Tonk Sydney Pty Ltd v ILend Capital Pty Ltd

1. [1]

   These proceedings concern a dispute between the plaintiffs and the defendants as to whether the plaintiffs are liable to the first defendant, ILend Capital Pty Ltd (ILend), to pay the amounts of $173,800 and $316,800 each described as a ‘brokerage fee’ and an amount of $33,000, described as a ‘commitment fee’, together with interest for late payment.

2. [2]

   ILend claims the amounts pursuant to two alleged agreements (together, the Mandates):

   1. (1)

      The ‘brokerage fee’ of $173,800 is said to be payable pursuant to an agreement entitled ‘Mandate, Brokerage Agreement and Irrevocable Authority to Pay on First Drawdown or Settlement, whichever occurs first’ dated 15 March 2022 between the plaintiffs and ILend, relating to a proposed loan of $7,900,000 by a third party to the first and second plaintiffs (Mandate 1);

   2. (2)

      The ‘brokerage fee’ of $316,800 and the ‘commitment fee’ of $33,000 is said to be payable pursuant to another agreement also entitled ‘Mandate, Brokerage Agreement and Irrevocable Authority to Pay on First Drawdown or Settlement, whichever occurs first’ and dated 15 March 2022 between the plaintiffs and ILend, relating to a proposed loan of $14,400,000 by a third party to the first and second plaintiffs (Mandate 2).

3. [3]

   The Mandates purportedly set out the terms on which the first and second plaintiffs engaged ILend to obtain an ‘offer of finance/loan approval’ from a source prepared to lend money to the first and second plaintiffs on particular terms identified in cl (i) of each Mandate. The Mandates were in the same terms except for the loan amounts, the term of the loan and the interest rate for the loan: in Mandate 1, the loan was to be $7,900,000 for a term of six months at an interest rate of 4.9% pa, and in Mandate 2 the loan was to be $14,400,000 for a term of 12 months at an interest rate of 2.25% pa above BBSY.

4. [4]

   The plaintiffs dispute that the alleged agreements were entered into or alternatively, if they were entered into, that the amounts claimed are payable under them.

Parties

1. [5]

   The first plaintiff is Tonk Sydney Pty Ltd (Tonk) of which the fourth plaintiff, Matthew Martino, is a director.

2. [6]

   The second plaintiff is JDC Project Management Pty Ltd (JDC), of which the third plaintiff, Domenico Ciliegi, is a director.

3. [7]

   The second defendant, Marwan Salim, is the sole director and secretary of ILend, the first defendant.

4. [8]

   The third defendant is the Registrar of Personal Property Securities which has responsibility under s 147(1) of the Personal Property Securities Act 2009 (Cth) (PPSA) to maintain the register known as the Personal Property Securities Register (PPSR). It filed a submitting appearance in these proceedings.

Procedural background

1. [9]

   On 18 May 2022, ILend sent to Mr Ciliegi and Mr Martino an invoice and what the covering email described as a ‘friendly letter of demand’ claiming the amount of $588,561.60 comprising (a) due diligence and application fee, $19,600, (b) a brokerage fee of $316,800.00 under Mandate 2, (c) a brokerage fee of $173,800.00 under Mandate 1, (d) interest accrued to 18 May 2022 of $12,856.00, (e) legal fees of $12,000.00, and (f) GST of $53,505.60.

2. [10]

   On 19 May 2022, Mr Ciliegi responded to ILend by email disputing that the claimed amounts were owing.

3. [11]

   On 9 June 2022, ILend lodged a caveat in respect of a property owned by Mr Ciliegi at Alfords Point, New South Wales and another caveat on a property owned by Mr Martino at Glenorie, New South Wales. Each caveat claimed a caveatable interest by way of charge pursuant to the Mandates.

4. [12]

   On 14, 15 and 22 June 2022, ILend registered security interests under the PPSA against each of the plaintiffs in respect of all their present and after acquired property, again relying on the terms of the Mandates. The PPSR registrations gave the contact name for ILend as Mr Dickran Yakenian, a solicitor, who is mentioned later in these reasons.

5. [13]

   There followed correspondence between the solicitors for the plaintiffs and the then solicitor for the defendants, Observatory Legal, in which the plaintiffs disputed both the caveats and the PPSA registrations. The solicitors for the defendants, Observatory Legal, refused to remove the caveats or the PPSR registrations relying on the terms of the Mandates.

6. [14]

   On 31 August 2022, the plaintiffs commenced these proceedings by way of a statement of claim, seeking declarations that there was no intention by the plaintiffs to enter into legal relations with the defendants upon the terms of the Mandates, that the first defendant had engaged in misleading and deceptive conduct in breach of s 18 of the Australian Consumer Law in Schedule 2 of the Competition and Consumer Act 2010 (Cth) (ACL) in procuring the plaintiff’s signature to the Mandates and a declaration that the second defendant was a person knowingly concerned in that contravention; an order pursuant to s 243 of the ACL declaring the Mandates to be void ab initio; orders pursuant to s 236 and/or 237 of the ACL for damages or compensation in respect of the contraventions against both defendants; a declaration pursuant to s 250 of the ACL that certain terms of the Mandates were unfair terms of a small business contract and void pursuant to s 23 of the ACL; orders pursuant to s 74MA of the Real Property Act 1900 (NSW) that ILend withdraw the two caveats and pay compensation pursuant to s 74P of the Real Property Act; damages and/or equitable compensation against each defendant.

7. [15]

   The defendants filed their defence to the statement of claim on 3 November 2022 and an amended defence on 22 December 2022. The plaintiffs filed their reply on 18 January 2023.

8. [16]

   On 15 November 2022, ILend filed a cross-claim seeking judgment against each of the plaintiffs/cross-defendants in the sums of $173,800, $316,800 and $33,000 (being the brokerage fees and the commitment fee allegedly owing under the Mandates), together with interest payable under the Mandates, and declarations supporting the two caveats lodged in respect of the Alfords Point and Glenorie properties. The plaintiffs filed their defence to the cross-claim on 18 January 2023.

9. [17]

   On 24 October 2023, the plaintiffs filed an amended statement of claim (ASOC) which expanded the relief sought to include a declaration that ILend had no entitlement under the PPSA to register the security interests referred to earlier and an order pursuant to s 182(4) of the PPSA for the removal of those security interests from the PPSR. The defendants filed their defence to the ASOC on 9 November 2023.

10. [18]

    All the evidence had been filed by 2 February 2024, comprising:

    1. (1)

       for the plaintiffs, eight affidavits from four witnesses being Mr Ciliegi (three), Mr Martino (three), Mahmoud Hamze who introduced the plaintiffs to Mr Salim (one) and Suzanne Hibberd, a real estate agent (one); and

    2. (2)

       for the defendants, three affidavits from two witnesses, being Mr Salim (two) and Ms Fiona Hockley, a former employee of ILend (one).

11. [19]

    On 29 April 2024, the proceedings were fixed for a four day hearing, commencing on 21 October 2024. At that time, the defendants were represented by Observatory Legal and counsel (who signed the trial schedule on 29 April 2024 on behalf of the defendants). Apart from the usual orders for hearing, the Court granted liberty for the parties to apply to the trial judge for a pre-trial directions hearing to be held one month before the trial date.

12. [20]

    On 10 July 2024, Observatory Legal filed a Notice of Intention of Ceasing to Act followed by a Notice of Ceasing to Act on 19 July 2024. Communications by the plaintiffs to the defendants in connection with the preparation of the hearing were sent to the email address of the defendants notified in Observatory Legal’s Notice of Ceasing to Act.

13. [21]

    On 22 September 2024, ILend notified the plaintiffs’ solicitor, Mr Walton of Pitcher Walton, that Mr Dickran Yakenian, a solicitor, of Juris League Consultancy would be representing the defendants. On 23 September 2024, Mr Walton requested ILend, by email, to arrange for Mr Yakenian to file a Notice of Address for Service with the Court. Later the same day Mr Yakenian responded to Mr Walton, by email, stating that ‘we will file a Notice of Address for Service shortly’.

14. [22]

    At the request of the plaintiffs, I listed the matter for pre-trial directions on 30 September 2024, in accordance with the orders made on 29 April 2024. Mr Reuben of counsel appeared for the plaintiffs, instructed by Mr Walton who was also in court. There was no appearance for the defendants, and accordingly I stood the matter over to 9.30am on 9 October 2024. Shortly after the directions hearing on 30 September 2024 concluded, Mr Walton received a telephone call from Mr Yakenian in which Mr Yakenian said that he was at Court, but the matter appeared to have been dealt with. Mr Walton informed him that the matter had been adjourned for further directions on 9 October 2024 at 9:30am. In the interim, there were a number of email exchanges between Mr Walton and Mr Yakenian regarding the preparation of the matter for hearing.

15. [23]

    The matter next came before the Court on 9 October 2024 at 9:30am, when Mr Reuben of counsel, appeared for the plaintiffs and Mr Yakenian appeared for the defendants. Mr Yakenian informed the Court that Mr Salim was currently in Lebanon and that while Mr Yakenian (who had been engaged by Mr Salim ‘about two and a half weeks ago’) had been in contact with Mr Salim, he was unable to say whether or not Mr Salim would be available to appear in person to give evidence at the trial. Mr Yakenian also advised the Court that he would file a notice of appearance in the registry on behalf of the defendants later that day. I then said to Mr Yakenian that he needed to get instructions very quickly on whether an application to vacate the hearing would be made noting that he had not indicated that one would be made, that he could not assume that any such application would be successful give the nature of the issues in the case and that there were still two weeks to go before the hearing commenced, and that I would make a direction regarding the time for making such an application. I asked Mr Reuben if there was any objection by the plaintiffs to Mr Salim giving evidence by video link from Lebanon at the hearing and he said there was not. The Court then made the following orders and notations:

    1. (1)

       NOTES that a Notice of Appearance will be filled on behalf of the Defendant today.

    2. (2)

       Directs the Defendant to provide a list of witnesses required for cross-examination at the hearing, by 10:00am on 10 October 2024.

    3. (3)

       NOTES that if the Defendant requires any of the Plaintiff’s non-party witnesses to be cross-examined, the Plaintiff can apply to Richmond J in chambers for the issue of a subpoena for that witness to attend Court to give his or her evidence.

    4. (4)

       Any motion by the defendants to vacate the hearing on 21 October 2024 be returnable before the Court at 9:30am on Monday, 14 October 2024.

    5. (5)

       Liberty to apply on 1 day’s notice.

16. [24]

    Shortly after the directions hearing on 9 October 2024, Mr Walton forwarded to the email addresses of both ILend and Mr Yakenian, the orders made by the Court that day. Mr Salim confirmed to the Court (when he appeared by video link on 21 October 2024) that he received this email. No application was brought by the defendants to vacate the hearing date on or before 14 October 2024. To the contrary, Mr Yakenian took a number of steps on behalf of the defendants from which it could reasonably be inferred that the hearing would go ahead.

17. [25]

    On 10 October 2024, Mr Yakenian sent an email to Mr Walton requesting all witnesses for the plaintiffs’ to be available for cross-examination.

18. [26]

    On 16 October 2024, the Court sent an email to all the parties (including to Mr Yakenian’s email address) requesting the parties to provide opening submissions and objections to evidence by 12 noon on 17 October 2024. The defendants failed to provide submissions or objections to evidence to the Court as requested by that email and accordingly I listed the matter for further directions on 18 October 2024 at 9:30am and notified the parties of this by email to the parties (including Mr Yakenian).

19. [27]

    On 18 October 2024 at 8:33am, Mr Yakenian sent an email to my Chambers stating that he did not act for ILend as he had not received proper instructions in the matter and could not appear at the directions hearing that morning, nor for the trial the following week.

20. [28]

    On 18 October 2024 at 9:25am, Mr Yakenian sent an email to Mr Walton stating that: ‘the defendant is currently stuck in Lebanon, so I have no way of getting the Court Books to them. I will however, email a soft copy to them ASAP.’

21. [29]

    On 18 October 2024, the directions hearing occurred at 9.30am but there was no appearance for the defendants and no orders were made. On the same day, Mr Walton forwarded the plaintiffs’ submissions and objections to the defendants’ evidence (which had previously been provided to Mr Yakenian) to ILend’s email address.

Adjournment application

1. [30]

   When the matter came on for hearing at 10:00am on 21 October 2024, Mr Reuben of counsel appeared for the plaintiffs and Mr Salim appeared by audio visual link from Beirut, Lebanon. Mr Salim asked for an adjournment on the basis that he was ‘stuck in Lebanon’, would be back in Australia within two weeks and could then get a new legal team. He said that he had previously instructed Mr Yakenian to act in the matter, but Mr Yakenian was not now representing the defendants because ‘the communication with him was very bad’.

2. [31]

   The plaintiffs’ opposed the adjournment application for a number of reasons. First, the defendants have known since 19 July 2024 that they needed new legal representation and had every opportunity to obtain new legal representation for the hearing. Second, the new solicitor instructed by the defendants, Mr Yakenian, informed the Court that he would file a notice of appearance on 9 October 2024 and was made aware, as were the defendants, that any application for an adjournment would need to be brought on or before 14 October 2024 and not at the last minute, as has occurred. Third, the fact that Mr Salim does not have legal representation is a matter that he has created for himself and should not be visited on the plaintiffs who have been waiting a considerable time for the hearing to proceed. Fourth, the defendants will suffer prejudice from the continuance of the PPSR registrations which list them.

3. [32]

   After Mr Salim made his application, I refused it giving short reasons and stating that I would provide my detailed reasons later. These are set out below.

4. [33]

   Under s 66 of the Civil Procedure Act 2005 (NSW) (CP Act) the court has power to adjourn the hearing of proceedings before it.

5. [34]

   Section 56(1) of the CP Act states that the overriding purpose of the CP Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. Section 56(2) of the CP Act states that when the court exercises any power given to it by the CP Act or by rules of court it must seek to give effect to that overriding purpose. Each party is under a duty to assist the court to achieve that purpose, including by complying with directions of the court: s 56(3).

6. [35]

   Under s 57 of the CP Act, for the purpose of furthering the overriding purpose referred to in section 56(1), proceedings in any court are to be managed having regard to the just determination of the proceedings, the efficient disposal of the business of the court, the efficient use of available judicial and administrative resources, the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties. In addition, s 59 of the CP Act requires that in any proceedings, the practice and procedure of the court should be implemented with the object of eliminating delay.

7. [36]

   Under s 58 of the CP Act the court is to follow the dictates of justice in deciding whether to make any order or direction for the management of proceedings, including whether to grant an adjournment of the proceedings. For the purpose of determining what are the dictates of justice in a particular case, the court must have regard to the provisions of sections 56 and 57, and may have regard to the matters set out in s 58(2)(b), which include to the extent to which it considers them relevant:

8. [37]

   In Hamod v State of New South Wales [2011] NSWCA 375, Beazley JA (Giles JA and Whealy JA agreeing) made the following observations regarding the principles to be applied when deciding whether an adjournment should be granted:

9. [38]

   My reasons for concluding that the adjournment application should be refused were as follows. First, the defendants have known since 29 April 2024 that the matter was set down for a hearing of four days commencing on 21 October 2024. No adequate explanation has been given for why the defendants did not instruct new lawyers when Observatory Legal ceased to act for them on 19 July 2024 in good time to allow for preparation for the hearing starting on 21 October 2024. The mere fact that Mr Salim is in Lebanon (and has been there apparently since March 2024) is not a good explanation.

10. [39]

    There is no reason why Mr Salim could not have instructed new lawyers in Sydney from Lebanon to act for the defendants, retaining the same counsel as had previously acted for the defendants (or indeed retaining new counsel). The case is a relatively straight forward contractual dispute which experienced solicitors and counsel would have little difficulty mastering in a relatively short time. The defendants had only one material witness, Mr Salim, who was readily contactable by audio visual link to Lebanon. Indeed, Mr Salim did during September initially engage Mr Yakenian to act for the defendants, but for reasons which are unclear, Mr Yakenian was not ultimately retained by the defendants to act in the matter. This is despite a representation being made to the Court on 9 October 2024 that he would file a notice of appearance on behalf of the defendant that day.

11. [40]

    There is no reason why Mr Salim’s absence from Australia should have adversely impacted the defendants’ preparation of the case for hearing (and certainly no reason was given by him on his application).

12. [41]

    Third, the Court gave the defendants the opportunity to bring an adjournment application in a timely manner by the direction made on 9 October 2024, for any such application to be brought by Monday, 18 October 2024. It is clear that despite the defendants having notice of that order, they did not take the opportunity provided by that direction to bring a timely application. By neglecting to do so, the defendants have failed to comply with the case management directions of the Court designed to achieve the just resolution of the proceedings and the efficient use of the Court’s resources.

13. [42]

    Fourth, if the adjournment was granted, there could no hearing before me before February 2024. The plaintiffs contend that they will suffer prejudice from the continuation of the PPSR registrations against each of them during any period of delay between now and the hearing. In my view, that prejudice is real as the PPSR registration have the potential to adversely impact the ability of the defendants, who are engaged in the business of property development and construction, to borrow to finance their business, which is not compensable by an order for costs thrown away by any adjournment.

14. [43]

    Fifth, while the just resolution of the proceedings is a central consideration in determining whether the granting of an adjournment meets the overriding purpose of the Court ensuring the just, quick and cheap resolution of the proceedings, what is just in all the circumstances requires the consideration of the interests of all the parties, not just the defendants. The defendants have had every opportunity to prepare themselves for the commencement of the hearing on 21 October 2024, including obtaining any necessary legal representation. In my view, the defendants’ failure to obtain legal representation by the time the hearing was to commence on 21 October 2024 is a problem entirely of their own making. The bringing of the adjournment application late was a breach of the Court’s case management directions designed to ensure that the proceedings be managed in a manner which was just to all parties. In my view, there is no injustice to the defendants from the adjournment and it would be unjust to the plaintiffs to grant the adjournment given the prejudice that they will suffer from the delay.

15. [44]

    In all the circumstances, in my view, the appropriate decision was to refuse the adjournment application.

16. [45]

    Following the refusal of the defendant’s adjournment application, I gave Mr Salim the opportunity to consider whether he wished to appear and run the case for the defendants, in which case I would make directions for the hearing to be conducted at times which, as best as possible, would take account of the time difference between Sydney and Lebanon, or alternatively not to appear. I allowed him time to take legal advice on which alternative to adopt. He chose the latter alternative and the proceeding then continued without any appearance for the defendants.

Whether the plaintiffs are entitled to judgment against the defendants

1. [46]

   Whether the plaintiffs are entitled to judgment against the defendants in respect of the ASOC and the cross-claim raises two issues:

   1. (1)

      whether the Mandates create enforceable obligations owing by the plaintiffs to ILend;

   2. (2)

      if so, whether the amounts claimed by ILend, being the two brokerage fees and the commitment fee, are payable under the Mandates.

2. [47]

   The first issue turns in part on what happened at the meeting between Mr Ciliegi, Mr Martino and Mr Salim on 15 March 2022 (which was attended by Ms Hockley who was at that time an employee of ILend). The second issue is a question of construction of the relevant documents.

Background

1. [48]

   The third plaintiff, Mr Ciliegi, is the father-in-law of the fourth plaintiff, Mr Martino. In February 2022, they intended to collaborate with each other through their respective companies, Tonk in the case of Mr Martino and JDC in the case of Mr Ciliegi, to acquire land for redevelopment and construction of townhouses for sale. Tonk would be the vehicle to acquire any suitable property and JDC would project manage the construction on the land.

2. [49]

   During February 2022, Mr Ciliegi and Mr Martino found a suitable property at 15-17 Kirkwood Road, Cronulla (the Cronulla property) which was listed for sale by Ms Suzanne Hibberd of Abode Property Agents.

3. [50]

   On 18 February 2022 Mr Ciliegi submitted an offer on behalf of the proposed purchaser to Ms Hibberd to purchase the Cronulla property for $7.4 million with a 10% deposit payable upon exchange and a four month delayed settlement. After discussions with Ms Hibberd, he made an increased offer of $7.7 million in writing on 19 February to acquire the property on the same terms. The plaintiffs were contemplating constructing six townhouses over a basement for car parking on the property.

4. [51]

   On 1 March 2022, Mr Ciliegi met with Mr Salim who was the sole director and secretary of the first defendant, ILend Capital Pty Ltd, and its controlling mind. Mr Ciliegi had been introduced to Mr Salim by Mr Mahmoud Hamze, as a finance broker who could potentially assist with the obtaining of finance to acquire and develop the Cronulla property.

5. [52]

   At the meeting, Mr Salim made it known that he could arrange for the procurement of loans of the type the plaintiffs might be seeking.

6. [53]

   On 15 March 2022, Mr Ciliegi and Mr Martino attended the offices of ILend to discuss the project which the plaintiffs wished to undertake at the Cronulla property and the ability of ILend to find lenders prepared to finance the purchase and development of the property. What transpired at the meeting is in dispute.

7. [54]

   ILend asserts that on 15 March 2022 the plaintiffs executed the Mandates which give it an entitlement to charge the brokerage fees and commitment fee which are now claimed under the cross-claim. The plaintiffs assert they never knowingly or intentionally signed the Mandates at the meeting and did not intend to enter into legal relations with ILend for the procuring of loans which would incur a brokerage fee until such time as the purchase of the Cronulla property had been secured (which they say was the expressed common intention of the parties) and that no fees would be charged by ILend until a lender satisfactory to the plaintiffs could be found.

8. [55]

   Mr Ciliegi and Mr Martino deposed that during the meeting with Mr Salim on 15 March 2022 Mr Salim said that he would arrange for ILend to send to them after the meeting the mandate terms and conditions by Docusign for their signature through the Docusign system. The evidence discloses that ILend did send via Docusign a copy of each Mandate to review and sign on 15 March 2022 at 5.21pm not long after the meeting concluded.

9. [56]

   On 17 March 2022 Ms Hockley, who as noted above had been at the meeting, sent an email to each of Mr Ciliegi and Mr Martino, copying in Mr Salim which stated:

10. [57]

    Mr Ciliegi deposed to conversations with Mr Salim in late March 2022 in which he told Mr Salim that they were still negotiating with the vendors and then ultimately that the purchase of the Cronulla property would not proceed. Mr Ciliegi informed Ms Hibberd by email on 28 March 2022 that Tonk would not proceed with the purchase and the email exchange in the next paragraph indicates that Mr Salim knew this by 31 March 2022.

11. [58]

    On 30 March 2022 Mr David Carter, who was a credit manager at CC Capital Investment Fund Pty Ltd, sent an email to ILend querying whether the ‘outstanding file’ for ‘Tonk Sydney’ was ‘dead’. As mentioned below, Mr Carter had been previously involved in providing indicative terms for a loan to the plaintiffs for the Cronulla property. ILend responded to Mr Carter on the following day by email stating: ‘Tonk Sydney: client couldn’t purchase project, has replaced with another one.’

Terms of the Mandates

1. [59]

   Mandate 1 is dated 15 March 2022. After setting out the names of the parties (being ILend and the plaintiffs), it then describes under the heading ‘Property/Project/Security Address’ the Glenorie property, the Alfords Point property, another property at Panania (also owned by one of the plaintiffs) and the Cronulla property.

2. [60]

   Mandate 1 then continues (emphasis added):

3. [61]

   Clause (ix) contains a guarantee by the persons named as ‘guarantors’ (being each of the plaintiffs) in favour of ILend of all money presently owing or that may be owing in the future by Tonk and JDC to ILend.

4. [62]

   Mandate 1 then continues relevantly as follows:

5. [63]

   Mandate 2 is in the same terms as Mandate 1, except that in cl (i) the loan amount is $14,400,000, the term is 12 months, the interest rate is 2.25% above BBSW, interest only.

Issue 1: Whether the Mandates are binding contracts

1. [64]

   The plaintiffs submit that the Mandates are not binding contracts for essentially two reasons. First, the contemplated mode of acceptance by the plaintiffs of the offer contained in each Mandate was the execution of each Mandate once they were submitted to the plaintiffs through the Docusign system which never occurred. Second, insofar as reliance is placed on the signature by Mr Ciliegi and Mr Martino on the documents given to them in the meeting on 15 March 2022, no binding contract came into existence at that time because Mr Salim accepted at the meeting that no binding legal relationship would come into existence between the plaintiffs and ILend until such time as the plaintiffs secured the purchase of the Cronulla property, which never occurred.

2. [65]

   Mr Ciliegi and Mr Martino each deposed to conversations before and at the meeting on 15 March 2022 in which Mr Ciliegi told Mr Salim that the obtaining of finance for the purchase and development of the Cronulla property was subject to Tonk securing the purchase of the Cronulla property. Indeed, at the meeting on 15 March, Mr Ciliegi telephoned the real estate agent, Ms Hibberd, to find out where the vendor stood with Tonk’s previous offer, and was told by her that there were other buyers interested and Tonk’s offer had not been accepted by the vendor. This evidence is corroborated by the evidence of Ms Hibberd.

3. [66]

   Mr Ciliegi and Mr Martino each deposed to a conversation in the meeting on 15 March 2022 that Mr Salim asked them to sign some documents to progress the loan application and also said that ILend would send its mandate terms and conditions by Docusign after the meeting for signature by Mr Ciliegi and Mr Martino. They also deposed that they signed some documents at the meeting which they believed were loan application forms. ILend contends in the cross-claim that Mr Ciliegi and Mr Martino signed the Mandates at the meeting and there is a copy of each Mandate in evidence (subject to a limitation under s 136 of the Evidence Act 1995 (NSW)) which appears to bear their signatures. The plaintiffs dispute that the Mandates were signed at the meeting and issued a notice to produce calling for production of the originals of the documents which ILend says were signed at the meeting. Nothing was produced by ILend in response.

4. [67]

   The plaintiffs’ contention that the method of acceptance of the offer contained in each Mandate was delivery of signed copies of the mandate through Docusign is confirmed by subsequent events. At 5.21pm on 15 March 2022 shortly after the meeting concluded ILend sent an email to Mr Martino with the message ‘ILend Capital sent you a document to review and sign’ and a link to access the two Mandates. This was followed up by emails from ILend to Mr Martino and Mr Ciliegi on 17 and 18 March 2022 requesting their signature on the Mandates through Docusign. On 18 March 2022, Mr Martino sent to an email to Mr Salim stating that he was seeking advice from his solicitor on the form of the Mandates, and on the following Monday sent an email with suggested changes to the Mandates (reflecting the advice received from Mr Martino’s solicitor). The response from ILend to this email was simply: ‘When [Mr Salim] is in the office today we’ll go over your solicitor’s notes and come back to you.’ There was no assertion either in this email or until 18 May 2022 when the ‘friendly letter of demand’ was sent by ILend to the plaintiffs claiming that the brokerage fees were payable, that it was too late to seek amendments to the Mandates as they had already been entered into.

5. [68]

   I will address first the plaintiffs’ submission that the Mandates are not legally binding on the plaintiffs. I will do so on the basis that the plaintiffs do not deny that Mr Ciliegi and Mr Martino may have signed the Mandates presented by Mr Salim at the meeting on 15 March 2022, as it may have been one of a number of documents which Mr Salim presented to them as necessary to advance the loan applications. Their contention is that if they did sign the Mandates, they were under a mistake as to what they were signing and did not intend to sign the Mandates as they had not been shown to them or explained to them at the meeting and Mr Cilegi had told Mr Salim in the meeting that the plaintiffs would ‘need to get any documents reviewed by our solicitor prior to signing’.

6. [69]

   An agreement is not contractually enforceable unless a reasonable person in the position of each party would think that the other intends to create legal relations: JD Heydon, Heydon on Contract (2019, Lawbook Co) at [4.20]. Whether that intention exists is determined by what ‘would objectively be conveyed by what was said or done, in regard to the circumstances in which those statements and actions happen. It is not a search for the uncommunicated subjective motives or intentions of the parties’: Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95; [2002] HCA 8 at [25].

7. [70]

   In the present case, even if Mr Ciliegi and Mr Martino signed the Mandates at the meeting on 15 March 2022, (a) their evidence of what they said at the meeting in the context of what they previously told Mr Salim about the proposed purchase of the Cronulla property leading up to the meeting, (b) the evidence of what Ms Hibberd said on the telephone during the meeting, and (c) the commercial context and purpose of the mandate(s) which was that the loan approvals were only required if the plaintiffs were unable to secure the Cronulla property and it was clear at the meeting on 15 March 2022 that they had not done so, would objectively convey to ILend that no mandate was given to secure an offer of finance/loan approval until the plaintiffs had entered into a contract to purchase the Cronulla property, which never occurred. That this was the common understanding of the plaintiffs and ILend at the time of the meeting is confirmed by the subsequent conduct of ILend referred to at [58] and [67] above. Post contractual conduct is admissible on the issue of whether there is a contract: Heydon on Contract at [4.170].

8. [71]

   A document which to outward appearances constitutes a contract may be subject to a condition precedent which prevents it from being binding until the condition precedent is satisfied: Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 at 336.

9. [72]

   Put another way, the matters referred to in [70] above indicate that the arrangement discussed at the meeting on 15 March 2022 for ILend to have a mandate to procure an offer for finance for the plaintiffs was subject to a condition precedent that the plaintiffs were successful in entering into a contract to purchase the Cronulla property. As that condition was never satisfied, no contract of mandate ever came into existence.

10. [73]

    The plaintiffs put forward in written submissions a number of alternative arguments open to them as to why the Mandates are not binding. First, it was submitted that the evidence establishes that the prescribed method of acceptance of the offer contained in each mandate (being signature of the Mandates when they were sent after the meeting through Docusign) was not followed and accordingly no binding contract came into existence: NC Seddon & RA Bigwood, Cheshire & Fifoot Law of Contract (12th Australian Edition, 2023, LexisNexis Australia) at [3.46]. There are claims that representations were made by Mr Salim at the meeting on 15 March 2022 which ground relief for breach of s 18 of the ACL and s 23 of the ACL. Ultimately, in light of the conclusion above (and the conclusion on the next issue) it is not necessary to deal with these submissions.

Issue 2: Whether any amounts became due and payable under Mandate 1 or Mandate 2

1. [74]

   If contrary to the conclusion reached above, Mandate 1 and Mandate 2 created binding contracts, the question arises whether the brokerage fee of $173,800 is due and payable under Mandate 1 and whether the brokerage fee of $316,800 and the commitment fee of $33,000 are due and payable under Mandate 2.

2. [75]

   The cross-claim pleads at [9] that on or about 17 May 2022 ILend procured for the cross-defendants/plaintiffs and provided to them an offer for finance/loan approval satisfying cl (i) of Mandate 1 when it provided the cross-defendants/plaintiffs a document identified as ‘ILend Capital Pty Ltd written offer of loan dated 17 May 2022’ (ILend Offer). That document is in evidence (CB95). It is a letter dated 17 May 2022 on the letterhead of ILend addressed to the directors of Tonk and JDC. It is headed: ‘Re: Proposed first mortgage advance to Tonk Sydney Pty Ltd & JDC Project Management Pty Ltd. Loan amount: $7,900,000’.

3. [76]

   The opening paragraphs of the letter are as follows:

4. [77]

   The letter goes on to name the borrowers as Tonk and JDC and the guarantors as Mr Martino and Mr Ciliegi, states the purpose of the loan facility to be ‘to provide funds to assist in the refinance of a residential development site situated at 15-17 Kirkwood Road, Cronulla NSW, the subsequent of (sic) construction of six luxury townhouses on the site…’, states that the security for the loan will be a loan agreement between the Lender, a first registered mortgage over the Cronulla property, and a deed of guarantee given by Mr Martino and Mr Ciliegi. Clause 11 provides that upon on the acceptance of the letter of offer and issue of mortgage documents the borrower and guarantors will be liable for a number of fees, including ‘a brokerage fee of 2.0% of the loan amount payable to ILend Capital at settlement’ and ‘upon acceptance of the offer, a non-refundable commitment and due diligence fee of $33,000 (inc GST) is payable’.

5. [78]

   Clause 14 provides that the letter of offer may be withdrawn at the Facilitator’s sole discretion if a number of events occur (without the Lender or Facilitator incurring any liability whatsoever). These include if circumstances or facts arise or come to the Facilitator’s notice which in the Facilitator’s opinion may be prejudicial to the Lender’s interests or results in a situation where it would be, in the Facilitator’s opinion, uncommercial for the Lender to provide the loan, or the results of any searches or any enquiries relating to the security properties, the Borrower, the Guarantor or any associates prove to be unsatisfactory to the Lender in any way.

6. [79]

   Clause 19 headed ‘Disclaimer’ includes the following:

7. [80]

   The letter is not signed by or on behalf of ILend (or any other person). While it bears the typewritten words ‘ILend Capital’ at the end under the words ‘Yours faithfully’ that is not a signature for ILend by Mr Salim, the only person with authority to act on its behalf.

8. [81]

   For a number of reasons, this document cannot be regarded as an ‘offer of finance/loan approval’ which meets the description in cl (i) of Mandate 1. First, it is merely expressed to be a ‘preliminary approval’ not an approval. In its ordinary meaning, ‘preliminary’ means ‘preceding and leading up to the main matter or business; introductory; preparatory’ (Macquarie Dictionary, online ed, October 2024). The qualified nature of the ‘offer’ contained in the document is made clear by cl 14 and cl 19, which clearly indicate that there will be no offer or approval of a loan until the making of an actual advance by the ‘Lender’.

9. [82]

   Second, the document is not signed by the entity which purported to issue it, being ILend. Nor is it signed by the entity which purportedly has given the ‘preliminary approval’, being the Facilitator. Indeed, a search at ASIC of the word ‘ILend’ discloses that there was no entity registered with the name ‘ILend Capital Investment Fund Pty Ltd’. Hence, the purported (preliminary) approval referred to in the letter is by an entity which does not exist.

10. [83]

    Third, there is no evidence before the Court that ILend ever had the financial capacity to make a loan of $7.9 million on the terms of the Offer. The plaintiffs issued a notice to produce to ILend for bank statements and records of accounts for either ILend or ILend Capital Investment Fund Pty Ltd and nothing was produced.

11. [84]

    Fourth, when the Offer was purportedly issued to Tonk and JDC, Mr Salim was aware that the purchase of the Cronulla property had not gone ahead and would not do so, as noted above.

12. [85]

    As the plaintiffs submit, the document is a sham, in the sense of being a mere piece of machinery (indeed a worthless piece of paper) for serving some purpose other than that of constituting the whole of the arrangement which it purports to give effect: Raftland Pty Ltd as Trustee of Raftland Trust v Commissioner of Taxation (2008) 238 CLR 516; [2008] HCA 21 at [34].

13. [86]

    As ILend did not source an ‘offer of finance/loan approval’ meeting the description in cl 1(i) of Mandate 1, the brokerage fee of $173,200 (being 2.2% of $7,900,0000) claimed by ILend under Mandate 1 never became due and payable. This is because on the proper construction of Mandate 1, if it was binding, the brokerage fee only becomes payable if the condition stated in cl (iii) is met, being that ‘ILend produces an offer for finance’ which meets the description in cl (i).

14. [87]

    I note the cl (iv) of Mandate 1 states that the brokerage fee is payable ‘upon execution of this agreement’ and goes on to state that ‘while the payment of the brokerage fee is due and payable upon execution of this agreement, ILend Capital Pty Ltd will accept payment of the brokerage fee upon drawdown or settlement of the loan…’. Clause (iv) is inconsistent with both cl (iii) and cl 7 and is difficult to reconcile with cl (viii). The question arises as to how this inconsistency is to be resolved.

15. [88]

    It is a fundamental principle that a contract is to be construed as a whole, which means that the Court endeavours to construe each provision with the others so as to render the provisions harmonious with each other: Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99; [1973] HCA 36 at 109. It is sometimes the case that two provisions will appear to be inconsistent with each other, but this can be resolved by giving each a construction which resolves the conflict, for example by construing one as subject to the other. However, in circumstances where two provisions are inconsistent in the sense that they cannot be reconciled, the correct approach is to give effect to that part of the contract which is calculated to carry into effect the real intention of the parties as gathered from the instrument as a whole: Taylor v Dexta Corp Ltd [2006] NSWCA 310 at [1], [66], and [71]; GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 128 FCR 1; [2003] FCA 50 at [306]; McGowan v Commissioner of Stamp Duties [2002] 2 Qd R 499; [2001] QCA 36 at [22]; P Herzfeld & T Prince, Interpretation (2nd ed, 2020, Lawbook Co) at [22.90].

16. [89]

    The purpose of Mandate 1, if it were binding, is the appointment of ILend to perform a service of obtaining an approval for a loan facility on the terms set out in cl (i). This is clear from cl (i), cl (ii) and cl 1. The consideration payable for performance of that service is the brokerage fee. It is consistent with the purpose of the agreement that the consideration would only become payable if the service is performed and not at the time of execution of the agreement irrespective of performance. This is what cl (iii) provides, consistently with cl 7 and the heading of Mandate 1 (which describes the document as a ‘mandate, brokerage agreement and irrevocable authority to pay on first drawdown or settlement, whichever occurs first)’. Accordingly, the statement contained in cl (iv) that the brokerage fee is payable ‘upon execution of this agreement’ should be rejected.

17. [90]

    It follows that the brokerage fee of $173,800 never became due and payable.

18. [91]

    The cross-claim pleads that on or about 15 March 2022 ILend procured for the cross-defendants/plaintiffs an offer of finance/loan approval satisfying cl (i) of Mandate 2 when it provided to them a document identified as ‘CC Capital written offer dated 14 March 2022’: see cross-claim at [15].

19. [92]

    The document put forward by ILend as the document meeting this description (found at CB133) is a letter addressed to the directors of Tonk and JDC on the letterhead of CC Capital Investment Fund Pty Ltd and dated 14 March 2022, but is unsigned (CC Offer). It refers in the heading to a proposed first mortgage advanced to Tonk and JDC for a loan amount of $14,400,000. The opening paragraphs of the letter are as follows:

20. [93]

    The remainder of the letter bears a close similarity to the ILend Offer (and it may be inferred that the draftsperson of the ILend Offer used the CC Offer as a template).

21. [94]

    The CC Offer includes in cl 11(c) a statement that ‘a brokerage fee of 2% of the loan amount is payable to ILend Capital at settlement’ and in cl 11(d) a statement that ‘upon acceptance of this offer a non-refundable commitment and due diligence fee of $33,000.00 inc GST is payable’. Clauses 14 and 19 are in the same terms as the ILend Offer, including relevantly the statement in cl 19 that ‘the approval of any loan facility is not finalised until the making of the advance and the satisfaction of the Lender of all terms and conditions stipulated herein’. The document contains a space for the signature of David Carter, credit manager, on behalf of CC Capital Investment Fund Pty Ltd, but no signature appears on the document. None of the evidence filed by the defendants in the proceedings includes a signed copy of the letter. Nothing further was done by Mr Carter in relation to it, and it is clear from the email exchange referred to at [58] above that Mr Carter was aware by 31 March 2022 that the application for the loan was ‘dead’.

22. [95]

    In my opinion the CC Offer document cannot be regarded as an ‘offer of finance/loan approval’ which meets the description in cl (i) of Mandate 2. First, it is merely expressed to be a preliminary approval, and for the same reasons given above in relation to the ILend Offer, the CC Offer was not an offer of finance/loan approval but something preliminary thereto. Second, as the document is not signed by or on behalf of CC Capital Investment Fund Pty Ltd, there is no evidence that the letter was intended to create a legal obligation on the part of CC Capital Investment Fund Pty Ltd.

23. [96]

    The provisions of Mandate 2 dealing with the time at which a brokerage fee of 2.2% on a borrowing of $14.4 million (being $316,800), would become due and payable are the same as those in Mandate 1. For the reasons given above in relation to Mandate 1, the brokerage fee under Mandate 2 only became due and payable when ILend produced an offer of finance which met the description in cl (i). It did not do so by producing the CC Offer. There is no other ‘offer’ put forward by ILend. Accordingly, the brokerage fee of $316,800 never became due and payable.

24. [97]

    In relation to the commitment fee of $33,000, cl (vi) of Mandate 2 makes a commitment fee payable to ILend ‘once an offer of finance/loan offer is sourced by a lender through ILend Capital Pty Ltd’. There is no reference to a commitment fee of $33,000 in Mandate 2 but the cross-claim gives particulars of the commitment fee as the CC Offer. That document does refer to a commitment fee of $33,000. However, the CC Offer does not purport to create an obligation by the borrowers to pay ILend a commitment fee of that amount and, in any event, does not create any obligation of the plaintiffs to CC Capital Investment Fund Pty Ltd. Further, the CC Offer is not an ‘offer of finance/loan approval’ meeting the description in cl (i) of Mandate 2 and accordingly cl (vi) of Mandate 2 did not create any obligation on the plaintiffs to pay $33,000 to ILend.

25. [98]

    For these reasons, even if Mandate 2 created a binding contract between the plaintiffs and ILend (contrary to the conclusion reached earlier that it did not), the brokerage fee and the commitment fee claimed in the cross-claim were not at any time due and payable by the plaintiff to ILend under Mandate 2.

Conclusion

1. [99]

   For the above reasons the plaintiffs have established that the Mandates are not binding contracts and, even if they were, no amounts became due and payable under them in respect of the amounts claimed in the cross-claim.

2. [100]

   Accordingly, the cross-claim should be dismissed and the plaintiffs are entitled to the relief they seek in the ASOC in relation to the non-enforceability of the Mandates and declarations and orders for the removal of the registration under the PPSR of the security interests claimed by the first defendant in respect of the Mandates. The plaintiffs are entitled to their costs of the proceedings.

3. [101]

   At the hearing the plaintiffs informed the Court that the other relief claimed in the ASOC was not pressed, including the orders for removal of the caveats, which were no longer required because the caveats had lapsed in late 2022 under s 74J of the Real Property Act after the plaintiffs lodged lapsing notices.

4. [102]

   At the hearing, the plaintiffs indicated that they wish to bring a separate application for indemnity costs and I will allow a timetable for this to occur.

5. [103]

   Accordingly, the Court will make the following orders:

   1. (1)

      A declaration that the first defendant’s Mandates to Act dated 15 March 2022 are not binding on the plaintiffs and do not create enforceable obligations against any of the plaintiffs.

   2. (2)

      A declaration that the first defendant has no valid entitlement to register any security interest as referred to in Schedule 1 below under the Personal Property Securities Act 2009 (Cth) (PPSA).

   3. (3)

      An order pursuant to s 182(4) of the PPSA that the third defendant (Registrar of Personal Property Securities) be and is hereby required to register a financing change statement removing the registration of each purported security interest referred to in Schedule 1 below from the Personal Property Securities Register.

   4. (4)

      Each of the first and second defendants, their servants and/or agents be and are hereby restrained from enforcing or taking steps to register as against the plaintiffs, or any of them, a security interest relying on the first defendant’s Mandates to Act dated 15 March 2022.

   5. (5)

      The cross-claim is dismissed.

   6. (6)

      The first and second defendants are to pay the costs of the plaintiffs of the proceedings.

   7. (7)

      If the plaintiffs seek a different costs order, they may file and serve a written submission (of no more than three pages), together with any evidence on which they rely, within 14 days. In that event, the first and second defendant may file and serve a responding submission within a further seven days, and the issue of costs will be determined on the papers unless any party notifies the Court in their submissions that an oral hearing is required.