characterisation, and refers to paragraph D of the prayer for relief which is relief in the form of a debt.
The difficulty with relief sought in that form is that the Mr Xanthoulas obtained interlocutory judgment against Lifestyle and Mr Harrison ‘for damages to be assessed’. Where a plaintiff sues on alternative claims, the plaintiff may, on default of the defendant enter judgment under that rule in respect of one claim, in which case the other claim will be treated as abandoned.[25] Here, by obtaining interlocutory judgment against Lifestyle for damages to be assessed, Mr Xanthoulas must be taken to have abandoned the claim for the debt. Mr Xanthoulas cannot recover both the amount of the debt and damages of an amount calculated by reference to the sum that ought to have been paid. However, Mr Xanthoulas, in his prayer for relief, seeks damages in the alternative, and the 2FASOCincludes a claim for damages suffered as a result of ‘the foregoing’, which necessarily included the failure to pay Mr Xanthoulas the amount of commission. The particulars of damage comprise $1.87 million (being $1.7 million plus GST) plus damages in the nature of interest, less amounts paid in advance which total $71,415.58.
[25]Currie & Anor v May [1914] VLR 17 (Hodges J).
The distinction between the amount sought to be recovered by way of a judgment for the debt and a judgment for damages is therefore largely one of no consequence, save that the interest sought to be recovered by Mr Xanthoulas in relation to the debt claim is calculated by reference to s 58 of the Supreme Court Act 1986 (Vic) (‘SCA’), and the submission seeks to have interest calculated pursuant to s 58 from 17 December 2020 to 3 May 2021 (a period of 138 days), and then from 4 May 2021 onwards at the same rate (10%) but pursuant to s 60(1) of the SCA.
Section 58(1) of the SCA provides that in a proceeding for recovery of a debt or sum certain, absent good cause to the contrary being shown, the Court must order the payment of interest:
If in a proceeding a debt or sum certain is recovered, … from the time when the debt or sum was payable (if payable by virtue of some written instrument and at a date or time certain) or, if payable otherwise, then from the time when demand of payment was made.
It is not appropriate to allow interest under s 58(1). I do not accept that this is a case where Mr Xanthoulas is obtaining judgment for a debt or sum certain. Mr Xanthoulas is recovering damages. In any case, the debt did not become payable under the Lifestyle Consultancy Contract until such time as an invoice had been sent. As such, the debt did not become payable at a time certain. Otherwise there is no evidence of the time of any demand.
Whilst I accept that it would have been open to Mr Xanthoulas to seek damages representing the loss of use of the moneys, calculated by reference to the time at which Mr Xanthoulas would have sent an invoice, had Lifestyle informed him of the fact of settlement, there is no evidence of the loss suffered by reason of the delayed receipt of the moneys, nor is there any particulars of that loss.
The prayer for relief seeks interest according to statute, which necessarily includes interest under s 60(1). That section provides, in substance, that the Court must, on application in any proceeding for the recovery of debt or damages, unless good cause is shown to the contrary, give damages in the nature of interest at such rate (not exceeding the penalty rate) from the commencement of the proceeding to the date of the judgment, over and above the debt or damages awarded.
The proceeding was commenced on 4 May 2021. It included a claim for damages. Mr Xanthoulas will be entitled to interest, pursuant to s 60(1) calculated at the penalty rate, on the sum of $1,798,584.42 from the date of commencement to the date of judgment, totals $775,603.73.
Paragraphs 2-5 declarations
Paragraphs 2-5 all involve the making of declarations. Ordinarily, declarations ought not be made absent a contradictor.[26] However, each case depends on its own circumstances, and the fact that an opposing party does not appear is not an insurmountable obstacle to a plaintiff obtaining declaratory relief.[27] However, that said, generally speaking, a court should not make a declaration unless there is a real legal controversy to be determined that is not hypothetical and the declaration will have real legal consequences for the parties.[28] Each of the proposed declarations have their own problems, and I am not disposed to make any of them, save for that in paragraph 2.
[26]Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421, 437-438.
[27]Foris GFS Australia Pty Ltd v Manivel [2022] VSC 482, [36] (Elliott J).
[28]Ibid [37].
The form of proposed declaration the subject of paragraph 2 is inappropriate because, as foreshadowed earlier, I do not accept that Lifestyle was a party to the Harrison Consultancy Contract. However, I accept that Mr Harrison entered into the Lifestyle Consultancy Contract as agent for an undisclosed principal, and a declaration in those terms appears in paragraph A of the prayer for relief. The only question is whether there is any utility in making a declaration in that limited form, which goes no further than these reasons, and more particularly, the order for damages against Lifestyle. Given that it is possible that Lifestyle may go into liquidation at a later stage, and the face of the agreement suggests that Lifestyle is not a party to it, there is perhaps some utility in a declaration in the terms sought in paragraph A of the prayer for relief.
Paragraphs 3-5, in effect, seek declarations as to a proprietary interest of Mr Xanthoulas in the property. I was initially concerned with making a declaration in such terms given the requirements of s 126 of the Instruments Act 1958 (Vic), but I accept Mr Xanthoulas’s submission that a defendant must plead reliance on that Act, if it is to be invoked.[29]
[29]Verwey v De Tommasis, unreported, judgment of the Court of Appeal, 30 July 1997, Kenny JA with whom Winneke P and Hayne JA agreed.
Mr Xanthoulas submitted that the declaration could only bind him and Lifestyle. In that case, one wonders as to the utility of any declarations which go beyond that sought in paragraph 2.
Whilst the form of the declaration in paragraph 3 is largely unobjectionable and accords with the wording of clause 8.5(c) of the Lifestyle Consultancy Contract, no such declaration was sought in the prayer for relief. This, together with its marginal utility, means that I am not disposed to make the declaration sought.
The declaration the subject of proposed order 5 is also problematic. The declaration sought is that ‘the First Defendant holds ten percent of the property described in certificate of title volume 12241 folio 868 of the development thereon on trust for the benefit of the Plaintiff’. A declaration in that form was not sought in the 2FASOC. The declaration most closely corresponding to that now sought is that specified in paragraphs C and D2 of the prayer for relief —that Lifestyle holds the property on trust for Mr Xanthoulas to the extent of 10% of the net present value of the development. The meaning of clause 8.2 of the agreement is not entirely clear, but it suggests an entitlement to an equity share of 10% of the profits of the development. It does not, in terms, provide for ‘10% of the property’. A declaration in that form begs the question of whether it is 10% of Lifestyle’s equity in the property after allowing for priority encumbrances. I am not prepared to make the declaration sought. It is discordant with the contract, unclear, not specified in the prayer for relief and lacks clear utility in any case.
The declaration as to the asserted entitlement to maintain the caveat the subject of proposed order 4 is also problematic. In oral submissions, senior counsel for Mr Xanthoulas submitted that there was a caveat removal proceeding between Mr Xanthoulas and Lifestyle. This submission is consistent with the Xanthoulas Affidavit, which refers to proceeding no. S ECI 2021 01063.[30]
[30]See paragraph 15 of the Xanthoulas Affidavit.
Mr Xanthoulas exhibits orders made 13 April 2021, which dismisses the proceeding brought by Lifestyle for removal of the caveat lodged by Mr Xanthoulas on the basis, inter alia, that Mr Xanthoulas would commence a proceeding seeking to substantiate his claim in respect of the caveat the subject of the proceeding commenced by Lifestyle. Paragraph 5 of the orders made in the caveat removal proceeding was that the costs of Lifestyle and Mr Xanthoulas of the caveat removal proceeding ‘are to be costs in the proceeding which is to be commenced by the first defendant in the Commercial Court in accordance with the Undertaking’. By reason of this order, any costs order made in this proceeding includes, or picks up, the parties’ costs in the caveat removal proceeding. It follows that no declaration with respect to the caveat is necessary for the purposes of determining questions of costs in the proceeding initiated by Lifestyle.
There is another problem. The 2FASOC, in contrast, refers to a different caveat removal proceeding between a mortgagee, IFN, and Mr Xanthoulas. The pleading alleges that this proceeding was the subject of a deed of acknowledgement between the parties which ‘resolved the proceeding as between them on the basis that the registration of IFN’s mortgage would not affect Mr Xanthoulas’s priority’. The meaning of this summary description of the content of the deed is somewhat unclear, and the deed itself was not in evidence.
There is otherwise a paucity of information as to the proceeding between Mr Xanthoulas and IFN; paragraph 25B(d) refers to an application by IFN to the Registrar of Titles Victoria (‘Registrar’) pursuant to s 90(1) of the Transfer of Land Act 1958 (Vic) (‘TLA’). The section cited does not contemplate an application as such but the paragraph referable to the lodgement of the dealing (IFN’s mortgage) by IFN as referred to in the preceding paragraph of the plea and s 89A of the TLA which contemplates the lapse of any caveat preventing registration 30 days after the Registrar has given notice to the caveator. The next sub-paragraph refers to the commencement of a proceeding on or about 9 June 2022 by Mr Xanthoulas against IFN and the Registrar pursuant to s 90(3) of the TLA. Insofar as the plea refers to s 90(3) it makes little sense, as s 90(3) entitles an adversely affected party to seek an order for removal of a caveat. Whilst there is reference to an earlier caveat lodged by IFN, s 90(3) has nothing to do with the lodgement of the dealing by IFN and its effect on any other caveat, such as Mr Xanthoulas’s. Section 90(3) is probably intended to be a reference to s 90(2), which enables a caveator to seek a direction from a court that the Registrar delay registering the dealing, which would as a consequence prevent the lapse of Mr Xanthoulas’s caveat.
There is no plea of a direction under s 90(2), and it appears that the mortgage has since been registered. If this occurred, Mr Xanthoulas’s caveat would have lapsed.
In any case, the form of the declaration sought is inappropriate. It seems to suggest that the caveat (which in all likelihood has been removed) be maintained on the register for some unspecified time.
Paragraph 6 - the order sought against Mr Harrison
There are a series of difficulties with Mr Xanthoulas’s proposed order 6 insofar as it is directed against Mr Harrison.
First, the claim against Mr Harrison alone commences in paragraph 35 of the 2FASOC, and is introduced by the words ‘in the alternative to paragraphs 21 and 22 herein’. Paragraphs 21 and 22 contain the pleas that Mr Harrison executed the Lifestyle Consultancy Contract as agent for the undisclosed principal, Lifestyle. Where a plaintiff brings a claim against one defendant and an alternative claim against the other defendant, the plaintiff must elect between the two prior to judgment. The plaintiff cannot obtain a judgment against one defendant, as well as a judgment based on an alternative claim against the other defendant. Here, the plaintiff obtained a default interlocutory judgment against both defendants.
Secondly, the claim against Mr Harrison is framed as one for damages for misleading and deceptive conduct, contrary to s 18 of the ACL[31] (‘the misleading and deceptive conduct claim’).
[31]Being Schedule 2 of the Competition and Consumer Act 2010 (Cth).
Because the damages which are sought are those which arose by reason of the contravention, a plaintiff is required to plead, as has been the case here, a relevant counterfactual as to the state of affairs that would have arisen had there been no contravention.
The relevant counterfactual is pleaded in paragraph 50 and contemplates two alternatives. The first is that Mr Xanthoulas would have ensured that Lifestyle was a party to the Lifestyle Consultancy Contract before he executed it. Given my conclusion that Lifestyle is in any event bound by that contract, no loss follows from this counterfactual and it may be put to one side.
The second, or alternative, counterfactual is that the Greek Community would have refused to enter into the contract of sale with Lifestyle; that Mr Xanthoulas would have procured the Greek Community to enter into a contract of sale in relevantly identical terms with another developer; and that the other developer would have agreed to pay commission to Mr Xanthoulas of not less than the amount to which Mr Xanthoulas was entitled under the Lifestyle Consultancy Contract. No particulars are provided. Neither the identity of the alternative developer nor the amount that the alternative developer is willing to pay is particularised. The Xanthoulas Affidavit endeavours to fill those gaps, providing the name of the alternative developer and asserting a commission figure of $5 million. In Mr Xanthoulas’s submissions however, the damages calculation proceeds on the footing of an alternative commission of $2.8 million (which is neither the subject of particulars nor any evidence). From this, Mr Xanthoulas deducts the debt sought to be recovered against Lifestyle, resulting in damages claimed against Mr Harrison for $930,000.
The necessary predicate of this counterfactual is that the Greek Community would not have entered into the contract of sale with Lifestyle, and that Mr Xanthoulas would not have entered into the Lifestyle Consultancy Contract with Lifestyle by its agent Mr Harrison. Had that been so, Mr Xanthoulas would not be entitled to the damages he seeks as against Lifestyle.
Mr Xanthoulas therefore seeks damages against Lifestyle on the basis of facts arising from deemed admissions as against Lifestyle that Mr Xanthoulas entered into the Lifestyle Consultancy Contract and that Lifestyle acquired the property from the Greek Community. At the same time, Mr Xanthoulas seeks damages against Mr Harrison on the basis that he would not have entered into the Lifestyle Consultancy Contract and that the Greek Community would not have purchased the property. The two positions are irreconcilable. I reject Mr Xanthoulas’s submission that this is unproblematic because he accounts for the debt or damages recovered from Lifestyle by seeking damages in a reduced amount against Mr Harrison that takes account of the damages from Lifestyle. This addresses double counting, which is a separate problem to claims in the alternative.
By obtaining interlocutory judgment against both Lifestyle and Mr Harrison in respect of claims which are truly in the alternative, the interlocutory judgment is irregular and would have been amenable to being set aside on that basis.[32]
[32]RT Co Pty Ltd v Minister of State for the Interior (1957) 98 CLR 168.
However, in circumstances where there is no application made by either defendant to set aside the interlocutory judgment, and where it otherwise would have been open to Mr Xanthoulas to elect to seek judgment against Lifestyle and abandon his alternative claim against Mr Harrison, the most appropriate course is to allow Mr Xanthoulas damages against Lifestyle alone, and to assess the damages from Mr Harrison as nil, given that the predicate of the claim against him cannot arise and the damages are neither pleaded nor particularised.
The costs orders
In proposed order 7, Mr Xanthoulas seeks an order that the defendants pay the plaintiff’s costs of the proceeding on an indemnity basis from 15 June 2023.
Mr Xanthoulas relies upon an offer contained in a letter sent by his then solicitors dated 1 June 2023 headed ‘without prejudice save as to costs’, being a letter in the nature of a ‘Calderbank’ offer.
The letter, inter alia, proposed to resolve the proceeding together with a separate Magistrates’ Court claim (apparently a separate action in the Magistrates’ Court of Victoria)[33] on the basis of payment by Lifestyle and Mr Harrison of $1.87 million within 21 days of the execution by the parties of a deed of settlement, with releases not to arise until payment and receipt of the settlement sum. Mr Xanthoulas argues that the failure to accept the offer is unreasonable entitling him to indemnity costs.
[33]The action is currently in abeyance pending the outcome of this proceeding.
I do not consider it appropriate to make an order for indemnity costs. First, the Calderbank offer contemplated acceptance of obligation to pay by both Lifestyle and Mr Harrison. Given the manner in which Mr Xanthoulas pleaded and prosecuted his case, recovery against only one could be obtained. Secondly, no release would have arisen unless and until the settlement sum was paid. As such, the offer could not have been accepted unless either Lifestyle or Mr Harrison had capacity to pay $1.87 million within 21 days. If they did not, and there is no evidence nor any basis to suggest that they did, their failure to accept the offer was not unreasonable.
Thirdly, paragraph 5 of the orders made by the judge on 3 December 2024 provided:
5.The plaintiff’s costs to date in the proceeding (except where otherwise ordered in favour of the defendants) including reserved costs, the costs of the counterclaim and the costs of and incidental to the summons are to be taxed by the Costs Court at the standard rate and when taxed paid by the defendants.
Mr Xanthoulas now seeks what is described as a variation to that order so as to provide for payment of indemnity costs.
There was nothing left over in the order made 3 December 2024 which contemplated any variation, and no basis is suggested in the submissions as to why it would be open to a party who has obtained a final order for the payment of costs to later seek revision.
I accept that the orders made 3 December 2024 only deal with the costs to that date. Accordingly, it is necessary to make a further order with respect to the costs incurred since then.
In circumstances where I am not prepared to conclude that the defendants’ failure to accept the Calderbank offer was unreasonable, those costs will be ordered on a standard basis against Lifestyle.
Before returning to the form of the further order, it is also necessary to deal with the costs of the directions hearing held on 8 July 2025.
On that day, I ordered that the second defendant pay the plaintiff’s costs of and incidental to the directions hearing and adjourned the plaintiff’s application for the fixing of the costs in paragraph 4 to 11 August 2025.
As noted earlier, the assessment of damages and final relief had initially been fixed for 8 July 2025.
When the judge allocated to hear the matter was unable to do so, the matter was referred to me, and my Chambers sent an email to the parties advising that the hearing would take place on 15 July 2025.
In response to that email, the solicitors for Mr Xanthoulas advised that the date was acceptable but that the foreshadowed two day estimate was excessive as no affidavit evidence or submissions had been filed on behalf of the defendants to oppose the assessment of damages. Instead, a revised estimate of a hearing of three hours was proposed.
The earlier orders made by the judge at directions, as noted above, had contemplated a timetable for the filing and service of those affidavits and submissions.
In response to the email from my Chambers, Mr Harrison responded on his own behalf, and purportedly on behalf of Lifestyle, indicating that he wished to file material.
On that basis, the proceeding was listed for a directions hearing on 8 July 2025 to entertain what I apprehended to be Mr Harrison’s application for leave to file and serve affidavit material and submissions on behalf of both defendants.
At the hearing, Mr Xanthoulas was represented by senior counsel and junior counsel and opposed Mr Harrison’s application, including his application to appear on behalf of Lifestyle.
I was not prepared to grant Mr Harrison leave to appear on behalf of Lifestyle, but acceded to his application to file and serve affidavit material on his own behalf, as had been originally contemplated by the orders made 3 December 2024.
I did so after Mr Harrison indicated that he wished to do so and that he had unsuccessfully attempted to file such documents earlier.
In the result, no affidavit material was filed by Mr Harrison, nor any submissions.
In those circumstances, the directions hearing was unnecessary. Mr Xanthoulas now seeks an order that I fix the costs of that day in the sum of $9,300, comprising half day appearance by senior counsel, advice, preparation, half day appearance by junior counsel, and $1,350 (GST incl.) for three hours’ professional costs in preparation for and instructing at the directions hearing.
The costs seem rather high in the context of a brief mention. Ordinarily, a hearing of this nature could have been satisfactorily attended to by junior counsel.
In any event, I do not propose to fix the costs. The costs ordered on 3 December 2024 along with the further costs ordered since that date, excluding the costs of the hearing on 8 July 2025, will have to be taxed in any event.
The orders made on 8 July 2025 were that the costs of and incidental to the directions hearing be paid by the second defendant. There is no need to make any other order. Although the order does not differentiate between whether the costs are to be taxed on the standard basis or indemnity basis, absent specification of the basis, the default position is that they be assessed on the standard basis. That position applies.
I do not propose to fix the costs and accordingly a further order will be made that the application for the fixing of the costs ordered to be paid by paragraph 4 of the orders made 8 July 2025 is dismissed.
Conclusion
The orders that will be made therefore are as follows:
(1) The damages assessed pursuant to paragraph 2 of the orders made 3 December 2024, insofar as they amount to the plaintiff’s claim for damages against the first defendant, are assessed in the sum of $1,798,584.42 together with interest pursuant to s 60(1) of the SCA in the sum of $775,603.73.
(2) The quantum of damages assessed in relation to the plaintiff’s interlocutory judgment against the second defendant is assessed as nil.
(3) Declare that the agreement dated 29 November 2017 entered into between Mr Stergio Xanthoulas of 50-52 Branton Road, Hoppers Crossing, Victoria (Consultant) and Dale Harrison of PO Box 20, Prahran Victoria (Developer) was entered into by Mr Harrison as agent on behalf of his principal, Lifestyle Residences Hobson’s Bay Pty Ltd (ACN 615 058 305);
(4) The plaintiff’s costs of the proceeding in the period from 4 December 2024 onwards are to be taxed by the Costs Court at the standard rate and when taxed paid by the first defendant.
(5) The application by the plaintiff for relief otherwise than on the terms set out in paragraphs 1-3 hereof is dismissed.
(6) The plaintiff’s application for an order that the costs ordered to be paid by the second defendant on 8 July 2025 be fixed is dismissed.
In conclusion, it is appropriate to say something about the course followed by Mr Xanthoulas in this proceeding.
By Mr Xanthoulas’s summons filed 26 September 2024, the plaintiff sought orders that the defences of the first and second defendants be struck out and that the counterclaim of the plaintiff-by-counterclaim be struck out.
Having regard to the failure by the defendants to comply with Court orders, that course was understandable.
The summons also sought an order that ‘there be judgment in favour of the plaintiff in default of defence’.
That application too was understandable in view of the history of the matter. In the ordinary course, an application for judgment in default represents little difficulty. In circumstances where there is a debt claim against a single defendant pursuant to r 21.03(a) of the Rules, the position is particularly clear.
Where the plaintiff seeks interlocutory judgment against a single defendant for damages to be assessed, and no other claim is made, the position is also relatively straightforward.
However, where a plaintiff makes alternative claims against different defendants, and even where the plaintiff makes alternative claims against the same defendant, complications may well arise, as was the case here. Where declaratory relief is sought further care is required. In such circumstances, before seeking orders for default judgment in claims of such nature, plaintiffs are well-advised to give careful consideration to precisely what claims against which defendant they seek to vindicate by obtaining judgment.
SCHEDULE OF PARTIES
S ECI 2021 01418
BETWEEN:
| STERGIOS XANTHOULAS | Plaintiff / Defendant by counterclaim |
| - and - | |
| LIFESTYLE RESIDENCES HOBSON’S BAY PTY LTD (ACN 615 058 305) (RECIEVERS AND MANAGERS APPOINTED) - and - | First Defendant / Plaintiff by counterclaim |
| DALE JOHN HARRISON | Second Defendant |
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