Perception Investire Pty Ltd v Bassal Holdings Pty Ltd

1. [1]

   The plaintiff, Perception Investire Pty Ltd, seeks to enforce an option to buy from the defendants a commercial property in Campbelltown for $3.6 million (the Property). Neil Andrew Cato is the sole director of the plaintiff (a mortgage broker and real estate agent) (Ex PX 27; tr 9). The plaintiff seeks an alternative order that it is entitled to judgment in the amount of $407,832 in respect of loans allegedly advanced to the defendants pursuant to a loan agreement dated 8 January 2013.

2. [2]

   The defendants, Bassal Holdings Pty Ltd, Saxon Developments Pty Ltd and Mr Albert Bassal, are the registered proprietors as tenants in common of the Property, which is a two-storey commercial building (Ex PX 39-50).

3. [3]

   Albert Bassal (Albert) is the sole director of Saxon Developments and his son, Terry Bassal (Terry), is an alternate director of that company (Ex PX 31). Terry is the sole director of Bassal Holdings (Ex PX 36). Albert’s other son, Michael Bassal (Michael), was involved in (at least) one important meeting the subject of the dispute between the parties but was not and is not a director of Bassal Holdings or Saxon Developments.

4. [4]

   The defendants resist the plaintiff’s application to enforce the option principally on the basis that Albert, who signed the option for both Bassal Holdings and Saxon Developments, did not have authority to bind Bassal Holdings. The defendants contend that even if the plaintiff establishes the validity of the option, the Court would not exercise its discretion in the plaintiff’s favour because it has failed to establish that it was or is ready, willing and able to complete the purchase of the Property. The defendants deny that the plaintiff made loans to them. They claim that the amounts claimed by the plaintiff in debt were for payments of rent the plaintiff was obliged to pay for its occupancy of the Property from 2013 to 2015.

Background

1. [5]

   The plaintiff was incorporated on 1 August 2012 (Ex PX 27). On 15 August 2012 Mr Cato met with Albert at the Property and advised him that he had been working with some private investors from Singapore who might be interested in a joint venture to develop the Property.

2. [6]

   On 29 August 2012 the plaintiff entered into a Contract with the defendants to purchase the Property for $3.4 million. The execution page of the Contract was signed by Albert for himself and curiously for Bassal Holdings (of which he was not a director) and by Terry for Saxon Developments (of which he was an alternate director with Albert). Although there were continuing discussions between Mr Cato and Albert about the prospect of a joint venture (including at a meeting with the proposed overseas investors) to develop the Property, the plaintiff rescinded the Contract on 9 November 2012 because it could not obtain finance to complete the purchase at that time.

3. [7]

   It is apparent that when the defendants purchased the Property they financed it (at least in more recent years) by a loan from the National Australia Bank in the amount of $3 million. It is not in issue that on about 19 December 2012 Albert and Mr Cato had a conversation in the following terms:

4. [8]

   The conversation continued but the parties are at issue on its content. Mr Cato gave evidence that the following was said:

5. [9]

   Mr Cato’s reference to Dean was to Dean Alcorn, a former solicitor, who was advising the plaintiff and Mr Cato generally and in particular in relation to the Property. Mr Cato’s reference to Anthony was to Anthony Nixon, a director of the Nixon Group Pty Ltd, an investor in the plaintiff, and a person to whom Mr Cato referred as his “partner” in Perth.

6. [10]

   Albert claimed that in this conversation Mr Cato did not mention any loan. He claimed that the conversation continued as follows:

7. [11]

   Mr Cato gave affidavit evidence that he met with Albert in his office at Macarthur Law Group on about 8 January 2013 and they each signed a Loan Agreement between the defendants as “Borrower” and the plaintiff as “Financier”. Albert placed his initials, “A.B”, on each page and signed it for and on behalf of himself, Bassal Holdings as Sole Director/Secretary and Saxon Developments as Sole Director/Secretary. It was signed by Neil Cato as “Sole Director/Secretary” of the plaintiff (Ex PX 77-83). It has the date 8 January 2013 written on the top of the first page.

8. [12]

   The Loan Agreement provides relevantly:

9. [13]

   Albert denied that the Loan Agreement was signed in January 2013 in Mr Cato’s office. In his first affidavit (21 May 2015) Albert claimed that in late 2014 or early 2015 the plaintiff was 2 months in arrears and that he and Mr Cato went to the ANZ bank in Campbelltown. He claimed that Mr Cato paid him the sum of $30,000 “to bring the arrears up to date”, but before doing so said, “I need you to sign an acknowledgement of receiving this $30,000 for my partner”. Albert claimed that he responded, “No problem, I will sign”. He claimed that Mr Cato produced a document which he signed but did not read. In his second affidavit (30 June 2015) Albert gave a different version of events. He claimed that “in about February or March 2013” he had a conversation with Mr Cato in the following terms:

10. [14]

    In this affidavit Albert claimed that he met Mr Cato at the bank in Campbelltown at which time Mr Cato gave him $15,000 in cash and the other $15,000 was transferred into a bank account nominated by him. However Albert claimed that before this payment was made the following conversation occurred:

11. [15]

    In cross-examination Albert said that although he had initialled each page of the Loan Agreement he did not read it. He claimed that he signed the Loan Agreement without looking at it because he “knew the property was going to be sold in two/three weeks time” (tr 317). In further cross-examination Albert said that he did not understand the document to be a loan agreement (tr 318).

12. [16]

    In respect of his claim that the payment was for outstanding rent Albert accepted that there was no lease between the parties and gave the following evidence in cross-examination (tr 314; 319):

13. [17]

    Mr Cato denied that $30,000 was an advance rental payment or that he went to the ANZ bank in Campbelltown with Albert on 1 February 2013 (tr 33-35). Mr Cato claimed that he transferred the funds from the St George Bank to Albert’s nominated account after Mr Nixon transferred the funds to him in January 2013 (Ex PX 94).

14. [18]

    Mr Cato gave affidavit evidence that after he had departed from the meeting at which the Option Deed was signed (referred to below) on 1 February 2013 he received a telephone call from Albert in which the following conversation took place:

15. [19]

    Albert agreed that he made the telephone call to Mr Cato on 1 February 2013 but denied that the conversation was in the terms claimed by Mr Cato. He claimed that there was no mention of any loan and that the conversation was in the following terms:

16. [20]

    Neither party produced any bank records to support their respective claims of a transfer of these funds. Mr Cato prepared a schedule of what he referred to as “Costings” in which he recorded a “Loan Payment” of $30,000 on “1/01/2013”. Mr Cato said he started preparing the list sometime around April 2013 (tr 125). He was not cross-examined about the particular date “1/01/2013”. The list of “Costings” commences at 1 January 2013 and concludes on 26 February 2015. The total costings recorded by Mr Cato up to 26 February 2015 amount to $407,832, the amount claimed by the plaintiff in debt. The first time that Mr Cato records a payment of $15,000 is on 31 July 2013.

17. [21]

    On 1 February 2013 an Option Deed was signed at a meeting attended by Mr Cato, Mr Alcorn, Albert and Michael (Ex PX 148; 158; 216; 236). The Option Deed was between the defendants as “Owner” and the plaintiff as “Grantee”. It provides relevantly (Ex PX 52; Ex A; Ex B):

    1. (1)

       5.2 Owner executing Contract

    2. (2)

       The Contract is binding on the Owner and the Grantee even if the Owner does not comply on time with clause 5.1(c). The Grantee may not make any claim, requisition, delay completion, terminate or rescind the Contract because of that non-compliance.

    3. (3)

       …

18. [22]

    There is no issue that under cl 1.1 of the Option Deed the option was due to expire on 2 August 2014.

19. [23]

    Mr Alcorn prepared the Option Deed. Annexure A to the Option Deed was the Contract for the sale of the Property with a purchase price of $3.4 million. There is an issue as to what was actually annexed to the Option Deed at the time it was signed. There is no issue that the Contract that was annexed to the copy of the Deed annexed to Mr Cato’s affidavit of 12 May 2015 was not a complete contract. Indeed in its Statement of Claim the plaintiff seeks an order that the Contract in Annexure A to the Option Deed be rectified by including the full terms and conditions of the 2005 Edition of the Contract for sale of land. This issue is dealt with later in these reasons.

20. [24]

    The circumstances of the meeting at which the Option Deed was signed on 1 February 2013 are in dispute. Mr Cato claimed that there was a pre-arranged meeting at the defendants’ offices in Ingleburn (Ex PX 94; 148; tr 36; 172). His evidence was that the meeting was “comfortably” 40 minutes long. Mr Alcorn’s evidence was that the meeting lasted between one and three hours (tr 37; 170; 192-193; Ex PX 148).

21. [25]

    Albert claimed that the meeting was not planned. Rather he received a phone call from Mr Cato asking him to attend the Property. Albert claimed that half an hour later he and Michael attended the Property, Michael being present as Albert was giving him a lift to work. Albert’s evidence was that the meeting took place at Mr Cato’s office at the Property and lasted less than half an hour (Ex PX 216; 227; tr 278; 343; 419-420). Michael also claimed that the meeting took place at Mr Cato’s office at the Property (Ex PX 236; tr 527). There is no evidence that at this stage Mr Cato had an office at the Property.

22. [26]

    Mr Cato and Mr Alcorn gave evidence that Mr Alcorn explained the terms of the Option Deed to Albert (tr 40; 196-197). However Albert denied that there was any explanation of the document. His evidence was that he only understood the purchase price and the time period of the option (Ex PX 227; 236; tr 344-345).

23. [27]

    Albert signed the document for and on behalf of himself, as director of Saxon Developments and as director of Bassal Holdings. Albert initialled each of the pages on the body of the Deed before the annexures (tr 271). Albert’s signatures were witnessed by Mr Alcorn, who wrote the word “Sole” before “Director” beneath Albert’s signatures in respect of both companies and also wrote Albert’s name after he signed (tr 173) (referred to below). Albert claimed that he signed the Option Deed because he believed that the purchase was going to settle in two or three weeks’ time and “to get the thing moving” (tr 335; 345). In cross-examination Albert also said that he did not read the document or that if he read it he did not understand it much (tr 344).

24. [28]

    There is no issue that Terry, rather than Albert, was (and is) the sole director of Bassal Holdings. Neither Mr Cato nor Mr Alcorn obtained a company search. However Mr Cato assumed that Mr Alcorn had obtained a company search (tr 42; 183). Mr Cato accepted in cross-examination that on 1 February 2013 he knew that Terry was a director of Bassal Holdings and thought that Albert was “part of the company as well” (tr 42). Before the meeting he understood that Terry needed to sign the Option Deed (tr 43).

25. [29]

    Mr Cato claimed that the conversation at the meeting included the following:

26. [30]

    Albert claimed that the conversation at the meeting included the following:

27. [31]

    Albert claimed that there was no mention of Terry at any time during the discussions at this meeting. He claimed that he was under the impression that he, not Terry, was the sole shareholder and director/secretary of Bassal Holdings. He claimed that he only became aware that Terry was the sole director in about November 2014, the details of which are referred to below.

28. [32]

    Mr Cato was cross-examined about this meeting and his understanding of Terry’s status in Bassal Holdings. He agreed that he understood as at 1 February 2013 that Terry was a director and that Albert was “part of that company as well” (tr 42). He gave the following evidence in cross-examination (tr 43-45):

29. [33]

    Although it was suggested to Mr Cato that he deliberately pressed on knowing that Terry should have signed the Option Deed because he was fearful that if alerted to it Terry would not agree to an 18 month option for $1, he denied that this was so (tr 46-47).

30. [34]

    Mr Alcorn agreed that he had discussed his recollection of the location of the meeting with Mr Cato prior to giving evidence (tr 185). He agreed that Mr Cato raised a query as to where the meeting took place and they had a discussion about that topic (tr 186). He maintained that the meeting took place at the defendants’ offices in Ingleburn and not at the Property (tr 187). He maintained that the meeting took 2 to 3 hours and there was some discussion about general matters including Michael’s family law matter, the Property and what Mr Cato intended to do with it (tr 192). He denied that Mr Cato referred to any payments of “rent” and agreed that he knew at the time of the meeting that the defendants had significant interest payment obligations for a $3 million loan on the Property (tr 194-196). Mr Alcorn claimed that he asked where Terry was and that in response Albert said that he “could sign for all parties” (tr 197). He agreed that he was concerned that only Albert had turned up to sign the Option Deed and gave the following evidence in cross-examination (tr 198-200):

31. [35]

    Mr Alcorn was cross-examined about writing the word “Sole” in front of the word Director under Albert’s signatures for Bassal Holdings and Saxon Developments and gave the following evidence (tr 200-202):

32. [36]

    Albert was cross-examined about his signatures on the Option Deed as follows (tr 345-346):

33. [37]

    After Albert denied that Mr Alcorn had suggested that he take the Option Deed to his solicitors, Marsdens, before he signed it, Albert was shown his own affidavit in which he had given evidence that Mr Alcorn had asked him whether he was going to send the agreement to Marsdens Lawyers. Albert accepted that this was in his affidavit and gave the following evidence in cross-examination (tr 348):

34. [38]

    Albert’s affidavit evidence, denied by Mr Cato, was that soon after 1 February 2013 the plaintiff occupied 9 Lots of the Property and began paying rent of $15,000 per month. Albert’s evidence was that the plaintiff did not pay the full $15,000 per month initially and was almost always late in paying rent (Ex PX 158; tr 107; 219).

35. [39]

    Albert claimed that Mr Cato started to sub-lease parts of the Property sometime after 1 February 2013. He claimed that he recalled several businesses which were given sub-leases including a finance broker, a real estate agent and a photographer.

36. [40]

    Mr Cato claimed that on about 3 June 2013 he had a conversation with Albert in the following terms:

37. [41]

    The Property comprised 12 Lots. Previously a medical centre had occupied Lots 7 to 11, referred to as “single shop”. There was a supermarket in Lots 5 and 6 and by mid-June 2013 it is apparent that the previous businesses that occupied Lots 1 and 2 (a bodybuilding supplements shop) and Lots 3 and 4 (a fishing shop) had vacated. Mr Cato’s evidence was that in early June 2013 he commenced occupancy in the then vacant Lots that had been occupied by the medical centre (tr 10; Ex PX 96). He claimed that he undertook a “quasi site manager role” on the Property, for example, arranging for repairs and maintenance (tr 15-16).

38. [42]

    Mr Cato’s version of the time that he commenced occupancy is supported by the defendants’ solicitors’ letter of 7 May 2015 (referred to below) in which the defendants claimed that the plaintiff had been “in occupation of the Premises since about June 2013”.

39. [43]

    I am satisfied that the plaintiff did not take up occupancy in the Property until June 2013.

40. [44]

    On 18 June 2013 the plaintiff lodged a Caveat claiming an equitable interest in the Property relying on the Option Deed dated 1 February 2013 (Ex PX 25). On 4 May 2015 the defendants served a lapsing notice. On 27 May 2015 the operation of the Caveat was extended to 3 July 2015. On 6 July 2015 the operation of the Caveat was extended until further order.

41. [45]

    Neither party called any detailed evidence of what happened for the next 12 months. Mr Cato remained in occupancy of part of the Property and was apparently pursuing the overseas financiers. It is also apparent that Mr Cato, on the plaintiff’s behalf, was preparing to lodge the relevant application for the development of the Property.

42. [46]

    Mr Cato obviously suffered further delay in obtaining finance and/or agreement in respect of the proposed joint venture for the development of the Property and he made further approaches to Albert to discuss the future of the Property.

43. [47]

    In about April 2014 Albert travelled to Lebanon where he remained until September 2014 (tr 385; tr 20). He claimed that in April 2014, while he was in Lebanon, Mr Cato telephoned him and requested a 12 month extension to the option in exchange for $300,000. Albert claimed that he then obtained the fax number of a friend, Aristo Karam, and telephoned Mr Cato to provide that number to him (Ex PX 158). Mr Cato denied that this phone call took place (tr 60). His evidence was that on 2 July 2014 he telephoned Albert in Lebanon and the following conversation took place:

44. [48]

    Mr Cato claimed that it was in this conversation that he obtained Albert’s friend’s fax number (Ex PX 97; tr 20). On 3 July 2014 Mr Cato sent a fax to Albert in Lebanon consisting of a covering letter and a draft Deed (Ex PX 97; 159; tr 20; 61). The covering letter was in the following terms:

45. [49]

    The Deed (the Extension Deed) was between the defendants (referred to as “the Owner”) and the plaintiff (referred to as “the Grantee”) and was in the following terms:

46. [50]

    Albert claimed that after he received the fax on 3 July 2014 he signed the Deed on the line under which the words “Albert BASSAL” are typed and that his signature was witnessed by Aristo Karam at whose office the fax was received. He said that he did not sign in the other two places designated for signatures next to Bassal Holdings and Saxon Developments. Mr Karam witnessed his signature. Mr Karam attempted to send the Deed by fax to Mr Cato but Albert claimed that the fax did not go through.

47. [51]

    Although it was not detailed in his affidavit sworn on 12 August 2015, Mr Karam agreed in cross-examination (referred to below) that after the fax was sent on 3 July 2014, Albert took the original documents with him and left his office. He agreed that Albert returned to his office on 7 July 2014 because the fax that was sent on 3 July 2014 had apparently not been received by Mr Cato. In his affidavit Mr Karam claimed that Albert gave him an email address to which to send the document that he handed to him. Mr Karam said that he scanned the document and sent it to the email address that Albert had provided. Mr Karam claimed in his affidavit evidence that the document that he emailed had only one signature on it that he had witnessed.

48. [52]

    Mr Cato’s evidence was that he received the email from Mr Karam with an attachment that he annexed to his affidavit and described as a “true and complete copy of that email and annexure”. The annexure to the email annexed to Mr Cato’s affidavit was undated and included a signature next to Bassal Holdings and Saxon Developments without the name of that signatory being identified. That annexure included Albert’s signature above his name witnessed by a person identified as “Arisi Kefal” (the Kefal document).

49. [53]

    Albert claimed that Mr Cato telephoned at about this time and the following conversation took place:

50. [54]

    Albert claimed that after this telephone conversation with Mr Cato he put his signatures next to Bassal Holdings and Saxon Developments. He claimed that he left the document in Lebanon and after his return, he organised for it to be sent to him in Australia by courier. That original document became Exhibit 1 (the Karam document). There is no issue that all of the signatures on the Karam document (except for that of Mr Karam) are Albert’s signatures.

51. [55]

    It is not in issue that the signatures next to Bassal Holdings and Saxon Developments on the Kefal document that Mr Cato claimed he received by email are very different to Albert’s usual signature.

52. [56]

    On the fifth day of the hearing (10 November 2015) Mr Karam was called in the defendants’ case on Skype from Lebanon to be cross-examined on his affidavit. He was cross-examined as follows (tr 538-539):

53. [57]

    The plaintiff claims that the Kefal document was sent by Mr Karam to Mr Cato by email on 7 July 2014. The defendants claim that the signatures next to Bassal Holdings and Saxon Developments in the Kefal document are forgeries and that the witness Arisi Kefal is unknown to them.

54. [58]

    On a comparison of the Karam document with the Kefal document, it is clear that Albert’s signature on his own behalf is exactly identical in both documents. Whereas the signatures next to Bassal Holdings and Saxon Developments are different and the witness’ name and signature are clearly different. When cross-examined about these differences, Mr Cato gave evidence that they were “two different executed documents”. However he denied that he had received a document with only one signature on it. The plaintiff did not call any evidence of any attempts to identify Arisi Kefal. Both Mr Cato and Mr Alcorn denied that they had forged the signatures next to Bassal Holdings and Saxon Developments (tr 66-67; 244).

55. [59]

    On about 25 August 2014 Albert contacted Mr Cato and advised him that he had an interested Chinese buyer willing to pay $4 million for the Property. Mr Cato’s evidence was that he told Albert that the plaintiff was still buying the Property and he had just had “the Singapore bankers out to review and extend the facility”. He claimed that he informed Albert that he had invested close to one million dollars into the Property and “can’t not buy it”. According to Mr Cato, Albert suggested that he should consider increasing his offer. Mr Cato claimed that he responded by saying to Albert, “but we just agreed on an option extension to increase by $300,000 for 6 months”. Mr Cato claimed that Albert suggested that he should talk to Mr Nixon and Mr Alcorn and “get a better offer” and that he informed Albert that he didn’t like “your chances” but that he would speak to them and get back to him.

56. [60]

    Albert denied that he ever asked Mr Cato to speak to Mr Nixon or Mr Alcorn to increase the offer. He claimed that he informed Mr Cato that he had a Chinese buyer who was willing to settle very soon. He also claimed the following conversation took place at about this time:

57. [61]

    Both Mr Cato and Albert gave evidence of a conversation that occurred on 27 August 2014. Mr Cato claimed that Albert asked him whether he had spoken to Mr Nixon and Mr Alcorn about increasing the offer. Albert claimed that he merely asked Mr Cato whether he had spoken to Mr Alcorn about “what you want to do”. Mr Cato’s version of the conversation is as follows:

58. [62]

    Albert claimed that this conversation also included the following:

59. [63]

    Mr Cato claimed that on 1 September 2014 Albert visited him in his office and the following conversation took place:

60. [64]

    Albert denied that he discussed the new LEP or the DA or any architect with Mr Cato at this meeting. However he claimed that the conversation included the following:

61. [65]

    On 3 September 2014 Albert and Mr Cato had a conversation in the following terms:

62. [66]

    Albert gave evidence of telephoning Mr Cato many times during which conversations Mr Cato would inform him that he would be ready to settle soon and would pay the fees for the extension. However this never eventuated.

63. [67]

    Mr Cato claimed that on 9 September 2014 he and Mr Alcorn had a meeting with Albert at which the following conversation took place:

64. [68]

    Albert denies that this conversation occurred. He claimed that at this meeting he did not raise the issue of a joint venture. He claimed that the following conversation took place:

65. [69]

    Mr Cato claimed that on 16 September 2014 he had a telephone conversation with Albert in which the following was said:

66. [70]

    On 24 September 2014 the plaintiff received a letter from the defendants’ solicitors, Good Legal, dated 19 September 2014. That letter included the following (Ex PX 208-209):

67. [71]

    Albert’s evidence was that the reference in paragraph 5 of the letter, to Saxon Developments, was an error and should have been Bassal Holdings (Ex PX 162).

68. [72]

    In cross-examination Mr Cato accepted that he understood that in this letter the defendants’ solicitors were asserting that the Extension Deed had not been properly signed. He was cross-examined as follows (tr 95-98):

69. [73]

    None of Mr Cato’s affidavits contained any claim that he had provided a copy of the Extension Deed signed in three places to Albert prior to the commencement of the proceedings. I do not accept that this occurred.

70. [74]

    Mr Cato claimed that he had a telephone conversation with Albert on 25 September 2014 in which Albert informed him that Terry had been to the solicitor and that they were “going to get the new agreement for $3,700,000”. Mr Cato also claimed that Albert said, “we need to forget about the Option and increase like we discussed”. Mr Cato suggested that they should meet to discuss this matter and later on the same day Albert and Michael attended his office. There was discussion about the fact that Albert had not received any additional funds in particular the amounts referred to in the facsimile of 3 July 2014 sent to him in Lebanon. Mr Cato claimed that the following conversation took place:

71. [75]

    Mr Cato claimed that there was then further discussion in which Michael and Albert said they had a buyer for the Property with whom they were about to meet at the Property.

72. [76]

    Both Albert and Michael denied that this meeting took place. In response to Albert’s denial Mr Cato relied upon his affidavit of 2 July 2015 to which he annexed handwritten notes that he claimed he made of the conversations that took place at that meeting (and other meetings). Those notes reflect the conversations referred to above. When Mr Cato’s affidavit of 2 July 2015 was read, Mr Pritchard SC, for the defendants, had not had an opportunity to raise any objections as it was only provided to him on the day that it was sworn. However Mr Cato was cross-examined about those notes as follows (tr 106-107):

73. [77]

    In the circumstances Mr Pritchard then indicated that he would have to come back to the notes on another occasion (tr 107).

74. [78]

    When the matter resumed on 28 July 2015 the plaintiff advised that there were some recordings of the conversations that are the subject of the notes annexed to Mr Cato’s affidavit of 2 July 2015. An application was made to re-open the plaintiff’s case to prove the tapes and the transcriptions of them, it being apparent that the solicitors for the plaintiff were not aware of their existence until at least 2 July 2015. Ultimately the application to re-open was abandoned. There was no further cross-examination or any other evidence in respect of the notes annexed to Mr Cato’s affidavit of 2 July 2015.

75. [79]

    Albert’s evidence was that in early November 2014 Mr Cato offered to develop the Property with him in a joint venture. Albert said, “Okay, lodge the DA and then we talk” (Ex PX 164). On or about 1 November 2014 Mr Cato gave Albert a letter of authority to allow the plaintiff to lodge a Development Application with the Council (Ex PX 106; 224).

76. [80]

    On 3 November 2014 Albert attended a meeting with Mr Cato and Mr Alcorn. Mr Cato claimed that the following conversation took place:

77. [81]

    Albert denied that a conversation in these terms occurred. He claimed that the conversation included the following:

78. [82]

    Mr Cato claimed that later on 3 November 2014 Albert telephoned him and the following conversation took place:

79. [83]

    On 3 November 2014 the defendants’ solicitor wrote a letter to the plaintiff in the following terms:

80. [84]

    The plaintiff did not reply to this letter. In cross-examination Mr Cato said that the price of $3.7 million and the time of two weeks for exchange in the letter were not matters to which he had agreed (tr 101). He claimed in his affidavit of 26 May 2015 that on 4 November 2014 Albert telephoned him and the following conversation (which was denied by Albert) took place:

81. [85]

    On 6 November 2014 Albert attended Mr Cato’s office. Mr Cato suggested to Albert that there had been some confusion but that he wanted to buy the Property and had “sunk a lot of money into it”. There is no issue that Mr Cato informed Albert that the plaintiff was two weeks away from lodging the Development Application. He claimed that Albert said that he would help him with anything he needed and that he could get “Terry to sign provided we give him something”. He claimed that Albert also said that he would “look after [Terry], don’t worry”. Mr Cato’s evidence was that in this conversation Albert asked for $300,000 to give to the bank in exchange for another 6 months. Albert claimed that Mr Cato offered to pay the $300,000 (Ex PX 108; 225).

82. [86]

    On 11 November 2014 the defendants’ solicitors wrote to the plaintiff in respect of the Property in the following terms:

83. [87]

    The enclosed document was addressed to the General Manager of Campbelltown City Council and was dated 1 November 2014. It was signed by Terry as director of Bassal Holdings and Albert for himself and as director of Saxon Developments. It was in the following terms:

84. [88]

    Albert and Terry also signed another consent on 21 November 2014. It is apparent that no copy of the plan was ever produced to the defendants. Irrespective of whether that occurred there were certainly no plans for the development in evidence.

85. [89]

    Albert’s evidence was that he signed the consent on the basis that he might develop the Property with the plaintiff and Terry but not because he was legally bound to sign it (Ex PX 164).

86. [90]

    Terry’s evidence was that he met with Albert in November 2014 who advised him that the consent was to lodge a DA and that there was “potential for a JV”. Terry signed it and returned it to Albert. His evidence was that he never thought he was legally obliged to sign the consent (Ex PX 212). He claimed that he only became aware of the existence of the option in respect of the Property at this time (Ex PX 211). In cross-examination Terry gave evidence that he was waiting for someone to call him about a joint venture (tr 471-472). Terry denied advising Albert or Michael that he wanted a $3.7 million sale price (tr 487).

87. [91]

    On 24 April 2015 the defendants’ solicitors wrote to the Campbelltown City Council and the plaintiff giving notice that the defendants thereby revoked “all and any consent which they have given in relation to any Development Application” in respect of the Property.

88. [92]

    On 7 May 2015 the defendants’ solicitors wrote to the plaintiff in the following terms:

89. [93]

    On 12 May 2015 the defendants’ solicitors wrote to the plaintiff in the following terms:

90. [94]

    The plaintiff vacated the Property in May 2015.

Proceedings commenced

1. [95]

   The plaintiff commenced these proceedings by Summons filed on 14 May 2015. The Statement of Claim was filed on 30 June 2015 and the defendants’ Defences were filed on 1 July 2015.

2. [96]

   The matter was given an urgent hearing date by reason of the imminent expiry of the option under the Extension Deed. Mr MJ Gollan, of counsel, leading Mr AM Coombes, of counsel, appeared for the plaintiff. Mr DR Pritchard SC, leading Mr D Krochmalik and Mr A Macauley, of counsel, appeared for the defendants.

3. [97]

   For various reasons the proceedings could not conclude on 2 July 2015. Indeed the matter was heard on 28, 29 and 30 July 2015 and the parties then advised that they would need further time to complete the hearing. The further hearing of the matter took place on 10, 11 and 12 November 2015.

Purported exercise of Option

1. [98]

   On 31 July 2015 the plaintiff purported to exercise the option. It tendered a Notice of Exercise of Call Option, a Contract for the sale of the Property executed by the plaintiff and a cheque for the deposit in the amount of $36,000 (although the amount for the deposit on the Contract is $34,000). The defendants disputed the validity of the exercise of the option and did not bank the cheque. On 3 November 2015 the defendants filed a Cross Claim seeking a declaration that the exercise of the option was not valid. On 11 November 2015 the plaintiff filed a Defence to First Cross Claim.

Issues for determination

1. [99]

   In their Defence filed on 1 July 2015 the defendants denied that Bassal Holdings signed or authorised anyone to sign the Option Deed. The plaintiff did not file a Reply to the Defence. However the plaintiff’s Opening Submissions dated 1 July 2015 included the following contentions:

2. [100]

   The plaintiff did not make a claim in its pleading or its opening submissions that Albert had ostensible authority to sign the Option Deed for Bassal Holdings such as to estop the defendants from claiming that it was not executed by Bassal Holdings. However in closing oral submissions (there being no closing written submissions filed for the plaintiff) the plaintiff sought to claim that Albert had ostensible authority to sign the Option Deed (tr 577-578). However these submissions were made in support of the contentions that at various times in their “dealings” Bassal Holdings held Albert out as its agent.

3. [101]

   The first issue for determination is whether the Option Deed dated 1 February 2013 is valid. If it is not, that is the end of the plaintiff’s case for the enforcement of the option. If it is valid the next issue is whether the Extension Deed is valid. If it is not, that is the end of the plaintiff’s case for its enforcement. If it is valid there is an issue as to whether the plaintiff has exercised the option validly. Finally there is the issue of whether the plaintiff is ready, willing and able to purchase the Property.

4. [102]

   If the plaintiff fails in its case in respect of these issues, there is the issue of whether it is entitled to the entry of judgment in the amount claimed ($407,832).

Validity of the Option Deed

1. [103]

   Much was said and written in respect of the credibility and credit of the parties and their witnesses. Each side has criticised the other for not only inaccuracies in the evidence but also alleged false evidence. Indeed the defendants go so far as to allege that Mr Cato and/or Mr Alcorn forged signatures on the Kefal document. There is no doubt that there are problems in accepting the totality of the evidence of each of the parties and their witnesses. However it is necessary to determine a number of factual disputes.

2. [104]

   The first factual issue for determination is whether Albert advised Mr Cato and Mr Alcorn at the meeting on 1 February 2013 that he was authorised to sign the Option Deed for Bassal Holdings, a company of which he was not a director.

3. [105]

   It is necessary to determine whether at the meeting on 1 February 2013 Mr Cato said to Albert in Mr Alcorn’s presence that the option needed “Terry to sign” and that Albert responded by saying “that’s okay, I can sign for Terry, he is my partner”. Albert claimed there was no mention of Terry at any stage during that meeting. Michael was not cross-examined about whether Terry was mentioned during the meeting.

4. [106]

   Another matter that was discussed at the meeting was whether, at Mr Alcorn’s suggestion, Albert was to take the Option Deed to Marsdens Lawyers prior to signing it. Albert’s denial in the witness box that Mr Alcorn said this was most unimpressive having regard in particular to the fact that not only did each of Mr Cato, Mr Alcorn and Michael give evidence that it was said but also Albert had claimed in his own affidavit evidence that it was said.

5. [107]

   The fact that in cross-examination Albert would deny (quite firmly) that something was said when it clearly was said, does not mean that the whole of his evidence must be rejected. However it requires caution in accepting Albert’s evidence unless it is clearly preferable.

6. [108]

   On balance I accept Mr Cato’s evidence, and that of Mr Alcorn, on this aspect of the matter. I am satisfied that Mr Cato did ask whether it was necessary for Terry to sign the Option Deed and that Albert said that he could “sign for Terry”. The basis upon which Albert is said to have stated that he could “sign for Terry” was because Terry was his “partner”.

7. [109]

   An agent’s claim that he is authorised to sign a Deed will not be adequate to support a finding of actual authority: Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 at 466-467 [36]; Essington Investments Pty Ltd v Regency Property Pty Ltd [2004] NSWCA 375. However the plaintiff’s case is that it relied upon Albert’s representation together with the other surrounding circumstances referred to below.

8. [110]

   The plaintiff relied upon the previous history between the parties in which Albert had signed the Contract for the sale of the Property in August 2012 for Bassal Holdings even though he was not a director. There was no evidence to establish that Terry authorised Albert to sign the Contract for Bassal Holdings. Terry as an alternate director of Saxon Developments was entitled to sign the Contract, as he did, on behalf of Saxon Developments. There is no evidence that establishes that when Terry signed the Contract for Saxon Developments, Albert’s signature had already been placed on the document for Bassal Holdings. Terry’s evidence in cross-examination was that as at 29 August 2012 when the Contract was signed he was not aware that he was authorised to sign it on behalf of Saxon Developments as an alternate director (tr 512). When asked why he did not “correct” the Contract in respect of Albert’s signature for Bassal Holdings, he claimed that he did not look at the document carefully and that he did not see Albert’s signature. He claimed he attended the offices of his solicitors, Marsdens, and just signed the Contract where he was directed to sign (tr 513-514).

9. [111]

   Another aspect of the parties’ relationship upon which the plaintiff relied in support of the contention of Albert’s actual authority was the entry into and execution of the Loan Agreement on 8 January 2013. Once again Albert signed for himself, Saxon Developments and Bassal Holdings. The first issue for determination relevant to this aspect of the matter is whether I prefer Mr Cato’s claim that the Loan Agreement was executed prior to the Option Deed or Albert’s evidence that it was signed at the ANZ bank in Campbelltown in February or March 2013.

10. [112]

    It is clear that the defendants were under financial pressure from the Bank in respect of the mortgage payments on the Property and that this became more intense when the plaintiff rescinded the Contract in late November 2012. Notwithstanding that rescission, Albert was still treating with the plaintiff on the basis of a possible sale with the assistance of overseas investors and/or a possible joint venture to develop the Property. Indeed the terms of the Loan Agreement recognise the alternatives of the plaintiff purchasing the Property outright or entering into a joint venture with the defendants to develop the Property (cll 4.2 and 4.3).

11. [113]

    There is no issue that a conversation took place on 19 December 2012. The question is whether the loan was discussed at this time. At that time the parties were not contemplating that there would be a lengthy period between these discussions and the plaintiff being in a position to finance the purchase of the Property or a joint venture. The expectation that can be gleaned from both the Loan Agreement and the Option Deed (referred to below) was that at most it would be about 18 months before certainty was achieved. The Loan Agreement provides for repayment of $30,000 within six calendar months from the date of the document. There is no mention in the Loan Agreement of any funds being treated as rental. There is also no mention of any concept of rental in the Option Deed.

12. [114]

    It is peculiar that neither party sought to support their competing versions of events in respect of the loan with bank records. The only bank statement relied upon was for the period December 2014 to January 2015 for the purpose of showing that the mortgage amount remained at $3 million in that period. There is no question that $30,000 was advanced to Albert by Mr Cato. There is also no question that Albert informed Mr Cato in the conversation on 19 December 2012 that this was the amount that the defendants needed to pay the bank because it was “wanting money to be paid while we are waiting” for the Property to be sold. Mr Cato’s version of the conversation included the suggestion that he and Albert should make the $30,000 part of the deposit towards the purchase which was to be repaid if the purchase did not go through. This suggestion is reflected in the terms of the Loan Agreement. It is clear that in early January 2013 the parties were still negotiating in respect of the Property but had not finalised their agreement in respect of the option to be provided to the plaintiff. If the Loan Agreement had not been executed until after the Option Deed was executed it is reasonable to expect that cl 4.2 would have made reference to the purchase pursuant to the option. However there was no mention of the Option Deed in the Loan Agreement.

13. [115]

    Albert’s version of events in respect of the entry into the Loan Agreement changed between his first affidavit and his second affidavit. His first recollection was that he signed (but did not read) the Loan Agreement in late 2014 or early 2015. His second recollection was that he signed (but did not read) the Loan Agreement in February or March 2013. There was no explanation as to how the two different versions came about.

14. [116]

    I prefer Mr Cato’s evidence in respect of the entry into the Loan Agreement. I am satisfied that the Loan Agreement was executed on 8 January 2013 prior to the execution of the Option Deed.

15. [117]

    It was not suggested by the plaintiff or Mr Cato that there was any conversation about Albert’s capacity to sign the Loan Agreement on Bassal Holdings’ behalf. Albert maintained his claim that he did not read it. Terry gave affidavit evidence that he did not authorise Albert to sign “any document” on behalf of Bassal Holdings and that he was not aware that he had signed any document on behalf of Bassal Holdings. Terry was not cross-examined specifically about his knowledge of the existence of the Loan Agreement. Rather he was cross-examined about his understanding of how the mortgage payments were being met (tr 459; 496-497). He gave evidence that he was not aware at any stage that there were “any issues” about bills being paid including in respect of rates and electricity (tr 497). He claimed that he understood that the mortgage payments were being met by rental payments from tenants in the Property (tr 497).

16. [118]

    By the time the Option Deed was executed on 1 February 2013 Albert had signed both the Contract for the sale of land in August 2012 and the Loan Agreement on about 8 January 2013 for and on behalf of Bassal Holdings.

17. [119]

    The next issue for determination is whether Bassal Holdings held Albert out as its agent.

18. [120]

    The plaintiff relies on the fact of the execution (the Contract under the supervision of the defendants’ solicitors and the Loan Agreement in Mr Cato’s presence) as a holding out of Albert as an agent of Bassal Holdings. In this regard the plaintiff relied upon the statutory assumptions in the following provisions of Corporations Act 2001 (Cth) (the Act):

19. [121]

    Under these provisions of the Act the plaintiff was entitled to assume that if Bassal Holdings held Albert out as its agent, he had been duly appointed and had authority to exercise powers and perform duties customarily exercised or performed by that kind of agent of a similar company.

20. [122]

    The defendants submitted that there was no such holding out of Albert by Bassal Holdings within the relevant dealing as an agent authorised to execute the Option Deed on its behalf; and even if Bassal Holdings held Albert out as its agent, the authority that the plaintiff was entitled to assume that Albert had did not include authority to sign the Option Deed on its behalf because this did not fall within the powers exercised and duties performed by an agent of a similar company.

21. [123]

    The plaintiff contended that Terry’s evidence that he did not know that Albert had signed the Option Deed until November 2014 should be rejected. This contention is in part based on a conversation that Mr Cato alleged took place with Albert and Michael on 25 September 2014, referred to earlier, in which Michael informed Mr Cato that Terry had advised Albert that once the option lapsed he was not going to sign another option because he was not happy with the sale price of $3.4 million. It was contended that even if Terry had been unaware as at 1 February 2013 that Albert had signed the Option Deed on behalf of Bassal Holdings, this conversation suggests he was aware of it prior to August 2014 when the option was to expire.

22. [124]

    The plaintiff also relied upon the fact that Terry signed the consent letter addressed to the Campbelltown City Council dated 1 November 2014 on behalf of Bassal Holdings. The plaintiff contends that this consent was an aspect of Bassal Holdings’ obligation under clause 9.4 of the Option Deed (as extended) to “consent to all applications, give all information and sign all documents reasonably required” by the plaintiff to enable any development application to be made to the Council. The plaintiff also relied upon the additional consent that was signed by Terry on 21 November 2014. It was submitted that if, as Terry claims, he knew nothing about the option and/or Albert was not authorised to act as Bassal Holdings’ agent and to bind it to the option, then Terry would not have signed these consents.

23. [125]

    The plaintiff also relied upon Terry’s evidence in respect of his business relationship with Albert. Although there appears to have been a falling out between Terry and Albert in 2010 and for some years thereafter, it would appear from Terry’s evidence that he left quite a lot of the management of his business affairs to Albert.

24. [126]

    The defendants submitted that Albert did not have actual authority to execute either the Option Deed or the Extension Deed. It was submitted that he could not have had such authority because both of those documents are Deeds; Albert was not a director of Bassal Holdings; for a principal to empower an agent to execute a Deed on its behalf, the conferral of power must itself be contained in a Deed; and there is no Deed executed by Bassal Holdings conferring upon Albert authority to execute any Deed on its behalf. In this regard the defendants relied upon MYT Engineering Pty Ltd v Mulcon Pty Ltd (1997) 25 ACSR 78 at 92; and Torrens Re-Development & Research Pty Ltd v Oakworth Developments Pty Ltd [2008] NSWSC 1096; (2008) 13 BPR 25,501 at [34].

25. [127]

    The defendants emphasised that Mr Cato accepted that he relied on Albert’s statement on 1 February 2013 that he could “sign for Terry” in assessing the position as to whether he had authority to bind Bassal Holdings. Mr Alcorn gave similar evidence. The defendants submitted that this evidence, coupled with the fact that neither Mr Cato, nor any other person connected with the plaintiff, ever met Terry or had any dealings with him at this time, supports the conclusion that Albert was not held out by Bassal Holdings as its agent. In addition the defendants contended that it is inappropriate to resort to later conduct, for example, the provision of the Development Application consent, to determine this issue.

26. [128]

    The defendants also submitted that even if these submissions are not accepted, Albert’s mere signing of the Contract in August 2012 is insufficient to constitute a holding out by Bassal Holdings of Albert as a duly appointed agent. This conduct was in respect of a prior dealing that had taken place months before the Option Deed was executed. It was submitted that the distance in time and the difference in dealing are insufficient to sustain the relevant holding out of agency. It was also contended that it has not been established that Albert’s execution of the Contract in August 2012 occurred with Terry’s consent or knowledge. Terry’s evidence, referred to earlier, was that he simply signed the Contract where he was directed to sign it by his solicitors. He did not recall seeing Albert’s signature on the document next to Bassal Holdings.

27. [129]

    The defendants’ submissions have force. I am satisfied that at the time Terry signed the consent for the Development Application, the discussions between Mr Cato and Albert had revolved around the possibility of a joint venture between the plaintiff and the defendants. There had already been a letter from the defendants’ solicitors advising that Bassal Holdings had not executed the Option Deed. I am satisfied that Terry’s consent was to enable plans to go forward with a prospect of a joint venture between the plaintiff and the defendants in due course. I am not satisfied that it establishes that Bassal Holdings held Albert out as its agent to bind it to the option. Although the plaintiff had been assisting the defendants with meeting the mortgage payments to the Bank, there was never any real proposal for the plaintiff to settle the purchase of the Property. I accept Albert’s evidence in which he claimed that he had complained to Mr Cato on a number of occasions about the plaintiff’s delay. By the time Terry signed the consent to the Development Application it had been two years since the plaintiff had rescinded the Contract. I am satisfied that the defendants were willing to explore a possible joint venture with the plaintiff. However I am not satisfied that Terry’s consent to the Development Application establishes that Albert was held out by Bassal Holdings as its agent. Nor am I satisfied that this consent proves that Terry was aware and somehow endorsed the granting of the option or its extension to the plaintiff.

28. [130]

    The defendants also contended that, in any event, the plaintiff has failed to demonstrate that an agent of a similar company would have had authority to execute a document such as the Option Deed. It was submitted that because the plaintiff seeks to avail itself of the assumption in s 129(3)(b) it was incumbent upon it to prove what powers and duties would be exercised and performed by an agent of a similar company.

29. [131]

    It was submitted that even if Albert was the managing director of Bassal Holdings it is doubtful whether his implied actual authority would encompass executing a document of such importance to Bassal Holdings and effecting a transaction that was outside its ordinary trading operations: Hightime Investments Pty Ltd v Adamus Resources Ltd [2012] WASC 295 at [151]-[153]. A director’s normal power is to bind the company only by joining with other directors in a collective resolution of the board of directors: Northside Developments Pty Ltd v Registrar General (1990) 170 CLR 146 at 205; Junker v Hepburn [2010] NSWSC 88 at [48].

30. [132]

    The defendants submitted that it is important to identify the relevant “dealing with a company” in respect of which s 128(1) of the Act permits a person to make the assumptions in s 129 of the Act. Dealings extend to negotiations and other steps in relation to a contemplated transaction: Soyfer v Earlmaze Pty Ltd [2000] NSWSC 1068 at [82] per Hodgson CJ in Eq. The defendants also submitted that the identification of the relevant dealing is important because the prohibition in s 128(1) of the Act on a company challenging an assumption made under s 129 is restricted to the relevant dealing. In support of that proposition the defendants relied upon Esperance Cattle Company Pty Ltd v Granite Hill Pty Ltd [2014] WASC 279; (2014) 102 ACSR 255 at [391] per Martin CJ. An appeal from that case was heard on 21-23 September 2015. The decision is still pending. In addition the defendants emphasised that the document relied upon must arise from the relevant dealing: Soyfer v Earlmaze Pty Ltd at [82].

31. [133]

    The defendants submitted that the relevant dealing with respect to the Option Deed only includes the negotiations and discussions leading up to its execution; and does not encompass the discussion surrounding the failed Contract for sale in August 2012 because this was “an entirely different dealing” that resulted in a completely separate Contract that was later rescinded. Nor, for similar reasons, did it include the Loan Agreement. It was contended that, at best, Albert held himself out as having the authority to bind Bassal Holdings. However the statutory presumptions do not apply where the agent, rather than the company, makes the relevant representation about authority. The question is whether a person with actual authority to bind the principal made the relevant representation that the agent had authority to bind the principal: NCR Australia Pty Ltd v Credit Connection Pty Ltd [2004] NSWSC 1 at [136].

32. [134]

    Even assuming that the “dealings”, as that expression in s 128(1) is to be understood, included the 2012 Contract for the sale of the Property and the 2013 Loan Agreement, I am not satisfied that the conduct relied upon amounts to Bassal Holdings holding Albert out as its agent for the purpose of executing the Option Deed. The Option Deed was a different commercial transaction altogether. It locked the defendants in for a further 18 months in a rising market to sell the Property at the same purchase price negotiated in August 2012 for a fee of $1. It was not within Albert’s capacity to hold himself out as Bassal Holdings’ agent. That was a matter for the company itself. There was no such act by Bassal Holdings at the time of the execution of the Option Deed by which Albert was held out as its agent. No mention was made of the Contract or the Loan Agreement during the meeting on 1 February 2013. It was not suggested that the fact of Albert’s signatures on those documents was in the contemplation of the parties at this time. Rather it was accepted by the plaintiff and by Mr Alcorn that reliance was placed upon what Albert said at the meeting rather than on any previous conduct in the parties’ other dealings.

33. [135]

    In the circumstances the plaintiff was not entitled to make the assumptions in s 129(3) of the Act.

34. [136]

    Although it is not necessary I should deal with the submissions in relation to s 128(4) of the Act which prevents a person from making the relevant assumption if at the time of the “dealings” they knew or suspected that the assumption was incorrect. The relevant time to determine whether such knowledge or suspicion was present is at the time of the dealing. Thus being put on notice after the event is not a sufficient basis for the assumption: Correa v Whittingham [2013] NSWCA 263; (2013) 278 FLR 310 at [127]-[128] per Gleeson JA (Barrett JA and Tobias AJA agreeing). A failure to inquire even where a reasonably prudent person would have done so is not enough to prove that a person had the knowledge or suspicion: Errichetti Holdings Pty Ltd v Western Plaza Hotel Corporation Pty Ltd [2006] WASC 113; (2006) 201 FLR 192 at [74]. Rather there has to be the identification of a positive feeling of actual misapprehension or mistrust: Correa v Whittingham at [160]-[161].

35. [137]

    The defendants submitted that the Court can safely infer from the evidence that Mr Cato knew, or at least suspected, that Albert did not have authority to sign for Bassal Holdings at the time he executed the Option Deed. In this regard the defendants referred to Mr Cato’s evidence that: prior to the execution of the Deed he was aware that Terry was involved with the Property and was a director of Bassal Holdings; he thought it was necessary for Terry to sign the Option Deed; he expected Terry to be present at the meeting at which the Option Deed was to be signed; Mr Alcorn similarly expected Terry to be present; and that he understood Terry was required to sign the Option Deed. The defendants relied in particular upon the following evidence given by Mr Alcorn (tr 200):

36. [138]

    The defendants also relied in this regard on the following further evidence of Mr Alcorn (tr 213-215):

37. [139]

    The defendants submitted that the combined weight of the evidence of Mr Cato and Mr Alcorn negatives Mr Cato’s denials that he knew or at least suspected that Albert was not authorised to sign the Option Deed on behalf of Bassal Holdings. It was submitted that a finding should be made that the plaintiff harboured at the very least an actual suspicion that Albert was not authorised to act on behalf of both Saxon Developments and Bassal Holdings and that Terry’s presence, acceptance of and signature to the Option Deed and the Extension Deed were necessary. In making this submission the defendants also emphasised that Mr Cato was an experienced mortgage broker sufficiently involved in commercial and residential property and the sourcing of appropriate finance to understand the importance of proper documentation.

38. [140]

    The fact that Mr Alcorn was apparently concerned that Albert take the Option Deed to his solicitor does not mean that he harboured a suspicion that Albert was not authorised to sign. It is but a factor to be taken into account in considering this aspect of the matter.

39. [141]

    On balance I am not satisfied that the plaintiff has proved the requisite knowledge or suspicion under s 128(4) of the Act. If a finding had been made that the plaintiff was entitled to make the assumption under s 129(3) of the Act I am not satisfied that it would have been so precluded under s 128(4) of the Act.

40. [142]

    Torrens Re-Development & Research Pty Ltd v Oakworth Developments Pty Ltd was a case in which the plaintiff, Torrens, sought an order for specific performance of a contract said to arise upon the exercise of an option to put the property to the defendant, Oakworth. The sole director of Torrens, Mr Witham, had moved interstate and asked his solicitor, Mr Beckers, to become a director so that the company’s documents could be conveniently executed. Although the solicitor was reticent about taking up that position he said that he would be prepared to assist but would like to be removed as soon as possible. Mr Witham took the view that because of Mr Beckers’ reticence he would not appoint him as a director. Rather the company passed a resolution that “for practical reasons, the Board authorised Mr Heinz Beckers to execute the Put and Call Option Agreement on behalf of the Board”.

41. [143]

    Mr Beckers believed that he had been appointed as a director of the plaintiff. The option deed between Torrens and Oakworth was dated 7 October 2004 and was signed by Mr Beckers. The deed included the words “EXECUTED AS A DEED”. The deed as executed by Torrens as vendor included the words “Executed by the vendor by authority of the board H Beckers (signature) H Beckers Director”.

42. [144]

    In referring to the relevant authorities (Black v Smallwood (1966) 117 CLR 52 and MYT Engineering Pty Ltd v Mulcon Pty Ltd (1999) 195 CLR 636) in which the distinction between a contract signed by a person as agent for a company and a contract signed by a company itself authenticated by the signature of appropriate officers was made clear, Windeyer J said at [30]:

43. [145]

    Windeyer J also referred to the general rule at common law that appeared to have been accepted as correct by the High Court in MYT Engineering Pty Ltd v Mulcon Pty Ltd that “where an agent was authorised by a principal to execute a deed on behalf of the principal the authority must be under seal, that is by deed” (at [34]).

44. [146]

    The Option Deed was not signed by Bassal Holdings. It follows that there was no binding contract between the parties. The Option Deed is invalid.

45. [147]

    The plaintiff contended that even if the Option Deed is not valid because it was not executed by Bassal Holdings, an order should be made that Albert and Saxon Developments are bound as tenants in common to convey two-thirds of the Property to the plaintiff. In this regard the plaintiff relied upon the following passage of Basma v Weekes [1950] 2 All ER 146 at 152-153:

46. [148]

    The plaintiff submitted that at all times Albert had evinced an intention to grant the Option both on his own behalf and that of Saxon Developments.

47. [149]

    The defendants dealt with this claim in written submissions dated 16 November 2015. It was submitted that there is a crucial point of distinction between the facts in Basma v Weekes and the present case. In Basma v Weekes each of the respondents who were ordered to specifically perform the contract had agreed to sell their interest in the property in return for an aliquot share of a total purchase price of £1,900. It is evident that each of those respondents was taken to have intended to be immediately bound to sell their interest in the property. By comparison, in the present case what was proposed was that an option be granted to the plaintiff to purchase the entirety of the Property. Such a proposal required the consent of each of the defendants. Unlike in Basma v Weekes the total consideration payable for the Property was not expressed to be divided up between each of the defendants. All documents necessary for the exercise of the option were required to be sent to Bassal Holdings and it was submitted that this signified that it was not intended to be binding if only Albert and Saxon Developments executed the document. Clause 9.4 required all the defendants to consent to all applications if so requested by the plaintiff. The numerous consents referred to could only be provided by all of the owners of the Property, signifying that the Option Deed was only to take effect if all owners agreed to its terms.

48. [150]

    It was submitted that if no option was granted or extended by reason of the absence of execution or consent on behalf of Bassal Holdings (or in respect of the Extension Deed, both Bassal Holdings and Saxon Developments) the decision in Basma v Weekes is of no utility. It was submitted that if there is no option, no enforceable contract could have come into existence when the plaintiff purported to exercise the option on 31 July 2015.

49. [151]

    The defendants contended that the evidence all points one way. The Option Deed and the Contract in Annexure A did not contemplate an arrangement whereby the plaintiff was granted separate options to acquire each of the defendants’ respective shares in the Property. Rather the parties intended that there would be a single option granted by all the owners of the Property to the plaintiff to acquire the entirety of the Property.

50. [152]

    In circumstances where one of the co-owners of the Property, Bassal Holdings, never contracted to grant an option, the parties did not intend a binding agreement in the form of the Option Deed. The defendants submitted that the present case is analogous to the circumstances in 400 George Street (Qld) v BG International Ltd [2010] QCA 245; [2012] 2 Qd R 302. In that case the first and second appellants were the registered owners of the land. The third and fourth appellants agreed with the first and second appellants to construct a building on the land and were responsible for introducing potential tenants. The respondent was a tenant. In the process of the negotiations between the appellants and the respondent, the respondent executed a lease in the form of a deed and returned it to the appellants’ solicitors. One of the appellants delayed in executing the deed and the respondent purported to withdraw the agreement. Notwithstanding that an action was brought by the appellants to enforce the deed, it was unsuccessful because it was evident that the deed was not intended to have legal effect until all parties executed it (at [56]-[57]).

51. [153]

    It was submitted that the same reasoning applies to the present case and the irresistible conclusion is that the Option Deed is only to have effect if all the grantors of the option were bound and this did not occur.

52. [154]

    Basma v Weekes was distinguished in Martinez v Rowland [1983] 1 Qd R 496. In that case a rural property of approximately 100 acres at Gatton was owned by three plaintiffs as tenants in common. The defendant, as purchaser, signed the contract for sale and delivered it to the plaintiffs’ agent. However only one of the plaintiffs signed the contract indicating that if certain conditions were fulfilled the expectation was that the other co-owners would also sign the contract. The defendant brought a specific performance suit against the plaintiffs. That suit failed. Thomas J said at 502:

53. [155]

    The Property in the present case consists of commercial Lots that are owned by the defendants as tenants in common. The very nature of the Property militates against any intention by the parties to sell only part of the Property. This is particularly so where it is proposed that the Property be developed.

54. [156]

    I am not satisfied that Basma v Weekes provides any assistance to the plaintiff in the present proceedings.

55. [157]

    Although I have found that the Option Deed is invalid I will deal with the defendants’ claim that, in any event, it is void for uncertainty. The Option Deed provides for the plaintiff to purchase the Property in accordance with the Contract in Annexure A to the Deed. The Contract annexed to the copy of the Option Deed that was retained by Albert contains neither the ordinary conditions in the standard contract nor the documents required by s 52A of the Conveyancing Act 1919 and cl 4 and sch 1 of the Conveyancing (Sale of Land) Regulation 2010. That was the form of the copy of the Option Deed that Mr Cato annexed to his affidavit sworn on 12 May 2015.

56. [158]

    Albert claimed that the only document that was provided to him for signature was a document in the form of Exhibit B. Exhibit B was initialled by Mr Cato on each page of the body of the Deed. There were no initials on Annexure A to that Deed. However it is clear that Annexure A (containing the front sheet, two pages of the standard conditions and three pages of Special Conditions) was attached to the Option Deed and given to Albert. The copy that was annexed to Mr Cato’s affidavit, in the same form as Exhibit B (except that Annexure A also included a property search of Lot 1 of the Property), had Albert’s initials on each page of the body of the Deed with his signatures on the execution page. There were no initials on the Annexure A to that Deed.

57. [159]

    The plaintiff made a claim in the Statement of Claim filed on 30 June 2015 for the rectification of the Option Deed to include the full copy of the 2005 Edition of the Contract for sale of land. If the Option Deed as executed was in the form of Exhibit B and the annexure to Mr Cato’s affidavit of 12 May 2015, there is no issue that the Option Deed would be void for uncertainty. However notwithstanding that Mr Cato claimed in his affidavit that this was a “true and complete copy” of the Deed between the parties, this matter developed during the trial when Mr Alcorn gave his evidence.

58. [160]

    Mr Alcorn’s affidavit evidence addressed the circumstances of the meeting on 1 February 2013 and the discussions that took place in respect of the Option Deed. Mr Alcorn did not annex a copy of the Option Deed to his affidavit. Rather he claimed that in late January 2013 he “prepared the Call Option (as defined in the Affidavit of Neil Andrew Cato (“Cato”) filed in these proceedings) on behalf of the plaintiff”. That definition was of course a reference to the copy of the Deed that was annexed to Mr Cato’s affidavit which was in the form identical to Exhibit B (but for the addition of the property search). Mr Alcorn’s affidavit evidence was that at the conclusion of the meeting the “parties then signed the Call Option and it was exchanged and dated 1 February 2013”.

59. [161]

    During his cross-examination on 28 July 2015 Mr Alcorn was shown a copy of the Option Deed (at page 51 of Ex PX) that was annexed to Mr Cato’s affidavit, to which Mr Alcorn had referred in his affidavit. He gave the following evidence (tr 181-182):

60. [162]

    On 29 July 2015 the plaintiff was granted leave to elicit further evidence-in-chief from Mr Alcorn. It was at this stage that Mr Alcorn was shown a document which became Exhibit A that he described as “a complete copy of the call option that was signed by the parties on 1 February 2013” (tr 206). Exhibit A has annexed to it the additional pages of the 2005 Edition Contract for the sale of land (pages 2a to 12) and the various other documents to which Mr Alcorn had referred in his evidence the previous day. It is markedly much thicker than Exhibit B and the document annexed to Mr Cato’s affidavit. Exhibit A was initialled by Albert on each page of the body of the Deed and signed by him at the foot of the execution pages, next to his own name and that of Bassal Holdings and Saxon Developments. None of the annexures were initialled by him.

61. [163]

    Albert claimed in his evidence-in-chief that he did not see a document as thick as Exhibit A when he signed the Option Deed on 1 February 2013. However he said that “maybe” there was a draft Contract for sale annexed to it (tr 269). Mr Cato had already completed his evidence at the time Mr Alcorn gave his evidence and although recalled on another topic later in the trial, he was not asked about Exhibit A.

62. [164]

    The defendants’ claim that the Option Deed is void for uncertainty depends upon the absence from the Deed of the full version of the Contract for the sale of land. Exhibit A was produced late and there was no evidence of where the document came from or who held it at the time that it was produced to the Court. It is clear that the plaintiff did not understand at the time that it commenced these proceedings that there was anything additional to the Option Deed than that which appeared in the annexure to Mr Cato’s affidavit in (almost) identical form to that in Exhibit B. This conclusion is supported by the fact that the plaintiff sought rectification of the Option Deed to include the balance of the documents that are found in Exhibit A produced on 29 July 2015 on the second day of Mr Alcorn’s evidence.

63. [165]

    The defendants submitted that Mr Alcorn’s evidence that Exhibit A was the document signed by the parties on 1 February 2013 should be rejected. They relied upon Mr Cato’s evidence in paragraph 9 of his affidavit sworn on 12 May 2015 in which he referred to the annexed copy of the Option Deed (in a form almost identical to Ex B) as a “true and complete copy of a Call Option Deed dated 1 February 2013”. This claim was in fact repeated in paragraph 14 of Mr Cato’s affidavit sworn on 26 May 2015.

64. [166]

    Mr Alcorn was not asked to explain how it could be that both Mr Cato and Albert claimed that the Option Deed that they exchanged and were given could be so different to Exhibit A. There was no evidence at all about where Exhibit A was kept since 1 February 2013 when it was supposedly presented for execution. There was no suggestion by Mr Alcorn that he had provided only partial copies of the Option Deed to the parties. Nor was there any explanation by him as to how he could have adopted Mr Cato’s evidence that the annexure to his affidavit was a true and complete copy of the Option Deed.

65. [167]

    It is all very well to surmise that the parties might have been given only a partial copy of the Deed. The difficulties that exist in accepting the evidence of any of the relevant witnesses makes the determination of this issue all the more complex. On balance I am not satisfied that I should prefer Mr Alcorn’s evidence over that of Mr Cato and Albert in the absence of the evidence referred to above. I am satisfied that the parties exchanged the Option Deed in the form of Exhibit B and that attached to Mr Cato’s affidavit and not Exhibit A.

66. [168]

    It was accepted that if the parties only exchanged the Deed in the form of Exhibit B and that attached to Mr Cato’s affidavit, the Option Deed is void for uncertainty.

67. [169]

    It is true that there is no ratification pleaded by the plaintiff in its Statement of Claim. The defendants submitted that even if consideration were to be given to such a claim the mere signing of the consent to lodge a Development Application cannot be an act of ratification as it neither referred to nor accepted the entry into the Option Deed or the Extension Deed. The plaintiff did not establish that Terry had ever seen or been provided with a copy of the Option Deed or the Extension Deed. It was contended that Terry’s signature on the consent was equally consistent with his evidence that there were commercial negotiations between Albert and the plaintiff regarding a possible joint venture agreement to develop the Property which were completely independent of the existence of the Option Deed and the Extension Deed. I agree.

68. [170]

    I am not satisfied that the plaintiff has made out any claim of ratification.

The Extension Deed

1. [171]

   Notwithstanding that I have found that the Option Deed is invalid I will deal with the submissions in relation to the validity of the Extension Deed. The defendants contend that the Extension Deed was not executed by Albert for and on behalf of Saxon Developments or Bassal Holdings. The defendants contend that: Albert only signed the Extension Deed next to his own name and the other two signatures are not his; neither Mr Cato nor Mr Alcorn had any idea as to how the two different documents (the Karam document and the Kefal document) came into existence; Mr Karam’s evidence that he witnessed only one of Albert’s signatures should be accepted; the plaintiff had an opportunity to lead evidence of the forensic analysis of a computer to establish the veracity of what was or was not received from Lebanon and did not do so; Mr Cato acknowledged that he made subsequent alterations to the document received from Lebanon by inserting the date and Albert’s name (referred to below); Mr Cato did not proffer a copy of the Extension Deed to Albert when it was suggested that the option had expired; and at no time prior to the commencement of proceedings was there an undisputed contemporaneous communication by the plaintiff to the defendants asserting a binding Extension Deed.

2. [172]

   The defendants relied generally upon Mr Alcorn’s prior conduct as a solicitor which resulted in a criminal conviction and a term in prison and a removal from the roll of solicitors: Prothonotary of the Supreme Court of NSW v Alcorn [2007] NSWCA 288; Alcorn v Regina [2006] NSWCCA 209.

3. [173]

   The defendants made an attack on Mr Cato’s and Mr Alcorn’s credit on a number of fronts. These attacks were made to support the submission that Mr Cato’s evidence that he received the Kefal document from Albert on 7 July 2014 should be rejected. It was submitted that Mr Cato was shown to be capable of deception, an example of which was his claim about his commercial relationship with Mr Alcorn both to a third party and in his evidence in the proceedings.

4. [174]

   Mr Cato gave evidence that he did not pay Mr Alcorn for his services in relation to the preparation of the documents relating to the Property. He also gave evidence that Mr Alcorn was not financially interested in the project to develop the Property (tr 76). He was then cross-examined as follows (tr 76):

5. [175]

   Mr Cato was then shown a series of emails (Ex 2) in which he suggested to Mr Alcorn that he was going to answer a particular question raised by a design contractor (Jason Duda) on the basis that Mr Alcorn had “been involved in our project as a small equity owner from day one”. He was then cross-examined on this statement as follows (tr 77-78):

6. [176]

   Mr Alcorn’s evidence was that he had a 5% interest in the profits from the development of the Property (tr 179-180).

7. [177]

   The defendants also pointed to a series of claims that Mr Cato made in his evidence that were shown to be wrong. There is no doubt that some of the claims made by Mr Cato (as referred to in paragraph 19 of the defendants’ closing submissions) were in error. The defendants also submitted that Mr Cato failed to make obvious concessions when it was appropriate to do so. An example of this was in respect of whether the terms of the Option Deed were very favourable to the plaintiff. His evidence in this regard was as follows (tr 40-41):

8. [178]

   The complexity of the relationship between Mr Cato and Mr Alcorn was caused in part by the fact that Mr Alcorn had spent some time in prison for fraudulent conduct and had been struck off the roll of legal practitioners in respect of that same conduct. Mr Alcorn was therefore not in a position to provide legal services to Mr Cato or the plaintiff. Notwithstanding this impediment Mr Alcorn was shown to have described himself on LinkedIn as “Independent Legal Services Professional” in “Sydney Area, Australia”. He described his skills as including “Legal Advice” (Ex 5). Mr Alcorn was shown this document and cross-examined as follows (tr 231):

9. [179]

   Mr Alcorn was then asked about his understanding of the presumption to be made from the use of certain titles and descriptions including lawyer, legal practitioner, barrister, solicitor and attorney (tr 231-232). He was cross-examined further as follows (tr 232):

10. [180]

    Mr Cato admitted to writing Albert’s name on the Kefal document he claimed he received from Lebanon on 7 July 2014. That admission was only made in his third affidavit dated 2 July 2015. No mention was made of these changes in his first two affidavits. Mr Cato’s evidence in respect of the Kefal document was curious. The first copy of the Kefal document was annexed to his first affidavit and marked “NAC4”. It included the handwriting “7th” and “July” at the beginning of the Deed so that it read “7th day of July 2014”. Albert’s name was also handwritten in two places. In his second affidavit Mr Cato claimed that he sent a fax to Albert on 3 July 2014 enclosing the draft Deed (“NAC103”). That document had the typewritten date “7th day of July 2014” and was unsigned (which appeared at page 120 of Ex PX). He also annexed another document “NAC104” that he claimed he received from Albert on 7 July 2014 (the Kefal document) which did not have a date on it, was purportedly signed by Albert for himself, Saxon Developments and Bassal Holdings but without identification of the signatories (which appeared at page 124 of Ex PX).

11. [181]

    He was asked questions about the unsigned document with the typewritten date (7th day of July 2014), which appeared at page 120 of Exhibit PX, as follows:

12. [182]

    Mr Cato went on to give evidence that the reason he backdated that document was because Mr Alcorn asked him to provide a dated agreement (tr 74). He also gave evidence that the reason he wrote Albert’s name under the signature next to Bassal Holdings and Saxon Developments was because Mr Alcorn asked him to do so (tr 75). Mr Alcorn denied instructing Mr Cato to make these changes to the document (tr 237-240).

13. [183]

    It was submitted that a finding should be made that the Extension Deed delivered by Mr Karam by email did not contain Albert’s signature next to Bassal Holdings or Saxon Developments and there was never a valid extension of the Option Deed. The defendants submitted that although it was not “strictly necessary” to do so, it would be open to find that the signatures next to Bassal Holdings and Saxon Developments were forgeries committed by Mr Cato or by Mr Cato with the assistance of Mr Alcorn.

14. [184]

    I am satisfied that Terry was not aware that Albert had signed the Option Deed for Bassal Holdings until after the meeting on 1 February 2013. The evidence does not enable a precise finding of when Terry became aware of the option. However it would appear that it was before its expiry in July 2014. There was no evidence to establish whether Terry ever became aware of the Extension Deed until at least the solicitors commenced their communications in September 2014. It is quite telling that the plaintiff did not provide Albert with the Kefal document when it was alleged that it had not been signed by Bassal Holdings (or Saxon Developments). It is true that there was no expert handwriting evidence called. However the parties accepted that the signatures in the Kefal document next to Saxon Developments and Bassal Holdings do not appear to be the same as Albert’s usual signature. Although there are some serious questions about the genuineness of the Kefal document it is not necessary to determine whether it is a forgery. Even assuming that Albert signed the Kefal document for himself, Bassal Holdings and Saxon Developments as claimed by the plaintiff, the same problem of a lack of authority to sign for Bassal Holdings arises.

15. [185]

    For the reasons given in respect of the Option Deed I am satisfied that the Extension Deed was not valid. The fact that Albert signed the Karam document that he left in Lebanon does not assist the plaintiff. Once again Albert signed on behalf of Bassal Holdings and was not authorised to do so. In any event that Deed was never delivered to the plaintiff.

Option not validly exercised

1. [186]

   In the circumstances of the findings that the Option Deed and the Extension Deed are not valid it is unnecessary to deal in detail with the defendants’ Cross Claim that the option was not validly exercised.

2. [187]

   The principles governing the exercise of options were recently helpfully considered by Darke J in Haixing Group Pty Ltd v Chan [2015] NSWSC 1637 at [21]-[27]. An important aspect of those principles relevant to the present case is that the exercise of the option must express clearly and unequivocally the fact that this is what is intended; there must be strict adherence to the method subscribed; and the conditions for the exercise of the option must be precisely fulfilled. The exercise of options or the “world of options” has been described as a “cold hard world”: Thomas Developments Pty Ltd v Setlee Pty Ltd [2002] NSWSC 816; (2002) 11 BPR 20,495 at [21].

3. [188]

   On 31 July 2015 the plaintiff purported to exercise the option by serving a Notice of Exercise of Call Option and providing a bank cheque dated 31 July 2015 in the sum of $36,000 together with a signed Contract for sale.

4. [189]

   The Notice referred only to the option and not to the extended option. The cheque that was tendered for the deposit was in the amount of $36,000 (instead of $34,000). The executed sale Contract refers to the sale price of the Property as $3.4 million. Mr Cato accepted that the new sale price in accordance with the communication of 3 July 2014 was $3.6 million, even though Albert claimed that it was $3.7 million. In any event the sale price of $3.4 million was wrong. Although the cheque was $2,000 more than the required deposit I am not satisfied that this is a significant matter. However the sale price was clearly wrong.

5. [190]

   The requirements for exercise of the option were a precondition of a contract of sale for the Property coming into existence. Those conditions were not met and the contract did not arise.

6. [191]

   The defendants claimed that in any event the plaintiff has not established that it was ready, willing and able to purchase the Property. Certainly the completion date under the Contract that was served at the time of the purported exercise of the Option as extended has passed. The plaintiff has not paid any amounts to the defendants referred to in the fax of 3 July 2014. Even if it is accepted that those amounts were to be part of the purchase price, the Contract that was served did not reflect such an increase to $3.6 million, albeit that the deposit tendered was $36,000.

7. [192]

   In response to the defendants’ claim in this regard the plaintiff relied upon the evidence of Maxwell Gavin Nixon, Anthony Nixon’s father. Mr Nixon gave evidence that he was at 31 July 2015 and on the date that he gave his evidence ready, willing and able to provide funding of approximately $1 million to the plaintiff for the purposes of its purchase of the Property.

8. [193]

   The plaintiff also relied upon the evidence of a mortgage broker, Jason Luke, who gave evidence that he had made inquiries with various lenders including ANZ and NAB to ascertain the prospect of the plaintiff obtaining finance from them. Mr Luke’s evidence did not establish that any institution had made any offer to lend funds to the plaintiff. Mr Cato was re-called to give evidence on this issue and he agreed in cross-examination that he was not, as at 11 November 2015, in a position to proffer a cheque for the balance of the purchase price on that day (tr 574).

9. [194]

   The plaintiff also relied upon a letter from Chifley Securities dated 18 June 2015 entitled “Offer of Finance” (Ex J). That was an offer of a loan of $3.5 million for a term of 12 months with an additional 12 months “rollover” subject to terms. The terms and conditions of the offer were that the plaintiff was to accept it by returning it to Chifley Securities together with $19,250 (the due diligence fee) and $10,000 (the valuation fee). There is no evidence that this offer was accepted by the plaintiff.

10. [195]

    The availability of the relief of specific performance of the Contract depends upon the ability of the plaintiff to pay the purchase price. However that price did not become payable until the completion date of the contract: Bahr v Nicolay (1988) 164 CLR 604. On balance it may be that given time and the satisfaction of a number of conditions the plaintiff may have been ready, willing and able to purchase the Property. However it has not shown that it was able to do so at the completion date of the Contract that it served on 31 July 2015.

Claim in debt

1. [196]

   The plaintiff having failed in respect of its claim for specific performance or enforcement of the option seeks the entry of judgment for the loan moneys allegedly advanced to the defendants pursuant to the Loan Agreement dated 8 January 2013.

2. [197]

   The defendants relied upon the fact that the plaintiff failed to tender any bank statements to submit that the inference should be drawn that such evidence would not have assisted the plaintiff: Jones v Dunkel (1959) 101 CLR 298; Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; (2011) 243 CLR 361 at 385 [64]. As observed earlier, this is a peculiar aspect of the case that neither party resorted to any bank records to propound their respective claims; the plaintiff claiming the moneys were by way of loan and the defendants claiming that the moneys were either rental or licence fees. The defendants submitted that Mr Cato’s evidence in relation to the telephone conversation on the afternoon of 1 February 2013 about the Loan Agreement should be rejected. It was contended that it is entirely commercially implausible that the defendants would tie up the Property and permit the plaintiff to occupy it without paying any rent or licence fees. Prima facie that submission may be attractive. However the relationship between these parties was complex. Albert claimed in his affidavit that Mr Cato informed him about two months after December 2012 that the plaintiff was happy to take occupation of the Property and pay $15,000 “each month until we settle; which will be very soon”. The plaintiff only occupied part of the Property and did not do so until mid-2013. However I accept that the plaintiff made payments to the defendants well prior to that time.

3. [198]

   I have no doubt that Albert anticipated that the plaintiff would be in a position to settle the Property at an earlier time than the expiry of the period of 18 months. Mr Cato was constantly indicating that there were bankers from Singapore, investors from overseas and a capacity in the plaintiff to either purchase the Property outright or pursue a joint venture in the not too distant future. Notwithstanding the absence of bank records and taking into account the commercial oddity of providing the plaintiff with what must be seen as a very favourable arrangement, I am satisfied that the conversation in relation to the Loan Agreement took place on the afternoon of 1 February 2013 as Mr Cato claimed. Pursuant to that conversation and to the arrangements reached in mid-2013 the plaintiff was permitted to occupy the Property on the basis that: it paid the mortgage payments by way of loan in accordance with the Loan Agreement to be brought to account as part of the purchase moneys if and when the purchase occurred; and if it did not proceed then these moneys would be repaid to the plaintiff.

4. [199]

   The defendants did not suggest that payments had not been made. In their written submissions they acknowledged that “some moneys were received” but disputed the quantum. In cross-examination Mr Cato described the Schedule upon which the plaintiff relied for the quantum of the debt as “a record of our accounts on an ongoing basis” (tr 125). He produced only four documents purporting to be receipts of payments: one dated 8 May 2014 for $2,000 described as the “Balance of Interest Contribution”; another dated 8 September 2014 for $5,000 described as “Deposit” and “Balance of funds for Sept NAB”; another dated 28 January 2015 for $5,000 described simply as “cash”; and one dated 16 February 2015 for $15,000 referred to as “a loan” (Ex 3 and 4). These receipts were reflected in the Schedule, albeit that the relevant September receipt was dated 4 September 2014. There was no mention in any of the receipts of any rental or licence fees. Albert did not give any evidence-in-chief about these receipts, nor was he cross-examined about them.

5. [200]

   The Loan Agreement was signed by Albert for each of the defendants. Each of the defendants took the benefit of the payments made by the plaintiff to the extent that they were not required to pay the interest payments on the loan that each had taken out jointly with NAB. However the plaintiff has not established that Bassal Holdings was a party to the Loan Agreement or the conversation on the afternoon of 1 February 2013. Albert did not have authority to bind it and there is no evidence to establish that Terry, as the sole director of Bassal Holdings, authorised the Loan Agreement generally or in its specific terms. As referred to earlier Terry understood that the mortgage payments were being met by the rental payments received from various tenants in the Property.

6. [201]

   Although the Loan Agreement required repayment on the Repayment Date, I am satisfied from the discussions on 1 February 2013 between Albert and Mr Cato that it was intended that if the plaintiff did not purchase the Property or enter into a joint venture with the defendants to develop the Property, the borrowers would repay the amounts loaned to them by the plaintiff within a reasonable period from any demand after the plaintiff has failed to purchase the Property.

7. [202]

   Although the defendants have been critical of the plaintiff’s Schedule I am satisfied in all the circumstances that the amount claimed in that Schedule reflects the amounts paid by the plaintiff.

8. [203]

   I am satisfied that in the circumstances of the plaintiff not purchasing the Property and there being no joint venture agreement in place, Albert and Saxon Developments are liable to pay the plaintiff the amount of $407,832 as claimed.

Conclusion

1. [204]

   The plaintiff’s claims in respect of the Option Deed dated 1 February 2013 and the Extension Deed of July 2014 are dismissed. The plaintiff is entitled to the entry of judgment against Albert and Saxon Developments in the amount of $407,832. Having regard to the finding that the option was invalid it is appropriate that the defendants’ Cross Claim be dismissed.

Orders

1. [205]

   The following orders are made:

   1. (1)

      Enter judgment for the plaintiff against the second and third defendants in the amount of $407,832.

   2. (2)

      The plaintiff’s claims are otherwise dismissed.

   3. (3)

      The defendants’ Cross Claim is dismissed.

   4. (4)

      The matter is listed on 4 February 2016 at 10.00 am to finalise any outstanding questions of interest and costs.