Pittmore Pty Ltd v Chan; Chan v Tan

1. [1]

   BELL P: I agree with Leeming JA.

2. [2]

   LEEMING JA: The appellant, Pittmore Pty Ltd, and the respondent, Mr Edward Pei-Ying Chan, were participants in a failed joint venture to redevelop two adjacent recently rezoned properties in Willoughby, known as Number 15 and Number 17. The objective was to demolish the existing buildings and erect some 24 apartments on the two lots. Number 15 was owned by Mr Chan. Pittmore acquired Number 17 for $3 million, but ultimately sold to a third party for $6 million.

3. [3]

   Mr Chan and his wife sued Pittmore for breach of contract, breach of fiduciary duty and breach of statute, joining Pittmore’s sole director Mr Joo Kee Tan on the basis he had procured Pittmore’s breach of fiduciary duty and was involved in the statutory contraventions. The primary judge heard a trial confined to liability over five days, finding Pittmore liable but dismissing the claim against Mr Tan: Chan v Tan [2020] NSWSC 428. Pittmore has appealed and Mr Chan has cross-appealed. The appeal gives rise to numerous issues at law. The cross-appeal presents an important question in equity concerning the knowledge of a person alleged to have procured a breach of fiduciary duty.

Short overview of key factual background

1. [4]

   Mr Chan and Pittmore entered into a deed setting out the terms of their joint venture on 29 April 2016, the same day as contracts for the sale of Number 17 were exchanged. In circumstances described in more detail below, which give rise to most of the issues arising on Pittmore’s appeal, the parties executed a further document, also described as a deed and dated 29 April 2016, some three months later (on 25 and 27 July 2016). It will be convenient to refer to the First and Second Joint Venture Deeds, without predetermining whether the latter was, in fact, effective as a deed.

2. [5]

   The most significant difference between the First and Second Joint Venture Deeds was what was said about the ownership of the land. In the first, Number 15 was to be retained by Mr Chan and Pittmore was to become the owner of Number 17. In the second, both lots were to be owned as tenants in common in equal shares by Pittmore and Kienan Pty Ltd, the latter as trustee for “The Chanestate Trust” [sic]. The change in ownership structure accorded with written advice concerning stamp duty.

3. [6]

   The same advice provided that it was desirable to cause the vendor of Number 17 to rescind the existing contract and issue a new contract in favour of Pittmore and Kienan. At no time does attention appear to have been given to Pittmore’s rights under the existing contract to direct the vendor to transfer title to Pittmore’s nominee (cl 4.3 of the Real Estate Institute’s standard form of contract). Even so, at one stage the parties were told that the vendor’s solicitor had consented to rescinding the existing contract and replacing it with one in favour of Pittmore and Kienan, and it was at that stage that the Second Joint Venture Deed was executed. As it turned out, the vendor’s attitude thereafter changed, the contract for the sale of Number 17 was not rescinded, and the joint venturers took steps towards adopting a third structure, pursuant to which Pittmore would become the trustee of the Chans’ family trust. The joint venture progressed over the ensuing nine months, including an application for development consent lodged in December 2016 and tax advice obtained in March 2017.

4. [7]

   As will be seen below, the Second Joint Venture Deed stated that either party could terminate if both properties were not held by Pittmore and Kienan as tenants in common in equal shares by 30 April 2017. At the end of May, there were separate negotiations between Mr Joo Kee Tan and a third party, to buy Number 17 for first $5 million, then $6 million. Mr Tan disclosed this to the Chans, offering to share the windfall, but they wished to proceed with the joint venture. On 13 June 2017, Pittmore gave notice of termination of the joint venture, and on the same day, Pittmore exchanged contracts to sell Number 17 to the third party, which sale has been completed.

5. [8]

   Mr Chan sued for breach of contract, for damages for contravention of the Australian Consumer Law, and in equity for breach of fiduciary duty. The claims in equity and under statute extended to Mr Tan personally, as a person involved in the contravening conduct and who was said to have procured the breach of fiduciary duty. Claims for knowing receipt and knowing assistance under the first and second limbs of Barnes v Addy (1874) LR 9 Ch App 244 were disavowed. It was common ground that the joint venture parties owed fiduciary obligations towards each other, and that those obligations ceased if the joint venture were validly terminated in accordance with the deed.

6. [9]

   The primary judge found that the Second Joint Venture Deed never took effect, because it had only been delivered in escrow subject to a condition that the vendor of Number 17 would reissue a contract in favour of Pittmore and Kienan. Further, if it were effective, the primary judge found that, either as a matter of construction or as a matter of rectification in equity, it did not in fact confer a contractual right to terminate if both properties were not held by Pittmore and Kienan as tenants in common in equal shares by 30 April 2017. His Honour also indicated support for Pittmore having waived any right it had to terminate, but fell short of so finding.

7. [10]

   Accordingly, the primary judge found in favour of Mr Chan on questions of liability. Pittmore challenges the conclusions of the primary judge on delivery of the deed, construction and rectification. Mr Chan defends the reasoning of the primary judge, and relies upon a notice of contention including as to waiver.

8. [11]

   The primary judge dismissed Mr Chan’s claims against Mr Tan, finding that there was no misleading or deceptive, or unconscionable, conduct, and that Mr Tan could not be liable for procuring a breach of fiduciary duty absent dishonesty. Mr Chan cross-appeals challenging the failure to find unconscionable conduct and the conclusion that dishonesty is a necessary element of liability for procuring a breach of trust.

9. [12]

   The parties consented, during the course of the hearing, to defer questions of remedy. This appeal, accordingly, is interlocutory, but there was a concurrent hearing of the application for leave and the appeal over two days.

The circumstances preceding Mr Chan’s execution of the Second Joint Venture Deed

1. [13]

   There was no dispute about any of the following findings of primary fact.

2. [14]

   Underlying the development opportunity which gave rise to this litigation was a change to the planning regime. A draft Local Environmental Plan was exhibited in 2010. It was proposed that apartment buildings of up to four storeys be permitted where the Chans owned Number 15, but only if a total land area of 1,100 square metres was available. Numbers 15 and 17 were each about 700 square metres, with a single dwelling erected on each lot.

3. [15]

   The Local Environmental Plan was made by the Minister in January 2013. Following advice from a solicitor specialising in taxation and stamp duty, the Chans decided that the development would be undertaken using a trust. They intended to use their existing company, Kienan Pty Ltd, as trustee. Ms Chan’s firm did architectural and design work, and although she was not a party to either deed, she was prominent in the negotiations with their neighbour, and in involving Pittmore.

4. [16]

   On 9 April 2016, Ms Julia Tan, the daughter of the owner of Number 17, and no relation to Mr Joo Kee Tan, agreed informally to sell Number 17 for $3 million, with settlement deferred for six months. Shortly thereafter, Ms Chan approached Mr Joo Kee Tan, who agreed to participate, via his company Pittmore. He delegated his son, Mr Puay Song Tan (who was known as Daniel), who in turn nominated Mr David Kam, solicitor, to act on the purchase. Contracts for the sale of Number 17 to Pittmore were exchanged on 29 April 2016.

5. [17]

   The First Joint Venture Deed was executed on 29 April 2016, the same day as contracts were exchanged. The parties were Mr Chan (“EC”) and Pittmore (“PM”). The recitals were:

6. [18]

   Clause 1 provided:

7. [19]

   The deed provided that the joint venture’s objectives were completing renovation works on Numbers 15 and 17, subdividing the properties into separate titles and then dividing the units equally between the joint venturers. Clause 4 provided that the agreed value for Number 15 was $3.5 million, the agreed value for Number 17 was $3 million, and that upon the condition precedent in cl 1.1 being fulfilled, Pittmore would pay $500,000 into a joint account (this seems never to have occurred). Subject to that payment, Mr Chan and Pittmore would share the expenses and the profits or losses equally, and would own the assets equally.

8. [20]

   Clause 5 provided for the establishment of the “Development and Architecture Committee”, comprising Ms Chan and Mr Daniel Tan, with power to appoint, and retain consultants, builders and contractors. Ms Chan’s firm was to be engaged as the architect for the purposes of obtaining development approval.

9. [21]

   Mr and Ms Chan had intended for their share of the joint venture to be held on trust. Clauses 10.3 and 10.4 provided:

10. [22]

    Clauses 12 and 13 provided:

11. [23]

    Baker Stephenson, a firm known to Mr Joo Kee Tan, was retained to act as the project manager. The first meeting of the Development and Architecture Committee took place on 7 June. Baker Stephenson provided a timetable for the project, which showed the process of development approval beginning in November 2016, with consent expected at the end of April 2017, and construction commencing in September 2017.

12. [24]

    By letter dated 5 July 2016, responding to an inquiry from Ms Chan, Mr Kam recommended that the existing contract for the purchase of Number 17 be rescinded and replaced by a contract under which Pittmore and Kienan (as trustee of the Chans’ trust) would be the purchasers as tenants in common. Mr Kam wrote to Mr Daniel Tan, who in turn forwarded it to Ms Chan.

13. [25]

    There is scant documentary evidence about what occurred in the following fortnight, but plainly enough the vendor was invited to rescind the existing contract and execute one in favour of Pittmore and Kienan. On 20 July 2016, Mr Daniel Tan sent an email to Ms Chan containing advice that the vendor’s solicitors had received no instructions. He asked her whether “we should continue to wait or make contact with the vendor directly?” Evidently the vendor was approached, because on 22 July 2016 a solicitor at Mr Kam’s firm wrote to Mr Daniel Tan, copying in his father, advising that “the vendor has agreed to rescind the existing Contract and re-execute the Contract” with Pittmore and Kienan as purchasers, and attaching a new front page of the contract made out in those terms. Seemingly at around the same time, another version of the joint venture deed was prepared in Mr Kam’s office. It was sent to Mr Daniel Tan who in turn forwarded it to Ms Chan at 4.24 pm on 21 July.

14. [26]

    The new deed was dated 29 April 2016, the same date as the then existing joint venture deed. Most of the provisions were identical to those in the First Joint Venture Deed. There were important changes to the recitals and clause 1.

15. [27]

    Recital A was unchanged, but recitals B to E replaced the former B to D:

16. [28]

    New clause 1 provided (Ms Chan’s handwritten deletion and new wording are indicated in strikethrough and bold):

17. [29]

    It may be noted at the outset that the hand written alteration resulted in a disconformity of the dates referred to in each of clauses 1.1, 1.2 and 1.3, whereas the dates referred to in the corresponding clause of the First Joint Venture Deed were consistent. In some respects, the provisions of the Second Joint Venture Deed reflected what had been anticipated in cl 10.3 of the earlier deed. Clause 10.3 of the First Joint Venture Deed, which had authorised Mr Chan to transfer his share of Number 15 to the Chans’ family trust by 30 October, was deleted. Former cl 10.4 was renumbered as the new cl 10.3.

18. [30]

    The execution clause of the Second Joint Venture Deed was identical to that of the First Joint Venture Deed. Space was left for the common seal of Pittmore, to be affixed in the presence of a director and secretary.

19. [31]

    The primary judge found that the Second Joint Venture Deed was signed by Mr Chan and witnessed by Ms Chan on 25 July 2016. His Honour found that it was signed by Mr Joo Kee Tan on or about 27 July (at [105]) and there was no challenge to that finding. Pittmore did not provide a copy of the deed as executed until the following year, when it purported to terminate under the (new) cl 1.2.

20. [32]

    Two days later, a solicitor in Mr Kam’s office advised Mr Daniel Tan that stamp duty in the amount of $150,510.00 was payable today “for the existing Contract”. (That reflected the three month period under s 17 of the Duties Act 1997 (NSW).) Plainly the vendor had not executed the new contract. Eleven days later, the vendor’s solicitors wrote with new instructions: they said that they were entitled to rescind the existing contract. They made allegations of “misleading, fraudulent and unconscionable conduct in the proposed transaction”, and they said that the vendor would be prepared to exchange contracts in favour of Pittmore and Kienan at a price of $4 million, rather than $3 million. The offer was open for 24 hours.

21. [33]

    Despite the exchange of contracts on Number 17 in April 2016, other developers continued to express interest in acquiring either or both properties. One was Mr Ted Manny. On 14 July he made an offer to Ms Chan of $10 million for Numbers 15 and 17. According to Ms Chan, she notified Mr Daniel Tan of this offer but neither party took any action to pursue it.

22. [34]

    It is convenient to defer a fuller account of the events after July 2016 until addressing waiver. For present purposes, it suffices to note that the vendor of Number 17 refused to rescind the existing contract, which was completed in December 2016. Pittmore thereby became the registered proprietor of Number 17 (thus satisfying cl 1.1 of the First Joint Venture Deed). However, Number 15 continued to be retained by Mr Chan, so part of cl 1.1 of the Second Joint Venture Deed remained unsatisfied.

23. [35]

    Work continued on the development, including an application for development consent. The date for notifying termination of the joint venture, 30 April 2017, passed. At the end of May 2017, Pittmore received an offer from a third party to buy Number 17 for $5 million, which was increased to $6 million. It was common ground that Messrs Joo Kee Tan and Daniel Tan discussed this with Mr and Ms Chan. Mr Joo Kee Tan wanted to accept; the Chans (who feared they would be left with Number 15, which could not be developed alone because of its size) wanted to persevere with the development.

24. [36]

    On 13 June 2017, Pittmore gave notice of termination under cl 1.2 of the Second Joint Venture Deed, on the basis that cl 1.1 had not been satisfied. A copy of the Second Joint Venture Deed signed by Mr Joo Kee Tan on behalf of Pittmore accompanied the notice. On the same day, Pittmore exchanged contracts to sell Number 17 to the third party.

The dispositive reasoning of the primary judge on the appeal

1. [37]

   The primary judge accepted Mr Chan’s submission that Pittmore had not been entitled to terminate under cl 1.2 of the Second Joint Venture Deed because it had been delivered in escrow, implicitly subject to a condition that the vendor of Number 17 rescind the existing contract and enter into a new contract for sale of land to Pittmore and Kienan as tenants in common: at [100]-[115].

2. [38]

   The primary judge stated that while delivery was required of a deed, physical delivery was neither necessary nor sufficient. Instead the question was whether the party had evinced an intention, as objectively determined, to be bound by the terms of the deed. His Honour was conscious of the seeming technicality of this issue, because there was no necessity for the parties’ venture to be recorded in a deed, as opposed to a simple contract. His Honour said:

3. [39]

   The primary judge noted the submission that the deed had never physically been delivered to the Chans and that Pittmore had never done anything evincing an intention to be bound by it. However, his Honour noted that there had been no challenge to Mr Tan’s evidence that he had executed the deed on behalf of Pittmore on or about 27 July 2016, noting that while that did not itself amount to delivery, “delivery can be presumed from execution”, citing Hall v Bainbridge (1848) 12 QB 699; 116 ER 1032. His Honour noted, conversely, that there was no evidence of any positive steps taken evincing an intention not immediately to be bound by the deed (for example putting it in a safe, or delivering it to a solicitor with instructions to hold it pending some event). The primary judge added at [107]:

4. [40]

   This was challenged by Mr Chan in this Court. Ground 1(b) of his notice of contention maintained that the Second Joint Venture Deed did not take effect as a deed because it was not delivered.

5. [41]

   The primary judge then turned to whether Mr Chan had delivered the copy of the deed signed by him in escrow. The primary judge noted the altered condition in cl 1.1 that both Pittmore and Kienan should become registered as proprietors of Number 17 as well as the fact that at the time the deed was executed and handed over, both parties shared the understanding that the vendor had agreed to rescind the existing contract and replace it with a contract for sale in favour of Pittmore and Kienan.

6. [42]

   The primary judge also noted that the First Joint Venture Deed had been prepared in advance of, but had not been entered into until after, the exchange of contracts with the vendor of Number 17. His Honour noted that there was “every reason to suppose that the parties contemplated that the second joint venture deed would operate in the same way”.

7. [43]

   The primary judge rejected Pittmore’s submission that the new condition in cl 1.1 could be satisfied by Pittmore completing the contract and transferring Number 17 into ownership of itself and Kienan, stating at [111] that there was “nothing in the matrix of fact to suggest that the parties had this in mind” and that it was “also highly unlikely the parties who were so determined to minimise their tax obligations would have contemplated incurring a double liability for stamp duty and other transaction costs.”

8. [44]

   Finally, his Honour drew support for that inference from cl 1.3, which made express reference to the incidence of stamp duty on the transfer of Number 15 by Mr Chan to the companies. His Honour concluded that the second payment of stamp duty which Pittmore’s submission necessarily entailed would have “taken away the point of this carefully planned sequence of transactions”. At no stage was reference made to the purchaser directing the vendor to transfer title to the two companies.

9. [45]

   The primary judge also referred to the circumstances of delivery, which included the handing over of the Second Joint Venture Deed simultaneously with the signed contract for purchase by Pittmore and Kienan. His Honour noted that the latter was only intended to come into force if the existing contract for the sale of land was rescinded and added that it was “hard to see why the delivery of the second joint venture deed would have been intended to take effect on any other basis”: at [114].

10. [46]

    Those considerations were sufficient to enable the primary judge to conclude that “the [second] joint venture deed was implicitly conditional upon rescission of the existing contract for the purchase of Number 17 by Pittmore and its replacement with a fresh contract between the vendor and Pittmore and Kienan as tenants in common.”

11. [47]

    At [116]-[129], and after noting it was unnecessary to do so having regard to his conclusions concerning delivery, the primary judge addressed Mr Chan’s submissions that cl 1.2 did not, as a matter of construction, entitle either party to terminate after 30 April 2017, on the basis of the principles associated with Fitzgerald v Masters (1956) 95 CLR 420; [1956] HCA 53, or alternatively that cl 1.2 should be rectified in equity.

12. [48]

    The primary judge rejected a submission that cl 1.1 was to be construed as providing for automatic termination, as something which could not sensibly be understood in light of the presence of cl 1.2. Instead, his Honour stated that cl 1.1 was to be understood as having provided implicitly for the termination of the joint venture if it was not satisfied, but only if notice was then given under cl 1.2. His Honour said that there was “an implicit link between the two clauses which was not spelt out”, and that “rather than expressly linking the timing of the clauses together, the drafter simply used the same date, 30 April 2017”: at [120]. His Honour added that the date of 30 October 2016 in cl 1.2 (by which time Mr Chan was to transfer Number 15) created “a problem which went beyond clumsiness of expression”. That was the background in which Ms Chan’s handwritten amendment fell to be construed. His Honour added that the extrinsic evidence showed that construction was not expected to commence until well after 30 April 2017. That created the problem that cl 1.2, read literally, allowed termination well before the deadline in cl 1.1 was reached. His Honour noted that while the amendment did not create a temporal problem with cl 1.3, which already existed, it made that problem more acute.

13. [49]

    His Honour’s dispositive reasoning was at [124]-[126]:

14. [50]

    The primary judge also accepted Mr Chan’s submission that rectification would be ordered in equity, even if it was not necessary in light of the construction given to the clause already outlined. Pittmore was critical of the reasoning, insofar as it did not expressly attend to some aspects of the doctrine, including the necessity of there being “clear and convincing” evidence. His Honour’s reasoning was concise and may best be reproduced in its entirety:

15. [51]

    In light of the conclusion of the primary judge as to delivery in escrow and the contingent findings on construction and rectification, it was triply unnecessary for his Honour to deal with the other defences advanced by Mr Chan. However, his Honour observed at [136] that Mr Chan had submitted that any right to terminate after 30 April 2017 had been lost by election, in circumstances where both parties had continued as if the joint venture were still on foot. His Honour said that the meetings continued and expenses continued to be incurred in advancing the joint venture project, which was said necessarily to have involved Pittmore calling for and receiving continued performance of Mr Chan’s obligations under the deed, being something inconsistent with the exercise of a supposed right of termination. His Honour stated that “on the face of it, this submission appears correct”, but also stated that he did not need to decide the point finally. This is the subject of one aspect of Mr Chan’s notice of contention.

16. [52]

    The primary judge noted the defence of estoppel, and rejected the submission that there had been a representation in the negotiations relating to a further restructuring of the joint venture that Pittmore would not rely upon the terms of the deed. The primary judge also rejected the submission that the representation amounted to a form of misleading or deceptive conduct: at [130]-[135].

Mr Chan’s cross-appeal

1. [53]

   By his cross-appeal, Mr Chan challenges the rejection of his claim that Pittmore engaged in conduct which was unconscionable, contrary to the Australian Consumer Law. If Pittmore’s appeal succeeds, then this ground assumes prominence, because it is put that even if Pittmore had a legal right to bring the joint venture to an end, in doing so it was acting unconscionably. Conversely, as between Mr Chan and Pittmore, nothing turns upon whether Pittmore contravened the statute as well as breaching its contract, in the event that Pittmore’s appeal fails. If Pittmore was not contractually entitled to terminate the Second Joint Venture Deed, then Mr Chan is entitled to damages for breach of contract. The only pecuniary remedy under statute sought by Mr Chan was damages, and it is difficult to see how statutory damages for unconscionable conduct would exceed damages at common law for breach of contract.

2. [54]

   However, the claim of unconscionable conduct is one of two ways in which Mr Chan seeks to obtain orders against not merely Pittmore, but also its controlling mind Mr Joo Kee Tan. It was accepted that if Pittmore had contravened the Australian Consumer Law, Mr Joo Kee Tan was involved in the contravention.

3. [55]

   The second way in which Mr Chan seeks relief from Mr Tan is in equity. In this respect, the issues were substantially narrowed by the stance taken at trial. No claim of “knowing receipt” under the “first limb” of Barnes v Addy was advanced, and a claim of “knowing assistance” under the “second limb” was disavowed in closing submissions, on the basis that dishonesty had not been pleaded or put to Mr Tan. In Australia, liability for “knowing assistance” is confined to cases of dishonest and fraudulent design by the fiduciary: Farah Constructions Pty Limited v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22, carrying with it attendant obligations of pleading and confronting witnesses with that serious allegation.

4. [56]

   But it is clear, as Professor Ridge observed, that “accessorial liability for breach of trust and fiduciary duty should not be viewed solely through the prism of Barnes v Addy; indeed, to do so is inconsistent with long-standing authority”: P Ridge, “Equitable accessorial liability: Moving beyond Barnes v Addy” (2014) 8 Journal of Equity 28 at 33. Paragraph 161 of the High Court’s decision in Farah Constructions gave prominence to this, as did what was said by a Full Court of the Federal Court constituted by Finn, Stone and Perram JJ in Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; [2012] FCAFC 6 at [242]-[248]. As will be seen, many subsequent decisions, mostly at first instance, have dealt with allegations of third parties procuring or inducing breaches of trust or fiduciary duty.

5. [57]

   Mr Chan’s claim of procuring a breach of fiduciary duty had been pleaded (albeit in paragraph 35A of the Chans’ further amended reply). It was mentioned in a single sentence on page 19 of his 26-page opening submissions. It was not mentioned in written closing submissions. It was the subject of very brief oral submissions in closing address. The only decision relied upon was Farah Constructions Pty Ltd v Say-Dee (2007) 230 CLR 89; [2007] HCA 22. It will be necessary to deal with this in some detail below. For present purposes, it suffices to note that there was no challenge to the express finding of absence of dishonesty on the part of Mr Joo Kee Tan at [139]:

6. [58]

   That reflects the fact that, read literally, cl 1.2 of the Second Joint Venture Deed permitted Pittmore to do precisely what it did to terminate the joint venture after 30 April 2017.

7. [59]

   The primary judge referred to [161] of Farah Constructions and turned to the cases there mentioned, which involved dishonest advisers procuring a trustee who was unaware of all of the facts to commit unwitting breaches of trust. His Honour concluded that Farah Constructions did not itself establish that knowledge without dishonesty was sufficient for liability on the part of a third party procuring a breach of fiduciary duty, and added that “indeed I think that the judgment suggests that some form of dishonesty is necessary”. His Honour stated that to recognise the proposition advanced by the Chans, namely that a third party with knowledge of relevant facts, but without dishonesty, who causes a fiduciary to breach a fiduciary’s duty would be liable, would be a “significant step”. His Honour said that he was “not sure that step is justified in principle” and that even if he did, “I would not think it right for me sitting at first instance, to take the step”: at [156].

Appeal ground 1: Was the Second Joint Venture Deed delivered in escrow?

1. [60]

   Pittmore’s challenge to the conclusion that the Second Joint Venture Deed was delivered, implicitly, in escrow, had four limbs.

2. [61]

   First, relying upon a passage in N Seddon, Seddon on Deeds (Federation Press 2015) at [3.10] and what was said to flow from Scook v Premier Building Solutions Pty Ltd (2003) 28 WAR 124; [2003] WASCA 263 at [45], Pittmore submitted that the escrow condition could not be contrary to the terms of the deed itself. Pittmore pointed to clauses in the deed said to be inconsistent with delivery in escrow, namely, cll 1.1 and 1.2, and the entire contract clause in cl 12.1.

3. [62]

   Secondly, Pittmore challenged the reliance by the primary judge upon the absurdity that the existing contract for sale of land would be rescinded and replaced with a sale to Pittmore and Kienan before the second joint venture deed became effective.

4. [63]

   Thirdly, Pittmore challenged his Honour’s reliance upon cl 1.3, and its provision for the payment of stamp duty.

5. [64]

   Fourthly, Pittmore challenged the reasoning process which wrapped up conclusions based on the failure to establish delivery of the Second Joint Venture Deed with the position in contract. Pittmore contended that “a document ineffective as a deed may nevertheless take effect as a simple agreement under hand”: Nielsen v Capital Finance Australia Ltd [2014] 2 Qd R 459; [2014] QCA 139 at [36].

6. [65]

   Little issue was taken as to the applicable principles concerning the delivery of deeds. Even so, there are at least two reasons warranting care in the legal analysis. First, fundamental aspects of the law of contract may not apply to a deed. Simple contracts turn on the parties’ consensus. Not so a deed, which is centuries older. Lord Wright said that “[t]he law as to obligations or transfers under seal was fixed in days before the nature of the consensual contract was realized”, and cautioned against importing into the law of deeds “analogies from an entirely different region of law, that of simple contracts”: Lady Naas v Westminster Bank Ltd [1940] AC 366 at 403. Windeyer J expressed the same view in Brooks v Burns Philp Trustee Co Ltd (1969) 121 CLR 432 at 464; [1969] HCA 4. This is why, for example, a covenantee can sue a covenantor even though the covenantee has not executed the deed, a point to which I shall return.

7. [66]

   Secondly, some care needs to be taken when dealing with Australian authorities. The requirements of deeds vary between States, because statutes have altered the common law in different ways: see Seddon on Deeds at [3.3]. For example, in South Australia, “the common law doctrine of escrow is abolished” (Law of Property Act 1936 (SA), s 41AA(7)) and has been replaced by a statutory regime. McPherson J’s judgment in Ex parte Ryrie [1983] 2 Qd R 194 illuminatingly addresses the interplay between common law and statute. Fortunately, the Second Joint Venture Deed has no connection with any jurisdiction other than New South Wales, and the only relevant statute is the Conveyancing Act 1919 (NSW).

8. [67]

   Mr Chan signed the Second Joint Venture Deed, and Ms Chan attested to his doing do. The execution clause stated that it was “signed, sealed and delivered” by Mr Chan, and it was thus deemed to have been sealed by him: Conveyancing Act 1919 (NSW), s 38(3). It may be noted that the contemporary essentiality of signing, as opposed to sealing, reverses the historical position. Pollock and Maitland wrote that “before the end of the thirteenth century the free and lawful man usually had a seal”, while Plucknett observed that “[w]e do not commonly find signatures on deeds before the sixteenth century”; both are cited in the account by D E C Yale, “The Delivery of a Deed” (1970) 28(1) Cambridge Law Journal 52 at 53-54.

9. [68]

   “Delivery” is essential before a deed is binding. This is ancient law. Rastell wrote centuries ago that “After a deed is written and sealed, if it be not delivered, all the rest is to no purpose”: Les Termes de la Ley, under “Fait”. However, while the word “delivery” has described an essential requirement of deeds for centuries, its meaning has radically changed over that period. Indeed, demonstrating that point was the purpose of Yale’s illuminating paper in the Cambridge Law Journal:

10. [69]

    The replacement of the old law by the new was completed in England by Xenos v Wickham (1867) LR 2 HL 296. In Australia, it may be seen in Cussen J’s careful analysis and rejection of “the old rules” when writing for the Full Court in In re Carile; Dakin v Trustees Executors and Agency Co Ltd [1920] VLR 427.

11. [70]

    The details by which the law reached its present stage do not presently matter. The point of this historical digression on the altered meaning of “delivery” is to emphasise the care which must accompany that word in its technical legal sense. Cussen J cautioned a century ago that “[t]here may sometimes be a delivery without any handing over of the document, and sometimes a handing over without any delivery”: In re Carile; Dakin v Trustees Executors and Agency Co Ltd at 431.

12. [71]

    Thus the fact that Ms Chan handed over a copy of the Second Joint Venture Deed signed by her husband and witnessed by her was not determinative of whether the document was delivered and thereby took effect as a deed. As Sackville AJA said with the agreement of Allsop P and Campbell JA in Segboer v A J Richardson Properties Pty Ltd [2012] NSWCA 253; 16 BPR 31,235 at [58]:

13. [72]

    Sackville AJA added at [72]:

14. [73]

    There are thus three possibilities:

    1. (1)

       the deed may have been delivered unconditionally;

    2. (2)

       the document may have been delivered subject to a condition, such that it is only subsequently effective as a deed, while in the meantime there is no power to recall it: this is delivery by escrow;

    3. (3)

       the document may have been “delivered” subject to a condition, and on a basis that the covenantor may recall the deed prior to the condition being complied with; this is not delivery at all.

15. [74]

    The three possibilities are described in G Dworkin, Odgers’ The Construction of Deeds and Statutes (5th ed, Sweet & Maxwell 1967), p 10, Seddon on Deeds at par 3.8, and J Thomson, Commercial Contract Clauses (3rd ed, Thomson Reuters (Professional) Australia Ltd, 2019), p 47.

16. [75]

    Whether there has been delivery, and if so whether it is delivery in escrow, is a question of fact. Windeyer J explained that the fact that an instrument was delivered as an escrow can be inferred from the circumstances: Brooks v Burns Philp Trustee Co Ltd (1969) 121 CLR 432 at 471-472; [1969] HCA 4. Windeyer J cited Bowker v Burdekin (1843) 11 M & W 128 at 147; 152 ER 744 at 751, where Parke B had said “though it is in form an absolute delivery, if it can reasonably be inferred that it was delivered not to take effect as a deed till a certain condition was performed, it will nevertheless operate as an escrow”. Lord Wright said in Naas v Westminster Bank Ltd at 399 that “[t]he character of the act of delivery depends on intention, which must be ascertained by considering the nature and all the circumstances of the case”. The same points were made by Sackville AJA in Segboer at [59] and by a Full Court of the Federal Court in Lewski v Australian Securities and Investments Commission (2016) 246 FCR 200; [2016] FCAFC 96 at [165]. Most recently in this Court, Gleeson JA said with the agreement of Emmett AJA in Taouk v Ho [2019] NSWCA 156 at [47] that:

17. [76]

    Whether the deed was handed over by Ms Chan in escrow is a conclusion of fact. It was not expressed to be a conclusion which turned upon any finding of fact as to which the primary judge enjoyed an advantage. The primary judge brought to bear considerations of context (including the parties’ understanding of the intentions of the vendor of Number 17 and the operation of stamp duty and taxation law).

18. [77]

    I turn to Pittmore’s submissions. Pittmore first seeks to invoke cll 1.1 and 1.2 in order to sustain the conclusion that the document was not delivered in escrow. Pittmore maintained that an implied escrow should not have been found. Pittmore submitted that cl 1.1 “expressly addressed the topic of what (if any) matters it was to be conditional upon” (Pittmore’s emphasis). Pittmore submitted that the express agreement that the deed was contingent upon Pittmore and Kienan becoming co-owners told against an implied condition that the document take effect as a deed only if the vendor of Number 17 rescinded the existing contract and reissued it in favour of Pittmore and Kienan.

19. [78]

    Pittmore’s submission based on cl 1.2 was that it conferred an express power to terminate the deed if the condition in cl 1.1 was not satisfied by a certain date. It was said that “[i]f the deed had never come into effect, there could be nothing to terminate”, and thus the primary judge’s approach “contradicted the express provision made in clause 1.2”.

20. [79]

    I do not accept Pittmore’s submissions. It is not to the point to rely upon the terms of the deed. Whether a document is delivered unconditionally, or in escrow, turns upon all of the circumstances as objectively manifested. That includes the nature of the bargain. However, I do not see how the provisions in a document can exclude the operation of the rules of law concerning its delivery. If the requirements of a deed at common law as modified by statute are satisfied, then there will be a valid deed giving rise to legal rights and obligations. It may be that if the requirements of a deed are not established, nonetheless legal rights and obligations may be created (for example because a simple contract has come into existence, or because an estoppel binds a party). But the covenants in a draft deed cannot self-levitatingly modify the legal requirements which must be fulfilled if a deed is to come into existence.

21. [80]

    If the document contained a provision that “This document binds Mr Chan as a deed seven days after it has been sent to him, even if he neither signs nor delivers it” then that does not mean that Mr Chan is bound seven days after the document is sent to him. Pittmore’s submission based on cll 1.1 and 1.2 is not so extreme as that example, but it suffers from the same conceptual weakness. Pittmore’s submission is premised upon cll 1.1 and 1.2 taking effect. But the issue is whether the document is effective as a deed. That is an anterior issue. One cannot assume that the document is effective as a deed, and then rely on the promises contained within it to deny that the document never took effect as a deed.

22. [81]

    For the same reason, Pittmore’s reliance on the entire contract clause is misplaced. The clause does not speak to whether a document in which it is found was a deed or rather had been delivered in escrow. If the latter, then the clause does not have the force of a provision in a deed. The question of delivery by escrow is an anterior question to the effect of cl 12.1.

23. [82]

    Pittmore relied on a passage in Scook v Premier Building Solutions, in which Steytler J said at [45]:

24. [83]

    Pittmore’s submission misreads the carefully qualified language of the judgment. The words “at least” are significant. Steytler J was carefully declining to decide the point for which Pittmore invokes this decision. Steytler J said that an oral condition could sustain the conclusion that a deed was delivered in escrow, at least if the condition did not contradict a provision in the deed. That is not authority for the proposition that an oral condition which does contradict a provision in the deed cannot sustain the conclusion that it was delivered in escrow. The nuanced language emphasises that that was the very point his Honour was not deciding.

25. [84]

    Pittmore also prayed in aid what was said by Seddon on Deeds at [3.10]:

26. [85]

    No footnote was given in support of the last sentence. It seems contrary to first principle, for the reasons already given. It is also contrary to authority.

27. [86]

    During the characteristically careful exposition of principle in In re Carile, Cussen J said for the Full Court that:

28. [87]

    Cussen J was referring to the parol evidence rule. But the point made in the last sentence is not dissimilar from Pittmore’s reliance on the entire agreement provision in cl 12 of the document.

29. [88]

    In Re Goile; ex parte Steelbuild Agencies Ltd [1963] NZLR 666 the question was whether a deed had been delivered in escrow or subject to a condition precedent. Turner J, then newly elevated to the Court of Appeal, wrote for that Court at 682 dealing with a submission which appears indistinguishable from that made by Pittmore:

30. [89]

    So far as I can see, there is no support for Pittmore’s submission in R J A Morrison, H J Goolden, R F Norton, Norton on Deeds (2nd ed, 1928) or Odgers’ Construction of Deeds and Statutes. Although the sentence in Seddon on Deeds supports Pittmore’s submission, I do not think it is correct in principle, and in any event I would follow the reasoning in very strong appellate courts of Victoria and New Zealand.

31. [90]

    All parties proceeded in 2016 on the basis that Pittmore and Kienan could not in a timely and stamp-duty effective way become co-owners of Number 17 until and unless the vendor was prepared to rescind the existing contract for sale of land. Their assumption may have been incorrect. Even so, that does not detract from its being a powerful consideration favouring the conclusion that the Second Joint Venture Deed would only come into effect when the existing contract for the sale of land was rescinded and replaced. On the assumptions the parties were labouring under, the alternative was to commit the parties to double stamp duty, and there is no reason to doubt the finding (which in any event was unchallenged) that the parties wished to avoid paying stamp duty unnecessarily.

32. [91]

    There is also the fact that the First Joint Venture Deed was executed on the same day as contracts were originally exchanged. The Second Joint Venture Deed was backdated to that date, and was prepared at a time when it was anticipated that the vendor would rescind the existing contract and reissue it in terms which aligned with the new provisions in the Second Joint Venture Deed.

33. [92]

    There was no error in the primary judge relying upon those contextual matters. Indeed, contrary to Pittmore’s submissions, I think his Honour was correct to do so.

34. [93]

    Pittmore’s third submission turned on cl 1.3. Contrary to Pittmore’s submissions, cl 1.3 does support the conclusion drawn by the primary judge, because it confirms the parties’ acute sensitivity to minimising stamp duty. Labouring as they were under the misapprehension that there would be double stamp duty unless the existing contract for sale of land was rescinded, the primary judge was fully entitled to regard that as a powerful factor favouring delivery in escrow, as has been explained above.

35. [94]

    Mr Chan protested (by ground 1(a) of his notice of contention) that Pittmore should not be permitted to contend that if the Second Joint Venture Deed were ineffective as a deed, it nonetheless took effect as a contract, because this was not pleaded, nor had it been advanced at trial. Pittmore disputes this. I think Mr Chan’s objection has force.

36. [95]

    Pittmore and Mr Tan defended the validity of its notice of termination by alleging that the “conditional joint venture deed” (the term used for the Second Joint Venture Deed) “became operative in law and equity on or about 27 July 2016” (Amended Defence, para 5). Mr Chan filed an amended reply and a further amended reply, both of which denied the document took effect as a deed (based at least in part upon the failure to provide a signed counterpart to Mr Chan) and in the alternative made a very precise allegation concerning delivery in escrow:

37. [96]

    No rejoinder was filed. Instead, in their amended defence, Pittmore and Mr Tan formally joined issue with, inter alia, the amended reply.

38. [97]

    If the answer to the claim that the Second Joint Venture Deed was delivered in escrow was that Mr Chan remained bound as a matter of contract, then that should have been pleaded expressly. It may well have been that the evidence would not have been the same as was led at trial.

39. [98]

    But the submission can be addressed on its merits, although it turns on some points of factual detail which have not hitherto been mentioned. On a contractual analysis, the handwritten amendment to cl 1.1 on the version signed by Mr Chan and provided by Ms Chan to Mr Kam was a counter-offer. Although the unchallenged finding was that Mr Tan signed the document on 27 July 2016, initialling the amendment, Pittmore’s acceptance was not communicated to the Chans. In the meantime, on 26 August 2016 a further amended version of the joint venture deed was supplied, this time proposing that Pittmore would become the trustee of the Chans’ family trust. I would accept Mr Chan’s submission that this constituted a further counter-offer, thereby rejecting his counter-offer made on 25 July. Against this, Pittmore submitted that “[t]he later sending by Daniel Tan of a further draft proposed joint venture deed on 26 August 2016 does not constitute some implied rejection of an offer on the terms of the Second Joint Venture Deed” because “[b]y then, the offer had been accepted by the application of Pittmore’s signature to the document”. True it is that Mr Tan had signed on behalf of Pittmore. But that acceptance had not been communicated to Mr Chan. I think this is a case where the “general rule” that “a contract is not completed until acceptance of an offer is actually communicated to the offeror” applies: Tallerman & Co Pty Ltd v Nathan's Merchandise (Vic) Pty Ltd (1957) 98 CLR 93 at 111; [1957] HCA 10.

40. [99]

    The foregoing deals with this aspect of ground 1 of the appeal at the technical level adopted by the parties’ submissions. However, that is not to deprecate the pragmatic approach taken by the primary judge.

41. [100]

    Whether the parties intended to create contractual relations required an objective assessment of the state of affairs between the parties: Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95; [2002] HCA 8 at [25]. Mr Chan believed, rightly or wrongly, that in order to achieve the tax advantages associated with Pittmore and Kienan co-owning the entirety of the site, it was necessary for the vendor to rescind the existing contract and enter into a new one. Mr Tan was of the same view. The fact that their belief may have been wrong is not to the point. Their shared belief, each known to be held by the other, was an important aspect of the context in which the Second Joint Venture Deed was executed. I think it was open to the primary judge to impute to Mr Chan an intention only to be bound by the terms of the Second Joint Venture Deed, including the change in ownership of Number 17, until and unless the vendor was prepared to sell Number 17 to Pittmore and Kienan.

42. [101]

    I conclude that this ground is not made out.

Appeal ground 2: construction and rectification of cl 1.2 of the Second Joint Venture Deed

1. [102]

   Once again, there was no dispute as to the applicable principles. They have been reviewed in this Court recently in Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (In liquidation) (2019) 99 NSWLR 317; [2019] NSWCA 11 at [6]-[19], in HDI Global Specialty SE v Wonkana No 3 Pty Ltd [2020] NSWCA 296 at [48]-[66] and in James Adam Pty Ltd v Fobeza Pty Ltd [2020] NSWCA 311.

2. [103]

   Pittmore submitted that there was no “absurdity or inconsistency” sufficient to engage the principles of construction stated by Dixon CJ and Fullagar J in Fitzgerald v Masters. Rather, “[t]he contract was perfectly workable without doing violence to its text”. The submission turned upon cl 1.1 being construed independently of cl 1.2, because if both clauses were regarded as speaking to the same right to terminate, there was an obvious inconsistency in light of the handwritten alteration to the former but not the latter.

3. [104]

   Pittmore maintained that cl 1.1 was a self-executing discharge of the contract if Pittmore and Kienan had not become registered proprietors of both plots of land, as tenants in common in equal shares, prior to the commencement of construction, while cl 1.2 conferred a contractual right of termination by notice if Pittmore and Kienan had not become registered proprietors by 30 April 2017. According to Pittmore, the idea was that either party could terminate the joint venture deed if the land was not held by Pittmore and Kienan by 30 April 2017, but so long as those companies became co-owners when construction commenced, the joint-venture could proceed.

4. [105]

   The difficulty with these submissions is that in an attempt to avoid the absurdity or inconsistency on the face of the written document, they amount to something which itself is close to absurd. First, when would cl 1.1 ever apply? Let it be assumed that development consent and permission to commence construction was obtained but Number 15 and Number 17 were not held by Pittmore and Kienan. Is it seriously to be contended that the Second Joint Venture Deed remained in force until the moment at which demolition of the existing structures commenced, and thereupon came to an end? When this was raised in oral submissions, Mr Christie came very close to accepting that his construction was absurd, although he made no concession. The reality is that there is unavoidable inconsistency on the face of cll 1.1 and 1.2 and 1.3. The point is most clearly seen by contrasting cl 1.1 and cl 1.3. It was common ground that the awkward words “upon cl 1.1 being eventuated” ought to be understood as that clause being “satisfied”. It is impossible to reconcile the temporal components of cl 1.3. The opening words of cl 1.3 mean that the clause is only engaged when both properties are co-owned by Pittmore and Kienan. But cl 1.3 imposes an obligation in those circumstances for Mr Chan to transfer Number 15 to Pittmore and Kienan. The premise of that obligation is the satisfaction of cl 1.1. Further, cl 1.3 requires Mr Chan to transfer Number 15 on or before 30 October 2016, which was around a year before the parties anticipated construction would commence.

5. [106]

   Secondly, turning to the relationship between cl 1.1 and cl 1.2, those clauses prior to the handwritten amendment, both referred to 30 April 2017. In that respect, they resembled cll 1.1 and 1.2 of the First Joint Venture Deed. The two clauses are naturally to be read together. The first clause identifies a condition precedent, while the second clause confers the right upon parties to terminate. Why ever would there be separate rights to terminate in advance of an automatic termination at the time of construction?

6. [107]

   Thirdly, the context supplies the purpose for the handwritten amendment. Mr Chan was living in Number 15 at the time and (other things being equal) it was to his advantage to delay transferring title to Pittmore and Kienan. At the same time, there was no advantage to the parties in the companies becoming tenants in common in equal shares earlier than construction. It is with respect readily inferred, as the primary judge found, that the handwritten amendment to cl 1.1, deleting the words “on or before 30 April 2017” was made without apprehending that the same words appeared in cl 1.2.

7. [108]

   The position is straightforward. The handwritten amendments initialled by the parties outweigh the printed text, by analogy with what was said by Lord Ellenborough in Robertson v French (1803) 4 East 130 at 136; 102 ER 779 at 782 as to “words superadded in writing” upon a printed form having a “greater effect attributed to them than to the printed words”, on the basis that “the written words are the immediate language and terms selected by the parties themselves for the expression of their meaning”. Some of the (numerous) occasions when that passage has been cited with approval may be found in Kronenberg v Bridge (2014) 26 Tas R 359; [2014] TASFC 10 at [24]. The failure to alter cl 1.2 in the same way as cl 1.1 was altered gives rise to absurdity or inconsistency. The point of cl 1.1 was to permit the delayed transfer of Number 15 to the companies, and that is wholly taken away by the construction advanced by Pittmore. The intention to be imputed to the parties was correctly identified by the primary judge and involves deleting the dates in cl 1.2 and cl 1.3.

8. [109]

   It was also necessary, in order for Pittmore’s appeal to succeed, to challenge the primary judge’s reasoning on rectification in equity. Pittmore’s submission dwelt upon the failure of the primary judge to identify familiar and uncontroversial principles governing the availability of rectification in equity. These included the failure by his Honour to refer to the need for “clear and convincing proof”, and the fact that an inference is frequently drawn against a party asserting rectification which has failed to adduce evidence of the relevant subjective intention. Those submissions are correct, as far as they go; the entirety of the primary judge’s reasoning has been reproduced above. But the difficulty for Pittmore is that no challenge was made to the evidence to which the primary judge pointed. That appears to have been the only evidence bearing on the question.

9. [110]

   Pittmore’s written submissions asserted that the reasoning of the primary judge rose no higher than the Fitzgerald v Masters point addressed above, and necessarily failed because, according to Pittmore, there was nothing absurd about the contract bearing the meaning Pittmore favoured, namely, cl 1.1 being self-executing, with rights of termination separately conferred by cl 1.2. For the reasons given above, that submission is not sound.

10. [111]

    In some respects, the criticism by Pittmore on appeal was a little unfair. Rectification was pleaded and advanced orally and in writing by the Chans. Counsel appearing for Pittmore at trial, who did not appear in this Court, appears not to have made any written submissions (certainly, there were none contained in the appeal books) and did not address rectification at all in closing address, until reminded of that fact by the primary judge (“it’s a matter for you, but I don’t know that I’ve heard anything from you specific on rectification or the construction argument based on Fitzgerald v Masters”: transcript, 3 April 2020, p 307.3-5). What was subsequently said did not address the palpable difficulties in reading cl 1.1 together with cll 1.2 and 1.3. It is unsurprising that the primary judge addressed rectification in equity concisely.

11. [112]

    It may be noted that his Honour did so expressly in the further alternative (ie, on the assumption that he was wrong about delivery and wrong about construction). It followed that the ordinary discretionary considerations tending against rectification in equity when a mistake may be corrected by the principles of construction associated with Fitzgerald v Masters were not applicable (see Harker-Mortlock v Commonwealth Bank of Australia [2019] NSWCA 56 at [43]; Green Growth No 2 Ltd v Queen Elizabeth the Second National Trust [2019] 1 NZLR 161; [2018] NZSC 75 at [55] and [140]).

12. [113]

    True it is that his Honour made no express reference to the elevated standard of proof which applies in such cases, reflecting in part the unlikelihood that the parties and those advising them have incorrectly recorded their bargain in the formal document executed by them. But this was not a case where lawyers from both sides each scrutinised the document. The document was prepared in Mr Kam’s office, where it was forwarded to Ms Chan, who witnessed its execution by Mr Chan subject to some handwritten amendments. The document is far from perfect in the form in which it emerged from the solicitor’s office, and the handwritten amendments altered some of the critical dates but not others. Most importantly, the evidence was all one way.

13. [114]

    Although ordinarily one would expect fuller findings in order to rectify a document so as to deny to a party a prima facie right of termination, the more extensive review undertaken above leads me to find no error in the primary judge’s conclusion that the doctrine was engaged.

Notice of contention – ground 1(b) – failure by Pittmore to deliver the Second Joint Venture Deed

1. [115]

   Mr Chan does not challenge the finding that Mr Joo Kee Tan signed the Second Joint Venture Deed on behalf of Pittmore on 27 July 2016. However, by his notice of contention, he disputes the reasoning of the primary judge at [107], reproduced above, that delivery was effected almost a year later, on 13 June 2017, simultaneously with the service of a notice of termination.

2. [116]

   It is to be borne in mind that the premise of this ground of the notice of contention is that there was delivery of the Second Joint Venture Deed on behalf of Mr Chan, and that cl 1.2 did entitle either party to terminate after 30 April 2017 because neither lot had been transferred to Pittmore and Kienan as tenants in common. Questions of waiver and election must also be put to one side for the purposes of this ground (they are addressed immediately below).

3. [117]

   Although it was not a point made by Pittmore, this ground of Mr Chan’s notice of contention ignores a basic distinction between deeds and contracts. A deed binds a party upon its being signed, sealed and delivered, and may do so even before the other side is bound. Perhaps more than any other consideration, this emphasises the essentiality of the formal aspects of a deed inter partes, as opposed to the parties’ bargain which underlies a simple contract.

4. [118]

   Jordan CJ explained the point in Wilson v Frost (1935) 35 SR (NSW) 521 at 525:

5. [119]

   In Wollongong Coal Ltd v Gujarat NRE India Pty Ltd (2019) 100 NSWLR 432; [2019] NSWCA 135 at [55], it was said:

6. [120]

   The position was not as one-sided as those passages may suggest, because equity could intervene. In Federal Commissioner v Taylor (1929) 42 CLR 80 at 87; [1929] HCA 13, Rich, Starke and Dixon JJ said that “relief in equity is available to the party who executed it upon the faith of the others doing so”. Sir George Jessel MR said that where a party failed to execute a deed while knowing that others had executed a deed on the faith that the party would do so, it was “well settled” that the deed did not bind in equity: Luke v South Kensington Hotel Company (1879) 11 Ch D 121 at 125.

7. [121]

   Thus it is not to the point that Pittmore had not delivered the Second Joint Venture Deed to Mr Chan. Mr Chan was (on the assumptions inherent in this ground of the notice of contention) already bound. While he might obtain relief in equity if Pittmore declined to execute the deed, none was sought.

8. [122]

   In those circumstances, I see no good reason to address the (not uninteresting) question whether delivery may be effected by the self-same act by which a notice exercising a right of termination conferred by the deed is served.

Notice of contention – ground 2(d) – election or waiver

1. [123]

   Assuming, contrary to the above, that the Second Joint Venture Deed was delivered and entitled Pittmore to terminate after 30 April 2017, because Mr Chan had not transferred Number 15 to Pittmore and Kienan, Mr Chan maintains by his notice of contention that Pittmore lost that right by electing to continue with the joint venture thereafter. As noted above, the primary judge gave tentative support to that conclusion, but did not determine the point finally.

2. [124]

   Pittmore accepted that “[w]aiver is an intentional act done with knowledge whereby a person abandons a right (or privilege) by acting in a manner inconsistent with that right (or privilege)”: Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management Marketing Pty Ltd (2013) 250 CLR 303; [2013] HCA 46 at [30]. Where, as here, the two alternative rights arise under the terms of the one contract, a party may be held to have elected to affirm it, notwithstanding that it was unaware of the actual right to avoid it: Khoury v Government Insurance Office (NSW) (1984) 165 CLR 622 at 633-634; [1984] HCA 55.

3. [125]

   Throughout May and June 2017, when according to Pittmore it enjoyed a right to terminate the Second Joint Venture Deed, weekly meetings were held at Pittmore’s premises by the “Development and Architectural Committee” constituted under cl 5.1 of the joint venture deed. The committee comprised Ms Chan and Mr Daniel Tan and was given broad powers to “determine and to control the activities of the parties in relation to the joint venture” (cl 5.2). In evidence were minutes of meetings held on 2, 9, 16, 23 May and 1 June 2017. All were attended by Mr Daniel Tan and Ms Chan, as well as Messrs Baker and Stephenson. One recurring theme involved architectural and design work to be done by Ms Chan. At the meeting of 2 May 2017, she was asked “to produce two drawings of typical bathroom and kitchen – for builders’ information”. At the meeting of 9 May 2017, she was to produce details of balustrades to assist builders’ pricing, a point which was also recorded in the minutes of 16 May 2017. At the meeting of 23 May 2017, the minutes record that “GC to continue to develop kitchen layouts for all units” and “alternative balustrade details to be investigated – glass panel details shown in tender documents may prove to be too expensive”.

4. [126]

   The joint venturers were also spending money throughout this period. For example, Northrop Consulting Engineers Pty Ltd had issued its fifth and sixth invoices on 28 April and 31 May 2017 which Baker Stephenson appears to have paid on 4 May and 15 June 2017. The latter was for work amounting to $23,842.50 towards obtaining four construction certificates. The minutes of 1 June 2017 record that another consultant, Douglas Partners, issued a report on contamination of the site and were providing Baker Stephenson with the costs of drilling five bores within the sites to ascertain the level of ground water contamination. On the same date, the minutes referred to a report indicating the presence of asbestos and PCB’s “within both residences and strong possibility of asbestos in the ground around each house”. The parties apparently discussed three possible contractors if required for removal.

5. [127]

   The documents suggest that many other activities were taking place on the site, with a view to achieving the construction of a substantial residential development in the shortest possible time. It is plain that the activities extended to work relating to Mr Chan’s land, Number 15. Some of the groundwater bores evidently were to be drilled into his land, and the asbestos report extended to “the ground around each house”. The design work plainly enough extended to the whole of the development, including that on Mr Chan’s land. Insofar as these activities involved contractors retained on behalf of both joint venturers carrying out work referable to Mr Chan’s land, it is unequivocally referable to the ongoing joint venture.

6. [128]

   Pittmore asserted that the attendance at weekly meetings and all of the work that was taking place during this time were acts which were not inconsistent with the subsistence of a right to terminate. It was said that “none involved the insistence on the performance of a duty by Mr Chan. Each is equally consistent with Pittmore reserving its rights”. I do not agree. Mr Chan was permitting his land to be made available for the purposes of the joint venture, and incurring liabilities in respect of his share of the costs of the activities of the contractors during this period. Nowhere in the evidence is there any mention of Pittmore reserving its rights, as Mr Christie SC confirmed when the appeal was heard.

7. [129]

   Although not relied upon in Pittmore’s written submissions, attention should be given to cl 13 of the Second Joint Venture Deed, reproduced above.

8. [130]

   Mr Insall maintained that cl 13 had no operation in relation to election or affirmation. He also adopted a construction to the effect that the clause applied to inaction by way of failure, delay or omission, but not to positive acts amounting to affirmation. That, with respect, is a natural way to read the clause. It is expressed to preclude inactivity by a party from amounting to a waiver of rights arising under the contract. It is not expressed to apply to positive acts of the party which are sufficient to affirm the contract. It is not necessary to express a concluded opinion on the operation of cl 13, because Pittmore’s appeal fails on multiple anterior issues which were the subject of argument, but I favour the view that cl 13 would not prevent Pittmore’s positive acts constituting an election or affirmation.

Notice of contention – grounds 2(a) and (b) – notice of termination invalid because of estoppel, misleading and deceptive conduct, implied obligation to act in good faith

1. [131]

   These grounds were not addressed in detail by the primary judge, and were far from being at the forefront of the submissions advanced orally in this Court over a hearing lasting two days. Nothing turns on them; what has already been said supplies multiple reasons for confirming the ineffectiveness of the notice of termination. I do not think it is necessary to lengthen these reasons further by addressing them; cf Boensch v Pascoe [2019] HCA 49; 94 ALJR 112 at [7]-[8] and [101].

Cross-appeal – grounds 1-3 – failure to find unconscionable conduct

1. [132]

   Mr Chan’s statutory claim in this Court was confined to a contravention of s 21 of the Australian Consumer Law. I intend no criticism, but the pleading was in very general terms: the allegation was added as the final amendment to the Further Amended Statement of Claim, referred to most of the preceding paragraphs in the pleading, and alleged that the conduct of Pittmore and/or Mr Tan was in all the circumstances unconscionable.

2. [133]

   At least in large measure, it appears that the forensic purpose of this claim was to counter the possibility that the Second Joint Venture Deed was valid, and thus Pittmore had a legal right to terminate the deed after 30 April 2017. At any rate, that was how the primary judge addressed it. Because his Honour had concluded (and on multiple bases) that Pittmore had no contractual right to terminate the joint venture, his Honour declined to determine the issue: at [139].

3. [134]

   In part, grounds 1-3 of Mr Chan’s cross-appeal served the same forensic purpose as the allegation had at trial, directed to the possibility that Pittmore might succeed in establishing a legal right to terminate. For the reasons already given, Pittmore did not have a legal right to terminate.

4. [135]

   In principle, it is possible that the exercise of a legal right to terminate could be found to be unconscionable contrary to s 21 of the Australian Consumer Law. The narrowly divided decision in Australian Securities and Investments Commission v Kobelt (2019) 267 CLR 1; [2019] HCA 18 recognises how contestable such a conclusion might be, as well as how dependent it is on a close consideration of the entirety of the facts, as indicated in Jenyns v Public Curator (Qld) (1953) 90 CLR 113 at 119; [1953] HCA 2 by reference to Lord Stowell’s statement in The Juliana (1822) 2 Dods 504 at 521; 165 ER 1560 at 1567 that “[a] court of equity ... looks to every connected circumstance that ought to influence its determination upon the real justice of the case”.

5. [136]

   But Pittmore did not have a legal right to bring the joint venture to an end after 30 April 2017. There is no utility in attempting to reach a necessarily hypothetical conclusion as to whether if (contrary to the fact, but in accordance with Mr Tan’s belief) Pittmore did have a legal right to bring the joint venture to an end, it would have been contrary to s 21 of the Australian Consumer Law.

6. [137]

   In this Court, Mr Chan focussed attention on a forensic goal which had received but scant attention at trial: the possibility that Mr Joo Kee Tan’s involvement in Pittmore’s contravention of s 21 might lead to a judgment against him personally. Mr Chan sought a finding that irrespective of Pittmore’s legal entitlement to terminate the joint venture, its conduct in bringing it to an end and selling Number 17 to a third party was unconscionable. This was principally based upon the propositions that (a) without Number 17, it was not possible to exploit the full development potential of Number 15, and (b) Mr and Ms Chan had, to the knowledge of Mr Tan, been seeking the development of the two lots together and had introduced him to the vendor of Number 17 (who was their neighbour) to that end.

7. [138]

   These grounds may be addressed concisely. Mr Christie withdrew, on the second day of the hearing, his submission that the conduct was not in trade or commerce because “it was conduct of a private, intramural character”, and properly so; the point was always untenable. The point of the joint venture was to make money, by acquiring Number 17, developing both parcels of land, registering a strata plan and selling the apartments.

8. [139]

   Pittmore acquired Number 17 for $3 million and received an offer to sell it, within a year, for $6 million. Pittmore offered to share that profit with Mr Chan. The parties had different assessments of the risk and likely returns involved. Pittmore considered that the offer represented an excellent return; Mr Chan preferred to proceed with the development. The evidence was that Pittmore invited Mr Chan to match the $6 million offer and buy it out, which he did not wish (or perhaps was not able) to do.

9. [140]

   As noted above, it was not put to Mr Tan that he did not believe that he was entitled to terminate after 30 April 2017. It is likely that that was for the good reason that Mr Chan had no proper foundation to put to Mr Tan in cross-examination that he did not believe Pittmore had rights in accordance with what is, after all, the literal meaning of cl 1.2 of the Second Joint Venture Deed.

10. [141]

    In those circumstances, a conclusion that Pittmore’s conduct was unconscionable cannot be sustained. Mr Chan’s submissions accepted that it was necessary to establish that Pittmore’s conduct showed “no regard for conscience” and was “irreconcilable with what is right and reasonable”, by reference to Qantas Airways Ltd v Cameron (1996) 145 ALR 294 at 309. Mr Chan complains that Pittmore’s conduct “undermined the substance of the contractual benefit bargained for”, by reference to Paciocco v Australian and New Zealand Banking Group Ltd [2015] FCAFC 50; 321 ALR 584 at [288]. I do not agree. The bargain was to exploit the development potential of Numbers 15 and 17 – in short, to make money. It was always intended to sell the land. The opportunity to sell Number 17 sooner, less riskily and at a large profit could scarcely be regarded as foreign to the joint venture. All that occurred is that the joint venturers, after progressing their venture for around a year, were of different opinions as to the commercial value of an offer, and after discussing it, and offering one the opportunity to buy the other out, the other purported to exercise a right it believed it had to bring the joint venture to an end. That the parties had considered the value of the offer differently is utterly unsurprising: Mr and Ms Chan had apparently continued to live in Number 15, and Ms Chan expected to do a deal of architectural and design work in the course of the joint venture (for which her firm would be paid); on the other hand, Mr Tan had contributed capital and was obliged to contribute more (the unpaid $500,000).

11. [142]

    That, with respect, is far removed from conduct which shows no regard for conscience.

12. [143]

    Grounds 1-3 of Mr Chan’s cross-appeal, and ground 2(c) of his notice of contention, are not made out.

Cross-appeal – grounds 4 and 5 – failure to find Mr Tan involved in Pittmore’s unconscionable conduct

1. [144]

   Pittmore and Mr Tan accepted that if Pittmore had contravened s 21 of the Australian Consumer Law, then Mr Tan was involved in the contravention. But grounds 4 and 5 must fail in the absence of a contravention.

Cross-appeal – grounds 6 and 7 – liability for procuring a breach of fiduciary duty

1. [145]

   Ground 6 of the cross-appeal challenged the conclusion of the primary judge that it was necessary to establish dishonesty on the part of Mr Joo Kee Tan if he were to be liable for procuring a breach of fiduciary duty by Pittmore, and ground 7 challenged the failure to find him liable as a constructive trustee on that basis. These grounds are best addressed together. They are based on what was said in Farah Constructions at [161]:

2. [146]

   A footnote to [161] stated:

3. [147]

   Despite their importance – both to the outcome of this litigation in particular and the principled development of the law more generally – these two grounds were not the subject of elaborate submissions at first instance. Indeed, that understates what occurred. The primary judge was given no material assistance in relation to liability for procuring breach. Mr Chan’s submissions advanced but did not elaborate a claim against Mr Tan for procuring a breach of fiduciary duty. This claim otherwise passed unmentioned throughout the entire trial, including in closing oral submissions, until the judge raised the point:

4. [148]

   Counsel who appeared for Pittmore and Mr Tan at trial supplied no written submissions at all. His oral submissions did not separately address the claim against Mr Tan based on procuring a breach of fiduciary duty.

5. [149]

   This Court was better assisted than the primary judge. Mr Chan’s written submissions contained five paragraphs directed to these grounds, which maintained that Mr Tan had knowledge of all relevant circumstances and that “dishonesty is not a requirement”. When asked what this meant, Mr Insall said:

6. [150]

   In opposition, Pittmore submitted that all Mr Chan had done in his pleading was to allege that “Mr Tan procured the breach, full stop”, emphasising that there was no pleading of any knowledge at all, let alone dishonesty. That was said to be a major deficiency in the way in which Mr Chan approached the issue. Yet there was no notice of contention that this aspect of the cross-appeal should be dismissed because of the way the case had been pleaded or run (which would have been a point not taken at trial). These grounds of the cross-appeal are best addressed on their merits.

7. [151]

   Substantively, Pittmore defended the reasoning of the primary judge, and contended that what emerged from Farah Constructions was that “in order to be liable for procuring or assisting a breach of trust, what is required is consciousness of those elements of the transaction which make the participation transgress ordinary standards of honest behaviour.”

8. [152]

   It is trite that, following Farah Constructions, a third party who assists a breach of trust or a breach of fiduciary duty may only be made liable as an accessory pursuant to the “second limb” in Barnes v Addy if the breach by the fiduciary amounts to a “dishonest and fraudulent design”. Not so a third party who procures or induces a breach of trust or breach of fiduciary duty. In Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; [2012] FCAFC 6 at [245] the Full Court confirmed that “it is not necessary to show any dishonest or fraudulent design here”. The same point was made in Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609; [2014] NSWCA 266 at [77]. That prompts a question: what does a requirement of “dishonesty” mean in this context? What does it mean if, as Pittmore submits, “dishonesty” is necessary before a third party be held liable for procuring or inducing a breach of trust or breach of fiduciary duty, in circumstances where the breach need not itself be dishonest?

9. [153]

   Before turning to that question, I wish to deal with three preliminary points. The first concerns terminology. I shall refer to “breach of trust or breach of fiduciary duty” although I think the same principles govern the liability of third parties who procure or induce breaches of trust or breaches of fiduciary duty. The second addresses whether there is a distinction between “inducing” and “procuring” a breach of trust; I conclude that there is not. The third concerns a reservation I have with the submissions on appeal, insofar as they apply to company directors. After elaborating those preliminary points, I shall return to the meaning of “dishonesty”.

10. [154]

    I shall in what follows refer explicitly (and somewhat cumbersomely) to “breach of trust or breach of fiduciary duty”, in order to make it clear that the analysis applies to those who procure or induce a breach of fiduciary duty which is a breach of trust, as well as to those who procure a breach of fiduciary duty which is not a breach of trust. That is because I cannot see how the liability of a person who procures or induces a breach of trust by a trustee can be different from the liability of a person who procures or induces a breach of fiduciary duty by a fiduciary who is not a trustee.

11. [155]

    I am conscious of the caution noted by the High Court in Farah Constructions at [113] on a related point:

12. [156]

    That paragraph acknowledges that Farah Constructions is not authoritative for any proposition concerning the liability of third parties pursuant to the “first limb” of Barnes v Addy for knowing receipt in connection with fiduciaries who are not trustees. And it may readily be seen that the proprietary consequences of a trust relationship, which may be absent in other fiduciary relationships, may result in some differences in relation to the knowing receipt of trust property. But as a matter of principle, I fail to see how there can be any difference in the liability of one who procures or induces a breach of fiduciary duty that is also a breach of trust, and the liability of one who procures or induces a breach of fiduciary duty that is not a breach of trust. Whatever principles of judge-made law govern the liability of those who procure or induce the breach will be the same, subject to any special statutory alteration, if the defendant was a trustee, or a partner, or a director, or a joint venturer, or a solicitor, or an agent, or any other form of fiduciary who is not a trustee.

13. [157]

    There is much to be said for referring simply to “breach of trust” in this context to embrace all breaches of fiduciary duty, not merely by trustees but also by fiduciaries who are not trustees. That would in fact reflect an older usage, before the narrowing of the term “trust” in the nineteenth century and the pressing into service of the term “fiduciary” to describe relationships, especially principal and agent and company and director, for which “trust” had ceased to be appropriate: see W Gummow, “Knowing Assistance” (2013) 87 ALJ 311 at 312. While there is always the danger in “trusting to verbal formulae” to which Fletcher Moulton LJ famously adverted in Re Coomber; Coomber v Coomber [1911] 1 Ch 723 at 728, I think there is merit in recognising that simpler language can be used to describe a form of ancillary liability – procuring or inducing a breach of trust or fiduciary duty – which is relevantly identical across the spectrum of persons who are subject to fiduciary obligations.

14. [158]

    The most detailed analysis to date on this issue, which I have found helpful, is that of Sloss J in the remitted Marriner litigation: Australian Super Developments Pty Ltd v Marriner [2014] VSC 464. Her Honour entertained an elaborate submission based on the precise text of [161] of Farah. The High Court had referred to a third party being treated as a participant in a breach of trust “where the third party had knowingly induced or immediately procured breaches of duty by a trustee where the trustee had acted with no improper purpose”. It was submitted that the five words highlighted in the quotation summarised two distinct heads of liability, and that while the former had a requirement of knowledge, the latter did not. Sloss J referred to the early decisions to which the High Court had referred, to the decision of the Northern Territory Court of Appeal in Syrimi v Hinds (1996) 6 NTLR 1, to Brereton J’s decision in Metropolitan Petar v Mitreski [2012] NSWSC 16, to the Full Court’s decision in Grimaldi and to well-known articles by Charles Harpum, “The Stranger as Constructive Trustee” (1986) 102 LQR 114 and the Hon William Gummow, “Knowing assistance” (2013) 87 ALJ 311.

15. [159]

    Her Honour concluded at [301]:

16. [160]

    An appeal from her Honour’s decision was dismissed, but the parties accepted the principles formulated by her Honour: Marriner v Australian Super Developments Pty Ltd [2016] VSCA 141 at [72], and so the decision lacks precedential weight on that issue (see the decisions mentioned in CSR Ltd v Eddy (2005) 226 CLR 1; [2005] HCA 64 at [13] as to the absence of precedential weight where propositions of law are accepted without argument.)

17. [161]

    I respectfully agree with Sloss J’s conclusion. “Inducing” and “procuring” a breach of trust or fiduciary duty are synonyms, or, at most, substantial equivalents. They are treated as such in the two leading works on ancillary liability: P Davies, Accessory Liability (Hart Publishing, 2015), pp 29-31 and J Dietrich and P Ridge, Accessories in Private Law (Cambridge University Press, 2015), pp 40-41. There is no sound basis for distinguishing between them, let alone requiring a different mental state for the procurer as opposed to the inducer of a breach of trust or fiduciary duty. The submission to the contrary displays the “over refinement of verbal analysis” of which complaint was made in W Gummow, “Knowing assistance” at 311 and which was deprecated in Grimaldi at [247]: “participatory liability as it evolved in equity in cases prior and subsequent to Barnes v Addy was not based on inflexible formulae”. At the level of authority, the language of “knowingly induced or immediately procured” dates at least to the decision of Elders Trustee and Executor Co Ltd v E G Reeves Pty Ltd (1987) 78 ALR 193 at 238 where there is nothing to suggest that there are two separate species of liability. Cases where a third party “knowingly induces or procures a breach of trust or breach of fiduciary duty” were treated as a single class in Grimaldi at [245].

18. [162]

    The argument in this Court put to one side the fact that the “third party” Mr Joo Kee Tan was the sole director of Pittmore. As noted above, it had been put at trial that Mr Tan was liable for procuring Pittmore’s breach because his conduct was “the actions of the sole director in causing the breach to occur”. Indeed, in submissions in support of the cross-appeal, this was made a virtue (“it seems a little bit perverse to say that the corporation which has done exactly what the director has procured it to do with the director’s mind, should be liable for a breach of fiduciary duty but the director not”). This was central to Mr Chan’s submission, and not opposed in this respect by Mr Tan. But I am far from convinced about its correctness.

19. [163]

    For one thing, it sits ill with the position of inducing breach of contract. The foundation of the relationship between Mr Chan and Pittmore was contractual; this was a case like many where the fiduciary relationship must accommodate itself to the terms of the parties’ agreement so that it is consistent with and conforms to them: Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 97; [1984] HCA 64. Mason J went on to say that “[t]he fiduciary relationship cannot be superimposed upon the contract in such a way as to alter the operation which the contract was intended to have according to its true construction”. To my mind it would be strange, and not conducive to the coherence of the law, if Mr Joo Kee Tan were liable in equity for procuring a breach of fiduciary duty by his company, but was not liable at law for precisely the same conduct which amounted to inducing a breach of contract by his company. Yet there is a powerful body of authority holding that a director merely by causing a company to breach its contract, knowing that doing so cannot be legally justified, is not personally liable for the tort of inducing a breach of contract.

20. [164]

    Sir Frederick Jordan explained in O’Brien v Dawson (1941) 41 SR NSW 295 at 307-308 that this is because the company is a figment of the law, incapable of acting other than through agents, and the directors “are not in the position of outsiders who are influencing the independent volition of a contracting party who is capable of exercising volition for himself” but rather “[i]t is their volition and theirs only which determines the making, the performance, or the breach of the company’s contracts”. In dismissing the appeal (O’Brien v Dawson (1942) 66 CLR 18; [1942] HCA 8), Starke J at 32-33 and McTiernan J at 34 confirmed that the director could not be liable for inducing a breach of contract by the company where he was acting in pursuance of his authority as a director. Starke J said:

21. [165]

    More recently, Hodgson CJ in Eq said in Tsaprazis v Goldcrest Properties Pty Ltd [2000] NSWSC 206; 18 ACLC 285 at [11] that directors are not liable for the tort of inducing breach of contract, where, in exercising their functions as directors, they have caused the company to breach its contract. The same point was made in Realtek Holdings Pty Ltd v Wetamast Pty Ltd [2019] NSWSC 1869 at [242]-[246] and in Armstrong Strategic Management and Marketing Pty Limited v Expense Reduction Analysts Group Pty Ltd (No 9) [2016] NSWSC 1005 at [178] (where United Kingdom and New Zealand authorities to the contrary were noted).

22. [166]

    None of the above is to deny that directors who act other than in their capacity as one of the organs of a company may be found to have procured or induced a breach of trust or fiduciary duty. But I did not understand it to have been put that Mr Tan acted other than as a director of Pittmore.

23. [167]

    Mr Chan pointed to a short passage in Kation Pty Ltd v Lamru Pty Ltd [2009] NSWCA 145; 257 ALR 336 at [117] which was said to support the proposition that a director would be liable under the second limb of Barnes v Addy. There is nothing to suggest that any point was taken or any argument developed in that appeal, in which this Court concluded that there had been no error in the way the trial judge had approached the issue, even though his decision had preceded Farah Constructions. I do not think that Kation detracts from the force of the decisions mentioned above.

24. [168]

    That is not to say there is no support for Mr Chan’s proposition; Australian Securities Commission v AS Nominees Ltd (1995) 62 FCR 504 at 523 (a decision of Finn J) proceeds on the basis that directors exercising the powers of the board who thereby cause their company to commit a breach of trust are “peculiarly vulnerable” to liability for knowing assistance.

25. [169]

    Although as presently advised I favour the view adopted in Othman v Stanley [2012] VSC 211 at [6] that the two forms of liability share the same rationale, I can also see an argument in principle favouring a distinction between the two forms of ancillary liability in equity and at common law. The essence of a fiduciary relationship is to act in the best interests of another, as opposed to tort and contract where the parties are taken to be independent and equal actors concerned primarily with their own self-interest: see Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484; [2003] HCA 15 at [40] and Pilmer v Duke Group Ltd (in liq) (2001) 207 CLR 165; [2001] HCA 31 at [71], in both cases approving statements by McLachlin J (in Canson Enterprises Ltd v Boughton & Co [1991] 3 SCR 534 at 543 and Norberg v Wynrib [1992] 2 SCR 226 at 272). Conceivably the character of the fiduciary relationship might result in a broader approach to ancillary liability than would be the case at common law for inducing breach of contract.

26. [170]

    If I had otherwise concluded that Mr Tan were liable for procuring or inducing a breach of fiduciary duty by Pittmore, I would have invited submissions from the parties on whether that liability extended to Mr Tan for acts undertaken merely in his capacity as director. None of the foregoing was the subject of submissions; indeed, the only decision to which the Court was taken was Kation Pty Ltd v Lamru Pty Ltd. However, on the view I have reached, it is unnecessary to take that course. I shall assume, favourably to Mr Chan, that the fact that the steps taken by Mr Tan which are alleged to have amounted to procuring a breach of fiduciary duty by Pittmore were taken in his capacity as director does not disentitle Mr Chan’s claim against him.

27. [171]

    I return to the main point on the cross-appeal, namely, whether there is an element of “dishonesty” in the test applicable to a person who induces or procures a breach of trust.

28. [172]

    Perhaps the clearest case is Eaves v Hickson, the last decision cited by the High Court at [161] of Farah Constructions. There trustees had paid out trust assets to the five children of William Knibb on the strength of a forged marriage certificate supplied by their father, and known by him to be a forgery, which backdated his marriage to 14 March 1826 rather than 14 March 1836; in fact, all five children were illegitimate and thus not beneficiaries. Sir John Romilly MR ordered the children to repay what they had received, with interest. But the children’s father William Knibb was also ordered to pay into Court so much of the trust fund as should not be recovered from the children, because he had “sent the certificate with the forged date to the trustee, and which he must have known was false”: (1861) 30 Beav 136 at 141-2; 54 ER 840 at 842. The trustees (who were said to have been deceived by the fraud) were also liable to make good any deficit.

29. [173]

    Eaves v Hickson was a case where the third party was knowingly dishonest in procuring or inducing the breach of trust, and the trustee was taken in by the forgery, described by the Master of the Rolls as one which “would have deceived anyone who was not looking out for forgery or fraud”. William Knibb not only knew that he was asking the trustees to pay out trust funds in breach of trust, he induced them to do so on the basis of a document known by him to be a forgery. It made it natural for the High Court in [163] to refer to a defendant who dishonestly procures or assists in a breach of trust or fiduciary obligation where the trustee or fiduciary need not have engaged in a dishonest or fraudulent design. But an extreme case such as Eaves v Hickson, which would easily satisfy any plausible test for liability, sheds little light on the mental state which is necessary to establish liability.

30. [174]

    The same may be said of the decision of the Supreme Court of Canada in Trusts & Guarantee Co Ltd v Brenner [1933] SCR 656, where Mr Brenner tricked the beneficiary’s stockbrokers into dealing with unauthorised investments. His liability was held (for the purposes of federal bankruptcy legislation) to arise out of a breach of trust (at 662), but the fact that he had “industriously concealed the facts” in the course of conceiving and directing the breach of trust makes this decision a clear case, but also one which is similarly unhelpful in ascertaining the necessary elements of liability.

31. [175]

    The meaning of “dishonesty” as applied to participants in, or accessories to, a breach of trust or fiduciary duty has proven controversial in the United Kingdom. That country’s ultimate appellate court has repeatedly been urged to conclude that it is necessary for the person subjectively to appreciate that his or her conduct was dishonest according to ordinary standards: see Twinsectra Ltd v Yardley [2002] UKHL 12; [2002] 2 AC 164 (where the submission was accepted), Barlow Clowes International Ltd v Eurotrust International Ltd [2005] UKPC 37; [2006] 1 WLR 1476 (defendant’s own standards are irrelevant if by ordinary standards a defendant’s mental state would be characterised as dishonest) and Ivey v Genting Casinos (UK) Ltd (t/a Crockfords Club) [2018] AC 391; [2017] UKSC 67 (objective standard was reaffirmed). It was with this line of decisions in mind that Professor Davies wrote “It is difficult to establish precisely what dishonesty means and how it is assessed”: P Davies, Accessory Liability (Hart Publishing, 2015), at p 49. He added (at p 50):

32. [176]

    I doubt that “dishonesty” is the right word to describe the test of liability of a person who procures or induces a breach of trust or fiduciary duty. It is far from being a test which is clear-cut in this context; see for example King Network Group Pty Ltd v Club of the Clubs Pty Ltd [2008] NSWCA 344; 69 ACSR 172 at [56] (“Some ordinary decent people might regard what KNG did as dishonest, but others might not”). It is not the test used for inducing breach of contract, where the gravamen is intention. In Fightvision Pty Ltd v Onisforou (1999) 47 NSWLR 473; [1999] NSWCA 323 at [171], this Court said:

33. [177]

    See also Hospitality Group Pty Ltd v Australian Rugby Union Ltd (2001) 110 FCR 157; [2001] FCA 1040 at [127]; Daebo Shipping Co Ltd v The Ship Go Star (2012) 207 FCR 220; [2012] FCAFC 156 at [88]-[89]; OBG Ltd v Allan [2008] AC 1 at [39]-[43] and [191]-[192].

34. [178]

    Why should liability for inducing a breach of trust or fiduciary duty be different from inducing a breach of contract? In many cases, including the facts giving rise to the present litigation, the self-same conduct may constitute inducing a breach of contract and inducing a breach of trust or fiduciary duty. And in many cases, including the present, contract is the foundation of the fiduciary relationship between the parties.

35. [179]

    A test framed in terms of “dishonesty” also gives rise to problems in this area. Take Midgley v Midgley [1893] 3 Ch D 282, where there was no loss to the estate, and the main question was costs. The solicitor Mr Midgley was described as “the fons et origo” of a scheme whereby his clients (two aunts) might be repaid from the executors a debt which was statute-barred. Romer J and the Court of Appeal plainly deprecated the solicitor’s conduct, and ordered the solicitor to pay the plaintiffs’ costs. Yet there was no finding of dishonesty per se, merely that “money was got by him by a deliberate scheme to get it paid out of the fund out of which I have already held it was not legally recoverable”. Indeed, Harpum cites the decision as an instance where liability does not turn on dishonesty:

36. [180]

    Notwithstanding the reservations expressed above, there is a way of reconciling the position. Before doing so, it is convenient to refer to the modern authorities.

37. [181]

    The position is much changed from Harpum’s lament in 1994 that “[t]here are no modern authorities on knowing inducement – indeed the very existence of this category of liability has been overlooked”: C Harpum, “The Basis of Equitable Liability” in P Birks (ed), The Frontiers of Liability (Oxford University Press, 1994), vol 1, p 12 at 13.

38. [182]

    Mr Chan’s submissions cited Sino Iron Pty Ltd v Palmer (No 3) [2015] 2 Qd R 574; [2015] QSC 94. Jackson J reproduced (at [120]) the conclusions reached by Sloss J following her Honour’s careful review of the authorities in Australian Super Developments Pty Ltd v Marriner [2014] VSC 464. Sino Iron followed Sloss J’s decision holding that it was sufficient if the person knowing or inducing a breach of trust had actual knowledge of facts which, to a reasonable person, would suggest a breach of trust. Jackson J emphasised that it was not necessary for the third party to “actually appreciate that the relevant facts constitute a trust in law”; that would “favour the legally ignorant over the legally aware, when the facts and knowledge otherwise are identical”: at [144].

39. [183]

    During the hearing, the Court directed Mr Chan to the decision in Metropolitan Petar v Mitreski [2012] NSWSC 16 where Brereton J said at [164]-[165] after reference to Farah Constructions:

40. [184]

    There have been other first instance decisions addressing the issue. In THC Holding Pty Ltd v CMA Recycling Pty Ltd [2014] NSWSC 1136; 101 ACSR 202 at [187]-[198], Stevenson J concluded that company administrators who sold goods to a third party in the face of the true owner’s claim had sufficient knowledge of the facts for equity to impose an obligation upon them to account for their conduct. Likewise, in Jin Niu Investments Pty Ltd v Wang (No 2) [2020] NSWSC 649 at [190], Henry J proceeded on the basis that the defendants had actual knowledge of the breach of trust they had induced or procured, and so could be liable on that basis, as well as for knowing assistance. In Twigg v Twigg (No 4); Lambert v Twigg Investments Pty Ltd (No 3) [2020] NSWSC 1159 at [266], Ball J with respect correctly noted that the level of knowledge required for procuring or inducing a breach of trust was not clear as a matter of authority, but noted, “From a practical point of view, it is difficult to see how that head of liability would be satisfied without actual knowledge". In KTC v David (No 1) [2019] NSWSC 281 at [19(2) and (4)] and in Chickabo Pty Ltd v Zphere Pty Ltd (2019) 57 VR 406; [2019] VSC 73 at [173]-[175], two decisions on which Pittmore relied, it was said more firmly that knowledge that what the third party was doing was procuring or inducing a breach of fiduciary duty, in the sense ranging from actual knowledge to knowledge of circumstances which would indicate the facts to an honest and reasonable person, was necessary and sufficient. In Syrimi v Hinds (1996) 6 NTLR 1 at 11, the Northern Territory Court of Appeal said that it “can safely infer the Syrimis knew a transfer to Allora Pty Ltd would constitute a breach of fiduciary obligation and would be dishonest”. In Australian Super Developments Pty Ltd v Marriner, Sloss J proceeded on the basis that any of the first four Baden categories of knowledge was sufficient: at [305]. The earlier decision of the Victorian Court of Appeal in the same litigation, Marriner v Australian Super Developments Pty Ltd (2012) 46 VR 213; [2012] VSCA 171 stated at [160] that constructive notice is insufficient, but otherwise is of limited precedential force, because the Court received scant submissions and remitted the proceedings to the Trial Division (where it was determined by Sloss J): see at [164]. Finally, in Thomas v Arthur Hughes Pty Ltd [2015] NSWSC 1027 at [60] White J said, relying on Hasler at [77], that the man who had instigated or procured his mother’s breach of fiduciary duty was liable to pay equitable compensation even though his Honour found that neither the man nor his mother was guilty of dishonesty.

41. [185]

    It is fair to say that the weight of authority has hitherto proceeded cautiously, on the basis that the law is not settled in this area, but has focussed on the need to establish knowledge on the part of the third party of the breach of trust or fiduciary duty.

42. [186]

    A third party’s liability for inducing or procuring a breach of trust or fiduciary duty has two elements. The first is the intentional conduct which causes, and is intended to cause, the breach of trust or fiduciary duty. The second is that the third party knew that he or she was bringing about a breach of trust or fiduciary duty.

43. [187]

    In some cases, the third party’s conduct will involve dishonest deception of the fiduciary. The forged marriage certificate in Eaves v Hickson is the paradigm example. In the case of an honest trustee or fiduciary who properly seeks to adhere to the trust or fiduciary obligations to which he or she is subject, procuring or inducing a breach of trust or fiduciary duty will almost always involve a knowing deception of the trustee.

44. [188]

    In other cases, where the trustee or fiduciary is less than scrupulous in attending to his or her duties, or indifferent to those duties, or indeed utterly unconcerned to abide by them, then there will be less need for deception by the third party procurer or inducer.

45. [189]

    But however scrupulous or casual trustees or fiduciaries be in adhering to their duty, the third party will in all cases know that the result intended to be brought about, which is in fact brought about, is something which would reasonably be regarded as a breach of trust or fiduciary obligation. I see no difficulty in describing the third party’s conduct in those circumstances as “dishonest”. However, the essential aspect of the third party’s liability is not so much the conclusion that the conduct is dishonest. Rather, it is the knowledge that the third party has procured a breach of duty by the trustee or fiduciary.

46. [190]

    That accords with the Australian authorities summarised above. In particular, it accords with the attention directed to knowledge by many of those authorities. It also accommodates Midgley v Midgley and White J’s express finding in Thomas v Arthur Hughes Pty Ltd that the son was liable for inducing the mother’s breach of fiduciary duty, even though no finding of dishonesty was made. What matters is that the son instigated his mother’s breach of fiduciary duty, in circumstances where both were found to have a "want of probity” from a knowledge of “all relevance circumstances”: see at [62].

47. [191]

    What someone knows is distinct from the degree of certainty with which it is known. The so-called “Baden scale of knowledge” more than any other aspect of ancillary liability in equity is associated with technicality and distinctions which are difficult if not illusory; “it tends to invite the use of formulae to solve problems”: Grimaldi at [260]. However, the formulation helpfully emphasises that the conclusions of mixed fact and law which often comprise the elements of what a defendant “knows” come in shades of grey. In any event it was affirmed in Farah Constructions and Grimaldi as applicable to ‘knowing receipt” and “knowing assistance”. The five categories taken from Baden v Société Générale pour Favoriser le Développement du Commerce et de l'Industrie en France SA [1993] 1 WLR 509 at 575-576, 582 are “(i) actual knowledge; (ii) wilfully shutting one’s eyes to the obvious; (iii) wilfully and recklessly failing to make such inquiries as an honest and reasonable man would make; (iv) knowledge of circumstances which would indicate the facts to an honest and reasonable man; (v) knowledge of circumstances which would put an honest and reasonable man on inquiry.”

48. [192]

    Any of the first four categories is sufficient to satisfy the knowledge requirement for knowing assistance. Consistently with equity’s regard for conscience and the reasoning in Farah Constructions, the same is true for a third party who procures or induces a breach of trust or fiduciary obligation. It is sufficient if the inducer or procurer of a breach of trust or fiduciary duty knew of the facts which, to a reasonable person, would indicate a breach of trust or fiduciary duty. That accords with what Brereton J said in Mitreski at [165] reproduced above.

49. [193]

    In addition, it must be shown that the inducer or procurer intended the trustee or fiduciary to do the thing which is a breach of trust or fiduciary duty. However, because procuring or inducing a breach of trust or fiduciary duty involves intentional conduct, it may be expected that this element will be readily satisfied.

50. [194]

    The foregoing sits harmoniously with the liability of third parties who merely assist, but fall short of inducing or procuring, a breach of trust or fiduciary duty. The liability of a procurer or inducer is broader, insofar as it is not confined to breaches which amount to a “fraudulent and dishonest design”, but extends to all breaches of trust or fiduciary duty. On the other hand, the conduct on the part of the third party is more onerous to establish: it is necessary not merely to have “assisted”, but to have “procured” or “induced” the breach of duty. However, the same level of knowledge of the breach of trust or fiduciary duty is required. It is sufficient that the third party knows the facts which, to a reasonable person, would indicate a breach of trust or fiduciary duty. That is to say, knowledge in the first, second, third or fourth categories in Baden will suffice, but constructive notice is insufficient. That accords with the personal liability to account which is imposed by equity upon persons who procure or assist in a breach of trust or fiduciary obligation being of the same character: Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10 at [4]. In that fashion, and no differently from the case of knowing assistance, “the morally obtuse cannot escape by failure to recognise an impropriety that would have been apparent to an ordinary person applying the standards of such persons”: Farah Constructions at [177].

51. [195]

    The foregoing also sits harmoniously with other areas of ancillary liability less closely connected to procuring or inducing a breach of trust or fiduciary duty than liability for knowing assistance. Essentially, what is required is knowledge of the essential matters which go to make up the breach of trust or breach of fiduciary duty, even if the procurer or inducer does not know that those matters amount to a breach of trust or breach of fiduciary duty. That accords with the provisions regulating ancillary criminal liability considered in Giorgianni v The Queen (1985) 156 CLR 473; [1985] HCA 29 and those regulating ancillary liability under the Trade Practices Act considered in Yorke v Lucas (1985) 158 CLR 661; [1985] HCA 65. There is much to be said for equity drawing upon statutory and criminal law regimes in order to develop a coherent accessorial liability framework, as advocated by J Dietrich, “The Liability of Accessories under Statute, in Equity, and in Criminal Law: Some Common Problems and (Perhaps) Common Solutions” (2010) 34(1) Melb Uni L Rev 106 and W Gummow, “The Equitable Duties of Company Directors” (2013) 87 ALJ 753. After all, the same conduct may give rise to multiple causes of action.

52. [196]

    I think one can fairly describe a third party who procures or induces a trustee or fiduciary to do something which a reasonable person in the position of the third party would apprehend to be a breach of trust or a breach of fiduciary duty to be acting “dishonestly”. However, I do not regard “dishonesty” as an element of the test for liability. I respectfully agree with Lord Millett that “dishonesty” is an unnecessary distraction: Twinsectra Ltd v Yardley at [134].

53. [197]

    As noted above, the primary judge received no material assistance from either side on a question of real importance and complexity. His Honour was taken to no authority apart from Farah Constructions. His Honour concluded that Mr Tan could not be liable for inducing Pittmore’s breach of fiduciary duty absent dishonesty.

54. [198]

    That finding was grounded in the fact that it was not put that Mr Tan did not believe that he was entitled to terminate pursuant to cl 1.2 of the Second Joint Venture Deed after 30 April 2017. It was unequivocally accepted at trial that Mr Chan’s and Pittmore’s fiduciary relationship would come to an end if valid notice of termination were given (transcript, 3 April 2020, 280.43-281.1) and so the complexities concerning exercising a contractual power to terminate for the purpose of procuring a benefit which would be denied to the (former) fiduciary if the relationship continued may be passed over (cf Edmonds v Donovan; Disctronics Ltd v Kingston Links Country Club Pty Ltd (2005) 12 VR 513; [2005] VSCA 27 at [56]-[61] and Schmidt v AHRKalimpa Pty Ltd (receiver appointed) [2020] VSCA 193 at [93]-[103] and [141]-[148]).

55. [199]

    It follows from the way in which the trial was conducted that Mr Tan, who caused Pittmore to purport to exercise the right conferred by cl 1.2 of the Second Joint Venture Deed, must be taken not to have been conscious of any breach of fiduciary duty. There can be no suggestion that Mr Tan had actual knowledge, or shut his eyes to the obvious, or deliberately refrained from making inquiries in order to avoid learning that there was a breach of fiduciary duty by Pittmore.

56. [200]

    I do not think an honest and reasonable person in Mr Tan’s position would think he or she was precluded from exercising the power under cl 1.2. There was on the face of the document a non-compliance with the condition precedent, in circumstances where Mr and Ms Chan were unwilling to take advantage of an immediate, riskless, substantial offer which had been disclosed to them, preferring to continue down the path of developing both lots, with the certainty of immediate large expense and substantial delay in realising any profit. The Second Joint Venture Deed had been signed by Mr Chan and provided to him, varying the terms of their joint endeavour in a way sought by Mr and Ms Chan, but with which they had not complied. I do not think that an honest and reasonable person in Mr Tan’s position is expected to be aware of delivery by escrow, or to read cl 1.2 contrary to its literal meaning. I am more troubled by the fact that for some six weeks Pittmore continued to proceed with the development after 30 April 2017, something which must have been known to Mr Tan, but on balance I do not consider that this was sufficient to enable a conclusion that an honest and reasonable person in Mr Tan’s position would conclude that the right to bring the joint venture to an end had been lost. The notice of termination was supplied under cover of a letter from the solicitor Mr David Kam and senior counsel for Mr Chan accepted, entirely properly, that Mr Tan had “been told by, no doubt, the solicitor that you can terminate the Second Joint Venture Deed”. It was accepted that once the joint venture was terminated, Pittmore was free to sell Number 17 to a third party.

57. [201]

    Accordingly, I conclude that Mr Tan did not have sufficient knowledge to be liable for inducing or procuring Pittmore’s breach of fiduciary duty in purporting to terminate the Second Joint Venture Deed and selling Number 17. These grounds are not made out.

Orders

1. [202]

   There should be grants of leave to Pittmore and to Mr Chan in order to appeal and cross-appeal against the judgment against Pittmore, and the dismissal of Mr Chan’s proceedings against Mr Tan. However, both the appeal and the cross-appeal should be dismissed. The analysis leading to that result is in some respects quite technical. However, it also accords with the commercial reality. On the one hand Pittmore sought to walk away from the joint venture pursuant to the letter of a poorly drafted contract which as a matter of commercial reality had never relevantly formed the basis of their joint endeavour – neither Pittmore nor Mr Chan had taken steps to make Pittmore and Kienan registered proprietors as tenants in common for either lot. The fact that there are a multitude of reasons why that course was not legally effective should scarcely come as a surprise. On the other hand, while Mr Chan sued Mr Tan personally, Mr Tan had at all times structured his involvement in the joint venture through a corporate vehicle. It ought to come as no surprise that Mr Tan is not liable to Mr Chan. Had the joint venture been conducted as a partnership between Mr Chan and Mr Tan, then each would have been personally liable to the other.

2. [203]

   Costs of the appeal and the cross-appeal are quite distinct, having regard to the nature of the arguments. Separate written and oral submissions were made in respect of the appeal and cross-appeal. In each case, subject to one point, costs should follow the event.

3. [204]

   The qualification is the white folders provided to the Court. There was a concurrent hearing of both the appeal and cross-appeal with the applications for leave. Thus, entirely properly, the parties proceeded to supply white folders rather than the usual appeal books. However, this was done extremely inefficiently.

4. [205]

   First, Pittmore supplied a single white folder with the essential documents sufficient for a separate leave hearing. That folder was filed on 23 June 2020.

5. [206]

   Secondly, after there had been a determination that there was to be a concurrent hearing, Mr Chan supplied four large, inadequately indexed, folders containing a great deal of the entire record of the trial. His submissions made reference to the pagination in those folders. They were filed on 28 August 2020. Each set contains more than 2400 pages.

6. [207]

   Thirdly, on 3 November 2020, Pittmore filed eight additional white folders, differently paginated, likewise inadequately indexed, but duplicating thousands of pages in those already supplied by Mr Chan. Each set of the eight folders contained more than 4500 pages.

7. [208]

   The result of the last step was that tens of thousands of pages were needlessly photocopied. Pittmore saw fit to re-reproduce the entirety of the 310 page transcript of the trial in volumes 8 and 9 of its folders, although it had already been reproduced in full in volume 2 of Mr Chan’s folders. The reproduction of the court book led to worse duplication. By way of example, and by reference to only factually intensive aspects of the case (the steps taken by the joint venturers after July 2016 until April 2017), pages 614-1057 of the tender bundle at trial were reproduced as pp 1063-1506 of volume 3 of Mr Chan’s white folder, and pp 750-1193 of volume 3 of Pittmore’s white folder. The Court was taken to about a dozen of those pages. The wastage was much worse than that example might suggest, because there were thousands of pages each side copied, to which no reference was made throughout the appeal and which need not have been included in either side’s books in the first place, although I appreciate that it may sometimes be more efficient to reproduce parts or all of the record at trial than to attempt to confine the appeal books to the documents that will matter. What concerns me far more than Mr Chan’s four large volumes, much of which turned out to be unnecessary, was the late service of Pittmore’s eight volumes, which insofar as they duplicated Mr Chan’s folders were unarguably unnecessary and could only result in additional cost and the potential for confusion.

8. [209]

   This ranks amongst the worst examples of preparing appeal books I have seen. Unnecessarily voluminous appeal books are familiar, but re-reproducing what has already been filed introduces a new dimension of waste. It is difficult to imagine that the clients would have been responsible for it, and if they are not, then as presently advised there is no reason for them to bear any of its cost. A similar course was taken by this Court in Insurance Australia Ltd t/a NRMA Insurance v Milton [2016] NSWCA 156 at [67]-[70]. The Court granted Mr Christie leave to supply a note, after judgment was reserved, by way of answer to my question at the end of the hearing: “Is there anything you want to say as to - to explain why there seems to have been thousands of pages unnecessarily reduplicated by your side?” On 9 December 2020, Mr David Kam, the solicitor on the record for Pittmore and Mr Tan, supplied a note of four pages which claimed that “we understood the parties were required to file separate White Folders for Pittmore’s application and for Chan’s application”, and, by way of explanation of the late filing of the eight volumes, stated that “we understood Chan’s Notice of Contention to put in issue the entirety of the factual substrate of the trial”. (Aspects of the account were disputed; it is unnecessary to summarise Mr Chan’s solicitor’s response.)

9. [210]

   While I accept Mr Kam’s explanation at face value, it falls short of constituting a valid excuse. There had been a single court book at trial for the statement of claim and cross-claim; it should have been obvious that there would be a single set of appeal books to resolve the appeal and cross-appeal in this Court. A recurring theme in Pt 51 of the rules is the obligation upon litigants to include in appeal books only what is necessary: see rr 51.12(2)(e) and 51.13(3)(d) (white folders only to contain necessary documents), 51.28(2) (transcript only to the extent necessary), 51.29(1)(b) (blue books to contain all documents which are relevant and necessary).

10. [211]

    Legal practitioners charging professional rates for the conduct of appeals in this Court are to be expected to have a basic familiarity with the rules governing the preparation of appeal books. The notion that the two sets of white folders would be required is quite wrong. The notion that Pittmore should reproduce in its own white folders the entirety of the court book and the transcript when much of the court book and the entirety of the transcript had already been reproduced by Mr Chan is also quite wrong. The notion that the notice of contention “put in issue” the entirety of the factual substrate of the trial” is likewise quite wrong. By the time those acting for Pittmore supplied their eight volumes, both sides’ written submissions had been served, which provided strong confirmation that many thousands of belatedly copied pages were irrelevant.

11. [212]

    I raised during the hearing the possibility of “an order which ensured that no client had to bear the costs of massive unnecessary photocopying”. Such an order necessarily involves the cost being borne by the legal practitioners. Nothing in Mr Kam’s response provides any sound basis for Pittmore or Mr Tan to bear any part of the costs of providing the eight volumes of white folders filed on 3 November 2020.

12. [213]

    I propose these orders:

    1. (1)

       Grant leave to appeal, direct Pittmore to file a notice of appeal in accordance with the draft notice of appeal, and otherwise dispense with the requirements of service.

    2. (2)

       Appeal dismissed.

    3. (3)

       Grant leave to cross-appeal, direct Mr Chan to file a notice of cross-appeal in accordance with the draft notice of cross-appeal, and otherwise dispense with the requirements of service.

    4. (4)

       Cross-appeal dismissed.

    5. (5)

       Subject to order 7 below, Pittmore to pay Mr Chan’s costs of the appeal.

    6. (6)

       Subject to order 7 below, Mr Chan to pay Pittmore’s and Mr Joo Kee Tan’s costs of the cross-appeal.

    7. (7)

       No part of the cost of providing the eight volumes of white folders filed on 3 November 2020 is to be passed on by David Kam & Co, with the intent that the entirety of those costs be borne by that firm.

13. [214]

    BRERETON JA: I agree with Leeming JA.