Union Fidelity Finance (Aust.) Pty. Ltd v Renauf

The first plaintiff, Union Fidelity Finance (Aust.) Pty Ltd (UFFA) and the second plaintiff, Union Fidelity Pty Ltd (UF) conduct a business in the non-bank, non-conforming lending market. Specifically:

Mr Bernard Hugh Danby Ross (Mr Hugh Ross) is the director of UF and UFFA. Mr Alexander Ross (Mr Ross) manages UF’s and UFFA’s business.

The defendant, Mr Samuel Renauf (Mr Renauf):

On 18 March 2024, UF (as agent for UFFA) issued to Mr Renauf a document styled “Prospective Approval Indication contract” (PAI) which was accepted by Mr Renauf on 22 March 2024 and returned to UF. UFFA contends that moneys are owing to it by Mr Renauf under the terms of the PAI. On 3 July 2024, UFFA lodged Caveat AU214900 (First Caveat) on the title to the Property.

On 28 January 2025, Mr Renauf served a lapsing notice in respect of the First Caveat.

By Summons filed 13 February 2025 UFFA and UF seeks the following final relief:

On 18 February 2025, I made orders by consent to the effect that the First Caveat be removed but that UFFA has leave to file a further caveat in the same interest as the First Caveat.

On or about 18 February 2025, the First Caveat was withdrawn. On or about 21 February 2025, Caveat AU847078 (Second Caveat) was registered on the title to the Property.

The proceedings were heard on 13 March 2025. Mr A Cornish appeared for the plaintiffs and Mr S O’Brien appeared for the defendant. No witnesses were cross examined.

Although the submissions traversed, to some extent, the issue of the validity of the two caveats, the hearing was a final hearing essentially concerned with whether the money claimed by UFFA was owing under the PAI was in fact owing. This involved determining the proper construction of the PAI and whether the relevant clause operated as a penalty in the circumstances.

For the reasons set out below I have determined that UFFA’s claim for the Brokerage Fee succeeds. Mr Renauf’s contentions, including that clause (c)(i) of the PAI is unenforceable as a penalty, should not be accepted. The parties should seek to agree orders to give effect to these reasons and any remaining issues will be determined on the papers.

The resolution of the principal issue litigated – whether the moneys are owing under the PAI – primarily depends on the proper construction of the PAI and the circumstances in which the prospective loan did not proceed. Some evidence was adduced as to the circumstances leading up to the PAI. These circumstances are largely of peripheral relevance only. I set out the relevant chronology below.

On 20 February 2024, Mr Renauf - via his broker, Mr Matt Sweeney (Mr Sweeney) - approached UF by email seeking financing for the redevelopment of the Property (Loan Proposal). Two documents were attached to the email.

First, a memorandum providing a high level overview of the development project. The Key Financial Metrics set out in the memorandum included an estimate of Gross Realisation of $25 million with an estimate of construction costs of $5.835 million.

Second, a copy of the development consent in relation to the proposed redevelopment.

On 21 February 2024, Mr Ross advised Mr Sweeney that UF would be happy to take on the Loan Proposal. He requested certain further details be provided.

Between 21 February and 28 February 2024, Mr Ross sought and received from Mr Sweeney further information in relation to the Loan Proposal (including a statement of assets and liabilities, an indicative sale realisation opinion and a copy of the relevant development consent). The relevant development consent stated that the “cost of development” was $1,496,000.

On 28 February 2024, Mr Ross introduced the Loan Proposal to Mr Matt Claffey of Australian Securities Limited (ASL).

On 29 February 2024, Mr Ross informed ASL of a revised financing request of $10,886,500.00. The 28 February 2024 email sought finance of $16,250,000.

In Mr Ross' initial approach to Payton Capital Ltd (Payton) on 6 March 2024 in relation to the Loan Proposal, the particulars of the loan proposal cited were:

The email from Mr Ross also stated that the clients had already been offered terms by three other financiers.

On 8 March 2024, Mr Sweeney provided Mr Ross with a copy of a statement of the current loan in respect of the Property (which loan was in the name of SSMW Group Pty Ltd (SSMW) – a company associated with Mr Renauf).

On 11 March 2024, Mr Michael Deegan (of Payton) internally referred the Loan Proposal to a colleague, Mr Michael Tadros of Payton (Mr Tadros).

On 13 March 2024:

On 14 March 2024:

In light of UF’s correspondence with Payton, on 18 March 2024 UF issued a letter agreement to Mr Renauf (c/o Mr Sweeney) (referred to in these proceedings as a “Prospective Approval Indication contract - the PAI”):

I set out the relevant terms of the PAI later in these reasons.

Having received the executed PAI from Mr Renauf, Payton proceeded to accept and assess the Loan Proposal.

On 25 March 2024, Mr Ross sent an email to Mr Howe:

On 26 March 2024, Mr Howe sent an email to Mr Ross:

On 8 April 2024, UF sent an email to Mr Sweeney to update him in respect of the consideration of the Loan Proposal:

On 9 April 2024, Mr Sweeney sent an email to Mr Ross stating “Can we set up a call? Clients very worried”.

On 10 April 2024:

On 12 April 2024:

On 15 April 2024:

On 16 April 2024:

On 7 May 2024:

On 29 May 2024, M3 Property issued a formal valuation of the Property (as at 9 May 2024) on two bases; “As Is - free of GST” of $15 million and “As if complete - free of GST” of $25,000,000 (Valuation). Relevantly, the Valuation stated:

On 14 June 2024, Mr Howe sent Mr Renauf an email raising the question of the applicability of GST to a sale of the Property at the conclusion of its redevelopment:

On 18 June 2024, Mr Panzatis sent an email to Mr Renauf stating:

On 19 June 2024:

On 20 June 2024:

On 27 June 2024 at 4.19pm Mr Ross sent an email to Mr Sweeney in the following terms:

On 28 June 2024 at 4.19pm, Mr Sweeney sent an email to Mr Ross withdrawing Mr Renauf’s Loan Proposal on account of Mr Renauf’s accountant’s inability to provide a GST Clearance certificate:

On 1 July 2024 at 10.54am, Mr Hugh Ross sent an email to Mr Sweeney marked “without prejudice save as to costs” advising that the matter had now been taken over by UFFA.

On 1 July 2024 at 2.34pm, Mr Howe emailed Mr Sweeney stating:

At 2.49pm Mr Sweeney asked Mr Howe to confirm this with UF and at 2.56pm Mr Howe stated that he verbally confirmed this with UF earlier today and that he was happy for UF to be provided with a copy of his email from 2.39pm if further confirmation is required.

Subsequently on 1 July 2024, Mr Hugh Ross sent a notice to Mr Renauf and Ms Nicola Garrett (Notice). The Notice stated (in part):

On 4 July 2024 an identical letter was issued, this time addressed also to “the Secretary SSMW Group Pty Ltd”.

The First Caveat was lodged on 3 July 2024 and registered on 14 July 2024. The First Caveat stated that the “Estate or Interest Claimed” was a Charge by virtue of an agreement between UFFA and Mr Renauf. Next to “Details Supporting the Claim” it was stated “Pursuant to facility agreement dated 22/3/2024 between the caveator and Payton Capital Ltd as borrower and the registered proprietor as guarantor”.

Correspondence then ensued between the parties in which Mr Renauf’s lawyers demanded that the First Caveat be removed.

On 28 January 2025, a Lapsing Notice was served on behalf of Mr Renauf in respect of the First Caveat. The proceedings were then commenced.

The First Caveat was withdrawn on 18 February 2025.

The Second Caveat was registered on 21 February 2025. The only substantial difference between the First Caveat and the Second Caveat is in the “Details Supporting the Claim” section which now states “Pursuant to Prospective Approval Agreement dated 18/03/2024 between the caveator and registered proprietor”. The caveator is UFFA.

Although the case began as a duty matter seeking an extension of caveat and was heard on a final basis within weeks of commencement and without pleadings, the issues litigated were quite clear and focussed on ultimate questions of liability.

Essentially, they can be reduced to three:

Submissions were also advanced in relation to whether the First Caveat and the Second Caveat were properly lodged. It emerged in closing submissions that resolution of these issues was only relevant to costs and the parties agreed that I would determine the contractual issues first and then give the parties an opportunity to be heard on costs.

Expressed in summary form, the plaintiffs contended that:

Expressed in summary form, Mr Renauf contended that:

Central to the resolution of the dispute between the parties is the proper construction of the terms of the PAI.

The letter is on the letterhead of UF and is addressed to Mr Renauf, care of Mr Sweeney. It runs to eleven pages.

The letter relevantly begins:

There then follows a schedule which sets out a number of separate matters including “Borrower”, “Facility Amount”, “Interest Rate”, “Term”.

Against the heading “Other Conditions” it is stated “The lender will be pleased to consider approval of your loan subject to obtaining the following: …”. Ten items are listed, the last one being “Any other conditions as per lender deems to be fair and reasonable”.

Against the heading “Lender’s Establishment fee” is stated:

Against the heading “Conflict:” appears the following:

Below this item, the letter states:

Below the heading “Lender’s Fees” it is stated “Total Lender’s Establishment Fee” of $217,838.00 and it is then indicated that the fee will be deducted from settlement proceeds.

On the next page there is a heading “Brokerage Fees” below which it is stated:

In order “to accept this prospective approval indication” the borrower is requested to initial all pages and sign page “Acceptance of Prospective Approval Indication”, sign Union Fidelity’s Irrevocable Authority to Pay and deposit a Processing Fee of $7,750.00 to Union Fidelity’s bank account.

Mr Renauf signed the “Acceptance of Prospective Approval Indication and Irrevocable Authority” and paid the processing fee.

The Irrevocable Authority provided that the Borrower irrevocably directs and authorises “the lender ( )” to pay Union Fidelity Capital Funding Pty Ltd from settlement proceeds a Brokerage Fee of $217,838.00. The bank account details provided is stated to be an account in the name of UFFA.

The final page of the letter begins “Below is the detail on how and what fees are payable”. There is then a table as follows:

The principles applicable to the construction of a commercial contract such as the PAI are well known. The following summary suffices for present purposes.

Three core principles emerge from what French CJ, Hayne, Crennan and Kiefel JJ said in Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at [35]:

Notwithstanding these three core principles, as French CJ, Nettle and Gordon JJ stated in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 at [48], “ordinarily this process of construction is possible by reference to the contract alone”.

As Allsop P observed in Onesteel Manufacturing Pty Ltd v Bluescope Steel (AIS) Pty Ltd (2013) 85 NSWLR 1 at [61], the analysis is an objective one that can produce only one true meaning. The process of construction is not a process necessarily concluded by logical reason or a priori analysis. It involves the weighing of differing considerations partly logical and partly intuitive (though rational) leading to a choice. Analysis of competing arguments assists in that process, but the “correct” answer is not arrived at merely by seeing which side has the greater number of “good” points.

As Leeming JA observed in Zhang v ROC Services (NSW) Pty Ltd (2016) 93 NSWLR 561 (Zhang v ROC) at [53], the starting point is to determine the literal or grammatical meaning or meanings of the clause. Second, one determines the legal meaning of the clause. Whereas here, there are several clauses of the agreement to be construed, it is clear that every provision must be read, together and construed with the others, so as to render, as far as possible, the provisions harmonious with each other: see Herzfeld and Prince, Interpretation (3rd ed, 2024, Thomson Reuters) at [22.30] and the cases cited therein. This is with a view to the legal meaning reflecting a measure of internal coherence: see HP Mercantile Pty Ltd v Hartnett [2016] NSWCA 342 (HP Mercantile) at [134] per Leeming JA.

Where there is more than one available legal meaning, a court looks at the text, context and purpose with a view to determining which potential meaning best accords with those considerations. An iterative process is called for – checking each of the rival meanings against the other provisions of the document and investigating its commercial consequences.

As Leeming JA further observed in HP Mercantile at [134]:

The effect of the PAI having regard to its terms is, obviously enough, nothing more than an agreement whereby UF, as agent for UFFA, indicates to Mr Renauf that it has found a lender who is prepared to consider (has a Willingness to Proceed in the words of the PAI) loaning the moneys sought to Mr Renauf on particular terms. The PAI makes it clear that it is not an offer from the lender (who is not even named) to loan moneys and further makes it clear that the lender reserves the right to amend the indicated terms and to impose new terms and conditions. The role of UF/UFFA is confined to having identified the lender and, for want of better words, introduced the lender to Mr Renauf.

Acceptance of the terms of the PAI by Mr Renauf binds him to having the lender consider formally approving the loan. It is a commitment by Mr Renauf to the lender going forward with the approval process. UFFA has introduced Mr Renauf to that lender as a lender prepared to move forward with a process of approving a loan to Mr Renauf (again – has a Willingness to Proceed). It is in this sense that the agreement is properly described as a prospective approval indication or PAI.

It is important to understand these basic matters when considering the respective submissions, particularly those advanced on behalf of Mr Renauf.

Turning now to clause (c)(i), looked at in isolation its grammatical meaning is tolerably clear. Mr Renauf acknowledges that an “acceptance of this Prospective Approval Indication” (the means by which this is to occur being clearly set out elsewhere in the document), the “Brokerage Fee” (which is clearly set out on page 7 of the document) is payable regardless of whether the loan proceeds or not. The reference to “the loan” in this regard is, clearly enough having regard to what precedes the reference in the document, and particularly the introductory words at the commencement of the document, the loan sought by Mr Renauf which a potential lender is prepared to proceed to formally consider approving.

The immediate context in which “the loan” is referred to in clause (c)(i) also supports this construction. The reference is in the context of whether the loan proceeds or not. There is no warrant for reading the words “the loan” as referring to a formally approved loan. The broader context – of an agreement whereby UF/UFFA have already performed their introductory role and have no further role to play in terms of whether the loan is formally approved – also supports this construction.

Unless qualified by another provision of the document, clause (c)(i) obliges Mr Renauf (having accepted the PAI) to pay the Brokerage Fee.

Whilst the terms of the PAI elsewhere contemplate the Brokerage Fee being deducted from the Settlement Proceeds, this is obviously where “the loan” proceeds and as such is not the situation principally dealt with by clause (c)(i).

Turning now to clause (c)(ii), it is made up of two separate parts.

It was not in dispute that clauses (c)(i) and (c)(ii) (both parts) must be construed together. Counsel for Mr Renauf contended that the only way that clause (c) as a whole can make sense is if the obligation to pay a Brokerage Fee did not take effect unless and until a “loan approval” was in place. A “loan approval” in this sense was said to be a formal approval by the unnamed Lender in the PAI, as opposed to the “indicative” approval the subject of the PAI.

In support of this contention, reliance was placed on the reference to “loan approval” in each of the two parts of clause (c)(ii), the reference to the “Lender’s Formal letter of offer” at the commencement of the clause headed “Conflict” (which includes clause (c)), and the fact that the consideration for the PAI was the processing fee of $7,750.

The plaintiffs contended that clause (c)(ii) did not qualify clause (c)(i) in this way but rather operated at a different point in time to clause (c)(i), at the later point in time when the fate of the loan was known. The reference to “loan approval” should be construed as referring to the prospective approval forming the subject of the PAI, and not as if referring to some later obtained formal loan approval.

I accept the plaintiffs’ contentions and reject those advanced by Mr Renauf.

The wording of clause (c)(i) is clear. Reading “loan approval” in the manner contended for by the plaintiffs is a plain and ordinary reading of the words in the context of the PAI. There is nothing nonsensical about such a construction. The inclusion of the word “remain” in the first part of clause (c)(ii) also supports the construction propounded by the plaintiffs – it is payable under clause (c)(i).

Adopting the construction propounded by Mr Renauf would be quite inconsistent with the clear terms of clause (c)(i). There is nothing in clause (c)(i) to the effect that the Brokerage Fee is payable on acceptance of the PAI and formal approval of the loan by the unnamed lender. There is no reason why the provisions need to be read together that way. Clauses (c)(i) and (c)(ii) can comfortably be read together in the manner contended for by the plaintiffs.

The fact that the consideration for the PAI is the processing fee of $7,750, does not lend support to Mr Renauf’s argument that the Brokerage Fee is only payable once formal loan approval is granted by the Lender. The issues are separate. The circumstances in which the Brokerage Fee is payable depends on the construction of the terms of the PAI.

The meaning of each subpart of clause (c)(ii) is also clear.

The first part applies where the loan is withdrawn by the lender due to the Borrower’s default which directs attention to clause (e), it being agreed that the reference to “F” was an obvious mistake. Clause “(e)” states that “an event of default means the failure by the Borrower to remedy or make good any event by which the Borrower does not proceed with the accepted loan … after 7 calendar days’ notice of default in writing has expired”.

Counsel for the plaintiffs did not shy away from the contention that this in effect required the Borrower (Mr Renauf) to go ahead with the loan, or when read with the other part of clause (c)(ii), meant that the only circumstance in which the Brokerage Fee was not payable was where the Lender withdraws pursuant to its discretion in clause (b).

Counsel for the plaintiffs contended that this was the commercial risk taken by a Borrower in the circumstances – principally the Borrower having to borrow in the non-conforming lending market, self-evidently unable to obtain finance through some more traditional i.e. bank lending channels. The substantial fee payable reflects that risk.

I agree that this is the ordinary and grammatical meaning of the words used in clause (e), construed along with the two parts of clause (c).

The meaning of the second part of clause (c)(ii), is also clear. The words “the Lender withdraws the loan approval at any time under (B) above with no Borrower’s default Notice under (F) [sic (E)] below no further brokerage fees are payable”, when read along with the words of clause (b) which gives the Lender the right to withdraw or amend the loan approval if “there arises any matter which may adversely affect the proposed loan”, confine the operation of the part to a situation where it is the Lender that is withdrawing and there is no inability or unwillingness on the part of the Borrower going ahead with the loan. This last aspect clearly emerges from the defined meaning of event of default in clause (e).

Adopting a harmonious reading of clauses (c)(i) and (c)(ii), the second part of clause (c)(ii) sets out the only circumstance in which the Brokerage Fee is not payable as clearly set out in clause (c)(i).

The combined effect of each of the relevant clauses is that:

To be clear, if the Borrower, having accepted the PAI, decides not to proceed with the proposed loan, the Brokerage Fee is payable. If the reason why the Borrower does not wish or is unable to proceed is because the Borrower is unable or unwilling to comply with a term imposed by the Lender, the Brokerage Fee is payable.

The question that next arises is why did the loan not proceed or, put another way, which of the two parts of clause (c)(ii) applies?

Mr Renauf contended that in the alternative to his contention that the Brokerage Fee was only payable in the event that formal loan approval was granted, the second part of clause (c)(ii) applied, namely Payton had withdrawn the loan, and as such no Brokerage Fee was payable.

I have set out the factual events above. Relevantly:

What is clear on the chronology is that Mr Renauf withdrew his loan application first – on 28 June 2024 – and before Payton indicated it was not willing to proceed with the proposed funding – on 1 July 2024.

Mr Renauf sought to contend – as I understood the submission – that the operative act relied on by the plaintiffs was Payton’s email of 1 July 2024 indicating it was not proceeding. The contention is premised on the fact that the plaintiffs first notice of demand to Mr Renauf is dated 1 July 2024.

I do not accept this contention at a factual level in circumstances where, at 10.54am on 1 July 2024, several hours prior to Payton informing Mr Sweeney of its decision not to proceed, Mr Hugh Ross sent an email to Mr Sweeney marked “without prejudice save as to costs” advising that the matter had now been taken over by UFFA. The obvious context of this email, and its marking, was a potential dispute with Mr Renauf in relation to the Brokerage Fee. So much is clear from the notice of demand emailed at 5.46pm on 1 July 2024.

I am conscious in this regard that Mr Howe of Payton indicated to Mr Sweeney in an email at 2.56pm on 1 July 2024 that he had verbally confirmed Payton’s discussion with the plaintiffs “earlier today”, although he does not say precisely when.

In any event, I do not think any of this matters. Mr Renauf was first to withdraw his loan application on 28 June 2024. Payton’s decision not to proceed was likely in circumstances where Mr Renauf had indicated he was unable to provide a GST clearance certificate. Whilst the seven day notice to remedy provided for in clause (e) was not issued, such notice would never have been complied with given Mr Renauf’s decision to withdraw his loan application and go elsewhere. Whilst Mr Ross told Mr Sweeney on 27 June 2024 that he had convinced Payton’s Head of Credit to accept the existing letter from the accountant whilst waiting for the GST Clearance Certificate, self-evidently a clearance certificate was still being insisted on and this is what was stated on 28 June 2024 as not being able to be provided.

The second part of clause (c)(ii) has no application in the circumstances. Mr Renauf elected not to proceed on 28 June 2024. Pursuant to clause (c)(i), the “Brokerage Fee” is payable.

Counsel for Mr Renauf also placed some reliance on the fact that it was proposed, after the PAI was executed, that the loan would be in the name of a corporate entity associated with Mr Renauf - SSMW. As I understood the argument, this fact, together with the fact that Payton’s formed the view that an LVR of 70 percent (as referred to in the PAI) was no longer achievable, changed the character of the loan and placed it outside the scope of the PAI. I do not accept this submission. Neither of these “facts” takes Mr Renauf outside the terms of the PAI. There was only ever one proposed loan. Recognising that the borrower would be the existing borrower – a corporate entity associated with Mr Renauf – did not alter that fact. In relation to the LVR proposed change, the terms of the PAI permitted the lender to make these changes.

The plaintiffs also placed reliance on the decision of Slattery J in La Trobe Capital v Mortgage Corporation Limited (No 2) [2009] NSWSC 1372 where it was held that a Union Fidelity entity was entitled to recover a Brokerage Fee under an accepted “Prospective Approval Indication”. I accept counsel for Mr Renauf’s submission that this decision is distinguishable from the present case and thus does not assist the plaintiffs. A formal loan approval was in fact granted in that case and the operative provisions of the agreement were different.

Subject to the penalty question, to which I now turn, the Brokerage Fee is payable by Mr Renauf under the terms of the PAI.

Mr Renauf contends that clause (c)(i) is unenforceable as a penalty. The elements of the argument – as advanced in written submissions, where little was said orally in relation to it – was as follows:

As I understand the contentions, the “primary stipulation” was to go ahead with the loan.

It was then contended that the Brokerage Fee of $217,838.00 claimed by the plaintiff was patently extravagant and unconscionable, out of all proportion to any genuine pre-estimate of damages.

The plaintiffs disputed that the clause operated as a penalty. No attempt was made by the plaintiffs, however, to justify the quantum of the Brokerage Fee in the event the doctrine applied. Rather, the debate was whether the clause operates as a penalty.

The High Court reframed the law of penalties in Australia in Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205 (Andrews) and Paciocco v Australia and New Zealand Banking Group Ltd (2016) 258 CLR 525 (Paciocco). The relevant principles are not in dispute – see Arab Bank Australia Ltd v Sayde Developments Pty Ltd (2016) 93 NSWLR 231 (Arab Bank) at [69]-[76] per McDougall J (Gleeson JA and Sackville AJA agreeing) and Australia Capital Financial Management Pty Ltd v Linfield Developments Pty Ltd (2017) 18 BPR 36,683 (Australia Capital) at [353]-[376] per Ward JA (McColl and Gleeson JJA agreeing).

In Andrews at [9]-[10], the Court (French CJ, Gummow, Crennan, Kiefel and Bell JJ) stated:

In Andrews, the High Court held that the primary stipulation to which the penalty doctrine applies may be the occurrence or non-occurrence of an event which is neither a breach of contract nor an event which it is the responsibility or obligation of the party subjected to the penalty to avoid (at [12], [45], [46], [67]). That is because “a penalty conditioned on failure of a condition is for these purposes in substance equivalent to a promise that the condition will be satisfied”: Integral Home Loans Pty Ltd v Interstar Wholesale Finance Pty Ltd [2007] NSWSC 406 at [57].

The onus of proving that the impugned clause is a penalty rests with the party asserting it, in this case, Mr Renauf: see Arab Bank at [75], [111].

In considering whether the penalties doctrine is engaged at all, Ward JA at [359] in Australia Capital referred with approval to the framework proposed by Gordon J in Paciocco v Australia and New Zealand Banking Group Limited (2014) 309 ALR 249. The framework is in the following terms:

Of present relevance are questions (3) and (4).

I do not accept Mr Renauf’s contention that in the present case clause (c)(i) is properly viewed as a stipulation collateral to a primary stipulation of progressing the loan. On the view that I take of the PAI, clause (c)(i) is a primary stipulation in itself, requiring the Borrower – Mr Renauf – to pay the Brokerage Fee whether the proposed loan proceeds or not. The fee is the same whether the loan proceeds or not. It is the fee payable by Mr Renauf to UFFA for the introduction to the lender “willing to proceed”, i.e. for the introduction to the lender who is prepared to consider formally approving the loan.

The Brokerage Fee is not payable on breach of a term of the PAI. The PAI does not impose any obligation on Mr Renauf to proceed with the proposed loan. Clause (c)(i) does not impose an additional detriment on Mr Renauf. It is payable on acceptance of the PAI.

The penalty doctrine is not engaged.

For the reasons set out above, the plaintiffs succeed and the first plaintiff is entitled to judgment for the sum sought of $217,838, plus pre-judgment interest.

At the request of the parties, I will not deal with costs or the issue of the validity of the First Caveat and the Second Caveat.

I will give the parties the opportunity to be heard on any remaining issues, including as to interest and costs. My preliminary view is that costs should follow the event and Mr Renauf be ordered to pay the plaintiffs’ costs. There seems to me to be little utility in determining the issues associated with the validity of the caveats in circumstances where Mr Renauf accepted that if, as I have found, the Brokerage Fee is payable, UFFA would be entitled to lodge a fresh caveat on title.

The orders of the Court are: