The Property Investors Alliance Pty Ltd v C88 Project Pty Ltd (in liq)

1. [1]

   WHITE JA: This is an appeal from orders of the Equity Division (Rees J) dismissing claims by the appellant that it is entitled to an equitable charge over certain units in a development known as “The Somerset” to secure moneys owing to it pursuant to an agency agreement called a “Sole Agency Agreement” under which the appellant acted as agent for the respondent to sell units in the development. The appellant also sought rectification of a provision in the Sole Agency Agreement relating to the definition of “Commission” and “commission entitlement” to which the provisions in the Sole Agency Agreement said to have given rise to the equitable charge referred (The Property Investors Alliance Pty Ltd v C88 Project Pty Ltd (in liq) [2022] NSWSC 1081).

2. [2]

   The appellant carries on business as a real estate agent. Between 2015 and 2019, it entered into a number of agency agreements with the respondent for the sale of apartments in the Somerset situated at Carlingford. The primary judge recorded that the appellant had sold 317 apartments in the development and had received some $10 million in commission but remained owed some $18 million (at [1]). The respondent was a special purpose vehicle incorporated by Dyldam Developments Pty Ltd (“Dyldam”) for the purpose of developing the Somerset. It is now in liquidation.

3. [3]

   On 13 September 2021, summary judgment was given for the appellant for the amount of outstanding commission in the sum of $18,055,076.20 plus interest (The Property Investors Alliance Pty Ltd v C88 Project Pty Ltd [2021] NSWSC 1175). The respondent was placed into external administration on 14 April 2022 and, on 31 May 2022, a meeting of creditors resolved that it be wound up.

4. [4]

   The appellant claims that it is entitled to an equitable charge over 27 specified lots in the development to secure its claimed entitlement to commission. It relies upon the following clauses of the Sole Agency Agreement that it entered into with the respondent on 20 April 2018:

5. [5]

   The appellant put its case for the existence of an equitable charge on two bases. The first, was that cll 12.15 and 12.16 contained an express equitable charge. Alternatively, it submitted that cll 12.9, 12.10 and 12.11 created a charge in its favour by implication.

6. [6]

   Whatever the proper characterisation of those provisions, they protect the Agent’s right to “Commission” or its “commission entitlement”. Clause 1.1(g) includes the following definitions:

7. [7]

   “Agency Lots” is defined as follows:

8. [8]

   The schedule to the Sole Agency Agreement contained a list of 34 Agency Lots and the respective MSPs (Minimum Selling Prices) for each Agency Lot. By a later agreement, additional apartments in the development were added to the definition of Agency Lots.

9. [9]

   The effect of the definition of Commission was that even if cll 12.9 - 12.11, 12.15 and 12.16 conferred on the appellant the rights of an equitable chargee, the only debt secured by the charge would be for any commission earned from the sale of the listed Agency Lots.

10. [10]

    At the time the Sole Agency Agreement was entered into, the appellant was owed $3,203,862 in outstanding commissions in relation to the sale of other apartments in the Somerset development, which had settled. It also had a contingent entitlement to substantial further commissions that would be payable on completion of the sale of apartments where contracts had been exchanged but not yet settled. As at 20 April 2018 the appellant had effected the unconditional exchange of 295 lots within the Development.

11. [11]

    The Sole Agency Agreement of 20 April 2018 was the third written agreement entered into between the parties in relation to the development. In 2015, the parties entered into an “Exclusive Agency Agreement” for a term of four months. That agreement was replaced by a further “Exclusive Agency Agreement” on 21 May 2015. The terms of those agreements are not directly relevant to this appeal. They are summarised in the reasons of the primary judge at [17]-[26].

12. [12]

    The sole director of the appellant is Mr Yue (Justin) Wang. The primary judge accepted his evidence. He deposed that, in or around the end of March or early April 2018, the respondent wanted the appellant to sell unsold units in the Somerset, including some unsold units the subject of the second Exclusive Agency Agreement, under a new Sole Agency Agreement. (We were informed that the difference between the two forms of agreements is that, under an exclusive agency agreement, an agent has the right to sell a property even to the exclusion of the vendor. Thus, the agent would be entitled to commission even if the vendor, and not the agent, were the effective cause of the sale. Under a Sole Agency Agreement, the agent would not be so entitled to commission if the vendor were the effective cause of the sale.)

13. [13]

    The earlier Exclusive Agency Agreement of 21 May 2015 had not included provisions to the same effect as cll 12.9, 12.10, and 12.11. It did include provisions to the same effect as cll 12.15 and 12.16.

14. [14]

    Mr Wang’s evidence, referred to below, was to the effect that cll 12.9, 12.10, and 12.11 were introduced because of his concern about the delay in payment of outstanding commission for several developments including, but not limited to, units in the Somerset. Mr Wang gave evidence that it was his intention that he needed a right to caveat to protect the appellant’s whole commission for the whole project. It was not until he received legal advice that he learnt that the definition of Commission was confined to the commission to be derived from the sale of each Agency Lot, being the lots specified in the Agency Lot Schedule attached to the Sole Agency Agreement (as subsequently amended when additional lots were added). The primary judge recorded (at [46]) that, as drafted, the caveat provisions applied to protect the Agent’s Commission on the 34 apartments only (being Commission of some $641,000), rather than all unpaid commission. The appellant sought an order for rectification of the definition of “Commission” so that the definition reads as follows:

15. [15]

    The primary judge correctly observed that, before construing the Sole Agency Agreement to determine whether it gave rise to an equitable charge, it was necessary to identify the true terms of the agreement to be construed. Hence, the primary judge dealt with the appellant’s claim for rectification first (at [70]).

Rectification

1. [16]

   The appellant relied upon the evidence of Mr Wang. He deposed to discussions that he had primarily with Mr Sam Fayad, whom he understood to be one of the owners of Dyldam. Mr Fayad was a director of the respondent. The other directors of the respondent were a Mr Joseph Khattar and his wife, Ms Chahida Khattar.

2. [17]

   By 20 April 2018, the appellant had introduced purchasers who had exchanged unconditional contracts for the purchase off-the-plan of 295 lots. Around March 2018, when the South, East and West buildings of the Somerset were nearly ready for settlement, Mr Fayad called Mr Wang. Mr Wang deposed that they had a conversation to the following effect:

3. [18]

   He deposed that Chahida Khattar called him around the same time and they had a conversation to a similar effect of the conversation to which he deposed he had with Mr Fayad.

4. [19]

   Mr Wang agreed to Mr Fayad’s request and received only 3.3% of the contract price towards payment of its commission on sales of units in the East, West and South buildings. The respondent admitted the appellant’s allegation that, at the date of the entry into the Sole Agency Agreement, the amount of commission unpaid that was owing under the former Exclusive Agency Agreement amounted to $3,203,862. [1]

5. [20]

   Mr Wang deposed to having had further conversations with Mr Fayad concerning delays in payment of commission in several developments to the following effect:

6. [21]

   He deposed that he and Mr Fayad agreed to change the commission rate to 5.5% for further sales on the sole agency basis and there was a further discussion with Mr Fayad as follows:

7. [22]

   The primary judge found that it was not clear whether Mr Fayad’s quoted “OK” expressed agreement to Mr Wang’s request or simply acknowledged the changes which Mr Wang wished to make to the agency agreement. Her Honour favoured the latter characterisation on the basis that Mr Wang and Mr Fayad continued to negotiate about the inclusion of the caveat clauses when they next spoke (at [32]).

8. [23]

   Nonetheless, Mr Fayad had already expressed agreement to the appellant’s having “protection” for its outstanding commission on units it had already sold, either by recourse to the deposits it held as stakeholder, or by the use of caveats.

9. [24]

   At some point, and the evidence did not reveal precisely when, the respondent sent to the appellant a schedule of the Agency Lots that were to be the subject of the Sole Agency Agreement. Mr Wang or his staff prepared a Sole Agency Agreement that incorporated the caveat clauses 12.9, 12.10, and 12.11 quoted above. Mr Wang deposed that he had a further discussion with Mr Fayad in around early April 2018 to the following effect:

10. [25]

    After this conversation, Mr Wang and Mr Fayad signed the Sole Agency Agreement for their respective companies. It was signed on or about 20 April 2018.

11. [26]

    The appellant’s claim to rectify the definition of “Commission” or “commission entitlements” was based upon its claim that it was the parties’ common intention that the provisions which it contended gave rise to an equitable charge would secure its entitlement to past commissions and not merely the commissions to be earned from the sale of the Agency Lots specified in the Schedule. No claim was advanced for the rectification of the instrument on the ground of the appellant’s unilateral mistake, that is, on the basis that the respondent had deliberately set out to ensure that the appellant did not become aware of the existence of the mistake (Taylor v Johnson (1983) 151 CLR 422 at 432-3; [1983] HCA 5).

12. [27]

    Mr Fayad did not give evidence. The appellant submitted at trial and on appeal that an inference should be drawn favourable to the appellant on the principles in Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 arising from his failure to do so.

13. [28]

    The primary judge rejected this submission on the basis that, by the time of the trial, the respondent was in liquidation and Mr Fayad could not be described as “in the camp” of the respondent that was then being administered by the liquidator merely by reason of his having been a director of the company (at [6]).

14. [29]

    There was evidence from the solicitors retained by the liquidator as to their unavailing attempts to try to contact Mr Fayad to ascertain whether he would be willing to give evidence (at [8]).

15. [30]

    The primary judge’s reasoning is challenged by ground 3 of the Notice of Appeal which contends that the primary judge erred in declining to draw an inference that any evidence given by Mr Fayad or Ms Chahida Khattar, who also did not give evidence, would not have assisted the respondent.

16. [31]

    The hearing of the trial commenced on 23 June 2022. Administrators had been appointed to the respondent on 14 April 2022.

17. [32]

    Mr Wang’s affidavit, parts of which have been quoted above, was filed on 12 October 2021. The primary judge recorded that the respondent had first been ordered to put on its evidence by 25 February 2022 and recorded the liquidator’s submission that that order had been varied to require its evidence to be served by 28 March 2022 (at [5]).

18. [33]

    That submission was not an accurate description of the relevant orders. On 9 December 2021, Ball J ordered that the appellant file and serve any further evidence in chief on which it intended to rely in respect of the “equitable charge and judicial sale relief” by 28 January 2022 and that the respondent file and serve any evidence in reply by 25 February 2022.

19. [34]

    On 24 January 2022, the appellant’s solicitors advised the respondent they had served their evidence, save for valuation evidence, which was outstanding. This, they said, was partly due to the Christmas and New Year holiday period and also because the respondent was yet to provide keys for access to certain units. On 31 January 2022, Hammerschlag J made the following orders:

20. [35]

    Any evidence Mr Fayad could have given was due to have been served by 25 February 2022.

21. [36]

    The respondent’s then-solicitors filed a notice of ceasing to act on 25 March 2022.

22. [37]

    The primary judge’s reasons for not drawing a Jones v Dunkel inference from the respondent’s failure to serve an affidavit by Mr Fayad after the appointment of administrators did not address its failure to have served an affidavit from Mr Fayad prior to 25 February 2022. That failure was unexplained.

23. [38]

    The primary judge drew an inference “generally adversely to the agent” arising from its failure to adduce documentary evidence which might have been expected to be brought forward to support its case for rectification (at [11]). The primary judge recorded that the liquidator submitted that an adverse inference should be drawn from the agent’s failure to adduce any corroborative documents of anything that was said, in particular, “the email or cover letter by which the agent sent the Sole Agency Agreement to C88” (at [9], [11]).

24. [39]

    It would have been open to either party to tender any email or covering letter accompanying the draft of the Sole Agency Agreement, assuming that there was such an email or letter and, after a lapse of three years or more, it was still preserved. It was not suggested to Mr Wang in his cross-examination that he had made a file note of his conversations with Mr Fayad.

25. [40]

    The primary judge referred (at [11]) to the absence of any drafts or notes created in the course of preparing the agreement and observed that this was a little surprising in light of the quantity of apartments to be sold and the quantum of the appellant’s anticipated commission.

26. [41]

    The Sole Agency Agreement was not prepared by the appellant’s solicitor, a Mr Cheung. From about 2009 or the end of 2010, Mr Cheung provided templates of a form of agency agreement or agreements for the appellant’s use. He prepared the caveat provisions, cll 12.9,12.10, and 12.11, in one of those templates in, he believed, 2011 or 2012 or thereabouts. Mr Wang or one of his staff used a template document that had earlier been provided by Mr Cheung in preparing the Sole Agency Agreement.

27. [42]

    The primary judge referred to the relevant legal principles concerning rectification of written instruments, noting in particular the requirement of clear and convincing proof that the parties had a common intention concerning their agreement which is not reflected in the written instrument (Fowler v Fowler (1859) 4 De G & J 250 at 265; 45 ER 97 at 103; Australian Gypsum Ltd v Hume Steel Ltd (1930) 45 CLR 54; [1930] HCA 38; Crane v Hegeman-Harris Co Inc [1939] 1 All ER 662 at 664-5; Joscelyne v Nissen [1970] 2 QB 86 at 98; Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336 at 349; [1973] HCA 23; Pukallus v Cameron (1982) 180 CLR 447 at 452; [1982] HCA 63; Simic v New South Wales Land and Housing Corporation (2016) 260 CLR 85; [2016] HCA 47 at [41]) .

28. [43]

    The primary judge accepted Mr Wang’s evidence as to the terms of the conversations he had with Mr Fayad (at [78]). Her Honour accepted Mr Wang’s evidence as to his intention and understanding at the time (at [88]), which was that he understood that the provisions providing for the entitlement of the appellant to lodge caveats on the properties in the development would include protection for the appellant in relation to commissions which were then owing to it by the respondent, and for commissions in relation to properties in that development which had already been sold by the appellant. The primary judge was not satisfied that that was also Mr Fayad’s intention. In relation to the conversation quoted at [17] above her Honour said that it was not entirely clear whether Mr Fayad’s agreement at the time to the lodgement of caveats depended upon its becoming clear that the deposits for stage 4 would not be enough to pay unpaid commission from stages 1, 2 and 3 and, in any event, his consent to the lodgement of caveats was qualified by his request to “…please make sure your caveat will not affect our sale and settlement” (at [79]).

29. [44]

    These reservations did not address the issue whether recourse to the deposits, or the protection envisaged by the lodgement of caveats, would apply to arrears of commission.

30. [45]

    In relation to the conversation deposed to by Mr Wang in paragraph 18 of his affidavit, quoted at [20] above, the primary judge observed that it was unclear whether Mr Fayad had in mind that the agent would be paid all outstanding commissions in respect of the Somerset when the North building was sold, or whether this means of payment would extend to commissions owing to the agent in respect of other developments (at [80]). That is true, but the conversation at least established that Mr Fayad was promising to pay all outstanding commissions in respect of the Somerset development. It was in that context that the discussions about caveats, which were the subject of the next conversation to which Mr Wang deposed, took place. That conversation is quoted at [21] above and, as noted at [22] above, the primary judge found in respect of it (at [32]) that Mr Fayad’s “OK” should be understood as merely acknowledging Mr Wang’s request for the addition of a caveat clause in the agency agreement to provide security for significant amounts owing to the appellant in Somerset rather than voicing agreement with it.

31. [46]

    Mr Fayad ultimately did accede to the inclusion of cll 12.9, 12.10 and 12.11 in the Sole Agency Agreement and could not have been in doubt that those clauses were requested by Mr Wang so as to provide security for arrears of commission.

32. [47]

    The primary judge observed (at [84]) that, if the caveat clauses were taken straight from Mr Cheung’s template without amendment, then it is unsurprising that they did not address the problem of arrears in commission. Her Honour observed that, as unpaid commissions then exceeded $3 million, it might have been a matter on which Mr Cheung’s assistance would have been sought. Mr Cheung’s unchallenged evidence was that his assistance was not sought. Her Honour said:

33. [48]

    With respect, this reasoning is difficult to follow given her Honour’s finding that it was Mr Wang’s intention and understanding that the caveats would secure arrears of commission. If there were any such notes or drafts, and there was no evidence that there were, they would only have been adverse to the appellant’s claim if an amendment to the definition of Commission had been drafted but then rejected. But that would have been inconsistent with Mr Wang’s intention. The primary judge accepted Mr Wang’s evidence of his intention. The existence of such notes or drafts could not be relevant to the respondent’s intention.

34. [49]

    In rejecting the rectification claim, the primary judge also had regard to evidence of a conversation to which Mr Wang deposed that he had with Mr Fayad in August 2019. Mr Wang deposed:

35. [50]

    The primary judge said that if there were a common intention that a caveat lodged under the Sole Agency Agreement secured commissions payable prior to entry into that agreement, it would not have been necessary for Mr Wang to ask the question “what is the security for PIA?” (at [89]).

36. [51]

    But Mr Wang’s questions were only relevant to his understanding as to whether the caveat provisions applied to arrears of commission. They were not relevant to Mr Fayad’s understanding. The primary judge accepted that Mr Wang’s intention and understanding was that the caveats did secure commission in respect of arrears of commission (at [88]). The respondent’s notice of contention does not challenge that finding. Mr Fayad’s acknowledgement that the appellant could place a caveat on the units, but his request not to do so at that time, in the context of the conversation which related to recovery of arrears, was confirmatory of Mr Fayad’s intention that arrears of commission would be secured by the caveat provisions.

37. [52]

    The appellant has not sought rectification of cll 12.9, 12.10, or 12.11, so Mr Fayad’s intentions as to what those provisions were intended to achieve is not relevant. But if cll 12.9, 12.10, and 12.11 do imply the grant of an equitable charge to secure the payment of commission, Mr Fayad’s statement as recounted by Mr Wang is confirmatory of Mr Fayad having the intention that arrears of commission would be secured by those provisions.

38. [53]

    The Sole Agency Agreement included an “Whole Agreement” clause in the following terms:

39. [54]

    This clause does not preclude the availability of rectification (MacDonald v Shinko Australia Pty Ltd [1999] 2 Qd R 152 at 155-6). But it is relevant to whether Mr Wang’s or Mr Fayad’s dominant intention was to be bound by the document as worded.

40. [55]

    Mr Wang’s evidence was that he probably did not read the clause, which was part of the template which he believed was there to protect him, and had “no impression [that] I particularly paid attention for this clause when I prepared the Sole Agency Agreement…I [am] confident that this, this is all good for us” (at [83]). The primary judge accepted Mr Wang as a witness of credit.

41. [56]

    The primary judge found:

42. [57]

    The reasoning that the terms of the document were tolerably clear must be a reference to a reading of the caveat clauses which were the subject of the negotiations with their reference to the defined term “Commission”.

43. [58]

    In Bush v National Australia Bank Ltd (1992) 35 NSWLR 390, Hodgson J (as his Honour then was) dealt with the position where a party both intends to give effect to the document as worded, but also intends to enter into a transaction which has a different effect from that for which the document provides. His Honour said at 407 that, in those circumstances, rectification will be available if the intention to achieve a legal effect, which is not the true legal effect of the words used, is clearly predominant over the intention to give the effect of the document as it is worded.

44. [59]

    A fair inference is that Mr Fayad had the same intention as Mr Wang that the caveat provisions would provide “protection” not only in respect of commissions to be earned from the sale of the Agency Lots listed in the Schedule, but for arrears of commission. That had been the subject of their negotiations.

45. [60]

    A second possibility is that Mr Fayad had that intention but also intended to give effect to the document as worded.

46. [61]

    A third possibility is that Mr Fayad either read the terms of the document, or was advised on the terms of the document, and either believed, or was advised, that the effect of the document, as worded, was that the caveat provisions would only give “protection” for commissions to be derived from the sale of the Agency Lots listed in the Schedule and not for arrears of commission.

47. [62]

    Mr Wang and Mr Fayad had done business together since 2009, when the appellant was first engaged to market and sell a development conducted by a special purpose vehicle of Dyldam’s in Castle Hill. From about 2014, the appellant was Dyldam’s principal external selling agent. It should not lightly be inferred that Mr Fayad, knowing Mr Wang’s purpose in including the new caveat provisions in the Sole Agency Agreement, would have signed the agreement knowing that the agreement as worded did not provide protection in respect of arrears of commission and kept silent. If Mr Fayad had given evidence to that effect, it might have been anticipated that the appellant would have submitted that it was entitled to rectification on the ground of its own mistake known to the respondent, who had deliberately set out to ensure that it did not become aware of the existence of the mistake.

48. [63]

    The respondent submitted that no adverse Jones v Dunkel inference should be drawn against it because Mr Wang had not given evidence concerning the respondent’s intention other than what could be gleaned from the conversations. As those conversations were not disputed, there was nothing which the respondent was required to explain or contradict.

49. [64]

    I do not accept that submission. A consequence of not calling a witness who might be expected to be called is not only that it can be inferred that the witness would not have advanced the case of the party who might be expected to have called him or her, which will often not take the matter further. It is also that an inference available from the evidence that has been led by the opposite party, adverse to the party who might be expected to call the witness, may more readily be drawn (Jones v Dunkel at 308, 312, 320; RPS v The Queen (2000) 199 CLR 620; [2000] HCA 3 at [26]; Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11 at [63]).

50. [65]

    There is no reason that that principle should not apply to rectification suits where the plaintiff has the burden of establishing the opposite party’s intention by clear and satisfactory evidence, or convincing proof. It should not be thought that a party facing a claim for rectification, where an inference as to that party’s intention as to the legal effect of the document is available on the evidence adduced by the plaintiff, can successfully defeat the claim by not going into evidence itself, but by propounding alternative inferences by argument, unsupported by evidence, and submitting that the proof proffered by the plaintiff is not convincing because the alternatives have not been rebutted. It may be a question of degree. But in this case, the primary judge erred in concluding that the appellant had not established that it was the parties’ common intention that arrears of commission be “secured” or “protected” by the caveat provisions.

51. [66]

    The primary judge accepted Mr Wang’s evidence as to his intention and the conversations to which he deposed were not disputed. The fair inference that Mr Fayad had the same intention as Mr Wang should be drawn in the absence of evidence from Mr Fayad to the contrary.

52. [67]

    The respondent submitted that, even if a common intention were established, the appellant’s proposed amendment to rectify the Sole Agency Agreement would be inconsistent with that common intention. The primary judge had observed that the caveat provisions as drafted did not include qualifications requested by Mr Fayad that caveats not be lodged until the remaining stages had been completed, the strata plans had been registered, and the appellant had not received payment for settlement of the sold lots. Mr Wang agreed. That was not a matter relevant to whether the “protection” to be provided by the caveat provisions would extend to arrears of commission. It is not relevant to the claim for rectification of the definition of “Commission” and “commission entitlement”.

53. [68]

    Mr Wang adhered to his agreement with Mr Fayad not to lodge the caveats until those events had passed.

54. [69]

    The respondent’s submissions did not otherwise identify why, if the common intention of the parties were established, the proposed rectification of the definition of “Commission” and “commission entitlements” did not give effect to that intention. The respondent did not submit that rectification of the definition should be confined to the use of the defined term “Commission” in cll 12.9, 12.10, and 12.11.

55. [70]

    For these reasons, the definition of “Commission” or “commission entitlement” in the Sole Agency Agreement should be rectified as sought in paragraph 1A of the Amended Summons.

Express charge

1. [71]

   What would be secured by an equitable charge is relevant to the construction of cll 12.9, 12.10, and 12.11 in that it informs the construction of the infinitive “to protect” in cl 12.10 (see below at [111]).

2. [72]

   The appellant’s primary submission on appeal was that cll 12.15 and 12.16 conferred on it the right to compel a sale of the Agency Lots and set off outstanding Commission against the purchase price. The appellants submitted that this was “a charge by another name” because the Agency Lots had been expressly made liable for the discharge of the Commission owed by the respondent to the appellant. It submitted that it enjoyed a right of immediate recourse to identifiable property, exercisable upon its demand for the satisfaction of that debt.

3. [73]

   The primary judge dealt with this submission as follows:

4. [74]

   The appellant submitted that the primary judge conflated the concept of creating an equitable charge on request with the exercise of the mechanism to enforce that equitable charge on request.

5. [75]

   There is a more fundamental difficulty with the appellant’s submission. In Swiss Bank Corporation v Lloyd’s Bank Ltd [1982] AC 584, Buckley LJ said (at 595):

6. [76]

   That passage has been cited with approval in a number of decisions of intermediate appellate courts in this country (see, eg, Broken Hill Proprietary Co Ltd v Commissioner of Stamp Duties [1998] 1 Qd R 452 at 458; Morris Finance Ltd v Brown (2017) 252 FCR 557; [2017] FCAFC 97 at [38]; Johnson v Synnex Australia Pty Ltd [2017] SASCFC 165 at [56]).

7. [77]

   I accept that cll 12.15 and 12.16 do confer a proprietary interest on the appellant as security for the payment of accrued commission. But the security provided is in the form of a call option, exercisable by the agent with the right of set-off of the accrued commission against the purchase price payable on the exercise of that option. The mechanism agreed by the parties for the enforcement of the security is not a judicial process for the appointment of a receiver or for judicial sale, which are the remedies granted to an equitable chargee in the event of default in the payment of the secured debt (King Investment Solutions Pty Ltd v Hussain [2005] NSWSC 1076; (2005) 13 BPR 25,077 at [50]-[51], [81] (Campbell J)). Exercise of the call option with a right of set-off is the only remedy the parties contemplated. It excludes recourse to the Court for the appointment of a receiver or for an order for judicial sale.

8. [78]

   The appellant has not sought to exercise that option. The appellant submitted that this Court should make a declaration as to its entitlement to exercise the option as an alternative declaration as to the proper construction of cl 12.15(b). It sought leave to amend its notice of appeal accordingly. But that was not an issue in the proceedings below. The respondent is in liquidation. Counsel for the respondent submitted that defences might be available to the liquidator if the appellant now sought to exercise the option, including that the appellant’s right to commission has merged in the judgment (at [3] above). No issues relevant to the alternative relief sought were ventilated below. It would be inappropriate to make any declaration or order. I would refuse leave to amend. It suffices to say that cll 12.15 and 12.16 do not confer on the appellant the rights of an equitable chargee.

Implied Charge

1. [79]

   Clauses 12.9 – 12.11, 12.15 and 12.16 are quoted at [4] above. By cl 12.9, the respondent agreed that the appellant may lodge and maintain a caveat or caveats on any “units in the Development”. “Development” was defined in cl 1.1(l) as follows:

2. [80]

   The “Land” meant land known as 7-13 Jenkins Road and 2-14 Thallon Street, Carlingford, being the site of the Somerset development.

3. [81]

   “Unit” or “Units” was defined in cl 1.1(z) as a reference to the “respective Agency Lot in the Development, or as a general reference to the residential apartment(s), unit(s) [sic] in the Development, as the context may require”.

4. [82]

   Clause 12.9 uses the word “units” in lower case and not the defined term “Units”. The right to lodge and maintain caveats conferred by cl 12.9 was therefore a right that related to all units in the Somerset development which had not been transferred to purchasers, in contradistinction to the call options conferred by cl 12.15 which related only to the specified Agency Lots. This would follow even if “units” were to be read as “Units” in the defined sense. This is because the context, in particular the express reference in cll 12.15 and 12.16 to Agency Lots, would suggest that even a reference to Units would be to all units in the Development.

5. [83]

   Clause 22.1 (the Whole Agreement clause referred to at [53] above) precludes recourse to the negotiations between Mr Fayad and Mr Wang in construing cll 12.9 – 12.11, even in so far as those negotiations reveal matters of objective fact (Johnson Matthey Ltd v AC Rochester Overseas Corporation (1990) 23 NSWLR 190 at 196; Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424; [2001] FCA 1833 at [440]). But that clause does not preclude regard being had to the objective facts that must have been known to both parties at the time the Sole Agency Agreement was entered into, namely, that the appellant was owed millions of dollars in outstanding commission with more commission becoming payable as the settlement of exchanged contracts proceeded.

6. [84]

   At all material times, s 74F of the Real Property Act 1900 (NSW) has provided that a person who claims to be entitled to a legal or equitable estate or interest in land under the provisions of that Act may lodge with the Registrar-General a caveat prohibiting the recording of any dealing affecting the estate or interest to which the person claims to be entitled.

7. [85]

   The call options provided for by cl 12.15 undoubtedly conferred on the appellant a caveatable interest in respect of the Agency Lots (see, eg, Mackay v Wilson (1947) 47 SR (NSW) 315 at 325). But because the right granted by cl 12.9 extends to the lodgement of caveats on units in the development other than the Agency Lots specified in the schedule to the Sole Agency Agreement, cll 12.9 – 12.11 are not to be read down by reference to cl 12.15.

8. [86]

   In Taleb v National Australia Bank Ltd (2011) 82 NSWLR 489; [2011] NSWSC 1562, Bryson AJ observed that:

9. [87]

   That observation has been approved by this Court in Aged Care Services Pty Ltd v Kanning Services Pty Ltd (2013) 86 NSWLR 174; [2013] NSWCA 393 at [82] – [83] (Gleeson JA, with whose reasons Meagher and Leeming JJA agreed) and Ta Lee Investment Pty Ltd v Antonios [2019] NSWCA 24; (2019) 19 BPR 39,153 at [98] (Bathurst CJ, Beazley P and Macfarlan JA)).

10. [88]

    Nonetheless, consideration of cases in which it has been held that a right to lodge a caveat does or does not impliedly confer the grant of an interest in land by way of equitable charge may be instructive.

11. [89]

    In Murphy v Wright (1992) 5 BPR 11,734, a deed of guarantee provided that, in the event of default by the principal borrower in payment of moneys due under the “Security Documents” (being a deed of loan between the lender and borrower and a registered mortgage given by the borrower over its land), the lender would be entitled

12. [90]

    On an application for an order extending the operation of a caveat lodged by the lender in respect of property of which the guarantor was the registered proprietor, there was an order for the separate determination of the question whether, by that clause, the guarantor agreed to grant any security interest in any asset to the lender.

13. [91]

    By majority (Priestley and Handley JJA, Sheller JA dissenting), that question was answered in the affirmative.

14. [92]

    Handley JA held that the clause conferred on the lender an option which, when exercised, created an equitable charge over the subject property. He construed the clause as a conditional contract by the guarantor authorising the lender to attach the debt to her property in respect of her property other than her Torrens title land. As to such other property, the option failed because the manner of its exercise had not been specified. But in relation to the Torrens title land, the manner of exercise of the option was specified by the lender having the right to “register” [sic] a caveat. Handley JA held that attaching a debt to a property involved charging the property with the debt (at 11,739). He reasoned that, unless this construction were adopted, the clause would be meaningless. Priestley JA held that only the construction favoured by Handley JA gave the clause some effect (at 11,735).

15. [93]

    The reasons of Handley JA and Priestly JA focused on the right of the lender to attach the debt due to any assets of the Guarantor. The right to lodge a caveat was consequential on the meaning attributed to those words.

16. [94]

    In Troncone v Aliperti (1994) 6 BPR 13,291, the loan agreement did not in terms provide for any security for repayment of the loan, but included a clause which provided:

17. [95]

    Mahoney JA held (at 13,292):

18. [96]

    Mahoney JA concluded that the caveator’s sufficient interest to support the lodgement of the caveat was the registered proprietor’s covenant that he would not sell or deal with the land until the loan was repaid and that a right to restrain a dealing with the land was an interest in the land “within this branch of the law” (at 13,293).

19. [97]

    However, this was not the ratio decidendi of the Court of Appeal’s decision in Troncone v Aliperti.

20. [98]

    Priestley JA agreed with Mahoney JA’s construction of cl 5 of the loan agreements and with his conclusion. He did not agree with his reasoning. Priestley JA regarded the case as being indistinguishable from Murphy v Wright, where the majority concluded that the caveat was supportable by the charge created, in that case, by the clause providing for the attachment of the debt to the property (at 13,293).

21. [99]

    Meagher JA initially stated that he agreed with Mahoney JA’s reasons and his proposed orders, but his Honour went on to say that the interest which the debtor intended to grant to each of his lenders could only be an equitable charge because, unless the clause were construed as granting a charge, it would be meaningless (at 13,293).

22. [100]

    In Coleman v Bone (1996) 9 BPR 16,235, the de facto husband of the plaintiff lent the plaintiff’s daughter and her de facto partner $50,000 to assist them to purchase a home unit from the plaintiff and her de facto husband. A document was prepared without legal assistance which provided for the terms of the loan of $50,000. The terms included:

23. [101]

    In holding that the lender was entitled to an equitable charge to secure repayment of the loan of $50,000 plus any capital gain, McLelland CJ in Eq said (at 16,239):

24. [102]

    In Redglove Projects Pty Ltd v Ngunnawal Local Aboriginal Land Council [2004] NSWSC 880; (2004) 12 BPR 22,319, I referred (at [21]) to other first instance decisions in which Troncone v Aliperti had been characterised as a case of an implied charge.

25. [103]

    In Taleb v National Australia Bank Ltd, Bryson AJ did not agree with the observations of McLelland CJ in Eq in Coleman v Bone (at [60]) but they were cited with apparent approval by Gleeson JA in Aged Care Services Pty Ltd v Kanning Services Pty Ltd (at [83]). In Taleb, a lender advanced money to a company that carried on the business of pawning motor cars. The deed acknowledging the loan included a term that the company agreed to the following term:

26. [104]

    Bryson AJ held that this provision did not impliedly grant an equitable charge. His Honour said:

27. [105]

    In Aged Care Services Pty Ltd v Kanning Services Pty Ltd, Gleeson JA said:

28. [106]

    What emerges from this review of the authorities is that the principle that where A grants B authority to lodge a caveat in respect of the property of A, the grant carries with it by implication such estate or interest in the property as is necessary to enable the authority to be exercised, is to be qualified by the fact that the agreement to lodge the caveat does not necessarily imply a grant of an interest in the land (s 74F(1)). This is because the existence of a contract authorising the lodgement of caveat may be a good discretionary reason for refusing an application under s 74MA of the Real Property Act for an order that the caveat be withdrawn (Depsun Pty Ltd v Tahore Holdings Pty Ltd (1990) 5 BPR 11,314 at 11,318-9). In Troncone v Aliperti, where the clause provided that the right to lodge the caveat was “to protect” the lender’s interest, the Court of Appeal did not consider this alternative.

29. [107]

    After referring to the authorities, the primary judge reasoned as follows:

30. [108]

    I do not agree that only one judge in Troncone v Aliperti found that the use of the words “to protect” created an equitable charge. I adhere to the opinion I expressed in Redglove Projects Pty Ltd v Ngunnawal Local Aboriginal Land Council (at [20]) that the ratio decidendi of Troncone v Aliperti was that the proper construction of the clause in question in that case was that debtor impliedly granted an equitable charge to the creditors.

31. [109]

    But the construction of the clause in Troncone v Aliperti is not determinative of the proper construction of cll 12.9 – 12.11 in this case.

32. [110]

    I do not accept that the negotiations between Mr Wang and Mr Fayad can be used to construe those clauses. It may be accepted that the caveat provisions gave the agent the ability to interrupt or prevent a sale of an apartment until unpaid commission had been paid. It is true that cll 12.9 - 12.11 did not provide that the agent could bring about the sale of the apartment itself and use the proceeds of sale to pay the debt owed, but any such clause would go beyond the grant of an equitable charge and amount to the grant of an equitable mortgage. It does not negate the implication of an equitable charge.

33. [111]

    Clause 12.10 contained an acknowledgement that the caveat provision gave the agent an “absolute right” to protect its interest to commission entitlement. Its commission entitlement ran into the millions of dollars. It is not plausible, considered objectively, that such protection would be provided merely by a right to restrain the completion of contracted sales of units in the Development. Although such a right might give the agent an advantage in negotiating its position, such an advantage would be illusory where the Owner was a special purpose company incorporated for the purposes of the development so that its ability to pay the commission depended upon its being able to complete the sale of units.

34. [112]

    For these reasons I consider that cll 12.9 – 12.11 impliedly conferred on the appellant the right of an equitable chargee to protect its interest to its commission entitlement by way of an equitable charge.

Notice of Contention

1. [113]

   By Notice of Contention, the respondent submitted that “the Court would not find an implied term creating a charge where the charge would be in contravention of s 49(1) of the Property and Stock Agents Act”.

2. [114]

   Section 49 of the Property and Stock Agents Act 2002 (NSW) is in Division 4 of Part 3 of that Act, entitled “Conflicts of interest”. Section 46 provides that regulations may be made requiring a real estate agent who provides financial or investment advice to a person in connection with the sale or purchase of land to provide the person with specified information or warnings. Section 47 requires a buyer’s or seller’s agent acting on the sale or purchase of the land to disclose information to a prospective buyer of the land of any relationship the agent has with his client. Section 48 provides that a real estate agent may not act for both the buyer and seller of land.

3. [115]

   Section 49 relevantly provides:

4. [116]

   The primary judge held (at [144] – [145]) that if cll 12.9 – 12.11 or 12.15 – 12.16 created an equitable charge, then the appellant contravened s 49 by obtaining a beneficial interest in the respondent’s property. The appellant did not challenge that finding.

5. [117]

   The primary judge held that nonetheless, if the appellant were entitled to the benefit of an equitable charge, s 49 did not render that charge unenforceable (at [150] – [152]). The respondent did not challenge that finding.

6. [118]

   But the respondent relied upon the finding that the grant of an implied equitable charge to secure outstanding commission would contravene s 49 as a reason for denying the implication. It also relied on cl 1.2(h) of the Sole Agency Agreement which provided:

7. [119]

   The respondent submitted that by cl 1.2(h) the parties expressly catered for any inadvertent contravention of the law by excising the contravening clauses.

8. [120]

   In the absence of a ground of appeal or any submissions on the issue, I proceed on the basis that because, in s 49, the definition of “property” includes an interest in property, the grant of an equitable charge to a real estate agent to secure outstanding commission would contravene the section. I am not to be taken as necessarily accepting that proposition. The reference in s 49 to a “beneficial” interest rather than an equitable interest, the examples in s 49(5) which suggest Parliament’s focus was on beneficial interests which relate to the ownership of property, and the fact that prima facie a registered mortgage which secured the payment of outstanding commission would not be within the scope of the section, suggest that a contrary construction would be arguable. Any such argument must await another day.

9. [121]

   Under cl 1.2(h) a term which is contrary to law is only to be read down as not to be contrary to law where this is for the benefit of the Agent. The provision is clearly intended to be for the benefit of the Agent. The respondent relies on the second part of cl 1.2(h). Construing that part of the clause beneficially for the Agent its intended scope is that the offending provisions are to be excised from the Agreement where otherwise the whole Agreement or any particular provisions of it would be invalid. So construing the clause it does not negate the implication of an equitable charge arising from cll 12.9 – 12.11.

10. [122]

    The respondent does not challenge the primary judge’s finding that s 49 does not render the agency agreement or the equitable charge contained in it (assuming it arises) unenforceable. Clauses 12.9 – 12.11 are not “invalid” even on the necessary assumption that they are contrary to law.

11. [123]

    For these reasons, I propose the following orders:

    1. (1)

       Refuse the appellant leave to amend its notice of appeal.

    2. (2)

       Appeal allowed.

    3. (3)

       Set aside the order in the Court below of 12 August 2022.

    4. (4)

       In lieu thereof make the following declaration and orders:

    5. (5)

       Remit the proceedings to the primary judge for the purpose of making orders for judicial sale in relation to each of the apartments contained within the said schedule.

    6. (6)

       The respondent pay the appellant's costs of the appeal.

12. [124]

    KIRK JA: Three broad issues arise in this appeal: rectification; the existence of an equitable charge; and whether or not the appellant can rely on cll 12.9-12.11 of the Sole Agency Agreement (SAA) in light of the possible breach of the Property and Stock Agents Act 2002 (NSW). The context in which these issues arise, and the relevant facts, are set out in the judgment of White JA.

13. [125]

    Taking those issues in reverse order, I agree that the notice of contention, raising the third issue, should be rejected for the reasons given by White JA.

14. [126]

    As regards the charge issue, I agree with White JA that no express charge is made out. I also agree that the appellant should not be permitted belatedly to raise a claim that cl 12.15 of the SAA conferred a call option. In the proposed amended notice of appeal that issue was only sought to be raised in the alternative to the claim for an equitable charge. It therefore would not have been necessary to address the point in any event in light of the recognition of an implied charge.

15. [127]

    In relation to that issue, the primary judge, having reviewed relevant case law, correctly summarised the legal position as follows:

16. [128]

    I agree with the reasons given by White JA for concluding that, in the circumstances of this case, cll 12.9-12.11 of the SAA do impliedly create an equitable charge, save that I do not consider it necessary to address the point raised by his Honour at [106] as to whether the existence of a contract authorising the lodgement of caveat may be a good discretionary reason for refusing an application under s 74MA of the Real Property Act 1900 (NSW) for an order that the caveat be withdrawn, nor whether any such conclusion has relevance to recognising an implied equitable charge. Part of the reasoning of White JA relates to the amount owing at the time the SAA, which takes account of his Honour’s conclusion in favour of rectification. I reach a different view on that issue. However, significant amounts would foreseeably come to be owed in any event, thus I do not consider that difference leads to any change in the conclusion.

17. [129]

    As for the rectification claim for mutual mistake raised by appeal grounds 2-5, those grounds overlap. Ground 2 in effect raises the ultimate issue, to which the conclusions on grounds 3-5 – relating to the drawing of inferences – are relevant. Nevertheless, it is convenient to address them in order.

Ground 2 – the claimed common intention

1. [130]

   The principles relating to a claim in rectification for mutual mistake were not in dispute. They are summarised by Griffiths AJA at [157]-[166] below. Consistently with that summary, it was necessary for the appellant to discharge the onus of making out its claim, doing so by reference to clear and convincing proof of the parties’ common intention. The standard required is onerous for good reason. Where parties have committed themselves to a written contract, the courts will not readily engage in a process of rewriting it.

2. [131]

   As White JA indicates at [65] above, the fact that a defendant does not go into evidence does not necessarily defeat such a claim. That party’s intention may be revealed directly by statements they have made or in documentary evidence, or may be inferred more indirectly from a range of sources. But the onus remains on the claimant to make the claim good. The fact that the defendant has not gone into evidence may give rise to a Jones v Dunkel inference of one kind or another but, as addressed further below, is not of itself enough to fill an evidentiary gap relating to intention and understanding.

3. [132]

   Here, the primary judge found that when signing the SAA, Mr Wang, on behalf of the appellant, “understood and intended that the agent’s entitlement under the Sole Agency Agreement to lodge caveats would include protection for the agent in relation to commissions which were then owing by C88 for properties which had already been sold by the agent” (at [87]). There has been no challenge to that finding. The issue is whether or not Mr Fayad, on behalf of the respondent, had the same intention and understanding such that the SAA did not accurately record their agreement.

4. [133]

   Mr Fayad did not give evidence. Whether or not he had the requisite intent depends upon what can be drawn from the evidence, directly or by inference. There are no relevant documents in evidence going to this issue, leaving aside the SAA itself.

5. [134]

   The highpoint of the appellant’s case for rectification is Mr Wang’s recitation of two conversations with Mr Fayad – the first in March or April 2018 (as quoted by White JA above at [21]), and the second around early April 2018 (as quoted above at [24]). Like Griffiths AJA, and without doubting the primary judge’s acceptance of the evidence of Mr Wang, I have some reservations about placing great reliance on the exactitude of his recollection. As was said in the rectification suit in Bonhote v Henderson [1895] 1 Ch 742 at 748-749 (a decision upheld on appeal in Bonhote v Henderson [1895] 2 Ch 202):

6. [135]

   Nevertheless, for the purposes of my analysis it suffices to assume in his favour the accuracy of Mr Wang’s recollection.

7. [136]

   It is clear from the first key conversation that Mr Wang communicated to Mr Fayad that he wanted security for the significant amounts then owing to the appellant. Mr Fayad obviously understood that, and requested that Mr Wang send him a draft SAA. He did not indicate that he agreed to Mr Wang’s request about security; he wanted to consider the written proposal, and “[w]e can discuss further afterwards”.

8. [137]

   A draft SAA was then drawn up at Mr Wang’s direction – although he did not recall by whom – and sent in some way to the respondent so as to come to the attention of Mr Fayad. That occurred prior to the second key conversation. Mr Wang did not recall how the draft had been sent across. Importantly, Mr Wang accepted in cross-examination that it was possible that Mr Fayad had had the assistance of a solicitor in considering the SAA (as had occurred previously), and that it was possible the draft SAA had actually been sent on the appellant’s behalf to the respondent’s solicitor. Mr Wang also accepted in cross-examination that the SAA departed from the then current agreement in more than the three ways that had been outlined by Mr Wang in the first key conversation. He said: “Yeah, a lot of changes, yeah, of course. The changes were submitted to the vendor to review it. Yeah, I think my staff take this opportunity to amend it.”

9. [138]

   It thus is entirely plausible that Mr Fayad had received legal advice on the content of the SAA. He had certainly wanted the opportunity to consider it before discussing the matter further.

10. [139]

    In Mr Wang’s recount of the second key conversation he does not explain the context of what he says was said. The first thing Mr Wang records that he said was an explanation of some of the changes made to the SAA compared to the current agreement. His recitation does not include all of the changes made. Mr Wang does not state that Mr Fayad asked for an explanation of how the SAA differed from the then current agreement. On Mr Wang’s version it is equally possible that he volunteered what he saw as the main differences.

11. [140]

    Mr Fayad is then said to have stated: “Can you leave out the caveat part?” Mr Wang had not used the word “caveat” in what he had said prior to this query. Rather, what he had relevantly said was: “… and the added part is the security provisions in clauses 12.9, 12.10 and 12.11 to safeguard the commission and interest which C88 has failed to pay for the sales and further sales …”. Based on Mr Wang’s recount, Mr Fayad must have had some understanding that cll 12.9-12.11 of the SAA provided for caveats. That implies he had read it himself and/or received some advice about it from someone.

12. [141]

    Mr Wang’s response to the request to leave the caveat part out was to say no and explain why. Mr Fayad then responded: “Okay, but can you agree not to lodge caveats until the remaining stages have completed and the strata plans registered, and PIA has still not received payment for settlement of the sold lots?” The “okay” in this response denoted agreement by Mr Fayad that the “caveat part” would not be left out of the SAA; that is, he acceded to Mr Wang’s rejection of his request. It did not signify assent to anything else. Taking account of his acceptance of that rejection, he went on to seek a further softening of what was proposed.

13. [142]

    A rectification case based upon mutual mistake requires clear and convincing proof of the parties’ common intention. Here, there is nothing in either of the two key conversations which indicate that Mr Fayad agreed and intended that the SAA would safeguard the commission and interest which the respondent had failed to pay for past sales. That point is reinforced by the conclusion that there is a real possibility that Mr Fayad had received legal advice about the content of the SAA. The primary judge was correct to conclude that “it is at least equally likely that C88 had no intention to enter into an agreement other than in the terms of the document proffered by the agent” (at [88]).

14. [143]

    The appellant also relied on the fact that it had subsequently placed caveats on 74 properties, consistently with Mr Wang’s understanding of the SAA, and the respondent did not assert in response that doing so was not consistent with the contract. As the primary judge discussed at [61]-[64], the respondent did request the removal of the caveats to allow the apartments to be sold, and Mr Wang agreed to do so for 46 of the apartments, insisting in return only on payment of the appellant’s commission on the relevant apartment, without requiring payment of amounts owing from apartments previously sold. This course of events throws little light on whether or not the respondent intended that the caveat clauses in the SAA extend to create an interest relating to past sales.

Grounds 3 and 4 – the drawing of a Jones v Dunkel inference

1. [144]

   Ground 3 claimed that the primary judge erred in declining to draw an inference “that any evidence given by Mr Sam Fayad and/or Mrs Chahida Khattar would not have assisted the respondent in relation to the issue of whether the appellant and respondent had the common intention in Ground 2”. Ground 4 asserted that her Honour erred in finding that the respondent had adduced evidence of a sufficient explanation as to why Mr Fayad had not been called to give evidence.

2. [145]

   Let it be assumed, without deciding, that the inference sought by the appellant should have been drawn. The rule in Jones v Dunkel “permits an inference, not that evidence not called by a party would have been adverse to the party, but that it would not have assisted the party”: Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11 at [64]. The rule does not permit the bridging of gaps in evidence. As Ward JA said in RHG Mortgage Corporation Ltd v Ianni [2016] NSWCA 270 at [161] (Meagher JA agreeing at [29]; citation omitted):

3. [146]

   Similarly, Besanko, Perram and Katzmann JJ said the following in Sagacious Legal Pty Ltd v Wesfarmers General Insurance Ltd [2011] FCAFC 53 at [79] (citations omitted):

4. [147]

   I agree; see also Ling v Pang [2023] NSWCA 112 at [25] and [27]. The latter observation – that generally speaking the inferences only become material where the balance of the evidentiary record is equivocal – has previously been endorsed in this Court: CSR Ltd v Adecco (Australia) Pty Ltd [2017] NSWCA 121 at [144].

5. [148]

   Here, as explained, there is no evidence that Mr Fayad had the same subjective intention and understanding as Mr Wang. The inference that Mr Fayad’s or Mrs Khattar’s evidence would not have assisted the respondent does not make up for that absence of evidence.

6. [149]

   The appellant did not seek that the second type of Jones v Dunkel inference be drawn, namely that the Court should draw, with greater confidence, any inference unfavourable to the party. But even if it had, that argument would fail for the same reason. Based upon the evidence, in my view there is insufficient basis to found any inference that Mr Fayad, on behalf of the respondent, had the requisite understanding and intention. The claim that he did is speculative.

Ground 5 – the drawing of an inference against the appellant about documents

1. [150]

   The appellant’s ground 5 is that the primary judge erred in drawing an inference against the appellant with respect to its failure to adduce documentary evidence relating to the drafting and provision of the SAA. As explained, I have reached the conclusion that the appellant’s rectification case fails regardless of whether or not such an inference should be drawn against the appellant. In that context it is not necessary to address ground 5. In any event, senior counsel for the appellant indicated in his reply submissions that “it seemed to us to be common ground between the parties that [this issue] did not affect the outcome of the case”. The ground thus seemed to have fallen away in any event.

Conclusion

1. [151]

   I would thus dismiss the appeal insofar as it relates to the rectification claim. In my view the primary judge was correct to reject that claim. I agree with the orders proposed by Griffiths AJA.

2. [152]

   GRIFFITHS AJA: I have had the advantage of reading in draft the reasons for judgment of White JA. I gratefully adopt his Honour’s description of the background facts.

3. [153]

   I respectfully agree with White JA’s reasons for upholding ground 1 of the amended notice of appeal (which relates to whether or not the Sole Agency Agreement (SAA) created an equitable charge) and for rejecting the notice of contention.

4. [154]

   I respectfully disagree, however, with his Honour’s conclusion that grounds 2-5 (which relate to the issue of rectification and/or the principle in Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8) should be upheld. In brief, this is because I am not persuaded that the appellant has discharged its heavy onus of establishing by clear and convincing evidence the existence of the asserted common intention.

5. [155]

   This means that I would grant a declaration in narrower terms to that proposed by White JA relating to the scope of the equitable charge. Rather than extending to the schedule of lots which is Annexure “A” to the amended notice of appeal, I consider that the charge should be limited to the debt relating to outstanding commission concerning the lots as listed in the Agency Lot Schedule which is an annexure to the Supplementary Agency Agreement dated 12 August 2019.

6. [156]

   I shall now explain why grounds 2-5 should be rejected.

Relevant legal principles concerning rectification summarised

1. [157]

   First, it is well settled that a written document which is being executed by the parties is presumed to be the true record of their agreement subject to a defence of non est factum or rectification (see Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471; [2004] HCA 55 at [33] per Gleeson CJ, McHugh, Kirby, Hayne and Callinan JJ).

2. [158]

   Secondly, where rectification is sought, the party seeking rectification carries the onus, which Gleeson JA has aptly described as “a heavy one” in Newey v Westpac Banking Corporation [2014] NSWCA 319 at [170].

3. [159]

   Thirdly, and relating to the content of that heavy onus, as noted by Perry Herzfeld and Thomas Prince in Interpretation (2nd ed, 2020, Thomson Reuters) at [28.120], it is well settled that the relevant common intention must be proved in the “clearest and most satisfactory manner”, an expression used by Lord Chelmsford LC in Fowler v Fowler (1859) 4 De G & J 250 at 265, as approved for example in Australian Gypsum Ltd v Hume Steel Ltd (1930) 45 CLR 54 at 64; [1930] HCA 38 and Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336 at 349; [1973] HCA 23 and see also Newey at [170] per Gleeson JA.

4. [160]

   Fourthly, the following obiter observations by Tobias JA (with whom Mason P and Campbell JA agreed) in Ryledar Pty Ltd v Euphoric (2007) 69 NSWLR 603; [2007] NSWCA 65 at [182], [185]-[186] provide helpful guidance on the kind of evidence that might constitute “clear and convincing proof” of the parties’ common intention which includes not only objective material but also evidence of the parties’ subjective states of mind:

5. [161]

   One of the prominent features of this appeal is that because Mr Fayad did not give evidence (a matter to which I will return), Mr Wang gave evidence of the terms of various conversations he had with Mr Fayad, which evidence was accepted by the primary judge. This evidence went not only to Mr Wang’s subjective state of mind but also to what the plaintiff claimed to be the outward expression of the parties’ common intention.

6. [162]

   Fifthly, the prerequisite of establishing a common intention for the purposes of rectification is directed to the subjective or actual intention of the parties. The following paragraphs from Gleeson JA’s reasons for judgment in Newey at [175] and [176] are apposite:

7. [163]

   In Simic v New South Wales Land and Housing Corporation (2016) 260 CLR 85; [2016] HCA 47 at [104], Gageler, Nettle and Gordon JJ said (citations omitted):

8. [164]

   Sixthly, as Herzfeld and Prince also point out at [28.120] (footnotes omitted):

9. [165]

   Seventhly, as Campbell JA observed in Ryledar, the requirement that the requisite common intention be in some manner disclosed is consistent with the underlying rationale for rectification, which is “the avoidance of unconscientious taking advantage of the common mistake”. Thus, Campbell JA said at [315]:

10. [166]

    Finally, it was not suggested that the primary judge’s summary of the relevant legal principles at PJ[72]-[75], which largely reflect my summary above, is erroneous.

The primary judge’s reasons for refusing rectification summarised

1. [167]

   As White JA has observed, rectification was not sought of the terms of cll 12.9, 12.10 or 12.11. In the plaintiff’s amended summons filed on 26 October 2021, the order seeking rectification was directed only to the definition of “Commission” (and related definitions) in the SAA. The primary judge noted at PJ[71] that the plaintiff sought rectification to amend the definition of “Commission” as follows (the tracking reflects amendments by the plaintiff):

2. [168]

   In the notice of appeal filed on 31 August 2022, the appellant sought an order that the SAA be rectified by correcting the definition of “Commission” so as to read the same as that sought below (that formulation was also retained in the amended notice of appeal).

3. [169]

   The primary judge was not persuaded that the plaintiff had discharged the heavy onus of establishing by “clear and convincing proof” that the parties had a common intention that the caveat protection afforded by cll 12.9, 12.10 and 12.11 of the SAA extended to commissions payable to the plaintiff prior to 20 April 2018 (being the date of execution of the SAA). Her Honour rejected the plaintiff’s contention that the requisite common intention was established by the four conversations between Mr Wang and Mr Fayad. In brief, the primary judge made the following primary findings regarding the insufficiency of evidence to establish common intention.

4. [170]

   First, while these conversations between Mr Wang and Mr Fayad indicated each party’s individual intention, none of those conversations established a common intention in the relevant sense.

5. [171]

   Secondly, it is reasonable to think Mr Fayad would have wanted to see a final draft of the SAA and, in particular, the precise detail of the security sought by the plaintiff before considering whether that form of security was acceptable to the defendant.

6. [172]

   Thirdly, whether the clauses dealing with security were sufficient to protect the plaintiff’s interests was hardly a matter on which the defendant would have been expected to comment.

7. [173]

   Fourthly, it was not clear whether the relevant clauses in the SAA were extracted from an earlier “template” prepared by the plaintiff’s lawyer (Mr Cheung) or whether the template had been amended. The primary judge reasoned that, if these clauses were extracted from the template, they would not have been drafted to address the subject of arrears in commissions (because that problem had only recently emerged). Accordingly, if it was intended that the clauses cover that territory, it would have been obvious that the template required revision. The primary judge then noted at PJ[84] that, because the Court had neither the template nor any notes or drafts retained by the plaintiff, it was “not possible to say precisely what happened, save that no attempt appears to have been made to draft such a clause” (see further at [177] below).

8. [174]

   Fifthly, at PJ[88], her Honour reasoned as follows:

9. [175]

   Sixthly, the primary judge referred at PJ[89] to a later conversation in August 2019 between Mr Wang and Mr Fayad, in which Mr Wang “continued to hark back to the initial deal in March 2018” and that, notwithstanding that the caveat clauses had been added to the SAA in the interim, Mr Wang was still asserting “Same question, what is the security for PIA?”. Her Honour reasoned that if there was a common intention as at 20 April 2018 that a caveat lodged under the SAA secured commissions payable prior to entry into that agreement, it would not have been necessary for Mr Wang to ask that question of Mr Fayad the following year.

10. [176]

    Finally, after noting that Mr Wang’s evidence was unchallenged and that he was a credible witness, the primary judge declined to apply the principle in Jones v Dunkel so as to infer that Mr Fayad’s evidence, if given, would not have assisted the defendant. Her Honour’s reasons for rejecting the plaintiff’s reliance on Jones v Dunkel are set out at PJ[5]-[8]. In brief, her Honour concluded that Mr Fayad was not “in the camp” of the defendant company (which was then in liquidation) merely because of his directorship. In addition, after noting that the principle in Jones v Dunkel may be applied where there is an unexplained failure by a party to call the witness, her Honour concluded that the liquidator’s failure to call Mr Fayad was explained by the liquidator’s solicitors. Their evidence was to the effect that when they tried to contact Mr Fayad through his solicitor shortly before the hearing commenced, they learned that Mr Fayad was in the United States, could not provide an affidavit and would only return to Sydney during the first day of the hearing. When the liquidator’s solicitor followed up with Mr Fayad’s solicitor on the first day of the hearing, he was told that Mr Fayad was unwell, had been advised to do a COVID test and was unavailable on that day.

11. [177]

    Although the primary judge declined to apply the Jones v Dunkel principle to the failure of Mr Fayad to give evidence, as noted at [173] above, her Honour considered whether the principle applied against the plaintiff by reason of its failure to provide any drafts or notes which were created in the course of preparing the draft SAA. Her Honour referred to authority at PJ[10] in support of the proposition that the principle can equally apply to missing documents as well as to missing witnesses. Her Honour then stated at PJ[11] (emphasis added):

12. [178]

    As noted above, at PJ[84], the primary judge said that it was not possible to say precisely what had happened and whether cll 12.9-12.11 were taken straight from Mr Cheung’s template or whether the template was amended. In circumstances where the plaintiff had not put into evidence either the template nor any notes or drafts relating to those clauses, her Honour stated that she inferred that such documents as might be expected to be in the plaintiff’s possession regarding the preparation of the SAA “would not have supported its claim”. White JA describes this reasoning as “difficult to follow”. I shall explain below why I consider that her Honour’s reasoning does not present a material error.

Common intention of the parties

1. [179]

   For the following reasons, I consider that the appellant has failed to establish any appellable error in the primary judge’s conclusion that it did not discharge its heavy onus of establishing the requisite common intention so as to justify rectification.

2. [180]

   At the risk of some repetition with White JA’s reasons, having regard to the central significance of Mr Wang’s evidence concerning the terms of the four conversations he had with Mr Fayad, it is desirable to set out the entirety of [16]-[22] of Mr Wang’s affidavit sworn on 12 October 2021:

3. [181]

   As noted above, the primary judge accepted Mr Wang’s evidence as to the terms of the conversations, but ultimately concluded that the evidence was insufficient to establish the asserted common intention. Before explaining why I agree with that conclusion, it is apt to say four things about Mr Wang’s evidence (some of the points overlap).

4. [182]

   The first point relates to the significance of the fact that Mr Wang frankly said at [7] of his affidavit that, in describing the conversations with Mr Fayad, “I have set out the effect of the words used” (emphasis added). He said that he may not recall the exact dates and times of the meetings and telephone calls but that he did “recall the discussions during those meetings and telephone calls”. It is notable that Mr Wang then set out in his affidavit his recollection of the various conversations in direct speech.

5. [183]

   This brings to mind the recent observations of Jackman J in Kane’s Hire Pty Ltd v Anderson Aviation Australia Pty Ltd [2023] FCA 381 at [121]-[129] (which were referred to approvingly by White JA (Simpson AJA and Basten AJA agreeing) in Gan v Xie [2023] NSWCA 163 at [119]) regarding the use of direct speech in affidavits. In particular, Jackman J said the following at [127]-[129]:

6. [184]

   I respectfully agree with the thrust of those observations. In particular, they highlight the need for caution in drawing inferences from, for example, the use of a term such as “OK”, as attributed to Mr Fayad by Mr Wang in their third conversation and as accepted by the primary judge. This may explain why the primary judge said at PJ[32] that it was not entirely clear whether the term voiced agreement with Mr Wang’s requests or simply acknowledged the changes which Mr Wang wished to make. I respectfully agree with her Honour’s observations.

7. [185]

   Similar ambiguity relates to the significance of the term “okay” in the conversation which occurred in early April 2018 as set out in [21] of Mr Wang’s affidavit.

8. [186]

   The second point relates to the heavy onus carried by Mr Wang and the necessity for the evidence supporting a common intention to be clear and convincing. The following observations of McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 318-319 are apposite to the circumstances here, notwithstanding that they are directed to alleged misleading conduct arising from oral statements:

9. [187]

   The essential point may be expressed as follows. Merely because the primary judge accepted Mr Wang’s evidence regarding the terms which were used in the four relevant conversations does not mean that those terms, assessed in the context of all relevant surrounding circumstances, constituted clear and convincing proof of the alleged common intention.

10. [188]

    The third point (which overlaps with the second) concerns the weight to be given to the fact that the statements which Mr Wang attributes to Mr Fayad are statements which were made in the course of robust and protracted commercial negotiations. Justice Gummow made the following observations about the approach to be taken to such statements in the context of a claim for breach of s 52 of the Trade Practices Act 1974 (Cth) in Concept Television Productions Pty Ltd v Australian Broadcasting Corporation (1988) 12 IPR 129 at 135L; [1988] FCA 419, observations which also resonate here:

11. [189]

    To similar effect, the following observations of Barrett J in Overlook v Foxtel [2002] NSWSC 17 at [114] ring true in the present case:

12. [190]

    The four relevant conversations here occurred in the context of ongoing and robust negotiations over several weeks or months regarding Mr Wang’s concern that the plaintiff be paid outstanding commission. His own strongly stated position was that he needed to have the capacity to lodge caveats on the remaining units. He made this clear in the first and third of their conversations. It is equally plain that Mr Fayad’s strong personal position was that the plaintiff’s commission was adequately protected because he was willing for it to keep all the deposit for the sale of units in the North building of the development (which the primary judge found was a reference to Stage 4 of the development and the strata plan for that stage was ultimately registered on 12 July 2019), to be applied to any outstanding commission at that time. In their first conversation, Mr Wang responded by saying that if the deposits were not enough to cover the balance of commission, he needed to “put caveat on your remaining units”. Mr Fayad is said to have responded by saying “it is ok, but please make sure your caveat will not affect our sale and settlement”.

13. [191]

    Viewed in isolation, Mr Fayad’s response on this occasion might provide some support in establishing the common intention but, significantly and as a matter of context, the negotiations did not end there. In the second conversation, which according to Mr Wang took place towards the end of March 2018 (i.e., approximately three weeks before the SAA was executed), Mr Wang again raised the need for outstanding commissions to be paid. Mr Fayad simply repeated that the plaintiff would be fully paid when the North building settled. Notably, Mr Wang did not suggest that either he or Mr Fayad raised in this particular conversation the issue of caveats protecting the plaintiff’s past commission. This issue was simply not part of the negotiations which occurred at that time. This assumes that this particular conversation occurred earlier than the third conversation, to which I now turn.

14. [192]

    In the third conversation (noting that it is unclear whether it formed part of the second conversation in late March 2018 or early April 2018 or some other time but possibly within that period), it is plain that the parties were still in robust negotiations. Apparently for the first time Mr Wang raised whether Mr Fayad and his business partner could provide personal guarantees to pay all unpaid commission and interest on late payments. Mr Fayad rejected that suggestion. Again, he sought to reassure Mr Wang that his commission and penalty interest were sufficiently protected by the fact that the plaintiff as agent held 10 per cent of the deposit. When Mr Wang insisted that he needed some security, Mr Fayad asked what security he wanted. This led Mr Wang to say that he needed to add a “caveat clause in our agency agreement”. Mr Fayad is recorded as saying “OK” and that his office will send Mr Wang a list of the further units to be included in a sole agency agreement and that they can “discuss further afterwards”. Plainly, therefore, Mr Fayad kept open the prospect of further negotiations. I respectfully agree with the primary judge’s finding that Mr Fayad’s use of the term “OK” on this occasion should not be viewed as an express agreement to Mr Wang’s request, but rather amounted to an acknowledgment of the changes which Mr Wang wished to make in the proposed sole agency agreement so as to protect the plaintiff regarding outstanding commission.

15. [193]

    The fourth point (which is weaker than the earlier points) relates to Mr Wang’s command of English. I mean no disrespect to him when I say he clearly had difficulties with the English language, it being his second language. As the primary judge noted at PJ[11], Mr Wang said that he left the preparation of documents to his staff whose “English is better than me”. This evidence was given in the context of the following exchange during Mr Wang’s cross-examination:

16. [194]

    Under cross-examination, Mr Wang freely acknowledged that his English was not good as is evident from the following exchange:

17. [195]

    If further evidence of Mr Wang’s difficulties with the English language is required, reference can be made to the following extracts from his cross-examination:

18. [196]

    Mr Wang did not give evidence with the assistance of an interpreter. I am not suggesting that because of his difficulties with English as his second language his evidence deserved no weight. That would be inconsistent with the primary judge’s acceptance of his evidence regarding the terms of the four conversations. Rather, the point I am making is that considerable caution needs to be exercised in attaching significance to, or drawing strong inferences from, Mr Wang’s account of his recollections of particular words used by Mr Fayad. Mr Wang’s difficulties with the English language is relevant to the weight to be given to matters upon which linguistic skills depend. Naturally, these reservations do not apply to any reasonable inferences drawn from conduct, as opposed to words.

19. [197]

    With those four points in mind, I will now explain why I consider that the primary judge was correct in concluding that the plaintiff failed to discharge its heavy onus regarding common intention.

20. [198]

    In his reasons for judgment at [23], after referring to the primary judge’s interpretation of Mr Fayad using the word “OK” in the third conversation, White JA states that, nonetheless, Mr Fayad “had already expressed agreement to the appellant’s having ‘protection’ for its outstanding commission on units it had already sold, either by recourse to the deposits it held as stakeholder, or by the use of caveats”. His Honour may be referring to what was said at the conclusion of the first conversation with Mr Wang, when Mr Fayad said: “It is ok, but please make sure your caveat will not affect our sale and settlement”.

21. [199]

    With respect, I do not agree. As I have emphasised, Mr Wang and Mr Fayad were engaged both then and subsequently in ongoing and earnest negotiations. This is evident not only from the terms of the relevant conversations, but Mr Wang himself frankly acknowledged during his cross-examination that he too was still in the course of negotiating when he forwarded a copy of the draft SAA for Mr Fayad’s review. The following exchange occurred concerning this matter:

22. [200]

    No doubt each negotiator was seeking to advance and secure his own commercial position throughout the course of the negotiations. The fact that Mr Fayad is recorded as saying at the end of the first conversation after the issue of caveats was raised by Mr Wang that: “it is ok…”, does not mean that he had expressed final agreement to Mr Wang’s proposal regarding caveats.

23. [201]

    The fourth conversation (which is set out at [21] of Mr Wang’s affidavit) occurred in early April 2018, which was several weeks before the SAA was executed. It may be inferred that Mr Wang had sent Mr Fayad a copy of the proposed SAA before the fourth conversation occurred. The draft included the caveat provisions at cll 12.9, 12.10 and 12.11, as well as the definition of “commission” as set out at [6] of White JA’s reasons for judgment. Mr Wang explained to Mr Fayad that there was no personal guarantee but that the added part of the proposed SAA was “the security provisions in clauses 12.9, 12.10 and 12.11 to safeguard the commission and interest which C88 has failed to pay for the sales and further sales and the extension of the agency period and payment of the first instalment of the commission”. Consistently with his earlier position, Mr Fayad asked whether the caveat part could be left out. Plainly, he was still negotiating. Mr Wang refused to delete the caveat provisions, describing them as “necessary and important” and that caveats would be lodged if the plaintiff was not paid upon completion of contracts for lots sold since 2015 or any further sales. That led to Mr Fayad then saying what is attributed to him at the end of the fourth conversation, including the significance of his use of the term “okay”. But then he immediately asked whether Mr Wang would agree not to lodge caveats unless certain things occurred. Mr Wang recalls he then said “okay”.

24. [202]

    Thus, it is evident from Mr Wang’s account of the fourth conversation that both he and Mr Fayad continued to negotiate right up to the end of that conversation notwithstanding that, by this time, Mr Fayad had been provided with a copy of the proposed SAA.

25. [203]

    Finally, as noted above, the primary judge also attached some significance to the terms of a conversation which Mr Wang and Mr Fayad had in August 2019 (i.e., well after the SAA was executed), around the time when the North building was ready to settle. The terms of that conversation are set out at [49] of White JA’s reasons for judgment.

26. [204]

    The primary judge attached significance to the fact that Mr Wang again raised with Mr Fayad the question of the plaintiff’s security. Her Honour reasoned that if there was a common intention that a caveat lodged under the caveat clauses of the SAA secured commissions payable prior to 20 April 2018, it would not have been necessary for Mr Wang to ask that question.

27. [205]

    I respectfully agree with that reasoning. Moreover, Mr Fayad sought to assuage Mr Wang’s concerns by saying that the defendant would have “a lot of profit left” and that there were some units (presumably in the North building) without any mortgagee. It was in that context that Mr Wang asked him whether he could put a caveat on those particular units, to which Mr Fayad responded affirmatively but asked that no such lodgement occur which would disturb the funders and affect settlement. I do not regard this exchange as indicating an acceptance on Mr Fayad’s part that caveats could cover arrears of commission. Viewed in the wider context, the statements are equivocal and open to more than one interpretation. In my respectful view, they are insufficient to discharge the appellant’s heavy onus.

28. [206]

    For these reasons, I reject ground 2 of the notice of appeal.

Jones v Dunkel

1. [207]

   Grounds 3, 4 and 5 of the amended notice of appeal all relate to the principle in Jones v Dunkel. I have summarised her Honour’s reasons on this matter at [176] above.

2. [208]

   I agree with White JA that the principle can apply in a rectification suit. In particular, I agree with his Honour’s observation that such a suit should not be successfully defended simply by the other party not going to evidence itself. Ultimately, the issue whether or not the principle applies depends on the particular circumstances and, as his Honour correctly points out, may involve a question of degree.

3. [209]

   The Jones v Dunkel principle was recently considered by Kirk JA (Leeming and Mitchelmore JJA agreeing) in Ling v Pang [2023] NSWCA 112 at [20]-[28]. As Kirk JA observed at [21], after referring to Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11 at [63], there are two types of inferences which may be drawn where the principle applies (citations omitted):

4. [210]

   I respectfully agree with Kirk JA’s statement at [27] as to the rationale underlying the principle:

5. [211]

   Having regard to the wording of ground 3 of the amended notice of appeal and the appellant’s outline of submissions at [64], it appears that the appellant relied upon the first type of inference described by Kirk JA in Ling. The appellant’s claim was that any evidence given by Mr Fayad and/or Mrs Khattar “would not have assisted the respondent in relation to the issue of whether the appellant and the respondent had the common intention in Ground 2”.

6. [212]

   In circumstances where Mr Wang deposed at [17] of his affidavit that the conversation he had with Mrs Khattar was similar to that which he had with Mr Fayad, it is sufficient to focus upon this ground as it relates to Mr Fayad. Although the appellant pointed out that Mrs Khattar’s absence was entirely unexplained, I do not consider that this puts her in a different position from Mr Fayad. As I shall shortly explain, the Jones v Dunkel principle did not apply because of the plaintiff’s failure below to discharge its onus of establishing the claimed common intention. This failure applies equally to Mr Fayad and Mrs Khattar.

7. [213]

   Although no affidavit was filed by Mr Fayad prior to 25 February 2022 as required by the orders dated 9 December 2021 (subsequent orders dated 31 January 2022 relate only to the filing of valuation evidence), no significance or adverse inference should attach to this omission. For the reasons given above, I agree with the primary judge’s assessment that, objectively assessed, Mr Wang’s oral and affidavit evidence (together with the matters of conduct relied upon by the plaintiff) did not provide a sufficient foundation for any inference to be drawn concerning the alleged common intention. Thus there was no requirement for the defendant to go into evidence on this point given that the plaintiff carried the burden. In these circumstances, there was no scope for an unfavourable inference to be drawn against the defendant because of Mr Fayad’s failure to provide an affidavit. To put the matter another way, given the equivocal nature of the plaintiff’s evidence on the issue of common intention, no natural inference should be drawn that the defendant feared that if Mr Fayad had provided evidence this would have exposed facts which were unfavourable to it.

8. [214]

   In addition, insofar as Mr Fayad’s failure to give evidence at the hearing itself was concerned, an adequate and acceptable explanation was provided as summarised at [176] above.

9. [215]

   For these reasons, I reject grounds 3 and 4.

10. [216]

    Ground 5 relates to the primary judge’s observations at PJ[11] and [84] concerning the plaintiff’s failure to adduce any notes or drafts pertaining to the preparation and finalisation of the SAA. As noted at [178], the primary judge’s reasoning on this matter was criticised by White JA as “difficult to follow” and appears to form part of the basis for his Honour’s opinion that ground 5 should succeed. For the following reasons, I respectfully disagree.

11. [217]

    First, even if it be assumed that the reasoning is difficult to follow, that of itself would not assure the appellant success. It is well settled that appeals lie from orders, not reasons (see, e.g., BP v State of New South Wales [2019] NSWCA 223 at [11]-[12]; McNab v Director of Publication Prosecutions (NSW) (2021) 106 NSWLR 430; [2021] NSWCA 298 at [25]; and Kramer v Stone [2023] NSWCA 270 at [259]).

12. [218]

    Secondly, I do not have any difficulty with the primary judge’s reasoning at PJ[11] and [84]. The critical steps in that reasoning may be summarised as follows:

13. [219]

    Fairly read, I understand her Honour’s reference at PJ[84] to “its claim” to be a reference to the plaintiff’s claim below that there was a common intention that the SAA would permit caveats to be lodged in respect of arrears in commission.

14. [220]

    I do not read the primary judge’s reasoning as involving any inconsistency between her Honour’s acceptance of Mr Wang’s intention and the inference her Honour may have drawn from the plaintiff’s failure to adduce documents regarding the drafting of the SAA. I understand her Honour to be saying that if in fact there was a common intention which accorded with Mr Wang’s subjective intention, it would be reasonable to expect that this would be recorded in the notes or drafts of the SAA. But since no such documents had been adduced, an inference could be drawn that any documents which may have existed would not have supported the plaintiff’s case concerning the asserted common intention.

15. [221]

    Thirdly, and in any event, as the appellant’s counsel explained in his reply submissions, it was common ground between the parties on the appeal that the primary judge’s observations at PJ[84] concerning the Jones v Dunkel principle applying to any notes or drafts, did not affect the outcome of the case. I see no reason why the Court should depart from the common position of the parties on this issue.

Conclusion

1. [222]

   For these reasons, I propose that the appeal be allowed in part. As I have indicated above, I consider that the declaration regarding the equitable charge needs to be narrower so as to reflect the appellant’s failure to obtain rectification. The parties should have an opportunity to agree the terms of a declaratory order, as well as orders as to costs of both the proceeding and the appeal.

2. [223]

   Accordingly, I propose the following orders:

   1. (1)

      The appeal be allowed in part.

   2. (2)

      Set aside the order dated 12 August 2022.

   3. (3)

      Subject to order (4), remit the proceedings to the primary judge for the purpose of considering making orders for judicial sale.

   4. (4)

      Within 14 days hereof, the parties are to seek to agree the form of a declaratory order which gives effect to these reasons, as well as seek to agree costs of the proceeding both below and on appeal. If they are unable to reach agreement, each should within that time provide a brief written outline of submissions, not exceeding four pages in length, in support of their respective positions. The remaining issues will then be finalised on the papers and without a further oral hearing.